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PETITIONER: RAUNAQ RAM TARA CHAND & ORS. ETC

       Vs.

RESPONDENT: THE STATE OF PUNJAB & ORS.

DATE OF JUDGMENT14/07/1975

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. ALAGIRISWAMI, A. BHAGWATI, P.N.

CITATION:  1975 AIR 1587            1976 SCR  (1)   1  1975 SCC  (2) 554  CITATOR INFO :  RF         1980 SC1124  (32)  MV         1985 SC 679  (25)

ACT:      Punjab Agricultural  Produce Markets Act, 1961 Sections 6, 10,  23-Punjab  agricultural  Produce  Markets  (General) Rules, 1962-Rules  17, 29 and 31- Whether fees can be levied on persons  who are not licensees as contemplated by Section 23 and rule 29.

HEADNOTE:      The appellants  sell Gur  and Shakkar within the market area notified under Punjab Agricultural Produce Markets Act, 1961. The appellants have obtained licences under Section 10 of  the   Act  in  Form  as  Commission  Agents.  Since  the appellants were  selling Gur  and Shakkar in their own shops within the  notified market area without submitting accounts and without Payment of fees they were asked to show cause by the Market  Committee why  legal action  should not be taken against them  for violation  of rules 29(3) and 31(1) of the Punjab Agricultural  Produce markets  (General) Rules, 1962. The appellants  dismissed their  liability to  pay the  fees under the  Act. The Administrator of Market Community levied fees on  the  appellants  on  the  basis  of  best  judgment assessment and  also imposed penalty. The High Court allowed the Writ  Petitions filed  by the appellants and quashed the order of  assessment  as  arbitrary  and  violative  of  the principles of  natural justice.  The  High  Court,  however, rejected the  contention of  the appellants  questioning the validity of the fees levied.      Under section  10 of the Act any person may apply for a licence which  may be  granted on  such conditions as may be prescribed.  Under   section  6(3)  after  tho  issue  of  a notification under  section 6(1)  no person  can purchase or sell any Agricultural produce except under a licence granted in accordance  with the  pro visions  of the Act. Section 23 authorizes the  Committee to  levy fees  on the agricultural produce bought  or sold  by the  licensees in  the  notified market area.  Rule 29 provides that the Committee shall levy fees on the agricultural produce bought or sold by licensees in the  notified market area. Rule 17(1) provides that a per

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son desirous  of obtaining a licence under section 10 of the Act shall  apply in  form A.  The  licence  granted  to  the appellant is  in accordance with form B. No licence has been issued to  the appellants  for doing  the business of busing and selling  agricultural produce.  Therefore, although  the appellants  are  licensees  as  required  for  some  of  the businesses mentioned  in Form  B. they  have no  licence for carrying out  business of  purchase and sale of agricultural produce within  the notified Market Area. Reading section 23 and rule  29 it is clear that the Act authorises levy of fee on the  agricultural produce  bought or  sold  by  licensees only.      Allowing the appeal, ^      HELD : The appellants have not as a matter of fact been issued licences  as contemplated  by section 23 and rule 29, and no  fees can, therefore, be levied on them in respect of purchase and  sale of  agricultural  Produce  by  them.  The appellants are,  therefore, not  liable to  payment  of  fee under the Act as demanded. [15B-C]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos.  299 and 120 to 124 of 1972.      From the  Judgment and order dated the 25th March, 1970 of the  Punjab & Haryana High Court in Civil Writ No. 325 of 1968, L.P.A.  No. 177  of 1969,  Civil Writ  No. 1534, 1545, 1829 and 2201 of 1969 respectively.      G.  L.  Sanjay,  S.  K.  Mehta,  R.  L.  Batta  and  M. Qumaruddin, for the appellants (in Civil Appeal No. 299/72). 2      V. C.  Mahajan, S.  S. Khanduja and R. L. Bata, for the appellants  (In C.As. Nos. 120-124/72)      D. Mukherjee, Hardev Singh, R. S. Sodhi and G. C. Garg, for the respondents. (In C.A. No. 299/72).      The Judgement of the Court was delivered by      GOSWAMI, J. In these appeals by certificate of the High Court of  Punjab and Haryana validity of action taken by the Market Committee,  Patiala,  under  the  provisions  of  the Punjab Agricultural  Produce Markets  Act,  1961,  is  under challenge.      The appellants  are shop-keepers of Gur Mandi, Patiala, and  are   licensees  under   section  10   of  the   Punjab Agricultural Produce Markets Act, 1961 (briefly the Act) and are also pucca arhtiyas. It is not in dispute that they sell gur and  shakkar within  the market  area notified under the Act. It  is also  admitted that  they  have  licences  under section 10  of the  Act in  Form ’B’  as kacha  arhtiyas  or commission agents.  Since they  were found to be selling gur and shakkar  in their  own shops  within the notified market area without submitting accounts and without payment of fees they were  asked to  show cause  by the Market Committee why legal action  should not be taken against them for violation of rules  29(3) and 31(1) of the Punjab Agricultural Produce Markets (General)  Rules, 1962  (briefly the  Rules) and for violation of  condition No. 1 of the licence which is to the effect that the licensee shall comply with the provisions of the  Act,   Rules  and   Bye-laws  framed   thereunder   and instructions issued from time to time.      The appellants  disclaimed liability  to pay  fee under the Act  on various grounds. The Administrator of the Market Committee after  some correspondence  levied on  one of  the appellants, M/s  Prem Chand  Ram Lal,  appellants  in  Civil

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Appeal No.  120 of  1972, Rs.  5014/- as  market fee  on the basis of  best judgment  assessment and imposed equal amount of penalty  and a  demand notice was issued for payment. M/s Prem Chand  Ram Lal filed a writ application before the High Court for quashing the demand notice. The High Court allowed the petition  quashing the  order of assessment as arbitrary and violative of the principles of natural justice. The High Court, however  rejected the  other contentions  of the said petitioner questioning  the validity  of the fee levied. M/s Prem Chand Ram Lal filed a Letters Patent Appeal against the judgment of  the learned  single Judge rejecting their other substantial points.      The appellants in civil Appeal No. 299 of 1972 had also filed a  writ application  under articles 226 and 227 of the Constitution in  the High  Court questions  the action taken against them  as well as the levy under the Act. By a common judgement of  March 25,  1970 the Division Bench of the High Court dismissed  the Letters Patent Appeal of M/s Prem Chand Ram Lal  as also  the writ application of the appellants and granted certificates to appeal to this Court.      The question  is whether  the appellants  are liable to payment of fee under the Act. 3      Action in  this case  was taken  for violation of rules 29(3) and 31(1) of the Rules. We will read these rules :           R.29(1). ’Under  section 23 a Committee shall levy      fees on  the agricultural  produce bought  or  sold  by      licensees in  the notified  market area  at  the  rates      fixed by the Board from time to time‘... "           (3) "The  fees shall be paid to the Committee or a      paid officer duly authorised to receive such payment on      the day of the transaction or on the following day".           R.31(1). "Every  licensed dealer  and every dealer      exempted under  rule 18  from obtaining a licence shall      submit to  the Committee a return in Form M showing his      purchases and  sale of each transaction of agricultural      produce  on   each  day,   on  the  day  on  which  the      transaction takes place or on the following day .......      "      The fault  of the  appellants lies  in that  they  have neither paid  fees under  rule 29(3) nor have they submitted returns in  Form ’M’. A perusal of the above two rules would show that  the Committee  is  authorised  to  levy  fees  on agricultural produce  brought or  sold only by a licensee in the notified market area. Similarly under rule 31 (1) only a licensed dealer is required to submit a return.      We have  now to  take note of the scheme disclosed in a few other  relevant provisions  which are  material for  our purpose.      Under section  10 of  the Act  "any person may apply to the authority specified in section 9 for a licence which may be granted for such period, in such form, on such conditions and on payment of such fees not exceeding one hundred rupees as may  be prescribed".  There is  a proviso  to  this  sub- section whereby "if any personal carrying on any business of the nature  specified in  sub-section (3)  of section 6 in a notified market  area on  the date  of issue of notification under sub-section  (1) of  that section  fails to  apply for licence  on  or  before  the  date  specified  therein  t‘or obtaining licence,  the prescribed  authority may,  before a licence is  issued, impose on him such penalty not exceeding one hundred  rupees as  may be  prescribed". By section 5 of the Act  the State  Government by  notification declares its intention of  exercising control  over the  purchase,  sale, storage and  processing of specified agricultural produce in

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a  specified   area.  By  section  6(1)  the  Government  by notification notifies  a market  area for the purpose of the Act. Section 6(3) may be quoted:           6(3).  "After   the  date   of   issue   of   such      notification  or   from  such  later  date  as  may  be      specified therein,  no person, unless exempted by rules      made under this Act, shall, either for him I self or on      behalf of  another person,  or of  the State Government      within the  notified market  area set  up, establish or      continue or  allow to  be continued  any place  for the      purchase,  sale,   storage  and   processing   of   the      agricultural produce except 4      under  a   licence  granted   in  accordance  with  the      provisions of  the Act.  the  rules  and  by-laws  made      thereunder  and   the  conditions   specified  in   the      licence.. ..."      As we  read the  above sub-section  it is clear that no person  shall,   unless  exempted   by  rules,  inter  alia, purchase, sell,  store or process the specified agricultural produce except  under a  licence. It  is not the case of the appellants that they belong to the exempted class.      Rule  17(1)   provides  that   "a  person  desirous  of obtaining a  licence under section 10 of the Act shall apply in Form  A (to be submitted in duplicate) to the Chairman of the Board  through the  Committee of  the area  in which  he wishes to  carry on his business and shall also deposit with the committee  the  requisite  licence  fee".  Sub-rule  (3) provides that  if any  person on the specified date fails to apply for  a licence,  he is liable to penalty in accordance with a  certain scale.  Under sub-rule (7) "the Chairman may grant a  licence to  the applicant  in Form  B. The  licence shall be subject to the conditions mentioned therein".      When we  look  to  Form  ’A’  which  is  the  form  for application for  a licence  under section  10 we  find  that against entry  8, the applicant has to give the "particulars of the  business for  which the  licence is  required" under four heads:      (1) Kacha Arhtiya      (2) Commission Agent      (3) Storage      (4) Processing      Similarly in  Form ’B’ which is the form of the licence under section  10, against  entry 5, the same particulars of the business  as against  entry in  Form ’A’  appear.  As  a matter of  fact one  of the  licences of  the appellants was shown to  us and  it was in accordance with Form ’B’. It is, therefore, clear  that no  licence has  been issued  to  the appellants  for   doing  business   of  buying  and  selling agricultural produce.  It is the case of the appellants that they  make   direct  purchases   and  this   fact   is   not controverted.  Although,   there  are,  the  appellants  are licensees as  required for  some of the businesses mentioned in Form  ’B’, they  have no licence for carrying on business of purchase  and sale  of agricultural  produce  within  the notified market area.      Now under  section 23 "a Committee may, subject to such rules as may be made by the State Government in this behalf, levy on  ad valorem  basis fees  on the agricultural produce brought or  sold by licensees in the notified market area at a rate  not exceeding  rupee one  fifty paise  for every one hundred rupees, provided..... " Section 43 provides for rule making power.  Rule 24 is referable to section 43(2)(v), but we are  not concerned  with this  rule in this case. Rule 29 provides that  under section  23 a Committee shall levy fees

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on the  agricultural produce  bought or sold by licensees in the notified  market area  at the  rates fixed  by the Board from time  to time.  Reading section 23 and rule 29 together it is  not possible  to escape  from the conclusion that the Act 5 authorises levy  of fee  on agricultural  produce bought  or sold by  licensees only. The appellants have licence only in respect of  the business  of kacha  arhtiya  and  commission agent. While  we express no opinion on the point whether the absence of  reference to  buying and selling of agricultural produce in  Form ’A’  and Form ’B’ disables the Committee to issue licences  for that purpose, we are of opinion that the present appeals  can be disposed of all the sole ground that the appellants have not as a matter of fact been issued such licences and  no fees  can, therefore,  be levied on them in respect of  purchases and  sales of  agricultural produce by them. The  appellants are,  therefore, not liable to payment of fee under the Act as demanded.      The appellants  also contend that since gur and shakkar are  manufactured   products  they  cannot  come  under  the definition of  agricultural  produce  with  the  meaning  of section 2(a)  of the  Act. Section 2(a) defines agricultural produce to  mean "all  produce whether  processed or not, of agriculture, horticulture,  animal husbandry  or  forest  as specified in  the Schedule  to this  Act" which  mentions 85 items of  commodities. These  are  statutorily  agricultural produce under  section 2(a). It is not possible to entertain the argument  that  the  Court  will  undertake  a  judicial scrutiny of  these items  in order  to come  to a conclusion whether these  are agricultural  produce or  not. In view of the definition  in section  2(a) such  an enquiry  is out of place. In this context we may note that under section 38 the State Government may be notification add to the schedule any other item of agricultural produce or amend or omit any such specified item  It is  because of  this power  to add to the schedule items  of agricultural  produce that the first part of the  definition under  section 2(a)  gives guidance as to what  agricultural   produce  means.  The  submissions  are. therefore. devoid of substance.      In the  result the  appeals are allowed. The appellants are not liable for payment of fee with regard to their sales in the  notified market  area other  than in the capacity as kacha arhtiyas or commission agents. In the circumstances of the case there will be no order as to costs. P.H.P.                                      Appeals allowed. 6