# SREENIVASA GENERAL TRADERS & ORS. ETC v. STATE OF ANDHRA PRADESH & ORS. ETC

- **Citation:** [1983] 3 S.C.R. 843
- **Court:** Supreme Court of India
- **Decided:** 1983-09-06
- **Bench:** A.P. Sen, E.S. Venkataramiah, R.B. Misra
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/sreenivasa-general-traders-ors-etc-v-state-of-andhra-pradesh-ors-etc-8409
- **Pages:** 42

## Headnote

Andhra Pradesh (Ag;icu/tural Produce and Livestock) Market Act 1966-
'
Sections 7(6), 12(1) scope of-Prohibiting sale/purchase of agricultural produce
outside the market-Whether encroaches upon citizen's· right under Art. 19(l)(g)--
Levy of market fee on transactions from one's business· premises if invalid-Rule
74(1)-Scope of.
Tax and fee-Es;entia/ differences-What are.
Jurisprudence-Decision of a Court-To what ext~nt an authority.
The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act,
1966 was Cnacted to reguJatc.the purcha'se and sale of agricultural produce,.
livestock and products of livestock ( compendioiisly referred to as agriCultriral
produce), to establish n1arkets in connection .therewith, to eliminate iniddlemen.
and to protect the producers in· such agricultural produce from exploitation
aild to ensure them a fair price for their produce.
The Act empowers the
State Government to establish Market Committees.
Section 7 prohibits the
setting-up of any Place for the purchase, sale etc. of any riotified agricultural
produce except in accordance with the conditions of a licence granted by the
Market Co1nmiltee. Sub-seetion (6) of section 7 prohibits the purchase or sale
of. any notified agricultUral produce outside the n1aket in the Dotified area,
Section 12 empowers the State Governmenl to authorise the Market Com:.
mittees to levy a fee on agricultural produce purchased or sold within the
notified area.
The market fee which in 1970 Was 25 paise for every ·hundred rupees of
the aggregate amount for which the notified agricultural produce.was pui'chased
or ~old was raised to 50 ~aise in 1972. It was eventualJy raised to Re. 1.
It was contended on behalf.of the· petitioners that (i) s«::ctiou · 7(6) which ·~
totally prohibits the purchase and sale of any notified agricultural produce out·
side the market in that area encroaches upon the right of the· citizen to carcy
on trade or business and is repugnant to Article 19(l)(g) of the Constitution and
is therefore void; (ii) levy of market fee under section· 12(1) on transactions
effected by the petitioners from their business premises wliich are located in the
notified market . area but outside the market proper is per se illegal and
unconstitutional as such levy is not corelated to any services rendered to
the1D,,
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SUPREME COURT REPORTS
(1983] 3 S.C.R.
Dismissing the appeal,
HELD : Having regard to the purpose and object of the IOJ1islation the
· restrjction imposed by section 7(6) of the Act is reasonable re!!triction within
the meaning of Atticle 19(6) of the Constitution.
[865 A-Bl
· . Marketing legislation which seeks to enable producers to eet a fair price
for the commodities produced by them by eliminating middlemen and providing regulated markets, cannot be said to impose an unreasonable restriction
on the citizen's right to do business unless it is clearly. established that the
provisiops are too drastic to achieve the object for which the law was enacted.
In order to .:m.ake such legislation effective it would be reasonable for the
legislature to CO!Jtrol transactions betwren traders and also the sale within the
market area of_ produce grown outside the market area. [859 D~F}
The liberty of the invividual n1ust yield to the common good. There
can be no protection of the rights 1hemselves unless there is a measure of
Control and regulation of the ria:hts of each individual in the interest of all.
[863 OJ
In order to determine the reasonableness of a restriction the court must
have regard to the nature and conditions prcvailina: in that trade. Section 7(6)
was enacted for the very purpos: of controlling the business in aa:ricullural
produce.by the establishment of reaulated markeis in connection therewith.
Therefore the se-ction cannot be said to be arbitrary or of aa excessive natur•
which is beyond what is required in the interests of th~ community.
If the
agricultllral produce is sold in the notified area the tran

## Text

_Characters 0–39,879 of 104,923. This is a partial read: ask again with offset=39879 for what follows._

843
SREENIVASA GENERAL TRADERS & ORS. ETC.
v.
STATE OF ANDHRA PRADESH & ORS. ETC.
September 6, 1983
[A.P. SEN, E.S. VENKATARAMIAH AND R.B. MISRA, JJ.J
Andhra Pradesh (Ag;icu/tural Produce and Livestock) Market Act 1966-
'
Sections 7(6), 12(1) scope of-Prohibiting sale/purchase of agricultural produce
outside the market-Whether encroaches upon citizen's· right under Art. 19(l)(g)--
Levy of market fee on transactions from one's business· premises if invalid-Rule
74(1)-Scope of.
Tax and fee-Es;entia/ differences-What are.
Jurisprudence-Decision of a Court-To what ext~nt an authority.
The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act,
1966 was Cnacted to reguJatc.the purcha'se and sale of agricultural produce,.
livestock and products of livestock ( compendioiisly referred to as agriCultriral
produce), to establish n1arkets in connection .therewith, to eliminate iniddlemen.
and to protect the producers in· such agricultural produce from exploitation
aild to ensure them a fair price for their produce.
The Act empowers the
State Government to establish Market Committees.
Section 7 prohibits the
setting-up of any Place for the purchase, sale etc. of any riotified agricultural
produce except in accordance with the conditions of a licence granted by the
Market Co1nmiltee. Sub-seetion (6) of section 7 prohibits the purchase or sale
of. any notified agricultUral produce outside the n1aket in the Dotified area,
Section 12 empowers the State Governmenl to authorise the Market Com:.
mittees to levy a fee on agricultural produce purchased or sold within the
notified area.
The market fee which in 1970 Was 25 paise for every ·hundred rupees of
the aggregate amount for which the notified agricultural produce.was pui'chased
or ~old was raised to 50 ~aise in 1972. It was eventualJy raised to Re. 1.
It was contended on behalf.of the· petitioners that (i) s«::ctiou · 7(6) which ·~
totally prohibits the purchase and sale of any notified agricultural produce out·
side the market in that area encroaches upon the right of the· citizen to carcy
on trade or business and is repugnant to Article 19(l)(g) of the Constitution and
is therefore void; (ii) levy of market fee under section· 12(1) on transactions
effected by the petitioners from their business premises wliich are located in the
notified market . area but outside the market proper is per se illegal and
unconstitutional as such levy is not corelated to any services rendered to
the1D,,
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SUPREME COURT REPORTS
(1983] 3 S.C.R.
Dismissing the appeal,
HELD : Having regard to the purpose and object of the IOJ1islation the
· restrjction imposed by section 7(6) of the Act is reasonable re!!triction within
the meaning of Atticle 19(6) of the Constitution.
[865 A-Bl
· . Marketing legislation which seeks to enable producers to eet a fair price
for the commodities produced by them by eliminating middlemen and providing regulated markets, cannot be said to impose an unreasonable restriction
on the citizen's right to do business unless it is clearly. established that the
provisiops are too drastic to achieve the object for which the law was enacted.
In order to .:m.ake such legislation effective it would be reasonable for the
legislature to CO!Jtrol transactions betwren traders and also the sale within the
market area of_ produce grown outside the market area. [859 D~F}
The liberty of the invividual n1ust yield to the common good. There
can be no protection of the rights 1hemselves unless there is a measure of
Control and regulation of the ria:hts of each individual in the interest of all.
[863 OJ
In order to determine the reasonableness of a restriction the court must
have regard to the nature and conditions prcvailina: in that trade. Section 7(6)
was enacted for the very purpos: of controlling the business in aa:ricullural
produce.by the establishment of reaulated markeis in connection therewith.
Therefore the se-ction cannot be said to be arbitrary or of aa excessive natur•
which is beyond what is required in the interests of th~ community.
If the
agricultllral produce is sold in the notified area the tranractions would be
carried on under the supervision and control of the market committee. The
produCers can get the best competitive prices and the transactions will be in
ready cash. The producers do not have to pay the 1niddlemcn.
The use of
standard weights and measures would eliminate the possibility of the producer
being vict'imizcd by malpractices of the traders. Supervision of the operation!
ir.the notified market area can be more conveniently done if business is carried
on in a specified area. (873 H, 864 ·B-C, F-0]
M.C. V.S. A.runachala Nadar .etc. v. State of Madras and Ors., [1959]
Supp. 1 SCR 92; Mohammad Hussain Gu/um Mohammad and Anr. v. Stat~ of
Bombay and A.nr., [1962] 2 SCR 659 and Mohammadbhai Khudabux Chhipa and
Anr. v. Stato of!]ujarat and A.nr., [1962] Suppl. 3 SCR 875, relied ori.
The contention that no liability is cast on the petiiion~rs to pay market
fee on transactions of sale and pllrchase of notified ·agricultural produce jf
they carry on such trade from their own premises in the\notified .area but
outside the market in that area proceeds on. wrona assumption because firstly,
in view of the- express prohibition contained in section 7(6) the petitioners
cannot carry on such trade by not resortina; to the market proper.
Contraven~
tion of tho provisions of section 7(6) is made a penal offence under section 23(1).
Secondly, establishment of regulated markets for aericulturaJ produce is a
service rendered to those who are enaaaed in the business of purchase and sale
of such commodities. .The ·duty of the market committee docs not and with
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SREE NIVA!A G. TRADERS v. ANDHRA PRADESH
845
th1 establishment of such markets but extends Under section 15 of the Act to
providing facilities in the market Service rendered by a market committee
and facilities so be provided arc not confined to the market proper but extend
throu11b tho notified area. [865 F-H, 866 D-E]
lmmldis<tti
Ramakrishlfiliah v. Stale of A,P., [1976] !LR (AP) 878,
approved.
TherC is no irrconcilable conflict" between the provisions of section 7(6)
and 12(1) because they are meant to achieve two distinct and 'separate objects
operate on two different planes. [868 BJ
The argument of the petitioners that since the market committees do not
provide any ~dditional facilities to justify increase in the rate of market fee is
devoid of substance. The decision of this Court in Kewal Krishan Puri's case
does not lay down any legal principle of· general applicability and is clearly
distinguishable on facts.
In that case the increase in the market fee was
quashed because the income of the market fee had become a source of revenue.
The market committees throughout the State were left with huge surplus funds
and the State Government had directed the market committees to contribute a
laree sum to a Medical College and deposit the surplus amounts with the
State Agricultural Marketing Board and the Board in turn advanced intcrestfrce loans to Marketing Federations. Even after incurr_ing: these unauthorised
expenditures, the market committees were left with huge surpluses and were
required to make donations to many educational institutions; The marketina
committees also spent large sums on general improvement of the Municipal
areas. The Punjab Act permitted diversion of funds for any purpose calculated
to promote the gener"a.l intefes.t of the committees or the national or public
interest. [870 C, F-H]
Kewal Krishan Puri and Anr. v. State of Punjab and Ors., [1979] 3 SCR
1217, distinguished and held inapplicable.
The
Com1nissioner,
Hindu
Religious
Endvwments, Madras · v. Sri
Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, [1954] SCR 1005 and Matthews
v. Chicory M~ketin¥ Board, 60 Com .L.R. 263, referred to.
A case is an authori_ty only for what it ~ctually decides and not for what
may logically follow from it. Every judgment must be read as applicable to
the particular facts proved, or assumed to be proved; ·sincC the aencrality of
the expressions which may be found there are not intended to be expositions
of the whole law but a•verned or qualified by the particu1ar facts of the case
in which exp"res.sions are to be found. In Kewal Kris!tan Purl's case tbere arc
certain obs:ervations which were really nOt necessary for purposes of that
dccJsion and e:o beyond the occasion and therefore they have .no binding
authority thou&h th~ may have a persuasive value. [871 H, 872 A-BJ
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The traditional view that there must be act~al quid pro quo for a fee has
\lDdersone a sea change. The dis.tinction between a tax and a fee ~es primarily
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SUPREME COURT REPORTS
[ 1983] 3 S. C.R.
in the fact that a tax is levied as part of a common burden while a fee is for
payment of a specific benefit or privile&e although the ~peciai advantage is
secondary to the primary motive of regulation in public interest. If the
element ofreVenue fer general purpose of the State predominates, the levy
becomes .a tax.
Jn regard to fees there is, and must always be, correlation
be.tween the fee collected and the s-ervice intended to be' rendered. , In' deter·
mining whether a levy is a fee or a- tax, the true test 1nust be whether its
primary and essential purpose is to render specific services to .a specified area or
class; it m·ay be of on consequence that the State n1ay ultimately and indirectly
be benefited by it. The power 'of any le&islature to levy a fee is cOnditioned by
the fact that it must be' 'by and large" a quid pro quo for the· services rendered.
However, correlationship between the levy and the services .rendered is one of
general character and· not of Mathematical exactitude. All that is necessary is
that there should be a reasonalc ''relationship" between levy of the fee and 'thC
s~rvice rend~red. [872 D·G]
The Conimissioner; Hindu
Religious
Endown1ents,
Madras
v. Sri
Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, supra; H. H. Sundhundra
Thirtha Swa1niar v. Commissioner for Hindu Religious & Churitable Endowments,
Myswe, [1963] Suppl. 2 SCR 302; The Hingir,Rampur Coal Co. Ltd. v. State of
'Drissa & Ors:, [1961] 2 SCR 537; H.Ji. Shri Swamiji of Sltfi Admar Mutt etc. v.
The Co111missioner, Hindu Religiolls &: Charitable Endownieuls Departn1'enl & Ors.
[1980] t"SCR 368; Southern Pharmaceuticals & Chen1icals, Trichur & Ors. etc:
v. State of Kera/a & ·Ors. etc., [1982] 1 SCR 519 and Municipal Corporation of
Delhi & Ors. v. Mohd. Yasin, AlR [1983) SC 617, referred to.
There is no generic difference between a tax and a fee : both are compulsory exactions of money by public aUthorities. Compulsion lies in the fact
that payment is enforceable by law against a person inspite of his un\villingness
or want of consent. A levy in the nature of 2. fee does ·not cease to be of that
character merely because there is an element o~ compulsion or coerciverieSs
present in it, nor is it a postulate of a fee that it must have direct relation to
the actual service rendered by the authority to each individual who obtains the
benefit of the service. It is. npw increasiflgly realize·d that merciy becau~e the
collections''fOr the services rendered or for grant of a privilege or licenCe are
taken to the consolidated fund of the State and not_ separately appropriated
towards the expenditure for rendering the servic~ is not by itself decisive.
Presumably the attention of the Court in the Shirur Mutt case was ~ot drawn
to Art.'.266 ~f the Constitution. The Constitution nowhere coniemplate.s it to
be ~n essential element-of fee that it si.,.,utd be credited tO a separiite fund and
not to the consolidited fund. The element of quid Pro qua in the strict SensC
is not always a sine qna non for" a fee. The elen1ent of quid prO quo is not
necessarily absent in every t_ax.
[873 B-F]
£!',·
.
there is no force in the contention that the increase in the rate of
market fee from 50 paise to t rupee was illegal on the ground .that there was
no correlation between the ·increase in the services rendered. The levy of
mar. ke~·fee under section 12(1) o~f the Act is co-related to the purposeS mentioned in section 15 that all the
onies received by a market committee fron1
the.traders on sale of agricultura produce have to be paid into a fund called
'
SREENIVASA G. TRADERS \', ANDHRA PRADESH
847
the Market Con1rnittee Fund, and all expenditure incurred has to be defrayed
out of that fund and any surplus has to be invested in the prescribed manner.
A
The purposes mentioned in section 15 are all purposes which are extremely
beneficial to the growers and the traders. [874 F-H, 875 A-BJ
•
In the instant case, there was no allegation that C1'penditure incurred by
the Market committee was not authorised by the Act. When the petitioners
had not challenged the increase of the market fee ftom 25 paise to 50 paise in
1972 there could be no basis for challenging the increase in the rate"Offee
B
to Re. 1 in 1978. Apparently, the cost of rendering services ha~ correspondingly increaszd over the years.
Moreover, the Market committees are
rendei:ing services some of which are obligatory duties.
[875 C-E]
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It is not always possible to work out with- mathe1natical precision the
an1ount of fee required for the services to be rendered each year and to collect
C
only just that amount which is sufficient for meeting the expenditure in th~t
year. In somel}'ears, the income of a market committee by way of market fee
and licence fee may exceed the expenditure and in another year when the
development works are in progress for providing modern infra-structure facilities, the expenditure may be far in excess of the income. It is wrong to take
only one particular year or a few years into consideration to decide whether
the fee is commensurate with the services rendered. An overall picture has to -
D
be taken in dealing with the question Whether there is quid pro quo i.e. there is
correlation between the increase in the fate of fee from 50 paise to rupee one
and the services rendered. [852 D·F]
On the plain language of section .. 12(1) of the Act the markel fee is
leviable both on purchase of paddy by a rice miUer from a purchaser and a]so
on purchase or sa1e of rice by a miller to a trader or by a trader to a trader
E
because there is service rendered by market com mittec at each of the stages.
Rice and paddy are not the same comn1odity. There is distinction between
the two although paddy is milled into rice by the process of de-husking, they
are two separate and distinct' ·commercial commodities and have been separately specified as individual agricultural produce in schedule JI of the Rules.
[879 G-H, 880 A]
F .
On a reasonable construction of r. 74(1), the legal consequences as set
forth must ensue. If paddy is subjected to levy of a market fee on purchase
or sale. by the producer to a~ rice miller in a notified market area by a market
committee within the State and is taken into the notified market area of
another n:iarket committee of being processed i.e. de-husked into rice and sold
by a rice miller to a trader or by a trader to a trader in the course of a comG
mercial transaction, there cannot by· any levy of market fee on such purchase
or sale of rice in another notified market area. If that be so then it must logi
cally follow that the subsequent sale of rice inthe notified area of the market
con1mittee cannot be subjected to levy of market fee on purchase Or sale of
rice by a miller to a trader or by a trader to a trader, if sale or purchase of
padclY within such notifled market area has suffered the levy of .market fee.
H
This is of course subject to the qualification tha.t such sale or ptirchase has
taken place· in the notified market area, but outside the mai-kct in that area
as enjoined by the proviso tor. 74(1). [881 H, 882 A·B] ·
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SUPREME COURT REPORTS
[ 1983] 3 s.c.i<.. . .,
ORIGINAL JuR1SDICTION : Writ Petitions Nos. 2727 2840-42
.
.
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,
2765, 2868, 2869, 2911, 3137, 3138, 3568-71, 3680, 7485-7580, 381720, 4190, 9018-62,45'53, 4554-55, 4690, 4773, 6617-6C63, 4774, 666571, 4775, 6672-81, 4919, 4929, 7588-7606, 8824, 7039-96, 7129, 82858311, 8506-8653, 8654-8854, 7946-65, 9485 of 1981, 2642-84, 3584,
4114-22, 4409, 5485-5509 of 1982, 4246-72bf1973, 5519-34, 5605-85,
6983, 7000, 7252-60, 7478-7637, 7925-42, 8386, 9372-90, 9291-9440,
9605, 9804-9921, 9922-26, 9958-78, 9979-9994 of 1982, 199-318,
834-50, 2862-2893, 3644-48, 3660-3665, 2901-2983 of 1983, 1286 and
1924, 1925-49 of 1973, 9383-9407, 8009-8036 of 1981, 1650-82, 16831704, 1763-88, 1789-1917, 1964-2Jl3, 2287-91, 2461-78, 2846-49,
3107-27, 3128-48, 3637-55, 3707, 4652-4788, 4790-4919, 7093-7121,
8088 of82, 1174-80, 4435-4565, 4838-4909, 4825-5074 of 1983.
(Under Article 32 of the Constitution of India)
WITH
Special Leave Petition No. 728/81 and Civil Appeal Nos. 1485,
2108, 2469/1972, 4013/82, 10/73 and 7502/81.
For the Appearing Petitioners
G. L. Sanghi, Dr. L.M. Singhvi, D. Sudhakara Rao, Mrs Urmi/a
Sirur, T. V. S. N. Chari, B. •Kanta Rao, G. R. Subbarayan, B: Kanta
Rao, A. M. Singhvi, B. Parthasarthi, C. Seetharamiah, A. Subba Rao,
Upendra Gupta, A. V. Rangarn, Mrs. Sar/a Chandra, N. Bhatakatsalam,
Mrs. C. K. Sucharita, J. M. Khanna, G. Narayana Rao, M. Veerappa,
Raju Ramachandra, G. S. Narayana Rap, and M. M. S. Srivastava.
For Jhe Appearing Appellants.
· F
P.P. Rao and B. Parthasarthi with him in CA. Nos. 1485, 2108,
2469/72, 1073 and 4013 of i982.
Mrs. Shyamala Pappu, Mrs. Indra Sawhney and Miss Kittu
Bansila/, with her for the Appellants in CA. No. 2502/81.
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For the Appearing Respondents.
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P. Ram Reddy and G. N. Rao with him.
The Judgment of the Court was delivered by
SEN, J.
These petitions under Art. 32 of the Constitution
principally lay a challenge to the constitutional validity of the increase
iQ the ~ate of market fee levied .by .the markei committees in· the State
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; . SREEN!VASA G. TRADERS v. ANDHRA PRADESH {Sen, J.)
849
of Andhra Pradesh under sub·s. (I) of s. 12 of the Andhra Pradesh
(Agricultural Produce and Livestock) Markets Act, 1966 ('Act' for
· short) from 50 paisa to rupee one on every one hundred rupees of
the aggregate amount for which the notified agricultural produce,
livestock or products of livestock are purchased or sold in their
respective notified market. area~ on the ground that there was no quid
pro quo i. e. there was no correlation between the increase in _the rate
of market fee ~nd the service rendered.
There are also certain subsidiary questions raised in these
petitions viz. : As to (1) Thf constitutional validity of sub-s. (6) of s.7
of the Act which prohibits the carrying on of any transaction of
purchase or sale of notified agricultural produce, livestock or products of livestock in a notified market area or outside the market in
that area as violative of Art. 19 (I) (g) of the Constitution. (2) As to
the power of the market committees to levy inarket fee under sub-s.
( 1) of s. 12 of the Act at rupee one per hundred rupees of the aggregate amount for which such agricultural produce, livestock or products
of livestock is purchased or sold outside their markets but within their
respective notified market areas. And·(3) Whether under r. 74 (I) of
the Andhra Pradesh (Agricultural Produce and Livestock) Markets
Rulos, 1969 (Rules' for short) if purchase or sale of paddy has
suffered market fee in the hands of a rice miller, the subsequent
purchase or sale or rice by . a miller to a trader, or by a trader to a
. .
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trader, can be subjected to payment of market fee again.
Writ Petition No. I 286 of 1973 questions the validity of a
notification issued by the State Government being G. 0. M. S. No.
2095 dated· October 29, 1968 declaring rice to be a notified agricultural produce under s. 2 (i), and the n_otification issued by the State
Government of Andhra Pradesh under sub-s. (4) of s. 4 of the Act
being G.O.M.S. No. 971 dated July 16, 1971 declaring an area of 20
kms. around Kothavalasa to be the notified market area of the Kotha·
valasa Agricultural Market Committee for the district of Visakhapatnam, as well as the constitutional validity of sub-s. (6) of s. 7 of
tlie Act and sub-s. (I) of s. 12 of the Act. Civil Appeal No. 1485 of
!972 is directed against the judgment of the Andhra Pradesh High
Court dited July 7, 1971.upholding the constitutional validity of sub-s.
f6) of s. 7 of the Act and suh-s. (I) of s. 12 of the Act. Civil Appeal
No. 2108 of 1972 is directed against the judgment of.the Andhra
Pradesh High Court dated July 27, 1971 uphol\iing the increase
in the rate of market fee from 13 paise per quintal to 25 paise per .
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SUPREME COURT REPORTS
( 1983] l s.c.R.
hundred rupees by the Agricultural Market Committee, Guntur in
the year 1970 on the ground that there was no quid pro quo i. e. there
was no correlation between the service and the increase in .the rate of
market fee. Civil Appeal No. 2502 of 1981 is directed against the
judgment of the Andhra Pradesh High Court dated April 21, 1981
upholding the levy of market fee at 50 paisa per hundred rupees on
cotton seeds by an agro-based industry engaged in the business of
manufacture and sale of cotton seed oil. Civil Appeal No. 4013 of
1982 is directed against the judgment of the Andhra Pradesh High
court dated September 17, 1982 upholding the increase in the rate of
market fee from 50 paisa per hundred rupees to rupee one by the
Agricultural Market Committee, Gunt\JI' upon the basis that there
need be no quid pro quo to justify the levy of such market fee.
It appears that initialiy in the year 1970 the bye-Jaws of all the
market committees throughout the State provided for the levy of
market fee @ 25 paisa for every hundred rupees of the aggregate
amount for which the notified agricultural pro<)uce liyestock or
products of livestock was purchased or sold.
Sub~quently, in 1972
the rate of market fee was increased to 50 paisa per hundred rupees
of the value of such agricultural produce, livestock or products of
livestock. The State Advisory Board at its meeting held or January
27 and 28, 1976 resolved to recommend the enhancement of the
existing rate of market fee to rupees one per hundred rupees so as to
enable the market committees to build up adequate finances to meet
the increasing cost towards acquisition of land and establishment of
markets with modern infrastructure facilities. The Director of
Marketing accordingly addressed a letter dated February 16, 1976 to
all the agricultural market committees in the State inviting their
attention to the resolution of the Advisory Board and requesting them
to place the proposal for the enhancement of the existing rate of
market fee from 50 paisa to rupee one before the market committees
and communicate their consent for levy of the enhanced rate of
market fee under sub-s. (!) of s. 12 of the Act read with bye-law No.
44 (i) of the concerned market committee bye-laws.
Accordingly,
all the market committees throughout the State accepted the reco!il·
mendation of the Advisory Board· and resolved to enhance the market
fee from 50 paisa to rupee one requesting the Director to forward
the amended bye· law No' 24 (i) to the State Government for their
- approval. J'he State Government of Andhra Pradesh by notification
dated January I, 1978 published in the Andbra Pradesh Gazette dated
February 23, 1978 accorded their approval to the amended bye law.
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SkBENIVASA o. TRADERS v. ANDHRA PRADESH (Sen, J.)
SS!
In pursuance of the impugned notification the market committees
throughout the State began to levy market fee @ rupee oue per
hundred rupees.
Some of the petitioners challeged the increase in the rate of levy
of matket fee from 5Ci paisa to rupee one by filing petitions under
Art. 226 of the Constitution before the Andhra Pradesh High Court.
All these writ petitions were disposed 'of by the High Court by its
judgment in Sri Vijaya Cotton Traders and Ors. v. The State of
Andhra Pradesh and Ors.(1) by which it negatived many of the ·submissions advanced before us .. Aggrieved by the decision of the High
Court, the petitioners applied to this Court for grant of special leave
'under Art. i 36. After hearing learned counsel appearing for them
at considerable length, the Court dismissed the special leave petitions
by its order dated May I, 1981. Undaunted by the dismissal of the
special leave petitions, these petitioners along with others have now
filed petitions under Art. 32' of the Constitution and
secured
a rule nisi on the pretext that similar questions were involved in Civil
Appeal No. 2108 of 1972 and Writ Petition No. 1286 of 1973.
The pattern of working of the market CQmmittees in the State
is more or less the same although the circumstances in which each
market committee is placed may differ. Facts as far as they can be
gleaned from some of the writ petitions where counters have been
filed may be briefly stated. The Malakpet Agricultural Market
Committee, Hyderabad has in its counter in Writ Petition No. 2911of 1981 furnished sufficient material to show the nature of services
rendered by the Market Committee. It has established and has under
its control various Markets in the twin cities of Hyderabad and
Secunderabad viz. (i) Osmanganj Market for the purchase and sale
of foodgrains and other notified agricultural produce, (ii) Jambagh
Market for sale of fruits, (iii) Miralam Mandi and Sabzi Mandi for
the sale of vegetables in Hyderabad, and Hissamgunj Market in
Secunderabad for the pur9_hase .and sale 'Of foodgrains and vegetables.
In all those markets, . the Committee is providing necessary facilities
to the traders and produ~rs of agricultural produce. The Market
Committee during the financial year 1981-82 incurred an expenditure
of Rs. 8 28 crores for the construction of godowns, shops, platforms,
formation of internal roads, approach roads, construction of press
building'etc. So far as the Malakept area is concerned, the Osmangang Market was not sufficient for regulating the transactions of sale
(I) A.l.R. 1981 A.P. 203.
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SUPREME COURT REPORTS
[i985] 3 s.c.t
and purchase of agricultural produce. The Market Committee therefore permitted the traders of Malakept to carry on their business
from their respective licensed premises, subject to the supervision and
control of the functionaries of the Market Committee. Due· to the
location of the present markets in busy and congested places, it was
not possible to extend the market areas any further. The .Committee
therefore acquired an area of 41 acres 22 guntas at Miilakpet on a
permanent lease from the Andhra Pradesh Housing Board in April .
1980. It also applied for acquisition of 20 acres 20 guntas at
Bahadurpura, 70 acres at Mansoorabad and 50 acres at Kukatpally.
The aforesaid construction work for expansion of the markets was in
progress when the writ petitions were filed. It appears from the
statement of income and expenditure for the years 1978'79, 1979-80
- and 1980-81 that the income from the market fee even after its
increase from 50 paisa to rupee one is not sufficient to meet the
expenditure of the Market Committee .
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It is not always possible to work out with mathematical precision
the amount of fee required for the services to be rendered each year
and to collect only just that amount which is sufficient for meeting
the expenditure in that year. In some years, the income of a market
committee by way of market fee· and licence fee may exceed the
expenditure and in another year when the development works are in
progress for providing modern infra-structure facilities, the expenditure may be far in excess of the income. It is wrong to take only one
particular year or a few years into consideration to decide whether
the fee is commensurate with the services rendtn d.
An overall
picture has to be taken in dealing with the question whether there is
quid pro quo i. e. there is correlation between the irycrease in the rate
of fee from 50 paisa to rupee one and the services renderd. The
High Court in Sri Vijaya Cotton Traders' case, supra has dealt with
the Nizamabad Agricultural Market Committee.
It observed
from the statement showing the details of income and expenditure
for
three years 1977-78, 1978-79 ·and <1979-80 that there was a·
closing balance of about Rs. 39 lakhs at the end of the year 1977-78,
of about Rs. 15 lakhs at the end of I 978-79'and of about Rs. 66 lakhs
at· the end of 1979-80. The Market Committee filed a counteraffidavit showing that it had taken up constructional works with a
spill over for the year 1978-79, estimated at over Rs. 16 lakhs and
had to complete new works costing about Rs. 21 lakhs. That apart,
the expenditure for development of the eastern portion of the market
yard at SJ,raddhanand Gunj'. Nizamabad came to nearly Rs. 24 lakhs
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SREENIVASA G. TRADERS v. ANDHRA PRADESH (Sen, J.)
853
and that on the western side came to Rs. 134 Iakhs.
It was stated
ct
that for the year 1977-78-the Committee derived a total income of
Rs. 18 Iakhs by way of market fees and licence fees and the expendi· ·
.ture was to the tune of Rs. 16 Iakhs.
At the end of the year 1977-78
the closing balance was Rs. 39 Iakhs but it was not sufficient to meet
the cost ofland acquisition, cost for development works and providing
of modern facilities. In these thousand and odd writ petitions, it is
difficult to expect each and every market committee to file their
counter but some of the market committees like the Agricultural
Market
Committee,
Guntur,
Kothavalasa,
Bheemavaram anc~
Ambajipeta have filed their counter showing the nature of servic~s
rendered. Learned counsel appearing for the State Government has
filed a statement showing the income and expenditure of the market
committees and a detailed chart indicating the nature·of development
works undertaken by each. It is clear from the material placed before
us that the income from the market fee even after its increase from
'- 50 P.aisa to rupee one is not sufficient to .meet the expenditure of the
market committees.
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In all fairness to learned counsel for the petitioners, we must
state attbe very outset that they do not challenge the levy of market '
fee of 50 paisa per hundred rupees in the year 1972 and have con·
fined their submissions questioning the increase in the rate of market
fee from 50 paisa to rupee one per hundred rupees of the price.
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In support of these petitions, three main contentions were
raised, namely: (I) Sub-s. (6) of s. 7 of the Act which totally
prohibits purchase or sale of any notified agricultural produce, live·
stock and products of livestock in a notified market area, outside the
market in that area, encroaches upon the right of citizens to carry
on trade or business and is repugnant to Art. 19(i)(g) of the Consti·
tution and is in consequence void.
(2) The levy of market fee by the
market committees under sub-s. (1) of s.12 of the Act on transactions
of purchase or sale of any notified agricultural produce, livestock
or products of livestock in the notified market area effected by_ the
petitioners from their business premises therein but located outside the
market prorer is per se illegal and unconstitutional as such levy of
market fee is not correlated to any service rendered to them. {3) If
paddy is brought by the producer into the notified market area for
purposes of the de-husking and is sold to the miller, no market fee
is Ieviable on subsequent transaction of sale ·or purchase of rfoe by
the miller to a trader, or by a trader to a trader, or by a trader to a .
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SUPREME COURT REPORTS
[1983] 3 s.c.ll.
consumer. At any rate, there should be no levy of market fee on
sale of toodgrains by a trader to a consumer.
It is a common feature throughout the country· wherever t.here ·
is such marketing legislation whether be it the State of Andhra
Pradesh or any other State, that there is the usual reluctance of the
traders who deal in foodgrains etc. to shift from their established
trading premises situate in a notified market area to the market
proper. The petitioners before us are all merchants licensed under
sub·s. (I) of s. 7 of the Act to C2fry on the business of purchase and
sale of notified agricultural produce, livestock and products of live·
stock by different market committees in various parts of the State.
They are therefore subject to the restrictions contained in sub·ss. (I)
and (6) of s 7 and the terms and conditions of their licence.
The object and purpose of the Andhra Pradesh (Agricultural
Produce & Livestock) Markets Act, 1966' as reflected in the long
title is to consolidate and amend the law relating to the regulation
of purchase and sale of agricultural produce, livestock and products
of livestock and the establishment of markets in connection there·
with. The legislation is designed to eliminate middlemen in notified
·agricultμral produce, livestock and products of livestock, to protecl
the producers of such agricultural produce, livestock and products
of livestock from exploitation and to ensure to them a fair price for
their produce. The material provisions of the Act may be referred
to. s. 2 is the definition clause and defines the expression 'agricultural
produce' in cl. (i) to mean anything produced from land in the course
of agriculture or horticulture and includes forest produce or any
produce of like nature either processed or unprocessed and declared
by the Government by notification to be agricultural produce for the
putposes of this Act. The term 'market' as defined in s. 2 (vi) means
a market established under sub-s. (3) of .s. 4 and includes market yard
and .any building therein. The expression.'notified area' as defined
in s. 2 (xi) means any area notified under s. 3, and . 'notified market
area" in clame (xii) meMs any area declared to be a market area by
notification under s. 4. Under s. 3 of the Act, the State Government
is empowered to declare their intention or regulating the purchase
and sale of such agricultural produce, livestock or products of livestock in such area as may be specified in such notifications. After
considering the objections and suggestions, if any, the State Govern·
ment iS authorized to publish a final notification under sub-s. (3)
thereof declaring such area to be a notified area. By sub·s. (I) of
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SREENIYASA G. TRADERS v. ANDHRA PRADESH {Sen; J,)
855
s. 4, the State GovernlJ\ent is empowered to consti.tnte a market
committee for every notified area which shall be a body corporate
having perpetual succession and a common seal. The duty of enforc·
' ing the provisions of the Act and the ruk s and bye· laws is entrusted
to a market committee under sub-s. (2) thereof. Sub-s. (3) of s. 4 em·
powers the market committee to establish such number of markets as
the State Government may, from time to time, direct for the purchase
and sale of any notified agricultural produce, livestock or products
of livestock. Sub-s. (3) of s. 4 provides such facilities in the market
. as may be specified by the Government from time to time by a gene·
ral or special order. Sub·s. (4) provides that the State Government
shall, after the establishment of a market under sub·s. (3), declare,
by notification the market area and such other area adjoining thereto
as niay be specified in the notification, to be a notified market . area
for the purposes of the Act. Section 1 insofar as material provides as
follows :
· "7. Trading etc., in notified agricultural produce,
livestock and producr s of livestock in the notified area :
(I) No person shall, within a notified area, set up,
establish or use, or continue or allow to continued, any
place for the purchase, sale, storage, weighment, curing,
pressing or processing · of any notified agriculturi:il
produce or products of livestock or for the purchase or
sale of livestock except under and in accordance with the
conditions of a licence granted to him by the market
committee.
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(2) Nothing in sub-se_ction (I). shall apply to a
person purchasing notified agricu1tural produce, liveF
stock or products of livestock for his own domestic ..
consumption .
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(5) A person to whom a licence is granted ·under subsection (I) shall comply with the provisions of this Act,
,the rules and the bye-laws made thereunder and the
conditions specified in the lincence.
(6) Notwithstanding anything in sub-section (1), n'o
person shall purchase or sell any notified agricultural
produce, live;tock a11d products of livestock in a notified
market area, out'\ide the market in that area."
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856
SUPREME COURT REPORTS
h 983] 3 s.c.li..
Section 12 ot the Act which provides for the levy of market fee and
as an important bearing, reads : ·
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"I 2 Lel'y of fees by the market committees
(I) The market committee shall levy fees on any notified
agricultural produce, livestock or products of livestock purchased or sold in the notified market area
at such rate, not exceeding one rupee, as may be
I.
. specified in the bye-laws for every hundred rupees of
the aggregate amount for which the notified agricultural produce, livestock or ·products of livestock is
purchased or sold, whether for cash· ot deferred
payment or other valuable consideration.
Explanation I : For the purposes of this
section~
all notified agricultural produce, livestock or products
of livestock taken out of a notified market area
shall, unless the contrary is proved; be presumed to
have been purchased or sold within such area.
(~) The fees referred to in sub-section (I) shall be paid
by the purchaser of the notified agricultural produce,
livestock or products of livestock :
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Provided that where the purchaser cannot be
identified, the fees shall be paid by the seller."
Under the scheme of the Act, the market committee is enjoined
· by sub-s. (I) of s. 14 to pay into a fund called the 'Market Committee Fund' all moneys received from the traders as market fee on '
transactions of sale or purchase of agricultural produce taking place
within the notified market area and they are to be credited in the
nearest Government treasury or in a Bank, with the previous
sanction of the State Government. All expenditure incurred by the
market committee under and for purposes of the Act have to be
defrayed out of the said Fund and any surplus remaining after such
expef!diture, has to be invested in such manner as may be prescribed.
Under sub·s. (2), every market committee has to pay to the State
Government out of its Fund the cost of any :Special or additional
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sREENIVASA G. TRADERS v. ANDHRA PRADESH (Sen, J.)
857
staff employed by the Government with their consultation. Where
such odditional staff is employed for the purposes of one or more
market committees, the State Government has to apportion the ·cost
of such special or additional staff among the market committees
concerned in such manner as they think fit.
Under _sub-s. •(3), the
market committee may grant loans to another market committee out
of its surplus funds, with the previous sanction of the State Government, at such rates_ of interest as may be prescribed. The purposes
for which the market Committee Fund may be expended are set out
in s. J 5 whiCh reads :
(i) the acciuisition of site for the market;
(ii) the establishment, maintenance and improvement
. of the market;
{iii) the construction and maintenance of buildings,
necessary for the market and for the health,
convenience and safety of the persons using the
market and maintenance of buildings under the
control of the ~arket committee;
(iv) the provision and maintenance of standard
weights and measures;
(v) the pay, pensions, le.ave allowance, gratuities,
compassionate allowances and
contribution
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