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

PETITIONER: VIRENDRA KUMAR & ORS

       Vs.

RESPONDENT: KRISHI UTPADAN MANDI SAMITI & ORS.

DATE OF JUDGMENT23/09/1987

BENCH: DUTT, M.M. (J) BENCH: DUTT, M.M. (J) MISRA RANGNATH

CITATION:  1987 SCC  (4) 454        JT 1987 (3)   647  1987 SCALE  (2)664

ACT:      U.P. Utpadan  Mandi Adhiniyam,  1964: ss. 2(y), 5, 9(1) proviso &  17(iii)(b)-Producers of Khandsari sugar-owners of Khandsari Units-Selling  produce in  the market area-Whether liable to take out licence and pay market fee-Such producer- Whether a trader.

HEADNOTE:      Section 9(1)  of the U.P. Utpadan Mandi Adhiniyam, 1964 prohibits local  body or other person from setting up within the market  area any  place for  the  sale-purchase  of  the specified  agricultural  produce,  except  under  a  licence granted by  the  Committee  concerned.  A  proviso  thereto, however, exempts  a  producer  in  respect  of  agricultural produce produced,  reared, caught or processed by him or any person who  purchases or stores any agricultural produce for his domestic  consumption. Clause  (b) s. 17(iii) empowers a Committee  to   levy  and  collect  market  fee  payable  on transactions of  sale  of  specified  agricultural  produce. Where such  produce is sold through a commission agent, sub- cl. (1)  of cl.  (b) makes  him liable to collect the market fee and pay the same to the Committee.      The petitioners,  who are producers of Khandsari sugar, claimed that  as they  were only  ’producers’ in  respect of agricultural produce  in  the  market  area  they  were  not required to  take out  any licence  or to pay the market fee under  the  Act,  that  the  expression  "for  his  domestic consumption" in  the proviso  to s. 9(1) does not refer to a producer  of  agricultural  produce  but  to  a  person  who purchases or  stores any agricultural produce, and that sub- s.(l) of  s. 9  would apply.  Only to  a producer  who was a trader and  the petitioners  were not  ’traders’ within  the definition  of   the  term   under  s.   2(y)  and  also  as contemplated by sub-s. (1) of s. 9.      Dismissing the writ petition, ^      HELD: 1.  It is  not the  intention of  the Legislature that a  ’producer’ of  an agricultural  produce  within  the Market Area  should be  exempted from taking out any licence even though  he sells his produce in the Market Area. [311G- H] 309

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

    2. Sub-section  (1) of  s. 9  of the U.P. Utpadan Mandi Adhiniyam, 1964  will not  apply to  the two  categories  of persons mentioned  in the  proviso thereto,  namely,  (1)  a producer  who   produces,  rears,   catches   or   processes agricultural produce  for his  domestic consumption, and (2) any person  who purchases or stores any agricultural produce for his  domestic consumption.  If,  however,  the  producer produces, rears,  catches or processes agricultural produces not for his domestic consumption but for the sale thereof in the Market  Area such  a producer  will not  come within the purview of  the proviso  and he  will have  to  take  out  a licence under s. 9(1). [312B-C; F]      Since the petitioners in the instant case are producing Khandsari for sale in the Market Area they will have to take out a  licence under  sub-s. (1) of s. 9. They are thus also liable  to   pay  market  fee  to  the  Committee  on  their transactions of sale, under s. 17(iii)(b). [313D]      3. The expression "for his domestic consumption" in the proviso to  s. 9(1)  refers to  a producer  of  agricultural produce. The proviso should be interpreted in a manner which would be in conformity with the intention of the legislature and also the object of the Act, i.e., the regulation of sale and purchase  of  agricultural  produce  and  establishment, superintendence and  control  of  market  therefor.  If  the proviso  is   interpreted  to  mean  that  the  producer  of agricultural produce  is exempt  from taking  out a  licence under s.  9(1), even  though he  produces, rears, catches or processes not  for his  domestic consumption but for selling them in  the Market Area, it would defeat the very object of the Act. [312C-D]      4. The  petitioners by  producing Khandsari  sugar  and selling it  within the market area are also ’traders’ within the meaning  of s.  2(y) and  also as contemplated by sub-s. (1) of s. 9. [313B]      Ramesh Chandra  v. State  of U.P.,  [1980] 3  SCR  l04, referred to.

JUDGMENT:      ORIGINAL JURISDICTION: Writ Petition No. 766 of 1987.      (Under Article 32 of the Constitution of India).      Soli J. Sorabjee and Pramod Swarup for the Petitioners.      Dr. Y.S.  Chitale, Mrs.  S. Dikshit  and Pradeep Mishra for the Respondents.      The Judgment of the Court was delivered by 310      DUTT, J.  In this writ petition under Article 32 of the Constitution  of  India  the  petitioners  have  prayed  for issuance of the writ in the nature of mandamus directing the respondents not  to  compel  the  petitioners  to  take  out licences and  to pay market fee under the U.P. Utpadan Mandi Adhiniyam, 1964, hereinafter referred to as ’the Act’.      The petitioners  are the  producers of  khandsari sugar and are  the owners  of Khandsari  Sugar  Units  which  they operate with the aid of power crushers for the production of khandsari sugar. The petitioners claim that as they are only producers of  khandsari sugar,  they are  not liable to take out any  licence or  to pay  the market fee under the Act as illegally demanded by the respondents Mandi Samitis.      It appears  from the Preamble that the Act provides for the regulation  of sale and purchase of agricultural produce and for  the establishment,  superintendence and  control of market therefor  in Uttar  Pradesh. Section  5  of  the  Act provides for  the declaration  of  intention  of  the  State

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

Government to  regulate and  control sale  and  purchase  of agricultural produce  in any area to be declared as a Market Area. Under  section 6,  the Market Area will be declared by the State  Government by a notification in the Gazette after considering  the   objections  received  within  the  period referred to  in section  S of  the Act . Section 9(1) of the Act provides as follows:-           "S. 9(1).-As  from the  date of  declaration of an           area as  Market Area no Local Body or other person           shall, within  the Market  Area, set up, establish           or continue, or allow to be set up, established or           continued,  any   place  for  the  sale  purchase,           storage, weighment  or processing of the specified           agricultural  produce,   except   under   and   in           accordance with the condition of a licence granted           by  the   Committee  concerned,  anything  to  the           contrary contained in any other law, custom, usage           or agreement notwithstanding:                Provided that  the provisions  of  this  sub-           section shall  not apply  to a producer in respect           of agricultural  produce produced,  reared, caught           or processed by him or to any person who purchases           or  stores   any  agricultural   produce  for  his           domestic consumption.      Section 17  lays  down  the  powers  of  the  Committee constituted under  section 13 of the Act. Clause (iii)(b)(1) of section 17 provides as follows: 311           "S.17-A Committee  shall, for  the purpose of this           Act, have the power to- A                .................................                .................................                (iii) levy and collect:                .................................                .................................                     (b)  market fee,  which shall be payable      on  transactions  of  sale  of  specified  agricultural      produce in  the market  area at  such rates,  being not      less than  one percentum and not more than one and half      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 ;"      It is  urged by Mr. Sorabjee, learned Counsel appearing on behalf  of the  petitioners, that  as the petitioners are only producers  in respect of agricultural produce, they are not required  to take out any licence in view of the proviso to section  9(1) of  the Act. Counsel submits that under the proviso, sub-section  (1) of section 9 will not apply to two categories of  persons, namely,  (1) the producer in respect of agricultural  produce and (2) any person who purchases or stores   any   agricultural   produce   for   his   domestic consumption.  In  other  words,  according  to  the  learned Counsel, a producer who produces the agricultural produce in the Market  Area and  sells them will not have to take out a licence under sub-section (1) of section 9. We are unable to accept the  contention. In our view, it is not the intention of the  Legislature  that  a  producer  of  an  agricultural produce within  the Market  Area would be exempt from taking out any  licence, even  though he  sells his  produce in the

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

Market Area.  We have  already noticed  that the Preamble of the Act  shows that  it is  for the  regulation of  sale and purchase of  agricultural  produce  and  for  establishment, superintend- 312 ence and  control of market therefor. The very object of the Act, as  indicated in  the Preamble,  will be defeated, if a producer of  an agricultural  produce within the Market Area is exempted from taking out a licence merely because he is a producer of  an agricultural  produce. It is true that under the proviso,  sub-section (1)  of  section  9  will  not  be applicable to a producer of agricultural produce. But such a producer  must   be  a   producer  of  agricultural  produce processed, reared,  caught  or  processed  by  him  for  his domestic consumption.  If, however,  the producer  produces, rears, catches or processes the agricultural produce not for his domestic  consumption, but  for the  sale thereof in the Market Area,  such a  producer  will  not  come  within  the purview of  the proviso  and he  will have  to  take  out  a licence under  sub-section (1)  of section  9 of the Act. We are unable  to accept  the contention of the learned Counsel for the  petitioners that  the expression  "for his domestic consumption" in  the proviso does not refer to a producer of agricultural produce,  but to  a  person  who  purchases  or stores any agricultural produce. As has been stated already, if the  proviso is  interpreted to  mean that  a producer of agricultural produce  is exempt  from taking  out a  licence under sub-section (1) of section (9) of the Act, even though he  produces,  rears,  catches  or  processes  not  for  his domestic consumption  but for  selling them  in  the  Market Area, it  would defeat  the very  object  of  the  Act.  The proviso, in  our opinion,  should be interpreted in a manner which would  be in  conformity with  the  intention  of  the Legislature and  also the  object of  the Act. Therefore, in our view,  there  can  be  no  doubt  that  a  producer  who produces, rears,  catches, or processes agricultural produce for  his  domestic  consumption  and  also  any  person  who purchases  or   stores  any  agricultural  produce  for  his domestic consumption  are  exempt  under  the  proviso  from taking out  any licence.  In other words, sub-section (1) of section 9  will not apply to these two categories of persons as mentioned in the proviso      It is,  how ever,  urged on  behalf of  the petitioners that sub-section  (1) of  section 9  would apply  only to  a producer who  is a  trader. Our  attention has been drawn to the definition  of the  word ’trader’  under section 2(y) of the Act  as meaning  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. It is submitted that the petitioners are not ’traders’ within the meaning of the said definition and  also as  contemplated by  sub-section (1) of section 9  of the  Act. In  support of  this contention, the learned Counsel for the petitioners has placed much reliance upon a decision of this 313 Court in  Ramesh Chandra  v. State of U.P., [1980] 3 SCR 104 which also  relates to  the Act with which we are concerned. In that  case it  has been  observed that  a producer-trader will be  required to  take out  a licence and the expression ’producer-trader’ has  been explained  to be a person who is both a  producer of  agricultural produce and himself trades in it. We do not think that the decision at all supports the contention of  the  petitioners.  The  petitioners,  in  our

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

opinion, by  producing khandsari sugar and selling it within the Market  Area are  also ’traders’  within the  meaning of section 2(y)  and also as contemplated by sub-section (1) of section  9.   The  petitioners  are,  therefore,  ’producer- traders’ as explained in the above decision of this Court.      The next  question  that  falls  for  consideration  is whether the  petitioners are  liable to  pay market  fee. We have  already  extracted  above  the  provision  of  section 17(iii)(b)(1) which  has been  relied upon  by  the  learned Counsel for  the petitioners  in support  of his  contention that the  petitioners are  not liable  to  pay  market  fee. Section 17(iii)  (b)(1), inter  alia, provides  that 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.  lt is argued on  behalf of the petitioners that as they sell their produce  through   a  commission   agent,  it  is  only  the commission agent who is liable to pay the market fee and not the petitioners.  It has,  however, been frankly conceded by Mr. Sorabjee  on behalf  of the petitioners that there is no averment in  the petition  that the  petitioners sell  their produce through  a commission  agent. In  the absence of any such averment,  we are  afraid, such  a  contention  is  not available  to  the  petitioners.  There  is,  therefore,  no substance in  the contention  that the  petitioners are  not liable to pay market fee.      No  other  point  has  been  urged  on  behalf  of  the petitioners.      For  the   reasons  aforesaid,  the  writ  petition  is dismissed. There will, however, be no order as to costs. P.S.S.                                    Petition dismissed 314