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PETITIONER: M/S. MAHALUXMI RICE MILLS & ORS.

       Vs.

RESPONDENT: STATE OF U.P. & ORS.

DATE OF JUDGMENT:       19/08/1998

BENCH: K.T. THOMAS, SYED SHAH MOHAMMED QUADRI

ACT:

HEADNOTE:

JUDGMENT:                             WITH (Civil Appeal Nos. 558, 559, 560, 561, 562 & 563 of 1997)                       J U D G M E N T THOMAS. J.      The area  of dispute,  in this  appeal,  has  now  been considerably narrowed  down with  the decision  of  a  three Judge Bench  of this  Court in Food Corporation of India vs. State of  Kerala (1997  (3) SCC 410). The short question now remains is  whether the  market fee  payable to  the  Market Committee constituted  under the  U.P. Krishi  Utpadan Mandi Adhiniyam, 1964  (for short  "the Act)  shall be paid by the seller or  purchaser when  agricultural produce is sold by a trader to the Government. The aforesaid question arose under the following facts:      Appellants are  traders carrying  on business  in  rice milling within  certain areas  constituted in  the State  of U.P. Such  areas have  been notified  as market  areas under Section 6  of the Act. Among the business activities carried on by  the appellants  they purchased paddy form cultivators or  sellers  outside  the  market  area  and  the  paddy  so purchased is hulled to make it rice for sale. They are under a duty  to sell  rice to  the State  Government as  levy  by virtue of  Clause (3)  of the  U.P. Rice and Paddy (Levy and Regulation of Trade) Order, 1985, which was issued under the Essential Commodities  Act. It  will hereinafter be referred to as the "Levy Order".      Provisions of  the Act  envisage  the  formation  of  a Market Committee for each market area and the said Committee is empowered  to levy and collect fee called "market fee" on transactions of  sale of  agricultural  produce  which  take place within  the market  area, at  such rates  as the State Government may  specify by  notification. Section 17(iii) of the Act reads thus:      "17. Powers  of the  Committee.-  A      Committee shall, for the purpose of      this Act, have the power to-      xxx   xxx   xxx     xxx   xxx      (iii) levy and collect:      xxx         xxx          xxx    xxx      xxx

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    (b) market  fee, which    shall  be      payable on  transaction of  sale of      specified agricultural  product  in      the  market  area  at  such  rates,      being not  less than one per centum      and not  more than two percentum of      the  price   of  the   agricultural      produce  so   sold,  as  the  State      Government    may     specify    by      notification, and such fee shall be      realised in the following manner-      (1) if  the produce is sold through      a commission  agent, the commission      agent, may  realise the  market fee      from the  purchaser  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  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 to the Committee; and      (4)   in any  other case of sale of      such produce,  the purchaser  shall      be liable  to pay the market fee to      the Committee."      The Market  Committee concerned  made  demands  on  the appellants to  remit the  market fee as indicated in Section 17(iii) (b)  (3) of  the Act. Appellants challenged the said demand before the Allahabad High Court on different grounds. First ground  is that  when a  rice miller gives rice to the Government as  levy under  the Levy Order it does not amount to a  "transaction of  sale" and  hence no market fee can be collected  thereon.   Second  ground   is  that   the  State Government is  not a  "trader" as  contemplated in  the sub- clause and  hence there  is no  liability to pay market fee. Third ground  is that, even if it was a sale to a trader the liability to  pay  market  fee  is  on  the  purchaser  i.e. Government  and   not  the   miller  who  sells  it  to  the Government.      High  Court   did  not  accept  any  of  the  aforesaid contentions  and   hence  the  reliefs  prayed  for  by  the appellants in  the writ  petitions were  disallowed. Against the  judgment  repelling  those  contentions  Special  Leave Petitions have  been filed by the appellants and hence these appeals.      In the present appeals, appellants did not contend that Government is not a trader as envisaged in sub-clause (3) of Section  17(iii)   (b)  of   the  Act.  However,  appellants persisted with  the third contention that the Act of selling rice to  the Government  under  the  Levy  Order  is  not  a transaction of  sale. That  contention was  heard by a three Judge Bench  of this  Court along  with some  other  appeals wherein similar  question was  involved. It  was held by the Bench that  the disputed transactions are sales are thus the said contention  is put  to rest. (vide paragraph 35 of Food Corporation of India vs. State of Kerala (supra)).      However, these appeals were not disposed of by the said Bench since  the first  ground mentioned  above has not been

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heard. Hence  these appeals  were delinked  from the rest of appeals and they were posted before a Bench of two Judges of this Court.  When the  appeals were  heard on 22-4-1998, the Bench deemed  it necessary  to have these appeals heard by a larger Bench  due to  the following reasons: Before the said Bench counsel  for the  appellants relied on the decision of another two  Judge Bench  of this  Court in  Krishi  Utpadan Mandi Samiti, Haldwani & ors. vs. India Wood Products Ltd. & anr. (1996 3 SCC 321) in which this Court held thus:      "In a case where the trader selling      the produce has realised the market      fee from  the  trader,  the  seller      shall be  bound to  pay the  market      fee  to   the  Committee.  However,      where the  selling trader  does not      realise it from the purchaser he is      under  no  obligation  to  pay  the      market fee to the Committee."      On behalf of the Market Committee it was submitted then that an  earlier decision  of a  Constitution Bench  of this Court was  not taken note of by the learned Judges in Krishi Utpadan Mandi  Samiti Ltd.  vs. Indian  Wood Products Ltd. & anr. (supra).  In view  of the aforesaid contentions learned Judges felt the need that these appeals should be heard by a larger Bench  regarding the  remaining  question.  Thus  the limited question  mentioned in  the  first  paragraph  alone needs answer for the final disposal of these appeals.      Shri O.P.  Rana, learned  senior counsel who argued for the Market  Committee contended  that the  provisions of the Act are  intended to  make it feasible and practical for the Market Committee  to realise market fee; the Committee looks to the  licensed traders doing business within the limits of the market  area for  realisation of  the market fee; if the primary liability to pay market fee is that of purchaser and not a  seller  the  market  committee  would  find  it  very difficult to  collect the  fee from  the purchaser who might leave the  market area  after  purchasing  the  agricultural produce. Mr.  B.D. Agarwal,  learned senior  counsel for the appellants argued  that  since  sub-clause  (3)  allows  the seller to collect fee from the purchaser, trader’s liability must be  fastened with  the purchaser and when the purchaser is Government  the market  fee is very often not paid by the government to  the seller and in such a contingency it would be unjust  for the  Market Committee to realise the fee from the seller.      Sub-clause (3)  of Section 17(iii) (b) of the Act which has been extracted above contains the following limbs:      (1) The right of the Market Committee to collect market fee would arise under the sub-clause only "if the produce is purchased by a trader from another trader".      (2) In  such a case it is open to the seller to realise the market fee from the purchaser.      (3) But  it is the duty of the seller to pay the fee to the Committee.      It is  significant to  note that  the word used for the seller to  realise market  fee from  his purchaser  is "may" while the  word used as for the seller to pay the market fee to the  Committee is  "shall". Employment  of the  said  two monosyllables of  great jurisprudential  import in  the same clause dealing  with two  rights regarding  the same  burden must have  two different imports. The legislative intendment can easily  be discerned  from the  frame of  the sub-clause that what  is conferred  on the  seller is only an option to collect market fee from his purchaser, but the seller has no such option   and  it is imperative for him to remit the fee

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to the  Committee. In  other words,  the Market Committee is entitled to  collect market fee from the seller irrespective of whether  the seller has realised it from the purchaser or not.      In Krishi Utpadan Mandi Samiti vs. Indian Wood Products Ltd. (supra)  the learned Judges were persuaded by the ratio laid down  by this  Court in Krishi Upaj Mandi Samiti & ors. vs. Orient  Paper &  Industries Ltd.  (1995     1  SCC  655) wherein provisions of a similar Act which is in force in the State of  Madhya Pradesh  were considered  and held that the primary liability  to pay  the fee is placed upon the buyer. But the corresponding provision in the Madhya Pradesh Act is differently worded  and hence  the question of the liability to pay  market fee  as per sub-clause (3) of Section 17(iii) of the  Act could not have been solely based on the ratio in the said  decision. It is difficult for us to agree with the reasoning that  "the use  of the  word ’shall’  in the  said clauses means  that where  the selling  trader collects fees from a  purchasing trader  he is under an obligation to make over the  fee to  the Market Committee and where the selling trader does  not collect  the fee from the purchasing trader the liability  to pay  the market  fee remains to be that of the purchaser."      The Constitution Bench in Ramesh Chandra etc. vs. State of U.P.  etc. (1980  3 SCR 104) considered the provisions of the Act though in a different context. Their Lordship, while dealing with  Section 17(iii)  (b) of  the Act looked at the distinction between  sub-clause (2)  and sub-clause  (3) and observed that  if paddy  is purchased in a particular market area by  a rich  miller and the same paddy is converted into rice and  then sold,  the rice  miller will be liable to pay market fee  on his purchase of paddy from the agriculturist- producer, but  he cannot  be asked  to pay  market fee  over again under sub-clause (3) in relation to the transaction of rice. The Bench then added:      "If, however,  paddy is  brought by      the rice-miller from another market      area, then  the Market Committee of      the area  where paddy  is converted      into rice and sold will be entitled      to  charge   market  fee   on   the      transaction of  sale in  accordance      with sub-clause (3)."      The Constitution  Bench then  referred to a transaction of sale of Ghee and pointed out two types of dealers in such transaction -  (1) a dealer who purchases milk or cream from the villagers  & others  and manufactures Ghee in his plant, and  (2)   a  dealer   who  purchases  such  Ghee  from  the Manufacturer of  Ghee and  sells it to another trader in the same market  area. It  is held  that when  the first  dealer sells Ghee  to another  dealer then under sub-clause (3) the manufacturing dealer will be liable to pay market fee to the Market Committee  on the transaction of Ghee, but he will be entitled to  pass on  the burden  to his  purchaser. In that context learned Judges stated thus:      "Apropos  the   Market   Committee,      however, the  liability will  be of      the manufacturing dealer."      The aforesaid  observations of  the Constitution  Bench makes the  position clear that the Market Committee is fully entitled to collect the market fee from the seller and it is for the  seller to pass the burden on the purchaser if he so chooses. It  is not  the look out of the Market Committee to see  that  seller  gets  the  amount  of  fee  paid  by  the purchaser.   Thus    the   appellants   cannot   shirk   the

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responsibility to pay the market fee to the Market Committee when the  transaction falls within the purview of sub-clause (3) of  Section 17(iii)  (b) of the Act and then it would be open to  them to  recover the  same  from  the  purchaser  - Government. For the above reasons we dismiss these appeals.