RAMESH CHANDRA ETC v. STATE OF U.P. ETC

Citation: [1980] 3 S.C.R. 104

Court: Supreme Court of India

Bench: Y.V. CHANDRACHUD, V.R. KRISHNA IYER, N.L. UNTWALIA, P.N. SHINGAL, A.D. KOSHAL

Case summary

Various tr~ders carrying on business in the State of Uttar Pradesh within the jurisdiction of several Market Committees challenged the levy of fee in the High Court of Allahabad from time to time....

Judgment text

RAMESH CHANDRA ETC. v. STATE OF U. P. ETC. March 25, 1980 [Y. V. CHANIJRACHUD, C. J. , V. R. KRISHNA IYER, N. L. UNTWALIA, P. N. SHINGHAL AND A. D. KosHAL,. JJ. ] Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1954 (U. P. , Act XXV of 1964), Ss. 2 (a), (p), (y), (k), 6, 17, and Uttar Pradesh Krishi Utpadan Mandi Niyamawalli 1965, Rules 66, 67 and 68-Levy of market fee by market · Committees in Uttar Pradesh on transactions relating to agricultural produce --A' --11alidity of-Declaration of big areas as n1arket area-Whether offends the law. Market Committees-To be constituted in a regular manner and on a pernianent baiis-Machinery to be evolved for setting dz'sputes. The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (U. P. Act XXV of 1964) provides for the regulation of sale and purchase of agricultμra! produce and for the establishment superintendence and control Of ma.. kets in Uttar Pradesh.

The enactment Was passed for the development of new market areas and for efficient data collection and processing of arrivals in the Mandies to enable the World Bank to give a substantial help for the establishment of various markets in the State of Uttar Pradesh. It led to the establishment of Market Areas, Principal Market Yards and Sub-Market Yards and levying of the fee in relation to transactions of certain commodities in the State ·of Uuar Pradesh. Various Macket Committees were formed known as Mandi Samitis. Jn order to give effect to the working of the Act the Uttar Pradesh Krisbi Utpadan Mandi Niyamawalli 1965, being Rules under the Act were made by the Governor. The Act was amended several times but the Rules were not accordingly amended as and when required to make them uptodate , in accordance with the amended Act. ( "Agricultural Produce" has been defined in clause (a) of s. 2 of tho Act to ·~ mean:- "Such items of produce Olf agriculture, horticulture.

viticulture, apiculture, sericulture, pisci-culture, animal husbandry or forest as / are specified in the Schedule, and includes a mixture of two or more of such items, and also includes any such item in processed form, and further includes gur, rab, shakkar, khandsari and jaggery. " ·while Clause (e) defines "commission agent" or "Arhatiya" to mean:- "a ,person who, in the ordinary course of 1 business, makes or offers to make, a purchase or sale of agricultural produce, on behalf of the owner or seller or purchaser of agricultural produce, for Arhat or commission". RAMESH CHANDRA V. U. P. STATE 105 under clause (p), ""producer" means a person who, whether by himself or through hired labour, produces, rears or catches, any agricultural produce, not being a prOOucer who also works as a trader, broker or Dalal, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce".

Cause (y) defines a "trader" to mean :- "a person who in the ordinary course of business is enga8ed in buying or selling agricultural produce as a principal or as a duly authorised agent of one or ni. ore principals and includes a person, engaged in processing of agricultural produce. n Under Clause (k), 'Market Area' means an area notified as such under Section 6, or as modified under Section 8, while 'Principal Market Yard' has been defined under clause (o) to mean, the ponion of a Mark,1 Area, declared as such under Section 7, and 'Sub Market Yard' under clause (w) means a portion of a Market Area, declared as such under Section 7. 'Ibe State Goverment under s. 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 IIl of the Act deals with the establishment, incorporation and constitution of, the> Market Committees, section 17 provides for the power 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 prescnOed. 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 rate / and in the manner provided therein. [Though clause (b) of section 17 (iii) had undergone drastic changes from time to time, the Rules Were not correspondingly amended. ] Section 19 provides for the Market Committee Fund and its utilisation. Section 19-B was introduced in the Act by U. P. Act 7 of 1978 w. e. f. 29-12-1977 providing for the establishment of 'Market Development Fund' for each committee. The Rule making power of the State Government is in Section 40, Rule 66 deals with the levy of market fee, Rule 68 provides for its recovery end Rule 67 provides for licence fee.

By a State Government notification, which was issued on April fl, 1978 making it effective from May l, 1978, almost the whole of Uttar Pradesh had been declared to be a Market Area, dividing it into 250 areas and indicating in Schedule 8 of the Notification 115 commodities in respect of which the fee could be levied by the Market Committees. Declaration of Principal Market Yards and Sub-Market Yards under Section 7 had also been made. Various traders carrying on business in the State of Uttar Pradesh within the jurisdiction of several Market Committees challenged the levy of fee in the High Court from time to time. There were several rounds of litigation and the writ petitions were dismissed. On account of the litigations between the traders and the Market Committees, the workiruz of the Committees had not successfully proceeded, as fees levied from tune to time could no. be 8-189 SCI/80 realised in full. Sometimes illegal or unauthorised collections have been made.

Money justifiably realised also had not been 'fully utilised as it ought to have been done. In the appeals and writ petitions to this court it was contended on behalf of the appe! lants and petitioners that :- 1. Big areas consisting of towns and villages have been notified as Market Areas without rende'ring any service, which is contrary to the whole object of the Act and the concept of fee. 2. No market area or market yard had been validly created. 3. No Mandi Samiti (Market Committee) had been validly appointed. 4. No machinery had been provided in the Rules for adjudication of disputes. 5. Fixation of minimum of I% to be charged as market fee by all the Market Committees under s. 17(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 agricul· tural produce were specified. 7. There could not be any multi point levy of any market fee either in the same me. rket area or in different market areas. 8. The retrospective operation of the law brought about in s. 17(ili)(b) by U. P. Act 7 of 1978 w. e. f. 12-6-1973 was bad. 9. No market fee could be levied on goods not produced within the limits of a particular market area and if produced outside and brought in sueh area. 10. No market fee could be levied both on paddy and rice. The rice millers had been illegally asked to pay market fee on their sale of rice, Similarly no market fee was payable on Ghee either by the producer-trader of Ghee or by its purchaser. 11. Fee could be charged on sale of animals but could not be charged on hides and skins as was being illegally done. ~ - 12.

Fee co,uld be charged on wood or timber but could not be charged either on furniture manufactured from such wood or timber or on Catechu (Katha). 13. Wood cut and brought from the jungle by a manufacturer or paper could not be subjected to levy of fee. -14. Some of the items mentioned in the notification are Kirana goods brought from outside the market area or even from other States for sale in different Mandis, and cannot be subjected to the levy of 11111rket fee. 15. No market fee could be charged" on tobacco or tendu leaves nor on bidis. 16. No market fee could be charged on rilb salawat and rah galawat.. RAMESH CHANDRA V. U. P. STATE 107 17. No market fee am be charged if only goods are brought in a market 6rea and despatched outside it without there taking place any transaction of purchase and sale in respect of these goods. 18. If no licence is issued or taken under s. 9(1) of the Act tlien there is no liability to pay a market fee. 19. No market fee ce.

n be levied on transactions of match boxes, soyabin products. 20. No market fee can be charged from the vendors of fruits and vegetables through their Commission Agents. 21. Fee can be charged only on those transactions· in which the seller is prcx:Iucer and not on any other transaction, and market fee can be charged only on_ those transactions in which the seller is the purchaser o( agricultural produce and not on any other transaction. HELD : 1. Declaration of big areas as Market Areas does not offend any provision of la\\'. Any area big or small including towns and villages can be declared as Market Area under s. 6 of the Act. [121 F] 2. The traders are required to take out licences under s. 9(2) read with s. 11 of the Act, for such place which is either a principal J\ifarket Yard or a sub-Market Yard or at any specified place in the Market Area.

No body ean be permitted to carry on his business anywhere in the Market Areas a1 the Market Committee will not be able to control and levy fee throughout the · Market Area. [121 G-HJ I 3. (i) Market Committees have not yet been constituted in accorUance. with the provisions contained in s. 13 of the Act. They have been constituted temporarily under Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam, 1972 which \Vas a temporary Act, extended from year to year. 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. [123 CJ (ii) The levy and collection of fee by the temporary Market Committees is not illegal as argued on behalf of the appellant>;. [123 DJ Kewal Krishan Puri v. State of Puniab [1979] 3 S. C. R. 1217, referred to. 4.

A machinery for adjudication of disputes is necessary to be provided under the Rules for the proper functioning of the Market Committees. [123 E] 5(i) Under clause (b) of s. 17(iii) of the Act a minimum end maximum limit of market fee chargeable has been fixed by the legislatore. The minimum is 1% and the maximum is H% of the price of the agricultural produce sold. The fixing of the minimum of 1% fee by itself is not illegal but it would be subject to the rendering of adequate services. [123 G] (ii) The charging of 1% fee throughout the State of Uttar Pradesh 1iy all the market Committees is not illegal and does not go beyond the quid pra qua theory discussed in Puri's case. [124 Al ' . 6. The notification dated 11-4-1978 indicates that in the various Districts, which number about 55, 250 Market Committees have been constituted and about 115 items have been selected in respect of which market fee has been directed to be levied.

None of the items so specified is such that it cannnt be covered by the Schedule which is a part of the Act. The definition of 'egricultural produce' is very wide, and it is not confined to items of agricultural produce only but includes items of produce of horticulture, viticulture, apiculture, sericulture, pisCi-culture, animal husbandry or forest. (124 CJ 7(i) All the four clauses of clanse (b) of S. 17(iii) are mutually exclusive. If the produce is purchased from a producer directly the trader shall be liable to pay the market fee to the Committee in accordance with sub-clause (2). But if the trader sells ·the same produce or any product of the same produce to another trader· neither the seller trader nor the purchasertrader can be made t<> pay tho market fee und01' sub-clause (3). [125 CJ (ii) In a particular market area market fee oonuot be levied both in relation to the transaction of purchase and sale of paddy and the rice produced from the same paddy.

Fee can be charged only on one transaction. This finds support from the unamended Rules as they are, wherein is to be found sub-r. (2) of Rule 66, There is nothing in the provisions of the Act or the Rules to warrant the view that in another market area the Market Committee of that area cannot levy fee on a fresh transaction of sale and purchase taking place in that area. [125 H·126 A] 8(i) Before 1973, reading the provisions of the Act and the Rules, market fee was to be charged at such rates as specified in the by&-laws of particular Market Committee. But it could not exceed 1/2 perccntum of the price of the agricultural produce. 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 produces was sold directly by the seller to the consumer. This provision has oow been superseded by an amendment in the Act brought about by U. P. Act 19 of 1979.

[127 F-GJ (ii) After the amendment in the Statute, Rules could apply only mutatia mutandis and wherever there was a conflict between the Rules and the Statute the latter had o prevail. [128 DJ (iii) The State Legislatures are competent to make retrospective amend· ment and retrospective imposition of a fee is valid. However, in a given case and in a given situation the retrospective operation may be hit by Article 19. [129 A·BJ B. Banerjee v. Anita Pan [1975] 2 S. C. R. 774, Mis. S. K. G. Sugar Ltd. v. State of Bihar & Ors. [1975] 1 S. C. R. 312 and H. H. Sudhundra Thirtlia S·wamiar v. Commissioner for Hindu Religious & Charitable Endowment! , Mysore [1963] Suppl. 2 S. C. R. 302 referred to. (iv) The Rules which were framed in 1965 oomely Rules 66 and 68 are very diffea-ent from the present provision of law. The Government bas failed to amend the Rules and bringing it in confirmity with the amended provisions of the Statute from time to time.

The Rules will apply as far as possible so long they do not come in conflict with the Statute and eveo RAMESH CHA\'IDRA v. U. P. STATE 109 without the aid of the Rules the provision in section 17(ili) (b) as it stands A' after the amendment brought about by U. P. Act 7 of 1978 is workable and can be given effect to. [128 G-HJ In the present case the retrospectivity of the law as such is not bad and the only safeguard will be that if market fee has been realised by any Market Committee in respect of transactions of sale of agricultural produce taking I place b-een 12-6-1973 and the coming into force of U. P. Act 7 of 1978, in accordance with law as it prevailed then, no market fee under tho amended law can be realized again. But if in respect of ariy transactions aforesaid market fee had not yet been roo. lised then it can be realised in accordance with the amended provision of the law. (129 CJ 9.

No provision in the Act or the Rules limit the operation of the law in a particular market area only in respect of the agricultural produce produced in that area. [129 GJ IO(i) A producer who produces agricultural produce generally does not indulge in trading activities so as to beCome a trader within the meaning of clause (y). He is covered by clause (p) only. If a perse>n is simply trader indulging in trading acti'1ties he is covered by the definition in clause (y). The expression producer-trader has been coined for a person who is both a pro be levied and ce>llected in relatie>n IC> the trans· actie>n e>f paddy alone. Otherwise there will be a risk of vie>lation of Article 14 if it Is left te> the Market Committee in the case of some rice millen to ~ . charge market fee on the transaction of paddy and in the case of others J' to charge it when the sale of the rice takes place.

If, he>wever, paddy is brought by the rice miller from another market area, then the Market Committee of the ma where paddy is converted into rice and se>ld will be entitled le> charro market fee oo the transaction and sale in accordance with . ub-clause (3). (130 F-GJ (iv) In transactions of Ghee, a dealer who purchases milk or cream from the villagen and others and manufactures Ghee in his plant will be liable to pay market fee because he is the producer of Ghee within tho meaning of the Act and at the same time a trader in Ghee also. When ho sells Ghee to another dealer. in Ghee who is simply a deruer then under sub-clause (3) of Section 17(iii)(b), the manufacturing deeler will be liable to pay market fee to the Market Committee or the transaction of Ghee, but he will be entitled to pass on the bmden to his purchaser. [131 C. DJ 11. The definition clause (a) of section 2 uses the expression 'animal lm!

bandry' by way of a descriptive· one without strictly confining to the pro· products of animal husbandry as the additions, of the words 'specified in the - s. 5521, 4982, 5001, 4447/78, 4454, 2311, 5134, 3826, 4409, 4020, 5144, 5728, 5002, 4455/78, 6948, 4665, 4560, 4666, 4985,4449, 5540,4823,4619, 5150, 4588, 4593,4926,4947, 4948, 5012, 5062, 5088, 5089, 5191, 5539, 5106, 5097, 4833, 4911, 1398, 2114, 2515, 898/78, 5071, 5454, 5592, 5072, 5034, 4149, 5153, 5169, 5734/78, 4947/ 76, 5533/78, 3299/77, 4943, 4629/78 & 5194, 5195, 5196/79. AND CIVIL APPEAL No. 487 OF 1979. From the Judgment and Order dated 21-9-1978 of the Allahabad High Court in W. P. No. 4445 of 1978. AND ··----· WRIT PETITION Nos. 257 & 600 of 1979. (Under Article 32 of the Constitution). F. S. Nariman, R. F. Nariman and P. C. Bhartari for the Appellants in CA Nos. 2260 & 2261. ... S. P. Gupta, H. K. Puri, V. K.

Bahl and Miss Madhu Moo/chandani for the Appellants in CAs 1841 to 1846, 2426 to 2428, 929, 1007 to 1009, 1630, 2169 to 2172 and 1635. V. M. Tarkunde, G. B. Pai, Mrs. Saran Mahajan, Mr. Arvind Kumar, Mrs. Lakshmi Arvindand R. K. Sinha for the Appellants in CA lfos. 2507, 2322, 2457 and 871. 114 SUPREl\fE COURT REPORTS [1980] 3 S. C. R. Shanti Bhushan, S. P. Gupta, H. K. Puri and Miss Madhu Moo/· chandani for the Appellants in CA 174. " L. N. Sinha, S. S. Ray, Ghayyas Alam and R. K. Jain for the Appe- ~ llants in CA 2269, 2270 to 2272. Shanti Bhushan, Subhash Chandra Bir/a and Shreepal Singh for the Appellants in 2373, 2302, 2374, and 2375. ~ Yogeshwar Prasad and Mrs. Rani Chabra for"the Appellants'in'CA 599, 142 to 144, 385, 1638, 2219 to 2226, 1921, 1960, 2173, 2178, 2180 to 2187, 2179, 386 to 388, 429 to 438 and W. P. 257. _J Pramod Swarup for the Appellants in CAs Nos. 230, 2359, and 2386. P. R.

Mridul ad All As already stated, Market Yards also have been established while issuing notifications under s. 7. By and large, the Mandis where the • 1raders are carrying on their business for the time being have been declared as Market Yards. When the Market Committees are able ·to construct. their own Market Yards, as in some places they have • been able to do, then a question will arise whether a trader can 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 provi- ·sions contained in s. 13 of the Act. They have been con~tituted tem- / porarily 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 then in the first instance the Market Committee itself or any Sub-Committee appointed by it can give its finding which will be subject to challenge in any court oflaw when steps are taken for enforcement of the provisions for reali- ·sation of the market fee. ~ Point No. 5 Under clause (b) of s.

17(iii) of the Act a minimum and maximum ·1imit of market fee chargeable has been fixed by the legislature. The minimum iFt I% and the maximum is It% of the price of the agricultural produce sold. The fixing of the minimum of I %fee by itself is not illegal but it would be subject to the rendering of adequate services as explained by this Court in Kewal Krishan Puri's case. The • facts placed before the High Court as also before us were too meagre to indicate that services to the extent of the fee levied at I %are not . being rendered. In Puri's case we upheld the levy of market fee at 2 % on the value of the goods sold. But there we found that the Market Committees were rendering greater services than are being rendered by the Market Co=ittees of Uttar Pradesh. Yet charging of 1%fee as is being charged throughout the State ofUttar Pradesh by all the Market Committees is not illegal and does not go beyond the quid pro quo theory discussed in Puri's case. • Point No.

6 It is difficult to understand the significance of this point. The· notification dated 11-4-1978 indicates that in the various Districts, the number of which is about 55, 250 Market Committees have been. constituted and about 115 items have been selected in respect of which market fee has been directed to be levied. None of the items so specified is such that it cannot be covered by the Schedule which is a part of. the Act. The definition of agricultural produce is very wide. It is not confined to items of agricultural produce only but includes items of produce of horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry or forest. Such items are specified iu the 'D Act which is undoubtedly a part of the Act. That being so challenge to the notificatiou dated 11-4-1978 on the ground that it was issued without any application of mind is devoid of any substance and must be rejected. Point No.

7 , It is clear and it was expressly conceded to on behalf of the Market Committees and the State that there cannot be any multi point levy of market fee in the same market area. The reason is obvious. Section 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- ... (! ) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall te liable to pay the same to th in the municipal Acts and the Zila Parishad Acts to show that no market committee could be constituted in a municipal area or a Nyaya Panchayat.

We do not consider it necessary to deal with this point in any detail. We merely reject it as being devoid of any substance. ·C Point No. 17 Gur, rab, shakkar, khandsari and jaggery are expressly include& · in the definition of agricultural produce given in clause (a) of section 2 of the Act. We are here concerned with the question as to whether rab galawat and rab salawat are rab within the meaning of section 2(a) or are bye-products of molasses received 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 ofrab. 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 F 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 thereafter by the High Court, if necessary, in a fresh writ petition. It will bear :re· petition to say that the only transaction which can be subjected to levy ,.. of market fee in a particular market area is the first transaction of rab _.

and no other transaction of rab galawat and rab salawat. Point No. 18 B This point urged on behalf of the appellants is well founded and must be accepted as correct. On the very wordings of clause (b) of -section l 7(iii) market fee is payable on transactions of sale of sp~cifbd agricultural produce in the market area and if no transaction of sale 'takes place in a particular market area no fee can b~ charged by the Market Committee of that area. • If goods are merely brought in any market area and are despatched . outside it without any transaction of sale taking place therein, then no market fee can be charged. If the bringing of the goods in a parti- . cular market area and their despatch therefrom are as a result of tran- ·sactions of purchase and sale taking place outside the market area, it is plain that no fee can be levied. . l'oint No. 19 This point has no substance and has got to b~ rejected. As held in Vi$hnu Agencie• (Pvt. ) Ltd. etc. v. Commercial Tax Officer & Ors. etc.

(1) on a review of earlier decisions even if a commodity is sold pursuant •to the controlled regulations still some small area is left to make it a transaction of sale. It may well be that no freedom is left to the parties . in a large area of the transaction yet it is a transaction of sale. . Point No. 20 This point also must be rejected. A pure and simple producer as . defined in clause (p) of section 2 is not required to take any licence for j selling his agricultural produce nor is he required to pay market fee under any of the sub-clauses of section I7(iii)(b). But if he is a pro- ·ducer-trader in the sense we have explained above, then he will be re- . quired to take out a licence in accordance with s. 9(2) ofthe Act and no body can be permitted to carry on any trade in agricultural prodnce in the market area without a valid licence. Merely for his lapse of not ·taking out a licence he cannot escape the liability to pay the market fee.

Market fee will still be chargeable from the trader, as, in s. 17(iii)(b) it is not stated that market fee can be charged only from the licensees. The proviso to clause (p) of s. 2 will be attracted only if a question arises as to whether any person is a producer or not for the purposes of the . Act and in that event the decision of the Director made afterJan 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. (I) [1978] 2 S. C. R. 433. 136 SUPREME COURT REPo;us [1980] 3 S. C. R. In support of the argument reliance was placed upon the decision of this Court in Raunaq Rom Tara Chand & Ors. etc. v. The State of Punjab & Ors. (l).

But that case is distinguishable because of the language of rules 29 an<l;3fof 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 onlythat even the charging section 23 of the Act itself stated :-"a Committee may, subject to such rules as:may be. made by the State Goverrment in this behalf, llevy on ad valorem basis fees on the agricultural produce brought or sol<! by licensees in the notififd market area at a rate not exceeding rupee one fifty paise for eve1y one hundred rupees, provided ...... " On the. other hand in section 17 (iii) (b) of the U. P. Act and Rules 66 and 68 of the Rules charging of market fee in terms is not found to be chargeable from the [licensees only. The traders cannot escape their lia~ bility to pay the fee on account of their default of taking out licences. Point No.

21 This point is also well founded and must be accepted as comect... Market fee can be charged only on the transactions of purchase ofwood and if a manufacturer of match-sticks purchases wood from the prGducer for the purposes of manufacturing the sticks he will be required to pay market fee on such purchase of wood only and not on the sale of match-sticks or match boxes. Similarly market fee will be leviable on the transaction of purchase of soyabin and not on transaction of sale of soyabin products. Exactly the same will be the position with regard to the articles sold by Kisan P1 oducts Ltd. and the sale of Pan. Agricultural produce purchased by the dealers:will be chargeable to market fee and not the sale of the products after one kind of processing or the other. Point No. 22 Under this head the sutmission on behalf of the fruit and vegetable merchants was that they biing their products to the market and sell them in wholesale through their commission agents.

No market fee, therefore, should be charged from them. In our opinion the argument so placed on behalf of the merchants is misconceived. Under rnb-clame (! )of s. 17(iii)(b) of the Act when fruits and vegetables are sold through a commission agent by the producer then the Commission agent is liable to pay the market fee and he can realise it from ' the purchaser of fruits ar. d vcgctables. The burden doe. s not fall on the producer. The liability in the first instance is of the commission II agent and finally of the purchaser of the articles. (! ) [1976] I S. C. R. I. RAMESH CHANDRA v. u. P. STATE (Untwalia, !. ) 137 A. Point No. 23 Point No. 24 Reliance was placed urcn a decision of the Mysore High Court (now Karnataka) in the case of K. N. Mar~daradhya v. The Mysore . • State(l) but the vitw taktn by the [Myrnre High Ccurt was dissented from by the Patna HiEh Court in the case of Manga/chand Ramchandra B " and others etc. etc. v. State of Bihar(2).

One of us (Untwalia J,) delivering the judEm<rt of the Patna High Court stated at page 1053 thus : "At this stage I would diScuss a Bench decision of the Mysore High Court on which great reliance was placed on C, \__ behalf of the petitioners in support of their contention I that no fee can be levied on transaction of buyirg ar. d 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 1)1 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 E 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 ofthe agricultural produce belonging to the producer only. There does not seem to be a pointed discussion of the question whether the first purcha<e frcm a dealer could be subjected to levy , or not. But by necessary implication, as I read the judgment, it seems, their Lordships of the Mysore High Court took the view that such a deal cannot be subjected to the levy of fee. With great respect, in that regard, I strike my note of dissent from the view expressed by the Mysore G\ High Court. Firstly, merely because the object of tlte legislation is the protection of t1'e agriculturist, the plain meaning of the section cannot be cut down. Secondly, they have relied upon the practice prevailing around the area under different State •tatutes "-• mentioned in paragraph 36. If I may say with respect, law could not be so II (! ) A. I. R. [1970) Mysore 114. (2) [19711 B. L. J. R. 1038.

19-189SCI/80 l 138 SUi'REME COURT REPOOlTS {198-0J 3 s:c. R. decided on the blsis of any p'actico. Of C)urse, th! interpretation given to the Statute can be suppDrted by nfoNnce to practice. Thirdly, I am in;lin~ to think th1t the Supreme Court decision in the ca9C of K~is/11111 Coco/fut Company does not lend supp)rt to the limited view ex- • preseed ·by tire Mysore High Court. We approve of the Patna view and in the set·u[l of the U. P. Act al'c:r an elaborate discussion we hw! pJinted oat as to in wlnt kln:I of transaction who is liable to p1y the m·uket fee. In tlle U. P. Act even traders under certain circumstancos llave been m1de liable to ply such fees. Similarly the argument that market fee can be charged ·c I only on those transactions in which the seller is the producer of a. gri- . A: cultural produce and not on any other transaction is also devoid of \ any substance.

Conclusions For the reasons stated above, we hold that market fee should be ·~ li regularised and be charged in the light of this Judgment. If anytlling ,. 'D " has been realised from the traders or any other person which goes li contrary to this Judgment the same should be refunded by the Market . ~ ) Committee concerned within six months from today. Tb. is may not be treated as a precedent for all cases of this type. The form of the order in relation to the refund of the market fee may vary from case to case depending upon the facts and circumstances of each case. Market fee due from the traders in the light 0f this judgement should also be charged and paid withi. n a perird of six months from . today. If there is any disputed question of fact to be decided by the Market Committee then it should be decided as quickly as possible leaving the person concerned to agitate the matter in a court of law, preferably in the High Court, within a short time thereafter.

The High Court will proc:eed to decide the matter in the light of our Judgment. We do hope that services are being rendered and will continue to be rendered by the various Market Committees in the light of the Judgment of this Coart in Kewal Krishan Puri's case. If in regard to any particular Market Committee it is found that services are not being rendered or in future lapses are made then it will be open to the pryers c·f fees to reagitate the matter in the High court in the light of that judgment. For the reasons stated above the appinls an<\ writ petitions are partly allowed and partly dismissed in the manner indicated above. There will be no order as to costs in any of them. N. V. K. Appeals and petitions partly allowed.