TMI Blog1980 (3) TMI 262X X X X Extracts X X X X X X X X Extracts X X X X ..... risdiction of several Market Committees challenged the levy of fee in the High Court of Allahabad from time to time. There were several rounds of litigation in which they by and large, failed. Finally many Writ Petitions were dismissed by the High Court by its judgment dated September 21, 1978 on which date many writ petitions were also dismissed in limine. Civil Appeal 1841 of 1978 and about 103 more appeals are from the said judgment and order of the High Court. Immediately preceding the said judgment a longer and more elaborate judgment had been delivered by the High Court on April 29, 1977. Civil Appeal 871 of 1978 and Civil Appeal 1636 of 1979 are from the said judgment. Along with these 106 appeals, two Writ Petitions were also heard being Writ Petition No. 257 of 1979 and Writ Petition No. 600 of 1979. Thus in all 108 matters have been heard together and are being disposed of by this judgment. 2. At the outset it may be mentioned that because of the litigations cropping up from time to time between the traders and the Market Committees the working of the Committees had not successfully proceeded so far, as, fees levied from time to time could not be realised in full. Some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Kewal Krishan Puri v. State of Punjab the fee realised from the payer of the fee has, by and large, to be spent for his special benefit and for the benefit of other persons connected with the transactions of purchase and sale in the various Mandis. The earlier cases on the point of fee have been elaborately reviewed in that judgment and certain principles have been called out which will be adverted to hereinafter. While deciding the question of quid pro qua in relation to the impugned fees the High Court had not the advantage of the judgment of this Court. In that regard this judgment is a settler on the point and we hope that the authorities and all other concerned in the matter will be guided by and follow the said decision in the matter of levy and utilisation of the market fee collected. 4. We shall now at the outset refer to the relevant provisions of the Act as they stood in the year 1978 and some of the rules framed thereunder. Wherever necessary reference will be made to the unamended provisions of the Act. 5. In Clause (s) of Section 2 of the Act Agricultural produce has been defined to mean:- Such items of produce of agriculture, horticulture, vit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the Tee could be levied by the Market Committees. Under Section 7 declarations of Principal Market Yards and Sub-Market Yards have been made. Most of such areas declared so far are the markets or the Mandis where the traders are carrying on their businesses. It is proposed to establish Principal Market Yard and Sub-Market Yards separately in every market area and a question of asking the traders to carry on their business only in such Market Yards is under consideration of the Government. The State Government Under Section 8 has got the power to alter any market area and modify the list of agricultural produce. Section 9 provides for the effects of declaration of Market Area. Chapter III of the Act deals with the establishment, incorporation and Constitution of the Market Committees. The most important section is Section 17 which provides for the powers of the Committee. Clause (i) authorises a Committee to issue or renew licences under the Act on such terms and conditions and subject to such restrictions as may be prescribed. Clause (iii) authorises a Committee to levy and collect (a) such fees as may be prescribed for the issue or renewal of licences, and (b) market fee at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument was addressed to us on behalf of the State. In some of the appeals the State and/or the Market Committees are the appellants. The points urged on behalf of the trader-appellants, although too numerous, broadly speaking are the following :- (1) Big areas consisting of towns and villages have been notified as Market Areas without rendering any service. This is contrary to the whole object of the Act and the concept of fee. (2) No market area or market yard has been validly created. (3) No Mandi Samiti (Market Committee) has been validly appointed. (4) No machinery has been provided in the Rules for adjudication of disputes. (5) Fixation of minimum of 1 % to be charged as market fee by all the Market Committees Under Section 7(iii)(b) of the Act was illegal as the requirement of and the services to be rendered by the various Market Committees could not be on the same footing. (6) There was no application of mind in issuing the notification dated 11-4-1978 whereby 250 market areas were notified and 115 items of agricultural produce were specified. (7) There could not be any multi point levy of any market fee either in the same market area or in different mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seller is the purchaser of agricultural produce and not on any other transaction. Points 1 to 4 10. These four points are taken up together as there is no substance in any of them. Declaration of big areas as Market Areas does not offend any provision of law. Any area big or small including towns and villages can be declared as Market Area Under Section 6 of the Act. As explained in the case of Kewal Krishan Puri (supra) the whole of the market area is not meant where the traders or the licensees can be allowed to set up and carry on their business. The traders are required to take out licences Under Section 9(2) read with Section 11 of the Act, for such place which is either a Principal Market Yard or a Sub-Market Yard or at any specified place in the Market Area. No body can be permitted to carry on his business anywhere in the Market Area as the Market Committee will not be able to control and levy fee throughout the Market Area. The question of rendering service and its co-relation to the charging of fee has been elaborately discussed in the said decision and the following principles have been culled out :- (1) That the amount of fee realised must be earmarked for rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be forced to go to that place only for carrying on his business in agricultural produce or he can be permitted to carry on his business in his old place. For the time being this question is left open. Market Committees have not been constituted yet in accordance with the provisions contained in Section 13 of the Act. They have been constituted temporarily under Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam, 1972 which Act was a temporary Act and has been extended from year to year. But it is high time that Market Committees should be constituted in a regular manner on a permanent basis in accordance with the provisions contained in Chapter III of the Act. But the levy and collection of fee by the temporary Market Committees is not illegal as argued on behalf of the appellants. A machinery for adjudication of disputes is necessary to be provided under the Rules for the proper functioning of the Market Committees. We have already observed and expressed our hope for bringing into existence such machinery in one form or the other. But it is not correct to say that in absence of such a machinery no market fee can be levied or collected. If a dispute arises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 17(iii)(b), as amended by U.P. Act 7 of 1978 reads as follows :- market fee, which shall be payable on transactions of sale specified agricultural produce in the market area at such rates, being not less than one percentum and not more than one and half percentum of the price of the agricultural produce so sold, as the State Government may specify by notification, and such fee shall be realised in the following manner- (1) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the Committee; (2) if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the Committee; (3) if the produce is purchased by a trader from another trader, the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the Committee; and (4) in any other case of sale of such produce, the purchaser shall be liable to pay the market fee to the Committee. All the four clauses of Clause (b) are mutually exclusive. If the produce is purchased from a producer directly the trader shall be l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittee of that area cannot levy fee on a fresh transaction of sale and purchase taking place in that area. Supposing the Wheat is purchased in market area X by a trader from a producer, fee will be chargeable Under Section 7(iii)(b)(2). If the same Wheat is taken to another market area say Y and another transaction of sale and purchase takes place there between a trader and a trader the market fee will be leviable under Sub-clause (3). It is also not correct to say that the agricultural produce must have been produced in the market area in which the first levy is made. It might have been produced in another market area or even outside the State of Uttar Pradesh but if a transaction of sale and purchase takes place of an agricultural produce as defined in the Act and covered by the notification within a particular market area then fee can be charged in relation to the said transaction. 14. In order to appreciate the implication of this point we have first to read and compare the provisions of Section 7(iii)(b) of the Act as they stood before 1973, between 1973 and 1978 and after the amendment by Act 7 of 1978. The provision as enacted in U.P. Act XXV of 1964 read as follows :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular Market Committee. But it could not exceed 1/2 percentum of the price of the agricultural produce. We were informed at the Bar that almost every Market Committee had levied fees @ 1/2%. The liability to pay the fee was of the seller of the agricultural produce. Market fee was liable to be paid Under Rule 68(2)(ii) even if the specified agricultural produce was sold directly by the seller to the consumer. This provision has been superseded now by an amendment in the Act brought about by U.P. Act 19 of 1979, whereby a proviso to the following effect has been added to Section 17(iii)(b) :- Provided that no market fee shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer. 17. Clause (b) of Section 17(iii) was amended by U.P. Act 13 of 1973 as reenacted by U.P. Act 20 of 1974. The said clause stood as follows after the said amendment :- (b) market fees, which shall be payable by purchasers, on transactions of sale of specified agricultural produce in the Principal Market Yard or a Sub-Market Yard at such rates, being not less than one percentum and not more than one-and-a-half percentum of the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Mysore [1963] Suppl. 2 S.C.R. 302 at pages 324-25 that retrospective imposition of a fee is valid. Of course, this cannot be a rule of universal application. In a given case and in a given situation the retrospective operation may be hit by Article 19. But in the present case we are inclined to take the view that the retrospectivity of the law as such is not bad and the only safeguard which we want to point out is this. If market fee has been realised by any Market Committee in respect of transactions of sale of agricultural produce taking place between 12-6-1973 and coming into force of U.P. Act 7 of 1978, in accordance with the law as it prevailed then, no market fee under the amended law can be realised again. But if in respect of any transactions aforesaid market fee has not yet been realised then it can be realised in accordance with the amended provision of the law. The only hardship will be to persons covered by Sub-clauses (1) and (3) wherein a provision has been made to pass on the burden of fee to others. In the case of Sub-clause (1) the commission agent can realise the market fee from the purchaser and the seller-trader under Sub-clause (3) can realise it from the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rice is obtained from paddy. We would, therefore, like to clarify the position of law in this regard. If paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist-producer under Sub-clause (2) of Section 17(iii)(b). He cannot be asked to pay market fee over again under Sub-clause (3) in relation to the transaction of rice. Nor will it be open to the Market Committee to choose between either of the two in the example just given. Market fee has to be levied and collected in relation to the transaction of paddy alone. Otherwise, there will be a risk of violation of Article 14 if it is left to the sweet-will of the Market Committee in the case of some rice millers to charge market fee on the transaction of paddy and in case of others to charge it when the sale of rice takes place. If, however, paddy is brought by the rice-miller from another market area, then the Market Committee of the area where paddy is converted into rice and sold will be entitled to charge market fee on the transaction of sale in accordance with Sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agricultural produce within the meaning of the Act. They are obtained from the carcass of an animal and not from a living animal. Argument stressed was that under group G in the Schedule appended to the Act Animal Husbandry Products only can come. Item 11 Hides and Skins, item 12 bones, item 13 meat etc. are not products of Animal Husbandry. Some authoritative books were cited before us on Words and Phrases to show the meaning of 'Animal', 'Husbandry' and 'Animal Husbandry'. Animal Husbandry means that branch of agriculture which is concerned with farm animals especially as regards breeding, care and production. We are not impressed by this argument. The definition Clause (a) of Section 2 uses the expression 'animal husbandry' by way of a descriptive one without strictly confining to the products of animal husbandry as the addition of the words specified in the schedule indicates. In the schedule under the group 'husbandry products' are mentioned all these items. We may also add that one may breed and rear animals in a farm for the purpose of obtaining hides and skins after they are butchered. 23. Market fee is, therefore, leviable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that wood. The wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity. That is immaterial. The owner of the jungle where from the wood is cut and brought will be a producer within the meaning of the Act and the licensee-producer of that wood would be a purchaser of an agricultural produce within the meaning of Sub-clause (2) of Section 17(iii)(b) of the Act liable to pay market fee. It matters little what use is made of the wood by him. The question of quid pro quo and service cannot be decided by a dichotomy of service to every payer of fee as held by this Court in Kewal Krishan Puri's case. The matter has to be judged in a broad sense and not in the sense of rendering service to every individual payer of the fee. 26. This point also presented some difficulty. But on a parity of reasoning mentioned so far in connection with the other items, we have got to hold that such Kirana goods as are included in the notification brought from outside a particular market area or even from outside the State of Uttar Pradesh are chargeable to market fee when their sale takes place in a particular market area. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived at the time of manufacture of khandsari. According to the case of some of the appellants who deal in these commodities they are the bye-products and market fee has already been charged on rab and therefore the fee cannot be charged again on rab galawat and rab salawat. Disputes of facts were raised in this connection before us on behalf of the Market Committees. On the materials placed before us it was clear to us that rab galawat and rab salawat cannot be subjected to a separate charge of market fee apart from the transaction of rab. Market fee can be levied on the first transaction of rab taking place in any market area in accordance with any of the Sub-clauses of Section 17 (iii) (b), as it may be applicable. It cannot be again charged on the second transaction of rab galawat or rab salawat even assuming that it is rab. But on the materials placed before us it appeared to us that rab galawat and rab salawat are not rab in the original form but they are obtained at one stage or the other in the process of manufacture of khandsari. Any way the question of fact may be decided as we have indicated in respect of the other items in the first instance by the Market Committee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson is a producer or not for the purposes of the. Act and in that event the decision of the Director made after an inquiry conducted in the manner prescribed by the rules shall be final. The proviso has nothing to do with a case of a producer-trader. If a question arises whether a person is merely a producer or producer-trader the Director will have no power to decide this question. Such a question will have to be decided by the Market Committee itself which will be subject to the final decision of a court of law. 34. In support of the argument reliance was placed upon the decision of this Court in Raunaq Ram Tara Chand and Ors. etc. v. The State of Punjab and Ors. [1976] 1 S.C.R. 1. But that case is distinguishable because of the language of Rules 29 and 31 of the Punjab Agricultural Produce Market Rules framed in accordance with the Punjab Agricultural Produce Markets Act, 1961. Both the rules aforesaid clearly stated that the fee could be charged from the licensees only. Not only that even the charging Section 23 of the Act itself stated :- a Committee may, subject to such rules as may be made by the State Government in this behalf, levy on ad valorem basis fees on the agric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 1053 thus : At this stage I would discuss a Bench decision of the Mysore High Court on which great reliance was placed on behalf of the petitioners in support of their contention that no fee can be levied on transaction of buying and selling between a dealer and a dealer even though such transactions take place within the market area or the market proper. The decision of the Mysore High Court is in the case of K.N. Marudaradhya v. The Mysore State A.I.R. 1970, Mysore 114. At page 126 (column 2) from paragraph 33 starts the discussion on the point at issue. To the extent the decision goes to hold that the purchase in respect of which the fee could be levied or collected is the earliest purchase, that is to say, the fee can be levied only on one purchase and not on subsequent purchases, with respect I am inclined to agree with that view expressed in paragraphs 33 to 38. But while discussing the point, Iyer J., has confined this earliest purchase of the agricultural produce belonging to the producer only. There does not seem to be a pointed discussion of the question whether the first purchase from a dealer could be subjected to levy or not. But by necessary implication, as I re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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