http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5  

PETITIONER: M/S LABHA RAM AND SONS & OTHERS, M/S UGGAR SAIN HARI KISHANT

       Vs.

RESPONDENT: STATE OF PUNJAB AND OTHER

DATE OF JUDGMENT:       30/04/1998

BENCH: M.M. PUNCHHI, K.T. THOMAS, D.P. WADHWA

ACT:

HEADNOTE:

JUDGMENT:                             WITH              CIVIL APPEAL Nos. 2506-07 of 1998      [Arising out of SLP (Civil) Nos. 17058-59 of 1997]                       J U D G M E N T Thomas J. Leave granted.      Appellants are  dealers  in  food-grains  having  their business places  at  two  certain  localities  in  Ferozepur District (Punjab).  Appellants in  one appeal are dealers at Guru Har  Sahai and  appellants in  the  other  appeals  are dealers at Talwandi. According to them, they have been doing business at  the old  market areas  in those  localities for over fifty years and the State Government have declared such places as  " market  area" as  per the  provisions of Punjab Agricultural Produce  Markets Act  1961  (  For  short  ’the Market Act").  Those areas  attained much  development  with many facilities due to increased governmental activities.      With  the   enactment  of  Punjab  New  Mandi  Township (Development and  Regulation) Act  1960 (for  short ’  Mandi Township Act’)  powers have  been  conferred  on  the  State Government  to   create  and   declare  new  Market  (Mandi) Townships.  As   per  Section  3  of  that  Act,  the  State Government have  power to  sell, lease or otherwise transfer either by  allotment or  auction or  otherwise, any  land or building  in  ht  new  Mandi  Township  on  such  terms  and conditions as the Government may deem fit to impose.      In the  year 1997  Government decided  to create  a new Mandi Complex  at Guru  Har Sahai another at Talwandi. Lands were acquired  by Government  for that purpose and buildings were constructed for providing the infrastructure to the new market areas.  The immediate  impact of creation of such new market townships on the appellants was that they had to move their business  from the  existing market  areas to  the new township in  order to  prevent closure  of  their  business. Resultantly all  of them became anxious to get accommodation in the  respective new  market areas  but they  are told  to stand in the queue along with all the new comers and compete with them in the open auction.      On earlier occasions when such new Mandi townships were created  the   Government  had  provided  some  ameliorative

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 5  

reliefs to the existing traders by fixing concessional rates as for  them in  respect o the plots or buildings in the new Market areas.   In 1985 Government issued a circular stating that "grain shops, subzi shops and food stall/booths will be allotted to  Arhtis (traders)  in all  the  new  Mandi  area established and  developed by the colonization department on 25% above  the reserved price", of course subject to certain other terms and conditions.  But Government did not continue with such reliefs being afforded to the existing traders for long.   This is  reflected in  alter circular  issued by the Government that  stall/plots would  be auctioned in open and any one  could compete  and  the  highest  bidder  would  be preferred for allotment.      Government in  the present situation also entrusted the work  of   allotment  of  stall/plots  to  the  Colonization Department which  in turn  took a  decision to  auction such plots/stall in  the new  Mandi complex without providing any concession for the existing traders despite they being badly affected by  the establishment  of new complex.  Appellants, therefore, filed  writ petitions in the High Court of Punjab and  Haryana   for  issuing   necessary  directions  to  the respondents.   But these  writ  petitions,  were  dismissed. Hence these appeals.      Shri RK  Jain, learned  Senior Counsel  argued for  the appellants that  if the  existing traders and the new-comers are placed  on equal  position  between  them  for  securing allotment of  stalls/plots in  the new Market Area that will in effect amount to treating claimants unequally which would offend Article  14 of  the Constitution.   He also contended that the  consequences which  had befallen the appellants on account of  creation of the new Mandi included their virtual displacement  from   the  place   where   they   established themselves over  the years and they are compelled to abandon their existing trading places.  According to the counsel, if they have  to contest  along with the new-comers for getting accommodation in the new Mandi, it would only be at the risk of substantial  impairment of  their right  to  trade  under Article 19(1)(g)  of  the  Constitution.    Learned  counsel relied on  the decision of a three judge bench of this Court in M/s  Prem Chand  Trilok Chand  vs. State of Haryana dated 7.8.1991 (CA No. 3122/91) in which claims of similar traders situated in similar circumstances were upheld by this Court. Their Lordships held thus:      "We are  of the  view that normally      once    the    Government    starts      regulating the  place  of  sale  of      agricultural produce/covered by the      Act and  does not  permit any other      place to  be used  for the purpose,      there is an inherent obligation for      the Government  to provide  at  the      new  site   for  all  the  licensed      dealers  sufficient   accommodation      for carrying  on  their  trade  and      until that  is done it would not be      possible  for   the  Government  to      direct closure of the old site."      However, learned  counsel for  the respondents  invited our attention  to another  decision of  a two judge bench in which a different view has been adopted (Chand Ram Ram Chand vs. State  of Punjab  - 1996 (9) SCC 338) learned counsel or the  appellants   on  the   other  hand   informed  us  that subsequently another two judge bench of this Court (Majmudar and Kurdukar) has decided on 13.2.1998 exactly in accordance with the  three judge  bench decision  in M/s  Puran Mal Ram

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 5  

Chander vs.  State of  Haryana (CA  827/98).    But  learned Judges Made it clear that the said decision is "based on the peculiar facts  of the case and it shall not be treated as a precedent". Hence,  it is  not proper to treat that decision as laying down any proposition of law.      In Chand Ram (supra) the two judge bench has considered the earlier  decision of the three judge bench in Prem Chand Trilok Chand and made the following observations:      "Putting new  sites to  auction and      allowing everyone  to compete would      tantamount   to    the   Government      providing an  opportunity to enable      the  existing  licensees  to  shift      their place  of business to the new      Mandi,   if    they   so    desire.      Therefore, the observations in Prem      Chand’s case  to  the  effect  that      there was  an obligation to provide      new sites  for all licensed dealers      would only mean that an opportunity      should be  granted to  the licensed      dealers to acquire sites in the new      Mandi."      It is  noted that  learned judges  did  not  doubt  the correctness of the principle that Government has an inherent obligation to  provide all  the licensed  dealers sufficient accommodation for  carrying on  their trade.   But can it be said  that  such  obligation  stands  discharged  merely  by allowing them to compete with outsiders in the open auction. It  must   be  remembered  that  even  without  any  special provision the  existing traders  can have  such a  right  to compete with  rest of  others.   We find  much force  in the contention of  the learned  counsel for  the appellant  that merely providing  an opportunity to compete with the rest of the public  for getting  accommodation in the new Market, is not sufficient  to discharge  the inherent obligation of the Government to provide the existing traders at the new market area.   hence, it  is difficult  to  concur  with  the  view adopted in Chand Ram Ram Chand vs. State of Punjab (Supra).      Section 3(1)  of the  Township Act confers power on the Government to  carve out  an area  and to create a new Mandi with such  area to be known by such name as may be specified in the notification.  Sub-section (2) reads thus:      "The  State  Government  may  sell,      lease  or  otherwise  transfer,  by      auction,  allotment  or  otherwise,      any land  or building  belonging to      or vested  in the  State Government      in any  new Mandi  Township on such      terms and  conditions  as  it  may,      subject to  any rules that may made      under  this   Act,  deem   fit   to      imposes."      It is  by virtue  of the said power that the Government authorised Colonization  Department to deal with the matter. The words "or otherwise transferred by auction, allotment or otherwise" in  Section 3(2)  of the  Township Act  are quite wide  enough   to  enable   the  Government   to  take  into consideration   various    factors    including    equitable considerations for  deciding in  what  manner  and  on  what conditions the  lands and  plots in  the new Mandi should be allotted.   But such wide powers are not intended to be used to the detriment of the victims of the newly created Mandis. It is  not that  the State  government must sell the land or the building  by auction  without any  other option.  Rule 3

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 5  

which has  been framed  under Section 3(2) and Section 25(a) of this  Act states  that the  lands and  buildings shall be sold by the State Government by public auction or allotment. In the  case of  sale by public auction the sale price shall be the  reserve price  or the  price offered  by the highest bidder whichever  is higher.   In  the    case  of  sale  by allotment the  sale price  can be  determined by  the  State Government from  time to  time keeping  in view  the  market price thereof.   While  allotment of  buildings and plots is made, the  State Government  has a  duty  to  take  into  on account  the   handicaps  to   which  existing  dealers  are subjected on account of creation of the new Mandi. Section 4 of the  Mandi Township  Act imposes  a bar that no one shall erect or  occupy any  building or  use or  develop any  site without  the   previous  permission   in  writing   of   the "administrator". In such a situation the only avenue open to the traders  is through  the allotments  sanctioned  by  the authorities.      Learned counsel  for the respondent had fairly conceded that there is no difficulty to find space to accommodate the erstwhile  dealer   sin  the  new  market  area.    But  the contention advanced  is that  the purpose  of public auction was to  earn revenue  and there  was no  bar on the existing traders to  compete with  the new comers and that sufficient number of  plots/shops were  available to  satisfy all  such traders if  they choose  to bid in the open auction.  It was also submitted  that there  was no bar on   those traders to continue their business at old places, although for sale and purchase of agricultural produce they may have to move their business at the market yards of the new Mandis.      The above  line of  argument of  the State  seems to us rather specious.   Land  is acquired under the provisions of the  Land   Acquired  under   the  provisions  of  the  land Acquisition laws  for establishing new Mandi township.  Land so acquired is developed, plots are carved out and shops and flats are built thereon. Plots as such may be disposed of or shops and  other construction thereon can be made for use of the trading.   hence the land for establishment of new Mandi is not  to generate  revenue for  the State.   It  may be  a laudable object  for the  State  to  earn  revenues  in  the process but  that could  not be  the sole  or even  the main purpose of  acquiring land.    New  Mandis  are  established because of  increase in business transactions and congestion in the old Mandis and for other such objects.      It is  easy to  contend that  the existing  traders can still operate from their old places but then for the conduct of their business for sale of agricultural produce they have to come  to new Mandi.  It would mean that they have to come to the  new Mandis for conduct of their routine business but for rudimentary  business they could continue to do the same at old  places.  The fact remains that any trader would like to conduct his business of sale and purchase of agricultural produce at the platform close to his shop.      We  do   not  suggest   that  government   should  give preference  to  the  erstwhile  dealers  by  providing  free allotment of  buildings or  plots not to fix a rate which is below the  reserved price.   It is open to the Government to fix up  any rate  above the reserved price for such licensed dealers,  of   course  such   fixation  should   not  be  at unreasonable rates.      We are, therefore, of the view that the decision of the three judge bench in Prem Chand Trilok Chand requires no re- thinking.   Hence, we  direct  the  respondents  to  provide preference to  the appellants  in the matter of allotment of building or  plot in  the light  of  the  observations  made

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 5  

above.      Appeals are thus allowed and the impugned judgments are set aside.