RAMESHCHANDRA KACHARDAS PORWAL & ORS. v. STATE OF MAHARASHTRA & ORS. ETC

Citation: [1981] 2 S.C.R. 866

Court: Supreme Court of India

Bench: R.S. PATHAK, O. CHINNAPPA REDDY, BAHARUL ISLAM

Case summary

There can be no question of any incoHsistency between section 6 and rule 5. 'ere therefore, cancelled and the old markets were allowed to function for sometime.

Judgment text

RAMESHCHANDRA KACHARDAS PORWAL & ORS. v. STATE OF MAHARASHTRA & ORS. ETC. February 17, 1981 (R. S. PATHAK, 0. CH! NNAPPA REDDY A~D BAHARUL ! SLAM, JJ. ] Constitution of India 1950, Article 91 ( 1) (~)-Maharashtra Agricultural • P1oduce Marketing, (Regulation) Act 1963, SS : and 6 & Maharashtra Agricultural Produce Afarketing (Regulation) Rules 1963, Rule 5-Karnataka Agricultural Produce Marketing (Regulation) Acl 1966, SS. 8, 10 and 11 'ii:,_. Bilzar Agricultural Produce Marketing Act 1960 Sections 5, 15-Trading in ~ specified agricultural produce-State Government--Setting up of new market area-Whether valid. Notification declaring that traditional trading acllvlty in old market area be shifted to new 1narket-Whether permissible-lnf1ingement of fundamental right to carry on trade-Whether arises. Adtninistrative law-Principles of natural justice-Markel yard disestablisfred at one place and established at another place-l>uty to invite and hear objections-Whether arise3.

The Maharashtra Agricultural Produce Marketing (Regulation) Act 1963 provides for the regulation of the marketing of agricultural produce in market area6 to be established therefor in the State, M Onal consumption. • ' TI1e Maharashtra Agricultural Prnduce Marketing (Regulation) Rules, 1963 were promulgated pursuant to the power confe1Ted by section 60 of the Act. f Rule 5 provides that no person shall market any declared agricullutal produce in any place in a market area other than the r rincipal market or subsidiary R. K. PORWAL v. MAHARASHTRA 867 n1arket established therein. The proviso to the rule enables the Director of Aitark. eting to authorise a Market Committee to permit a trader or commission agent to market declared agricultural produce or to permit any other market functionary to operate at any place within the market area as may be nientioned by the· Market Comn1ittee in the licence granted to such trader.

The petitioners who were wholesale traders in onions and potatoes in their writ petitions to the Supreme Court assailed the notices requiring them to carry , on business in regulated agricultural produce in the market yard at the specified • areas of the State, and at no other place, contending that : (1) the 1963 Act, Jid not invest the Director of Marketing or the Market Committee with any po\ve'r, to co1npel a trader to transfer this activity from a previously existing ffiarket to a principal or subsidiary market established under section 5 of the Act (2) Rule 5 was inconsistent with section 6 and therefore ultra vires. (3) The Bombay Agricultural Produce Markets Act, 1939 and the Agricultural Pro· duce Marketing Acts of other States such as Karnataka provided or indicated by an express provision tha. t once a market was established it was not permis- ~ible to market or trade outside the market and that the absence of such an expre'3s provisiou in the 1963 Act :-.

howed that no such ban was coutemplatcd by the Act. (4) The transactions between trader and trader and transa-ctions by which the agricultural produce was imported into- the 111arket area from outside the market areas were outside the purview of the Act and if section 5 and rule 5 were intended to cover such tran~actions also they \Vere invalid. (5) The statue itself imposed and provided for stringent supervision and control, sufficient to regulate transactions between traders and traders, that it was superfluous to insist that such transactions do take place in the market only. (6) Section 6 of the Act made a distinction between (a) the use of any place jn the market area for the marketing of the declared agricultural produce, and (b) the operation in the market areas or in any market therein as a trader, commission agent, broker etc.

in relation to the marketing of agricultural produce and that the distinction was in reality a distinction between a sale by a producer to a trader and a subsequent sale by a trader to a trader, and consequently the ban imposed by Rule 5 applied only to a sale of the agricultural produce by a producer to a trader. (7) Section 13(1A) which declared the area comprising greate~ Bombay a market area for the purposes of the Act was invalid as it was wholly unreasonable to constitute such a large area into a single market area. (8) when a market yard was dis-established at one place and _. -----. -. --.. established at another place it was the duty of the concerned authority to invite and hear objections and failing to do so, was a violation of the principles of natural justice and the notification establishing the market yard elsewhere was bad. Dismissing the writ petitions and appeals :- l-lELD: 1. (i) The power cunferred by S.

5 of the Act to establish a principal market or a subsidiary market carries with it the power to dis-csta-blish such market. Section 5 of the Act, read \Vith section and would have little chance of obtaining the best price for his produce. T:1is cannot happen if he is persuaded to take his produce to the place of busiress of an individual trader outside the principal or subsidiary market. There . s a greater possibility of abuse and greater likelihood of the object of the Act being frustrated. Fair price to the agriculturist will soon be a mirage and the ! Vil sought to be prevented will persist. [882 E-H] Kewal Krishan Puri & Anr. v. State of PuHjab & Ors. [1979] 3 S. C. R. p. 1217, 1247, referred to. 2. There can be no question of any incoHsistency between section 6 and rule 5. Section 6 is applicable to both the sltuations before and after the establishment of mairkets, and is expressly declared to be subject to the rules prc.

viding for regulating the marketing of agricultural produce in the market~-~ area by stipulating that the marketing shall be carried on in the market esta· blished in the market area. [883F, D~E] 3. 'The rule prescribing that no marketing operation in any declared agri~ cultural produce shall be carried on outside th! principal or subsidiary market-; is consistent and in consonance with the sche1nc of the Act and is within the competence of the rule making authority and is reasonable. Absence of an express provision in the Act to the effect that once a market is established it ' ' was not permissible to market or trade in agricultural prcxluce outside the market itself merely means that greater latitude is given to the rule making authority to introduce regulation of marketing by stages and to b&n all market- ' ing activity outside the market. This cannot I! ad to the inference that the rule making authority has no po\ver to make a rule banning marketing activity R. K. PORWAL V.

MAHARASHTRA 869 outside the market once the market is established even when such a ban is found to be necessary. [884 B, 883 H-884 Al 4. (i) The assumption that the Act was conceived in the interest of the agriculturists on1y and intended for their sole benefit is not well founded. One of the principal objects sought to be achieved by the Act is the securing of a fair price to the agriculturist for his produce oy the elimination of middlemen and other detracting factors. But that is not the only object. The Act is intended to regulate marketing of agricultural and certain other produce. The marketing of agricultural produce is not confined to the first transaction of sale by _the producer to the trader but must necessarily include all subsequent tran&-actions in the course of the movement of the commodity into the ultimate hands of the consumer so long, of course, as the commodity retains its original character &S agricultural prcx:1uce.

While middlemen are sought to be eliminated, it is wrong to view the Act as one aimed at legitimate and genuine traders. [884D- F] (ii) Promotion of grading, standardisation of agricultural produce, weighn1ent, the provision for settlement of disputes arising out of transactions connected with the marketing of agricultural produce and oo. cilliary matters are as much to the benefit of the producer as the consumer. Oearly therefore the regulation of marketing contemplated by the Act involves benefits to the traders too in a large way. Regulation of marketing of agricultural produce, if confined to the sales by producers within the marketing area to traders, wilt very soon lead to circumvention in the guise of sales by traders to traders or import of agricultural produce from outside the market area to within the market area. [884G-885BJ 5.

(i) It is not correct to say that the statute itself imposed and provided for such stringent supervision, and control sufficient and more, to regulate transactions between traders and traders, that it was superfluous to insist that such transactions do take place in the market only. The other supervisory measures in the Act cannot be said to be sufficient to make it unnecessary for the traders to move their places of business into the market. No amount of supervision may be as effective as when all the transactions take place within the market. Nor is effective supervision at all possible if traders are dispersed all over the market area. The rendering of services to the traders also will be far easier. Therefore, localising marketing i'i helpful and necessary for regula~ tion and control and for providing facilities.

[887E-888A] (ii) The requirement that the locus of transactions of sale and purchase of agricultural produce, including those between trade and trader, should be in the market cannot be said to be harsh or an excessive restriction on the , Fundamental Right to carry on trade. [888B] • 6. The proviso to ru1e 5 speaks of operating at any place within the mar~ ket area by a trader, commission agent or other market functionary after obtaining a licence while the main provision refers to the marketing of dee~ tared agricultural produce at any place in the market area. It cannot be contended that 1he proviso is unrelated to the main provision. According to ordinary canons of construction the proper function of a proviso is to accept and deal with a case which would otherwise fall within rhe general language of the main enactment. [888F-G] 7. There was nothing unreal arid unreasonable in establishing a single market for a large area.

It had become imperative in the public interest that the markets should be shifted from their former place to the new area. The R present village was chosen because it was free from congestion, conveniently located near another trunk road. A railway line linking with both the Western· ' • Railway and the' Central Railway and so on. There is, therefore, nothing unreasonable in the statutory declaration of Greater Bombay and Turbhe Villa. ge as a market area; nor in the· establishment of a single market in Turbhe Village, for the entire market area. [889B-E] 8. Where a market yard was dis-established at one place and established at another place, no exercise of a judicial or quasi-judicial function is involved. All that is involved is the declaration by a notification of the Government that a certain place shall be a principal market yard for a market area, upon which declaration certain statutory provision.

hould be subjected to regulation irrespective of its source or final destination. " Again they said in paragraph 95 as follows : • "We wish to record here that there appears to be a doubt among the traders as well as the Market Committees about the precise position of sales of commodities after they are bought from agriculturists by traders vis-a-vis the provi-sions of the Act and the Rules. It has been the belief of the traders that the law is for the benefit of agriculturists and on this ground they have pleaded that its scope should be restricted only to the dealings with them. We are afraid that this plea is not tenable. The benefit of a, regulated market will no doubt primarily accrue to the agriculturists but traders also will be profitted by it. Furthermore, no market can be regulated effectively unless and until the regulation covers all the stages of marketing within a parti- • cular area.

Above all, it i~ not possible to distinguish between 'the agricultural produce subjected to resale or changing bands between the traders themselves and the one sold by the agriculturists through the commission agents to the traders. We, therefore, recommend that all transactions including the resales between the traders and traders in respect of the agricultural commodities, which are regulated. should be covered by the Act and the Rules. Thus in a regulated market, trading in agricultural commodities irrespective of the fact as to whether they are produced in the market area or sold by the agriculturists or not, will be brought within the scope of the legislation. " Nor are we without any guidance from this Court itself in answering the question posed. In Mohammadbhai Khudabux Chhippa & Anr. v. The State of Gurajat & Anr. ,(') it was pointed out while dealing with the provisions of the Bombay Agricultural Produce Markets Act, 1939, as follows (at p.

899) : "Next it is urged that the provisions in the Act also affect transaction between traders and traders, and also affect produce not grown within the market area if it is sold in the market area. That is undoubtedly so. But if control has to be effective in the interest of the agricultural producer such incidental coutrol of produce grown outside the market area and brought into the market yard for sale is necessary as otherwise the provisions of the Act would be evaded by alleging that the particular produce sold in the market yard was not grown in the market area. For the same reasons transactions between traders and traders have to be controlled, if the control in the interest of agricultural producers and the general public has to be • effective. We are therefore of opinion that the Act and the Rules and Bye-laws therennder cannot be struck down (I) [1962) Supp/. 3 S. C. R. 875 @ 899. on this ground. The contention under this head therefore must fail".

Again in Ram Chandra Kai/ash Kumar & Co. & Ors. v. State of • U;P. & Anr. ,(I) dealing with the contention that fee could be charged only on those transactions in which the seller was the producer and not on any other transaction this Court disapproved the view taken by the Mysore High Court and approved the view taken .. by the Patna High Court that fee could be levied on a transaction of buying and selling between a dealer and a dealer. Dealing with the contention that the agricultural produce not produced in the market area was outside the purview of the, Act, it was observed (at p. 1134): "It is also not correct to say that the agricultural produce must have been produced in the market area in which the first levy is made.

It might have been produced in another market area or even outside the State of Uttar Pradesh but if a transaction of sale and purchase takes place of an agricultural produce as defined in the Act and covered by the notification within a particular market area then fee can be charged in relation to the said transaction". One of the submissions strenuously pressed before us was that the statute itself imposed and provided for such stringent supervi- ly made known that such market yards wodd be c! oscct on spec•ticd dates and merchants were advised to move their business into the Muradpur Dulla principal market yard as early as possible. Finally by a notification dated July 3, 1979, the previous notification dated April 9, 1979 was cancelled and Muradpur Dulla market yard was alone notified as the principal market yard. The facts in the other two appeals were ~---~· that on Septemlx! r 19, 1963, Gaya town was declared as a market area.

On April 6, 1964, Chandauti was declared as the market proper under Sec. 5(2) (ii) of the Bihar Act. By a notification dated April 7, 1964, Mahalia Purani Godown was declared as principal market yard and Kedarnath Market was declared as the sub-market yard for the market area. On October 19, 1973, Mahalia Purani Godown was once again declared as the Pdncipal Market Yard. Subsequently on February 28, 1978, Chandauti was declared as the Princ;pal Market Yard. This meant that Mahalia Purani Goclo. vn ceased to be a market yard and Kedarnath Market ceased to be a sub-market yard. But, again on April 9, 1979, another notification was issued, ' ; to the effect that Moha! la Purani Godown would continue as the market yard as before. Finally on June 27, 1979, Chandauti was declared as the Principal Market yard once more. This was questioned in Writ Petitions filed in th(l, Patna High -court. The Patna High Court rejected all but one of the contentions raised.

The only contention which was accepted was that the procedure prescribed by Rule 80 was not followed before Chandauti was declared as the principal market yard by the notification dated February 28, 1978. Rule 80, as already mentioned by us provides that a market shall be established for a market area and that after the establishment of a market a noti- • fication declaring the market yard shal! be issued. The contention which was accepted was that a market had not been established before a market yard was declared. Against the judgment of the High Court the merchants have filed Civil Appeal No. 1715 of 1980 and the State of Bihar has filed Civil Appeal No. 36 of 1980. Notwithstanding the filing of the appeal, the State of Bihar chose to issue a fresh notification after observing the procedure prescribed by Rule 80. This was again questioned in the High Court. The High Court upheld the notification. The merchants have preferred Civil Appeal No.

1716 of 1980 against the judgment of the High Court. From the history of events it may appear as if declarations regarding market yards have been made in a most erratic fashion but a_s pointed out by the learned Attorney General who appeared for the State of Bihar it was not madness. There was a method. The old markets had • existed from ancient days and it had become necessary to establish modern market yards with conveniences and facilities. When this was sought to be done there were representations by the traders and the Government appears to have thought that it was advisable to give the traders sufficient time to enable them to prepare themselves to move into the new market yards. The notifications establishing new market yards were therefore, cancelled and the old markets were allowed to function for some time. Later when the time was thought to be ripe, notifications establishing new market yards were once again issued.

It is, therefore seen that the seeming confusion was not the result of any arbitrary or erratic action on the part of the Government but was the result of a desire to accommodate the traders as much as possible. We, therefore, see no force in any of the submissions made on behalf of the petitioners. AH the Writ Petitions and Civil Appeals are therefore, dismissed with costs. Petitions and Appeals dismissed. N. V. K.