# STATE OF MADHYA PRADESH & ORS v. GALLA TILHAN VY AP ARI SANGH & ORS

- **Citation:** [1977] 2 S.C.R. 619
- **Court:** Supreme Court of India
- **Decided:** 1977-01-17
- **Case number:** Civil Appeals Nos. 1912-1914 of 1976
- **Bench:** S. MuRTAZA FAZAL Au, P. S. KArLASAM
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-madhya-pradesh-ors-v-galla-tilhan-vy-ap-ari-sangh-ors-7080
- **Pages:** 2

## Headnote

Madhya Pradesh· Krishi Upaj Mandi Adhiniyam, 1972, S. 37(5)(a), co1t<1titutiona/ validity of-Whether unreasonable to commission agents.
The respondents challenged the constitutional validity of s. 37(5)(a) of the
Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, before the High Court
on the ground that it places unreasonable restriction on the commission agent
and puts a great burden on him for storing the goods given to him by his
principal, without charging the commission for its safe custody. The plea was
accepted and the High Court struck down the impugned provision as unconstitutional.
Allowing the appeal by Special Leave, the Court,
HELD : Section 3 7 ( 5 )(a) is constitutionally valid and there is no hardship
A
c
or unreasonableness in it. The provision prevents the commission agent from
D
levying any additional charges from the farmer or the principal for safe custody
of the goods, but s. 37(4) of. the Act compensates him by authorising him to
charge not. only his commis:!io"n from th~ principal trader, but also the expenses
incurred by him for the purpose of storing the produce,
and .the
services
rendered by him.
[620 D, E, G]
·

## Text

619
STATE OF MADHYA PRADESH & ORS.
v.
GALLA TILHAN VY AP ARI SANGH & ORS.
January 17, 1977
[S. MuRTAZA FAZAL Au AND P. S. KArLASAM, JJ.]
Madhya Pradesh· Krishi Upaj Mandi Adhiniyam, 1972, S. 37(5)(a), co1t<1titutiona/ validity of-Whether unreasonable to commission agents.
The respondents challenged the constitutional validity of s. 37(5)(a) of the
Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, before the High Court
on the ground that it places unreasonable restriction on the commission agent
and puts a great burden on him for storing the goods given to him by his
principal, without charging the commission for its safe custody. The plea was
accepted and the High Court struck down the impugned provision as unconstitutional.
Allowing the appeal by Special Leave, the Court,
HELD : Section 3 7 ( 5 )(a) is constitutionally valid and there is no hardship
A
c
or unreasonableness in it. The provision prevents the commission agent from
D
levying any additional charges from the farmer or the principal for safe custody
of the goods, but s. 37(4) of. the Act compensates him by authorising him to
charge not. only his commis:!io"n from th~ principal trader, but also the expenses
incurred by him for the purpose of storing the produce,
and .the
services
rendered by him.
[620 D, E, G]
·
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1912-1914
of 1976.
E
(Appeal by special Leave from
the Judgment and order dated
7-2-1975 of the Madhya Pradesh High Court in Misc.
Petition No.
231174 and 685 and 732173 respectively.)
I. N. Shroff and H. S. Parihar, for the appellants.·
S. K. Gambhir, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by
FA~AL Au, J.
In this appeal by special leave, on an app~ication
filed by the respondents before the High Court of Madhya Pradesh,
the High Court struck down the constitutional "."alidity of sub-s. (5)(a)
of s. 37 of the Madhya Pradesh Krislti Upaj Mandi Adhiniyam, 1?72
-hereinafter· referred to as 'the Act'-(No. 24 of 1973).
The impugned sub-section runs as follows :
'
'
...
" ( 5) Every commission agep.t shall be liable-:-;
to keep the go~ds' of' his. pr_inc;ipal 'in ·. s~fe: custody .
without any charge other than the comm1s~1on payable to him; and"
F
H
A
c
D
E
F
G
H
620.
SUPREME COURT REPORTS
[1977] 2 s.c.R.
The High. C:ourt thought that this statutory provision places unreasona~le res.tnct~on on the co~mission agent and pu!B great burden on
~1m for storm~ 'f!he good.s given to him by the principal without chargrng. the. comm1ss1on for its safe custody. The Act is a social piece of
leg1slat~on and should have been liberally construed so as' to advance
the. obiect of the Act and fulfil the aims to be achieved thereby.
The
mam purpose of the Act is to secure a scientific method of storage,
sale, distribution and marketing of agricultural produce and cut out
a~ far. as possible middle-man's profit.
The Act, therefore, contains
prov!S!ons of a beneficial nature preventing profiteering tendencies. It
is not, however, the hardship that can be termed unreasonable so as
to make a statute unconstitutional.
Moreover, the High Court does
not appear to have looked to the scheme of the Act and has in fact
completely overlooked the ptovisions of s. 3 7 ( 4)
which runs as
follows :
.
" ( 4) The commission agent shall recover his commission only from his principal trader at such rates as may be
specified in the bye-laws including all such expenses as may
be incurred by him in storage of the produce and other
services rendered by him."
This section clearly empowers the commission agent to charge such
rates as may be specified by the bye-laws even for the storage of the
Produce and other services rendered by him.
This provision
also
does not prevent the commission agent from levying reasonable charges
for the storage over and above his commission.
All that the Act
prevenffi is that the commission agent is prohibited from levying any
charges for safe custody from the farmer or the principal.
This is
done in order to attract and lure the farmers to place their goods
with commission agents without additional payment of charges for
~afe custody.
Section 37 ( 4), however, compensates the commission
agent by authorising him to charge his commission and all expenses
which may be incurred by the commission agent in connection with
the storage of the produce and the services rendered by him.
This
~ection, therefore, clearly authorises the commission agent not only
to charge his commission from the principal trader but also expenses
incurred by him for the purpose or the storage.
That apart s. 2(e)
of the Act which defines a "Commission agent" empowers him to
charge any commission or percentage upon the amount involved in
~uch transaction.
For these reasons, therefore, we do not see any hardship or unreasonablenei& in the provisions df s. 3 7 ( 5) (a) of the Act.
The
High Court, therefore, committed an error of law in striking down
this provi~ion as unconstitutional.
In our opinion, therefore, s .. 3_7
(5)(a) of the Act is constitutionally valid. In the view we take, 1t is
not necessary to 80 into the question whether the law violates Art. 19
of the CoI111titution which stands suspended during the emergency.
The lilppeal is accordingly allowed.
The order of the High Court
is quashed.
In the circumstances, there will be no order as to costs.
M.R.
Appeal allowed.