# SASA MUSA SUGAR WORKS ETC. ETC v. STATE OF BIHAR AND ORS. ETC. ETC

- **Citation:** [1996] Supp. 3 S.C.R. 149
- **Court:** Supreme Court of India
- **Decided:** 1996-07-08
- **Case number:** Civil Appeal No. 7431 of 1994
- **Bench:** G. N. Ray, B.L. Hansaria
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sasa-musa-sugar-works-etc-etc-v-state-of-bihar-and-ors-etc-etc-14614
- **Pages:** 42

## Headnote

Bihar Afjlitllltural Produce Markets Act, 1960-Sections 4A and 48
inse11ed by (Amendment) Act, 1993, Sec. 33M as inserted by (Amendment)
Act, 1992-Legality of-Notification dated 31-8-1992 issued u/s 4 of the
Act-Power of inclusion or deletion of an afjlicultural produce-Requirement
of followi11g the procedure under Sections 3 & 4 of the Act-Section 4A does
not suffer from encroachmellt of judicial power of the State-Sections 3 & 4
stand modified on account of Section 39 r/w S 4A of the Act-Deletion of an
itent and subsequent inclusion of the sanie u/s 39 to be 111ade in accordance
with Section 39 r/w S 4A-Vires of Ss. 4A & 4B, 33M upheld.
On 6-8-1960 when the Bihar Agricultural Produce Markets Act, 1960
came into force, sugar was one of the scheduled items in respect of which
A
B
c
D
the provisions of the Act were made applicable. On 22-3-1976, all sugar
mills were exempted from the provisions of Section 15 of the Act. By
notification dated 2-5- 1977, sugar and some other items were deleted from E
the schedule in exercise of the power u/s 39 of the Act. On 21-5-1977, by
another Notification, issued in exercise of power u/s 39 of the Act, the
previous Notification dated 2-5-1977 was cancelled. Several sugar mills
challenged this Notification dated 21-5-1977 by filing Writ Petitions alleging as to whether or not the cancellation of the earlier Notification by the F
subsequent notification dated 21-5-1977 had the effect of restoring the
situations prevailing prior to 2-5-1977. The High Court held that Notification dated 21-5-1977, even though cancelled the earlier Notification dated
2-5-1977, did not tantamount to an automatic revival of sugar being an
item in the Schedule; that for including sugar as an item in the Schedule G
'Jf the Markets Act, positive action of issuing separate notification adding
sugar in the Schedule ~'as necessary and even if it was assumed that the
effect of notification dated 21.5.1977 was to add sugar in the Schedule of
the Act, such inclusion did not authorise imposition of market fee u/s 27
of the Act because it was necessary to comply with the requiren1ents u/Ss
3 and 4 of the Act before including any item in the Schedule of the Act. H
149
•
150
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A TI1e Bihar State Agricultural Marke1ting Board filed Special Leave Petition
against the Judgment of the High Court. On 23-5-1992, Memo No. 3027
Dated 12-'-1992 issued u/S 39 of the Markets Act adding sugar to the
Schedule under the Markets Act, was published in the Bihar Extraordinary Gazette. By the Bihar Agricul(ural Produce Markets (Amendment)
B Act, 1993, Sections 4A and 4B were inserted in the Markets Act. The
market committees issued notices to the Sugar Mills in view of the amendment of the Act incorporating Sections 4A and 4B. Writ Petitions were filed
by several sugar mills challenging the valiclity of Sections 4A and 4B of the
Act. The High Court, partly allowing the petition, held that the Validate ing/Amending Act of 1993, introduding Sections 4A and 48 into the
Markets Act after Section 4, could not have the effect of making the Act
applicable to sugar under Notification dated 21-5-1977 in view of the fact
that Sections 3 and 4 remained integral and vital parts of the Markets Act
and compliance of Sections 3 and 4 was essential; that the Validating/Amending Act had merely the effect of making Sections 3 and 4 of the
D Act not applicable to action taken under Section 39 of the Act, but having
regard to the continuance of Sections 3 and 4 of the Act, other provisions
of the Act cannot be made applicable merely because of the re-introduction
of sugar into the Schedule as to make !he Act applicable to the items added
by Notification dated May 21, 1977, there must have been a fresh notificaE lion u/Ss. 3 and 4 of the Act; a notification u/S 3 (1) is not a mere
notification introducing agricultural Produce under the Schedule of the
Act but the said notification is also concerned with prescribing the area

## Text

_Characters 0–39,978 of 104,984. This is a partial read: ask again with offset=39978 for what follows._

SASA MUSA SUGAR WORKS ETC. ETC.
v.
STATE OF BIHAR AND ORS. ETC. ETC.
JULY 8, 1996
[G. N. RAY AND B.L. HANSARIA, .JJ.]
Bihar Afjlitllltural Produce Markets Act, 1960-Sections 4A and 48
inse11ed by (Amendment) Act, 1993, Sec. 33M as inserted by (Amendment)
Act, 1992-Legality of-Notification dated 31-8-1992 issued u/s 4 of the
Act-Power of inclusion or deletion of an afjlicultural produce-Requirement
of followi11g the procedure under Sections 3 & 4 of the Act-Section 4A does
not suffer from encroachmellt of judicial power of the State-Sections 3 & 4
stand modified on account of Section 39 r/w S 4A of the Act-Deletion of an
itent and subsequent inclusion of the sanie u/s 39 to be 111ade in accordance
with Section 39 r/w S 4A-Vires of Ss. 4A & 4B, 33M upheld.
On 6-8-1960 when the Bihar Agricultural Produce Markets Act, 1960
came into force, sugar was one of the scheduled items in respect of which
A
B
c
D
the provisions of the Act were made applicable. On 22-3-1976, all sugar
mills were exempted from the provisions of Section 15 of the Act. By
notification dated 2-5- 1977, sugar and some other items were deleted from E
the schedule in exercise of the power u/s 39 of the Act. On 21-5-1977, by
another Notification, issued in exercise of power u/s 39 of the Act, the
previous Notification dated 2-5-1977 was cancelled. Several sugar mills
challenged this Notification dated 21-5-1977 by filing Writ Petitions alleging as to whether or not the cancellation of the earlier Notification by the F
subsequent notification dated 21-5-1977 had the effect of restoring the
situations prevailing prior to 2-5-1977. The High Court held that Notification dated 21-5-1977, even though cancelled the earlier Notification dated
2-5-1977, did not tantamount to an automatic revival of sugar being an
item in the Schedule; that for including sugar as an item in the Schedule G
'Jf the Markets Act, positive action of issuing separate notification adding
sugar in the Schedule ~'as necessary and even if it was assumed that the
effect of notification dated 21.5.1977 was to add sugar in the Schedule of
the Act, such inclusion did not authorise imposition of market fee u/s 27
of the Act because it was necessary to comply with the requiren1ents u/Ss
3 and 4 of the Act before including any item in the Schedule of the Act. H
149
•
150
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A TI1e Bihar State Agricultural Marke1ting Board filed Special Leave Petition
against the Judgment of the High Court. On 23-5-1992, Memo No. 3027
Dated 12-'-1992 issued u/S 39 of the Markets Act adding sugar to the
Schedule under the Markets Act, was published in the Bihar Extraordinary Gazette. By the Bihar Agricul(ural Produce Markets (Amendment)
B Act, 1993, Sections 4A and 4B were inserted in the Markets Act. The
market committees issued notices to the Sugar Mills in view of the amendment of the Act incorporating Sections 4A and 4B. Writ Petitions were filed
by several sugar mills challenging the valiclity of Sections 4A and 4B of the
Act. The High Court, partly allowing the petition, held that the Validate ing/Amending Act of 1993, introduding Sections 4A and 48 into the
Markets Act after Section 4, could not have the effect of making the Act
applicable to sugar under Notification dated 21-5-1977 in view of the fact
that Sections 3 and 4 remained integral and vital parts of the Markets Act
and compliance of Sections 3 and 4 was essential; that the Validating/Amending Act had merely the effect of making Sections 3 and 4 of the
D Act not applicable to action taken under Section 39 of the Act, but having
regard to the continuance of Sections 3 and 4 of the Act, other provisions
of the Act cannot be made applicable merely because of the re-introduction
of sugar into the Schedule as to make !he Act applicable to the items added
by Notification dated May 21, 1977, there must have been a fresh notificaE lion u/Ss. 3 and 4 of the Act; a notification u/S 3 (1) is not a mere
notification introducing agricultural Produce under the Schedule of the
Act but the said notification is also concerned with prescribing the area
within which the agricultural produce will have to be sold and purchased
and notification u/s 4 can be brought into existence only after considering
F the objections presented under Sections 3 and 4 of the Act, pursuant to
the notification issued under Section 3 (1) of the Act. The introduction of
a commodity into the Schedule of the Markets Act must be combined with
notification u/s 4(1) of the said Act and that the requirements under
Sections 3 and 4 of the Act must be complied with together and they cannot
be severed and it is only after issuanct! of notification u/S 4 (1) of the Act
G that the fee leviable under the Act became payr.ble; that Section 27 of the
Act is wholly dependent upon a notification under Section 4(1) of the Act
because levy of market fee can be made only on agricultural produce
bought or sold in the market at the sp,,cified rates and as Section 4(1) of
the Markets Act still remains operative and has not been excluded, mere
H inclusion of a commodity under Section 39 of the Markets Act will not ipso
SASAMUSASUGAR WORKSv. STAIB
151
facto attract other provisions or the Act; that Sections 4A and 4B are A
invalid as they constitute two different procedures, namely, the procedure
for items which are added subsequent to the commencement or the act and
the procedure which has to be followed in the case or the items already
included in the Schedule as there cannot be two separate procedures for
the items existing prior to August 6, 1960 and those which are added
subsequently, therefore, the provisions for non-application or Sections 3
and 4 or the Markets Act by Section 4A(l) or the Act, is arbitrary, without
intelligible basis and has the effect of destroying the Scheme of the
Markets Act, therefore, Section 4A(l) of the Act has to be struck down to
keep the other provisions of the Act alive; that Sections 4A and 4B
introduced by the Amending Act violate Articles 14 and 19(l)(g) of the
Constitution, and the said Sections 4A and 4B create two separate classes
for the application or the Act, one for those who would be traders in the
area concerned and the other for the market con1mittee; that Section 48
is partly valid and partly invalid, the said Section having four parts out
B
c
of which first part is invalid and cannot be given effect to while the Second D
part is valid and can be given effect to, the other two parts of Section 4B
are merely ancillary and consequential to the first and second part. These
appeals had been filed against the Judgment of the High Court.
The sugar mills submitted that any inclusion or an item in the
Schedule to the Markets Act u/s 39 does not bring about any control or
regulation of sale, purchase, storage or processing of such produce as in
order to regulate and bring the produce under control, it is necessary that
intention to regulate a produce is to be notified and procedure to be
followed; that the Markets Act presents an integrated scheme and Section
E
39 of the Act cannot be read in isolation or·other provisions or the Act;
F
that the Amending/Validation Act introducing Sections 4A and 4B failed
to revive control of any agricultural produce, even if it is included i.n the
Schedule u/S 39 of the Act, until and unless the provision of Sections 3 and
4 or the Act r/wS 15 are complied with; that Sections 4A and 4B are invalid
as sub-sections (1) or Section 4A, in so far as it dispenses with the G
requirement or complying with the provisions or Sections 3 and 4 before
market ree can be validly levied on an agricultural produce, is bad and
void for being repugnant to the scheme of the Act and for truncating
valuable rights given u/Ss 3 and 4 & that sub-Section (1) of Section 4A
also obliterates the concept of market area which is the sole basis of
operating the Act aud for imposing the levy and as a result of sub-Sec. (1) H
152
SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.
A of Section 4A, the basis of the Act gets transmitted from an Act levying a
fee to an Act imposing tax; that sub-Section (2) of Section 4A is also bad
because it renders invalid the notifications for deletion of items issued by
the Stale Government, which have been acted upon by the citizens and all
concerned and the introduction of sub-Section (2) of Section 4A retrospecB tively w.e.f. 6-8-1960 would lead to invalidation of notifications by which
items have been deleted and enable the market committee to impose a fee
and to collect the fee in respect of items which have been deleted, the same
is bad inasmuch as it undoes the certainty with which citizens had acted
upon issuance of notification u/S 39 of the Act deleting items from the
Schedule; Section 4A (2) is also bad inasmuch as the legislature has
C provided an opportunity for hearing at the stage of deletion of the items
from the Schedule and not at the stage of addition of the items and since
the process of addition and deletion are both legislative acts, unless a
rational basis exists to ditl'erentiat~ the circumstance, not atl'ording of
opportunity to the members of genen1I public when an item is being added
D to the Schedule, is per se discriminatory and as such void; that sub-Sections (1) and (2) of Section 4A cannot coexist with Sections 3 and 4 of the
statute and, therefore, the continuaince of Sections 3 and 4 after the
Amending Act is entirely futile and these Sections have been reduced to a
dead letter and such cannot be the scheme of the Act; that Sections 3 and
4 do not influence the exercise of power u/s 39 of the Markets Act and are
E not therefore, condition precedent, yet once an item is added to the
Schedule it would be operative in a market area through the process of
Sections 3 and 4; that the Notifications of 2-5-1977 and 21-5-1977 are
referable to Section 39 and the Notification dated 21·5-1977 expressly
rescinds notification issued u/s 39 on 2-5-1977, hence this notification is
F referable to Section 39 and not to Section 4(3) and for exercise of power
u/s 4(3), the procedure u/s 3 is to be followed and therefore, sugar having
been deleted from the Schedule by the Notification of2-5-1977, its inclusion
could have been made only by taking integrated actions as contemplated
u/Ss 3 &4 of the Markets Act and any attempt to include sugar in the
Schedule for imposition of levy either by amending/validating Act or by
G purporting to rescind the Notification elated 2-5-1977 by Notification dated
21-5-1977 is illegal, arbitrary, unreasonable and repugnant to the Scheme
of the Act.
The respondent State submitted that Section 39 is an independent
H provision and that this power to amend or cancel is not controlled by Ss. 3
SASAMUSASUGAR WORKSv. STATE
153
& 4 of the Markets act and even if it was assumed that Sec. 39 cannot add A
to the Schedule without the aid of Ss. 3 & 4, the infirmity is cured by the
amending/validation Act by introducing Sections 4A & 4B; that Sec. 4B of
the Amending Act protects the levy and collection of fee in the past and that
Notification dated 2-5-1977 shall be deemed never to have been issued,
therefore, no question ofr~·introducing ne\f goods into the Schedule arises
in this case because sugar had always been in the Schedule; that Section 24
of the Bihar General Clauses Act \\ill apply, as the intention of the Legislature in enacting Ss. 4A & 4B of the Act is clearly to include the items
deleted on 2-5-1977 by giving effect to the notification of 21-5-1977, notmthstanding the non-compliance of the conditions in Ss.3 & 4 of the Act as
it was not a deletion u/s 4(1) of the Act and, therefore, it was sought to be
done mthout following the procedure prescribed in Ss. 3 & 4 of the Act.
Disposing of the appeals and SLPs this Court
B
c
HELD 1.1. Unless an agricultural produce is included in the D
Schedule to the Bihar Agricultural Produce Markets Act, the provisions
of the Act have no application to such produce. An agricultural produce
may find its place in the Schedule to the Markets Act as originally included
by the Legislature, or it may subsequently be added to the Schedule under
Section 39 of the Act. Section 39 is the only provision in the Act which
authorises the State Government to add any item to the Schedule of the E
Act or delete any item therefrom. Section 39 being an independent
provision, it does not require sustenance from other sections. It operates
on its own strength. [185-C-D]
1.2. The power of altering the Schedule by addition or deletion so as
to determine the area of control and the goods to be controlled other than
those specified in the Schedule has been delegated by the Legislature to
F
the State Government. For dramng up the field of control by specifying
agricultural produce in the Schedule so that control in respect of the same
under other provisions of the Act is made, no hearing has been prescribed G
by the statute. Such hearing is not contemplated because it may not always
be feasible or even desirable to give hearing for determining which produce
is to be included in the Schedule. The wisdom in selecting the field of
control by including the produce in the schedule was exercised initially by
the Legislature and thereafter such msdom has been left to the discretion
of the delegated authority namely the State Government. [185-E-G]
H
154
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A
1.3. When the field of control is circumscribed by the items in the
Schedule, the actual control part of it including the goods to be controlled,
the market area where the control will operate and where the controlled
products will have to be sold are left to the judgment of the State Government subject to the statutory conditions imposed by Section 3(1) and
B Section 4(1) of the Markets Act. Once the Notification under Sections 3
and 4 are issued specif)fog the goods to be controlled and the areas where
the control will operate, the other provisions of control contained in
Section 5 onwards including the levy of fee under Section 27 of the Markets
Act spring into action. Ever since control on sugar was imposed by fixing
the market areas, the Markets Act had been operating for controlling sale
C of sugar and purchase has been levied with fee. [185-H, 186-A-B, DJ
1.4. In exercise of power under Section 39 of the Markets Act, a
notification was issued on May 2, 1\177 deleting sugar from the Schedule.
Admittedly, the said notification under Section 39 was issued without folD lowing the procedure of Sections 3 and 4 of the Markets Act. As a result of
the said notification sugar was deleted from the Schedule and such deletion
had the effect of shrinking the field of control of the original Schedule.
Inclusion or deletion of an item in selecting the field of control is to be made
in exercise of power under Section 39 of the Markets Act and State Government is clothed with such power which can be exercised without any aid of
E the provisions of Sections 3 and 4 of the Act. Since deletion of sugar from
the Schedule was made in exercise cif power under Section 39, and such
deletion wae not a deletion under S"ction 4(1) of the Act, the procedure
prescribed in Sections 3 and 4 of the Act, was not required to be followed.
Section 4(3) does not contemplate inclusion or exclusion of produce under
F Section 39 of the Act but is applicable only to the inclusion or exclusion of
any area from the area of market or ainy produce specified therein as have
been notified for control in a specified market already by notification issued
under Sections 3 and 4 of the Act. [186-E-H, 187-A-B]
1.5. The Legislature is quite competent to make provision for hearing
G only in case of deletion of a scheduled item without making such provision
for inclusion of an item in the Schedule. Whether an item deserves to be
included in the Schedule so that cont1rol under the Act may be brought in
respect of such item, is a matter of decision of the State Government
according to its perception to the felt need for such inclusion. But when
H the State Government has felt the need of inclusion in the Schedule but
SASAMUSASUGAR WORKSv. STATE
155
later on intends to change its mind by deleting the item from the Schedule, A
the Legislature in its wisdom has thought it fit that before deletion, a
second thought is desirable by noting the objections that might be given
by a party aggrieved. Both the sub-sections of Section 4A are within the
legislative competence and are also informed by reasons. Therefore, there
is no occasion to hold that Section 4A is ultra vires. [188-B-E)
1.6. The amending/validation Act does not intend to overrule or
annul any decision of the Court1 but the amending Act has brought in a
change in the requirement of fol1011ing the procedure under Sections 3 and
B
c
4 of the Act while amending the Schedule under Section 39 of the Act.
Hence, the basis of the decision in DCM's case has undergone a legislative
change. Therefore, Section 4A does not suffer from encroachment of
judicial power of the State, Section 4A does not offend Article 14 of the
Constitution. In view of Section 4A of the Act, any exercise of po\\'er under
Section 39 of the Act is to be uniformaly exercised in accordance with
Section 4A of the Markets Act. No objection as to the validity of Section D
4A can be raised on the ground that dilferent procedures for inclusion and
deletion of an item for the purpose of exercising power under section 39
and powers under Sections 3 and 4 of the Act have been provided for in
the Act. Exercise of power UP_der section 39 is altogether a different exercise
from the exercise of po"·er under Sections 3 and 4. Even if it is assumed
that the exercise of power under Section 39 in the matter of inclusion and
deletion of an agricultural produce overlaps or comes in conflict with the
exercise of power under Sections 3 and 4, lhe Legislature by incorporating
Section 4A has given overriding power to Section 39, subject to the limitaE
tion under Section 4A(2). Sections 3 and 4 stand modified on account of
Section 39 read with Section 4A of the Markets Act. First part of Section F
4B contemplates validation of Market fee levied and collected by treating
such levy and collection under the Act as amended. Second part of Section
4B legislatively annuls the notification dated 2-5-1977. The other parts
relate to consequential actions flowing from the first two parts. Levy of
market fee was held invalid for item like sugar which was excluded from
the Schedule by notification dated2-S-1977 on the ground that once deleted G
from the Schedule, its reintroduction can take effect only after complying
with Sections 3 and 4 of the Act. In view of Section 4A, which has been
inserted in the market Act by specifically indicating in Section 2 of Amending Act that the said Section "shall always be deemed to have been inserted", deletion of an item and subsequent inclusion of the same under H
156
SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.
A Section 39 is to be made in accordance with Section 39 read with Section
4A. Sub-section (2) of Section 4A makes it imperative that deletion can be
made after hearing objection. Hence,. even if notification dated 21-5-1977
purporting to rescind the notification dated 2-5-1977, by which sugar was
deleted from the Schedule, is held invalid for the reasons indicated by the
B High Court, such deletion stands invalidated under Sub-section (2) of
Section 4A. Hence, declaration of annulment of notification dated 2-5-1977
flows from Section 4A (2). The result is that sugar must be deemed to be
always in the Schedule in respect of which controls have been operative.
Both the parts of Section 48 therefore, do not suffer from any infirmity,
even otherwise. If deletion is non-est annulment of notification dated
C 2-5-1977 is a matter of course. Similarly, levy and realisation of market fee
on the items which were included in the Schedule, but eXclusion of which
was of no consequence cannot be helll invalid. In a sense, first two parts
of Section 48 are declaration of the consequence of invalidation of deletion
notification, therefore, there is no difficulty in upholding the vires of both
D Sections 4A and 48 of the Markets Aet. [188-G-H, 189-A-H, 190-A-B]
1.7. Section 33M cannot also be held ultra vires inspite of the fact that
the object for inclusion of Section 33M in the Act is not happily worded.
It has been categorically stated by the State Government that the collection
to be made by the State Government under Section 33M of the Markets
E Act are not to be utilised for general purposes but entire collection are to
be ploughed back for achieving the purposes under the Act. It cannot be
held that imposition has lost the character of fee and it partakes the
character of tax. [190-C]
F
Delhi Cloth and Ge11era/ Mills Company and Others v. Agricultural
Produce Mm*et Committee and Others, AIR (1993) Patna 43, distinguished.
Ram Krishan Dalmia v. Shri Justice S.R Tendu/kar, [1959] SCR 279;
Prag Jee and Oil Mills v. U11io11 of India, [1978] 3 SCR 293; Commissioner
Commercial Taxes v. R.S. !haver, [1968] 1 SCR 148; MSVS Arunachal
G Naddar v. State of Madras and Others, [1959] Suppl. SCR 92; Lakhan Pal
v. State of Bihar, [1968] 3 SCR 534; Prithvi Cotton Mills v. Broach Borough
Municipality & Ors., [1969] 2 SCC 283; Municipal Corporation of the City of
Ahmedabad v. New Shrock Spinni11g and Weaving Co. Ltd., [1970] 2 SCC
280; Madan Mohmi Pathak v. Union of India and Ors., [1978] 2 SCC 50;
H State of Gujarat v. Raman/a/ Keshav Lal, [1980] Vol. IV SCC 65; Jagannath
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.]
157
Ramamirig Dass v. State of Orissa, [1954] SCR 1046; Chief Commissiollei; A
Delhi a!ldAllother v.DeUti Cloth a!ld Gmeral Mills Co. Ltd. and Ors., [1978]
3 SCR 657 and Municipal Corporation of Delhi and Ors. v. Mohd. Yasin Etc.,
[1983] 2 SCR 999, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7431 of
1994 Etc. Etc.
From the Judgment and Order dated 20.1.94 of the Patna High Court
in C.W.J.C. No. 12937 of 1992.
Gopal Subramanium, K.K. Venugopal, Y.V. Giri, H.N. Salve, H.L.
Agarwal, AK. Sen, Udai Sinha, Raja Ram Agarwal, N.P. Agarwala, P.P.
Tripathi, Anil Agarwala, Jyoti Sharan, P.C. Sharma, A. Sharan, C.N. Sree
Kumar, B.B. Singh, K.L. Vajala, Irshad Ahamd, Anil Kumar Jha, Ramesh
Agarwal, Praveen Kumar and B.B. Singh for the appearing parties.
The Judgment of the Court was delivered by
G.N. RAY, J. These appeals and the special leave petition involve
common question of law and they arise out of the common judgment dated
January 20, 1994, passed by the Division Bench of Patna High Court. By
B
c
D
the impugned judgment, the Division Bench of the Patna High Court
allowed in part the Writ Petitions filed by several sugar mills of Bihar E
challenging the validity of Section 4A and 4B inserted by the Bihar Agricultural Produce Markets (Amendment) Act, 1993. Section 33M as inserted
by the Bihar Agricultural Produce Markets (Amendment) Act, 1992;
notification dated August 31, 1992 issued under Section 4 of the Bihar
Agricultural Produce Markets Act, 1960 (hereinafter referred to as the
Markets Act), and also challenging the validity of imposition of market fee
under the Markets Act in view of exemption of all the sugar mills in Bihar
from the provision of Section 15 of the Markets act under notification
dated March 22, 1976. The High Court on the basis of respective contention of the parties in the said Writ Petitions formulated the following points
for the decision of the Court :
(a) Whether sub-section (1) and (2) of Section 4A is valid
or
constitution ·so far as prospective part of the same is concerned.?
(b) If answer to (a) is in the affirmative, whether the said provisions
F
G
are valid and constitutional so far as the retrospective part of the same is H
158
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A concerned?
B
(c) Whether Section 4B is valid and constitutional?
(d) Whether Section 33M of the Markets Act as introduced by
amendment of 1992 is valid and constitutional?
( e) Whether Rule 68 (iii) of the Bihar Agricultural Produce Markets
Rules (hereinafter referred to as the Rules) as inserted by Notification No.
4 dated November 30, 1992 is valid.?
(f) What is the effect of grant of exemption made under Section 15
C of the Markets Act?
(g) What is the effect of Bihar Ordinance No. 8 of 1988 having lapsed
so far as levy of market fee is concerned?
D
(h) Whether a limited and restricted meaning can be given to the
expression agricultural produce by excluding the industrial products
produced by industry from the scope and ambit of the Markets Act?
E
(i) Is the Notification dated June 31, 1992 a valid Notification under
Section 4 of the Markets Act?
The High Court by the impugned judgment answered the said points
formulated by it in the following manner :
(i) Neither sub-section (1) nor sub-section (2) of Section 4A is valid
or constitutional prospectively. Both the sub-sections are ultra vires of
F Articles 14 and 19(1)(g) of the Constitution and not protected by Article
19( 6) of the Constitution.
(ii) Even if it is assumed that prospective part of Section 4A is valid,
the retrospective part is ultra vires of Articles 14 and 19 (1) (g) of the
G Constitution.
(iii) Section 4B is partly valid and partly invalid. Section 4B can be
divided into four parts. The first pa:rt of Section 4B is invalid and cannot
be given effect to. The second part is valid and can be given effect to. The
third and fourth part of Section 4B are merely ancillary and consequential
H to first ~nd second part.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY..l.J
159
(iv) Section 33M of the Markets Act as sought to be introduced by A
the Amending Act of 1912 by replacing tile amending Ordinances is invalid
and ultra vires the Constitution. The said legislation lacks legislative competence.
(v) Rule 68(iii) of the Rules is invalid in view of the invalidity of
section 33M.
B
(vi) The grant of exemption made under Section 15 of the Markets
Act so far as sugar is concerned, does not affect the applicability of the
other provisions of the Act, rules and by laws, if they are otherwise valid
and applicable.
C
(vii) Bihar Ordinance No. 8 of 1988 having lapsed, the rate of market
fee provided under Section 27 of the Act before the Ordinance No. 8 of
1988 was promulgated, revived. The rate will be Re. 1 and it will continue
• . to be so until and unless it is modified according to law.
(viii) No limited or restricted meaning can be given to the expression
'agricultural produce' by excluding industrial products from the ambit of
the Markets Act.
D
(ix) In view of the decisions on various points formulated, no opinion
need b.e expressed on the validity of Notification dated June 31, 1992 issued
E
under Section 4 of the Markets Act.
For the purpose of appreciating the rival contentions of the parties,
the following facts need be noted:
(i) On August 6, 1960, the Markets Act, 1960 (Act No. 16 of 1960)
came into force and at the time of enforcement of the said Act, sugar was
one of scheduled items in respect of which the provisions of the Markets
Act were made applicable. On March 22, 1976, all sugar mills were
exempted from the provisions of Section 15 of the Markets Act.
F
G
(ii) By Notification dated May 2, 1977 bearing No. SO 75, sugar and
some other items were deleted from the Schedule under the Markets Act
in exercise of the power under Section 39 of the Act.
(iii) On May 21, 1977, by another Notification bearing No. 857, issued
in exercise of power under Section 39 the previous Notification dated May H
160
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A 2, 1977 was cancelled.
(iv) Till July 23, 1976, four notifications were issued under Section
39 of the Markets Act by which various items like rice bran, milk (only
liquid milk) etc. were deleted from the Schedule under the Act.
B
(v) Section 27 of the Markets Act was amended by Bihar Ordinance
No. 8 of 1988 by substituting the word "at the rate of rupee one". This
Ordinance elapsed subsequently.
(vi) The Notification dated May 21, 1977 issued under Section 39 of
the Markets Act cancelling the earlier notification dated may 2, 1977 (by
C which sugar was deleted from the Schedule under the Markets Act) was
challenged in a series of Writ petitions filed before the Patna High Court.
Such Writ Petitions were disposed of by a common judgment dated March
30, 1992. Such decision has been reported in Delhi Cloth Gild Gelleral Mills
Compally Gild Others v.Agricultural Produce Market Committee alld Others,
D AIR (1993) Patna 43. The question raised before the Patna High Court in
the said Writ Petitions was as to whether or not the cancellation of the
earlier notification by the subsequent notification dated May 21, 1977 had
the effect of restoring the situations prevailing prior to May 2, 1977.
The High Court considered the following questions raised before it,
E namely:
(a) Whether or not the Notification dated May 21, 1977 cancelling
the earlier Notification dated May 2, 1977 automatically restored the state
of affairs which had existed prior to May 2, 1977; and, if it did so, then did
it mean that sugar was automatically included in the Schedule under the
F Markets Act and became subjected to levy of market fee as "agricultural
produce" in "the specified are.a
11 under and Act?
(b) Even if it is assumed that Notification dated May 21, 1977 validly
cancelled the earlier Notification dated May 2, 1977 which resulted in the
G inclusion of sugar in the schedule, was it necessary that procedure etc.
contemplated by Sections 3 and 4 of the Act had to be applied afresh
before levying market fee?
The High Court, imer alia, held that Notification dated May 21, 1977,
even though cancelled the earlier Notification dated May 2, 1977 did not
H tantamount to an automatic revival of sugar being an item in the Schedule.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.]
161
For including sugar as an item in the Schedule of the Markets Act, positive A
action of issuing separate notification adding ougar in the Schedule was
necessary. The High Court also held that even if it was assumed that the
effect of notification dated May 21, 1977 was to add sugar in the Schedule
of the Markets Act, such inclusion did not authorise imposition of market
fee under Section 27 of the said Act because it was necessary to comply B
with the requirements under Sections 3 and 4 of the Markets Act before
including any item in the schednle of the Markets Act.
(vii) The Bihar Stale Agricultural Marketing Board filed Special
Leave Petition No. 9529/92 before this Court impugning the said judgment
passed by the High Court. Such special leave petition was admitted but no
C
stay order was granted by this Court.
(viii) On May 23, 1992, Memo No. 3027 dated May 12, 1992 issued
under Section 39 of the Markets Act adding sugar to the schedule under
the Markets Act, was published in the Bihar Extraordinary Gazette.
(ix) By Notification No. GSR 40 dated November 30, 1992 sub-rule
(iii) of Rule 68 of the Rules framed under the Markets Act was inserted
by which every market committee was required to transfer 20% of the total
receipt to the State Fund.
D
(x) On October 13, 1992, an Ordinance, known as Bihar Agricultural E
Produce Markets (Second Amendment) Ordinance, 1992, was promulgated. The said Ordinance being Ordinance No. 25/92 was repealed on
February 3, 1993 and in its place the Bihar Agricultural Produce Markets
(Amendment) Act, 1993 was enacted. By the said Amending Act, Sections
4A and 4B were inserted in the Markets Act.
(xi) The Market Committees issued notices to the Sugar Mills in view
of the amendment of the Act incorporating Sections 4A and 4B.
It will be appropriate at this stage lo refer to Sections 3, 4, 4A 4B,
F
15, 33M and 39 of the Markets Act :
G
3. Notification of intention of exercising control over purchase,
sale, storage and processing of agricultural produce in specified
area - (1) Notwithstanding anything lo the contrary contained in
any other Act for the time being in force, the State Government
may, by notification, declare its intention of regulating the purH
162
A
B
c
D
SUPREMECOURTREPORTS [1996)SUPP.3S.C.R.
chase, sale, storage and processing of such agricultural produce
and in such area, as may be specified in the notification.
(2) A notification under sub-section (1) shall state that any objection or suggestion which may be received by the State Government
within a period of not less than two months to be specified in the
notification, shall be considered by the State Government.
4. Declaration of market area. - (1) After the expiry of the period
specified in the notification issued under Section 3 and after
considering such objection and suggestions as may be received
before such expiry and after holding such enquiry as it may consider necessary, the State Government may by notification, declare
the area specified in the notification under Section 3 or any portion
thereof to be a market area for the purposes of this Act, in respect
of all or any of the kinds of agricultural produce specified in the
notification under Section 3.
(2) On and after the date of publication of the notification under
sub-section (1), or such later date as may be specified therein, no
municipality or other local authority, or other person, notwithstanding anything contained in any law for the time being in
E
force, shall, within the market area,or within a distance thereof to
be notified in the official Gazette in this behalf set up, establish,
or continue, or allow to be set up, established or continued, any
place for the purchase sale, store or processing of any agricultural
F
G
H
produce so notified, except in accordance with the provisions of
this Act, the rules and by laws.
Explanation - A municipality or other local authority or any person
shall not be deemed to set up, establish or continue or allow to be
set up, establish or continue a place as a place for the purchase,
sale, storage or proce:;sing of agricultural produce within the
meaning of this section, if the quantity is as may be prescribed and
the seller is himself the producer of the agricultural produce
offered for sale at such place or any person employed by such
producer to transport the same and the buyer is a person who
purchases such produce for his own use or if the agricultural
produce is sold by retail sale to a person who purchases such ~
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.]
163
produce for his own use.
(3) Subject to the provisions of Section 3, the state Government
may at any time by notification exclude from a market area, any
area or any agricultural produce specified therein or include in
any market area or agricultural produce included in a notification
issued under sub-section (1).
(4) Nothing in this Act shall apply to a trader whose daily, or
annual turnover does not exceed such amount as may be
prescribed.
4A. Sections 3 and 4 not to apply to section 39 - (1) The provisions
of sections 3 and 4 shall not apply to the exercise of powers by the
State Government under Section 39 to amend the schedule by
addition of any item of agricultural produce not specified therein.
A
B
c
(2) The State shall not order the deletion of any item in exercise D
of its power under Section 39 without giving an opportunity for
hearing to the affected parties.
4B. Validating of market fee levied and collected - Notwithstanding
any judgment, decree or order of any Court to the contrary, any
market fee levied and collected shall be deemed to be valid as if E
such levy and collection was made under the provisions of this Act
as amended by this Act and notification No. 730 dated 2nd May,
1977 shall be deemed never to have been issued and no suit or
other legal proceedings shall be maintained or contained in any
Court for the refund of the fee collected under the provisions of
this Act and no Court shall entertain any proceedings challenging
F
the fee merely on the ground that liability had ceased on the issuing
of the notification no. 730, dated May 2, 1977."
15. Sale of agricultural produce - (i) No agricultural produce,
specified in notification under sub-section (1) of Section 4 shall be G
bought or sold by any person at any place in the market area other
than the relevant principal market yard or sub-market Yard or
yards established therein except such quantity as may on this behalf
be prescribed for retail sale or personal consumption.
(2) The Sale and purchase of such agricultural produce in such H
A
B
c
164
SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
area notwithstanding anything contained in any law be made by
means of open auction or tender system except in cases of such
class or description of produce as may be exempted by the Board.
33-M. Every Market Committee shall out of its fund contribute to
the State Government Fund such percentage of its income derived
from licence fees and market fees as may be prescribed by Rules
from time to time by the State Government.
39. Power to amend the Schedule - The State Government may,
by notification, add, amend or cancel any of the items of agricultural produce specified in the Schedule."
The reasonings indicated by the High Court in deciding the vires of
Section 4A and 4B of the Markets Act as contained in the impugned
judgment may be broadly indicated as hereunder :
D
(a) Notification dated May 21, 1977 cannot be treated as re- introduction of sugar in the Schedule without the requirement of Sections 3 and
4 of the Markets Act which are valid and operative having been complied
with. Even if Section 24 of the Bihar General Clauses Act is treated as
applicable, it will have the effect o:f adding sugar in the Schedule; but
without a proper notification under Sections 3 and 4 of the Markets Act,
E the regulatory provisions for fee were not applicable merely because sugar
was added in the Schedule.
(b) Validating/Amending Act of 1993 introducing Sections 4A and
4B into the Markets Act after Section 4, could not have the effect of making
the Act applicable to sugar under Notification dated May 21, 1977 in view
F of the fact that Sections 3 and 4 still remained integral and vital parts of
the Markets Act and compliance of Sections 3 and 4 was essential.
(c) The scheme of the Markets Act is an integrated one and mere
introduction of a commodity into the Schedule will not proprio vigore
G attract the provisions of the Act without following the provisions of Sections 3 and 4 of the Act.
(d) The Validating/Amending Act had merely the effect of making
Sections 3 and 4 of the Act not applicable to action taken under Section
39 of the Act, but having regard to the continuance of Sections 3 and 4 of
H the Act, other provisions of the Act cannot be made applicable merely
SASAMUSASUGARWORKSv.STATE[GN.RAY,J.]
165
because of the re-introduction of sugar into the Schedule. To make the Act A
applicable to the items added by Notification dated May 21, 1977, there
must have been a fresh notification under Sections 3 and 4 of the Act.
( e) Sections 3 and 4 of the Act constitute the core of the Act for the
application of the provisions of the Act, which mandates fresh notification
before the Act is made applicable to items included in the Schedule. After
the commencement of the Act, introduction under Section 39 cannot
achieve that purpose. (t) A notification under Section 3 (1) is not a mere
notification introducing agricultural produce under the Schedule of the Act
but the said notification is also concerned with prescribing the area within
which the agricultural produce will have to be sold and purchased.
Notification under Section 4 can be brought into existence only after
considering the objections presented under Sections 3 and 4 of the Act,
pursuant to the notification issued under Section 3(1) of the Act. The
introduction of a commodity into the Schedule of the Markets Act must
B
c
be combined with notification under Section 4(1) of the said Act.