# AGRICULTURAL PRODUCE MARKET COMMITTEE v. BIOTOR INDUSTRIES LTD. & ANR

- **Citation:** [2013] 16 S.C.R. 939
- **Court:** Supreme Court of India
- **Decided:** 2013-11-29
- **Case number:** Civil Appeal Nos.3130-3131 of 2008
- **Bench:** G.S. Singhvi, V. Gopala Gowda
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/agricultural-produce-market-committee-v-biotor-industries-ltd-anr-29029
- **Pages:** 30

## Headnote

A
B
Agricultural Produce. Market Fee -
Respondentcompany, situated in market area of appe/lant-APMC,
undertaking manufacture of castor oil out of castor seed.s -
C
Appel/ant-APMC sought to levy market fee on castor seeds .
bought by respondent-company -
Respondent-company·~
contested the levy contending that castor seeds were brought,
into the market area of APMC as provided u/r. 48(2) of the
1965 Rules and no fees were leviable on agricultural produce D
brought from outside the market area into the market area fOr .
use therein by industrial concern situated in the market area
- Levy of market fee on castor seeds -
Validity - Held:
Respondent-company placed order for purchase of castor
seeds from its suppliers from outside the market area qut no
E
payment was immediately made for the same - When the
castor seeds reached the market area, it was weighed by
respondent-company and payment thereof was agreed to be
made to the tune of quantity received and till then the castor
seeds continued to be in the ownership of the seller -
F
Respondent-company became owner of the property only
once the exact weight of the castor seeds was ascertained and
purchase voucher was obtrined - Sale of castor seeds thus
took place within the market area of appellant-APMC and
accordingly appellant was authorized to charge fees from G
respondent-Company for such purchase - r.48(1) was
applicable to the fact situation and not r.48(2) - AppellantAPMC rightly made assessment of market fee and levied the
same as per s.28 of the Act - Respondent-Company liable
939
H
940
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
to pay market fee which is cess on purchase of castor seeds,
justifying the claim of APMC - Gujarat Agricultural Produce
Markets Act, 1963 - ss.2(1)(i) and 28 - Gujarat Agricultural
Produce Market Rules, 1965 - r.48 - Sale of Goods Act, 1930
- ss. 19, 20 and 21.
B
Agricultural Produce Market Fee -
RespondentCompany, situated in market area of appellant-APMC,
undertaking manufacture of castor oil out of castor seeds -
Extraction of castor oil leading to production of de-oiled cake,
a by-product containing less than 1% castor oil - De-oiled
C cake then sold in the market - Levy of market fee on de-oiled
cake ..;. Validity - Held: The by-product of de-oiled cake is
different from the oil cake as it contains oil less than 1 % and
it is not included in the Schedule to the Act for. the purpose
of charging market fee - The item which is mentioned is oil
D cake which is different and distinct from the de-oiled cake -
No market fee could thus be levied by appel/ant-APMC on
de-oiled cake - Gujarat Agricultural Produce Markets Act,
1963 - ss.2(1)(i) and 28.
E
The respondent-Company is an industrial concern
undertaking manufacture of castor oil out of the castor
seeds which are declared as agricultural produce in the
Schedule to the Gujarat Agricultural Produce Markets Act,
1963. The appellant-Agricultural Produce Market
F Committee, Baroda ("APMC") sought to levy market fee
on the castor seeds bought by respondent-Company.
The respondent-Company contested the levy contending
that castor seeds were brought into the market area of
APMC as provided under sub-rule (2) of Rule 48 of the
Gujarat Agricultural Produce Market Rules, 1965 and no
G fees are leviable on agricultural produce brought' from
outside the market area into the market area for use
therein by the industrial concern situated in the market
area.
H
The single Judge of the High Court upheld the plea
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 941
BIOTOR INDUSTRIES LTD.
of APMC for levy of market fee on the castor seeds A
purchased by the respondent-Company, but in respect
to levy of market fee on de-oiled cake, a by-product in
course of manufacturing castor oil, accepted the
contention of respondent-Company that de-oiled cake
could not be treated as oil cake, and therefore, it was not B
liable for levy of market fee since it was not mentioned in
the Schedule to the Act.
Aggrieved, respondent-Company as w

## Text

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[2013] 16 S.C.R. 939
AGRICULTURAL PRODUCE MARKET COMMITTEE
v.
BIOTOR INDUSTRIES LTD. & ANR.
(Civil Appeal Nos.3130-3131 of 2008)
NOVEMBER 29, 2013
[G.S. SINGHVI AND V. GOPALA GOWDA, JJ.]
A
B
Agricultural Produce. Market Fee -
Respondentcompany, situated in market area of appe/lant-APMC,
undertaking manufacture of castor oil out of castor seed.s -
C
Appel/ant-APMC sought to levy market fee on castor seeds .
bought by respondent-company -
Respondent-company·~
contested the levy contending that castor seeds were brought,
into the market area of APMC as provided u/r. 48(2) of the
1965 Rules and no fees were leviable on agricultural produce D
brought from outside the market area into the market area fOr .
use therein by industrial concern situated in the market area
- Levy of market fee on castor seeds -
Validity - Held:
Respondent-company placed order for purchase of castor
seeds from its suppliers from outside the market area qut no
E
payment was immediately made for the same - When the
castor seeds reached the market area, it was weighed by
respondent-company and payment thereof was agreed to be
made to the tune of quantity received and till then the castor
seeds continued to be in the ownership of the seller -
F
Respondent-company became owner of the property only
once the exact weight of the castor seeds was ascertained and
purchase voucher was obtrined - Sale of castor seeds thus
took place within the market area of appellant-APMC and
accordingly appellant was authorized to charge fees from G
respondent-Company for such purchase - r.48(1) was
applicable to the fact situation and not r.48(2) - AppellantAPMC rightly made assessment of market fee and levied the
same as per s.28 of the Act - Respondent-Company liable
939
H
940
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
to pay market fee which is cess on purchase of castor seeds,
justifying the claim of APMC - Gujarat Agricultural Produce
Markets Act, 1963 - ss.2(1)(i) and 28 - Gujarat Agricultural
Produce Market Rules, 1965 - r.48 - Sale of Goods Act, 1930
- ss. 19, 20 and 21.
B
Agricultural Produce Market Fee -
RespondentCompany, situated in market area of appellant-APMC,
undertaking manufacture of castor oil out of castor seeds -
Extraction of castor oil leading to production of de-oiled cake,
a by-product containing less than 1% castor oil - De-oiled
C cake then sold in the market - Levy of market fee on de-oiled
cake ..;. Validity - Held: The by-product of de-oiled cake is
different from the oil cake as it contains oil less than 1 % and
it is not included in the Schedule to the Act for. the purpose
of charging market fee - The item which is mentioned is oil
D cake which is different and distinct from the de-oiled cake -
No market fee could thus be levied by appel/ant-APMC on
de-oiled cake - Gujarat Agricultural Produce Markets Act,
1963 - ss.2(1)(i) and 28.
E
The respondent-Company is an industrial concern
undertaking manufacture of castor oil out of the castor
seeds which are declared as agricultural produce in the
Schedule to the Gujarat Agricultural Produce Markets Act,
1963. The appellant-Agricultural Produce Market
F Committee, Baroda ("APMC") sought to levy market fee
on the castor seeds bought by respondent-Company.
The respondent-Company contested the levy contending
that castor seeds were brought into the market area of
APMC as provided under sub-rule (2) of Rule 48 of the
Gujarat Agricultural Produce Market Rules, 1965 and no
G fees are leviable on agricultural produce brought' from
outside the market area into the market area for use
therein by the industrial concern situated in the market
area.
H
The single Judge of the High Court upheld the plea
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 941
BIOTOR INDUSTRIES LTD.
of APMC for levy of market fee on the castor seeds A
purchased by the respondent-Company, but in respect
to levy of market fee on de-oiled cake, a by-product in
course of manufacturing castor oil, accepted the
contention of respondent-Company that de-oiled cake
could not be treated as oil cake, and therefore, it was not B
liable for levy of market fee since it was not mentioned in
the Schedule to the Act.
Aggrieved, respondent-Company as well as the
APMC preferred cross appeals. The Division Bench of the C
High Court allowed the appeal preferred by respondentCompany and dismissed the appeal preferred by the
APMC.
In the instant appeals, the following questions arose
for the consideration of this Court:- 1) Whether APMC, D
Baroda was entitled to claim the market fee on the castor
seeds purchased by respondent-Company on the plea
that the same were purchased within the market area of
APMC, Baroda which castor seeds were used by the said
industrial concern for manufacture of castor oil within the E
market area of APMC, Baroda; 2) Whether purchase of
castor seeds for use of respondent industrial concern for
manufacturing castor oil fall within Rule 48(2) of the
Gujarat Agricultural Produce Market Rules, 1965 to get
exemption from payment of market fee; 3)Whether the F
Division Bench was justified in setting aside the finding
of fact recorded by the single Judge, holding that the
castor seeds purchased by the respondent-Company
were within the market area of APMC and 4) Whether the
Division Bench was justified in recording the finding that G
the respondent concern was not liable to pay any market
fee on the de-oiled cakes sold by it which are stated to
be the by-product in the course of manufacturing castor
oil and not one of the items enumerated in the Schedule
to the Act and notification issued by the Directorate.
"
H
942
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
Disposing of the appeals, the Court
HELD:1.1. The levy of market fee on the castor seeds
purchased by the respondent-Company is upheld, and
it is liable to pay the said market fee. [Para 19] [968-C]
B
1.2. On the basis of the material facts, the single
Judge of the High Court arrived at the conclusion that
respondent-Company placed order for purchase of
castor seeds from its suppliers from outside the market
area but no payment was immediately made for the same.
C On the demand of the respondent-Company, the quantity
of castor seeds so requisitioned by it was transported by
the supplier which was received by it within the market
area. The consignment so received was weighed by the
Company within the market area. Thereafter, on finding
D out the exact weight of castor seeds received by it, the
payment at the agreed rate was made by the Company
to the supplier. Therefore, the single Judge came to the
conclusion that the sale was not effected till the
consignment was received by respondent-Company and
E the same was weighed within the market area. The single
Judge of the High Court rightly rejected the assertion
made by respondent-Company holding that in case of
shortfall or loss or damage during transport, the seller
could claim damage from the transporter and that would
F further demonstrate that the respondent-Company did
not become owner of the goods till it took the physical
delivery thereof, weighing the same and satisfying itself
about the quantity received by it. It was held that it was
not a mere formality to find out the quantity by it but it
G has the essential element of making payment depending
on the extent of quantity received and in case of any
drastic shortfall in the quantity, the issue would be
between the supplier and the transporter. Further finding
was recorded that if against the quantity of 100 quintals
of castor seeds supplied by the trader, the respondentH
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 943
BIOTOR INDUSTRIES LTD.
Company received only half of it on account -of loss,
A
damage or pilferage, the company would make payment
only-for such quantity leaving it for the trader to recover
the damages from the transporter. There would also be
a case where on account of some untoward and
unforeseen circumstances, such as natural calamity or
B
theft, the respondent-Company did not receive the full
quantity of castor seeds, the payment shall be made only
for the quantity received by it and not for the entire
quantity to be supplied by the trader. The single Judge
further rightly recorded the finding of fact that when the c
castor seeds reach the market area, it was weighed by
the Company and. payment thereof was agreed to be
made to the tune of quantity received and till then the
castor seeds continue to be in the ownership of the
seller. The Company becomes the owner of the property
D
only once the exact weight of the castor seeds was
ascertained and purchase voucher was obtained. The
single Judge rightly held that APMC is justified in
contending that the sale of castor seeds did take place
within the market area and the appellant was authorized
E
to charge fees from the respondent-Company for such
purchase. Therefore, the single Judge held that the
castor seed was bought by the respondent-Company
within the market area of APMC, Baroda and therefore
Rule 48(1) of the Rules is applicable to the fact situation
and not Rule 48(2). The said conclusion was arrived at
after referring to the provisions of Sections 19, 20 and 21
of the Sale of Goods Act, 1930. [Para 13] [957-E-H; 958A-H; 959-A, B]
F
1.3. The single Judge on the basis of documents
G
which are all admitted documents came to the right
conclusion and held that the castor seeds were bought by
the respondent-Company within the market area.
Therefore, APMC rightly made assessment of market fee
and levied the same as per Section 28 of the Act, which
H
944
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A assessment order has been erroneously set aside by the
Revisional Authority without proper appreciation of facts
and applying the relevant provisions namely, Section 28
and Rule 48(1) and came to the erroneous conclusion and
held that the goods bought were brought from outside the
B market area for the purpose of manufacturing oil by the
Company in its factory. Therefore, the contention that
these are not exigible, was rightly set aside by the single
Judge and it was held that the respondent-Company is
liable to pay market fee which is cess on the purchase of
c castor seeds, justifying the claim of the APMC. That order
was erroneously set aside by the Division Bench. The
single Judge rightly held that the sale of goods of castor
seeds is within the market area of APMC. The Division
Bench on the other hand, placed strong reliance upon
0 Rule 48(2) by placing reliance upon Form No. V of the
Rules, which is the Form of declaration and certificate
produced by the Company which are totally irrelevant for
the purpose of finding out whether the goods i.e. the castor
seeds were bought by the Company within the market
E area of APMC or not. [Para 14] [960-G, H; 961-A-F]
1.4. The factual matrix is supported by the documents
of the respondent-Company which have been
extensively referred to by the single Judge in his
judgment to come to the conclusion holding that the
F castor oil seeds were bought by the respondentCompany within the market area of APMC and. therefore,
he has rightly held that Rule 48(2) is not applicable to the
fact situation as claimed by the respondent-Company
and the reliance placed upon Form No. V which is the
G Form of declaration and certificate obtained from the
APMC seeking exemption from payment of market fee on
the castor seeds brought by it from outside APMC area,
is contrary to the material evidence on record and
therefore, the Division Bench gravely erred in reversing
H the finding of fact recorded by the single Judge. [Para 15]
[961-F-H; 962-A-B]
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 945
,
BIOTOR INDUSTRIES LTD.
Agricultural Market Committee v. Shalimar Chemical A
Works Limited AIR 1997 SC 2502: 1997 (1) Suppl. SCR 164
- referred to.
Hoe Kim Seing v. Maung Ba Chit AIR 1935 PC 182 -
referred to.
2.1. Oil cake is included in the Schedule to the Act as
B
an agricultural produce which is exigible agricultural
produce in terms of section 2(1 )(i)of the Act. Sub-rule (iv)
therein contains oil seeds. Item No. 8 therein is castor
seed .and Item No. 11 therein is oil cakes. The oil cake is C
the exigible agricultural produce for the purpose of
levying market fee upon such produce. The single Judge
arrived at the finding with regard to the process
undertaken by the respondent-Company for extraction of
castor oil from the castor seeds purchased by it. The byD
product which is produced by the respondent-Company
is de-oiled cake which contains less than 1 % of castor
oil and castor seeds have to undergo a complex process
so as to extract maximum possible oil ·out of it. At the first
stage, after cleaning and separating raw seeds from husk E
etc. the castor seeds are crushed through mechanical
devices to extract oil from the same. After the mechanical
process which is involved in extracting substantial
amount of oil in the oil cake, the residual product is the
de-oiled cake which is sold in the market. The same does
F
not fall under the head of oil cake. [Para 16] [963-C-F]
2.2. The term oil cake is not defined in the APMC Act
and further on the basis of the available material on record
which elaborates the difference in the contents of oil in
oil cake and de-oiled cake, cognizance of different terms G
namely, oil cake and de-oiled cake in the Gujarat Sales
Tax Act, difference in the process of oil extraction which
would lead to by-product of the oil cake and de-oiled
cake, it is clear that de-oiled cake is a completely different
product than oil cake. The by-product of de-oiled cake is H
946
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
different from the oil cake as it contains oil less than 1%
and it is not included in the Schedule for the purpose of
charging market fee, therefore, the single Judge accepted
the case against levying the market fee on the de-oiled
cake. [Para 17] [966-B-C]
B
2.3.
The
by-product obtained out of the
manufacturing process is not oil cake but is de-oiled cake
after undergoing the process which would lead to
obtaining de-oiled cake. The single Judge came to the
conclusion that de-oiled cake containing less than 1% oil
C is not mentioned in the Schedule as per Section 2(1 )(i) of
the APMC Act as 'agricultural produce' by the authority
and further held that the above produce is totally different
from the oil cake. Therefore, no market fee can be levied
by the APMC to be paid by the respondent-Company.
D The said finding of fact of the single Judge has been
rightly concurred with by the Division Bench of the High
Court. The High Court was right in holding that the byproduct of the manufacture in producing the oil from the
castor seeds is only de-oiled cake and is not one of the
E Schedule items in the Notification for the purpose of
levying market fee. The view taken by it is based on a
proper appreciation of the factual matrix and the statutory
provisions as de-oiled cake is not mentioned in the
Schedule to the Act and the Notification. The item which
F
is mentioned is oil cake which is different and distinct
from the de-oiled cake. Accordingly, the appeal of the
APMC on this aspect of the matter must fail in regard to
levy of the market fee on de-oiled cake by directing that
the amount in relation to the market fee levied on de-oiled
G cake is to be reduced. [Para 18] [967-A-H; 968-A]
H
State of A.P. and Ors. v. Modern Proteins Ltd. (1994)
Supp (2) SCC 496 - referred to.
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 947
BIOTOR INDUSTRIES LTD.
Case Law Reference :
AIR 1935 PC 182
referred to
Para 13
1997 (1) Suppl. SCR 164
referred to . Para 13
A
(1994) Supp (2) SCC 496
referred to
Para 17
B
CIVIL APPELLATE JURISDICTION : Civil Appeal No
3130-3131 of 2008.
From the Judgment and Order dated 24.04.2007 of the
High Court of Gujarat at Ahmedabad in LPA Nos. 139 and 195 C
of 2006.
B. K. Satija for the Appellant.
Sanjay Bhatt, Hemantika Wahi, for the Respondnts.
The Judgment of the Court was delivered by
D
V. GOPALA GOWDA, J. 1. These appeals have been
directed against the common judgment and order dated
24:04.2007 passed by the High Court of Gujarat at Ahmedabad E
in Letters Patent Appeal Nos. 139 of 2006 and 195 of 2006 in
Special Civil Application No. 13606 of 2005 with Civil
Application No. 514 of 2006 and Civil Application No. 1380 of
2006 filed by the appellant-Agricultural Produce Market
Committee, Baroda (for short "APMC") as it is aggrieved by
the dismissal of its Letters Patent Appeal No.195 of 2006. The F
High Court allowed Letters Patent Appeal No. 139 of 2006
preferred by the respondent-Company. Both the Letters Patent
Appeals were filed against the order dated 22.12.2005 of
learned single Judge passed in Special Civil Application
No.13606 of 2005 whereby the learned single Judge G
substantially set aside the order dated 19.4.2005 of the
Revisional Authority and partly allowed the application filed by
the APMC by framing questions of law.
2. The brief facts of the case are stated below to H
948
SUPREME COURT REPuRTS
[2013] 16 S.C.R.
A
appreciate the rival claims of the parties and to find out as to
whether the appellant-APMC is entitled for the relief sought for
in these appeals:
The appellant-APMC was constituted pursuant to
8
Notification issued on 14.1.1958 under the provisions of the
Bombay Agricultural Produce Markets Act, 1939 and the area
of Baroda city and Baroda Taluk of Baroda District was
declared as the market area for the purpose of Gujarat
Agricultural Produce Markets Act, 1963 (hereinafter referred to
C
as "the Act"). The respondent-Company, manufacturing castor
oil from out of the castor seeds purchased by it comes under
the jurisdiction of the market area of the APMC and therefore,
it is liable for paying the market fees/cess for the trading
activities carried out by it in the market area. APMC levied
market fee on the castor seeds bought by the Company on the
D
basis that castor seeds were brought within the market area
of APMC. The respondent-Company contested the said levy
by filing Revision Application No. 2 of 2005 under Section 48
of the Act before the State Government contending that castor
seeds were brought into the market area of the APMC, Baroda
E
as provided under sub-rule (2) of Rule 48 of the Gujarat
Agricultural Produce Market Rules, 1965 (for short "the Rules")
and no fees are leviable on agricultural produce brought from
outside the market area into the market area for use therein
by the industrial concern situated in the market area. The State
F
Government vide its order dated 19.04.2005 decided the
Revision Application No. 2 of 2005 in favour of the respondentCompany by setting aside the order dated 27.12.2004 issued
by the APMC levying the market fee.
G
3. The APMC filed a Special Application No. 13606 of
2005 under /'
;les 226, 14 & 19 of the Constitution of India
before the High Court against the said order of the State
Government. The learned single Judge of the High Court after
hearing the parties at length partly allowed the said application
holding that the sale of the castor seeds in question took place
H
'AGRICULTURAL PRODUCE MARKET COMMITTEE v. 949
BIOTOR INDUSTRIES LTD. [V. GOPALA GOWDA, J.]
within the market area of APMC, Baroda, therefore, APMC was A
right in levying the market fee on the castor seeds purchased
by the respondent within the market area of APMC. The learned
single Judge in respect to exemption clause in sub-rule 2 of
Rule 48 held that the said exemption was available to the
agricultural produce brought by the industrian:oncern itself B
from outside ·the market area into the market area of APMC
and the exemption was not available where the castor seeds
were bought within the market area by the seller and sold to
the industrial concern within the market area. As such the
learned single Judge upheld the plea of APMC for levy of c
market fee on the castor seeds purchased by the respondentCompany. In respect to the levy of market fee on de-oiled cake
by APMC the learned single Judge accepted the contention
urged on behalf of the respondent-Company and held that deoiled cake could not be treated as oil cake, and therefore, it D
was not eligible for levy of market fee since it was not mentioned
in the Schedule. Both the respondent-Company as well as the
APMC being aggrieved by the judgment and order dated
22.12.2005 of the learned single Judge preferred Letters Patent
Appeal No.139 of 2006 and Letters Patent Appeal No. 195 of E
2006 respectively. The Division Bench of the High Court
allowed the appeal preferred by the respondent-Company and
dismissed the appeal preferred by the APMC and stated that
as soon as the agricultural produce, namely, castor seeds,
bought by the representatives of the Company, is brought from
outside the market area into the market area, after payment of F
octroi on such produce in their capacity as owner of the goods,
the same would be treated as completion of sale outside the
jurisdiction of the market area. The Division Bench of the High
Court, therefore, held that the collection of market fees from the
respondent-Company by APMC is contrary to the provisions of G
the Rules, namely, Rule 48, sub-rule (2) of the Rules, which
grants exemption to agricultural produce brought from outside
into market area by the industrial unit for its own use. On the
second issue, the High Court held that the by-product, namely,
de-oiled cake contains less than 1 % oil and is not notified in
H
950
SUPREME COURT REPORTS
(2013] 16 S.C.R.
A
the Schedule as per Section 2(i) of the Act and hence, the
above product being totally different from oil cake, there is no
liability upon the respondent-Company to pay the market fees.
Hence, the present Civil Appeals.
B
4. It is the case of the APMC that on 31.3.2004, the
Director of APMC, Baroda and Rural Finance, Gujarat State,
in exercise of the power vested in him under the Act, issued
Notification including castor seeds and castor cake in the
regulated agricultural produces of APMC, Baroda. On
C 19.4.2004 the Notification issued by the APMC, Baroda through
its Director was published in the daily newspaper intimating that
the trading of those produces is liable for paying of market fees/
cess to the APMC, Baroda. On 28.6.2004 the APMC issued
notices to the respondent-Company asking it to produce the
accounts for the period 19.4.2004 to 30.11.2004 in respect of
D the goods being used in the mill and further asked to obtain
license from Market Committee for the year 2004-2005. The
respondent-Company failed to submit the accounts and further
failed to obtain license within the stipulated period as
mentioned in an earlier letter dated 28.6.2004, and therefore,
E the APMC sent the reminder to the respondent-Company and
asked to comply with the direction. Vide letter dated 7.12.2004
the respondent-Company submitted monthly statement for the
period 19.4.2004 to 30.11.2004 in respect of the purchases
of castor seeds made by the Company. APMC on the basis
F of the details provided by the respondent-Company prepared
a statement showing the names of the suppliers, weight, price,
quantity and amount paid by the company as per the
weighment made by the Company which clearly shows that as
per bills, different parties were selling castor seeds to the
G respondent-Company for which weighment was done at the mill
site in the market area Baroda and payment made to the
parties as per the weighment done by the respondentCompany. On 27.12.2004 on the basis of statement submitted
by the respondent-Company, the APMC assessed the market
H cess for the purchases of the castor seeds in the market area
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 951
BIOTOR INDUSTRIES LTD. [V. GOPALA GOWDA, J.]
in respect of the same being used for processing and
A
converting them into castor oil and oil cake and on the basis
of assessment the respondent-Company was directed to pay
the market cess of 1,27,46,349.38 within a period of 10 days.
5. Being aggrieved by the said assessment made by
B
APMC on 27.12.2004, the respondent-Company preferred
Revision Application No. 2 of 2005 under Section 48 of the Act
before the State of Gujarat on 05.01.2005 challenging the
decision of the APMC directing it to pay the market cess as
per its letter dated 27.12.2004. To the said .Revision
Application, APMC filed its reply on 23.01.2005. The C
respondent-Company filed rejoinder on 23.02.2005 to the reply
filed by the APMC. The Deputy Secretary, (Appeal) allowed the
Revision Application No. 2 of 2005 by its cryptic order dated
19.04.2005 and set aside the order dated 27.12.2004 passed
by APMC. It is the case of the APMC that the Revisional
D
Authority erroneously arrived at the conclusion that Rule 48(1)
is not applicable and wrongly held that Rule 48(2) was
applicable to the fact situation and further wrongly held that no
market fee is to be paid by the respondent-Company on the
de-oiled cake.
E
6. Being aggrieved by the order of the Revisional Authority
dated 19.4.2005 in Revision Application No. 2 of 2005 of the
Revisional Authority, the APMC preferred Civil Application No.
13606 of 2005 before the learned single Judge of the High
F
Court of Gujarat. The learned single Judge after hearing the
parties vide its order dated 22.12.2005 set aside the order of
revision in so far as the levy of market fee on the castor seeds
is concerned holding that the sale did take place within the
market area and therefore APMC was authorized to charge fee
G
from the respondent-Company for such purchase and partly
allowed the application. However, the learned single Judge,
with respect to the levy of fee on the de-oiled cake which was
sold by the respondent-Company held that it is the by-product
in the course of manufacturing of castor oil and therefore, it is
H
not an agricultural produce and not Jiable to levy of market fee.
952
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
7. Being aggrieved by the said judgment dated
22.12.2005, the respondent-Company ·filed Letters Patent
Appeal No. 139 of 2006 on 18.1.2006 before the Division
Bench of the Gujarat High Court challenging the findings of
learned single Judge that market fee is exigible on the
B
purchase of castor oil seeds by the industrial concern. The
APMC also being aggrieved by the said order dated
22.12.2005 of learned single Judge filed Letters Patent Appeal
No. 195 of 2006 for rejecting of claim of APMC, Baroda for
market fees/cess on de-oiled cake. The Division Bench of the
c
High Court on 24.4.2007 after hearing the parties allowed the
appeal of the respondent-Company and dismissed the appeal
of the APMC, Baroda after setting aside the order of the
learned single Judge holding that Rule 48(2) is applicable and
that the castor seeds were brought from outside the market
D
area. The Division Bench upheld the rejection of the Special
Civil Application No. 13606 of 2005 filed by the APMC, Baroda
not accepting the case pleaded by it that market fee is levied
on de-oiled cake which is a by-product sold by it and is not
exigible goods as it is not an agricultural produce. Aggrieved
E
by the common judgment, present appeals are filed.
8. On the basis of the legal grounds urged in these
appeals questioning the correctness of the findings and
reasons recorded by the Division Bench of the High Court on
both the points which have been formulated by it, the following
F
points would arise for the consideration of this Court in these
appeals:-
G
H
(1)
Whether the APMC, Baroda is liable to claim the
market fee on the castor seeds purchased by the
respondent-Company on the plea that the same
were purchased within the market area of APMC,
Baroda which castor seeds are used by the said
industrial concern for manufacture of castor oil
within the market area of APMC, Baroda?
(2)
Whether purchase of the castor seeds for use of the
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 953
'·
BIOTOR INDUSTRIES LTD. [V. GOPALA GOWDA, J.]
(3)
(4)
(5)
respondent industrial concern for manufacturing A
castor oil falls within Rule 48(2) of the Rules to get
exemption from payment of market fee?
Whether the Division Bench was justified in setting
aside the finding of fact recorded by the learned
B
single Judge, holding that the castor seeds
purchased by the respondent-Company are within
the market area of APMC?
Whether the Division Bench is justified in recording
the finding on point No.2 in connection with LPA No. C
195 of 2006 that the respondent concern is not
liable to pay any market fee on the de-oiled cakes
sold by it which are stated to be the by-product in
the course of manufacturing castor oil which is not
one of the items enumerated in the Schedule to the D
Act and notification issued by the Directorate?
What order?
Answer to Point Nos. 1 to 3
E
9. The point Nos. 1 to 3 are answered together as they are
inter-related with each other by assigning the following reasons:
It would be necessary for this Court to refer to the definition
of 'Agricultural Produce' under Sections 2(i) and provisions
F
relating to levy of market fee under Section 28 of the Act and
under Rule 48(1) of the Rules for the purpose of appreciating
the factual matrix with reference to the rival legal contentions
urged on behalf of the parties:-
"2(i)-"agricultural produce" means all produce, whether G
processed or not, of agriculture, horticulture and animal
husbandry, specified in the Schedule.
Section 28: The market committee shall, subject to the
provisions of the rules and the maxima and minima from
H
954
SUPREME COURT REPORTS
(2013) 16 S.C.R.
A
time to time prescribed levy and collect fees on the
agricultural produce bought or sold in the market area:
Provided that the fees so levied may be collected by the
Market Committee through such agents as it may appoint.
B
Rule 48: Market fees:- (1) The market committee shall
le.vy and collect fees on agricultural produce bought or sold
in the market area at such rate as may be specified in the
by-laws subject to the following minima and maxima vis.,
c
(1)
rates when levied ad valorem shall not be less than
30 paise and shall not exceed 2 (two) per hundred
rupees.
D
(2)
Rates when levied in respect of cattle, sheep or
goat shall not be less than 25 paise per animal and
shall not exceed 4 per anmimal.
Explanation- For the purposes of this Rule a sale of
agricultural produce shall be deemed to have taken place
in a market are!:l if it has been weighed or measured or
E
surveyed or delivered in case of cattle in the market area
F
G
H
for the purpose of sale, notwithstanding the fact that the
. property in the agricultural produce has by reason of such
sale passed to a person in a place outside the market
area.
(2) No fee shall be levied on agricultural produce brought
from outside the market area into the market area for use
therein by the industrial concerns situated in the market
area of for export and, in respect of which declaration has
been made and a certificate has been made and a
certificate has been obtained in Form V:-
Provided that if such agricultural produce brought into the
market are for export is not exported or removed therefrom
before the expiry of twenty days from the date on which it
was so brought, the market committee shall levy and
AGRICULTURAL PRODUCE MARKET COMMITTEE v. 955
BIOTOR INDUSTRIES LTD. [V. GOPALA GOWDA, J.]
collect fees on such agricultural produce from the person
A
bringing the produc~ into the market area at such rates
as may be specified in the by-laws subject to the
maximum and minimum specified in sub-rule (i):
Provided that no fee shall be payable on a sale or
B
purchase to which sub-section (3) of Section 6 applies."
10. It is an undisputed fact that the respondent-Company
is an industrial concern which has been undertaking
manufacture of castor oil out of the castor seeds which are
declared as agricultural produce in the Schedule to the Act vide
C
notification issued by the Directorate of APMC, Baroda.
11. It is the case .of the respondent-Company that the
demand and assessment made and levying the market fee on
the castor seeds for the period from 19. 04.2004 to 30.11.2004
D
is erroneous as castor seeds were purchased from outside the
market area of APMC, Baroda and the same were brought for
the use of the industrial concern which is situated within the
market area of APMC, Baroda for the purpose of using the
same for manufacturing of the oil. In this regard, the APMC has
called upon the respondent-Company to produce the accounts
for the period 19.04.2004 to 30.11.2004 in respect of the
goods being used in the mill and was further asked to obtain
license from the Market Committee for the year 2004-2005.
E
F
On 07.12.2004, the respondent-Company submitted monthly
statement for the aforesaid period in respect of the purchases
made of castor seeds by the company. The APMC on the
basis of details provided by the respondent-Company
prepared the statement showing the names of the suppliers,
weighment, quantity of the agricultural produce goods
purchased and amount paid by the company to its trader as
G
per the weighment made by the company. According to the
committee, the purchases made by the company clearly show,
as per the bills issued to different parties for castor seeds sold
to the respondent-Company, that the weighment of castor
seeds was made at mill site in Baroda and payment was· H
956
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A
made to the parties as per the weighment done by the
respondent-Company. Therefore, on the basis of the
assessment, the respondent-Company was directed to pay the
market cess of 1,27,46,349.38 vide its order dated 27.12.2004.
The respondent-Company aggrieved by the said assessment
B
order preferred Revision Application No. 2 of 2005 under
Section 48 of the Act before the State of Gujarat questioning
the correctness of the assessment order r.iade by the APMC.
The Deputy Secretary (Appeal) after hearing the parties passed
a cryptic order dated 19.04.2005 by allowing the Revision
c Application and setting aside the order of assessment of the
market Committee dated 27.12.2004. While allowing the
Revision Application, the Revisional Authority arrived at the
conclusion that Rule 48(1) of the Rules is not applicable and
held that Rule 48(2) will be applicable to the fact situation. The
0
correctness of the same was challenged before the learned
single Judge of the High Court of Gujarat by filing a petition
under Article 226 of the Constitution i.e. Special Civil
Application No. 13606 of 2005.
12. The learned single Judge after giving opportunity to the
'E
respondent-Company and hearing both the learned counsel
appearing on behalf of the parties has held that castor seeds
have been bought within the market area of APMC, therefore,
sub-rule (1) of Rule 48 is applicable to the fact situation and
not sub-rule (2) of Rule 48 upon which reliance was placed by
F
the respondent-Company's counsel. In arriving at the said
conclusion the learned single Judge has referred to the factual
aspects with reference to certain documents such as invoices,
bill receipts etc. exchanged between the respondeht-company
and its suppliers of castor seeds. The bill issued by one Manish
G Trading Company of Naroda, Ahmedabad dated 03.05.2004
for supply of 150 bags of castor seeds weighing 75 kilos each
was examined. The rate charged was 305/- per 100 kg. The
total quantity shown was 112.50 quintals and the total amount
claimed was 1,71,562/-. In the said bill dated 03.05.2004, it was
H
indicated that payment was yet to be made. At page 28 to the
AGRICULTURAL PRODUCE MARKET COMMITTEE v: 957
BIOTOR INDUSTRIES LTD. [V. GOPALA GOWDA, J.]
compilation, there is a purchase voucher/remittance note
A
issued by the respondent-Company. It is not in dispute that the
said purchase voucherlremittance note pertains to the same
consignment transported by the Manish Trading Company
under the bill dated 03.05.2004. The purchase voucher
indicates that the quantity of the castor seeds received was
B
short by 37.50 kilos. Weight of bags of 150 kilos was also
deducted from the quantity of castor seeds. The agreed rate
of 305/- for 100 kilos remained constant and the respondentCompany therefore agreed to remit a total amount of 1,70,991/
- to the Manish Trading Company referred to supra. To the query c
from the court, the learned counsel appearing on behalf of the
company, on instructions, made submissions that
•
consignments were received from the sellers within the market
area for the purpose of finding out shortfall or pilferage and the
payment is made to the extent of actual quantity received. The
D
learned single Judge has also referred to the total quantity of
castor seeds weighing 112.50 quintals which was transported
to the respondent-Company by Manish Trading Company ~nd
it had made payment after weighing consignment and after
finding out the correct weight of the castor'seeds received by
E
it.
13. On the basis of the said material facts the learn~d
single Judge arrived at the conclusion that the respondentCompany placed order for purchase of castor seeds from its
suppliers from outside t~e market area but no payment was
F
immediately made for the same. On the demand of the
respondent-Company, the quantity of castor seeds so
requisitioned by it was transported by the supplier which was,.
received by it within the market area. It is an undisputed fcfct)
that the consignmenf so received was weighed by the
G
Company within the market area. Thereafter, on finding out the
exact weight of castor seeds received by it, the payment at the
agreed rate was made by the Company to the supplier.
Therefore, the learned single Judge came to the conclusion on
the basis of appreciation of the aforesaid facts and held that
H
958
SUPREME COURT REPORTS
[2013] 16 S.C.R.
A the sale was not effected till the consignment was received by
the respondent-Company and the same was weighed within the
market area. The learned single Judge has rightly rejected the
assertion made by the learned counsel on behalf of the
Company holding that in case of shortfall or loss or damage
s during transport, the seller could claim damage from the
transporter and that would further demonstrate that the
respondent-Company did not become owner of the goods till
it took the physical delivery thereof, weighing the same and
satisfying itself about the quantity received by it. It was held that
c it was not a mere formality to find out the quantity by it but it
has the essential element of making payment depending on the
extent of quantity received and in case of any drastic shortfall
in the quantity, the issue would be between the supplier and
the transporter. Further finding was recorded that if against the
0 quantity of 100 quintals of castor seeds supplied by the trader,
the respondent-Company received only half of it on account of
loss, damage or pilferage, the company would make payment
only for such quantity leaving it for the trader to recover the
damages from the transporter. There would also be a case
where on account of some untoward and unforeseen
E circumstances, such as natural calamity or theft, the
respondent-Company did not receive the full quantity of castor
seeds, the payment shall be made only for the quantity received
by it and not for the entire quantity to be supplied by the trader.
The learned single Judge has further rightly recorded the finding
F of fact that when the castor seeds reach the market area, it was
weighed by the Company and payment thereof was agreed to
be made to the tune of quantity received and till then the castor
seeds continue to be in the ownership of the seller. The
Company becomes the owner of the property only once the
G exact weight of the castor seeds was ascertained and
purchase voucher was obtained. The learned single Judge
rightly held that APMC is justified in contending that the sale of
castor seeds did take place within the market area and the
appellant was authorized to charge fees from the respondentH Company for such purchase. Therefore, the learned single
AGRICULTURAL PRODUCE MARKET COMMITTEE v.