http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

CASE NO.: Appeal (civil)  3732 of 2001

PETITIONER: DIRECTOR, KRISHI UTPADAN MANDI SAMITI AND ANR

RESPONDENT: M/S. RAM KISHAN DAYA RAM & CO

DATE OF JUDGMENT: 19/09/2007

BENCH: S.B. SINHA & H.S. BEDI

JUDGMENT: J U D G M E N T (WITH CIVIL APPEAL NO. 3079/2004)

    S.B. SINHA, J.

       Appellant is aggrieved by and dissatisfied with the judgment and order  dated 3.2.2000 passed by a Division Bench of the High Court of Judicature at  Allahabad in Civil Misc. Writ Petition No.32828/1991, whereby and  whereunder the writ petition filed by the respondent herein was allowed  directing:

\023The petition succeeds. The contention of the petitioner that  it is not liable to pay the market fee to the Market Committee  on the purchases of tendu leaves made by it from the U.P.  Forest Corporation, is accepted. The Market Committee  concerned is directed to refund the deposit of Rs.99,310.00  against the market fee for the year 1991-92 to the petitioner  and also to pay 12 per cent per annum interest thereon in  accordance with the interim order dated 11.11.1991 of this  Court.\024

       Basic fact of the matter is not in dispute. Business in tendu leaves is dealt  in by the Government of U.P. It has a monopoly  in respect thereof. The State  of U.P. appointed the U.P. Forest Corporation as its agent.  Questioning the  legality of levy of market fee upon the Corporation by the appellant herein a  writ petition was filed, inter alia, on the premise that no service having been  rendered to the Corporation, the market fee was not leviable.  

       It is the admitted case of the parties that the said writ petition was allowed  by a judgment and order dated 20.1.1983. A special leave petition was filed  thereagainst. Before this Court, the parties to the said SLP agreed that the  U.P. Forest Corporation would collect market fee from the purchasers and  deposit the same with the appellant. However, the U.P. Forest Corporation  did not collect any market fee from the purchasers for the assessment years  1991-92.  Demand notices were issued against the purchasers by the  appellant relying on and/or on the basis of Clause (4) of sub-section (iii) of  Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (\023Act\024  for short). Notices of demand having been issued to the respondent, a writ  petition was filed before the High Court which, as noticed hereinbefore, has  been allowed by reason of the impugned judgment dated 3.2.2000.  It is not in  dispute that the total amount sought to be collected by reason of market fees  was Rs.99,310/-. Respondent deposited the said amount before the High  Court but after delivery of the impugned judgment the said amount has been  returned to it.   

       The short question which arises for our consideration is as to whether  clause (3) of sub-section (iii) of Section 17 is attracted in the instant case or  not.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

       Mrs. Shobha Dikshit, learned senior counsel appearing on behalf of the  appellant, in support of the appeal, would submit that as the respondent was  not a licenced trader, clause (3) of sub-section (iii) of Section 17 would not be  applicable in the instant case. According to the learned senior counsel, a  statutory liability having  been  fixed upon the purchaser in terms of aforesaid  clause the High Court committed a manifest error in passing the impugned  judgment.  

       Learned counsel appearing on behalf of the respondent, however, would  support the impugned judgment.          Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (Act)  was enacted to  provide for regulation of sale and purchase of agricultural produce and for  the establishment, superintendence and  control of markets therefor in the  Sate of Uttar Pradesh.

        Section 2(f) of the Act defines  \023Committee\024 to mean a Committee  constituted there. \023Trader\024 has been defined in Section 2(y) of the Act to  mean a person who in the ordinary course of business is engaged in buying  or selling agricultural produce as a principal or as a duly authorised agent of  one or more principals and includes a person engaged in processing of  agricultural produce. Indisputably, U.P. Forest Corporation was a trader.

       Section 9 of the Act provides for the effects of declaration of market area;  sub-section (2) whereof reads as under: \023No person shall, in a Principal Market Yard or any Sub- Market Yard, carry on business or work as a trader, broker,  commission agent, warehouseman, weighman, Palledar or in  such other capacity as may be prescribed, in respect of any  specified agricultural produce except under and in  accordance with the conditions of a licence obtained therefor  from the Committee concerned.\024

       Section 17 delineates the powers of the Committee.  Sub-section (iii) of  Section 17 empowers a Committee to levy and collect fees, the mode and  manner whereof are as under: \023(1) If the produce is sold through a commission agent, the  commission agent may raise the market fee and the  development cess from the purchasers and shall be liable to  pay the same to the Committee; (2) if the produce is purchased directly by a trader from a  producer, the trader shall be liable to pay the market fee and  development cess to the Committee; (3) if the produce is purchased by a trader from another  trader, the trader selling the produce may realise it from the  purchaser and shall be liable to pay the market fee and  development cess to the Committee;         Provided that notwithstanding anything to the contrary  contained in any jdugment, decree or order of any court, the  trader selling the produce shall be liable and be deemed  always to have been liable with effect from June 12, 1973 to  pay the market fee to the Committee and shall  not be  absolved from such liability on the ground that he has not  realised it from the purchaser;            Provided further the trader selling the produce shall not be  absolved from the liability to  pay the development cess on  the ground  that he has not realised it from the purchaser; (4) in any other case of sale of such produce, the purchaser  shall be liable to pay the market fee and development cess to  the Committee;         Provided that no market fee or development cess shall be  levied or collected on the retail sale of any specified  agricultural produce where such sale is made to the  consumer for his domestic consumption only.\024          Provided further that notwithstanding anything contained

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

in this Act, the Committee may at the option of, as the case  may be, the commission agent, trader or purchaser, who has  obtained the licence, accept a lump sum in lieu of the amount  of market fee or development cess that may be payable by   him for an agricultural year in respect of such specified  agricultural produce, for such period, or such terms and in  such manner as the State Government may, by notified order  specify;         Provided also that no market fee or development cess shall  be levied on transaction  of sale of specified agricultural  produce on which market fee or development cess has been  levied in any market area if the trader furnishes in the form  and manner prescribed, a declaration or certificate that on  such specified agricultural produce marker fee or  development cess has already been levied in any other  market area.\024    

       Relying on and/or on the basis of the various decisions rendered by this  Court Mrs. Dikshit submitted before us that a trader should have a licence.  A  bare perusal of the definition of the said term, in our opinion, does not  envisage that all traders must be licensed traders for the purpose of  realisation of the market fee.  The proviso appended to clause (3) of sub- section (iii) of Section 17 of the Act, although was enacted by Act No.4 of  1999, the same had been given retrospective effect and retroactive operation.  In no uncertain terms it provides that the trader would be bound to pay the  market fee and shall not be absolved from such liability on the ground that he  has not realised it from the purchaser.  

       In that view of the matter, we are of the opinion that the U.P. Forest  Corporation could not have escaped its liability from payment of the market  fee, only because the appellant as also the State of U.P. lost the writ petition  filed by the U.P. Forest Corporation before the High Court, which by itself, in  our opinion, does not entitle the appellant herein to fall back upon the  respondent for the purpose of realisation of market fee.           For the reasons aforementioned, we are of the opinion that there is no  infirmity in the impugned judgment. The appeals are dismissed accordingly.   No costs.