I.T.C. LIMITED v. AGRICULTURAL PRODUCE MARKET COMMITTEE AND ORS

Citation: [2002] 1 S.C.R. 441

Court: Supreme Court of India

Bench: S.P. BHARUCHA, G.B. PATTANAIK, Y.K. SABHARWAL, RUMA PAL, BRIJESH KUMAR

Judgment text

I. T. C. LIMITED v. AGRICULTURAL PRODUCE MARKET COMMITTEE AND ORS. JANUARY 24, 2002 [S. P. BHARUCHA, en, G. B. PATTANAIK, Y. K. SABHARWAL, RUMA PAL AND BRIJESH KUMAR, JJ. ] Constitution of India, 1950-Articles 246 and 254-Seventh Schedule -List /, Entries 7, 48 and 52-List /1, Entries 24, 28 and 66-List Ill, Entry 33: Tobacco Industry-Power to legislate in respect of-Tobacco Board Act, 1975-JTC Ltd. v. State ofKarnataka, [1985) Supp. 1 SCR 145 holding that once in the public interest Tobacco industry, was declared as industry under Entry 52 of-List I of Vl/ Schedule of Constitution of India, the State Legislatures cea;ed to be competent to legislate on the subject-Held : not correctly decided ...

Expression "industry "-Scope of-Held, it has to be given a restricted meaning-In the Constitutional context it has to be understood as meaning "manufacture or production"-Activity regarding sale of raw tobacco as provided in Tobacco Board Act cannot be regarded as "industry"-To:~acco Board Act, 1975. Agricultural Produce Market Fee-Legislative competence of States- Held, State Legislatures are competent to enact legislation providing for the levy and collection of market fee on the sale of tobacco in a market area - Tobacco Board Act, 1975. Agricultural Produce Marketing Acts-Enactment by State Legislatures viz-a-viz. Tobacco Board Act, 1975, a Parliamentary legislation-To the extent the State Acts relate to sale oftobacco in market areas-Held, cannot co-exist and the State Acts prevail over the Parliamentary Act.

Different State legislatures have enacted Agricultural Produce and Markets Acts for regulating the sale and purchase of agricultural produce within the market area and for levy and collection of market fee. Having declared that it is expedient in the public interest that Union of India should take under its control the Tobacco industry, Parliament enacted Tobacco Board Act, 1975 which is an Act providing for the development "\ ,. of tobacco industry under the control of the Union Government. Under the Agricultural Produce Markets Act, the State Government having notified tobacco as an agricultural produce, the purchase and sale of tobacco is to be regulated under the provisions of the State Act and the Market Committee has the right to levy and collect market fee on such sale and purchase of the notified agricultural produce viz. tobacco. In ITC Ltd. v. State of Karna/aka, [1985) Supp.

1 SCR 145, this Court held by majority that the tobacco industry having been taken over by the Central Government under Entry 52 of List I and having passed the Tobacco Board Act, the State Legislature seized to have any jurisdiction to legislate in that field and therefore, the provisions contained in the Karnataka Act, entitling the Market Committee to levy market fee in respect of sale and purchase of tobacco within the market area directly, collides with the Tobacco Board Act, 1975 and as such the said Act so far as it relates to tobacco was struck down. In similar matter arising from the Bihar State, the High Court remanded the matter for making a fresh assessment order after notice to ITC. In respect of matters arising from the State of U. P.

, the Division Bench of the Allahabad High Court followed the judgment of this Court in ITC case and held that Mandi Samiti cannot charge market fee on sale and purchase of tobacco and consequently Krishi Utpadan Mandi Samiti has preferred appeals to this Court. In an another appeal from U. P. , the Full Bench of the Allahabad High Court considered the . :onstitutional ,. validity of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 and held that the Adhiniyam permitting levy and collection of fee under section 17(iii) in so far as it applies to tobacco is not repugnant to the provisions of the Tobacco Board Act. The Tobacco Merchants Association has come in appeal challenging the validity of the said Full Bench decision of the Allahabad High Court. The Tamil Nadu Agricultural Marketing Board has challenged the judgment of the Madras High Court which followed the judgment of this Court in ITC v.

State ofKarnataka and held that the State legislature has no legislative competence to notify tobacco for the purpose of control and regulation and levy market fee under the provisions of Tamil Nadu l. T. C. LTD. V. A. P. M. C. 443 Regulation Act, 1959. ,, In respect of M. P. matters, the High Court followed the judgment of this Court in ITC v. State ofKarnataka and held that Market Committee ---would not be entitled to realize any market fee in relation to the trade with regard to tobacco since the Market Committee Act is repugnant to the Tobacco Board Act. However, the High Court held that the M. P. Krishi Utpadan Mandi Samiti Adhiniyam, 1972 as amended by 1986 Act to be valid. Hence these appeals arising from the decisions ofvarious High Courts.

The writ petition filed under Article 32 challenged the constitutional validity of certain provisions of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 on the ground that in view of Tobacco Board Act, 1975 and the Tobacco Association Act, 1975, the entire field regarding the development of tobacco industry including the marketing of tobacco was occupied and the State legislation is repugnant to the Central Act. In all these matters, the issue involved relates to the validity and applicability ofvarious Agricultural Produce Markets Act enacted by State Governments to the extent they deal with the sale of tobacco in market areas with particular reference to the levy of market fee after enactment of Tobacco Board Act, 1975, a parliamentary legislation. These issues were subject matter of the decision in ITC v. State ofKarnataka and the majority decided in favour of ITC.

Later, a Bench of two Judges expressed a tentative view that decision in ITC requires reconsideration. Thus these matters came before the Constitution Bench. • .. On behalf of the appellant-ITC, the Union of India, the States concerned, various Marketing Committees, the Tobacco Board, various contentions were advanced mainly relating to the supremacy of Parliamentary legislation, legislative competence of Parliament and State Governments, repugnancy between State and Central Acts, and the correctness of the decision in ITC case. In view of the various contentions put forth, the following questions arose for determination : I.

Whether the Tobacco Board Act enacted by the Parliament under Entry 52 of List I can be held to be constitutionally valid and within the legislative competence of the Parliament, so far as the provisions contained ,A in the same in relation to the growing of tobacco and sale of raw materials, and this in turn would depend upon the question whether the word "industry" used in Entry 52 of List I should be given a restricted meaning; 2. Even if the Tobacco Board Act is held to be constitutionally valid and the Agricultural Produce Market Act is also held to be constitutionally valid and within the powers of the State Legislature, so far as purchase and sale of tobacco within the market area is concerned, whether both the Acts can be allowed to operate, as was held by the minority judgment in ITC case; 3. Ifthere is a repugnancy between the two then whether the Central Act would prevail, as was held by the majority judgment in ITC case.

Disposing of the appeals and the writ petition, the Court HELD: By the Court. I. ITC's case [19851 Suppl. 1 SCC 476 was not correctly decided. 1471-E( 2. The State legislatures are competent to enact legislation providing , for the levy and collection of a market fee on the sale of tobacco in a market area. Consequently, the Market Acts enacted by the States are valid. (471-Fl 3. The State legislations and the Tobacco Board Act, 1975, to the extent they relate to the sale of tobacco in market areas, cannot co-exist and the former prevail over the latter. (471-G) ITC v. State ofKarnataka, (1985) Suppl. 1 SCC 476, overruled. Per Majority: Y. K. Sabharwa/, J. I. The State legislations and parliamentary legislations cannot coexist is apparent from various provisions of the two legislations.

Reference may be made on one hand to Section 4(2) of Bihar Agricultural Produce Markets Act, 1960 and similar provision in other State legislations and on the other to the provisions of Section 13 of the Tobacco Board Act in States wherein this section has been enforced and also to Section 8(2)(cc). Reference can also be made to Rule 32 of the Tobacco Board Rules, 1976 framed in exercise of the powers conferred by Section 32 of the Tobacco Board Act regarding purchase of Virginia tobacco in comparison to Section 15 of Bihar Act requiring the agricultural produce, which tobacco l. T. C. LTD. v. A. P. M. C. 445 is, to be brought to the market yard and sold by means of an auction or tender to the highest bidder. The power of the Tobacco Board to purchase from growers as provided in Rule 32 cannot co-exist with sale by auction or tender. Even the price and manner of payment, licencing and auction procedure under two legislations and Rules made thereunder show that they cannot co-exist.

In this regard reference can also be made to the Tobacco Board (Auction) Rules, 1984 and Tobacco Board (Auction) Regulation, 1984. It is evident that the compliance with the provisions of one would involve non-compliance of the provisions of the other. Therefore, they cannot co-exist simultaneously. (473-B-E) 2. The majority opinion in ITC has not noticed the Constitution Bench's decision in the case of Ch. Tika Ramji & Ors. v. The State ofUttar Pradesh & Ors. , and other decisions on the scope of Entry 52 but relying upon MA.

Tulloch and Baijnath Kadio held that when declaration under Entry 52 of List I in respect of public interest is made and the extent laid down the subject of legislation to the extent laid down becomes an exclusive subject of legislation by the Parliament and any legislation by the State after such declaration trenching upon the field disclosed in the declaration must necessarily be unconstitutional because that field is abstracted from the legislative competence of the State Legislature. Thus it was held that the Government of Karnataka had no jurisdiction to levy any market fee on tobacco because the State Act to that extent collides with the Central Act of 1975. (478-D-Ff Ch. Tika Ramji & Ors. v. The State ofUttar Pradesh, (1956[ SCR 393; State ofOrissa v. MA. Tulloch & Co. , (1964[ 4 SCR 461 and Baijnath Kadio v. State ofBihar & Ors. , (1969) 3 SCC 838, referred to. 3.

The validity and applicability of the State legislations in respect of a field of legislation on State List has come under a cloud on account of a legislation passed by the Parliament in respect of field of legislation under Entry 52 of the Union List, namely, the Tobacco Board Act, 1975 It is on account of this legislation containing declaration as contemplated by Entry 52 of the Union List that doubts have arisen about the validity and applicability of State legislation about the sale of agricultural produce of tobacco in market areas and levy thereupon of market fee which aspects are on field of legislation on the State List (Entries 14, 27,28 and 66). Entry 24 of the State List is subject to Entries 7 and 52 of List I. In the present matter, the Court is not concerned with Entry 7.

The question here is as to the effect of transfer of field of legislation under Entry 24 of the State List to the Union List (Entry 52), on other fields in the State List, namely, fields of legislation under Entries 14,27,28 and 66 and what in fact can be transferred. (479-C-E( 4. /shwar Khetan 's case involved the determination or scope of Entry 52 of List I and Entry 24 of List 11 only. The scope of these entries with respect to Entries 26 and 27 of List 11 and Entry 33 of List Ill did not fall for consideration. So also the scope of the industry did not fall for examination in lshwari Khetan 's case. There is no discussion on the interpretation of expression 'industry' and that probably is the reason why Tika Ramji's case has not been referred to. The reliance on Baijnath Kadio 's case in lshwari Khetan 's case was to show the denudation ofStates' power being limited to the extent of control.

While Baijnath Kadio 's case dealt with Entry 23, List 11, lshwari Khetan 's case dealt with Entry 24 List II. The subject matter of the other entries was not in issue in this decision. The structure in Entry 54 of List I was not equated with that of Entry 52 List I as has been contended on behalf of ITC. This decision does not adopt the mines and minerals cases for the purposes of considering the scope of Entry 52 of List I. The cases of mines and minerals are not of much assistance while examining the scope of Entry 52 of List I. (480-G; 481-F-HI lshwari Khetan Sugar Mills (P) Ltd. & Ors. v. State of Uttar Pradesh & Ors. , (198014 SCC 136 and Baijnath Kadio v. State ofBihar & Ors. , (19691 3 sec 838, distinguished. Ch. Tika Ramji & Ors. etc. v. State of Uttar Pradesh & Ors. , (19561 SCR 393, referred to. 5. The ambit and scope of a constitutional entry cannot be determined with reference to a parliamentary enactment.

If it is otherwise, it would result in the Parliament enacting and/or amending an enactment thereby controlling the ambit and scope of the constitutional provision. That cannot be the law. The power to legislate with which this Court is concerned is contained in Article 246. The fields are demarcated in the various entries. On reading both, it has to be decided whether the concerned legislature is competent to legislate when its validity is questioned. (482-A-BI State ofA. P. & Ors. v. Mc. Dowell & Co. & Ors. , (1996( 3 SCC 709, ·relied on. 6. 1. The fact that the validity of the parliamentary legislation was , I. T. C. LTD. v. A. P. M. C. 447 not in issue in Tika Ramji 's case does not in any manner, affect the ratio · of that decision. The point for determination in that case was substantially the same as in the present case, namely, the scope of the expression "industry" in Entry 52 of List I and Entry 24 of List II.

There also the point was to adopt a narrow or wide interpretation of the expression 'industry'. Further, the fact that it was a case of a manufacturing industry under IDR Act also does not affect the ratio of the case. The interpretation placed in Tika Ramji's case cannot be confined to industry falling under IDR Act alone. There is neither any express or implied indication in that decision to limit the interpretation nor there is any valid reason to so limit it. (486-C-E) 6. 2. In the present matters also, the challenge is to the State legislations on the ground that in view of Entry 52 of List I on enactment of Tobacco Board Act, 1975, the State Legislature loses competence to legislate in respect of sale of tobacco and, therefore, the existing State legislations will have no applicability and thus, the legislations in respect of marketing under Entry 28 of List II would have no applicability insofar as it concerns the agricultural produce 'tobacco'.

In Tika Ramji's case rejecting the contention that the expression 'industries' in Entry 52 of List I is wide enough to take into its compass the power to legislate in respect ·-" of raw material said to be an integral part of the industrial process, the Court repelled the plea of the State Act being ultra vires, the same being covered by the subject of sugar industry control whereof have been declared by the Parliament by law to be expedient in the public intere~t under the exclusive domain of Parliament. (486-F; 488-G) Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors. , (19561 SCR 393, relied on. 7. The intention of the Constitution makers was not to make Entries 14,27,28 and 66 subject to Entry 52 of the Union List. The expression 'industries' cannot be interpreted in the manner suggested, so as to comprise in it all its aspects commencing from procurement of raw material upto disposal of final product of that industry and not only the process of manufacture or production.

(490-8) The Calcutta Gas Company (Proprietary) ltd v. The State of West Bengal & Ors. , (19621 Suppl. 3 SCR I and Ch. Tika Ramji & Ors. etc. v. State ofUttar Pradesh & Ors. , [19561 SCR 393, referred to. 8. 1 Parliamentary legislation has supremacy as provided under ' ,( Article 246(1) and (2). This is of relevance when field of legislation is on concurrent list. While maintaining parliamentary supremacy, one cannot give go by to the federalism which has been held to be a basic feature of "'\ the Constitution. (490-CI S. R. Bommai v. Union ofIndia, (1994( 3 SCC 1, relied on. 8. 2. The Constitution of India deserves to be interpreted, language permitting, in a manner that it does not whittle down the powers of State Legislature and preserves the federalism while also upholding the central supremacy as contemplated by some of its articles. (490-DI 9.

In Seventh Schedule, part of Entry 27 is in Entry 26 of the State List; Markets and fairs is Entry 28 of List II; Money lending and money lenders (Entry 30, List II); Production, supply and distribution of goods subject to the provisions to Entry 33 of List II (Entry 27, List II); Industries subject to the provisions of Entries 7 and 52 of List I (Entry 24, List II). It would, thus, be seen that under Government of India Act, 1935, both production, supply and distribution of goods as well as development of industries were subject to the provisions of List I as provided in Entry 29. Our Constitution makers, however, bifurcated Entry 29 into two parts. Industries were put in Entry 24 of List II subject to the provisions of Entries 7 and 52 of List I. The production, supply and distribution of goods was put in Entry 27 of List II and made subject to Entry 33 of List III. The acceptance of the plea by ITC would mean that no object was sought to be achieved by such a bifurcation.

It is clear that two entries have been separated. One made subject to the provi•ions of Entry 33 of List III and the other subject to the provisions of Entries 7 and 52 of List I. Therefore, to interpret the expression 'industry' to include • in it the aspect of raw material would mean that by the same analogy the subject matter of production, supply and distribution of goods should also be included therein and in fact that was the plea of ITC. Accepting this, would negate the will of the Constitution makers. The same argument would equally apply to Entry 14 of List II in respect of agriculture which is not subject to any List. Further, earlier when the Parliament felt the need to control raw material, it included 'raw jute and raw cotton' in Entry 33, List Ill by Constitution Third Amendment Act, 1954.

Even Article 369 indicates that agricultural raw material is in the State List for it refers to raw cotton, cotton seed and edible oil seeds and seeks to temporarily place it, by fiction in the concurrent list to enable Parliament to make laws. The expression 'industries' in Entry 24, List II or Entry 52, List I, cannot be > I. T. C. LTD. v. A. P. M. C. 449 interpreted in a manner that would make other entries of list II of the Seventh Schedule subject to Union control which in fact they are not. )r Wherever it was intended to be made subject to such control, whether of List I or that of List III, it was said so.

A perusal of List II shows that whenever a particular entry was intended to be made subject to an entry in List I or III, it has been so stated specifically, Therefore, an interpretation which tends to have the effect of making a particular entry subject to any other entry, though not so stated in the entry, deserves to be avoided unless that be the only possible interpretation. Such an interpretation therefore, cannot be placed on the entries in question namely, Entry 52 of the Union List and Entry 24 of the State List. (490-G-H; 491-A-GJ 10. The principles of interpretation are well settled. There is no doubt that the entries in the lists in the Seventh Schedule do not provide competence or power to legislate on the legislature for which the source of power is contained in Article 246 of the Constitution. In deciding question of legislative competence, it has to be kept in view that the Constitution is not required to be consi~ered with a narrow or pedantic approach.

It is not to be construed as a mere law but as a machinery by which laws are made. The interpretation should be broad and liberal. The entries only demarcate the legislative field of respective legislature and do not confer legislative power as such and if it is found that some of the entries overlap or in conflict with the other, an attempt to reconcile such entries and bring about a harmonious construction is the duty of the court. When, however, reconciliation is not possible, then the court will have to examine the entries in relation to legislative power in the Constitution. .. (491-H; 492-A-BJ II. The subject matter of the issue in these matters is about the interpretation of Entry 52 in List I of the Seventh Schedule. It requires the Parliament to make a declaration by law identifying an industry, the control of which by the Union is expedient in the public interest.

Under the said entry only an 'industry' can be declared as an industry, the control whereof by the Union is regarded as expedient in public interest. It is, therefore, implicit that if an activity cannot be regarded as industry, Entry 52 will have no applicability to that activity. The question is about the concept of 'industry' in Entry 52 of List I. It cannot be disputed that the entries in the Legislative List have to be construed in the widest sense but it has also to be borne in mind that such construction should not make other entries totally redundant. The meaning of the word 'industry' in ' various dictionaries is not of any assistance while considering the constitutional meaning of the said term. There may not be any embargo or limitation on the power of the Parliament to enact the law in respect ' ,, of activities other than manufacturing activities but that power is nonexistent in Entry 52 of List I. It may be elsewhere.

Reference in this regard can be made to Entry 33 of List III including in its ambit food stuff and certain raw materials. Tobacco, howe~er, is admittedly not a food stuff. (492-C-FI 12. The structure and scope of Entry 54 of the Union List and Entry 23 of the State List and their inter-relationship is substantially different from the scope and structure of Entry 24 of the State List and Entry 52 of the Union List. The Entry relating to mines and minerals has in it both the industry of mines and its product minerals and, therefore, on a declaration both mines and minerals get embedded in Entry 54 of the Union List. Therefore, it has been consistently held by this Court, that by declaration under Entry 54, the Parliament evinces an intention to occupy the whole field. (502-H; 503-AI Ch. Tikaramji & Ors. etc. v. State ofUttar Pradesh & Ors. , (19561 SCR 393; B. Vishwanathiah & Co. & Ors. v. State ofKarnataka & Ors. , (19911 3 SCC 358; Chaturbhai M Patel v. Union ofIndia & Ors.

, (1960[ 2 SCR 362; Sulramanyan Chettiar v. Muthuswamy Goundan, (1940) FCR 158; State of Rajasthan v. G. Chawla & Anr. , AIR (1959) SC 544; Ganga Sugar Corporation ltd. v. State ofU. P. & Ors. , 1198011 SCC 223; Kannan Devan Hills Produce v. State ofKera/a & Anr. , (197212SCC218 and SIEL Ltd & Ors. v. Union ofIndia & Ors. , (19861 7 SCC 26, relied on. Harakchand Ratanchand Banthia & Ors. v. Union of India, (19701 1 SCR 479; State Bank of India v. Yasangi Venkateswara Rao, (19991 2 SCC 375; Indian Aluminium Co. Ltd & Anr. v. Karnataka Electricity Board & Ors. , [199212 SCC 580 and Mis Shriram Industrial Enterprises ltd v. The Union ofIndia & Ors. , AIR (1996) All. 135, referred to. Smith v. A/wright, (321) US 649, referred to. 13. 1. In Be/sund Sugar Co. Ltd. v. State of Bihar & Ors.

, the Constitution Bench examined the question regarding the legality of levy of market fee under the provisions of Bihar Agricultural Produce Markets Act, 1960 pertaining to various commodities including sugarcane, sugar and molasses, wheat and tea. It noticed that the Market Act had been enacted by the Bihar Legislature as per the legislative power vested in it l. T. C. LTD. v. A. P. M. C. 451 · by Entries 26,27 and 28 of List II of the Seventh Schedule of the Constitution. The Court, however, noticed that the Market Act dealt with supply and distribution of the goods as well as the trade and commerce therein as it seeks to regulate the sale and purchase of agricultural produce to be carried on in the specified markets under the Act. To that extent, the Court said, the provisions of Entry 33 of List Ill override the legislative powers of the State Legislature in connection with legislations dealing with trade and commerce in, and the production, supply and distribution of goods.

Thus, to the extent to which the Market Act seeks to regulate the transactions of sale and purchase of sugarcane and sugar which are foodstuffs and trade and commerce therein, the Constitution Bench said that it has to be held that the Market Act being enacted under the topics of legislative powers under Entries 26,27 and 28 of List II will be subject to any other legislation under Entry 33 of the Concurrent List. The contention that as admittedly tobacco is not foodstuff and does not fall under Entry 33 of List Ill, like the amendment to the Constitution made in 1953, the Parliament by further amendment of the Constitution can, if so advised, place tobacco - raw material of the industry - in Entry 33 of List III and, thus, confer on itself the competence to legislate in respect to tobacco, need not be examined by this Court as being unnecessary.

However, it may be noted that the Constitution Bench, after noticing various provisions of the Act and the Rules, came to the conclusion that the need for regulating the purchase, sales, storage and processing of sugarcane, being an agricultural produce, is completely met by the comprehensive machinery provided by the Sugarcane Act enacted by the same very legislature which enacted the general Act being the Market Act. 1503-C-H; 504-AJ 13. 2. In Belsund Sugar Co ltd. , one of the contentions urged was that under the IDR Act, in public interest, Union of India had taken over the control of the wheat industry as specified in the First Schedule to the Act and consequently any ti . ,,1saction of purchase and sale of the product of that industry cannot be 1 •ulated by the State Act.

The Constitution Bench noticed that the Parliament in exercise of its legislative power under Entry 52 of List I of the Seventh Schedule had enacted the IDR Act and nour industry is listed as one of the scheduled industries under the caption "Food-processing Industries". The Bench said that the production of wheat as a raw material or its sale is not covered by the said Act and, consequently, so far as wheat as 'agricultural produce' is concerned, it is outside the sweep of the IDR Act. The question still remained whether the sale of flour or any other product out of wheat can be said to be covered by the sweep of the IDR Act. It was noticed that the Central Government had not promulgated any statutory order under Section ISG covering the field. The Court rejected the contention that mere existence of a statutory provision in the Act enabling the Central Government to issue such order would be sufficient to occupy the field contemplated by the provision.

While examining the decision in Hingir-Rampur Coal Company's case on which reliance was placed by the appellants, the Constitution Bench held that it has to be kept in view that any legislation in exercise of legislative power under Entry 54 of List I would enable the Parliament to regulate mines and the minerals development by taking them under the control of the Union in public interest. Thus, all aspects of the mining . industry would be covered by the general sweep of such a declaration. But it was noticed that the IDR Act was enacted under Entry 52. It was held that the scheme of Entry 54 of the Union List read with Entry 23 of the State List was entirely different from the scheme of Entry 52 of List I read with Entry 24 of List II with which the Court was concerned in that case. On conjoint reading of these two entries, the ratio of the decision in Hingur-Rampur Coal Company's case, it was held, cannot be effectively pressed into service.

The majority decision in ITC case for the view it took had placed reliance on Baijnath Kadio which followed Hingir-Rampur Coal Company's case. Further in Belsund Sugar Company, the Constitution Bench cited with approval the decision in SEIL case and reiterated that merely because industry is controlled by Belsund Sugar Company a declaration under Section 2 of the IDR Act enacted by Entry 52 of the Union List, the State Legislature would not be denied of its power to regulate the·products of such an industry by exercise of its legislative power under the State List. 1504-B-H; 505-A-B] 13. 3. The principles enunciated in Be/sund Sugar Company's case would equally apply to Entries 14,27,28 and 66 of List II. It may further be noticed that in para 170 of Belsund Sugar Company's case, the Constitution Bench reiterated the view expressed in Tika Ramji 's case as also in SE/l's case affirming Full Bench decision of the Allahabad High Court in Mis Shriram Industrial Enterprises. (506-E( Ch.

Tika Ramji & Ors. etc. v. The State of Uttar Pradesh & Ors. , (1956( SCR 393, relied on. Belsund Sugar Co. ltd. v. State of Bihar & Ors.. (1999] 9 SCC 620; The Hingir-Rampur Coal Co. ltd. & Ors. v. State ofOrissa & Ors. , (1961) 2 l. T. C. LTD. v. A. P. M. C. 453 SCR 53i and Baijnath Kadio v. State of Bihar & Ors. , ! 19691 3 SCC 838, distinguished. I4. There is no compelling reason either on account of any binding precedent in the form of an earlier Constitution Bench judgm• ·it, history and background of the framing of the Constitution or the words used in various Entries or the language of any Article in the Constitution of India, to take a view which will result in denuding the pcwer of State Legislatures to legislate not in respect of field of legislation under Entry 24 but field of legislation covered by other entries on State List on making of declaration under Entry 52 of the Union List.

The Constitution Bench judgment in the case of Tika Ramji and other decisions following it confine the field of legislation of industries to 'the process of manufacture or production' and not to 'raw materials' which may be integral part of industrial process or to the 'distribution of the product of the industry'. 1506-F-GI I5. Thus, the State legislations and the Tobacco Board Act, I975 to the extent of sale of tobacco in market area cannot co-exist. The State Legislatures are competent to enact legislations providing for sale of agricultural produce of tobacco in market area and for levy and collection of market fee on that produce.

The Parliament is not competent to pass legislation in respect of sale of agricultural produce of tobacco in market areas, while legislating in the field of legislation covered by Entry 52 of the Union List under which the Parliament can legislate only in respect of industries, namely, 'the process of manufacture or production' as held in Tika Ramji's case. The activity regarding sale of raw tobacco as provided in the Tobacco Board Act cannot be regarded as 'industry'. .. 1506-H; 507-A-B-CI Tika Ramji v. State of UP. , 119561 SCR 393, relied on. Ruma Pal, J. I. I The starting point in any controversy dealing with apparently conflicting legislative jurisdictions is to see whether the conflict can be fairly reconciled by reading the entries to which the legislations are referable, together and "by interpreting and, where necessary, modifying -. the language of the one by that of the other".

It is only when such resolution is not possible that the Courts should be called upon to decide the question of legislative competence. This principle has been stressed in a number of cases by the Privy Council, the Federal Court and more recently by this Court. 1513-F-Gi 1. 2. Similarly, when there is an apparent conflict between two statutes enacted in valid exercise of legislative powers under the ·•"Concurrent List, reconciliation must be attempted. Only when the differences are irreconcilable should the Courts resort to striking down a piece of legislation. 1514-B-q 1. 3. The issue raised in this case can be resolved by limiting consideration to the question of conflict, if any, between the two entries in the seventh schedule of the Constitution to which the Tobacco Act and the Market Act are respectively relatable and between the provisions of the two statutes which have a bearing on the marketing of tobacco.

The discussion is therefore limited to the scope of the two entries and the allegedly conflicting provisions of the two Acts with which this Court is concerned. The underlying rationale of Tika Ramji's definition of the word 'industry' is that the Constitution having expressly provided for particular fields of legislation in the three Lists, each field must be given a meaning, Entry 24 of List II cannot be read so as to subsume within itself the other entries in List II. It must be given a meaning which allows the other entries to survive and be defined to that extent with reference to what it is not. 1514-D-E; 515-FI M. P. V. Sundararamier & Co. v. Sate ofAndhra Pradesh, 1195'8[ SCR 1422; The Calcutta Gas Company (Prop. ) ltd v. The State of West Bengal, 11962) 3 SCR 1; SR. Bommai & Ors. v. Union of India & Ors. , 11994) 3 SCC 1; A. S. Krishna v. State of Madras, 119571 SCR 399; Chaturbhai M. Patel v. Union of India & Ors. , 1196012 SCR 362; State ofRajasthan v. G.

Chawla, AIR (1959) SC 544; Ishwari Khetan Sugar Mills (P) Ltd. v. State of UP. , 119801 4 SCC 136; Mis Hoechst Pharmaceuticals ltd. v. State of Bihar, 1198314 SCC 45 and Deep Chandv. The State ofUttar Pradesh, 119591 Supp. SCR 8, relied on. ITC ltd. & Ors. v. State of Karnataka, (19851 (Suppl. ) SCC 476, referred to. 2. 1. There are numerous decisions which have followed the logic of Tika Ramji and accepted its conclusion that for the purposes of Entry 24 of List II and consequently Entry 52 of List I, 'industry' means "manufacture or production" and nothing more. It is sufficient to note that Tika Ramji's definition of industry has been affirmed and applied recently by a Constitution Bench in Belsund Sugar Company v. State ofBihar and is still good law. Harak Chand Banthia's case does not strike a discordant note. 1518-BI l. T. C. LTD. v. A. P. M. C. 455 2. 2.

The decision in Harak Chand Banthia's case cannot be read as whittling down or deviating from the reasoning or the definition of the .. - word industry in Tika Ramji. It does not seek to do so. Indeed the Court re-affirmed the definition of industry in Tika Ramji. The observation relating to Entry 27 of List II must be understood in relation to the language of the entry which provides for States to generally legislate on production, supply and distribution of goods. Entry 33 of List III deals particularly with the production, supply and distribution of the products of industries where the control of such industry by the Union is declared by law to be expedient in the public interest under Entries 7 or 52 of List I. It would not have been necessary to have especially provided for trade and commerce in, and the production, supply and distribution of the products of a controlled industry in Entry 33 of List Ill, had the word 'industry' in Entries 7 and 52 of List I covered the field.

Similarly had the word 'industry' in Entry 24 of List II been sufficient, there was no need to have a separate head under Entry 27 of the same list dealing with the production, supply and distribution of goods unless it is conceded that the framers of the Constitution were guilty of "ineptitude, want of precision and tantology". The concept of a 'general' and 'particular' term is necessarily relative depending upon the context in which the term is considered. Entry 27 of List II is certainly a general entry but only in relation to Entry 33 of List III which deals with trade, commerce etc. in particular kinds of products namely the products of a controlled industry. Banthia held that the Gold Act was legislatively competent under Entry 52 of List I because it dealt with the process of manufacture or production of gold i. e. , it was within the sweep of industry as defined in Tika Ramji.

Banthia's case has been considered and explained in the subsequent decision of the Constitution Bench in Mis Fatehchand Himmatlal and Ors. v. State ofMaharashtra. (520-A-F( Ch. Tika Ramji & Ors. v. State ofUP. & Ors. , (1956( SCR 393; Belsund Sugar Company v. State ofBihar, (19991 9 SCC 620; Harakchand Ratanchand Banthia & Ors. v. Union ofIndia, II97011 SCR 479; Fatehchand v. State of Maharashtra, (1977) SC 1825; State ofAndhra Pradesh v. Mc. Dowell & Co. , 119961 3 sec 709; Kannan Devan Hill Produce v. State ofKera/a, I19721 2 SCC 218; Ganga Sugar Corporation ltd. v. State ofUttar Pradesh and Ors. , [19801 l SCC 223; Calcutta Gas Company (Prop. ) ltd. v. State of West Bengal, AIR (1962) SC 1044 and B. Viswanathiah and Company and Ors. v. State of Karnataka, [19911 3 SCC 358, referred to. 3. The word 'industry' for the purposes of Entry 52 of List I has been firmly confined by Tika Ramji to the process of manufacture or production only.

Subsequent decisions including those of other Constitution Benches have reaffirmed that Tika Ramji's case authoritatively "" defined the word 'industry' to mean the process of manufacture or production and that it does not include the raw materials used in the industry or the distribution of the products of the industry. Given the constitutional framework, and the weight of judicial authority it is not possible to accept an argument canvassing a wider meaning of the word 'industry'. Whatever the word may mean in any other context, it must be understood in the Constitutional context as meaning 'manufacture or production'. Applying the negative test as evolved in Tika Ramji in this case it would follow that the word 'industry' in Entry 24 of List II and consequently Entry 52 of List I does not and cannot be read to include Entries 28 and 66 of List II which have been expressly marked out as fields within the State's exclusive legislative powers.

Entry 28 deals with markets and fairs and Entry 66 with the right to levy fees in respect of, in the present context markets and fairs. Entry 52 of List I does not override Entry 28 in List II nor has Entry 28 in List II been made subject to Entry 52 unlike Entry 24 of List II. This Court in Belsund Sugar has also accepted the argument that Entry 28 of List II operated in its own and cannot be affected by any legislation pertaining to industry as found in Entry 52 of List l. 1521-F-H; 522-A-CI Tika Ramji v. State of UP. , 119561 SCR 393 and Belsund Sugar Co. ltd v. State ofBihar & Ors. , I1999f 9 SCC 620, relied on. Amritsar Municipality v. State ofPunjab, AIR (1969) and Waverly Jute Mills Co. ltd v. Raymon & Co. (India) Private ltd, f1963f 3 SCR 209, • referred to. Halsbwy's laws of England (4th Ed. ) Vol. 29, page 601 and Oxford English Dictionary, referred to. 4.

If any portion of the market area or the market yards is used for the sale or purchase of tobacco, that too will be within the State's competence. To hold to the contrary would be to ignore the exclusive powers of the State to legislate in re~pect of ma1·kets and fairs under Entries 28 and 66 of List II. The Markets Act does not seek to regulate either the "manufacture or production" of tobacco (assuming that agricultural produce can be ma'"nufactured) and thus does not impinge upon the Tobacco Act in so far as it is at all relatable to Entry 52 of List I. All the provisions of the Markets Act, are clearly relatable to Entry 28 l. T. C. LTD. v. A. P. M. C. 457 of List II given the scope of the entry.

The State in the circumstances, was not incompetent to incidentally also legislate with regard to tobacco Jr and "the semantic sweep of Entry 52 did not come in the way of the State Legislature making laws on subjects within its sphere and not directly going to the heart of the industry itsetr'. Therefore Sections 15 and 27 of the Markets Act in pith and substance are relatable to Entries 28 and 66 of List II ard have been competently enacted by the State. Incidentally it is nobody's case that the fee charged under Section 27 does not represent a quid pro quo for the services rendered and facilities afforded in the market area. It follows that Parliament is incompetent to legislate for the setting up or regulation of 'markets and fairs' within the meaning of the phrase in Entry 28 of List II, even in respect of tobacco.

It may of course incidentally trespass into the States legislative field, provided (I) the trespass is an inseparable part of the provisions validly passed and (2) the State has not already fully occupied its field with conflicting statutory provisions. 1524-F; 525-A-DI 5. Since States are exclusively competent to decide on the location of markets, the authorities under the Tobacco Act would have to comply with the municipal laws and set up the auction platforms only within the permissible areas. If the facilities afforded under the Market Act are utilized, the facilities will have to be paid for and the authorities appointed to levy and collect fees for the purpose under the Markets Act would be competent to do so. If further facilities are offered at the Auction Platforms under the Tobacco Act, fees may be levied under Section 14-A of that Act. The right to levy fees under the two Acts therefore may not necessarily conflict, the levy not being in the alternative but additional.

Assuming this is not possible and there is any conflict, the provisions of the Markets Act and not the Tobacco Act would prevail. 1528-C-El The New Shorter Oxford English Dictionary, referred to. 6. Even if Sections I~ and 27 of the Markets Act are not referable to Entries 28 and 66 of List II and are referable to Entries 26 and 27 of List II - nevertheless these Sections of the Markets Act do not trespass on turf reserved by Parliament under Entry 52 of List I State legislation on the supply and distribution of goods as well as trade and commerce therein which are relatable to Entries 26 and 27, is only subject to the Central enactment if any under Entry 33 of the Concurrent List and not Entry 52 of List I. Furthermore, whether or not any portion of the Tobacco Act relates to an "industry" within the meaning of Entry 52 List I, following the logic of Tika Ramji at least those provisions relating to the disposal of tobacco are not so relatable.

The declaration under Entry 52 List I does not cover these provisions and the States were free to legislate "' under Entries 26 and 27 of List II on tobacco. To decide whether the provisions of the Tobacco Act dealing with the sale of tobacco may be sustained with reference to Entry 33 of List Ill, is an unnecessary exercise because the appellants did not argue this, and also because the Constitutional validity of the provisions of the Tobacco Act has not been referred to this Bench for scrutiny. 1528-F-G; 529-AJ Tika Ramji v. State of UP. , 119561 SCR 393 and M. Karunanidhi v. Union ofIndia, 1197913 SCC 431, relied on. 7. Assuming that Chapter III of the Tobacco Act are covered by Entry 52 of List I, nevertheless the Parliament did not intend to invalidate any portion of the Markets Act.

It has been consciously clarified by Section 31 that it does not intend to occupy the entire field and has 'made space' for the State legislation and made it clear that the provisions of the Central Act shall be in addition to and not in derogation of any other law. The Section assumes greater significance since most of the Markets Acts were in place when the Tobacco Act was enacted. There are two ways in which such a saving clause as is contained in Section 31 of the Tobacco Act may be understood. There is the way which found favour with this Court in M Karunanidhi v. Union ofIndia, which held that such Stction clearly evinced the intention of the dominant legislature leaving "no room for any argument that the State Act was in any way repugnant to the Central Act. " There is the other way of reading such a section in the dominant legislation as incorporating or taking under its legislative umbrella the allegedly conflicting provisions of the subservient statute.

Either way, the express words in Section 31 coupled with the duty of Courts to reconcile and uphold legislation, if possible, can only result in upholding the constitutional validity of the Market fee imposed by the State. 1529-B-EJ 8. A further compelling circumstance to uphold the levy of market fee is the fact that several provisions of Chapter Ill of the Tobacco Act particularly those dealing with the setting up of auction platforms namely Sections 13, 13A, and Section 14A relating to the levy of fees on the sale of tobacco have not been brought into operation in any State in India except for the State of Karnataka. Granting for the sake of argument that the sales of tobacco comes within the definition of industry until the l. T. C. LTD. v. A. P. M. C. 459 Central Government chooses to actually occupy the field by effectives legislation, it would remain open for the State Legislature to cover that ,, field under Entry 24 of List II.

It is difficult to adopt an interpretation which would debar the States from the right to provide for the sale of tobacco only within market areas and levy market fees although Parliament does not now and may never seek to bring Sections 13, 13A and 14A into operation in those States. 1529-F-H; 530-Al Ishwari Khetan Sugar Mills (P) ltd. v. State ofUttar Pradesh, 1198014 SCC 136 and Belsund Sugar Company v. State ofBihar, ! l999J 9 SCC 620, relied on. 9. Even if one were to concede that there is a conflict between the provision in the Markets Act prohibiting sale of tobacco otherwise than in a market area and the setting up of auction platforms under the Tobacco Act, and between the States' power to levy market fee under the Markets Act and the levy of fee on the sale of tobacco under the Tobacco Act, at least in those States where Sections 13, l3A and l4A of the Tobacco Act are not operative, the provisions of the Markets Act must prevail. 1530-GJ l0.

The majority opinion in ITC's case on the issue of legislative competence of the State Legislature struck down that part of the Karnataka Markets Act which provided for the power to levy market fee on tobacco and its products. The opinion was based on six premises, each of which do not appear to be in consonance with the law: (i) the Court proceeded on the basis that the Tobacco Act was wholly and solely relatable to Entry 52 of List I. Reasons have already been given for II ntent and scope of the expression "industry" in Entry 52 of List I and in fact the Court observed that it was concerned with as to whether the raw materials of an industry which form an integral part of the process are within the topic of "industry" which form the subject matter of Item 52 of List I.

The Central legislation which was under consideration in that case as well as the notifications issued by the Central Government were held to have been enacted by the Parliament in exercise of the legislative powers conferred upon it by Entry 33 of List Ill and was an exercise of concurrent jurisdiction and once the law is made by the Parliament in exercise of its concurrent jurisdiction, then it would not deprive the Provincial Legislatures of similar powers which they had under the Provincial Legislative List. When the Court observed that the term "industry" which would be capable of comprising three different aspects: (i) raw materials which are an integral part of the industrial process, (ii) the process of I. T. C. LTD. v. A. P. M. C.

465 _ manufacture or production and (iii) the distribution of the products of the industry, and held that raw materials should be goods which would be comprised of Entry 27 of List II and the process of manufacture or production would be comprised in Entry 24 of List II, except where the indu'. 'ry was a controlled industry when it would fall under Entry 52 of List I, the Court was obviously not examining the contents of the expression "industry" under E11try 52 of List I and that is why the Court observed that the legislation which was enacted by the Centre in regard to sugar and sugarcane could fall within Entry 52 of List I.

When the legislation in question that was under consideration was held not to be legislation under Entry 52 of List I, the question of applying the ratio in the case of Tikaramji in the context of Parliament's power to make a law under Entry 52 of List I and the content and scope of such law or the scope and content of the expression "industry" under Entry 52 of List I cannot have any application and consequently, on the basis of the judgment of this Court in Tikaramji, it cannot be contended that the expression "industry" in Entry 52 of List I must have a restricted meaning. It is further apparent from the conclusion of the Court in that case when it refused to import the pith and substance argument, holding that the same cannot be imported for the simple reason that both the Centre as well as the State Legislatures were operating in the concurrent field and, therefore there was no question of any trespass upon the exclusive jurisdiction vested in the Centre under Entry 52 of List I.

In other words in Tikaramji, neither this court was called upon to examine the content of the expression "industry" under Entry 52 of List I nor the rele' . •nt Central law which was under consideration had been enacted with reference to power under Entry 52 of List I. Thus, there is not much force in the contention that - the conclusion recorded by the majority view in /TC case is vitiated, as it had not noticed observations of the Constitution Bench decision in Tikaramji. It would be wholly inappropriate for this Court to apply the observations made in Tikaramji's case with regard to raw materials of "industry". Since the Court was examining the provisions of Industries (Development and Regulation) Act, which regulated the manufacturing process until Section 18-G was brought in amendment i.

1 the year 1953 and the Industries (Development and Regulation) Act did not purport to regulate the trade and commerce in the raw materials namely sugarcane and the Court in fact was scrutinizing whether the State Act enacted by the State Legislature could be held to be repugnant to the Central Legislation it found that there exist no repugnancy and the two Acts cover two different fields and would co-exist. In this view of the matter any I )_ > observations or conclusion of the Court in Tikaramji will be of no assistance for arriving at a decision as to whether the term "Industry" in Entry 52 of List I would have a restricted meaning or would have a wide meaning, which is the normal interpretation of every entry in the respective lists. [573-C-H; 574-A-H; 575-A-F[ 3. 2. In Calcutta Gas case, no doubt Tikaramji had been followed and the Court was examining the two competing entries in List II itself of the Seventh Schedule of the Constitution namely Entry 24 and 25.

While Entry 24 of List II is "industry", Entry 25 is "Gas and Gas works" and the question, therefore was whether law made by the State legislature on the subject head 'gas and Gas works' would prevail over a law made by the State legislature over the subject "industry" and the Court held that ' Gas and Gas works' being a special subject head, law made thereunder would prevail over any law made under the general head "industries". In Calcutta Gas case it has been held "It is not necessary in this case to attempt to define the expression "industry" precisely or to state exhaustively all its ingredients". In view of the aforesaid observations, this decision can not be pressed into service for ascertaining the true import and content of the ~xpression "industry" which is the subject head under consideration in the case in hand. [575-F-H; 576-A-B] 3. 3.

In Kanandevan Hills Produce case, it is the validity of State legislation namely Resumption of Lands Act, 1971, which was under challenge on the ground of lack of legislative competence of the State Legislature. The validity of the Act was upheld on a conclusion that the law was referable to the legislative head under Entry 18 of List II relating to land and legislative Entry 42 of List III relating to acquisition and requisitioning of property. It is in that context, it was observed that the power of the State legislature to make the law under the aforesaid two entries could not be denied merely on the ground that it had some effect on the industry, the control of which has been taken over under Entry 52 of List I. But the Court was careful to hold that the effect was not the same thing as the subject matter. In other words, the subject matter of "industry" under Entry 52 of List I really was not under consideration. [576-B-D] 3. 4.

The observations of this Court in the Constitution Bench decision of Ganga Sugar Corporation case, would make it crystal clear that the said observation is of no consequence either in the matter of deciding the ambit of the expression "industry" in Entry 52 of List I or in deciding l. T. C. LTD. v. A. P. M. C. 467 the legislative competence of Parliament to make law like the Tobacco Board Act in relation to a controlled industry and making provision therein in respect of the growing of tobacco and purchase and sale of raw tobacco. In Ganga Sugar's case, the levy of purch! \se tax on sugar-cane purchased by a factory owner under Section 3 of the U. P. Sugarcane (Purchase Tax) Act, 1961, was under challenge on the ground that the legislation in question being in respect of a controlled industry, the power belongs exclusively to Parliament under Entry 52 of List I.

The Court repelled this contention on the ground that Entry 54 in List II of the Seventh Schedule empowers the State to legislate for taxes on purchase of goods and therefore, it cannot be said to have invaded Entry 52 of List I. The Court posed the question as to whether the Purchase Tax Act is bade because it is a legislation with respect to a controlled industry namely the Sugar industry and answered the same in the negative, following the observations of the earlier Constitution Bench decision in Tikaramji's case. Thus the extreme argument that the State Legislature is incompetent to make any law with regard to a controlled industry, the control of which has been taken over by the Union Government by making a declaration, was negatived. (577-B-F) 3. 5.

Thus, in none of the aforesaid Constitution Bench decisions of this Court, the true import and meaning of the expression "industry" under Entry 52 of List I was for consideration, nor the competence of the Parliament to make a legislation in respect of a controlled industry, so as to include within itself the provisions relating to the stage prior to manufacture or production was an issue and consequently these decisions will be of no assistance so as to strike down the provisions of the Tobacco Act, so far as the provisions contained therein relating to growing of tobacco/or sale and purchase of raw tobacco. (578-A-B) Tika Ramji v. State of UP. , (19561 SCR 393; The Calcutta Gas Company Proprietary) Ltd v. The State ofWest Bengal & Ors. , 11962) Suppl. 3 SCR I; Ganga Sugar Corporation ltd v. State of U. P. & Ors. , (1980) I SCC 223; Kannan Devan Hills Produce v. State ofKera/a & Anr. , 119721 2 SCC 218; Belsund Sugar Co. ltd v. State of Bihar & Ors. , 119991 9 SCC 620 and B.

Viswanathiah and Company and Ors. v. State ofKarna/aka. (19911 3 sec 358, referred to. 4. In lshwari Khetan's case, the Court was construing the scope and ambit of Entry 54 of List II and Entry 52 of List I and had observed that "A the State's power under Entry 24 of List II would get eroded only to the extent the control is assumed by the Union pursuant to a declaration made by the Parliament in respect of declared industry as spelt out by legislative enactment and thefield occupied by such enactment is the measure oferosion and subject to such erosion, on the remainder the State legislature will have power to legislate in respect of declared industry without in any way trenching upon the occupied field.

Applying the aforesaid ratio to the case in hand and having examined the provisions of the Tobacco Board Act, the answer is irresistible that the State legislature is denuded of its power to make any law in relation to growing of tobacco or sale and purchase of raw tobacco when such a provision has already been made in the Tobacco Board Act. (578-D-G] Ishwari Khetan Sugar Mills (P) Ltd. & Ors. v. State of Uttar Pradesh & Ors. (19801 4 SCC 136, relied on. 5. The power of the State Legislature gets denuded to the extent the Central Legislation occupies the field in respect of the controlled industry, the control of which has been taken over by the Parliament on a declaration being made.

If after taking over the control of the industry in exercise of its legislative competence under Entry 52 of List I, the Parliament while making a law did not make any provision in relation to the supply of raw material, then merely because the control of the industry has been taken over, the State's power to make legislation in relation to the supply of raw-material would not get denuded. But that does not mean that the Parliament cannot make any law in relation to any other aspect other than the aspect of production and manufacture of the industry. (579-C-E) .. 6. So far as Belsund Sugar Company's case is concerned, the question for consideration was, whether the provisions of the Bihar Agricultural Produce Markets Act would at all be applicable for levy of market fee in respect ofsale and purchase of sugar cane, in view of the special provisions contained in the Bihar Sugarcane Regulation of Supply and Purchase Act, 1981.

The Market Committee Act was also a State Legislation purported to have been enacted under Entries 26, 27 and 28 of List 11. The Sugar cane Regulation of Supply and Purchase Act purported to be a legislation enacted in Entry 33 of List Ill. The Court held that in view of the special Act dealing with sale and purchase of sugar cane the general Act, namely, the Market Committee Act will have no application at all, and therefore, l. T. C. LTD. v. A. P. M. C. 469 the levy of market fee by the Market Committee was held to be invalid. On examining different provisions of the two Acts the Court also held that ).

there consists direct conflict between the two Acts and that conflict could be avoided only if it is held that the Market Act being a general Act covering all types of the agricultural produce and the Sugar Cane Act, wnich also deals with an agricultural produce like sugar, being a special enactment laying down an independent exclusive machinery for regulating sale, purchase and storage of such a commodity under a special Act, then the special Act would prevail over the general Act for that commodity and by necessary implication will take the said commodity out of the sweep of the general Act. This decision is not an a1,1thority for the proposition that -i the expression "industry" in Entry 52 of List I should be given a restricted meaning. (579-F-H; 580-A-BJ Belsund Sugar Co. ltd v. State of Bihar & Ors. , (1999) 9 SCC 620, referred to. 7. 1. The argument that the principle enunciated in Hingir-Rampur Coal Co. ltd. & Ors. v. The State ofOrissa & Ors. , Be/sund Sugar and State ,..

ofOrissa v. MA. Tulloch & Co. should equally apply to the case in hand while interpreting the scope and extent of the legislative competence of the Parliament under Entry 52 of List I, cannot be accepted since in all those cases the Court was considering the competing power of the State legislature under Entry 23 of List II and the power of the Central legislature under Entry 54 of List I. Both the Entries are on the subject 'Regulation of Mines and Minerals Development'. Entry 23 of List 2 itself is subject to the provisions of List I with respect to the Regulation and '""""' .. Development under control of the Union, and necessarily therefore, when Union takes over the control of the Mines and Minerals Development by legislation under Entry 54 of List I the State Legislature would be denuded to make any law in relation to the Mines and Minerals Development under Entry 23 of List II.

But in the case in hand, This Court is concerned with the legislation made by the Parliament under Entry 52 of List I which is the Tobacco Board Act and the legislation made by the State legislature under Entry 28 or any other ancillary Entry like Entry 14 or Entry 27 of List II, namely the Bihar Agricultural Produce Market Act.

In such a """ case the focus for consideration of the Court would be as to what is the scope and content of Entry 52 of List I and once it is held that the expression "industry" cannot be given any restricted meaning and the law enacted by the Parliament, the Tobacco Board Act, is held to be intra vires then the State legislation, namely, the Bihar Agricultural Produce Market Act, so far as it deals with the commodity tobacco will go out of the general sweep of all agricultural produce notified under the State Act, as the provisions in respect thereof have been made by the Central legislation and by application of Article 246 of the Constitution the Central Act would prevail. [580-E-H; 580-A-C) 7. 2.

It cannot be said that if the subject head of legislation in List II is not subject to the corresponding Entry in List I then the power of State Legislature to legislate with regard to that matter is paramount and supreme, and therefore, the Market Committee Act being relatable to Entries 14 and 28 of List II, which are not subject to any of the Entries of List I, the Market Committee Act must be allowed to prevail. The aforesaid approach to consider the validity of a law made by the Parliament or a law made by the State legislature is not a correct approach. The Entries merely being the subject head of the legislation and the power to make law having emanated from Article 246, if a particular law made by Parliament comes within the legislative competence of the Parliament with reference to any of the Entries in List I then the State legislature would not have the competence to make law with respect to that subject with reference to some other Entries in List II.

[581-E-GI Be/sund Sugar Co. Ltd v. State of Bihar & Ors. , [19991 9 SCC 620 and The Hingir-Rampur Coal Co. Ltd & Ors. v. State o/Orissa & Ors. , [19611 2 SCR 537, distinguished. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6453 of 2001. - From the Judgment and Order dated 16. 8. 84 of the Patna High Court in C. W. J. C. No. 3248 of 1979. (With C. A. Nos. 540, 541/87, 3872/90, 3024, 3023, 1535, 1194, 1394, 1536, 1980, 1981, 3715, 2464/88, 6619/97, 2088-89/99, 671, 673-675/2002 and W. P. (C) No. 8614 of 1982. ) R. N. Trivedi, Additional Solicitor General, Shanti Bhushan, S. Ganesh, Ms. Shobha Dikshit, L. Nageswara Rao, G. L. Sanghi, S. K. Gambhir, A. K. Ganguli, Dr. A. M. Singhvi, S. B. Sanyal, Rakesh Dwivedi, P. P. Malhotra, V. A. Bobde, Nillav Dutta, Adv. Genl. , for Assam, Beeran, Additional A. G. for Kerala, Pallav Shishodia, Sanjay R. Pathak, Buddy A. Ranganadhan, l. T. C. LTD. v. A. P. M. C. [Y. K. SABHARWAL, J. ] 471 Pradeep Misra, Ms. Indu Misra, R. P. Gupta, Ms.

Rashmi Jain, Shushendra Chauhan, S. K. Agnihotri, Anil K. Pandey, Sakesh Kumar Ms. Vibha Datta Makhija, Rohit K. Singh, H. K. Puri, Awanish Sinha, S. K. Puri, Rajesh Srivastava, U. ijawal Banerjee, Ms. Anindita Gupta, Vikas Singh, Yunus Malik, Sunil Roy, A. Subba Rao, S. B. Upadhyay, G. Umapathy, Krishnamurthi Swami, P. K. Bansal, Rajan Narain, Ashok Mathu, Ms. Krishna Sarma, Ms. Asha G. Nair, V. K. Sidharthan, Mahabir Singh, S. P. Singh Chauhan, Saket Singh, Ms. Niranjana Singh, B. B. Singh, Ms. lndu Sharma, Ms. Rachna Srivastava, Manoj Prasad, Pramod Swarup, Praveen Swarup, Ms. Pareena Swamp, L. K. Pandey, S. V. Deshpande, Ms. Anuradha Rastogi, Pramit Saxena, Manish Singhvi, Ramesh Singh, Ms. Bina Gupta, Ms. Divya Roy, Vivek Gambhir, B. G. Sridharan, G. C. Chandrashekhar, P. P. Singh, Sanjay R. Hegde, Satya Mitra, Prakash Shrivastava, A. Mariarputham, Ms. Aruna Mathur, Anurag D. Mathur, T. Raja, Heman! Sharma, S. N. Terdol, Kh. Nobin Singh, Ms. A. Subhashini, Ramesh Babu M. R.

, Anil Shrivastava, T. V. Ratnam, K. Subba Rao and S. K. Dwivedi for the appearing parties. The Judgments of the Court were delivered by BY THE COURT In keeping with the conclusions of the majority, expressed in the judgments of Sabharwal, Ruma Pal and Brijesh Kumar, JJ. , it is held that : I. JTC's case [1985] Suppl. 1 SCC 476 was not correctly decided. 2. The State legislatures are competent to enact legislation providing for the levy and collection of a market fee on the sale of tobacco in a market area. Consequently, the Market Acts enacted by the States are valid. 3. The State legislations and the Tobacco Board Act, 1975, to the extent that they relate to the sale of tobacco in market areas, cannot co-exist and the former prevail over the latter. The appeals and the writ petition are disposed of accordingly. No order as to costs. Y. K. SABHARWAL, J.

The issue in these matters is about the validity and applicability of Bihar Agricultural Produce Markets Act, 1960 and the Kamataka Agricultural Produce Marketing (Regulation) Act, 1966, to the extent these State legislations deal with sale of tobacco in market areas with particular reference to the levy thereupon of market fee, after enactment of Tobacco Board Act, 1975-a parliamentary legislation. The same is the issue in respect of similar State legislations passed by State Legislatures of Uttar Pradesh and Madhya Pradesh. These issues were subject matter of decision in ITC Ltd & Ors. v. State of Karnataka & Ors. , [1985] Supp. SCC 476. ... We are required to determine whether ITC's case is correctly decided or not. That is a decision rendered by a three Judge Bench. The majority decided in favour of ITC. Later a Bench of two Judges expressed tentative view that the decision in JTC's case requires reconsideration. Thus, these matters are before this Bench.

The arguments on behalf of the appellants contending that ITC has been correctly decided have been led by Mr. Shanti Bhushan followed and supported by other learned counsel appearing for Union of India and the Tobacco Board. On behalf of the State of Bihar and other parties contending that ITC has not been correctly decided, the arguments were led by Mr R. K. Dwivedi followed and supported by other learned counsel appearing for other States and Market Committees. The answer to the question-Whether ITC is correctly decided or not depends upon the scope of Entry 52 in Union List of the Seventh Schedule of the Constitution of India with particular reference to the meaning of the expression 'Industries' in the said entry as also in Entry 24 of the State List of the Seventh Schedule of the Constitution.

In ITC's case the majority held that the provisions of the Kamataka Agricultural Produce Marketing (Regulation) Act, 1966 are repugnant to the parliamentary legislation, the Tobacco Board Act, 1975 and, therefore, tobacco is liable to be removed from the Schedule of that enactment. Expressing the minority view, Sabyasachi Mukharji, J. held that the State legislation and the . c::- Tobacco Board Act, 1975 can co-exist. ... The first question to be determined is can State legislations and Tobacco Board Act co-exist in respect of sale of tobacco in the market areas within the framework of Agricultural Produce Marketing Acts - the State legislations under consideration? If our answer to this question is that the two legislations can co-exist, in that event it may not be necessary to go into the aspect of legislative competence.

If, however, our answer is that the State legislations and the parliamentary legislation are incapable of reconciliation and the two cannot co-exist, in that case, the next question that would require determination will be about the validity of the State legislations. In the proposed judgment, Hon'ble Mr. Justice Pattanaik has come to the conclusion that the Agricultural Produce Markets Act and the Tobacco 1. T. C. LTD. v. A. P. M. C. [Y. K. SABHARWAL, J. ] 473 Board Act are in direct collision with each other and cannot be allowed to be. operated simultaneously. The State legislations and parliamentary legislations cannot co-exist is apparent from various provisions of the two legislations. To illustrate in this regard, reference may be made on one hand to Section 4(2) of Bihar Act and similar provision in other State legislations and on the other to the provisions of Section 13 of the Tobacco Board Act in States wherein this section has bt:en enforced and also to Section 8(2)(cc).

Reference can also be made to Rule 32 of the Tobacco Board Rules, 1976 framed in exercise of the powers conferred by Section 32 of the Tobacco Board Act regarding purchase of ,J Virginia tobacco in comparison to Section 15 of Bihar Act requiring the agricultural produce, which tobacco is, to be brought to the market yard and sold by means of an auction or tender to the highest bidder. The power of the Tobacco Board to purchase from growers as provided in Rule 32 cannot co-exist with sale by auction or tender. Even in regard the price and manner of payment, licencing and auction procedure under two legislations and Rules made thereunder show that they cannot co-exist. In this regard reference can also be made to the Tobacco Board (Auction) Rules, 1984 and Tobacco Board (Auction) Regulation, 1984. It is evident that the compliance with the provisions of one would involve non-compliance of the provisions of the other.

The provisions of the two legislations have been referred to in the judgment of Brother Pattanaik, J. I am in respectful agreement with the opinion of Justice Pattanaik that the two cannot operate and co-exist simultaneously. In this view, the question about the legislative competence of the State Legislature will have to be examined. 0 In JTC's case, two learned judges have held the State legislation to be invalid. The power of State Legislature per se to legislate in respect of sale of tobacco in market areas and levy of market fee, in view of Article 246(3) read with Entries I4, 28 and 66 of the State List, is not in dispute.

The dispute has, however, arisen as according to ITC, on declaration as contemplated by Entry 52 of the Union List having been made by the Parliament in Section 2 of the Tobacco Board Act, 1975, and as a result of various provisions in that Act, the field of sale of tobacco which is said to be integral part of tobacco industry has been transferred from Entry 24 of the State List to Entry 52 of the Union List-Entry 24 being subject to the provisions of Entries 7 and 52 of the Union List. The contention is that in this view, the State Legislature is deprived of competence to legislate in the field of sale of tobacco in market area and levy market fee. Under these circumstances, the competence of the State Legislature to legislate in regard to sale of tobacco would depend upon the answer to the question whether under Entry 52 of the Union List, the Parliament is competent or not to legislate in respect of sale of raw tobacco.

If the answer to the question is that the Parliament is competent, in that eventuality, the State legislation will have to be invalidated for want of legislative competence. The answer to the question would, however, depend upon the scope ofthe expression 'Industries' as deployed in Entry 52 of the Union List and Entry 24 of the State List. If we find that the expression 'Industries' is wide enough to include the raw material of the industry and the Parliament is, thus, competent to enact law under Entry 52 of the Union List, in respect ofraw material, the Parliament having supremacy as provided in Article 246(1 ), the parliamentary legislation, namely, the Tobacco Board Act would hold the field and the State legislation invalidated.

The dispute in this case is not about parliamentary supremacy as none has doubted it in view of Article 246( I) of the Constitution but is whether Parliament has competence at all to legislate in respect of raw tobacco or it falls within the competence of State. If we hold that while legislating in the field of industry as provided in Entry 52 ofthe Union List, the Parliament is not competent to legislate in respect of the field anterior to industry, i. e. its raw material and can legislate only in respect of the process of manufacture or production, in that e~entuality, the State legislation will have to be held to be constitutional, intra vires and applicable.

In the proposed judgment, Justice Pattanaik has held that the word 'industry' in Entry 52 of the Union List cannot be given restricted meaning so as to exclude from its purview the subject of legislation coming within Entry 27 or Entry 14 of List II and, thus, the parliamentary legislation, namely, the Tobacco Board Act, 1975 is constitutionally valid and,~ ,,, consequently, the State legislations entitling the Market Committee to levy fee for sale and purchase of raw tobacco within the market area will not be operative so far as the produce of tobacco is concerned and that the majority judgment in the ITC's case is correctly decided. I express my respectful dissent with the view expressed by Justice Pattanaik on this aspect and thus this separate judgment. The Parliament and Assemblies draw power to legislate from the provisions of the Constitution of India. We are concerned here with Article 246.

Article 246(1) of the Constitution provides that notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule. l. T. C. LTD. v. A. P. M. C. [Y. K. SABHARWAL, J. ] 475 The said List is referred to in the Constitution as the 'Union List'. Entry 52 in the Union List is 'Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest'. In respect of field covered by this Entry, the Parliament has enacted the Tobacco Board Act, 1975. Section 2 of the Tobacco Board Act contains the declaration that it is expedient in the public interest that the Union should take under its control the Tobacco industry.

Article 246(2) provides that notwithstanding anything in clause (3), Parliament and, subject to clause (I), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule. The said List is referred to in the Constitution as the "Concurrent List". Article 246(3) provides that subject to clauses (I) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any ofthe matters enumerated in List II in the Seventh Schedule. The said List is referred to in the Constitution as the "State List". In exercise of power under Article 246(3), various State Legislatures have enacted Agricultural Produce Marketing Acts for regulating sale and purchase of the agricultural produce and levying market fee within the framework of those Acts which, inter alia, permit levy and collection of market fee.

The tobacco under the Acts in question has been notified as an agricultural produce. In JTC's case, by majority, it was held that the Tobacco industry having been taken over by the Central Government under Entry 52 of the Union List by enactment of Tobacco Board Act, the State Legislature ceases to have any jurisdiction to legislate for that field and, therefore, the provisions of the Karnataka Agricultural Produce Marketing Act entitling the market committee to levy market fee in respect of sale and purchase of Tobacco within the market area collide with Tobacco Board Act. Thus, the State Act so far as it relates to Tobacco was struck down. The minority view was that both the State and the Central Act can operate in their respective fields and there is no repugnancy if both the Acts are considered in the light of their respective true nature and character. The majority judgment in ITC ·~.

case for the view that it took principally relied upon the two Constitution Bench decisions of this Court in State of Orissa. v. M. A. Tulloch & Co. , [1964) 4 SCR 461 and Baijnath Kadio v. State of Bihar & Ors. , [1969] 3 SCC 838. Referring to these two decisions, the opinion expressed was that these cases are direct authority on the question at issue, viz. , if the Central Act, and the State Act collide, the inevitable consequence would have to be that the Central Act will prevail over the State Act and later will have to yield and that the provisions of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 are repugnant to the Tobacco Board Act, 1975 and, therefore, tobacco is liable to be removed from the schedule of the said Act.

The minority view, however, was that there is nothing in the State Act or in the Rules which indicate that it is inconsistent with or cannot be operated along with the marketing regulations and both the Acts can operate in their respective fields and there is no repugnancy if both the Acts are considered in the light of their true nature and character. In ITC 's case the challenge was to the constitutional validity of the Karnataka Agricultural Produce Marketing (Regulation) (Amendment) Act, 1980. By the amending Act, tobacco was enumerated as an agricultural produce for the purposes ofthe Karnataka Agricultural Produce Marketing (Regulation) .. Act, 1966.

The High Court was of the view that the Tobacco Board Act did not cover the marketing of tobacco in its entirety but only covered a part of the area of the topic of marketing of tobacco and that the two legislations, namely, the Tobacco Board Act, 1975 and the Karnataka Agricultural Produce Marketing (Regulation) Act, can co-exist and operate cumulatively. The further view expressed by the High Court was that any intention of the superior legislature to cover the whole field to make a comprehensive law with regard p to marketing of tobacco was not manifest in the legislation. The contention canvassed before this Court in ITC's case was that in view of the Central Act, the State Legislature was not competent to bring into fold of the State Act, the tobacco, the matter being covered by Entry 52 of the Union List of the Seventh Schedule of the Constitution of India.

The precise question in ITC's case was as to whether in respect of marketing of tobacco, the State Government was entitled to legislate or whether in view of the fact that there was a declaration under Entry 52 of the Union List, the State Legislature had no competence to legislate on tobacco and as such the impugned legislation was ultra vires. In the minority opinion, Mukharji, J. noticed that the Karnataka l. T. C. LTD. v. A. P. M. C. [Y. K. SABHARWAL, J. ] 477 Agricultural Produce Marketing (Regulation) Act, 1966 deals with the subject of market in Entry 28 read with Entry 66 of List II and that it had to be borne in mind that Entry 28 is not subject to withdrawal to List I by Parliament. The State Act is not on a subject in List III nor is the Central Act a law relating to any subject in List III. It was concluded that, therefore, there cannot be any question of repugnancy.

The nature and character of the Acts, namely, Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 and the Central Act was noticed and it was held that it is fully manifest that both the Acts can operate