# M/S. AMAR NATH OM PARKASH AND ORS. ETC v. STATE OF PUNJAB AND ORS. ETC

- **Citation:** [1985] 2 S.C.R. 72
- **Court:** Supreme Court of India
- **Decided:** 1984-11-29
- **Case number:** Civil Appeal Nos. 4500 and 4501 of 1984
- **Bench:** 0. Chinnappa Reddy, A.P. Sen, E.S. Venkataramiah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-amar-nath-om-parkash-and-ors-etc-v-state-of-punjab-and-ors-etc-8980
- **Pages:** 30

## Headnote

Punjab Agricultural Produce Markets Act-Excess fee collected from
dealers by Market Committee u/s 23 declared invalid by Court-Sec. 23A enacted
enabling market committees to retain excess collection in case of dealers who had
passed on the burden of such fee to the next purchaser of such atricultura/ pro·
duce-Section-Whether within legislative competence-Whether State Legislature
competent to validate levy declared by Court as bad in law.
After the decision of the Supreme Court in Kewal Kri1han Puri
v. State of Punjab AIR 1980 SC 1008 holding that the increase of the
market fee from Rs. 2 to Rs. 3
perhundred leviable on the agricultural
produce brought or sold by a licensee in the notified market area under
section 23 of the Punjab Agricultural Produce Markets Act was not justified,
some dealers wanted refund of the market fee in excess of Rs. 2/-per
hundred already collected by various market committees.
But, the Supreme
Court held in Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC
1037 that dealers who had not passed on the liabilities to others and
others who bad contributed to or paid the excess one parcent were entitled
to make claim for such sums as were due to them from the concerned
market committees a'Jd directed the market committees to pay the same.
The Court further directed that the unclaimed amounts, if anyJ shall be
permitted to be used by the respective market committee for the purposes
falling within the statute as interpreted by this Court in C.A. 1083 of
1977.
Thereafter more or less in tune wilh these directions given by the
Court, the Punjab Agricultaral Produce Markets Act was amended by
the introduction of section 23-A
It priovided, inter alia, that nctwithstanding anything contained in any judgment decree or order of any courtJ
it shall be lawful for a committee to retain the fee levied and collected
by it from a licensee in excess of that leviable under section 23 if the
burden of such fee passed on by the licensee to the next purchaser of the
agricultural produce in respect whereof such fee was levied and coliected.
The appellants challenged before the High Court the constitutional validity
of section 23·A and the same was upheld.
The appellant contended (I) that Section 23-A was a blatant. attempt
to validate a levy which had been declared invalid by the Supreme Court
and this was not permissible (2) that while the legislature was competent
to enact a law for the levy of fee and matters incidental and ancillary
thereto, it was incompetent to legislate providing for the retention by any
authority of fee illegally levied.
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AMAR. NATH OMPARi:ASH v. PUNlAli
Dismissing the appeals by tho appellants
HELD :
(1) The general scheme of the Pnnjab Agriculture Produce
Markets Act and the Act, as amended and in force in Haryana, are broadly
on the same lines as the Madras and the Andbra Pradesh Acts and similar
enactments in other States.
Sections 13, 26 and 28 of the Act covers a
vast range of topics and are so wide as take in a multitude of direct and
indirect ways of achieving the principal object of the Act, namely, the
better regulation of the purchase, sale, storage and processing of agricultural
produce and the establishment of markets for agricultural produce.
Some
of the purposes for which the funds may be expended may on a first
· impression appear to be municipal or govenmental functions, but a closer
scrutiny will reveal that they are clearly associated with providing better
facilities for marketing of agricultural produce. [81H; 86C-D)
(2) The primary pμrpose of s. 23·A is to prevent the refund of licence
fee by the market committee to dealers, who have already passed on the
burden of such fee to the next pucrhaser of the agricultural produce and
who want to unjustly enrich themselves by obtaining the refund from the
market committee.
S. 23·A, in truth recognises the consumer-pubiic who
have borne the ultimate burden as the persons who have really paid the
amount and so

## Text

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M/S. AMAR NATH OM PARKASH AND ORS. ETC
v.
STATE OF PUNJAB AND ORS. ETC.
November 29, 1984
(0. CHINNAPPA REDDY, A.P. SEN AND E.S. VENKATARAMIAH, JJ.]
Punjab Agricultural Produce Markets Act-Excess fee collected from
dealers by Market Committee u/s 23 declared invalid by Court-Sec. 23A enacted
enabling market committees to retain excess collection in case of dealers who had
passed on the burden of such fee to the next purchaser of such atricultura/ pro·
duce-Section-Whether within legislative competence-Whether State Legislature
competent to validate levy declared by Court as bad in law.
After the decision of the Supreme Court in Kewal Kri1han Puri
v. State of Punjab AIR 1980 SC 1008 holding that the increase of the
market fee from Rs. 2 to Rs. 3
perhundred leviable on the agricultural
produce brought or sold by a licensee in the notified market area under
section 23 of the Punjab Agricultural Produce Markets Act was not justified,
some dealers wanted refund of the market fee in excess of Rs. 2/-per
hundred already collected by various market committees.
But, the Supreme
Court held in Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC
1037 that dealers who had not passed on the liabilities to others and
others who bad contributed to or paid the excess one parcent were entitled
to make claim for such sums as were due to them from the concerned
market committees a'Jd directed the market committees to pay the same.
The Court further directed that the unclaimed amounts, if anyJ shall be
permitted to be used by the respective market committee for the purposes
falling within the statute as interpreted by this Court in C.A. 1083 of
1977.
Thereafter more or less in tune wilh these directions given by the
Court, the Punjab Agricultaral Produce Markets Act was amended by
the introduction of section 23-A
It priovided, inter alia, that nctwithstanding anything contained in any judgment decree or order of any courtJ
it shall be lawful for a committee to retain the fee levied and collected
by it from a licensee in excess of that leviable under section 23 if the
burden of such fee passed on by the licensee to the next purchaser of the
agricultural produce in respect whereof such fee was levied and coliected.
The appellants challenged before the High Court the constitutional validity
of section 23·A and the same was upheld.
The appellant contended (I) that Section 23-A was a blatant. attempt
to validate a levy which had been declared invalid by the Supreme Court
and this was not permissible (2) that while the legislature was competent
to enact a law for the levy of fee and matters incidental and ancillary
thereto, it was incompetent to legislate providing for the retention by any
authority of fee illegally levied.
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AMAR. NATH OMPARi:ASH v. PUNlAli
Dismissing the appeals by tho appellants
HELD :
(1) The general scheme of the Pnnjab Agriculture Produce
Markets Act and the Act, as amended and in force in Haryana, are broadly
on the same lines as the Madras and the Andbra Pradesh Acts and similar
enactments in other States.
Sections 13, 26 and 28 of the Act covers a
vast range of topics and are so wide as take in a multitude of direct and
indirect ways of achieving the principal object of the Act, namely, the
better regulation of the purchase, sale, storage and processing of agricultural
produce and the establishment of markets for agricultural produce.
Some
of the purposes for which the funds may be expended may on a first
· impression appear to be municipal or govenmental functions, but a closer
scrutiny will reveal that they are clearly associated with providing better
facilities for marketing of agricultural produce. [81H; 86C-D)
(2) The primary pμrpose of s. 23·A is to prevent the refund of licence
fee by the market committee to dealers, who have already passed on the
burden of such fee to the next pucrhaser of the agricultural produce and
who want to unjustly enrich themselves by obtaining the refund from the
market committee.
S. 23·A, in truth recognises the consumer-pubiic who
have borne the ultimate burden as the persons who have really paid the
amount and so entitled to refund of any excess fee collected and there·
fore directs the market committee representing their interests to retain the
amount.
It has to be in this form because it would, in practice, be a
difficult and futile exercise to attempt to trace the individual purchasers and
consumers who ultimately bore the burden.
It is reaJly a law returning
to the public what it has taken from the public, by enabling the Committee
to utilise the amount for the performance of services required of it under
the Act.
Instead of allowing middlemen to profiteer by illgotton gaios,
the legislature bas· devised a procedure to undo the wrong that has bel'o done
by the excessive levy by allowing the Committee• to retain the amount to
be utilised hereafter for the benefit of the very persons for whose benefit
the marketing legislation was enacted. [97D-G)
(3) There is Dt> substance in the argument that sec. 23-A is an attempt
at validating an illegal levy. Sction 23-A does not permit any recovery of fee
at the rate of Rs 3 per hundred in respe~t of any sales of agricultural produce
before or after the coming into force of that provision.
There is no
attempt at retrospective validation of excess collection nor any attempt at
providing for future collection at the rate of Rs. 3 per hundred.
AJI that
section 23-A does is to prevent unjust enrichment by those dealers who
have already passed on the burden of tho fee to the next purchaser and
so reimbursed themselves by also claiming a refund from the market com·
mittees.
It gives to the public through the market committee what jt has
taken from the public and is due to it.
There is no justification for
characterising a provision like section. 23-A as one aimed at validating an
illegal levy.
It is consistent with the spirit of Kewal Jrrlshan case and
th~
Jetter of Shiv Shankar Dal Mills case. [98B·D)
Walati Ram Mahabir Prasad v. State of Punjab, AIR 1983 P & H J20 &
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R. S. Joshi v. Ajlt Mills AIR 1977 SC 2279 approved.
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st1PIUlMB COURt REPORTS
(1985) 1 S.C,R.
Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC 1037
followed.
Orient Paper Mills Limited v. State of Oris.<a [1962] I SCR 549,
R.S. Joshi v. Ajit Mills AIR 1977 SC 2279 relied upon.
Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008, Srinivasa
. General Traders State of Andhra Pradesh AIR 1983 S. C. 1246, Kutt/ Keya
v. State of Marfra>'. AIR 1954 Mad 621 Arunachala Nadar, Stare of Madra~,
AIR 1959 SC 300, Inimedisetti RamKrishnaiah Sons v. State of Andhra Pradesh,
AIR 1976 AP \93 Sreenivasa General Taaders v. State of A. P. AIR 1983
SC 1246, Shirur Matt [1954] SCR 1005; Hingir-Rampur Coal Co. Ltd. v.
State of Orissa, [1962] 2 SCR 537, Corporation of Calcutta v. Liberties
Cinema [1965] 2 SCR 477, H. H. Sudhundra Thirtha Swamiar v. Commissioner,
[1963] Supp. 2 SCR 302, [{. [{. S;ri Swamlji v. Commissioner,
Hindu
Rellgiou~ and Charitable Endowments Department [1980] I SCR 368, Municipal Corporation Delhi v. Mohd. Yasin [1983] 3. SCC 229, Graving Dock
Co. Ltd. v. Horton, [1951] A. C. 737 at 761, Home Office v. Dorset Yacht
Co., [1970[ 2 All E. R. 294, Herington v. British Railways Board [1972] 2
W. LR. 537, & State of Bombay v. Un/tea Motors (India) Ltd, [19l3] SCR
1069 referred to.
A. V Nachane and Ors. v. Union of India, [1982] 1 SCC 2,'6 and
Abdul Quadar & Co. v. Sales Tax Officu, AIR 1964 SC 922; held inapplicable.
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4500 and
4501 of 1984.
Appeals by Special leave from the Judgment and Order dated
the 18th January and 25th January, 1984 of the Punjab and Haryana
High Court in Civil Writ Nos. 3300 of 1981 and 4757 of 1982.
H.K. Puri, M.P. Jha and Sanjeev Wa/ia for the Appellants.
S.K. Bagga for the Respondent.
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L.N. Sinha, A.K. Panda and Ashwani Kumar for the Respon-
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dent.
The Jndgment of the Court was delivered by
CHINNAPPA REDDY, .I. The appellants, who are traders engaged
in the purchase and sale of agricultural produce, appear to be a
determined lot. For over a decade, they or those similarly placed
have been litigating and impeding the levy and collection of market
fee by the Market Committees constituted under the Punjab Agricultural Produce Marke!s Act. Sometimes they have been successful,
sometimes they have not. One of the occasions when they appeared
to be successful was when this Court in Kewal Krz~han Puri v. S.tate
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AMAR NATI! oi.IPARICASH v. PUNJAll (Chlnnappa Reddy, J.)
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of Prmja/Al) declared that the enhancement of the fee from 2 % to
:t % was illegal. the court while striking down the enhancement or
foe fee laid down no new principles but made certain general obser- _
vations which, we regret to say, have been so misuderstood and
misinterpreted as to lead_ to some confusion and public mischief.
The misunderstanding and confusion have also naturally led to more
\ litigation. _ Fortunately, in Srinivasa General Traders v. State of
Andhra Pradesh(2), this Court has removed much of the misunderstanding, clear_ed_many of the cobwebs and retrieved the situation.
Before we proceed to consider the question at issue in the
present case, it will be fair to recall the object and purpose of the
Punjab Agricultural Produce Markets Act aud similar enactments
in force in other States. -Far back in 1953, Rajamannar, CJ and
· T.L. Venkatarama Aiyar, J, in Kut ti Keya v. The State' of Madrak(a),
considered the provisions of the Madras Commercial Crops Markets
Act, 1933(one of the fore-runner of the Punjab Agricultural Produce
Markets Act and other similar enactments elsewhere. The general
nature oithe legis!atiori was explained .b~ Venkatarama Aiyar, J.,
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as follows:
·" ... the Subject-matter of the impugned Act is marketin~ and legislation on marketing is now a well-recognised
feature ·of all commercbl countries. The need for such a
_ legislation arises whenever societies passed on from the stage
_ of self-s'lpporting economic unit, producing only articles for
· its own consumption to that of a commercial community
· .... _
prcducing articles for sale in outside areas for profit.
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While_ in the former stage, transactions would be generally
~~--settled directly between the sd!er and the purchaser, the
price being paid and delivery of the commodity taken at
------the time of the deal, the conditions would be different when-
-_ ·commercial crops are begun to be raised. The ultimate pur-
- chasers of these commodities would generally be persons
outside the area of production, a merchant residing - in
, -'another State and even in a foreign country.
-"To bring about a deal botween the local producers
and the outside purchasers, there emerged a class of
(I) AIR 1980 SC 1008.
(2) AIR 1983 S.C, 1246.
01 AIR 1954 Mad. 621.
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sUPREME COURT illlPORti\
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middlemen.
Even in well-organised and economically
advanced countries like England, it was found that the
agr'.culturist producer had not facilities for disposing of the
goods to his best advantage (vide the statement of Dr.
Addison, Minister for Agriculture, quoted at page 80 of
the Indian Central Banking Enquiry Committee Report,
Vol. I, Part II). It is these conditions that have led up to
the enactment of marketing laws in all countries having a
large volume of trade in ~omme1cial crops.
The object of
this legislation is to protect the p(Oducers of commercial
crops from being exploited by middlemen and profiteers
and to enable them to secure a fair need for their produce.
The need for such legislation is even greater in India
as the producers are as a class illiterate and economically
dependent and unstable. This question had engaged the
attention of several committees which had been constituted
to report on various economic matters. Indian Cotton was a
commodity greatly in demand in England and other coun·
tries and in the Central Provinces and Berar open markets
for cotton were established through legislation. In 1919, the
In jian Cotton Committee observed in their report that the
marketing system afforded great protection to the producers
and that special legislation should be undertaken to establish
such markets in every cotton growing area.
The Royal Commission on Agriculture in India recor·
ded a considerable body of evidence on the state trade in
food crops and it ghowed the need for legislative action for
safeguarding the fo.terests of the producers (vide report
dated 1928). In 1931 the Indian Central Banking Enquiry
Committee considered in Chapter VII of its report th@
condilions with reference to marketing. It is therein pointed
out that the village producer was seldom able to get a
proper price because he was chronically indebted to the
middlemen who advanced loans on the security of the
crops to be grown and were thus in a position to dictate
their own terms and that the bari:ains were seldom fair to
the seller.
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"It was also observed that for want of facilities fot
ware· housing the produce, the grower was not in a position
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to wait and sell the commodities for proper price (vido
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AMAR NATH OMPAll.KASH v. PUNJAB (Chinnappa Reddy, J.)
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pages 78 and 79). In 1933 the Act now under consideration
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was passed with the object of providing for "the better
regulation of buying and selling of commercial crops". It
must be mentioned that at that time the only products
which had become commercial crops having an internat10nal
market were cotton, groundnuts and tobacco ; and the
definition of commercia I crops as enacted originally com·
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prised only these three crops."
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"Various suggestions were ·made for improving the
market conditions (vide pp. 92 and 63). In the report
of the Planning, Comission published in 1952, Chapter
XVII, Vol. 1, deals l'tith agricultural marketing and after
referring to the working of the regulated markets in Bombay,
Madras, Hyderabad and Madhya Pradesh, it throws out
several suggestions for future improvements. It must be
added that there has been legislation on lines similar to
those of the Madras Act in several of the States in India.
"It will be clear from the above survey of the marketing legislation that its object is to enable producers to get
a fair price for their commodities and that it has been
generally adopted in all commercial States. Such laws have
been held in America to be within the Police l>ower of the
State as tending to promote general welfare (Vide- 'Parker
v. Brown', ((1942) 87 Law ED 315 (D).]
Under the Indian
Constitution, they must be upheld under Art. 19 (6) as
reasonable and enacted in the interests of the general
public."
The decision of the Madras High Court in Kutti Kera v. The
State was affirmed by a Constitution Bench of the Supreme Court
in Arunachala Nadar v. State of Madras.(1)
Subba Rao, J. referring
to the background of the Act, observed :
"There is a historical background for this Act. Marketing legislation is now a well·settled feature of all commercial
countries. The object of such legislation is to protect the
producers of commercial crops from being exploited by the
middlemen and profiteers and to enable them to secure a
fair return for their produce. In Madras State, as in other
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SUPREME coun REPORTS
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parts of the country, various Commissions and Committees
have been appointed to investigate the prob!em, to su)';est
ways and means of providing a fair deal to the gr<•.',crs
of crops. pa1ticularly commercial crops, and find a m~.·:kt
for selling their produce at proper rates. Several Commit·
tees, in their reportl, considered this question and suggested
. that a satisfactory system of agricultural marketing should
be introduced to achieve the object of helping the agri·
culturists to secure. a proper return for the produce grown
·by them."
The learned Judge then referred to the report of the Royal
Commission on Agriculture in India, the report of the Expert
Committee appointed by the Government of Madras, and proceeded
to observe:
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"With a view to provide satisfactory conditions for the
growers of commercill crops to sell their produce on equal
terms and at reasonable prices, the Act was passed OD 25th
July, 1933. The preamble introduces the Act with the
recital that it is expedient to provide for the better regufa·
tion of the buying and selling of commercial crops · m · the
Presidency of Madras and for that purpose to establish·
market and make rules for their proper administration. The
Act, therefore, was the result of a long exploratory investi· ·
gation by exports in the field, conceived and enacted to
· regulate the buying and selling of commercial crops by .
providing suitable and regulated market by eliminating
middlemen and bringing face to face the produces and the
buyer so that they may meet on equal terms, thereby
eradicating or at .any rate reducing the scope for exploita· ·
tion in dealings. Such a statute cannot be said to create
unreasonable restrictions on the citizens and right to do
businesss unless it is clearly established that the provisions
are too dmstic, unnecessarilyr harsh and over-reach the
scope of the object to achieve which it is enacted."
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" ... Shortly stated, the Act, Rules and the Bye-laws framed
thereunder have a long-term target of providing a net work
of markets where in facilitiel for correct weighment are
ensured! stora~e accommodation is provided! and equal
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AMAR NATH OMPARKASH v. PUNJAB (Chinnappa Reddy, J.)
powers of bargaining emured, so that the growers may
bring their commercial crops to the market and sell them
at reasonable prices.
Till such markets ace established,
the said provisions, by imposing licensing restrictions,
enable the buyers and sellers to meet in licensed premises,
ensure correct weighment, make available to them reliable
market information and provide for them a simple machi·
nery for settlement of disputes. After the markets are built
or opened by the marketing committees, within a reasonable
radius 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"
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In Immedisetti Ramkrishnaiah Sons v. State of Andhra Pradesh(l),
the nature of the duties of a Market Committee was
explained :
"Another unfounded assumption of the learned counsel
was that the activities of the Market Committee and the
facilities provided by it were confined by the Act to the
market area only. The establishment, maintenance and
improvement of the market is one of the purposes for
which the Market Committee lcund might be expended
under Sec. 15 of the Act. The other Services such as the pro·
vision and maintenance of standard weights and measures,
the collection and dissemination of information regarding
all matters relating to crop statistics and marketing in
respect of notified agricnltural produce, livestock and pro·
ducts of livestock schemes for the extension or cultural
improvement of notiJiad agricultural produce including the
grant of financial aid to scheme for such extension on
improvement within such area undertaken by other bodies
or individuals, propaganda for the improvement of agricul·
ture, livestock and products of livestock and thrift, the
promotion of grading services, measures for the preser·
vation of the foodgrains, etc. are not services which are
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SUPREME COURT REPORTS
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confined to the market area only. They area services which
are required ~o be performed by the Market Committe nn<' '
which may be rendered throughout the notified market
area without being confined to the market. Further, the'
facilities provided in the market are available for the use
of every grower of agricultural produce and owner of .livestock within the notified market area. It is too much to
expect the Market Committee to provide the same'facilities
as are available in the market area in every nook and ·
corner of the notified market area. It is up to the growers
of agricultural produce and owners of livestock to avail
themselves of the facilities afforded in the market. None can
complain against the levy of licence fees on the ground that
some may not avail themselves of· the facilities available in
the market."
lmmedisetti Ramakr!shnayya Sons v. State of Andhra Pradesh
{supra) was approved by this Court in Sreenivasa General Traders
· v. State of A.P.,(1) where it was observed :
"It is obviously in the interests of the producers of
agricultural produce that they can get the best competitive
prices in an open market and that they have not to pay the
middlemen. Sale or purchase of agricultural produce in
such a' market under the supervision and control of the
-market committee is likely to be in ready cash and therefore advantageous to the producers and the use of standard
·weights must eliminate the possibility of his being victimized by malpractices. Supervision of the operations in the
notified market area can be . more conveniently done if
business is carried on in a specified area or areas intended
for that purpose. The Act is an integrated one and it
regulates the buying and selling of notified agricultural
produce, livestock and products of livestock from a centra·
. Jized place."
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"The contention that there is no liability cast on the
petitioners to pay market fee on transactions of sale and
purchase of notified agricultural produce, livestock and
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(1) ATR. 19S3 S.C. 1246.
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AMARNATI{ OMPARUSll v. PUNJAB (Chinnappa Reddy, J')
81
products of livestock proceeds on a wrongful assumption
that they can still carry on such trade from their premises
in the notified market area, but outside the market in that
area. In view of the express prohibition contained in subsection (6} of Sec. 7, the petitioners cannot carry on such
trade by not resorting to the market proper."
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"There is a fallacy underlying the argument that since
the services are rendered by market committees within'· the
market proper, there is no liability to pay a market fee on
purchase or sale taking place in the notified market area
but outside the market. The contention does not take
note of the fact that establishment of a regulated market
for the purchase or tale of notified agricultural produce,
livestock or products of livestock is itself a service rendered to persons engaged in the business of purchase or sale
of such commodities. The duty of a market committee
constituted under sub-section (I) of sec. 4 of the Act does
not end with establishing such number of markets in the
notilled market area under the first part of sub-section (3)
but also extends to the providing of such facilities in the
market as the Government may from time to·. time by
general or special order specify under the second part of
sub-section (3). In exercise of their powers under sec. 33
of the Act, the State Government have framed the Andhra
Pradesh (Agricultural Produce and Livestock) Markets
Rules, 1969.
Chapter V relates to 'Regulation of trading'.
It would appear that Rules 48 to 53 are the machinrey
provisions for controlling the trade in notified agricultural
produce, livestock and products of livestock in a notified
area while Rules 54 to 73 impose restrictions on the carrying on of all such trade in such area. It is clear from the
provisions of 11ec. l S of the Act that the services to be
rendered by the market committee and facilities to be provided are not confined to the market proper but extend
throughout the notified area."
The general scheme of the Punjab Agricultural Produce
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SUPREME COURT REPORTS
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are broadly on the same lines as the Madras and the Andhra
Pradesh Acts and similar enactments in other States. Thongh
we do not consider it necessary to refer to all the provisions of the
Punjab and H.aryana Acts, we think it may be appropriate to mention here those provisions of the Act which enumerate some of the
duties and powers of the Market Committees constituted under the
Acts and the purposes for which the Marketing Development Fund
and the Market Committee Fund may be expended. We may mention that while there is to be a State Agricultural Marketing Board
for .the entire State for performing the functions and duties assigned
to the Board by the Act, the State Government may declare specified, notified areas as market areas for each of which there shall be
a market committee. The Board is vested with powers of superintendence and control over the committees. Section 13 prescribes
the duties and powers of market committees and is in the following
terms:
"13-Duties and powers of Committee-(1) It ihall be
· the duty of a Committee-
(a) . to enforce the provisions of this Act and the rules
and bye-laws made thereunder in the notified market area
and, when so required by the Board, to establish a market
. therein providing such facilities for persons visiting it in
connection with the purchase, sale, storage, weighment and
processing of agricultural produce concerned as the Board
may from time to time direct ;
(b) to control and regulate the admission to the
market, to determine the conditions for the use of the market and to prosecute or confiscate the agricultural produce
belonging to person trading without a valid licence ;
(c) to bring, prosecute or defend or aid in bringing,
prosecuting or defending any suit, action, preceding,
application or arbitration, on behalf of the Committee or
otherwise when directed by the Boards.
(2) Every person licensed under sec. 10 or sec. 13
and every person exempted nnder sec. 6 from taking out
licence, shall on demand by the Committee or any person
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AMARNA TH OMPARKASH v. PUNJAB (Chinnappa Reddy, J.)
authorised by it in this behalf furnish such information
and returns, as may be necessary for proper enforcement
of Act or the rules and bye-laws made thereunder.
83
(3) Subject to such rules as the State Government may
make in this behalf, it shall be the duty of a Committee to
issue licences to brokers, weighmen, measurers, surveyors,
gddown keepers and other functionaries for carrying on
their occupation in the notified market area in respect of
agricultural produce and to renew, suspend or cancel such
licences.
(4) No broker, weighman, measurer, surveyor, godown
keeper or other functionary shall, unless duly authorised
by licence, carry on his occupation in a notified market
area in respect of agricultural produce:
Provided that nothing in sub-sections (3) and (4) shall
apply, to a person carrying on the business of warehouseman who is licensed under the Punjab Warehouses Act,
1957 (Punjab Act No.2 of 1958)".
Section 25 provides for the creation of a Marketing Development
Fund out of which the Board has to defray its expenditure. Sections
27 Provides for the creation of Market Committee Fund out of
which the Committee has to defray its expenditure. The purpose
for which the Marketing Development Fund may be expended are
specified in sec. 26 as follows :
"26-The Marketing Development Fund shall be utilised out
of following purposes :-
(i) Better marketing of agricultural produce ;
(ii) Marketing of Agricultural produce on co-operative lines;
(iii) collection and dissemination of market rates and news ;
(iv) grading and standardisation of agricultural produce ;
(v) general improvements in the markets or their respective
notified ;
(vi) maintenance of the office of the Board and construction
and repair or its office buildings, rest-house and staff
quarters ;
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SUPREMI! COURT REPORTS
[1985] 2 S.C.R.
{vii) giving aid to financially weak Committees in the shape
' · ·
ofloans and grants ;
·
{viii) payment of salary, leave allowance, gratuity, compassionate allowance, compensation for injuries or death
resulting from accidents while on duty, medical aid,
, pension or provident fund to the persons employed by
. , . the Board and leave and pension contribution to Govern-
, ment servants on deputation ;
·{ix)'· iravelling
and other allowances to the · employees
of the Board, its members and members· of Advisory
Committees ;
{x) . propaganda, demonstration and publicity _ in favour of
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agricultural improvements ;
{xi) production and betterment of agricultural. produce ;
I
· (xii) -meeting any legal expenses incurred by the Board ;
{xiii)
! If •
{xiv)
{xv)
imparting educaiion in marketing or agricultur~ ;
. construction of godowns ; -
1.oans and advances to· the employees ;
{xvi) expenses incurred in auditing the accounts of the Board;
\
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{xvii) -witli the previous senction of the State Government,
·any other purpose which is calculated to promote the
general interests of the Board and the Committees {or
the national or public interests) ;
Provlded that if the Board decides to give aid of more
than five thousand rupees to a financially weak Committee
under clause (vii), the prior approval of the State Govern·
ment to such payment shall be obtained.
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(
The purposes for which the Market Committees Fund may be .
expended are specified in sec. 28 as follows :-
"28-Purposes for which the· Market Committee Funds
may be expended. Subject to the provisions of section 27
the Market Committee Funds shall be expended for the
· following purposes :-
H
(I) AIR 1983 SC 1246
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AMARNATli OMPARKASH v. PUNIAB (Chinnappa Reddy, J.)
85
(i)
(ii)
(iii)
acquisition of sites for the market ;
maintenance aud improvement of the market ;
construction and repair of buildings which are necessary for the purposes of the market and for the health,
convenience and safety of the persons using it ;
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(iv)
(v)
provision and maintenance of the standard weights
and measures ;
pay, leave, allowances, gratuities, compassionate
allowances and contributions towards leave allowances,
compensation for injuries and death resulting from
accidents while on duty, medical aid, pension or provident fund of the persons
employed
by the
Committee;
(vi) payment of interest on loans that may be raised for
purposes of the market and the provisions of a sinking
fund in respect of such loans ;
(vii) collection and dissemination of information regarding all matters realting to prop statistics and marketing in respect of the agricultural produce concerned ;
(viii) providing comforts and facilities, such as the shelter,
shade, parking accommodation and water for the persons, draught cattle vehicles and pack animals link
roads I coming or being brought to the market or on
construction and repair of approach roads, culverts,
bridges and other such purposes :
(ix) expenses)ncurred in the maintenance of the offices and
in auditing the accounts of the Committees ;
(x) propaganda in favour of agricultural improvements and
thrift ;
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(xi) production and betterment of agricultural produce ;
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(xii) meeting any legal expenses incurred by the Committee ;
(xiii) imparting education in marketing or agriculture ;
(xiv) payments of travelling and other allowances to the
members and employees of the committ.ee, as pres;,
cribed ;
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SUPREME coiJRt REPORTS
(xv) loans and advances to the employees ;
(xvi) expenses of and incidental to elections, and
[198S] 2 s.c.it.
(xvii) with the previous sanction of the Board, any other purpose which is calculated to promote the general interest
of the Committee or the notified market area (supra)
(or with the previous sanction of the State Government, any purpose calculated to promote the national
or public interest)".
It will be seen that sections 26 and 28 cover a vast range of
topics and are so wide as to take in a multitude of direct and indirect ways of achieving the principal object of the Act, namely, the
better regulation of the purchase, sale, storage and processing of
agricultural produce and the establishment of markets for agricultural produce. Some of the purposes for which the funds may be
expended may on a first impression appear to be municipal or
govemental functions, but a closer scrutiny will reveal that they are
clearly associated with providing better facilities for marketing of
agricultural produce. In fact, some of them may be municipal or
governmental functions, but may yet be purpose for which the funds
of the marketing board and marketing committees may be usefully,
lawfully and perhaps necessarily expended. For example, it is of
fundamental importance that there should be a network of roadways
if effective aid is to be given to farmers to transport and market
their produce. Section 23 of the Act enables the Committee, subject to such rules as may be made by the State Government in that
behalf, to levy on ad volorem basis, fee on the agriculrural producebought or sold by a licensee in the notified market area at a rate not
exceeding the rate mentionej in sec. 23 from time to time for every
one. hundred rupees. The fee which was originally 50 paise per 100
was ·raised to Re. l per 100 in 1969, thereafter to Rs. 1.50 in 1973
and to Rs. 2.25 in 1974. Later the fee was raised to Rs. 3 per
100. It was this enhancement of fee to Rs. 3 per 100 that was
challenged by several dealers from Punjab and Haryana in Kewal
Krishan v. State of Punjab (Supra). A Constitution Bench of this
Court, after referring to the principles laid down in the leading cases
of Shirur Matt,(11 Hingir-Rampur Coal Co. Ltd. v. State of Orissa,('J
Corporation oJ,Calcutta v. Liberties Cinema etc. thought that in all the
(I) (1954) SCR 1005
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(2) [1962] 2 SCR 537
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AMARNATH OMPARKASH v. PUNJAB (Chinnoppa Reddy, J.)
87.
/
circumstances of the case, an increase of the license fee beyond Rs 2
per 100 was not justified. The court noticed that each of the market
Committees had huge surpluses and had made large donations to educational institutions and expended funds for other purposes wholly
unconnected with the purpose stipulated by the Act. It appeared
that the increase from Rs. 2 to Rs. 3 in the year 1978 was made
largely to compensate the market committees for having contributed
the huge sum of Rs. One crore to the Medical College, Faridkot.
Having regard to the huge surpluses and unauthorised items of
expenditures, the court came to the conclusion, on the facts of the
case, that the in crease of fee above Rs. 2 per 100 was not justified.
In the course of the discussion, Untwalia, J. who spoke for the Court
made certain observations which when turn out of context appear
to give rise to some misunderstanding. For example, at page 1016 of
AIR, he said :
"But generally and broadly speaking, it must be shown
with some amount of certainty, reasonableness or preponderance of probability that quite a substantial portion of the
amount of the fee realised is spent for the special benefit of
its payers''.
This sentence should not be read in isolation. It must be read
in the context of the facts of the case. In fact, in the very sentence,
preceding the one quoted, it was said :
"It may be so intimately connected or interwoven with
the services rendered to others that it may not be possible
to do a complete dichotomy and analysis as to what
amount of special service was rendered to the payers of the
fee and what proportion went to others".
That was why Sen J. in Sreenivasa General Traders v. State of
Andhra Pradesh (Supra) took immense pains to explain the observations of Untwalia J. and place them in their proper setting.
He
observed, very rightly indeed,
"In the ultimate analysis, the Ccurt held in Kewal
Krishan Puri's case, supra that so long as the concept of fee
remains distinct and limited in contrast to tax, such expenditure of the amounts recovered by the levy of a market fee
cannot be countenanced in law. A case is an authority··· 1
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)lUPllilME COuRT llEPollrs
[1985] 2 s.c.tt.
only for what it actually decides and not for what may
logically follow from it. Every judgment must be read as
applicable to the particular facts proved, or assumed to be
proved, since the generality of the expressions which may be
founded there are not intended to be expositions of the
whole Jaw but governed or qualified by the particular facts
of the case in which such expressions are to be found. It
would appear that there are certain observations to be
found in the judgment in Kewat Krishan Puri's case, supra.
which were really not necessary for purposes of the decision
and go beyond the occasion and therefore they have no binding authority though they may have merely persuasive
value. The observation made therein seeking to quantify
the extent of correlation between the amount of fee collected and the cost of rendition of service, namely :
"At least a good and substantial portion of the amount
collected on account of fees, may be in the Mighbourhood
of two-thirds or three-fourths must be shown with reasonable certainty as being spent for rendering serv!ces in the
market to the payer of fee". appears to be an obiter''.
Obviously Untwalia, J. did not purport to lay down any new
principles and could not have intended to depart from the series of
earlier case of thi> Court. For instance, in H. H. Sudhtmdra
Thirtha Swamiar v. Commissioner(') the Court had said,
" ......... nor is it a postulate of a fee that it must have
direct relation to the actual services rendered by the authority to individual who obtains the benefit of the service.
lf with a view to provide a specific service, levy is imposed
· by Jaw and expenses for maintaining the service are met
out of the amounts collected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee
and not in the nature of a tax ......... b\Jt a levy will not be
regarded as a tax merely because of the absence of unifor-
. mity in its incidence, or because of compulsion in the collection thereof, nor because some of the contributories do not
obtain the same degree of service as others may".
(I) [1!163] Supp 2 "'CR 302 ..
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'AMAl\NATH OMPARKASH •• PllNJAB (Chinnappa Reddy, J.)
89
In Hingir-Rampur Coal Co. Ltd. v. State of Orissa (Supra) the
Court bad said, :
"If specific services , are rendered to a specific area or
to a specific class of persons or trade or business in any
local area, and as a condition precedent for the said services
or in return for them cess is levied against the said area or
the said class of person; or trade or business, the cess is
distinguishable from a tax and is described as a fee"' •
......... ........................ ...... ... ············ ......... ········· ..... .
"It is true that when the Legislature levies a fee for
rendering specific services to a specified area or to a speci- \
lied class of persons or trade or business, in the last analysis
such services may indirectly form part of services to the
public in general.