# MOHAMMAD HUSSAIN GULAM MOHAMMAD AND ANOTHER v. THE STATE OF BOMBAY AND ANOTHER

- **Citation:** [1962] 2 S.C.R. 659
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** P. B. Gajendragadkar, A. K. Sarkar, K. N. Wanohoo, K.C. DAs GUPTA, N. Rajagopala Ayyangar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/mohammad-hussain-gulam-mohammad-and-another-v-the-state-of-bombay-and-another-2282
- **Pages:** 20

## Headnote

Agricultural Produce Markets-Enactment for regulation of
purchase and sale of such produce -Constitulion,1l validity-Validity of rules framed under the Act-Bombay Agricultural Produce
Markets Act, I939 (Bom. 22 of 1939), ss. 4, 4A, 5, 5A, 5AA, II,
29, rr. 53, 64, 65, 66, 67·-Constitution of India, Arts. I9(l)(g),
19(6).
.
The Bombay Agricultural Produce Markets Act, 1939, was
enacted by the Bombay Legislature to provide for the better
regulation of buying and selling of agricultural produce in the
State of Bombay and the establishment of markets for such
produce. Under the provisions of the Act power was given to
the commissioner by notification to declare certain areas as
market areas as a result of which such areas could not thereafter
be used for the purchase or sale of any agricultural produce
specified in the notification, except under a licence.
Markets
were to be established and market committees constituted
with power to grant licences for operation in the market.
By
s. II a market committee may, subject to the provisions of the
Rules and subject to such maxima as may be prescribed, levy
fees on the agricultural produce bought and sold by licencees in
the market area. Section 2g enabled the State Government by
notification in the official Gazette to add to, an1end or cancel
any of the items of agricultural produce specified in the Schedule to the Act. The petitioners challenged the validity of the
Act and the rules framed thereunder, and in particular ss. 4,
4A, 5, 5A. and 5AA which provided for the declaration of a
market area and the establishment of a market, as unconstitutional on the ground that they placed unreasonable restrictions
on their right to carry on trade in agricultural produce and
thus infringed their fundamental right guaranteed under Art.
19(r)(g) of the Constitution of India. They also attacked the
validity of ss. II and 29 and rr. 53, 64, 65, 66 and 67.
Held: (1) that ss. 4, 4A, 5, 5A and 5AA of the Act are constitutional and intra vires and do not impose unreasonable
restrictions on the right to carry on trade in the agricultural
produce regulated under the Act.
M. C. V. S. Arnnachala Nadar v. The State of Madras, [1959]
Supp. 1 S.C.R. 92, followed.
May 2.
660
SUPREME COURT R.EPORTS
[1962]
196 1
(2) that the fee provided by s. n though calculated on
-·-
the amount of produce bought and sold, is not in the nature of
Gulam Mohammad sales tax as it is only a levy charged for services rendered by
v.
the market committee in connection with the enforcement of
Stale of Bombay the various provisions of the Act. Accordingly, s. II is valid.
(3) that r. 53 in so far as it enables the market committee to fix any rates as it liked of the fees to be collected on
agricultural produce bought and sold in the market area, is not
valid, because under s. II unless the State Government fixes
the maxima by rule it is not open to the committee to fix any
fees at all.
(4) that under s. 29, the power given to the State Government to add to, or amend, or cancel any of the items of the
agricultural produce specified in the Schedule in accordance
with the local conditions prevailing in different parts of the
State is only in pursuance of the legislative policy which is
apparent on the face of the Act, and, therefore, the section is
intra vires.
The Edwards Mills Co. Ltd., Beawar v. State of Ajmer and
Another, [1955] r S.C.H. 735, applied.
(5) that r. 64 is merely a method of enforcing the regulatory provisions with respect to market yards and sub-market
yards and is valid.
(6) that rr. 65, 66 and 67, in so far as they authorise the
market committee to grant a licence for doing business in any
market area, go beyond the power conferred on the market committee by s. 5A, and are ultra vires.
ORIGINAL JURISDICTION:
Petition No. 129 of 1959.
Petition under Art. 82 of the Constitution of India
for the enforcement of fundamental rights.
R Ganapathy Iyer, J.B. Dadachanji, S. N. Andley,
Rameshwar Nath and P. L. Vohra, for the petit

## Text

_Characters 0–39,991 of 45,220. This is a partial read: ask again with offset=39991 for what follows._

2 S.C.R. SUPREME COURT REPORTS
659
MOHAMMAD HUSSAIN GULAM MOHAMMAD
AND ANOTHER
v.
THE STATE OF BOMBAY AND ANOTHER
(P. B. GAJENDRAGADKAR, A. K. SARKAR,
K. N. WANOHOO, K.C. DAs GUPTA and
N. RAJAGOPALA AYYANGAR, JJ.)
Agricultural Produce Markets-Enactment for regulation of
purchase and sale of such produce -Constitulion,1l validity-Validity of rules framed under the Act-Bombay Agricultural Produce
Markets Act, I939 (Bom. 22 of 1939), ss. 4, 4A, 5, 5A, 5AA, II,
29, rr. 53, 64, 65, 66, 67·-Constitution of India, Arts. I9(l)(g),
19(6).
.
The Bombay Agricultural Produce Markets Act, 1939, was
enacted by the Bombay Legislature to provide for the better
regulation of buying and selling of agricultural produce in the
State of Bombay and the establishment of markets for such
produce. Under the provisions of the Act power was given to
the commissioner by notification to declare certain areas as
market areas as a result of which such areas could not thereafter
be used for the purchase or sale of any agricultural produce
specified in the notification, except under a licence.
Markets
were to be established and market committees constituted
with power to grant licences for operation in the market.
By
s. II a market committee may, subject to the provisions of the
Rules and subject to such maxima as may be prescribed, levy
fees on the agricultural produce bought and sold by licencees in
the market area. Section 2g enabled the State Government by
notification in the official Gazette to add to, an1end or cancel
any of the items of agricultural produce specified in the Schedule to the Act. The petitioners challenged the validity of the
Act and the rules framed thereunder, and in particular ss. 4,
4A, 5, 5A. and 5AA which provided for the declaration of a
market area and the establishment of a market, as unconstitutional on the ground that they placed unreasonable restrictions
on their right to carry on trade in agricultural produce and
thus infringed their fundamental right guaranteed under Art.
19(r)(g) of the Constitution of India. They also attacked the
validity of ss. II and 29 and rr. 53, 64, 65, 66 and 67.
Held: (1) that ss. 4, 4A, 5, 5A and 5AA of the Act are constitutional and intra vires and do not impose unreasonable
restrictions on the right to carry on trade in the agricultural
produce regulated under the Act.
M. C. V. S. Arnnachala Nadar v. The State of Madras, [1959]
Supp. 1 S.C.R. 92, followed.
May 2.
660
SUPREME COURT R.EPORTS
[1962]
196 1
(2) that the fee provided by s. n though calculated on
-·-
the amount of produce bought and sold, is not in the nature of
Gulam Mohammad sales tax as it is only a levy charged for services rendered by
v.
the market committee in connection with the enforcement of
Stale of Bombay the various provisions of the Act. Accordingly, s. II is valid.
(3) that r. 53 in so far as it enables the market committee to fix any rates as it liked of the fees to be collected on
agricultural produce bought and sold in the market area, is not
valid, because under s. II unless the State Government fixes
the maxima by rule it is not open to the committee to fix any
fees at all.
(4) that under s. 29, the power given to the State Government to add to, or amend, or cancel any of the items of the
agricultural produce specified in the Schedule in accordance
with the local conditions prevailing in different parts of the
State is only in pursuance of the legislative policy which is
apparent on the face of the Act, and, therefore, the section is
intra vires.
The Edwards Mills Co. Ltd., Beawar v. State of Ajmer and
Another, [1955] r S.C.H. 735, applied.
(5) that r. 64 is merely a method of enforcing the regulatory provisions with respect to market yards and sub-market
yards and is valid.
(6) that rr. 65, 66 and 67, in so far as they authorise the
market committee to grant a licence for doing business in any
market area, go beyond the power conferred on the market committee by s. 5A, and are ultra vires.
ORIGINAL JURISDICTION:
Petition No. 129 of 1959.
Petition under Art. 82 of the Constitution of India
for the enforcement of fundamental rights.
R Ganapathy Iyer, J.B. Dadachanji, S. N. Andley,
Rameshwar Nath and P. L. Vohra, for the petitioners.
N. S. Bindra and R. H. Dhebar, for the respondents.
S. T. Desai, Trikamlal Patel and I. N. Shroff, for the
Interveners.
1961. May 2.
The Judgment of the Court was
delivered by
Wanchoo J.
WANOHOO, J.-This petition raises a question as to
the constitutionality of the Bombay Agricultural
Produce Markets Act, No. XXII of 1939 (hereinafter
referred to as the Act) and the Rules framed thereunder. The petitioners are businessmen of Ahmedabad. Their case is that by a notification under the
2 S.C.R.
SUPREME COURT REPORTS
661
Act the whole area within a radius of 12 miles of
1961
Ahmedabad city was declared to be a market area
under s. 4 of the Act for the purposes of the Act in Gutam Mahummad
respect of certain agricultural produce from J unc 1, 51 1 .i'8
1
.
a e o1
om iav
1948.
At the same time a market yard and a market
__
·
proper were eiltablished for dealing in the commodiWanchoo J.
ties mentioned above; and simultaneously a market
committee was established under s. 5 of the Act for
the Ahmedabad market area by the name of "The
Agricultural Produce Market Committee, Ahmedabad." By later notifications certain other agricultural produce was declared to be regulated under the
provisions of the Act in this market area. In 1959 a
locality known as the "Kalupur market" in the Telia
Mill compound near the railway station Ahmedabad
was declared to be a sub-market yard for the purposes
of the Act.
The petitioners apparently· were carrying on business in the Kalupur market and therefore
after the declaration of that area as sub-market yard,
the market committee required the petitioners to take
out licences under the Act without which they were
not to be allowed to carry on business. The petitioners
contend that the various provisions of the Act and
the Rules and bye-laws framed thereunder place unreasonable restrictions on their right to carry on trade
in agricultural produce and thus infringe their fundamental right guaranteed under Art. 19 (l)(g) of the
Constitution. In particular, the heavy fees payable
to the market committee for taking out licences in
order to trade in various markets impose a heavy bur ..
den on trade in the regulated commodities resulting
in an unreasonable restriction on the right of the petitioners to carry on their trade. Further the declaration of the market area and the establishment of
market yard and sub.market yards has resulted in
compelling producers of agricultura.l commodities to
carry their produce for long distances, thus imposing
an unreasonable restriction on their right to carry on
trade. The petitioners thus assail the main provisions
of the Act and some of the provisions of the. Rules
a.nd the bye-laws framed by the market committee,
84
662
SUPREME COURT REPORTS
[1962]
z96z
which we shall specify at their proper place later.
--
The petitioners also contend that the State of BomGulain Mohammad b
l
. d
I
l
.
v
ay ias never reqmre
t 1e mar mt committee to
state of Bombay establish a market as required by s. 5AA of the Act
and no market has in law been established by the
ll'anchoa J.
market committee and therefore the market committee has no power to issue licences and to exercise other
powers conferred under the Act on market committees. They therefore pray that the Act and the Rules
and the bye-laws framed thereunder may be declared
unconstitutional, ultra vires and void. In the alternative a direction should be issued to the respondents,
in particular the market committee, not to enforce
the provisions of the Act, the Rules aud the bye.Jaws
against the pet.itioners so long as a market has not
been established as required under the law.
The petition has been opposed on behalf of t.he respondents, and their contention is that the Act, the
Rules and the bye-laws provide reasonable restrictions
on the fundamental right. to carry on trade under
Art. 19(l)(g). It is further contended that a market
has been established as required by law, and therefore the market committee in particular has the right
to enforce all the provisions of the Act, the Rules and
the bye-laws and to insist upon the petitioners taking
out licences as provided therein.
Before we consider the attack made on t.he constitutionality of the Act, the Rules and the bye-laws
framed thereunder, we should like to refer to the
main provisions of the Act and the scheme of regulation provided in it. The Act deals with the regulation
of purchase and sale of agricultural produce in the
State of Bombay and establishment of markets for
such produce. Section 2 of the Act is the definition
section. Section 3 provides for the constitution of
markets and market committees and gives power to
the Commissioner by notification to declare his intention of regulating the purchase and sale of such agricultural produce and in such area as may be specified
in the notificat,ion; and objections and suggestions
are invited within a month of the publication of the
notification. Thereafter the Commissioner after considering the objections and suggestions, if any, and
2 S.C.R.
SUPREME COURT REPORTS
663
after holding such inquiry as may be necessary, der96,
clares the area under s. 4(1) to be a market area for the G 1
-;-
f h A
Th
f
u am ->fohammad
purposes o t e
ct.
e consequence o the estabv
lishment, of the market area is given in s. 4(2) which State of ~ombay
lays down that after the market area is declared, no
place in the said area shall, subject to the provisions
w.,,,hoo J.
of s. 5A, be used for the purchase or sale of any agricultural produce specified in the notification.
After
the dechtration of the market area, the State Government is given the power under s. 5 to establish a
market committee for every market area. Thereafter
under s. 5AA it becomes the duty of the market committee to enforce the provisions of the Act, and also
to establish a market therein, on being required to do
so by the State Government, providing for such facilities as the State Government may from time to time
direct, in connection with the purchase and sale of the
agricultmal produce with which the market committee is concerned.
The Act however envisages that
thero may be a time lag between the declaration of a
mll.rket area and the establishment of a market; therefore the proviso to s. 4(2) lays down that pending the
establishment of a market in a market area the Commissioner may grant a licence to any person to use
any place in the said area for the purpose of purchase
and sale of any such agricultural produce, and it is the
duty of the market committee under s. 5AA also to
enforce the conditions of a licence granted under
s. 4(2).
Further under s. 5A, where a market has
been established, the market committee is given the
power to issue licences in accordance with the Rules
to traders, commission a.gents, brokers, weighmen,
measurers, surveyors, warehousemen and other persons to operate in the market; provided that no such
licence shall be necessary in the case of a person to
whom a licence bas been granted under the proviso to
s. 4(2).
The effect therefore of these provisions of the
Act read with the definition section is this. A market
area is first declared under s. 4(1). In the market area,
tt market may be established. The Rules make it
clear that the market may consist of what are called
ma.rket proper and principal market yard and
664
SUPREME COURT REPORTS
[1962]
r96r
sub-market yards, if any. Under s. 4A for each market
G I
M h
d area there shall be one principal market yard and one
u ant . o anima
v.
or more sub-market yards as may be necessary and
State of Bombay the Commissioner is given the power by notification
to declare any enclosure, building or locality in any
IVanchoo J.
market area to be the principal market yard for that
area and other enclosures, buildings or localities to be
one or more sub-market yards for the area. As we
have already said, the Act envisages that there may
be a time lag between the declaration of a market
area and the establishment of a market, and that is
why there is a provision for licences under the proviso
to s. 4(2) pending the establishment of a market in a
market area. The establishment of a market, however, takes place only when the State Government
requires the market committee under s. 5AA to establish a market in the market area. There does not
seem to be any provision in the Act or the Rules as to
how the market committee shall proceed, on being
required to do so by the State Government, to establish a market.; but reading the provisions of s. 4A and
s. 5AA together it appears that after the State Government has required the market committee to establish
a market, it has to approach the Commissioner with
its recommendation to declare localities as the principal market yard and the sub-market ya.rds, if any,
and the Commissioner makes a notification in regard
thereto, and thereafter the market is established. Till
however such action is taken by the committee and
the Commissioner notifies a principal market yard
and sub-market yards, if any, no market can in law
be established; and other provisions of the Act which
come into force after the establishment of a market
cannot be enforced and the trade is till then regulated
in the manner provided in the proviso to s. 4(2).
After the market is established, the market committee gets the power to issue licences under s. 5A.
Other provisions of the Act provide for the constitution of market committees and the establishment of a
market committee fund and the ancillary powers of
market committees with which however we are
not di~ectly concerned in the present case. It is
2 S.C.R. SUPREME COURT REPORTS
665
enough to refer to s. l1 only in this connection, which
r961
phrovides. ~hat tfhRe m
1
arket
1
combi;iittee mayhsubjec~ to Gulam ;;;:;,aminad
t e prov1s10ns o
u es anc su Ject to sue
maxima
as may be prescribed levy foes on the agricultural state oJ'Bombav
produce bought and sold by licencees in the market
·
area. This section, it will be noticed, applies to the
Wanchoo J.
purchase and sale of agricultural produce in the
market area and the power ·under it can be exercised
by the committee as soon as the market area is declared, though no market might have been established
under s. 5AA.
Till such time f1S the market is established the fees prescribed under s. 11 would be levied
on the licencees under the proviso to s. 4(2).
Then
come sections creating offences for contravention of
the various provisions of the Act, which it is unnecessary to consider. Section 26 gives power to the
State Government to frame rules for the purposes of
carrying out the provisions of the Act. Section 27
gives power to the market committee to frame byelaws with the previous sanction of the Director
or any other officer specially empowered in this
behalf by the State Government and subject to any
rules framed by the State Government under s. 26.
Finally, s. 29 provides that the State Government
may by notification in the official gazette add to,
amend or cancel any of the items of agricultural produce specified in the Schedule to the Act.
These are the main provisions of the Act and the
scheme which results in the declaration of a market
area and the establishment of a market therein. The
first contention on behalf of the petitioners is !hat
ss. 4, 4A, 5, 5A and 5AA which provide for the declaration of a market area and the establishment of a
market are unconstitutional as they are unreasonable
restrictions on the right to carry on trade in agricultural produce. Wf' are of opinion that there is no
force in this contention. This Court had occasion to
consider a similar Act, namely, the Madras Commercial Crops Market/! Act, No. XX of 1933, in M. C. V. S.
Arunachala NarZar etc. v. The State of Madras and
others (1) and the regulation with respect to marketing
(1) [1959] Supp. 1 S.C.R. 92,
666
SUPREME COURT REPORTS
[l!l62]
r9'1
of commercial crops provided in that Act was upheld.
G l
; 1-h
d The m:i.in provisions of the Madras Act with respect
u am l> o a1111na
,
•
v.
to the declarat10n of a market area (called notified
State 01 Uonibay area in that Act) and the estabfahment of markets
Wanchoo ].
:i.re practically the same as under the Act. It is therefore idle for the petitioners to contend tha.t the main
provisions contained in ss. 4, 4A, 5, 5A and 5AA of
the Act are unconstitutional. Learned counsel for
the petitioners, however, urges that there is a difference between the Madras Act, and the Act inasmuch
as the Madras Act dealt with commercial crops whereas the Act makes it possible to bring every crop under
its sweep. It is conceded that though it may be constitutional to regulate the sale and purchase of commercial crops, regulation of all crops made possible
under the Act would mean an unreasonable restriction
on the fundamental right enshrined in Art. 19(l)(g).
We are of opinion that there is no force in this contention. The Madras Act which dealt with commercial crops specified certain crops as commercial crops
in the definition section and added that the words
"commercial crop" used in that Act would include
any other crop or product, notified by the State
Government in the Fort St. George Gazette as a commercial crop for the purposes of that Act. In view of
this inclusive definition of ''commercial crop" in the
Madras Act, it was open to the State Government
under that Act to include any crop with in t.hc meaning of the words "commercial crop" which was
11
regulated by !hat Act. The Act had a schedule when
i'
it was origiually passed in which certain crops were
inoludc,J.
The Si:ttte Government was however given
the power to ad<l to, or ttmencl or cancel any of the
items mentioned in the Schedule by s. 29. It is true
I'
therefore that under the Act it. is 01wn to the State
Government to bring any crop other than those specified originally in the Schedule within its regulatory
provisions; bnt the fact that it is possible to bring any
crop within the regulatory provisions of lbc Act by
amendment of the Schedule would not necessarily
mn,ke the Act an unreasonable restriction on the exercise of the fundamental right guaranteed under Art.
2 S.C.R. SUPREME COURT REPORTS
667
19(1)(g). As we have already pointed out, the deliI96z
nition of the words "commercial crop" in the MadrasG 1
-M
h
d
A
1
"d
h t b .
h" h ti
u am
o anirna
ct was a so w1 e enoug
o rmg any crop w JC
ie
v
Stato Government considered fit to be included as a state of Bombay
commercial crop for the purposes of that Act.
There
is thus in our opinion no difference in the ambit of
Wanchoo J.
the Madras Act and of the Act. Besides we see no
reason why a crop which can be dealt with on a com1nercial scale should not be brought under the regulatory provisions of the Act. Section 4(2A) makes it
clear that the Act does not·apply to the purchase or
sale of specified agricultural produce, if the producer
of such produce is himself its seller and the purchaser
is a person who purchases such produce for his own
private use or if such agricultural produce is sold to
such person by way of a retail sale. Thus it is clear
from this exception that the provisions of the Act do
not apply to retail sale and are confino<l to what may
be called wholesale trn<le in the crop.'! regulated
thereunder. This would suggest that the Act also
deals with commercial crops in the same way as the
Madras Act, for the notion of wholesale trade implies
that the crop dealt with therein is a commercial crop.
There is thus no distinction so far as the main provisions are concerned between the Act and the Madras
Act, and for the reasons that have been elaborately
considered iu Arunachala Nadar's case (1) we are of
opinion that ss. 4, 4A, 5, 5A and 5AA of the Act are
constitutional and intra vires and do not impose unreasonable restrictions on the right to carry on trade
in the agricultural produce regulated under the Act.
The next attack is on s. 29 of the Act, which provides that the State Government may by notification
in the official gazette,. add to, amend or cancel any of
the items of agricultural produce specified in the
Schedule. It is submitted that this gives a completely
unregulated power to the State Government to include
any crop within the Schedule without any guidance or
control whatsoever. We are of opinion that this contention must also fail. It is true thats. 29 itself does
not provide for any criterion for determining which
crop shall be put into the Schedule or which shall
(1) [1959] Supp. I S.C.R. 92.
668
SUPREME COURT REPORTS
[1962]
i96i
be taken out therefrom but the guidance is in our
:-;--
dopinion writ large in the various- provisions of the
Gulam .nohamma A
't If
A
h
1
d
·
d
h
v.
ct I se .
s we
ave a rea y pomte
out, t e
state of B""'''"Y scheme of the Act is to leave out of account retail sale
altogether; it deals with what may be called wholesale
Wanchoo J.
trade and this in our opinion provides am plc guidance
to the State Government when it comes to decide
whether a particular agricnltnral produce should be
added to, or taken out of, the Schedule. The State
Government will have to consider in each case whether the volume of trade in the produce is of such a
nature as to give rise to wholesale trade. If it comes
to this conclusion it may add that produce to the
Schedule. On the other hand if it comes to the conclusion that the production of a particular produce
included in tho Schedule has fallen and can be no
longer a subject-matter of wholesale trade, it may
take out that produce from the Schedule. _ We may in
this connection refer to The Edward Mills Co. Ltd.,
Beawar v. The State of Ajmer and another (1). In that
case, s. 27 of the Minimum Wages Act, 1948, which
gave power to the appropriate Government to add to
either part of the schedule any employment in respect
of which it is of opinion that minimum wages shall be
fixed by giving notification in a particular manner was
held to be constitutional. It was observed in that
case that the legislative policy was apparent on the
face of the enactment (impugned there); it was to
carry out effectively the purposes of the enactment
that power had been given to the appropriate Government to decide with reference to local conditions whether it was desirable that minimum wages should be
fixed in regard to a particular trade or industry which
was not included in the list. The same considerations
in our opinion apply to s. 29 of the Act and the power
is given to the State Government to add to, or amend,
or cancel any of the items of the agricultural produce
specified in the Schedule in accordance with the local
conditions prevailing in different parts of the State in
pursuance of the legislative policy which is apparent
on the face of the Act.
Therefore, in enacting s. 29,
(1) [1955] 1 S.C.R. 735·
2 S .C.R. SUPREME COURT REPORTS
669
the legislature had not stripped itself of its essent.ial
r96r
powers or assigned to the administrative authority G 1 --
.
b
b d"
·
u am Mohanimad
anythmg utan accessory or su or mate power which
v.
wn.s deemed necessary to carry out the purpose and state of Bombay
policy of the Act.
We therefore reject the contention
that s. 29 of the Act gives uncontrolled power to the
Wanchoo J.
State Government and is therefore unconstitutionn.l.
The next attack is on s. 11 of the Act and the rules
frnmed in that connection. Section 11 gives power to
the market committee subject to the provisions of the
mies and subject to such maxima as may be prescribed to levy fees on the agricultural produce bought and
sold by licencees in the market area. It is said that
the fee provided by s. 11 is in the nature of sales tax.
Now there is no doubt that the market committee
which is authorised to levy this fee renders services
to the licencees, particularly when the market is
established.
Under the circumstances it cannot be
held that the fee charged for services rendered by the
market committee in connection with the enforcement
of the various provisions of the Act and the provisions for various facilities in the various markets
established by it, is in the nature of sales tax. It is
true that the fee is calculated on the amount of produce bought and sold but that in our opinion is only
a method of realising fees for the facilities provided
by the committee. The attack on s. 11 must therefore
fail.
Besides this however, it is also contended that
rr. 53 and 54 which provide for levying of fees under
s. 11 are ultra vires, as they do hot conform to s. 11 of
the Act. It will be noticed that s. 11 provides for
levy of fees to be fixed by the market committee,
subject to such maxima as may be prescribed by the
Rules and this fee is to be charged on the agricultural
produce bought and sold. There are thus two restrictions on the power of the market committee under
s. 11; the first is that the fee fixed must be within the
maxima prescribed by the Rules and naturally till
such maxima are fixed it would not be possible for the
market committee to levy fees, and the second restriction is that fees have to be charged not on the produce brought into but only on such produce as is
85
670
SUPREME COURT REPORTS
[1962]
t961
actually sold. Rule 53 provides that the market com-
-
mittee shall levy and collect fees on agricultural proGu/om Mohammad d
b
ht
d
Jd ·
h
k
h
uce oug
an so
m t e mar et area at sue rates
state 0/nomboy as may be specified in the bye-laws. The. Rules
-
nowhere prescribe the maxima within which the byeWonchoo J.
laws will prescribe fees.
The first attack therefore on
the Rules is that it will not be open to the market
committee to prescribe any fee under s. 11 till the
State Government prescribes the maxima by the Rules,
which it has not done so far.
Further there is an
attack on r. 54 which lays down that the fees on
agricultural produce shall be payable as soon as it is
brought into the principal market yard or sub-market
yard or market proper or market area as may be
specified in the bye-laws. The argument is that this
rule allows fees to be charged on the produce brought
into the market irrespective of whether it is actually
bought and sold, and this is against s. 11. As we read
s. 11, there is no doubt that the State Government is
expected to specify the maxima within which the
market committee shall fix fees and until such maximum is specified by the State Government in the
Rules it would not be possible for the market committee to fix any fees under s. 11. Further, there is
no doubt that s. 11 provides that fees shall be charged
only on the amount of produce bought and sold and
not on all the produce that may have been brought
into the market but may have to be taken back as it
is not sold. The reply of the respondents so far as
r. 54 is concerned is that the rule only prescribes a
convenient method of levying fees and that various
bye-laws provide for refond in case there is no sale
of the produce brought iuto the market. The
petitioners in their application have not specifically
said that there is no provision for refund and in the
circumstances all that we need say is that r. 54 will
be valid if proper provision for refund is made in the
bye-laws with respect to the produce brought into the
market on which fees have been charged but which
has been taken back because it is not sold, for then it
would only be a method of levying the fee permitted
under s. 11. In the connected petition
Y ograj
2 S.C.R. SUPREME COURT REPORTS
671
Shankersingh Parihar and another v. The State of Bom1961
bay and another (57 of 1957) which was heard along G 1
-;;-;,
4
with this petition there was an attack on r. 53; but '"am' v~ ammo
the attack was confined to the fee being analogous to state of Bombay
a sales tax and there was no ground taken that the
fee could not be levied under r. 53 because the maxima
Wan,hoo J.
had not been specified in the Rules. However, it is
not in dispute in this case that maximum has not
been specified in any rule and r. 53 itself leaves it
open to the market committee to prescribe such rates
as may be specified in the bye-laws. We have already
said that it would not be possible for the market committee to prescribe any fees under s. 11 through byelaws till the State Goverr.ment prescribes the maximum under s. 11.
As no such maximum has been
prescribed in the Rules, the contention that fees which
are being charged under the bye-laws for the purposes
of s. 11 are ultra vires of that section, must prevail.
It has been urged on behalf of the respondents that
the true construction of s. 11 is that if maxima are prescribed by the Rules, fees will be fixed by the market
committee within the maxima; but if no maxima are
fixed under the Rules, it will still be open to the market
committee to prescribe auy fees it thinks proper
under its power under s. 11. We are not prepared to
accept this interpretation of s. 11, for it amounts to
adding the words "if any" after the word "maxima"
therein. Besides, the legislature was conferring power
of taxation (using the word in its widest sense) by
s. 11 on the market committee. While doing so, the
legislature apparently intended that the committee
shall not have unlimited power to fix any fees it liked.
It restricted that power within the maxima to be prescribed by the State Government in the Rules. Thus
the power given to the committee was meant to be
subject to the control of the State Government which
would be in a position to view the situation as a whole
and decide the maxima. At the same time, some fiexibiJit.y was provided by leaving it to the committee to fix
fees within the maxima. We-may in this connection
refer to various municipal Acts for example where also
the power of taxation is subject to the control of the
672
SUPREME COURT REPORTS
[1962]
i96r
State Government though the control is provided in a
G I
-M
h
d different form.
Section 11 also prescribes similar
u ant
o a1111na
G
,
.
v,
control by the State
overnment over this taxmg
State of Ba111vay power of the committee and this is obviously in the
interest of the community as a whole. The State
Wanchoo J.
Government cannot practically abdicate that power as
it seems to have done under r. 53 by leaving it to the
committee to fix any rates it likes.
We are therefore
of opinion that unless the State Government fixes the
maxima by rule it is not open to the committee to fix
any fees at all and the construction urged on behalf of
the respondents is not correct.
The next attack is on r. 64 which provides that no
person shall (a) enter a principal market yard or submarket yard in contravention of a direction given by
a servant or a member of the market committee, or
(b) disobey any of the directions of the market committee in regard to the places where carts laden with
agricultural produce may stand or loads of agricultural produce may be exposed or in regard to the
road by which or in regard to the times at which th~
may proceed. Any person contravening or disobeying any of the directions referred to in sub-r. (I) shall,
on conviction be punishable with fine. It is urged
that this rule is ultra vires as it imposes an unreasonable restriction on the right to carry on trade.
We
are of opinion that there is no force in this contention
because this rule is merely a method of enforcing the
regulatory provisions with respect to market yards
and sub-market yards.
The next attack is on r. 65 which provides that "no
person shall do business as a trader or a general
commission agent in agricultural produce in any market area except under a licence granted by the market committee under this rule." The contention is
that this rule goes beyond the provisions of s. 5A
which lays down that "where a market is established
under s. 5AA, the market committee may issue licences in accordance with the Rules to traders, commission agents ...... "
So far as the grant of licence to
traders before the establishment of a market is concerned, the provision is to be found in the proviso to
2 S.C.R. SUPREME COURT REPORTS
673
s. 4(2) and the power to grant licences before the
r96i
establishment of a market for trading in any market G 1
-M-,
d
.
.
.
.
u ani
o 1atnma
area rs given to the Comm1ss1oner and not to the
v.
market committee. The power of the market com- state of Bombay
mittell to grant licences under s. 5A arises only after
a market is established and is confined to operation
Wanohoo J.
in the market. Rule 65 therefore in our opinion
when it authorises the market committee to gra.nt a
licence for doing business in any market area goes beyond the power conferred on the market committee
by s. 5A and entrenches on the power of the Commissioner under the proviso to s. 4(2). It must therefope
be struck down as ultra vires of the provisions in
s. 5A read with the proviso to s. 4(2).
Rule 66 which
is incidental would fall along with r. 65.
Thu next attack is on r. 67. It gives power to the
market committee to grant licences for doing business
in the market area and prohibits doing of business
without such licences.
This rule is open to the same
objection as r. 65, for the power of the market committee to grant licences is with respect to operation
in the market and not in the market area, the latter
power being in the Commissioner under the proviso
to s. 4(2) till the market is established. It seems to
us that rr. 65 and 67 as they are framed show a confusion in the mind of the rule making -authority. It
would have been enough if the Rules had been confined to grant of licences for operation in the market,
for under the law as soon as the market area is declared and a market is established, s. 4(2) comes into
force and no placl" in the said area can be used for the
purchase and sale of any agricultural produce except
as provided by s. 5A. It seems to us therefore that
the intention probably was to confine the issue of
licences under rr. 65 and 67 to markets which the
market committee has the power to do where a market is established under s. 5A; but the two rules as
drafted refer to the market area and not to the market and must therefore be held to be beyond the
power granted to the market committee under s. 5A.
The last point that is urged is that no market has
been established in law as required under s. 5AA of the
674
SUPREME COURT REPORTS
[1962)
'961
Act. We have already said while dealing with the
G 1
;;:;;,
d scheme of the Act that the scheme envisageR that there
u am
.~ amma may be a time lag bet11cen the declaration of a market
stat• of Bombay area under s. 4 and the establishment of a market under
s. 5AA. We have also pointed out that a market can
Wanchoo J.
only be established by a market committee constituted under s. 5, if it is required so to do by the State
Government under s. 5AA.
Therefore, the requirement by the State Government is a condition precedent to the establishment of a market under s. 5AA.
No procedure has however been prescribed either
under the Act or under the Rules as to what the
market committee has to do after it has been required
to establish a market. We presume, in view of the
provisions of s. 4A which gives power to the Commissioner to establish a market yard or Rub-market
yards, that the market committee after it receives a
direction from the State Government to establish a
market will have to approach the Commissioner with
its recommendation and ask him to notify the establishment of a principal mr.rket yard and sub-market
yards, if any. The contention of the petitioners is
that no direction was issued by the State Government
under s. 5AA to the market committee for the establishment of a market and that in any case the committee took no steps after the receipt of any such
direction for the establishment of a principal market
yard and sub-market yanfo, if any. It appears that
the market area was <lPclared for the first time in
Ahmedabad from June I, 1948, by notification dated
April 15, 1948.
This was followed by another notification by which the State Government established
a market and a market proper under the Act as it
stood before the amendment of 1954 by which the
power to establish a principal market yard and submarket yards has now been given to the Commissioner.
It seems however that no direction was issued as
required by s. 5 of the Act as it stood before the
amendment (now R. 5AA) requiring the market committee to establish a market. This matter had come
to the notice of the Bombay High Court in Bapubhai
2 S.C.R.
SUPREME COURT REPORTS
675
Ratanchand Shah v. The State of Bombay (1). Chagla,
r96r
C. J., then pointed out as follows at p. 887:-
G 1
M h
d
, N
,
'!
.
d' l
d
u am
o amma
' ow, a very curious s1 ·,uat10n was
1sc ose
to
v.
us by Mr. Joshi. No market has been established unState of Bombay
der s. 5 of the Act and therefore s. 5A has not come
into operation. The .result is this that the Market
Wanchoo J.
Committee cannot issue licences under s. 5A to
traders, commission agents, etc., to operate in the
market. In the absence of a market being established under s. 5 and the absence of licences being
issued under s. 5A, licences can only be issued by
the State Government under the proviso to s. 4A(2).
But the rules show that licences have been issued by
the Market Committee and not by the State Government. It is difficult to understand how either the
Government or the Market Committee came to the
conclusion that the Market Committee was authorised to issue licences without s. 5 and s. 5A being
brought into force.
Mr. Joshi suggests that the
Market Committee acts as a delegate of the State
Government and the authority to issue licences has
been delegated by the State Government. It is
rather difficult to accept this contention."
Having said this, the learned Chief Justice went on
to observe that as there was no such challenge in the
petition itself, therefore whether the challenge could
be sustained or not, it was not open to the petitione~s
before him to make that challenge. That observation
was made with respect to another market area but
the same, we understand, applies to the present case.
It appears that after that observation of the Bombay
High Court, the State Government on August 11, 1955,
issued a notification (No. PMA 7055) dated August 1,
1955, directing the Agricultural Produce Market Committee Ahmedabad to establish a market in the
market area for which the said committee had been
established. But there is nothing in the affidavit of
the respondents to show that after this direction was
issued on August 11, 1955, the market committee took
any steps to establish a market by making recommendations to t.he Commissioner to establish a principal
(t) I.L.R. (1955) Bom. 870.
676
SUPREME COURT REPORTS
[1962)
196 1
market yard or sub-market yards under s. 4A of the
G la . ~
d Act.
As a matter of fact, the principal market yard
u m
v~ amma was already there from before this direction given in
State of Bombay 1955 and has continued. Even in the case of the submarket yard established at Kalupur in 1959 there is
Wanchoo l·
nothing in the notification issued by the Commissioner
on January 16, 1959, to show that he was doing so in
pursuance of the desire of the market committ,ee and
on its recommendation. We should have thought that
if the market committee had requested the Commissioner to establish a sub-market yard and recommended Kalupur as the place for it, the notification should
have shown that the Commissioner was acting at the
desire of the market committee and on its recommendation.
In any case, even if the notification did
not show this, it was the duty of the respondents,
when this question was specifically raised in para. 25
of the petition, to state when the t:ltate Government directed the market committee to establish the
market and what steps the market committee took in
that behalf after such direction.
But in para.