TMI Blog2013 (11) TMI 1564X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing castor oil which is not one of the items enumerated in the Schedule to the Act and the notification issued by the Directorate? - Civil Appeal Nos. 3130, Civil Appeal Nos. 3131 of 2008, Civil Appeal No. 4860 of 2009 - - - Dated:- 29-11-2013 - SINGHVI G. S. AND GOPALA GOWDA V., JJ. B. K. Satija, Advocate, for the appellant. Sanjay Bhatt and Ms. Hemantika Wahi Advocates, for the respondents. JUDGEMENT These appeals have been directed against the common judgment and order dated 24-4-2007 passed by the High Court of Gujarat at Ahmedabad in Jayant Vegoils and Chemicals (P) Ltd. v. Agriculture Produce Market Committee filed by the appellant, Agricultural Produce Market Committee, Banda (for short APMC ) as it is aggrieved by the dismissal of its Letters Patent Appeal No. 195 of 2006. The High Court allowed Letters Patent Appeal No. 139 of 2006 prefetred by the respondent Company. Both the letters patent appeals were filed against the order dated 22-12-2005 of the learned Single Judge passed in Agriculture Produce Market Committee v. State of Gujarat whereby the learned Single Judge substantially set aside the order dated 19-4-2005 of the revisional auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-rule (2) of Rule 48 held that the said exemption was available to the agricultural produce brought by the industrial concern itself from outside the market area into the market area of APMC and the exemption was not available where the castor seeds were bought within the market area by the seller and sold to the industrial concern within the market area. As such the learned Single Judge upheld the plea of APMC for levy of market fee on the castor seeds purchased by the respondent Company. In respect to the levy of market fee on de-oiled cake by APMC the learned Single Judge accepted the contention urged on behalf of the respondent Company and held that de-oiled cake could not be treated as oil cake, and therefore, it was not eligible for levy of market fee since it was not mentioned in the Schedule. Both the respondent Company as well as APMC being aggrieved by the judgment and order dated 22-12-2005 of the learned Single Judge preferred Letters Patent Appeal No. 139 of 2006 and Letters Patent Appeal No. 195 of 2006 respectively. The Division Bench of the High Court allowed the appeal preferred by the respondent Company and dismissed the appeal preferred by APMC and stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , weight, price, quantity and amount paid by the Company as per the weighment made by the Company which clearly shows that as per bills, different parties were selling castor seeds to the respondent Company for which weighment was done at the mill site in the market area, Baroda and payment made to the parties as per the weighment done by the respondent Company. On 27-12-2004 on the basis of statement submitted by the respondent Company, APMC assessed the market cess for the purchases of the castor seeds in the market area in respect of the same being used for processing and converting them into castor oil and oil cake and on the basis of assessment the respondent Company was directed to pay the market cess of ₹ 1,27,46,349.38p. within a period of 10 days. 5. Being aggrieved by the said assessment made by APMC on 27-12-2004, the respondent Company preferred Revision Application No. 2 of 2005 under Section 48 of the Act before the State of Gujarat on 5-1-2005 challenging the decision of APMC directing it to pay the market cess as per its letter dated 27-12-2004. To the said revision application, APMC filed its reply on 23-1-2005. The respondent Company filed rejoinder on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case pleaded by it that market fee is levied on de-oiled cake which is a by-product sold by it and is not exigible goods as it is not an agricultural produce. Aggrieved by the common judgment, the present appeals are filed. 8. On the basis of the legal grounds urged in these appeals questioning the correctness of the findings and reasons recorded by the Division Bench of the High Court on both the points which have been formulated by it, the following points would arise for the consideration of this Court in these appeals: (i) Whether APMC, Baroda is liable to claim the market fee on the castor seeds purchased by the respondent Company on the plea that the same were purchased within the market area of APMC, Baroda which castor seeds are used by the said industrial concern for manufacture of castor oil within the market area of APMC, Baroda? (ii) Whether purchase of the castor seeds for use of the respondent industrial concern for manufacturing castor oil falls within Rule 48(2) of the Rules to get exemption from payment of market fee? (iii) Whether the Division Bench was justified in setting aside the finding of fact recorded by the learned Single Judge, holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding the fact that the property in. the agricultural produce has by reason of such sale passed to a person in a place outside the market area. (2) No fee shall be levied on agricultural produce brought from outside the market area into the market area for use therein by the industrial concerns situated in the market area or for export and in respect of which declaration has been made and a certificate has been obtained in Form V: Provided that if such agricultural produce brought into the market area for export is not exported or removed therefrom before the expiry of twenty days from the date on which it was so brought, the market committee shall levy and collect fees on such agricultural produce from the person bringing the produce into the market area at such rates as may be specified in the bye-laws subject to the maxima and minima specified in sub-rule (1):- Provided that no fee shall be payable on a sale or purchase to which subsection (3) of Section 6 applies. 10. It is an undisputed fact that the respondent Company is an industrial concern which has been undertaking manufacture of castor oil out of the castor seeds which are declared as agricultural produce in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was challenged before the learned Single Judge of the High Court of Gujarat by filing a petition under Article 226 of the Constitution i.e. Special Civil Application No. 13606 of 2005. 12. The learned Single Judge after giving opportunity to the respondent Company and hearing both the learned counsel appearing on behalf of the parties has held that castor seeds have been bought within the market area of APMC, therefore, sub-rule (1) of Rule 48 is applicable to the fact situation and not sub-rule (2) of Rule 48 upon which reliance was placed by the respondent Company's counsel, in arriving at the said conclusion the learned Single Judge has referred to the factual aspects with reference to certain documents such as invoices, bill receipts, etc. exchanged between the respondent Company and its suppliers of castor seeds. The bill issued by one Manish Trading Company of Naroda, Ahmedabad dated 3-5-2004 for supply of 150 bags of castor seeds weighing 75 kilos each was examined. The rate charged was ₹ 305 per 100 kg. The total quantity shown was 112.50 quintals and the total amount claimed was ₹ 1,71,562. In the said bill dated 3-5-2004, it was indicated that payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of shortfall or loss or damage during transport, the seller could claim damage from the transporter and that would further demonstrate that the respondent Company did not become the owner of the goods till it took the physical delivery thereof, weighing the same and satisfying itself about the quantity received by it. It was held that it was not a mere formality to find out the quantity by it but it has the essential element of making payment depending on the extent of quantity received and in case of any drastic shortfall in the quantity, the issue would be between the supplier and the transporter. Further finding was recorded that if against the quantity of 100 quintals of castor seeds supplied by the trader, the respondent Company received only half of it on account of loss, damage or pilferage, the Company would make payment only for such quantity leaving it for the trader to recover the damages from the transporter. There would also be a case where on account of some untoward and unforeseen circumstances, such as natural calamity or theft, the respondent Company did not receive the full quantity of castor seeds, then the payment shall be made only for the quantity received b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ler is bound to do something to the goods for the purpose of putting them into a deliverable state, the property does not pass until such thing is done and the buyer has notice thereof. The above judgment of the Privy Council in Hoe Kim case is referred to by this Court in the decision of Agricultural Market Committee v. Shalimar Chemical Works Ltd. [AIR 1997 SC page 2502]wherein the learned Single Judge rightly extracted the following paragraph from the said judgment and it is worthwhile to extract the same hereunder:- (SCC p. 529, para 40) 40. In order that Section 20 is attracted, two conditions have to be fulfilled:- (i) the contract of sale is for specific goods which are in a deliverable state; and (ii) the contract is an unconditional contract. If these two conditions are satisfied, Section 20 becomes applicable immediately and it is at this stage that it has to be seen whether there is anything either in the terms of the contract or in the conduct of the parties or in the circumstances of the case which indicates a contrary intention. This exercise has to be done to give effect to the opening words, namely, 'Unless a different intention appears' occ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent Company which have been extensively referred to by the learned Single Judge in his judgment at para 11 to come to the conclusion holding that the castor oilseeds were bought by the respondent Company within the market area of APMC and, therefore, he has rightly held that Rule 48(2) is not applicable to the fact situation as claimed by the respondent Company and the reliance placed upon Form V which is the form of declaration and certificate obtained from APMC seeking exemption from payment of market fee on the castor seeds brought by it from outside APMC area, is contrary to the material evidence on record and therefore, the Division Bench has gravely erred in reversing the finding of fact recorded by the learned Single Judge on proper appreciation of undisputed material evidence on record and recorded the finding of fact with reference to Sections 19, 20 and 21 of the Sale of Goods Act and the judgment of the Privy Council referred to supra which has been referred to by this Court in Shalimar Chemical Works Ltd. case wherein the learned Single Judge rightly came to the conclusion that the castor seeds were purchased by the Company in the market area for the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh mechanical devices to extract oil from the same. After the mechanical process which is involved in extracting substantial amount of oil in the oil cake, the residual product is the de-oiled cake which is sold in the market. The same does not fall under the head of oil cake. The process which is adopted for the purpose of getting the said by-product of de-oiled cake has been extensively referred to in para 23 of the order of the learned Single Judge and it is worthwhile to extract the same hereunder:- 23. The process undertaken by Respondent 2 for extraction of castor oil from the castor seeds purchased by it is not seriously in dispute. The fact that ultimately by-product which Respondent 2 claims to be de-oiled cake which Respondent 2 sells in the market and on which the petitioner is seeking to levy market fee contains less than 1% castor oil is also not seriously in dispute. Respondent 2 has explained the complex process through which the castor seeds are made to undergo so as to extract maximum possible oil out of it. At the first stage alter cleaning and separating raw seeds from husk, etc., the castor seeds are crushed through mechanical devices to extract oil from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deoiled cake. The attempt on the part of the petitioner Agriculture Produce Market Committee to levy market fees on sale and purchase of such deoiled cake in my opinion is not permissible. The Schedule to the Act specifies oil cake as one of the agricultural produces on which market fee can be charged. In view of my conclusion, that term oil cake does not include de-oiled cake, I find that the petitioner is not authorised to charge market fees on the de-oiled cake sold by Respondent 2. The difference in process which would lead to obtaining oil cake and de-oiled cake was also noticed by the Hon'ble Supreme Court in State of A.P v. Modern Proteins Ltd.[ 1[1994] 95 STC 181 (SC); [1994] Supp (2) 496] on which reliance was placed by the learned advocate for Respondent 2. It was noted that:- (SCC pp 498-99 para 3) '3.... groundnut seeds obtained after the process of decortication are of a high grade quality, rich in proteins but free from harmful materials processed in the expeller and the outcome is groundnut oil and groundnut oil cake. The groundnut oil cake again is pressed through the solvent in which food hexane is sprayed resultantly groundnut oil and groundnut d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er noticing the judgment of the Supreme Court in Modern Proteins Ltd., the learned Single Judge came to the conclusion that de-oiled cake containing less than 1% oil is not mentioned in the Schedule as per Section 2( 1)(i) of the APMC Act as agricultural produce by the authority and further held that the above produce is totally different from the oil cake. Therefore, no market fee can be levied by APMC to be paid by the respondent Company. The said finding of fact of the learned Single Judge has been rightly concurred with by the Division Bench of the High Court. The same was sought to be set aside by APMC. We have carefully examined the correctness of the concurrent finding of fact arrived at by the Division Bench on this aspect of the matter. We are in agreement with the view taken by the High Court of Gujarat in holding that the by-product of the manufacture in producing the oil from the castor seeds is only de-oiled cake and is not one of the Schedule items in the notification for the purpose of levying market fee. Therefore, we do not find any good reason whatsoever to interfere with the concrete finding of fact on this aspect of the matter. Hence, we have to affirm the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the learned Single Judge of the High Court. Being aggrieved, APMC filed this civil appeal framing certain questions of law and urging grounds in support of the same, praying to set aside the impugned judgment and order and to pass such other order as may be deemed fit and proper in the circumstances of the case. 3. The brief necessary facts for the purpose of examining the legality and validity of the impugned order are stated herein. The appellant APMC had filed Special Civil Application No. 9705 of 2008 under Articles 14, 19, 21 and 226 of the Constitution of India before the learned Single Judge of the High Court impleading the respondent Company and the State of Gujarat as parties, seeking relief for the issue of writ of certiorari or any other appropriate writ, order or direction, to set aside the order dated 30-6-2008 passed in Revision Application No. 69 of 2008 by Respondent 2, the State (revisional authority) and further sought tor declaratory relief to declare that APMC is entitled to levy market fee on the respondent Company for purchase of castor seeds as per the demand notices dated 5-3-2008 and 15-4-2008 given to the respondent Company. Further, by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for final hearing if the Rules are amended or the matter before the Apex Court is finally decided, whichever is earlier. The correctness of this interim order dated 13-11-2008 was challenged by the respondent Company by filing Letters Patent Appeal No. 1383 of 2008 urging various legal contentions. The Division Bench examined whether sub-section (2)(a) added to Section 28 of the Act by Amendment Act 17 of 2007 has the effect of taking away the substratum of the Division Bench judgment dated 24-4-2007 passed in Jayant Vegoils and Chemicals (P) Ltd. v. Agriculture Produce Market Committee in connected matters. The Division Bench after referring to certain relevant facts and Rule 48(2) of the Rules, came to its conclusion on the basis of the judgment rendered by the Division Bench of the High Court in Jayant Vegoils and Chemicals (P) Ltd. v. Agriculture Produce Market Committee and connected matters for the interpretation of Section 28 of the Act read with Rule 48(2) of the Rules. The relevant para 8 from the Division Bench judgment rendered in the aforesaid letters patent appeal filed by the respondent Company is extracted hereunder:- 8. Section 28 of the Act empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace within the area of the Market Committee, Baroda. Besides, the octroi paid to Baroda Municipal Corporation on the goods, namely, castor seeds imported and produced at p. 107 is also suggestive of the fact that sale does not take place within the area of the Market Committee. Even the Company has produced a number of forms prescribed under Rule 48 subrule (2) from pp. 79 to 86, the fact not denied by the Market Committee, which also establishes the case of the Company with sufficient declaration and a certificate that the abovementioned agricultural produce, namely, castor seeds, has been brought from outside the limits of the market area and brought within the limits of market area for industrial purpose, and for production of castor oil and other by-products. Thus, the Company fully complied with the requirement of Rule 48 of the Rules and is entitled for exemption from payment of market fees. Therefore, exercise undertaken by the learned Single Judge to find out the place of sale, so as to bring the case of the Company under Rule 48 sub-rule (I) of the Rules, is of no help and the finding, on that basis, arrived at by the learned Single Judge, will have to be quashed and set a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls with levy of market fee which is a mandatory provision that does not give any exemption to the respondent Company and as such a Rule cannot override provisions of the Act. The Division Bench of the High Court has simply affirmed the order of the revisional authority by setting aside the assessment order passed by APMC vide notices dated 5-3-2008 and 15-4-2008 without awaiting the decision to be rendered by the learned Single Judge on the legality and validity of Rule 48(2) in the backdrop of Section 28, of the amended provision. 6. After hearing the learned counsel for the parties, we have pronounced the judgment today in Civil Appeal No. 3130 of 2008 on similar demand notices demanding the market fee from the respondent Company on the castor seeds bought in the market area for the purpose of manufacturing of oil. We hold that the demand for the market fee made by APMC for castor seeds is justified as per the reasoning given in our judgment in the connected Civil Appeal No. 3130 of 2008, that the castor seeds were bought in the market area and not brought into the market area. It would suffice to say that the order dated 10-2-2009 of the Division Bench of the High Court in J ..... X X X X Extracts X X X X X X X X Extracts X X X X
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