# RAMESH CHANDRA ETC v. STATE OF U.P. ETC

- **Citation:** [1980] 3 S.C.R. 104
- **Court:** Supreme Court of India
- **Decided:** 1980-03-25
- **Case number:** Civil Appeal Nos. 1841-1846 of 1978
- **Bench:** Y. V. Chanijrachud, V. R. Krishna Iyer, N. L. Untwalia, P. N. Shinghal, A. D. KosHAL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ramesh-chandra-etc-v-state-of-u-p-etc-7949
- **Pages:** 35

## Headnote

Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1954 (U.P., Act XXV
of 1964), Ss. 2 (a), (p), (y), (k), 6, 17, and Uttar Pradesh Krishi
Utpadan
Mandi Niyamawalli 1965, Rules 66, 67 and 68-Levy of market fee by market
·
C
Committees in Uttar Pradesh on transactions relating to agricultural produce
--A'
D
E
,
G
H
--11alidity of-Declaration of big areas as n1arket area-Whether offends the
law.
Market Committees-To be constituted in a regular manner and on a pernianent baiis-Machinery to be evolved for setting dz'sputes.
The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (U.P. Act
XXV of 1964) provides for the regulation of sale and purchase of agricultμra!
produce and for the establishment superintendence and control Of ma .. kets in
Uttar Pradesh.
The enactment Was passed for the development of new market
areas and for efficient data collection and processing of arrivals in the Mandies
to enable the World Bank to give a substantial help for the establishment of
various markets in the State of Uttar Pradesh. It led to the establishment of
Market Areas, Principal Market Yards and Sub-Market Yards and levying of
the fee in relation to transactions of certain commodities in the State ·of
Uuar Pradesh.
Various Macket Committees were formed known
as
Mandi
Samitis. Jn order to give effect to the working of the Act the Uttar Pradesh
Krisbi Utpadan Mandi Niyamawalli 1965, being Rules under the Act were
made by the Governor. The Act was amended several times but the Rules
were not accordingly amended as and when required to make them uptodate
in accordance with the amended Act.
"Agricultural Produce" has been defined in clause (a) of s. 2 of tho Act to
mean:-
"Such items of produce Olf
agriculture, horticulture. viticulture,
apiculture, sericulture, pisci-culture,
animal husbandry or forest
as
are specified in the Schedule, and includes a mixture of two or more
of such items, and also includes any such item
in processed form,
and further includes gur, rab, shakkar, khandsari and
jaggery."
·while Clause (e) defines "commission agent" or "Arhatiya" to mean:-
"a , person who, in the ordinary course of 1 business, makes or
offers to make, a purchase or sale of agricultural produce, on behalf
of the owner or seller or purchaser of agricultural produce, for
Arhat or commission".
(
·~
/
/
RAMESH CHANDRA V. U. P. STATE
105
under clause (p),
""producer"
means
a
person who,
whether
by
himself or
through hired labour, produces, rears or catches, any agricultural
produce, not being a prOOucer who also works as a trader, broker
or Dalal, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce".
Cause (y) defines a "trader" to mean :-
"a person who in the ordinary course of business is enga8ed in
buying or selling agricultural produce as a principal or as a duly
authorised agent of one or ni.ore principals and includes a person,
engaged in processing of agricultural produce. n
Under Clause (k), 'Market Area' means an area notified as such under
Section 6, or as modified under Section 8, while 'Principal Market Yard' has
been defined under clause (o) to mean, the ponion of a Mark,1 Area, declared as such under Section 7, and 'Sub Market Yard' under clause (w) means a
portion of a Market Area, declared as such under Section 7.
'Ibe State Goverment under s. 8 has got the power to alter any market
area and modify the list of agricultural produce. Section 9 provides for the
effects of declaration of Market Area. Chapter IIl of the Act deals with the
establishment, incorporation and constitution
of,
the> Market Committees,
section 17 provides for the power of the Committee. Clause (i) authorises
a Committee to issue or renew licences under the Act on such terms and
conditions and subject to such restrictions as may be prescnOed.
Clause (iii)
authorises a Committee to levy and collect (a) such Fees as may be prescribed for the issue or renewal of licences, and (b) market fee at the rate
and in

## Text

_Characters 0–39,766 of 91,184. This is a partial read: ask again with offset=39766 for what follows._

A
B
104
RAMESH CHANDRA ETC.
v.
STATE OF U.P. ETC.
March 25, 1980
[Y. V. CHANIJRACHUD, C.J., V. R. KRISHNA IYER, N. L. UNTWALIA,
P. N. SHINGHAL AND A. D. KosHAL,. JJ.]
Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1954 (U.P., Act XXV
of 1964), Ss. 2 (a), (p), (y), (k), 6, 17, and Uttar Pradesh Krishi
Utpadan
Mandi Niyamawalli 1965, Rules 66, 67 and 68-Levy of market fee by market
·
C
Committees in Uttar Pradesh on transactions relating to agricultural produce
--A'
D
E
,
G
H
--11alidity of-Declaration of big areas as n1arket area-Whether offends the
law.
Market Committees-To be constituted in a regular manner and on a pernianent baiis-Machinery to be evolved for setting dz'sputes.
The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (U.P. Act
XXV of 1964) provides for the regulation of sale and purchase of agricultμra!
produce and for the establishment superintendence and control Of ma .. kets in
Uttar Pradesh.
The enactment Was passed for the development of new market
areas and for efficient data collection and processing of arrivals in the Mandies
to enable the World Bank to give a substantial help for the establishment of
various markets in the State of Uttar Pradesh. It led to the establishment of
Market Areas, Principal Market Yards and Sub-Market Yards and levying of
the fee in relation to transactions of certain commodities in the State ·of
Uuar Pradesh.
Various Macket Committees were formed known
as
Mandi
Samitis. Jn order to give effect to the working of the Act the Uttar Pradesh
Krisbi Utpadan Mandi Niyamawalli 1965, being Rules under the Act were
made by the Governor. The Act was amended several times but the Rules
were not accordingly amended as and when required to make them uptodate
in accordance with the amended Act.
"Agricultural Produce" has been defined in clause (a) of s. 2 of tho Act to
mean:-
"Such items of produce Olf
agriculture, horticulture. viticulture,
apiculture, sericulture, pisci-culture,
animal husbandry or forest
as
are specified in the Schedule, and includes a mixture of two or more
of such items, and also includes any such item
in processed form,
and further includes gur, rab, shakkar, khandsari and
jaggery."
·while Clause (e) defines "commission agent" or "Arhatiya" to mean:-
"a , person who, in the ordinary course of 1 business, makes or
offers to make, a purchase or sale of agricultural produce, on behalf
of the owner or seller or purchaser of agricultural produce, for
Arhat or commission".
(
·~
/
/
RAMESH CHANDRA V. U. P. STATE
105
under clause (p),
""producer"
means
a
person who,
whether
by
himself or
through hired labour, produces, rears or catches, any agricultural
produce, not being a prOOucer who also works as a trader, broker
or Dalal, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce".
Cause (y) defines a "trader" to mean :-
"a person who in the ordinary course of business is enga8ed in
buying or selling agricultural produce as a principal or as a duly
authorised agent of one or ni.ore principals and includes a person,
engaged in processing of agricultural produce. n
Under Clause (k), 'Market Area' means an area notified as such under
Section 6, or as modified under Section 8, while 'Principal Market Yard' has
been defined under clause (o) to mean, the ponion of a Mark,1 Area, declared as such under Section 7, and 'Sub Market Yard' under clause (w) means a
portion of a Market Area, declared as such under Section 7.
'Ibe State Goverment under s. 8 has got the power to alter any market
area and modify the list of agricultural produce. Section 9 provides for the
effects of declaration of Market Area. Chapter IIl of the Act deals with the
establishment, incorporation and constitution
of,
the> Market Committees,
section 17 provides for the power of the Committee. Clause (i) authorises
a Committee to issue or renew licences under the Act on such terms and
conditions and subject to such restrictions as may be prescnOed.
Clause (iii)
authorises a Committee to levy and collect (a) such Fees as may be prescribed for the issue or renewal of licences, and (b) market fee at the rate
and in the manner provided therein. [Though clause (b) of section 17 (iii)
had undergone drastic changes from time to time, the Rules Were not correspondingly amended.]
Section 19 provides for the Market Committee Fund
and its utilisation. Section 19-B was introduced in the Act by U.P. Act 7
of 1978 w.e.f. 29-12-1977 providing for the establishment of 'Market Development Fund' for each committee.
The Rule making power of the State Government is in Section 40, Rule
66 deals with the levy of market fee, Rule 68 provides for its recovery end
Rule 67 provides for licence fee.
By a State Government notification, which was issued on April fl, 1978
making it effective from May l, 1978, almost the whole of Uttar Pradesh
had been declared to be a Market Area, dividing it into 250 areas and indicating in Schedule 8 of the Notification 115 commodities in respect of which the
fee could be levied
by the Market
Committees. Declaration of Principal
Market Yards and Sub-Market Yards under Section 7 had also been made.
A
B
c
D
E
G
Various traders carrying on business in the State of Uttar Pradesh within
the jurisdiction of several Market Committees challenged the levy of fee in
the High Court from time to time. There were several rounds of litigation
and the writ petitions were dismissed. On account of the litigations between
the traders and the Market Committees, the workiruz of the Committees had
D
not successfully proceeded, as fees levied from tune to time could no. be
8-189 SCI/80
A
B
c
D
106
SUPREME COURT REPORTS
[1980] 3 S.C.R.
realised in full. Sometimes
illegal or
unauthorised
collections have been
made. Money justifiably realised also had not been 'fully utilised as it ought to
have been done.
In the appeals and writ petitions to this court it was contended on behalf
of the appe!lants and petitioners that :-
1. Big areas consisting of towns and villages have been notified as Market
Areas without rende'ring any service, which is contrary to the
whole object
of the Act and the concept of fee.
2. No market area or market yard had been validly created.
3. No Mandi Samiti (Market Committee) had been validly appointed.
4. No machinery had been provided in the Rules for adjudication
of
disputes.
5. Fixation of minimum of I% to be charged as market fee by all the
Market Committees under s. 17 (iii )(b) of the Act was illegal as the requirement of and the services to be rendered by the various Market Committees
could not be on the same footing.
6. There was no application of mind in issuing the notification dated
11-4-1978 whereby 250 market areas were notified and 115 items of agricul·
tural produce were specified.
7. There could not be any multi point levy of any market fee either in
the same me.rket area or in different market areas.
8. The retrospective operation of the law brought about in s. 17(ili)(b)
by U.P. Act 7 of 1978 w.e.f. 12-6-1973 was bad.
E
9. No market fee could be levied on goods not produced within the limits
of a particular market area and if produced outside and brought in sueh
area.
10. No market fee could be levied both on paddy and rice.
The rice
millers had been illegally asked to pay market fee on their sale
of rice,
Similarly no market fee was payable on Ghee either by the producer-trader
F
of Ghee or by its purchaser.
G
H
11. Fee could be charged on sale of animals but could not be charged
on hides and skins as was being illegally done.
~
-
12. Fee co,uld be charged on wood or timber but could not be charged
either on furniture manufactured from such wood or timber or on Catechu
(Katha).
13. Wood cut and brought from the jungle by a manufacturer or paper
could not be subjected to levy of fee.
-14. Some of the items mentioned in the notification are Kirana goods
brought from outside the market area or even from other States for sale in
different Mandis, and cannot be subjected to the levy of 11111rket fee.
15. No market fee could be charged" on tobacco or tendu leaves nor on
bid is.
16. No market fee could be charged on rilb salawat and rah galawat..
I
RAMESH CHANDRA V. U. P. STATE
107
17. No market fee am be charged if only goods are brought in a market
6rea and despatched outside it without there taking place any transaction of
purchase and sale in respect of these goods.
18. If no licence is issued or taken under s. 9(1) of the Act tlien there
is no liability to pay a market fee.
19. No market fee ce.n be levied on transactions of match boxes, soyabin
B
products.
20. No market fee can be charged from the vendors of fruits and vegetables through their Commission Agents.
21. Fee can be charged only on those transactions· in which the
seller
is prcx:I ucer and not on any other transaction, and market fee can be charged
C
only on_ those transactions in which the seller is the purchaser o( agricultural
produce and not on any other transaction.
HELD : 1. Declaration of big areas as Market Areas does not offend
any provision of la\\'. Any area big or small including towns
and
villages
can be declared as Market Area under s. 6 of the Act. [121 F]
D
2. The traders are required to take out licences under s.9(2)
read with
s.11 of the Act, for such place which is either a principal J\ifarket Yard or
a sub-Market Yard or at any specified place in the Market Area. No body
ean be permitted to carry on his business anywhere in the Market Areas a1
the Market Committee will not be able to control and levy fee throughout the
· Market Area. [121 G-HJ
3. (i) Market Committees have not yet been constituted
in accorUance.
with the provisions contained in s. 13 of the Act. They have been constituted
temporarily under Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik
Vyawastha) Adhiniyam, 1972 which \Vas a temporary Act, extended from
year to year. It is high time that Market Committees should be constituted
in a regular manner on a permanent basis in accordance with the provisions
E
contained in Chapter III of the Act. [123 CJ
F
(ii) The levy and collection of fee by the temporary Market Committees is not illegal as argued on behalf of the appellant>;. [123 DJ
Kewal Krishan Puri v. State of Puniab [1979] 3 S.C.R. 1217, referred to.
4. A machinery for adjudication of disputes is necessary to be provided
under the Rules for the proper functioning of the Market Committees. [123 E]
G
5(i) Under clause (b) of s. 17(iii) of the Act a minimum end maximum
limit of market fee chargeable has been fixed by the legislatore. The minimum is 1 % and the maximum is H% of the price of the agricultural produce
sold. The fixing of the minimum of 1 % fee by itself is not illegal but it
would be subject to the rendering of adequate services. [123 G]
(ii) The charging of 1 % fee
throughout the State of Uttar Pradesh
1iy all the market Committees is not illegal and does not go beyond the quid
pra qua theory discussed in Puri's case.
[124 Al
H
108
SUPREME COURT REPORTS
[1980] 3 s.c.R.
' A .
6. The notification dated 11-4-1978 indicates that in the various Districts,
which number about 55, 250 Market Committees have been constituted and
about 115 items have been selected in respect of which market fee has been
directed to be levied. None of the items so specified is such that it cannnt
be covered by the Schedule which is a part of the Act.
The definition of
'egricultural produce' is very wide, and it is not confined to items of agricultural produce only but includes items of produce of horticulture, viticulture,
B
apiculture, sericulture, pisCi-culture, animal husbandry or forest. (124 CJ
c
D
E
7(i) All the four clauses of clanse (b) of S. 17(iii) are mutually exclusive.
If the produce is purchased from a producer directly the
trader
shall be liable to pay the market fee to the Committee in accordance with
sub-clause (2). But if the trader sells ·the same produce or any product of
the same produce to another trader· neither the seller trader nor the purchasertrader can be made t<> pay tho market fee und01' sub-clause (3). [125 CJ
(ii) In a particular market area market fee oonuot be levied both in
relation to the transaction of purchase and sale of paddy and the rice produced from the same paddy. Fee can be charged only on one transaction. This
finds support from the unamended Rules as they are, wherein is to be found
sub-r. (2) of Rule 66, There is nothing in the provisions of the Act or the
Rules to warrant the view that in another market area the Market Committee
of that area cannot levy fee on a fresh transaction of sale and purchase
taking place in that area. [125 H· 126 A]
8(i) Before 1973, reading the provisions of the Act and
the
Rules,
market fee was to be charged at such rates as specified in the by&-laws of
a particular Market Committee. But it could not exceed 1/2 perccntum
of the price of the agricultural produce. The liability to pay the fee was of
the seller of the agricultural produce. Market fee was liable to be paid
under Rule 68 (2) (ii) even if the specified agricultural produces was sold
directly by the seller to the consumer. This provision has oow been superseded by an amendment in the Act brought about by U.P. Act 19 of 1979.
[127 F-GJ
(ii) After the amendment in the Statute, Rules could apply only
mutatia
F
mutandis and wherever there was a conflict between the Rules and
the
Statute the latter had o prevail. [128 DJ
H
(iii) The State Legislatures are competent to make retrospective amend·
ment and retrospective imposition of a fee is valid. However, in a given
case and in a given situation the retrospective operation may be hit by
Article 19. [129 A·BJ
B. Banerjee v. Anita Pan [1975] 2 S.C.R. 774, Mis. S. K. G. Sugar Ltd.
v. State of Bihar & Ors. [1975] 1 S.C.R. 312 and H. H. Sudhundra Thirtlia
S·wamiar v. Commissioner for Hindu Religious & Charitable
Endowment!,
Mysore [1963] Suppl. 2 S.C.R. 302 referred to.
(iv) The Rules which were framed in 1965 oomely Rules 66 and 68 are
very diffea-ent from the present provision of law.
The Government
bas
failed to amend the Rules and bringing it in confirmity with the amended
provisions of the Statute from time to time. The Rules will apply as far as
possible so long they do not come in conflict with the Statute and
eveo
I
I
RAMESH CHA\'IDRA v. U. P. STATE
109
without the aid of the Rules the provision in section 17(ili) (b) as it stands
after the amendment brought about by U.P. Act 7 of 1978 is workable and
can be given effect to. [128 G-HJ
In the present case the retrospectivity of the law as such is not bad and
the only safeguard will be that if market fee has been realised by any Market
Committee in respect of transactions of sale of agricultural produce taking
A'
place b-een 12-6-1973 and the coming into force of U.P. Act 7 of 1978,
B
in accordance with
law as it prevailed then, no market fee under
tho
amended law can be realized again.
But if in respect of ariy transactions
aforesaid market fee had not yet been roo.lised then it can be realised in
accordance with the amended provision of the law. (129 CJ
9. No provision in the Act or the Rules limit the operation of the law
in a particular market area only in respect of the agricultural produce proC
duced in that area. [129 GJ
IO(i) A producer who produces agricultural produce generally does not
indulge in trading activities so as to beCome a trader within the meaning of
clause (y). He is covered by clause (p) only. If a perse>n is simply a
trader indulging in trading acti'1ties he is covered by the definition in clause
(y). The expression producer-trader has been coined for a person who is
both a pro<jucer of agricultural produce and himself trades in it. For the
purposes of the Act he ceases to be a producer and becomes a trader only
as the definition indicates. (130 A-BJ
(ii) If paddy is purchased in a particular market area by a
rice
miller
0.nd the same paddy is converted into rice and then sold the rice miller will
be liable to pay market fee on his purchase of paddy from the agriculturistproducer under sub-clause (2) of section 17 (iii)(b). He cannot be asked
to pe.y market fee over again under sub-clause (3) in relation to the transaction of rice. (130 El
(ill) Market fee has le> be levied and ce>llected in relatie>n IC> the trans·
actie>n e>f paddy alone. Otherwise there will be a risk of vie>lation of Article
14 if it Is left te> the Market Committee in the case of some rice millen to
D
E
~
. charge market fee on the transaction of paddy and in the case of others
J'
to charge it when the sale of the rice takes place. If, he>wever, paddy is
brought by the rice miller from another market area, then
the Market
Committee of the ma where paddy is converted into rice and se>ld will be
entitled le> charro market fee oo the transaction and sale in accordance with
.ub-clause (3). (130 F-GJ
(iv) In transactions of Ghee, a dealer who purchases milk or cream
G
from the villagen and others and manufactures Ghee in his plant will be
liable to pay market fee because he is the producer of Ghee within
tho
meaning of the Act and at the same time a trader in Ghee also. When ho
sells Ghee to another dealer. in Ghee who is simply a deruer then under
sub-clause (3) of Section 17(iii)(b), the manufacturing deeler will be liable
to pay market fee to the Market Committee or the transaction of Ghee, but
he will be entitled to pass on the bmden to his purchaser. [131 C.DJ
H
11. The definition clause (a) of section 2 uses the expression 'animal
lm!bandry' by way of a descriptive· one without strictly confining to the pro·
110
SUPREME COURT REPORTS
(1980] 3 S.C.R.
A
products of animal husbandry as the additions, of the words 'specified in the
-<\
achedule' indicates. In the schedule under the group 'husbandry products'
are mentioned item 11_ hides and skins, item 12 bones, item 13 meat etc.
\-
Market fee is, therefore, leviable on the transactions of hides and
skins
a&
no market fee can be charged on transactions of sale and purchase of aninuils
in a market area in the State of Uttar Pradesh the same having not been
included in the notification. Had it been included in the notification, then
B
no market fee could be charged in the same market area on hides and skins.
It could only be charged in relation to the transaction of purchase
and
sale of animals. (131 H, G; 132 B-C]
12. Group E of the notification· dated 11-4-1978 deals with forest products. The items mentioned therein are (I) Gum, (2) Wood, (3) Tendu
leaves, (4) Catechu, and (5) Lac. Market fee can be charged on purchase
C
of wood by a trader from a producer. No fee can be charged on the sale
of furniture manufactured by the purchaser of wood. According to
the
Market Committees Catechu is a product from timber Ot trees like Gum
or Lac, which trickles down from the trees, while, according to the Catechu
dealers by processing of Khar trees Catechu is produced. This question of
fact
is left to be decided by the Market Committees concerned in the first
instance and then by a court of law. If Catechu is a product of Khar trees
D
by some processing as prima facie it appears to be so, it is plain that market
fee can be charged only on the purchase of .Khar wood and not on the sale
of Catechu.
[D, F1
E
G
.H
13. The owner of the jungle wherefrom the wood is cut and brought
will be a producer within the meaning of the Act and the licensee·producer
of that wood would be a purchaser of an agricultural produce within
the
meaning of sub-clause (2) of section 17(iii) (b) of the Act liable to
pay
market fee. 'It matters little what use is made of the wood by him. The
question of quid pro quo and service cannot be decided by a dichotomy of
service to every payer of fee as held in Kewal Krishan Puri's case.
The
i;oo.tter has to be judged in a broad sense and not in the sense of rendering
•trvice to every individuill payer of the fee. (133 B-C]
i4. In group A·VI Spices are mentioned including certain Kirana items
such as Ripe Chillies, Sonf, turmeric etc. They are sold
by
the
Kirana
dealers. Sometimes they purchase them from the agriculturists in the same
market area.
In relation to those transactions they will be liable to
pay
market fee under sub~clause (2) of section 17(iii)(b). More often
the.o
not such articles are brought from outside and sold by the Kirana merchants.
If they are sold to consumers, no market fee can be levied in view of the
proviso added in the year 1979.
If they are sold in wholesale, then
the
transaction can be subjected to the levy of market fee because in a particular
market area they enter into the first transaction of sale in respect of
the
specified agricultural produce. [133 E-F]
15. Market fee can be charged on transaction of tobacco as it is included
in group A-V of the notification. Similar is the position in regard to tendu
leaves which is mentioned in group E. Bidi cannot be treated as an agricuJ·
tural produce as it is not an admixture of tobacco and tendu leaves within
the meaning of section 2(a) of the Act.
But if a Bidi manufacturer purchases
tobacco and tendu leaves in the market area and uses them in the manufac--
~.·
I
}-
I
•
RAMESH CHANDRA V. U. P. STATE
111
ture of bidi, he will be liable to pay market fee in relation to the transaction of tobacco and tendu leaves. [133 Q.134 Al
16. Market fee can be levied on the first transaction of rab taking place
in any market area in accordance with any of the sub-clause of
section
17(iii)(b), as may be applicable. It cannot be again charged on the second
1i1Ul8action of rab galawat or rab salawat even assuming that it is rah. (134 F]
17. If goods are merely brought in any market area and are despatched
outside it without any transaction of sale taking place therein, then no market
fee can be charged.
If the bringing of the goods in a particular market
area and their despatch therefrom are as a result of transactions of purchase
and sale taking place outside the market area, it is plain that no fee can
be levied. [135 BJ
18(i) Producer as defined in clause (p) of section 2 is not required to
take any licence for selling his agriccltural produce nor is he required to pay
market fee under any of the sub-clauses of section 17(iii) (b). But if he
is a producer-trader in the sense explained above, then he will be required
tO take out a licence in accordance withs. 9(2) of the Act and no
body
can be permitted to carry on any trade in agricultural produce in the market
area without a valid licence. [135 E]
The proviso to clause (p) of s. 2 will be attracted only if a question
arises as to whether any person is a producer or not for the purposes of the
Act and in that event the decision of the Director made after an
inquiry
conducted in the manner prescribed by the Rules shalt be final. If a question
arises whether a pernon is merely & producer or producer-trader the Director
will have no power to decide this question. Such a question will have· to
be decided by the Market Committee itself which will be subject to the final
decision of a court of law. [135 G-H]
(ii) The traders cannot
escape their li;ibility to pay the fee on account
of their default of taking out licencea. [136 DJ
19. Market fee can be charged only on the transactions of purchase of
wood and if a manufacturer of match-sticks purchases wood from the produc--
er for the purpose Of manufacturing the sticks he will be required to pay
market fee on such purchase of wood only and not on the sale of matchsticks or match boxes. Similarly market fee Will be leviQbte on the transaction of purchase of soye.bin and not on transaction of sale of soyabin
products. [136 El
A
B
c
D
E
F
20. Under sub-clause (1) of s. 17(iii)(b) of the Act when fruits and
G
vegetables are sold through a commission agent by the producer then Iha
commission agent is lie.hie to pay the market fee and he can realise it from
the purchaser of fruits and vegetables. The burden does not fall on
the
producer. The liability in the first instance is of the commission agent 9.l1d
finally of the purchaser of the articles. [136 HJ
21. In the U.P. Act even traders under certain circumstances have been
made liable to P"Y such fees. The argument that market fee can be charged only on those trausactions in which the seller is the producer of agricul'
tural produce and not on any other transaction is devoid of substance. [138 CJ
H
A
B
c
112
SUPREME COURT REPORTS
[1980] 3 S.C.R.
Mangalchand Ramchandra and others etc. v. State of Bihar [1971] B.L
J.R. 1038 approved.
22. If anything has been realised from the traders or any other person
which goes contrary to this judgment the same should be refnnded by the
Market Committee concerned within six months. The form of the order in
relation to the refund of the market fee may vary from case to case depending upon the facts and circumstances of each case. [138 DJ
23. Market fee due from the traders should be regularised and be charged
in the light of this judgment, and paid within a period of six month. If
there is any disputed question of fact to be decided by the Market Committee
then it should be decided as quickly as possible leaving the person concerned
to agitate the matter in a court of law, preferably, in the High Court, within
a short time thereafter. [138 E-FJ
CivIL APPELLATE JURISDICTION : Civil Appeal Nos. 1841-1846
of 1978.
From the Judgment and Order dated 21-9-1978
of the
Allahabad High Court in W.P. Nos. 4846, 4436, 3815, 5040, 4475
D
and 4587 /78.
E
F
G
AND
CivIL APPEAL No. 871 of 1978.
From the Judgment and Order dated 29-4-1977 of the Allahabad
High Court in W.P. No. 1749 of 1974.
AND
CIVIL APPEAL No. 1921 OF 1978.
From the Judgment and Order dated 21-9-1978 of the Allahabad
High Court in W.P. No. 4566 of 1978.
AND
CIVIL APPEAL No. 1960 OF 1978.
From the Judgment and Order dated 21·9~1979 of the Allahabad
High Court in W.P. No. 4568/78.
AND
CIVIL APPEAL Nos. 2169-2173 OF 1978.
From the Judgment and Order dated 21-9-1978 of the Allahabad
High Court in W.P. Nos. 4542, 5589, 5592 to 5594/78.
AND
CIVIL APPEAL Nos. 2178-2187 of 1978.
D
From the Judgment and Order dated 21-9-1978 of the Allahabad
High Court in W.P. Nos. 4921, 4625, 4449, 5002, 5003, 5007, 5068,
5069, 5284 and 4568 of 1978.
•
....[
\
\
•
•
•
') ..
··----·
RAMESH CHANDRA V. U; P. STATE
113
AND
CIVIL APPEAL Nos. 2219-2226 OF 1978 •
From the Judgment and Order dated 21-9-1978 of the Allahabad High Court in W.P. Nos. 5185 and 5059 of 1978.
AND
CIVIL APPEAL Nos. 2269, 2302, 2373-2375 OF 1978.
From the Judgment and Order dated 21-9-1979 of the Allahabad
High Court in W.P. Nos. 5193/78, 5192, 5010, 4584 and 4583 of 1978.
AND
CIVIL APPEAL Nos. 2321, 2322, 2356, 2359, 2386, 2406-2408,
2426-2428, 2430 & 2431, 2457, 2504, 2507/1978 and 142, 144, 174,
230, 385, 388, 429, 438, 599, 635, 745, 821, 929 & 1007, 1009/79, 1149,
1149A, 1346, 1630, 1636, 1638, 1863, 1865, 1866, 1867 & 1869/79 and
2270, 2272/78.
From the Judgment and Order dated 21-9-1978 of the Allahabad
High Court in W.P. NQ>s. 5521, 4982, 5001, 4447/78, 4454, 2311, 5134,
3826, 4409, 4020, 5144, 5728, 5002, 4455/78, 6948, 4665, 4560, 4666,
4985,4449, 5540,4823,4619, 5150, 4588, 4593,4926,4947, 4948, 5012,
5062, 5088, 5089, 5191, 5539, 5106, 5097, 4833, 4911, 1398, 2114, 2515,
898/78, 5071, 5454, 5592, 5072, 5034, 4149, 5153, 5169, 5734/78, 4947/
76, 5533/78, 3299/77, 4943, 4629/78 & 5194, 5195, 5196/79.
AND
CIVIL APPEAL No. 487 OF 1979.
From the Judgment and Order dated 21-9-1978 of the Allahabad
High Court in W.P. No. 4445 of 1978.
AND
WRIT PETITION Nos. 257 & 600 of 1979.
(Under Article 32 of the Constitution).
A
B
c
D
E
F
F. S. Nariman, R. F. Nariman and P. C. Bhartari for the Appellants
G
in CA Nos. 2260 & 2261.
...
S. P. Gupta, H.K. Puri, V. K. Bahl and Miss Madhu Moo/chandani
for the Appellants in CAs 1841 to 1846, 2426 to 2428, 929, 1007 to
1009, 1630, 2169 to 2172 and 1635.
V. M. Tarkunde, G. B. Pai, Mrs. Saran Mahajan, Mr. Arvind
B
Kumar, Mrs. Lakshmi Arvind and R. K. Sinha for the Appellants in CA
lfos. 2507, 2322, 2457 and 871.
114
SUPREl\fE COURT REPORTS
[1980] 3 S.C.R.
A
Shanti Bhushan, S. P. Gupta, H. K. Puri and Miss Madhu Moo/·
chandani for the Appellants in CA 174.
"
L. N. Sinha, S. S. Ray, Ghayyas Alam and R. K. Jain for the Appe-
~
llants in CA 2269, 2270 to 2272.
Shanti Bhushan, Subhash Chandra Bir/a and Shreepal Singh for the
B
Appellants in 2373, 2302, 2374, and 2375.
~
Yogeshwar Prasad and Mrs. Rani Chabra for"the Appellants'in'CA
599, 142 to 144, 385, 1638, 2219 to 2226, 1921, 1960, 2173, 2178, 2180
to 2187, 2179, 386 to 388, 429 to 438 and W. P. 257.
c
Pramod Swarup for the Appellants in CAs Nos. 230, 2359, and
_J
2386.
P.R. Mridul ad All<k Croa fer tle Arrtllzrts in CAs 24C6.
to 2408.
Veda Vyasa, N. C. Sikri, A. K. Sikri and Vijay Jaiswal for the
D
Appellants in CA 821 & 487 and W.P. 600.
0. P. Vo ma fer tl:e arr<llar.ts in CAs 1867 and 1869.
Dr. Y. S. Chita/e, Mrs. M.ardlcra Rouchandran and P. K. Pillai
,!o; Appellant No. 1 in CA 1846, 745 and Appellant No. 2 in CA 1633
and 1634.
E
S. K. Jain fer t{,e Arrdlants in CA 187/79.
l T. S. Arora fer the Arrcllants in CA 23:6/78 & 1346/79.
Y. S. Chitale,' 0. P. Rana and Mrs. S. Ramachandran for the Appellants in CA 1866 and Appellants in CA 1865 and R.1 in CAs 142 &
143 and 144 and for the Anellants in CAs. 1631, 1632 and for appe·
F
llant No. 1 in CA 1633, 1634 and Appellants in CA 1863.
S. K. Dhingra for the Appellants in CA 2321/78.
_ __+..
J. M. Khanna for the Appellants Jn CA 2430 & 2431.
K. B. Rohtagi and Praveen Jain for the Appellants in CA 2504/
78.
G
M. M. L. Srivastava for the Appellants in CA 1149 & 1149A.
'
....
K. C. Dua for the Appellants in CA 1635 & 1636.
L. M. Singhvi, B. D. Madhyan, R. N. Dikshit and L. K. Pandey
...
for the Respondents (Mandi Samiti) CA 1841 to 1846, 1921, 2169 to
2173, 2178 to 2187, 2219 to 2226, 2260, 2261, 2269, 2302, 2373 to 2375,
H
2322, 2356, 2406 to 2408, 2420 to 2423, 2431, 2426 to 2428, 2507, 142
to 144, 174, 385 to 388, 429 to 439, 599, 230, 635, 1007 & 1008, 1149,
1149A, 1630 & 1631, 1638, 5135, 1346, and 2212.
··A-
•
RAMESH CHANDRA v. u. P. STATE (Untwalia, J.)
115
E. C. Aggarwala and R. Satish for RR 2 in CA 2179, 2180, 2222,
· 2271, 2431, 2433, 2504/78 and 1869 and 143/79 and in other matter,
for Mandi Samiti for Muzaffarnagar and Meerut.
Ravinder Bana for RR 2 in 2457, 2270, and 2272 and RR 2 and
RR 3 in CA 2269, and WP No. 257/79.
M. V. Goswami for RR I in CA 2356.
The Judgment of the Court was delivered by
UNTWALIA J., The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 being U .P. Act XXV of 1964, hereinafter called the Act,
was passed in that year. It led to the establishment of Market Areas,
Principal Market Yards and Sub-Market Yards etc. and the levying
of the fee in relation to transactions of certain. ccrr.mcditiu. in the
State of Uttar Pradesh. Various Market Committees were formed
known as Mandi Samitis. In order to give effect to the working of
the Act The Uttar Pradesh Krishi Utp1dan Mandi Niyamavali, 1965,
hereinafter called the Rules, were made by the Governor of Uttar
Pradesh. The Act has bee!1 amended several times. But we were
distressed to find that the Rules were not accordingly amended as and
when required to make them upto-date in accordance with the amen·
<led Act. Various tr~ders carrying on business in the State of Uttar
Pradesh within the jurisdiction of several Market Committees challenged the levy of fee in the High Court of Allahabad from time to time.
There were several rounds of litigation in which they by and large,
failed. Finally many Writ Petitions were dismissed by the High
Court by its judgment dated September 21, 1978 on which date many
WTit petitions were also dismissed in limine. Civil Appeal 1841 of 1978
and about 103 more appeals are from the said judgment and order of
the High Court. Immediately preceding the said judgment a longer
and more elaborate judgment had been delivered by the High Court
on April 29, 1977. Civil Appeal 871 of 1978 and Civil Appeal 1636
of 1979 are from the said judgment. Along with these 106 appeals,
two Writ Petitions were also heard being Writ Petition No, 257 of 1979
and Writ Petition No. 600 of 1979. Thus in all 108 matters have
been heard together and are being disposed of by this judgment
B
c
D
E
F
G
At the outset it may be mentioned that becanse of the litigations
cropping up from time to time bet\\ een the traders and the Market
Committees the working of th,e Committees had not successfully pr~·
H
ceeded so far, as, fees levied from time to time could not be reali~ed in
full. Sometimes illegal or unauthorised collections seem to have been
A
B
c
D
E
F
G
H
116
SUPREME COURT REPORTS
[1980] 3 S.C.R.
made. Money justifiably realised also does not seem to have been
fully utilised as it ought to have been done. In order to enable the
Market Committees in their attempt to implement the law as far as
possible and to save their attempt from being thwarted by any unnecessary litigation we allowed the parties to advance a full throated
argument in this Court including some of the points which were not
argued in the High Court or in support of which foundations of fact
were lacking. In this judgment our endeavour will be to formulate
the points of law and decide them as far as practicable so that in future
the business of the Market Committees may be conducted in the light
of this judgment leaving no scope for unnecessary litigation. Of
course even in our judgment at places it would be indicated, and even
apart from that, some genuine and factual disputes may crop up which
in the first instance may be decided by the Market Committees, preferably a Board constituted by a particular Committee for deciding
such disputes and then, if necessary, by the High Court. We do hope
that no further time will be lost by the State Government in amending
the Rules and making them up-to-date to fit in with the latest amendments in the Act.
The long title of the Act indicates that it is an Act "to provide for
the regulation of sale and purchase of agricultural produce and for the
establishment, superintendence, and control of markets therefor in
Uttar Pradesh." From the Objects and Reasons of the enactment
it would appear that this Act was passed for the development of new
market areas and for efficient data, collection and processing of arrivals in the Mandis to enable the World Bank to give a substantial
help for the establishment of various markets in the States of Uttar
Pradesh. In other States the Act is mainly meant to protect an agriculturist producer from being exploited when he comes to the Mandis
for selling his agricultural produce. As pointed out by the High
Court certain other transactions also have been roped in the levy of
the fee, in which both sides are traders and neither side is an agriculturist. This has been done for the effective implementation of the
scheme of establishment or'markets mainly for the benefit of the producers; But as pointed out recently by a Constitution Bench of this
Court in the case of Kewal Krishan Puri v. State of Punjab(l) the fee
realised from the payer of the fee has, by and large, to be spent for his
special benefit and for the benefit of other persons connected with the
transactions of purchase and sale in the various Mandis. The earlier
cases on the point of fee have been elaborately reviewed in that judgment and certain principles have been called out which will be adverted to hereinafter. While deciding the question of quid pro quo in
(1)1 [979] 3 S.C .R, 1217.
•
_f
\
\
'
··~.
RAMESH CHANDRA v. u. P. STATE (Untwalia, !.)
117
relation to the impugned fees the High Court had not the advantage
of tile judgment of this Court. In that regard this judgment is a settler
on tile point and we hope that the authorities and all other concerned
in the matter will be guided by and follow the said decision in the
matter of levy and utilisation of the market fee collected.
A
We shall now at the outset refer to the relevant provisions of the
B
Act as they stood in the year 1978 and some of the rules framed thereunder. Wherever necessary reference will be made to the unamended
provisions of the Act.
In clause (s) of s.2 of the Act "Agricultural produce" has been
defined to mean :-
"Such items of produce of agriculture, horticulture,
viticulture, apiculture, sericulture, pisci-culture, animal
husbandry or forest as are specified in the Schedule, and
includes admixture of two or more of such items, and also
includes any such item in processed form, and further includes gur, rab, shakkar; khandsari and jaggery." .
The 'Board' means the State Agricultural Produce Markets Board]
constituted under Section 26-A. Clause (e) defines "commission
agent" or "Arhatiya" to .mean :-
c
))
"person who, in the ordinary course of business, makes or
E
offers to make, a purchase or sale of agricultural produce,
on behalf of the owner or seller or purchaser of agricultural produce, for Arhat or commission."
Under clause (k) "Market Area" means an area notified as such under
Section 6, or as modified under S.ection 9. Clause ( o) defines "Principal
Market Yard" to mean the portion of a Market Area, declared as
such under Section 7. Clause (p) must be read in full :-
" 'Producer' means a person who, whether by himself
or through hired labour, produces, rears or catches, any
agricultural produce, not being a producer who also works
as a trader, broker or Dalal, commission agent or Arhatiya or who is otherwise ordinarily engaged in the business
of storage of agricultural produce.
Provided that if a question arises as to whether any person
is a producer or not for the purposes of this Act, the decision of the Director, made after an enquiry, conducted in
such· manner as may be prescribed, shall be final."
F
G
B
B
c
D
E
118
SUPREME COURT REPORTS
[1980] 3 S.C.R.
Under clause (w) "Sub-Market Yard" means a portion of a Market
Area, declared as such under Section 7. Clause (y) defines a "trader"
·l to mean:-
'.'a person who in the ordinary course of business is
engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more principals and includes a person, engaged in processing of
agricultural produce."
Action under s.5 was takeQ by the State Government declaring
its intention to regulate and control sale and purchase of agricultural
~produce in any area and thereafter declaration of Market Area was
-made under s.6.
Under the present impugned notification, which
was issued on April II, 1978 making it effective from May I, 1978,'
-almost the whole of Uttar Pradesh has been declared fo be ~Market
-Area dividing it into 250 areas and indicating in Schedule B of the
notification 115 commodities in respect of which the fee could be'
levied by the Market Committees. Under s.7 declarations of Principal
rMarket Yards and Sub-Market Yards have been made. Most ·of
-such areas declared so far are the markets or the Mandis where the
traders are carrying on their businesses. It is proposed to establish
-Principaf Market Yard and Sub-Market Yards separately in every
-market area and a question of asking the traders to carry on their
business only in such Market Yards is under consideration of the
Government. The State Government under s.8 bas got the power to
alter any market area and modify the list of agricultural produce.
Section 9 provides for the effects of declaration of Market Area. Chapter III of the Act deals with the establishment, incorporation and
constitution of the Market Committees. The most important section
is section 17 which provides for the powers of the Committee. Clause
(i) authorises 'a Committee to issue or renew licences under the Act
on such terms and conditions and subject to such restrictions as may
be prescribed.