# M. C v. S. ARUNACHALA NADAR ETC - **Citation:** [1959] Supp. 1 S.C.R. 92 - **Court:** Supreme Court of India - **Decided:** 1959 - **Case number:** Civil Appeals Nos. 169-171 of 1955 - **Bench:** S. R. DAS c. J, Bhagwati, B. P. Sinha, SuBBA RAO, K. N. Wanchoo - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-c-v-s-arunachala-nadar-etc-1677 - **Pages:** 19 ## Headnote E'undamental Right-Reasonable restrictions-Statute regulating buying and selling of commercial crops-Constitittional validityMadras Commercial Crops Markets Act (Mad. XX of r933)- Constitution of India, Arts. r9(r)(g) and r9(6). The Madras legislature enacted the Madras Commercial Crops Markets Act for providing satisfactory conditions for the gro\vers of commercial crops to sell their produce on equal terms with the purchasers and at reasonable prices. The Act. Rules and the Bye-laws framed thereunder have a long term targef of providing a net work of markets wherein facilities for correct weighment are ensured, storage accommodation is provided, and reliable market information is given. Till such markets are established the Act provides for the imposition of licensing restrictionsLpplications. The learned Judges held that s. 5(4)(a) of the Al't was void to the extent it.conferred on the Colledur :iuthol'ity to refuse a licence at his own discrdion 11,nd rule 37 was void in so far as it prohibitecl persons whose names had not yet been registered as buyers and sellers, from carryiug on business in the notified area. Subject to that, the impugned Act and the ltules were upheld under Art. 19(6) of the Const.itntion as a. v a.lid piece of marketing legislation. Jn the result, the applications were dismissed. The aforesaid three appellants have filed these appeal~ against the order of the High Court in so far as it dismissed their applications. Learned counsel for the appellants contends that the provisions of the Act and the Itnles framed thereunder constitute a.n unreasonable restriction upon the appellants' fundamental right to do business and that they not only do not achieve the object for which they are enacted but defeat their purpose. Elaborating this argument, he took us through some of the provisions (1) S.C.R. SUPREME COURT REPORTS 95 of the Act and the Rules ma.de thereunder in an 1958 attempt to establish that the provisions cripple the business of the appellants, restrict the ri~hts o! the A•"~~;~1:· ~~dar small traders, cause unnecessary and umntent10nal Etc.. hardship to the growers and thereby exceed the purv. pose of the enactment and defeat its object. The Staid of Before we scrutinize the provisions of the Act, the Madras if>. Others law on the subject may be briefly noticed. Under Art.19 Subba Rao J. (l)(g) of the Constitution of India all persons have the right to practise any profession, or to carry on any occupation, trade or business. Clause (6) of that Article enables the State to make any law imposing in the interest of general public reasonable restrictions on the exercise of the right conferred by sub-cl. (g) of cl. (1). It has been held that in order to he reasonable, a restriction must have a rational relation to the object. which the legislature seeks to achieve and must not go in excees of that object (See Chintaman Rao v. The State of 1Wadhya Prade.sh) (1). The mode of approach to ascertain the reasonableness of a restriction has been succinctly stated by Patanjali Sastry C. J., in State of Madras v. V. G. Row {2) thus: "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or genera.I pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict." Bearing the aforesaid principles in ·mind, we shall ascertain the object of the Act., from the circumstances under which it was passed, and its provisions, ttnd see whether the provisions have any reasonable relation to the object which the legislature seeks to achieve. There is a historical background for this Act. Marketing legislation is now a well-settled feature of (1) [1950] S.C.R. 759. (2) (1952] S.C.R. 597, 6o'!· 96 SUPREME COURT REPORTS [1959] Supp. r9Jll all commercial countries. The object of such legislaM c v 5 tion is to protect the producers of commercial crops il>una~h~la · N~d"' from being exploited by the middlemen and profiteers Etc. and to enable them to secure a. fair return for their v. produce. In Madras State, as in other parts of the The St•I• 01 country, various Commissions and Committees have Madras &- Others b · d • ' th bl eeu appomte to mvest1gate e pro em, to suggest subba Rao 1. ways and means of proriding a fair deal to the growers of crops, particularly commercial crops, and find a market for selling their produce at proper rates. Several Committees, in their reports, considered this question and suggested that a satisfactory system of agricultural marketing should be introduced to achieve the object of helping the agriculturists to secure a proper return for the prdduce grown by them. The Royal Commission on Agriculture in India appointed in 1928, observed: "That cultivator suffers from many handicaps: to begin with he is illiterate and in general ignorant of prevailing prices in the markets, especially in regard to commercial crops. The most hopeful solution of the cultivator's marketing difficulties seems to lie in the improvement of communications and the establishment of regulated markets and we recommend for the consideration of other Provinces the establishment of regulated markets on the Berar sy~tem as modified by the Bombay legislation. The establishment of regulated markets must form an essential part of any ordered plan of agricultural development in this country. The Bombay Act is, however, definitely limited to cotton markets and the bulk of the transactions in Berar market is also in. that crop. We consider that the system can conveniently be extended to other crops and; with a view to avoiding difficulties, would suggest that regulated markets should only be established under Provincial legislation." The Royal Commission further pointed out in its report: " The keynote to the system of marketing agricultural produce in the State is the predominant part played by middlemen." " It is the cultivator's chronic shortage of money (1) S.C.R. SUPREME COURT REPORTS 97 that has allowed the intermediary to achieve the pror95B minent position he now occupies." . . . 1 . db 111. c. v. s. The necessity for marketmg leg1s at10n was stresse Y .·lrun,,clw),, .vadar other bodies also like the Indian Central Banking enEtc. qniry Committee, the All India Rnral Credit and Survey v. Committee, etc. Recently the Government of Madras rhe State of appointed an expert Commit.tee to review the Act. In .11'rdras & Otliers its report the Commit.tee graphically described the - Subb.1 Rao ]. difficulties of the cuHivators and their dependence upon the middlemen thus : "The middleman plays a prominent part in sale trnnsactions and his terms and methods vary according to the nature of the crop and the status of the cnlt.ivator. The rich ryot who is unencumbered by debt and who has comparntively large stocks to dispose of, brings his produce to the taluk or district centre and entrusts it to a commission agent for sale. If it is not. sold on the day on which it is brought, it is stored in the commission agent's godown at the cultivators' expense and as Lhe latter generally cannot afford to wait ahont until the sale is effected he leaves his produce to be sold by the commission agent at the best possible price, and it is doubtful whether eventually he receives the best price. The middle class ryot invariably disposes of his produce through the same agency hut, unlike the rich ryot he is not free to choose hiR commission agent., because he generally takes advance;; from a particular commission 11gent on the condition that he will hand over his produce to him for sale. Not only, therefore, he places himself in a position where he cannot dictate and insist on the sale being effected for the highest price but he loses by being compelled to pay heavy interest on the advance taken from the commission agent. His relations with middlemen are more akin to those between a creditor and a debtor, than of a selling agent and producer. In almost all cases of the poor ryots, the major po1·- tion of their produce finds its way into the hands of the village money-lender and whatever remains is sold to μettiy traders who tour the villages and the price a.t which it changes hands is governed not so much by t.he 13 98 SUPREME COURT REPORTS rl959) Supp. r958 market rates, but by the urgent needs of the ryot which are generally taken advantage of by the purchaser. A M. ~·1 v.Ns. d The dominating position which the middleman occu- ,,,,n1c11a a a ar , . Etc. pies and his methods of sale and the terms of hi's dealv. ings have long ago been realized." The Stale of The aforesaid observations describe the pitiable Mad'"' and Othm dependence of the middle-class and poor ryots on ·the Subba 1100 ;. middlemen and petty traders, with the result that the cultivators are not able to fiiid markets for their produce wherein they can expect reasonable price for them. With a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on July 25, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of . Madras and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated markets by eliminating middlemen and bringing face to face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens' right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and overreach the scope of the object· to achieve which it is enacted. It is therefore necessary to scrutinize the provisions of the Act and the Rules made thereunder to ascertain whether the restrictions imposed are not reasonable. The said provisions fall under two groups : the first group provides the machinery for controlling the trade in commercial crops and the second group of provisions imposes restrictions on the carrying on of the said trade. Section 2( 1-a) defines ' commercial crop ' to mean cotton, groundnut or tobacco and includes any (1) S.C.R. SUPREME COURT REPORTS 99 other crop or product notified by the State Government in the Fort St. George Gazette as a commercial crop M. c. v. s. for the purposes of this Act. Under s. 3, the State .4r1rnacllafa Nada• Government issues a notification declaring their intenEtc. tion to exercise control over the purchase and sale of v. h · 1 · · · l Tile Stal• of sue commerc1a crop or crops m a part1cu a.r arna Mad.as ,r,, Others and calls for objections and suggest.ions to be made within a prescribed time. After the objectiom; are s11hba uao J. received, the State Government conside1·s them and declares the areas to be specified in the notification or any portion thereof to be a notified area for the purpose of the Act in respect of commercial crop or crops specified in the notification. Under s. 4-A, the State Government has to establish a market committee for every notified area and it shall be the 'duty of the market committee to enforce the provisions of the Act. Sections 6 to 10 provide for the constitution of Market Committees and s. 16 for their supersession for the reasons mentioned therein. In exe1·cise of the powers conferred by s. 18 of the Act the State Government made Rules which provide for the manner in which the members of Market Committees should be elected, and also for the constitution of sub-Committees. In exercise of the powers conferred by s. 19 of the Act and also subject to the Madras Commercial Crops Markets Rules, 1948, the Committees for the various districts made bye-laws for regulating their meetings and for the discharge of their duties by the various subordinate bodies. The said provisions which bring into existence a machinery for regulating the trade are not attacked by the learned counsel for the appellants. Under the second group, there are provisions providing for matters which are succinctly stated in the 'Report of the Expert Committee on the review of the Madras Commercial Crops Markets Act, 1933' at p. 7 as under: "(I) A common place is provided for seller and buyer to meet and facilities are offered by way of space, buildings and storage accommodation. (2) Market practices are regularized and Market . u.c. v.s. ,..1'unr1ch11ln Nadar Etc. v. The State of 1lludras ~;.Others Subha Rao J. 100 SUPREME COURT REPORTS [1959] Supp. charges clearly defined and unwarranted ones prohibited . (3) Correct weighment is ensured by licensed weighmen and all weights are checked and stamped. (4) Payment on hand is ensured. (5) Provision is made for settlement of disputes. (6) Daily prevailing prices are made available to tho grower and reliable market rnformation provided regarding arrivals, stocks, prices, etc. (7) Quality standards are fixed when necessary and contract forms standardized for purchase and i:;ale." section 5 says : ' No person shall, within a notified area, set up, establish or use, or continue or allow to be continued, any place for the purchase or sale of a notified commercial crop, except under and in accordance with the conditions of a liceuce granted to him by the Collector.' The first proviso to that section provides that after the establishment in such area of a market for tJ1e purchase and sale of >t notified commercial crop, no licence for the purchase or sale of such commercial crop shall be granted or renewed in respect of any place situated within such distance of the market as may from time to time be fixed by t.he State Government. The second proviso enablPs the Market Committee to exempt from the provisions of the above sub-section any person who carries on the business of purchasing or selling any commercial crop in qua.ntities not exceeding those prescribed by Rules made under the Act. The third proviso authorizes the said Committee to exempt a person selling commercial crop which has been grown by him, or a cooperative society registered or deemed to be registered under the Madras Co.operative Societies Act, 1932, selling a commercial crop which has been grown by any of its members, and also empowers it to withdraw t.he exemption. Sub-section (2) of s. 5 gives exemption to a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by Rules made under the Act. Sub-section (3) prohibits any person within a notified area from setting up, • (1) S.C.R. SUPREME COURT REPORTS 101 establishing or using, continuing or allowing to be '958 continued, any place for the storage, weighment, M. c. v. s. pressing or processing of any notified commercial crop Arnnachala Nadar except under and in accordance with the conditions of Etc. a licence granted to him by the Collector. Under v. b (3) • t d f th The State of proviso to su -s. a person IS exemp e rom e Jfudras"" Others operation of that Rule in respect of any notified commercial crop grown by him. Sub-section (4) enables s11bba Rao J. the Collector, on the report of the Market Committee a11d after such inquiry as he deems fit; to cancel or sμspend any licence granted under the said section. There are provisions providing for penalties for infringement of the statutory regulations and for referring disputes to compulsory arbitration. The bye-laws framed by the Committees prescribe graded scales of. licence fees in respect of various licences required under the Act; these show that a trader has to take separate licences under s. 5(1) and s. 5(3). The licence fee payable for additional premises is comparatively smaller than the amount payable for the main premises. Licence fee is also fixed for brokers, weighmen, etc. Rule 28(3) (iii) of the Rules states that it shall not be necessary for a pe1son to obtain more than one licence for setting up, establish" ing or continuing or allowing to be continued more than one place in the same notified area for the purchase, sale, storage, weighment, pressing or processing of the same commercial crop. A combined reading of the Rule and the bye-laws shows that though different licences may have to be obtained under s. 5(1) and s. 5(3), one licence is sufficient for different places and only small payments have to be made for every additional premises for the same purpose. It is not necessary to notice the other provisions as nothing turns upon them in the present case. Shortly stated, the Act, Rules and the Bye-laws framed thereunder have a long-term target of providing a net work of markets wherein facilities for correct weighment are ensured, storage accommodation is provided, and equal powers of bargaining ensured, so that the growers may bring their commercial crops to the market and sell them at reasonable prices. Till such markets are 102 SUPREME COURT REPORTS [1959] Supp. r958 established, the so.id provisions, by imposing licensing M c . restrictions, enable the buyers and sellers to meet in Aru'n;rh~l~ · i~d"' licer.ised premises, ensure correct w~ighment, make Uc. available lo them reliable market mformation and v. provide for them a simple machinery for settlement of Th• Stal• of disputes. After the markets are built or opened by Mad•as Ii> oihm the marketing committees, within a reasonable radius Subba Rao J. from the market, as prescribed by the Rules, no licence is issued ; thereafter all growers will have to resort to the market for vending their goods. The result of the implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities. Learned counsel for the appellants contends that the restrictions imposed by the provisions of s. 5 are not only unreasonable but tend to defeat the \•ery purpose of the legislation. Elaborating this argument, the learned counsel says that t.hey are unreasonable from the st.andpoint of the big trader, the small trader a.nd also the grO\rnr of crops. The trader, his argument proceeds, can only buy or sell in the licensed premises paying heavy licensing fees under different heads and paying also heavy overhead charges, with the inevitable consequence that he will not ho able to run his business with profit. It is also said that he cannot go wherever he likes to buy the produce at cheap rates and can negotiate for or enter into contracts of sale only in the licensed premises, with the result that he has to pay higher prices to the sellers. The first 11rgurnent rather exaggerates the situation ; for, the rates of licence fees shown in the bye-la.ws framed by the Marketing Committee at Virudhunagar do not appear to be so high as to cripple the trader's business. X o material has been placed beforn us to establish that the rates are so high and the burden is so unbearable that a .trader, who is otherwise making profit, cannot carry on his business. The second objection of the learned counsel in itself affords a reasonable basis for the legislat.ion ; for, what the learned counsel in effect says is that the trader is exploiting the small growers f (1) S.C.R. SUPREME COUlt'l' REPOltTS 103 and that he is prevented from doing so under the 1958 licensing regulations. . . . . . M. c. v. s. From the standpomt of the seller It IS said that Arunachala Natlar though he may be exempted from the operation of the Etc. said Act under the second proviso to s. 5 (1) he is v. prevented from selling his· produce by insisting that he 1'he State 01 should trade onlv with the licensed trader and in the Madras .s. Others licensed premis~s. Assuming that that is the legal Subba Rao J. position under the Rules, uothing prevents the grower from selling his produce to another grower whose requirements are greater than \vhat he produces or to a smaller trader exempted under the third proviso t<' s. 5 (1). After the market is established, it is contended, a grower will be obliger! to carry the goods to a. centralised place if he is to di~pose of the go1Jds, whi<'h can hardlv be clescriberl as increasing tlw facilities for marketing the goods. It is true that the grOWl!l'S may be under some difficulties in t.his regard, but that is counter-balanced by the marketing facilities provided for them under the Act. It is also said that wht-111 a market is establhihed, no licence to purchase, or sell, commercial crops will he granted or renewed in ·respect of any place· situated within such distance from the market. as may from time to time be fixed by the State Goverm11ent and that nothing under the Act prevents the Government from fixing a long distance as a prohibited area ; with the result that a person, who is having a licence to trade in and about the place where the market is fixed, is deprived of his livelihood, which is an unreasonable restriction upon his right to do business. But in our view, such a provision is necessary for preventing the local business being diverted to other places and the object of the scheme being defeated. Further, in practice, it is seen that the GovernmenL fixes by notification under s. 5 (1) a radius of five miles around the building and occasionally ten miles. It is also not likely that it would fix a longer distance in the present circumstances, having regard to the inadequate facilities for transporting commodities. That a.part, the establishment of a market does not prevent a. trader from carrying on the business in the market established, 104 SUPREME COURT REPORTS [1959] Supp. '958 but he could not run a market_ for himself in respect M c v 5 only of the commodities declared to be commercial Arun;ch~l; N~dar crops within the radius prescribed. Etc. While the object of the Act is to protect the growers, v. the argument proceeds, the small traders are compelTh• State of led to resort to distant markets, with the result that Madras" Others some of them would be forced to give up their business and others would have to incur unnecessary "xpendSubb• Jlao f, iture which they could not afford. The Act is an "' integrated one, and it regulates the buying and selling of commercial crops. If the small traders are exempted, it creates loopholes in the scheme through which the big trader may operate, and thereby the object itself would be defeated. That a part, the second proviso enables the Committee to exempt small traders in appropriate cases. The constitution of the Committee, in which there will be represent,atives of the traders and the buyers, is a sufficient guarantee against the implementation of the provisions of the Act to the detriment of all concerned. If a packed Committee abuses its powers, there is a further provision to enable the Government to supersede it. \Ve, therefore, hold that, having regard to the entire scheme of the Act, the impugned provisions of the Act constitute reasonable restrictions on a citizen's right to do business, and therefore, they are valid. The next contention of the learned counsel for the appellants is that the G. 0. No. 356 dated 8-3-1952 directing the establishment of a market at Virudhunagar is an unreasonable restrict.ion on the appellants' right to do business, and is, therefore, invalid. In Virudhunagar, there is already a well-established market which provides facilities for the purchase and sale of cotton and other goods. It. is stated that the said market has been functioning for over fifty years, that it has been largely used by the merchants of the community, and that it contains stalls for effecting sales, godowns for stocking goods, halls, parks and other amenities. Certain charges called ' mahimiti ' are collected on all transactions that take place within the market ; and they are constituted into a trust fund which is utilised for the maintenance of schools (1) S.C.R. SUPREME COURT REPORTS 105 and for religious purposes. The argument is that the z95B appellants in C. A. No. 169 of 1955 are running the .it. c. v. s. market as an occupation or business with high Arunachala Nndar standards and that the notification directing the conEtc. stitution of a market in the same locality, when v. admittedly the entire scheme of building a net work The 51•11• of Madras & Others of markets could not be finished within a predictable time, is not a reasonable restriction on their right to subba Rao 1. do business. It is also said that the same advantages could be given to the growers by continuing the said market with suitable restrictions and controls as the market established by the Market Committee would conceivably provide for them, and in those circumstances, when two alternative methods would equally achieve the objects, the notification directing the constitution of a market to the exclusion of the existing one would be an unreasonable restriction. The learned Advocate General of Madras contends that -the appellants have really two fundamental rights: one is to carry on trade or business and the other is to hold their property, i.e., the market; that by reason of the notification they are not prevented from doing their busine.ss, for they can still do business in the market established subject to the regulations and also do business outside the prescribed area; and that they are not prohibited from holding the market as property, for they could still utilise it for commodities other than the notified crops. In respect of the contention that holding the market is only an incident of ownership of the property, reliance is placed upon the decisions in T. B. Ibrahim v. Regional Transport Autho· rity, Tanjore (1); Ramunni K urup v. The Panchayat Board, Badagara (2); Captain Ganpati Singhji v. The State of Ajmer (3); and Valia Raja of Edappally v. The Commissioner for Hindu Religious & Charitable Endowments, Madras (4). It is unnecessary to express an opinion on the question whether the right of the appellants falls under Art. 19(l)(f) or (g) of the Constitution of India, or under both the sub-clauses ; for, the (1) [1953] S.C.R. 290. (2) I.L R [1954] Mad. 513. (3) [1955] l S.C.R. lo65. (4) l.L.R. [1955] Mad. 870. • 106 SUPREME COURT REPOR.TS [1959] Supp. '"-'°' yuestion whether the notification imposes an unreason1 . _ able restriction on the appellants' right cannot be .i.,,~~.~;,! · ~~da, decided on the ma~rial placed before us. '-';hat r,,. question may convemently be left open to be decided v. at the time when the market is established at ViruThe Slate oJ' dhunagar, pursuant t.o the notification issued b~· the (: Jtadra• & Othm Government. It does not appear from the record that there is any early prospect of such a mai·ket Subf,,, Rr10 ]. d h 1 bl being establishe in t at p ace. The reasona eness of t.he restrictions would depend upon the circumstances obtaining at the t.ime the market is established. It depends upon the comlitions then obtaining in the t,rade in commercial crops, t.he standards that will be maintained in the present market at that time, the comparative merits of the existing market and the market to be built up and other relevant considerations which cannot now be Yisualized. ·we would, therefore, lea~-e open that question to be decided at the proper time by the authorities eoncerned when a market is sought t.o be established in the manner provided b.)' law. The next argument relates to ' mahimai · allowances eollected by the" appellants from the sellers and buyers of the orops in the market. The learned judges of the High Court held that the question relating to this allowance did not arise for decision at that stage, but. having heard full arguments on the question, they expressed the view that 'mahimai' could not be claimed as a trade allowance. They concluded their discussion on the subject in the following words : " It has nothing to do with the transaction as such and is really a contribution levied at the time of the transaction for a purpose unconnected with it. It cannot therefore be properly regarded as a trade allowance, and bye-law 25(b) is perfectly valid." \.Ye cannot share the opinion. of the learned judges that the question does 11ot '1¥tise for decision at this stage. The appellants pra.yeafor issue of a writ of mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and bye-laws framed thereunder by the Ramanathapuram Committee ; and, the provisions of (1) S.C.R. SUPREME COURT REPORTS 107 the Act read with the bye-laws prohibited the collec19J8 tion of ' mahimai ' by the appellants. The question .u. c. v. s. whethe1· the bye-law prohibiting the collection of .4r1machala Nadar ' mahimai ' allowance is valid or not does directly Etc. arise for consideration in this case. There is also some v. ambiguit,y in the conclusion arrived at by the learned Th• state of .111111'-ns 0· Of/1ers judges of the High Court. They stated that the allowance had nothing to do with t,he transaction as such Subba Rao ]. and could not therefore be properly regarded as a trade allowance. The learned counsel for the appellants contends that if it is not a trade allowance, it is not covered either by s. 14 of the Act or by bye-laws framed thereunder, as s. 14 prohibits the deQuction of trade allowance and . does not operate upon any other payments made which are not trade allowances. There is considerable force in this argument, but we think that the learned judges meant only that the said allowance is not an admissible or a permissible trade allowance prescribed by the bye-law. The question, therefore, is whether the allowance described as 'mahimai' is a trade allowance and if so, whether the allowance is permitted to be received by the rules or bve-laws made under that section. The relevant p~ovisions may be noticed at this stage. Section L! says : " Xo trade allowance, other than an allowance prescribed by rules or by-laws made under this Act, shall be made or received in a notified area by any person in any transaction in respect of the commercial crop or crops concerned and no Civil Court shall, in an,Y suit or proceeding arising out of any such transaction, have regard to any trade allowance not so prescribed. Explanation : Every deduction other than deduction on account of deviation from sample, when the purchase is made by sample, or of deviation from standa1·d, when the purchase is ma.de by reference to a known standard, or on account of difference between the actual weight of the sacking and the standard weight, or on account of the admixture of foreign matter, shall be regarded as a tracle allowance--for the purposes of this Act". 108 SUPREME COURT REPORTS [1959] Supp. '958 Section 19: "(1) Subject to any rules made by the M. ~. s. State Government under section 18 and with the Arunach,.la Nadar previous sanction of the Director of Agriculture, Etc. Madras, a market committee may in respect of the •. notified area for which it was established make byMThe State 01 laws for the regulation of the business and the condiadras ©·0th .. -.; t' ft d' th . ,, _ 10ns o ra mg erem. Subba Rao J. By-law 25: Trade allowance applying to the market and the notified area : (a) ............................................................. . "(b) Deductions such as' mahimai' are prohibited. The weight of alien substance such as mud and stone, if any, contained in the lint or kapas borahs or in the bags of groundnut pods or kernels shall be deducted." The· gist of the aforesaid provisions may be stated thus : Trade allowance cannot be received in any notified area by any person in any transaction in respect of commercial crop or crops. Every deduction in any transaction in respect of the said crop other than those specified in the explanation is trade allowance for the purpose of the Act. A market committee generally may make bye-laws for the regulation of the business and conditions of trading therein and particularly it can make bye-laws prescribing what are permissible trade allowances under the section. Such allowances as are prescribed by a bye-law can be deducted in any transaction notwithstanding the fact that they are trade allowances. The argument of the learned counsel is that that bye-law is bad, because the market committee did not name the allowance or allowances taking them out of the prohibition under s. 14 which they are entitled to do under that section, but made the bye-law mentioning the 'mahimai' allowance as one not deductible in anv transaction. The validity of that part of the bye-la~ prohibiting the deduction of' mahimai' as trade allowance depends upon the nature of that deduction. If 'rnahimai' is not a trade allowance, the said part of the bye-law would obviously be invalid as inconsistent with the provisions of s. 14. If, on the other hand, ' mahimai ' is a trade allowance, the said part of the (1) S.C.R. SUPREME COURT REPORTS 109 bye-law will be superfluous, as the allowance falls with- '958 in th~ terms of the ~ectioJ? it~e,lf.. This leads us to the M. c. v. s. quest10n whether mahuna.i IS a trade allowance Arimachala Jlladar within the meaning of s. 14 of the Act. Etc. What is a trade allowance ? Trade involves exv. change of commodities for money, the bm~i11ess of buy11 Tdhe 51 ~ 1 •0° 1~ • d ll' d h • • l h I a ras "" ,,.,. mg an se mg an t e transaction mvo ves t. e _ seller, the buyer, the commodity sold and the price Subba Rao J. paid for the sale. Allowance means something given as compensation, rebate or deduction. Under the section, the said deduction should be in a11v transaction in respect of commercial crops. The· deduction may he out of the commodity or out of the price. The recipient may be the seller, the buyer or a third party. When A sells a quantity of cotton to B for a hundred rupees, B, the purchaser, may deduct one rupee from the sale price and pay ninety-nine rupees to A; he may keep that amount for himself or pay the same to C. So too, A, the seller, may purport to sell one maund of cotton but in fact deduct a small part of it, retain that part for himself or give it to C; or both A and B may fix the price of the 1Jommodity purchased at Rs.