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

- **Citation:** [2002] 1 S.C.R. 441
- **Court:** Supreme Court of India
- **Decided:** 2002-01-24
- **Case number:** Civil Appeal No. 6453 of 2001
- **Bench:** S.P. Bharucha, G.B. Pattanaik, Y.K. Sabharwal, Ruma Pal, Brijesh Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i-t-c-limited-v-agricultural-produce-market-committee-and-ors-18434
- **Pages:** 145

## Headnote

A
B
Constitution of India, 1950-Articles 246 and 254-Seventh Schedule C
-List /, Entries 7, 48 and 52-List /1, Entries 24, 28 and 66-List Ill, Entry
33:
Tobacco Industry-Power to legislate in respect of-Tobacco Board
Act, 1975-JTC Ltd. v. State of Karnataka, [1985) Supp. 1 SCR 145 holding
that once in the public interest Tobacco industry, was declared as industry D
under Entry 52 of-List I of Vl/ Schedule of Constitution of India, the State
Legislatures cea;ed to be competent to legislate on the subject-Held : not
correctly decided
Expression "industry "-Scope of-Held, it has to be given a restricted
meaning-In the Constitutional context it has to be understood as meaning E
"manufacture or production"-Activity regarding sale of raw tobacco as
provided in Tobacco Board Act cannot be regarded as "industry"-To:~acco
Board Act, 1975.
Agricultural Produce Market Fee-Legislative competence of StatesHeld, State Legislatures are competent to enact legislation providing for the F
levy and collection of market fee on the sale of tobacco in a market area -
Tobacco Board Act, 1975.
Agricultural Produce Marketing Acts-Enactment by State Legislatures
viz-a-viz. Tobacco Board Act, 1975, a Parliamentary legislation-To the extent G
the State Acts relate to sale of tobacco in market areas-Held, cannot co-exist
and the State Acts prevail over the Parliamentary Act.
Different State legislatures have enacted Agricultural Produce and
Markets Acts for regulating the sale and purchase of agricultural produce
within the market area and for levy and collection of market fee. Having H
441
442
SUPREME COURT REPORTS
[2002) I S.C.R.
A declared that it is expedient in the public interest that Union of India
should take under its control the Tobacco industry, Parliament enacted
Tobacco Board Act, 1975 which is an Act providing for the development
"\ ,.
of tobacco industry under the control of the Union Government. Under
the Agricultural Produce Markets Act, the State Government having
notified tobacco as an agricultural produce, the purchase and sale of
B tobacco is to be regulated under the provisions of the State Act and the
Market Committee has the right to levy and collect market fee on such
sale and purchase of the notified agricultural produce viz. tobacco. In ITC
Ltd. v. State of Karna/aka, [1985) Supp. 1 SCR 145, this Court held by
majority that the tobacco industry having been taken over by the Central
C Government under Entry 52 of List I and having passed the Tobacco
Board Act, the State Legislature seized to have any jurisdiction to legislate
in that field and therefore, the provisions contained in the Karnataka Act,
entitling the Market Committee to levy market fee in respect of sale and
purchase of tobacco within the market area directly, collides with the
Tobacco Board Act, 1975 and as such the said Act so far as it relates to
D tobacco was struck down.
In similar matter arising from the Bihar State, the High Court
remanded the matter for making a fresh assessment order after notice to
ITC.
E
In respect of matters arising from the State of U.P., the Division
Bench of the Allahabad High Court followed the judgment of this Court
in ITC case and held that Mandi Samiti cannot charge market fee on sale
and purchase of tobacco and consequently Krishi Utpadan Mandi Samiti
has preferred appeals to this Court. In an another appeal from U.P., the
F Full Bench of the Allahabad High Court considered the .:onstitutional
,.
validity of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 and held that
the Adhiniyam permitting levy and collection of fee under section 17(iii)
in so far as it applies to tobacco is not repugnant to the provisions of the
Tobacco Board Act. The Tobacco Merchants Association has come in
appeal challenging the validity of the said Full Bench decision of the
G Allahabad High Court.
The Tamil Nadu Agricultural Marketing Board has challenged the
judgment of the Madras High Court which followed the judgment of this
Court in ITC v. State of K

## Text

_Characters 0–39,997 of 399,745. This is a partial read: ask again with offset=39997 for what follows._

...
I.T.C. LIMITED
v.
AGRICULTURAL PRODUCE MARKET
COMMITTEE AND ORS.
JANUARY 24, 2002
[S.P. BHARUCHA, en, G.B. PATTANAIK, Y.K. SABHARWAL,
RUMA PAL AND BRIJESH KUMAR, JJ.]
A
B
Constitution of India, 1950-Articles 246 and 254-Seventh Schedule C
-List /, Entries 7, 48 and 52-List /1, Entries 24, 28 and 66-List Ill, Entry
33:
Tobacco Industry-Power to legislate in respect of-Tobacco Board
Act, 1975-JTC Ltd. v. State of Karnataka, [1985) Supp. 1 SCR 145 holding
that once in the public interest Tobacco industry, was declared as industry D
under Entry 52 of-List I of Vl/ Schedule of Constitution of India, the State
Legislatures cea;ed to be competent to legislate on the subject-Held : not
correctly decided
Expression "industry "-Scope of-Held, it has to be given a restricted
meaning-In the Constitutional context it has to be understood as meaning E
"manufacture or production"-Activity regarding sale of raw tobacco as
provided in Tobacco Board Act cannot be regarded as "industry"-To:~acco
Board Act, 1975.
Agricultural Produce Market Fee-Legislative competence of StatesHeld, State Legislatures are competent to enact legislation providing for the F
levy and collection of market fee on the sale of tobacco in a market area -
Tobacco Board Act, 1975.
Agricultural Produce Marketing Acts-Enactment by State Legislatures
viz-a-viz. Tobacco Board Act, 1975, a Parliamentary legislation-To the extent G
the State Acts relate to sale of tobacco in market areas-Held, cannot co-exist
and the State Acts prevail over the Parliamentary Act.
Different State legislatures have enacted Agricultural Produce and
Markets Acts for regulating the sale and purchase of agricultural produce
within the market area and for levy and collection of market fee. Having H
441
442
SUPREME COURT REPORTS
[2002) I S.C.R.
A declared that it is expedient in the public interest that Union of India
should take under its control the Tobacco industry, Parliament enacted
Tobacco Board Act, 1975 which is an Act providing for the development
"\ ,.
of tobacco industry under the control of the Union Government. Under
the Agricultural Produce Markets Act, the State Government having
notified tobacco as an agricultural produce, the purchase and sale of
B tobacco is to be regulated under the provisions of the State Act and the
Market Committee has the right to levy and collect market fee on such
sale and purchase of the notified agricultural produce viz. tobacco. In ITC
Ltd. v. State of Karna/aka, [1985) Supp. 1 SCR 145, this Court held by
majority that the tobacco industry having been taken over by the Central
C Government under Entry 52 of List I and having passed the Tobacco
Board Act, the State Legislature seized to have any jurisdiction to legislate
in that field and therefore, the provisions contained in the Karnataka Act,
entitling the Market Committee to levy market fee in respect of sale and
purchase of tobacco within the market area directly, collides with the
Tobacco Board Act, 1975 and as such the said Act so far as it relates to
D tobacco was struck down.
In similar matter arising from the Bihar State, the High Court
remanded the matter for making a fresh assessment order after notice to
ITC.
E
In respect of matters arising from the State of U.P., the Division
Bench of the Allahabad High Court followed the judgment of this Court
in ITC case and held that Mandi Samiti cannot charge market fee on sale
and purchase of tobacco and consequently Krishi Utpadan Mandi Samiti
has preferred appeals to this Court. In an another appeal from U.P., the
F Full Bench of the Allahabad High Court considered the .:onstitutional
,.
validity of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 and held that
the Adhiniyam permitting levy and collection of fee under section 17(iii)
in so far as it applies to tobacco is not repugnant to the provisions of the
Tobacco Board Act. The Tobacco Merchants Association has come in
appeal challenging the validity of the said Full Bench decision of the
G Allahabad High Court.
The Tamil Nadu Agricultural Marketing Board has challenged the
judgment of the Madras High Court which followed the judgment of this
Court in ITC v. State of Karnataka and held that the State legislature has
no legislative competence to notify tobacco for the purpose of control and
H regulation and levy market fee under the provisions of Tamil Nadu
l.T.C. LTD. V. A.P.M.C.
443
Regulation Act, 1959.
A
,,
In respect of M.P. matters, the High Court followed the judgment
~
of this Court in ITC v. State of Karnataka and held that Market Committee
----
would not be entitled to realize any market fee in relation to the trade
with regard to tobacco since the Market Committee Act is repugnant to
the Tobacco Board Act. However, the High Court held that the M.P. B
Krishi Utpadan Mandi Samiti Adhiniyam, 1972 as amended by 1986 Act
to be valid. Hence these appeals arising from the decisions ofvarious High
Courts.
The writ petition filed under Article 32 challenged the constitutional c
validity of certain provisions of the Karnataka Agricultural Produce
Marketing (Regulation) Act, 1966 on the ground that in view of Tobacco
Board Act, 1975 and the Tobacco Association Act, 1975, the entire field
regarding the development of tobacco industry including the marketing
of tobacco was occupied and the State legislation is repugnant to the
Central Act.
D
In all these matters, the issue involved relates to the validity and
applicability ofvarious Agricultural Produce Markets Act enacted by State
Governments to the extent they deal with the sale of tobacco in market
areas with particular reference to the levy of market fee after enactment
of Tobacco Board Act, 1975, a parliamentary legislation. These issues E
were subject matter of the decision in ITC v. State of Karnataka and the
majority decided in favour of ITC. Later, a Bench of two Judges expressed
a tentative view that decision in ITC requires reconsideration. Thus these
•
matters came before the Constitution Bench .
..
On behalf of the appellant-ITC, the Union of India, the States F
concerned, various Marketing Committees, the Tobacco Board, various
contentions were advanced mainly relating to the supremacy of
Parliamentary legislation, legislative competence of Parliament and State
Governments, repugnancy between State and Central Acts, and the
correctness of the decision in ITC case.
G
In view of the various contentions put forth, the following questions
arose for determination :
I. Whether the Tobacco Board Act enacted by the Parliament under
Entry 52 of List I can be held to be constitutionally valid and within the
legislative competence of the Parliament, so far as the provisions contained H
444
SUPREME COURT REPORTS
[2002] I S.C.R.
A in the same in relation to the growing of tobacco and sale of raw materials,
and this in turn would depend upon the question whether the word
"industry" used in Entry 52 of List I should be given a restricted meaning;
2. Even if the Tobacco Board Act is held to be constitutionally valid
and the Agricultural Produce Market Act is also held to be constitutionally
B valid and within the powers of the State Legislature, so far as purchase
and sale of tobacco within the market area is concerned, whether both
the Acts can be allowed to operate, as was held by the minority judgment
in ITC case;
3. If there is a repugnancy between the two then whether the Central
C Act would prevail, as was held by the majority judgment in ITC case.
D
Disposing of the appeals and the writ petition, the Court
HELD: By the Court.
I. ITC's case [19851 Suppl. 1 SCC 476 was not correctly decided.
1471-E(
2. The State legislatures are competent to enact legislation providing ,
for the levy and collection of a market fee on the sale of tobacco in a
market area. Consequently, the Market Acts enacted by the States are
valid. (471-Fl
E
3. The State legislations and the Tobacco Board Act, 1975, to the
F
extent they relate to the sale of tobacco in market areas, cannot co-exist
and the former prevail over the latter. (471-G)
ITC v. State of Karnataka, (1985) Suppl. 1 SCC 476, overruled.
Per Majority:
Y. K. Sabharwa/, J.
I. The State legislations and parliamentary legislations cannot coexist is apparent from various provisions of the two legislations. Reference
may be made on one hand to Section 4(2) of Bihar Agricultural Produce
G Markets Act, 1960 and similar provision in other State legislations and
on the other to the provisions of Section 13 of the Tobacco Board Act in
States wherein this section has been enforced and also to Section 8(2)(cc).
Reference can also be made to Rule 32 of the Tobacco Board Rules, 1976
framed in exercise of the powers conferred by Section 32 of the Tobacco
Board Act regarding purchase of Virginia tobacco in comparison to
H Section 15 of Bihar Act requiring the agricultural produce, which tobacco
,A
l.T.C. LTD. v. A.P.M.C.
445
is, to be brought to the market yard and sold by means of an auction or A
tender to the highest bidder. The power of the Tobacco Board to purchase
from growers as provided in Rule 32 cannot co-exist with sale by auction
or tender. Even the price and manner of payment, licencing and auction
procedure under two legislations and Rules made thereunder show that
they cannot co-exist. In this regard reference can also be made to the B
Tobacco Board (Auction) Rules, 1984 and Tobacco Board (Auction)
Regulation, 1984. It is evident that the compliance with the provisions of
one would involve non-compliance of the provisions of the other.
Therefore, they cannot co-exist simultaneously. (473-B-E)
2. The majority opinion in ITC has not noticed the Constitution C
Bench's decision in the case of Ch. Tika Ramji & Ors. v. The State of Uttar
Pradesh & Ors., and other decisions on the scope of Entry 52 but relying
upon MA. Tulloch and Baijnath Kadio held that when declaration under
Entry 52 of List I in respect of public interest is made and the extent laid
down the subject of legislation to the extent laid down becomes an exclusive
subject of legislation by the Parliament and any legislation by the State D
after such declaration trenching upon the field disclosed in the declaration
must necessarily be unconstitutional because that field is abstracted from
the legislative competence of the State Legislature. Thus it was held that
the Government of Karnataka had no jurisdiction to levy any market fee
on tobacco because the State Act to that extent collides with the Central
Act of 1975. (478-D-Ff
E
Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh, (1956[ SCR 393;
State of Orissa v. MA. Tulloch & Co., (1964[ 4 SCR 461 and Baijnath Kadio
v. State of Bihar & Ors., (1969) 3 SCC 838, referred to.
3. The validity and applicability of the State legislations in respect F
of a field of legislation on State List has come under a cloud on account
of a legislation passed by the Parliament in respect of field of legislation
under Entry 52 of the Union List, namely, the Tobacco Board Act, 1975
It is on account of this legislation containing declaration as contemplated
by Entry 52 of the Union List that doubts have arisen about the validity G
and applicability of State legislation about the sale of agricultural produce
of tobacco in market areas and levy thereupon of market fee which aspects
are on field of legislation on the State List (Entries 14, 27,28 and 66). Entry
24 of the State List is subject to Entries 7 and 52 of List I. In the present
matter, the Court is not concerned with Entry 7. The question here is as
to the effect of transfer of field of legislation under Entry 24 of the State H
446
SUPREME COURT REPORTS
[2002] I S.C.R.
A List to the Union List (Entry 52), on other fields in the State List, namely,
fields of legislation under Entries 14,27,28 and 66 and what in fact can be
transferred. (479-C-E(
4. /shwar Khetan 's case involved the determination or scope of Entry
52 of List I and Entry 24 of List 11 only. The scope of these entries with
B respect to Entries 26 and 27 of List 11 and Entry 33 of List Ill did not fall
for consideration. So also the scope of the industry did not fall for
examination in lshwari Khetan 's case. There is no discussion on the
interpretation of expression 'industry' and that probably is the reason why
Tika Ramji's case has not been referred to. The reliance on Baijnath
Kadio 's case in lshwari Khetan 's case was to show the denudation of States'
c power being limited to the extent of control. While Baijnath Kadio 's case
dealt with Entry 23, List 11, lshwari Khetan 's case dealt with Entry 24
List II. The subject matter of the other entries was not in issue in this
decision. The structure in Entry 54 of List I was not equated with that of
Entry 52 List I as has been contended on behalf of ITC. This decision
D does not adopt the mines and minerals cases for the purposes of
considering the scope of Entry 52 of List I. The cases of mines and
minerals are not of much assistance while examining the scope of Entry
52 of List I. (480-G; 481-F-HI
lshwari Khetan Sugar Mills (P) Ltd. & Ors. v. State of Uttar Pradesh
E & Ors., (198014 SCC 136 and Baijnath Kadio v. State of Bihar & Ors., (19691
3 sec 838, distinguished.
Ch. Tika Ramji & Ors. etc. v. State of Uttar Pradesh & Ors., (19561
SCR 393, referred to.
5. The ambit and scope of a constitutional entry cannot be
F determined with reference to a parliamentary enactment. If it is otherwise,
it would result in the Parliament enacting and/or amending an enactment
thereby controlling the ambit and scope of the constitutional provision.
That cannot be the law. The power to legislate with which this Court is
concerned is contained in Article 246. The fields are demarcated in the
G various entries. On reading both, it has to be decided whether the
concerned legislature is competent to legislate when its validity is
questioned. (482-A-BI
State of A.P. & Ors. v. Mc. Dowell & Co. & Ors., (1996( 3 SCC 709,
·relied on.
H
6.1. The fact that the validity of the parliamentary legislation was
,
·-"
I.T.C. LTD. v. A.P.M.C.
447
not in issue in Tika Ramji 's case does not in any manner, affect the ratio A ·
of that decision. The point for determination in that case was substantially
the same as in the present case, namely, the scope of the expression
"industry" in Entry 52 of List I and Entry 24 of List II. There also the
point was to adopt a narrow or wide interpretation of the expression
'industry'. Further, the fact that it was a case of a manufacturing industry
under IDR Act also does not affect the ratio of the case. The interpretation B
placed in Tika Ramji's case cannot be confined to industry falling under
IDR Act alone. There is neither any express or implied indication in that
decision to limit the interpretation nor there is any valid reason to so limit
it. (486-C-E)
6.2. In the present matters also, the challenge is to the State
legislations on the ground that in view of Entry 52 of List I on enactment
of Tobacco Board Act, 1975, the State Legislature loses competence to
legislate in respect of sale of tobacco and, therefore, the existing State
legislations will have no applicability and thus, the legislations in respect
c
of marketing under Entry 28 of List II would have no applicability insofar D
as it concerns the agricultural produce 'tobacco'. In Tika Ramji's case
rejecting the contention that the expression 'industries' in Entry 52 of List
I is wide enough to take into its compass the power to legislate in respect
of raw material said to be an integral part of the industrial process, the
Court repelled the plea of the State Act being ultra vires, the same being E
covered by the subject of sugar industry control whereof have been
declared by the Parliament by law to be expedient in the public intere~t
under the exclusive domain of Parliament. (486-F; 488-G)
Ch. Tika Ramji & Ors. v. The State of Uttar Pradesh & Ors., (19561
SCR 393, relied on.
F
7. The intention of the Constitution makers was not to make Entries
14,27,28 and 66 subject to Entry 52 of the Union List. The expression
'industries' cannot be interpreted in the manner suggested, so as to
comprise in it all its aspects commencing from procurement of raw
material upto disposal of final product of that industry and not only the G
process of manufacture or production. (490-8)
The Calcutta Gas Company (Proprietary) ltd v. The State of West
Bengal & Ors., (19621 Suppl. 3 SCR I and Ch. Tika Ramji & Ors. etc. v.
State of Uttar Pradesh & Ors., [ 19561 SCR 393, referred to.
8.1 Parliamentary legislation has supremacy as provided under H
448
SUPREME COURT REPORTS
(2002) I S.C.R.
A Article 246(1) and (2). This is of relevance when field of legislation is on
concurrent list. While maintaining parliamentary supremacy, one cannot
' ,(
give go by to the federalism which has been held to be a basic feature of
"'\
B
the Constitution. (490-CI
S.R. Bommai v. Union of India, (1994( 3 SCC 1, relied on.
8.2. The Constitution of India deserves to be interpreted, language
permitting, in a manner that it does not whittle down the powers of State
Legislature and preserves the federalism while also upholding the central
supremacy as contemplated by some of its articles. (490-DI
C
9. In Seventh Schedule, part of Entry 27 is in Entry 26 of the State
List; Markets and fairs is Entry 28 of List II; Money lending and money
lenders (Entry 30, List II); Production, supply and distribution of goods
subject to the provisions to Entry 33 of List II (Entry 27, List II);
Industries subject to the provisions of Entries 7 and 52 of List I (Entry
24, List II). It would, thus, be seen that under Government of India Act,
D 1935, both production, supply and distribution of goods as well as
development of industries were subject to the provisions of List I as
provided in Entry 29. Our Constitution makers, however, bifurcated
Entry 29 into two parts. Industries were put in Entry 24 of List II subject
to the provisions of Entries 7 and 52 of List I. The production, supply
E and distribution of goods was put in Entry 27 of List II and made subject
to Entry 33 of List III. The acceptance of the plea by ITC would mean
that no object was sought to be achieved by such a bifurcation. It is clear
that two entries have been separated. One made subject to the provi•ions
of Entry 33 of List III and the other subject to the provisions of Entries 7
and 52 of List I. Therefore, to interpret the expression 'industry' to include
F in it the aspect of raw material would mean that by the same analogy the
subject matter of production, supply and distribution of goods should also
be included therein and in fact that was the plea of ITC. Accepting this,
would negate the will of the Constitution makers. The same argument
would equally apply to Entry 14 of List II in respect of agriculture which
G is not subject to any List. Further, earlier when the Parliament felt the
need to control raw material, it included 'raw jute and raw cotton' in Entry
33, List Ill by Constitution Third Amendment Act, 1954. Even Article 369
indicates that agricultural raw material is in the State List for it refers to
raw cotton, cotton seed and edible oil seeds and seeks to temporarily place
it, by fiction in the concurrent list to enable Parliament to make laws. The
H expression 'industries' in Entry 24, List II or Entry 52, List I, cannot be
•
>
)r
..
I.T.C. LTD. v. A.P.M.C.
449
interpreted in a manner that would make other entries of list II of the A
Seventh Schedule subject to Union control which in fact they are not.
Wherever it was intended to be made subject to such control, whether of
List I or that of List III, it was said so. A perusal of List II shows that
whenever a particular entry was intended to be made subject to an entry
in List I or III, it has been so stated specifically, Therefore, an B
interpretation which tends to have the effect of making a particular entry
subject to any other entry, though not so stated in the entry, deserves to
be avoided unless that be the only possible interpretation. Such an
interpretation therefore, cannot be placed on the entries in question
namely, Entry 52 of the Union List and Entry 24 of the State List.
(490-G-H; 491-A-GJ C
10. The principles of interpretation are well settled. There is no
doubt that the entries in the lists in the Seventh Schedule do not provide
competence or power to legislate on the legislature for which the source
of power is contained in Article 246 of the Constitution. In deciding
question of legislative competence, it has to be kept in view that the D
Constitution is not required to be consi~ered with a narrow or pedantic
approach. It is not to be construed as a mere law but as a machinery by
which laws are made. The interpretation should be broad and liberal. The
entries only demarcate the legislative field of respective legislature and
do not confer legislative power as such and if it is found that some of the
entries overlap or in conflict with the other, an attempt to reconcile such E
entries and bring about a harmonious construction is the duty of the court.
When, however, reconciliation is not possible, then the court will have to
examine the entries in relation to legislative power in the Constitution .
(491-H; 492-A-BJ
I I. The subject matter of the issue in these matters is about the F
interpretation of Entry 52 in List I of the Seventh Schedule. It requires
the Parliament to make a declaration by law identifying an industry, the
control of which by the Union is expedient in the public interest. Under
the said entry only an 'industry' can be declared as an industry, the control
whereof by the Union is regarded as expedient in public interest. It is, G
therefore, implicit that if an activity cannot be regarded as industry, Entry
52 will have no applicability to that activity. The question is about the
concept of 'industry' in Entry 52 of List I. It cannot be disputed that the
entries in the Legislative List have to be construed in the widest sense but
it has also to be borne in mind that such construction should not make
other entries totally redundant. The meaning of the word 'industry' in H
450
SUPREME COURT REPORTS
(2002] I S.C.R.
' A various dictionaries is not of any assistance while considering the
constitutional meaning of the said term. There may not be any embargo
or limitation on the power of the Parliament to enact the law in respect
'
,,
of activities other than manufacturing activities but that power is nonexistent in Entry 52 of List I. It may be elsewhere. Reference in this
B regard can be made to Entry 33 of List III including in its ambit food
stuff and certain raw materials. Tobacco, howe~er, is admittedly not a
food stuff. (492-C-FI
12. The structure and scope of Entry 54 of the Union List and Entry
23 of the State List and their inter-relationship is substantially different
C from the scope and structure of Entry 24 of the State List and Entry 52
of the Union List. The Entry relating to mines and minerals has in it
both the industry of mines and its product minerals and, therefore, on a
declaration both mines and minerals get embedded in Entry 54 of the
Union List. Therefore, it has been consistently held by this Court, that
by declaration under Entry 54, the Parliament evinces an intention to
D occupy the whole field. (502-H; 503-AI
Ch. Tikaramji & Ors. etc. v. State of Uttar Pradesh & Ors., (19561 SCR
393; B. Vishwanathiah & Co. & Ors. v. State of Karnataka & Ors., (19911 3
SCC 358; Chaturbhai M Patel v. Union of India & Ors., (1960[ 2 SCR 362;
Sulramanyan Chettiar v. Muthuswamy Goundan, (1940) FCR 158; State of
E Rajasthan v. G. Chawla & Anr., AIR (1959) SC 544; Ganga Sugar
Corporation ltd. v. State of U.P. & Ors., 1198011 SCC 223; Kannan Devan
Hills Produce v. State of Kera/a & Anr., (197212SCC218 and SIEL Ltd &
Ors. v. Union of India & Ors., (19861 7 SCC 26, relied on.
Harakchand Ratanchand Banthia & Ors. v. Union of India, (19701 1
F SCR 479; State Bank of India v. Yasangi Venkateswara Rao, (19991 2 SCC
375; Indian Aluminium Co. Ltd & Anr. v. Karnataka Electricity Board & Ors.,
[199212 SCC 580 and Mis Shriram Industrial Enterprises ltd v. The Union
of India & Ors., AIR (1996) All. 135, referred to.
G
Smith v. A/wright, (321) US 649, referred to.
13.1. In Be/sund Sugar Co. Ltd. v. State of Bihar & Ors., the
Constitution Bench examined the question regarding the legality of levy
of market fee under the provisions of Bihar Agricultural Produce Markets
Act, 1960 pertaining to various commodities including sugarcane, sugar
and molasses, wheat and tea. It noticed that the Market Act had been
H enacted by the Bihar Legislature as per the legislative power vested in it
l.T.C. LTD. v. A.P.M.C.
451
· by Entries 26,27 and 28 of List II of the Seventh Schedule of the A
Constitution. The Court, however, noticed that the Market Act dealt with
supply and distribution of the goods as well as the trade and commerce
therein as it seeks to regulate the sale and purchase of agricultural
produce to be carried on in the specified markets under the Act. To that
extent, the Court said, the provisions of Entry 33 of List Ill override the B
legislative powers of the State Legislature in connection with legislations
dealing with trade and commerce in, and the production, supply and
distribution of goods. Thus, to the extent to which the Market Act seeks
to regulate the transactions of sale and purchase of sugarcane and sugar
which are foodstuffs and trade and commerce therein, the Constitution
Bench said that it has to be held that the Market Act being enacted under C
the topics of legislative powers under Entries 26,27 and 28 of List II will
be subject to any other legislation under Entry 33 of the Concurrent List.
The contention that as admittedly tobacco is not foodstuff and does not
fall under Entry 33 of List Ill, like the amendment to the Constitution
made in 1953, the Parliament by further amendment of the Constitution
can, if so advised, place tobacco - raw material of the industry - in Entry D
33 of List III and, thus, confer on itself the competence to legislate in
respect to tobacco, need not be examined by this Court as being
unnecessary. However, it may be noted that the Constitution Bench, after
noticing various provisions of the Act and the Rules, came to the conclusion
that the need for regulating the purchase, sales, storage and processing E
of sugarcane, being an agricultural produce, is completely met by the
comprehensive machinery provided by the Sugarcane Act enacted by the
same very legislature which enacted the general Act being the Market Act.
1503-C-H; 504-AJ
13.2. In Belsund Sugar Co ltd., one of the contentions urged was that F
under the IDR Act, in public interest, Union of India had taken over the
control of the wheat industry as specified in the First Schedule to the Act
and consequently any ti .,,1saction of purchase and sale of the product of
that industry cannot be 1 •ulated by the State Act. The Constitution
Bench noticed that the Parliament in exercise of its legislative power under G
Entry 52 of List I of the Seventh Schedule had enacted the IDR Act and
nour industry is listed as one of the scheduled industries under the caption
"Food-processing Industries". The Bench said that the production of
wheat as a raw material or its sale is not covered by the said Act and,
consequently, so far as wheat as 'agricultural produce' is concerned, it is
outside the sweep of the IDR Act. The question still remained whether H
452
SUPREME COURT REPORTS
[2002] I S.C.R.
A the sale of flour or any other product out of wheat can be said to be
covered by the sweep of the IDR Act. It was noticed
that the Central
Government had not promulgated any statutory order under Section ISG
covering the field. The Court rejected the contention that mere existence
of a statutory provision in the Act enabling the Central Government to
issue such order would be sufficient to occupy the field contemplated by
B the provision. While examining the decision in Hingir-Rampur Coal
Company's case on which reliance was placed by the appellants, the
Constitution Bench held that it has to be kept in view that any legislation
in exercise of legislative power under Entry 54 of List I would enable the
Parliament to regulate mines and the minerals development by taking
C them under the control of the Union in public interest. Thus, all aspects
of the mining .industry would be covered by the general sweep of such a
declaration. But it was noticed that the IDR Act was enacted under Entry
52. It was held that the scheme of Entry 54 of the Union List read with
Entry 23 of the State List was entirely different from the scheme of Entry
52 of List I read with Entry 24 of List II with which the Court was
D concerned in that case. On conjoint reading of these two entries, the ratio
of the decision in Hingur-Rampur Coal Company's case, it was held, cannot
be effectively pressed into service. The majority decision in ITC case for
the view it took had placed reliance on Baijnath Kadio which followed
Hingir-Rampur Coal Company's case. Further in Belsund Sugar Company,
E the Constitution Bench cited with approval the decision in SEIL case and
reiterated that merely because industry is controlled by Belsund Sugar
Company a declaration under Section 2 of the IDR Act enacted by Entry
52 of the Union List, the State Legislature would not be denied of its power
to regulate the·products of such an industry by exercise of its legislative
power under the State List. 1504-B-H; 505-A-B]
F
13.3. The principles enunciated in Be/sund Sugar Company's case
would equally apply to Entries 14,27,28 and 66 of List II. It may further
be noticed that in para 170 of Belsund Sugar Company's case, the
Constitution Bench reiterated the view expressed in Tika Ramji 's case as
also in SE/l's case affirming Full Bench decision of the Allahabad High
G Court in Mis Shriram Industrial Enterprises. (506-E(
Ch. Tika Ramji & Ors. etc. v. The State of Uttar Pradesh & Ors., ( 1956(
SCR 393, relied on.
Belsund Sugar Co. ltd. v. State of Bihar & Ors .. (1999] 9 SCC 620;
H The Hingir-Rampur Coal Co. ltd. & Ors. v. State ofOrissa & Ors., (1961) 2
..
l.T.C. LTD. v. A.P.M.C.
453
SCR 53i and Baijnath Kadio v. State of Bihar & Ors., !19691 3 SCC 838, A
distinguished.
I4. There is no compelling reason either on account of any binding
precedent in the form of an earlier Constitution Bench judgm• ·it, history
and background of the framing of the Constitution or the words used in
various Entries or the language of any Article in the Constitution of India, B
to take a view which will result in denuding the pcwer of State Legislatures
to legislate not in respect of field of legislation under Entry 24 but field of
legislation covered by other entries on State List on making of declaration
under Entry 52 of the Union List. The Constitution Bench judgment in
the case of Tika Ramji and other decisions following it confine the field of C
legislation of industries to 'the process of manufacture or production' and
not to 'raw materials' which may be integral part of industrial process or
to the 'distribution of the product of the industry'. 1506-F-GI
I5. Thus, the State legislations and the Tobacco Board Act, I975
to the extent of sale of tobacco in market area cannot co-exist. The State D
Legislatures are competent to enact legislations providing for sale of
agricultural produce of tobacco in market area and for levy and collection
of market fee on that produce. The Parliament is not competent to pass
legislation in respect of sale of agricultural produce of tobacco in market
areas, while legislating in the field of legislation covered by Entry 52 of
the Union List under which the Parliament can legislate only in respect E
of industries, namely, 'the process of manufacture or production' as held
in Tika Ramji's case. The activity regarding sale of raw tobacco as provided
in the Tobacco Board Act cannot be regarded as 'industry' .
1506-H; 507-A-B-CI
Tika Ramji v. State of UP., 119561 SCR 393, relied on.
F
Ruma Pal, J.
I. I The starting point in any controversy dealing with apparently
conflicting legislative jurisdictions is to see whether the conflict can be
fairly reconciled by reading the entries to which the legislations are G
referable, together and "by interpreting and, where necessary, modifying
-.
the language of the one by that of the other". It is only when such
resolution is not possible that the Courts should be called upon to decide
the question of legislative competence. This principle has been stressed
in a number of cases by the Privy Council, the Federal Court and more
recently by this Court. 1513-F-Gi
H
454
SUPREME COURT REPORTS
(2002) I S.C.R.
A
1.2. Similarly, when there is an apparent conflict between two
statutes enacted in valid exercise of legislative powers under the
·•"Concurrent List, reconciliation must be attempted. Only when the
differences are irreconcilable should the Courts resort to striking down a
piece of legislation. 1514-B-q
B
1.3. The issue raised in this case can be resolved by limiting
consideration to the question of conflict, if any, between the two entries
in the seventh schedule of the Constitution to which the Tobacco Act and
the Market Act are respectively relatable and between the provisions of
the two statutes which have a bearing on the marketing of tobacco. The
discussion is therefore limited to the scope of the two entries and the
C allegedly conflicting provisions of the two Acts with which this Court is
concerned. The underlying rationale of Tika Ramji's definition of the word
'industry' is that the Constitution having expressly provided for particular
fields of legislation in the three Lists, each field must be given a meaning,
Entry 24 of List II cannot be read so as to subsume within itself the other
D entries in List II. It must be given a meaning which allows the other entries
to survive and be defined to that extent with reference to what it is not.
1514-D-E; 515-FI
M.P. V. Sundararamier & Co. v. Sate of Andhra Pradesh, 1195'8[ SCR
1422; The Calcutta Gas Company (Prop.) ltd v. The State of West Bengal,
E 11962) 3 SCR 1; SR. Bommai & Ors. v. Union of India & Ors., 11994) 3
SCC 1; A.S. Krishna v. State of Madras, 119571 SCR 399; Chaturbhai M.
Patel v. Union of India & Ors., 1196012 SCR 362; State of Rajasthan v. G.
Chawla, AIR (1959) SC 544; Ishwari Khetan Sugar Mills (P) Ltd. v. State
of UP., 119801 4 SCC 136; Mis Hoechst Pharmaceuticals ltd. v. State of
Bihar, 1198314 SCC 45 and Deep Chandv. The State ofUttar Pradesh, 119591
F Supp. SCR 8, relied on.
ITC ltd. & Ors. v. State of Karnataka, (19851 (Suppl.) SCC 476,
referred to.
2.1. There are numerous decisions which have followed the logic
G of Tika Ramji and accepted its conclusion that for the purposes of Entry
24 of List II and consequently Entry 52 of List I, 'industry' means
"manufacture or production" and nothing more. It is sufficient to note
that Tika Ramji's definition of industry has been affirmed and applied
recently by a Constitution Bench in Belsund Sugar Company v. State of Bihar
and is still good law. Harak Chand Banthia's case does not strike a
H discordant note. 1518-BI
l.T.C. LTD. v. A.P.M.C.
455
2.2. The decision in Harak Chand Banthia's case cannot be read as A
whittling down or deviating from the reasoning or the definition of the
..-
word industry in Tika Ramji. It does not seek to do so. Indeed the Court
re-affirmed the definition of industry in Tika Ramji. The observation
relating to Entry 27 of List II must be understood in relation to the
language of the entry which provides for States to generally legislate on
production, supply and distribution of goods. Entry 33 of List III deals B
particularly with the production, supply and distribution of the products
of industries where the control of such industry by the Union is declared
by law to be expedient in the public interest under Entries 7 or 52 of List
I. It would not have been necessary to have especially provided for trade
and commerce in, and the production, supply and distribution of the C
products of a controlled industry in Entry 33 of List Ill, had the word
'industry' in Entries 7 and 52 of List I covered the field. Similarly had
the word 'industry' in Entry 24 of List II been sufficient, there was no
need to have a separate head under Entry 27 of the same list dealing with
the production, supply and distribution of goods unless it is conceded that D
the framers of the Constitution were guilty of "ineptitude, want of
precision and tantology". The concept of a 'general' and 'particular' term
is necessarily relative depending upon the context in which the term is
considered. Entry 27 of List II is certainly a general entry but only in
relation to Entry 33 of List III which deals with trade, commerce etc. in
particular kinds of products namely the products of a controlled industry. E
Banthia held that the Gold Act was legislatively competent under Entry
52 of List I because it dealt with the process of manufacture or production
of gold i.e., it was within the sweep of industry as defined in Tika Ramji.
Banthia's case has been considered and explained in the subsequent decision
of the Constitution Bench in Mis Fatehchand Himmatlal and Ors. v. State
of Maharashtra. (520-A-F(
F
Ch. Tika Ramji & Ors. v. State of UP. & Ors., (1956( SCR 393; Belsund
Sugar Company v. State of Bihar, (19991 9 SCC 620; Harakchand Ratanchand
Banthia & Ors. v. Union of India, I I 97011 SCR 479; Fatehchand v. State of
Maharashtra, (1977) SC 1825; State of Andhra Pradesh v. Mc. Dowell & Co.,
119961 3 sec 709; Kannan Devan Hill Produce v. State of Kera/a, I 19721 2 G
SCC 218; Ganga Sugar Corporation ltd. v. State of Uttar Pradesh and Ors.,
[19801 l SCC 223; Calcutta Gas Company (Prop.) ltd. v. State of West
Bengal, AIR (1962) SC 1044 and B. Viswanathiah and Company and Ors.
v. State of Karnataka, [ 19911 3 SCC 358, referred to.
3. The word 'industry' for the purposes of Entry 52 of List I has H
456
SUPREME COURT REPORTS
[2002) I S.C.R.
A been firmly confined by Tika Ramji to the process of manufacture or
production only. Subsequent decisions including those of other
Constitution Benches have reaffirmed that Tika Ramji's case authoritatively
""
defined the word 'industry' to mean the process of manufacture or
production and that it does not include the raw materials used in the
B industry or the distribution of the products of the industry. Given the
constitutional framework, and the weight of judicial authority it is not
possible to accept an argument canvassing a wider meaning of the word
'industry'. Whatever the word may mean in any other context, it must
be understood in the Constitutional context as meaning 'manufacture or
production'. Applying the negative test as evolved in Tika Ramji in this
C case it would follow that the word 'industry' in Entry 24 of List II and
consequently Entry 52 of List I does not and cannot be read to include
Entries 28 and 66 of List II which have been expressly marked out as fields
within the State's exclusive legislative powers. Entry 28 deals with markets
and fairs and Entry 66 with the right to levy fees in respect of, in the
present context markets and fairs. Entry 52 of List I does not override
D Entry 28 in List II nor has Entry 28 in List II been made subject to Entry
52 unlike Entry 24 of List II. This Court in Belsund Sugar has also
accepted the argument that Entry 28 of List II operated in its own and
cannot be affected by any legislation pertaining to industry as found in
Entry 52 of List l.1521-F-H; 522-A-CI
E
F
Tika Ramji v. State of UP., 119561 SCR 393 and Belsund Sugar Co.
ltd v. State of Bihar & Ors., I 1999f 9 SCC 620, relied on.
Amritsar Municipality v. State of Punjab, AIR (1969) and Waverly Jute
Mills Co. ltd v. Raymon & Co. (India) Private ltd, f1963f 3 SCR 209,
referred to.
Halsbwy's laws of England (4th Ed.) Vol. 29, page 601 and Oxford
English Dictionary, referred to.
4.