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PETITIONER: SHRI BHAGWAN DASS SOOD

       Vs.

RESPONDENT: STATE OF HIMACHAL PRADESH AND OTHERS

DATE OF JUDGMENT:       25/10/1996

BENCH: G.N. RAY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T      G.N.Ray.J.      This appeal is directed against judgment dated November 30, 1994  passed by  the Division  Bench of Himachal Pradesh High Court  Writ Petition No.568 of 1988 (M/s Sardar Singh & Sons  Vs.   State  of  Himachal  Pradesh)  involving  common question of  law and  all the  said  writ  petitions    were disposed of  by the  judgment rendered  in  C.W.P.No.568  of 1988.      The main  contention raised before the Himachal Pradesh High  Court   in  the  said  petitions  was  that  the  Writ Petitioners were not required to take licences under Section 4 (3)  of the  Himachal Pradesh  Agricultural Produce Market Act, 1949  (hereinafter referred  to as  Market Act) and are also not  required  to  pay  market  levy.  The  petitioners contended  that   the  market   committee  had   established principal/sub   market    yards   within   the   territorial jurisdiction of  the market  committee. But  the petitioners did not  carry on their business within the principal market or market  yards/sub market yards. On the contrary, they had been agricultural  produce outside the principal market/yard or sub  yards. They  had carrying on their business in their own premises  which were  though within  the notified market area, but  were outside  the principal market/market yard or sub-market yards.  Even then,  the  market  committees  were insisting the  petitioners to  obtain licence and pay market fee in accordance with the provisions of the Markets Act and the Rules  framed thereunder. Such action on the part of the market committee was wholly illegal and unconstitutional. It appears from  the impugned  decision of  the High Court that the petitioners  contention was that the provisions relating to taking  of licences  for carrying on business and payment of market fee under the Markets Act have placed unreasonable restrictions on  their right  to carry  on their  trade  and hence Section  4 (3) and 21 of the Markets Act are violative of Article  19 (i)  (g) of the Constitution of India. It was contended that market fee had a direct relationship with the services rendered and since the market committee rendered no service in  respect of the area in which the petitioners had carried  on   their  trading  activities  but  the  services

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rendered by  the market  committee remained confined only to principal market/market  or sub  market yard  established by the market  committee. realisation of market fee was illegal and unconstitutional.      Such  contentions   were  disputed  by  respondents  by contending that  principal market  yards had been identified and  constructions   had  been   undertaken.  According   to respondent, such  market and  market and  sub  market  yards would consist of shops, auction platforms and various public utility  services   like  provision   for  drinking   water, latrines, sanitation,  farmers rest  houses  etc.  would  be provided. Such  scheme would  cost  expenditure  of  several crores of rupees by each of the market committee. Though the works were  in process,  works of  such magnitude  involving very heavy  expenditure could not be immediately implemented in full  and the  works in  progress would require some more time to be completed. The respondents contended that even in respect of  areas outside principal market and market or sub market yards  inspecting staff  had been appointed to ensure proper weighment  and payment  of price  to the producers of scheduled agricultural  produce. It  was also contended that income to  be derived  from market  fee would  be spent  for providing the  aforesaid facilities  and  amenities.  Hence, there was sufficient nexus justifying imposition of levy and collection of the same.      By the  impugned judgment, the High Court has held that levy of  market fee  was quite justified. The requirement of obtaining licence  fee and  payment of  levy of  market  fee constituted reasonable  restriction under Article 19 (1) (g) of the  Constitution. Hence, the provisions of Section 4 (3) and 21  of the  Markets Act  were intra  vires and valid. It appears that  the High  Court has relied on the decisions of this Court  in Kewal  Krishna Puri  and another Vs. State of Punjab and  others (AIR  1980 SC 100B), Ram  Chandra Kailash Kumar and  Co. Vs.  State of  U.P. (AIR  1980 SC  1124)  and Sreenivasa General  Traders Vs. State of Andhra Pradesh (AIR 1983 SC 1246).      In Kewal  Krishna Puri’s case (supra), market fees were levied under  the Punjab Agricultural Produce Markets. 1961. But such  fees were  increased. Such increase was challenged before this  Court by contending that the market fees levied under the  Act were  sufficient for meeting the requirements of the  said Act.  Even then, increase in such fees was made for diverting  the said  fund for  purposes other than those for which  market fees  were levied. A Constitution Bench of this Court has held that the fee must have direct nexus with the services  provided by the market committee and since the increase was not intended to provide any additional service, the same cannot be lawfully imposed.      It has  been indicated  by this  Court in Kewal Krishna Puri’s case  that the  element of  quid pro  quo may  not be possible  or   even  necessary   to  be   established   with mathematical exactitude  but broadly and reasonably it  must be established  by the  authorities who charge the fees that the amount is being spent for rendering services to those on whom falls  the burden  of fees.  It has also been indicated that a  good and  substantial portion of amount collected on account of  fees, may  be, in the neighborhood of two thirds or three fourths, must be shown with reasonable certainty as being spent  for  rendering  services    kind  as  mentioned hereinbefore.      In  Ram  Chandra  Kailash  Kumar’s  case  (supra),  the principles justifying  imposition of  levy of  market fee as indicated in  Kewal Krishna’s  case have  been  affirmed  by another Constitution  Bench of  this Court. It has been held

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in Ram  Chandra’s case  that declaration  of  big  areas  as market areas  does not  offend any  provisions  of  law.  In Sreenivasa General Traders case (supra), this Court has held that establishment  of a principal market yard or sub market yard and  provisions for amenities and facilities to persons using the  same is  sufficient quid pro duo for the purpose. This  Court  has  also  emphasised  in  this  decision  that traditional view  or quid  pro quo has undergone sea change, though corelation  between the  fee  collected  and  service rendered or  intended to be rendered is still important. The true test is whether its primary and essential purpose is to render specified service to a specified area or class. It is of  no   consequence  that  the  State  may  ultimately  and indirectly be benefitted by it. The power of the Legislature to levy  a fee is established by the fact that it must be by and large  a quid pro quo for the service rendered. All that is necessary is that there should be reasonable relationship between the levy of fee and services rendered.      The principles  governing quid  pro quo justifying levy of market  fee in  Kewal  Krishna’s  case  were  taken  into consideration by  this Court in M/s Amar Nath Om Prakash Vs. State of  Punjab (AIR  1985 SC  218). In  view of finding by this Court  that increase  in levy  was unjustified in Kewal Krishna’s  case,   the  Legislature  by  amendment  inserted Section 23A  in the Punjab Agricultural Produce Markets Act, 1961. The  said provision  dealt with  saving of  excess fee already charged.  Section 23A  provided that notwithstanding anything contained  in any  judgment, decree or order of any court, it  would be  lawful for a market committee to retain fee levied  and collected  by it  in excess  of that  levied under Section 23. In considering the constitutional validity of Section  23A since  impugned in  Amar Nath’s  case,  this Court  has   held  that   observations  contained  in  Kewal Krishna’s case  about the extent of fees levied and realised to be  spent for justifying quid pro quo. are not to be read as Euclid’s  Theorems nor  as provisions of the statute. The observations must  be read  in the  context  in  which  they appear. The  constitutional validity of Section 23A has been upheld in  Amar Nath’s  case by  indicating that Section 23A intended to  prevent unjust  enrichment by these dealers who had already  passed on  the burden to the next purchaser and so reimbursed themselves.      The High  Court has  held in the impugned judgment that levy of  market fee  on the  traders  carrying  on  business outside principle  market/market or  sub market yard, cannot be held  as invalid  as it  has sufficient  nexus  with  the services rendered.  The services  are directly beneficial to the producers  of agricultural  produce  and  are  available within the notified market area.      Mr.P.P.Rao, learned  Senior Counsel  appearing for  the appellant, has  submitted that  Section 4  (3) and 21 of the Markets Act  may  not  be  held  invalid  on  the  score  of offending Article 19 (1) (g) of the Constitution and Markets Committee may  be competent  to impose levy of market fee on scheduled agricultural  produce generally  but the  question required to  be considered  as to whether any market fee was at all  leviable  on  the  appellant  and  consequently  the appellant was under any obligation to take licence under the Markets Act,  has not  been considered  by  the  High  Court presumably because  a number of writ petitions were disposed of by the common judgement impugned in this appeal where the specific question  raised by  the appellant was not in issue in other  cases and  the High  Court has addresses to itself the question of constitutional validity of Section 4 (3) and 21 of  the Markets  Act only  in the context of existence of

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quid pro  quo warranting  imposition of  levy of market fee. The High  Court  has  not  adverted  to  the  core  question involved in  the appellant’s case that the appellant being a petty  retailer,  had  purchased  from  other  dealers  such articles which  had already  been subjected  to levy  of fee under the  Markets Act  and hence  there was  no question of payment of levy of fee by the appellant. Consequently, there was no  requirement for  obtaining  any  licence  under  the Markets Act for carrying out the said retailer’s business in an area far away from any principal/sub market yard where no benefit consistent  with levy  of market  fee was available, even though  quid pro  quo for justifying imposition of levy of market  fee is  not required  to be  correlated with  any mathematical precision  with the  amount of service rendered and amount  of  fees  levied  and  realised  by  the  Market Committee.      Mr. Rao  had contended  that the  scheme of the Markets Act and  Rules framed thereunder is to protect the interests of the  producers and for this purpose the Act and the Rules contain various  provisions to  enable the market committees to notify  market areas  and establish  markets  and  market yards in  different parts,  provide  therein  and  levy  and collect fees from the licensed dealers. According to Mr.Rao, on a  reasonable interpretation  of the  Act, the  power  to establish markets  in the  notified market  area is  coupled with duty  to establish  sufficient  number  of  markets  in different parts  of the  notified area  which are reasonably accessible to producers and traders.      Mr.Rao has  contended that  in the  instant case,  non- establishment or  a principal  market or  market yards in or around Kasauli  town where  the appellant is carrying on his retail business  outlet. renders the traders in Kasauli town not liable to obtain licences and pay any market fee. Mr.Rao has submitted  that the imposition of levy of market fee may be held  justified if  the principal market and market yards or  sub  market  yards  are  reasonably  accessible  to  the producers and  traders of  scheduled agricultural produce so that the  benefit arising  out of an organised market having various  amenities,  are  available  to  the  producers  and dealers coming  to  the  principal/sub  market  yards.  When principal/sub market  yards are  established, completion  of such   principal/sub   market   yards   with   consequential constructions of  shops, yards,  toilets, rest room, offices etc. may  take a reasonable time. It may not be necessary to wait  for   imposition  of  levy  of  market  fee  till  the construction  of  infra  structures  of  such  principal/sub market yards  are fully  completed because  such  completion takes  some  time.  There  may  be  impelling  necessity  to generate funds  out of  imposition of  levy of market fee to take various  works necessary  to  establish  principal  and market and sub market yards at a desired level consisting of various  essential   infra  structures   with  amenities  of services attached  for effective  implementation of the aims and objectives under the Markets Act. Where principal market and  market/sub  market  yards  with  some  essential  infra structures  have   been  established   and  provisions   for reasonable amenities  to the producers and traders coming to such principal  market and  market yards or sub market yards are being taken within a reasonable time frame imposition of levy of  market fee  may  be  justified.  In  such  a  case, validity of  imposition of  levy cannot be challenged on the ground that  amount of levy collected and amount of services then available  are not fully correlated provided no part of income derived  put of  levy of  market  fee  is  spent  for purposes for which levy of fee was not imposed.

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    Mr.Rao has  submitted that  where a large acre has been notified as market area under the Act but only in one or two places, a  principal market  and market  yards or sub-market yards have  been established  where the  amenities envisaged under the  Act and  Rules are  available,  and  transactions taking place  in such  market/market yards are regulated but to a  large percentage of producers and traders of scheduled agricultural produce,  no amenity  of an organised principal market/market  yards   is  at   all  available   because  of inaccessibility to  such market  yards either  on account of long distance  of such market/market yards from the place of business  of   such  traders  or  for  some  other  reasons, imposition of  levy on such traders who do not purchase from organised market/market yards and are wholly deprived of any benefit available  to them arising put of imposition of levy of market fee, simply on the basis that such areas also come under the  notified market  areas, must  be held illegal and unconstitutional.   According    to    Mr.Rao,    in    such circumstances, the  basic ingredient  of fee  being  related with return  of some  service to  the payer  of fee  is  not satisfied and the fee, in reality, partakes the character of tax.      Mr.Rao. in  support of  his contentions,  has relied on the decisions of this Court in M.C.V.S. Arunachala Nadar Vs. State of  Madras (1959  Suppl. (1) SCR 92) and Lakha Lal Vs. State of  Bihar (1968  (3) SCR 539) and R.K.Porwal Vs. State of Maharashtra  (1981 (2)  SCR  866  (888)).  In  Arunachala Nadar’s case  (supra). this  Court has noted the practice of notifying a radius of five miles around the market buildings and yards  and occasionally  ten miles and has observed that keeping  in  mind  the  purpose  of  establishing  organised market/market yards  for the  benefit of  producers  and  to protect them  from exploitation  by traders and middlemen it is unlikely  that the government will fix longer distance in the prevailing circumstances. In Lakha Lal’s case (supra), a Constitution Bench  of this  Court has held that power under Section 4  (of the  Bihar Markets  Act to notify market area should  be   exercised  reasonably   consistent   with   the beneficial purpose  envisaged under the Act. In R.K.Porwal’s case (supra),  this  Court  has  examined  the  question  of reasonableness of  the location  of a market and after being satisfied that  the location  of the  market was reasonable, upheld the same.      Mr. Rao  has submitted  that it  cannot  be  reasonably presumed that the Himachal Pradesh Legislature have intended that Section  4 (3)  should be  construed literally to cover even retail  dealers in scheduled agricultural produce to be covered for the imposition of levy and requirement to obtain licence from  such retail  dealers. Until  Section 4  (3) is read down  by reasonably interoreting the scope and ambit of the said  Section. Section  4(3) is liable to be struck down being violative  of Articles  14  and  19  (1)  (9)  of  the Constitution.      Mr. Rao  has submitted  that it  is  the  case  of  the appellant that  the appellant  has a  shop or  outlet in the town  of   Kasauli  and   he  is  a  retailer  of  scheduled agricultural produce.  He purchases such articles from other bigger dealers.  From the  shop  or  retail  outlet  of  the appellant in Kasauli, there is no principal market/market or sub market  yards within  a radius  of about  20 kilometers. Mr.Rao  has  submitted  that  the  appellant  cannot  afford purchasing from dealers in principal market/market yards sub yards because of long distance of such place of business and consequential cost  of transportation.  The  appellant,  for impelling necessity,  purchases from  other dealers  in near

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about places  and carry  on his  retail business  n  various agricultural produce  in  his  shop  at  Kasauli  under  the administrative control  of Kasauli  Cantonment Board. Hence, in any  event, the appellant is not liable to pay market fee levied  on  various  agricultural  produces  by  the  Market Committee.      Mr.Rao has  submitted that  Markets Act  and the  Rules framed thereunder  envisage a  single  point  levy.  Once  a particular scheduled  agricultural produce  has already been subjected to levy of market fee, subsequent sale or purchase of such  produce cannot  be subjected to levy of market fee. In this  connection, Mr.Rao  has  referred  to  Rule  81  of Himachal Pradesh  Agricultural Produce  Market  Rules,  1971 framed under  the Markets  Act, Sub  rule  (1)  of  Rule  81 provides as follows:      81. Exemption from payment of fees-      (1) If  a fee  has once been levied      on sale or purchase of any quantity      of  agricultural   produce   in   a      notified market area and the dealer      concerned   complies    with    the      provisions with the sub-rule (2) of      this Rule,  then no  fee  shall  be      leviable on  the sale  or  purchase      within the  same notified  area  of      any      agricultural       produce      manufactured or  extracted from the      agricultural produce  in respect of      which  the  fee  has  already  been      paid.      (2) The  dealer  concerned  in  the      sale of purchase of any quantity of      agricultural produce  from which he      manufactures or  extracts any other      agricultural produce shall maintain      in Form L time and correct accounts      of sale or purchase as the case may      be,  of   the   said   agricultural      produce manufactured  or  extracted      from it.      Mr.Rao  has   submitted  that  dealers  n  agricultural produce are  not exempted from the levy of market fee. It is only the  actual growers  of agricultural  produce  who  are exempted from the imposition of levy of market fee when they sell agricultural  produce grown  by them  to dealers. Since the appellant  is small  retail dealer  who  purchases  from various other  dealers it should be reasonably held that the other  dealers  being  liable  to  pay  levy  on  the  first transaction in  course of  dealership business  and once the goods in  question  have  already  been  subjected  to  levy subsequent transaction between dealer and sub dealer and sub dealer and  retailer like  the appellant  is not open to any levy of market fee.      Mr.Rao has also submitted that the purpose of requiring a licence to be obtained for carrying on dealership business is to  bring the  dealer under  control so  that such dealer does not  escape payment of levy of market fee due from him. Where a  retailer has  no obligation to pay levy of fee, the very purpose of obtaining licence for dealership business in case of  such retailer  does not arise. Mr.Rao has submitted that the  dealer must  be  understood  and  defined  in  the context of  its liability  to pay  levy of  market fee.  All traders in  the State  of Himachal Pradesh are not liable to pay levy  of market fee even if they carry on their business within a  notified market  area.  It  is  only  the  dealers

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dealing in scheduled agricultural produce under the Act, who have been  brought within the purview of Markets Act. Hence, a retailer  purchasing the  items of its business from other dealers, who  as aforesaid,  must be  presumed to  have been subjected to levy of market fee on the agricultural produces sold by  such dealer to the retailer should be excluded from the definition  of dealer  by  interpreting  the  definition reasonably and in the context of single point levy envisaged under sub  rule (1) of Rule 81 of the Rules framed under the Act.      Mr.Rao has  submitted that  unfortunately the liability of the  appellant either  to take  a licence for carrying on retail business  in agricultural  products and his liability to pay  levy of  market fee  in the  context of single point levy, have  not been  taken into  consideration by  the High Court because  the Writ  Petition of the appellant was heard along   with  other  Writ  Petitions  where  only  a  common question of  law raised  in such  writ petitions  about  non existence of  liability to pay any levy of market fee in the absence of  quid pro  quo of  services to be rendered to the writ petitioners  on account  of levy of market fee had been taken into consideration. Mr.Rao has submitted that the writ petition of  the appellant  should be  remanded to  the High Court for considering the questions of law in the context of factual matrix to be established by the respective parties.      Disputing such contentions of Mr.Rao, Mr.E.C.Aggarwala, learned counsel  appearing for  the respondents Nos.2 and 3, has submitted  that the  appellant on  the admitted position that he  purchases agricultural  produce from  other dealers and carries on retail business in such produce is a ’dealer’ as defined  in Section  2 (i)  of the  Markets Act. Notified market area has been prepared under Section 4 of the Markets Act. Section 4 (3) of the Markets Act purchase, sale etc. of agricultural produce  so notified  except  under  a  licence granted in  accordance with  the provisions  of Markets Act. Section 5  of the  Markets Act  contemplates  that  in  each notified market  area there  shall be  one principal  market yard and  one or  more sub-market yards as the Government or the Board  may find necessary. Section 21 of the Markets Act provides that market committee shall levy on advalorem basis fee on  agricultural produce  bought or sold by licensees in the notified market area at the rate not exceeding one rupee for everyone hundred rupees, as may be fixed by the Board.      The market  area of  Solan District in Himachal Pradesh included  the   area  of  Kasauli,  Dharampur,  Jagjitnagar, Garkhal etc, including Chakki ka More. By notification dated June 18,  11973, the extent of area of the Market Committee, Solan was described as :- (1)  All the revenue estates including Municipal Committees, notified area  committees and Cantonment Board area of Solan District (except Nalagarh Tehsil) (2)  Revenue of Rajgarh Sub-Tehsil/Padihad  Tehsil of Sirmor District.      Mr.Agarwala has  contended that  the appellant  Bhagwan Das admittedly  carries on  business in agricultural produce in Kasauli  which is  within a  notified  market  area.  The appellant is a dealer within the meaning of Section 2 (i) of the Markets  Act. In  view of the fact that the entire Solan revenue estate and District of Solan excluding Nalagarh area have been  notified as  market area,  the appellant  being a dealer and  carrying on business in agricultural produce was bound to  obtain licence  under Section 4 (3) of the Markets Act. Inspite of repeated requests, the appellant has refused to take such licence under the Markets Act.      It has  been  contended  by  Mr.Agarwala  that  in  the

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district  of  Solan,  various  sub-market  yards  have  been constructed which have been set out in the counter affidavit filed before  the High  Court. It  was also  stated  in  the counter affidavit that proposals were afloat for development of market  yards and  sub-market  yards  at  several  places within the  district of  Solan, primarily  amongst them  are Jagjit  Nagar,  Dharampur,  Garkhal  and  ten  other  areas. Chakki ka More where a sub yard has been established is at a distance of 28 kilometer from Kasauli and Jagjit Nagar is at a distance  of only  11 kilometer  from Kasauli. Mr.Agarwala has informed  the Court  on instruction  from the respondent Nos.2 and  3 that  sub market yard at  Jagjit Nagar has been constructed and  has become operative and sub market yard at Dharampur is  likely to be completed soon because tender for construction has  already been  invited. The sub-market yard in Chakki  ka More  had been completed and made operative as far back as in 1981.      Mr.Agarwala has  submitted that  the entire district of Solan is  a hilly terrain and is not densely populated as in other places  in  the  plains.  It  is  not  practicable  to establish  and   construct  sub-market  yards  within  close distance in  such  hilly  terrain  sparsely  populated.  The agricultural production  is also  not  much  so  that  large volumes of  transaction of  such produce  will take place in various sub-market  yards if constructed at close proximity. Hence, for  appreciating the  felt need of establishing sub- market  yards   in  the  district  of  Solan,  the  test  of reasonable distance  of market  yards which is applicable in plain lands  involving good  productive  activities  of  the agriculturists, cannot  be applied  in view  of geographical features and contours of the district of Solan and volume of agricultural produce grown in the district.      Mr.Agarwala has submitted that the purpose of obtaining licence is  to bring a trader within the supervising control and regulation of the market committee. Licence being issued for a  particular place  in  the  market  area,  the  market committee knows  that  a  particular  trader  or  dealer  is carrying on  its business  in such particular area. Question of payment  of market  fee arises  only after  a person  has obtained a  licence and  submits  proof  of  the  fact  that particular agricultural  produce in  which he is carrying on business activity  has already  been subjected  to  levy  of market fee  so that  further  levy  of  market  fee  is  not enforced.      Mr. Agarwala  has also  submitted that  the question of including small traders was taken into consideration by this Court in  Arunachala Nadar’s  case (supra). It has been held that "The  Act is  an integrated  one and  it regulates  the buying and selling of commercial crops. If the small traders are exempted,  it creates  loopholes in  the scheme  through which the  big trader  may operate  and thereby  the  object itself may be defeated."      Mr. Agarwala has further submitted that the law is well settled by  a series  of decisions  of this Court as already referred that  correlation of  quantum of  fees levied under the Markets  Act and  extent of  services  rendered  by  the Market Committee  by establishing principal market yards and sub  yards   etc,  is   not  to   be  scrutinised  with  any mathematical precision.  It will be sufficient to uphold the validity of  levy of  market fee  if it  is established that steps for  establishing market yards and sub yards have been taken and realisation from levy or market fee is being spent for the  avowed object  under the  Markets Act. Mr. Agarwala has submitted  that it  is not  necessary to  establish that traders of  a particular  area within the notified area have

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in fact  received the  benefit  of  services  and  amenities envisaged by the Markets Act and Rules framed thereunder.      In this  connection, Mr.  Agarwala has  referred  to  a decision of  this Court  in Mohammad  Hussain Gulam Mohammad and another  Vs. State  of Bombay and another (1962 (2)  SCR 659). The  attention of  the Court  has been  drawn  to  the observation at  page 663  of the  report  to  the  following effect:      "The act,  however, envisages  that      there may  be time  lag between the      declaration of  a market  area  and      the  establishment   of  a  market:      therefore the  proviso to Section 4      (2)   lays    down   that   pending      establishment  of  a  market  in  a      market area,  the Commissioner  may      grant a  licence to  any person  to      use any  place in the said area for      the purpose of purchase and sale of      any agricultural produce."      Mr. Agarwala  has submitted  that even though no market yard was established, the imposition of market fee under the Bombay Act  has been  upheld by this Court. Mr. Agarwala has also  submitted  that  establishment  of  various  yards  is reasonably expected  to take  some time  and  also  involves substantial expenditure.  If steps  for establishing  market and sub-market  yards have  been bona fide taken by a Market Committee by  ensuring that  collection from  levy of market fee is being spent and intended to be spent for the purposes for which  such levy has been imposed, the levy must be held to be  a valid  imposition under  the Markets  Act and  such validity is  not required  to be  tested in  the context  of quantum of  levy imposed  and extent  of service rendered by the Market Committee.      Mr. Agarwala  has also  submitted that appellant had an obligation to  take licence  under the  Markets Act  because admittedly he  deals in  agricultural produce.  Not only  he failed and neglected to take licence under Section 4 (3) but even when  reminded of  such obligation  to take  licence he filed the  writ petition  for contending that levy of market fee in  the absence of quid pro quo was unconstitutional and invalid. Such contention being wholly untenable in the facts of the  case and  law being clearly laid down in a series of decisions of  this Court,  there was  no  occasion  for  the appellant to move this Court. The appeal being devoid of any substance, should be dismissed with exemplary cost.      After giving our careful consideration to the facts and circumstances of  the case  and the  submissions made by the learned counsel for the parties, it appears to us that under the Markets  Act any  trader or  dealer dealing in scheduled agricultural produce  within a notified market area is under an obligation to obtain a licence under Section 4 (3) of the Markets Act.  Such obligation is not confined to wholesalers of agricultural  produce or  intermediate dealers  indulging wholesale and  retailed business  but also to retail traders like the appellant.      In our view, licence is required to be taken by a small retailer  operating  within  a  notified  market  area.  The question of  reasonable  interpretation  of  ’dealer’  under Section 2  (i) and  provisions requiring  a dealer to obtain licence under  Section 4 (3), in the context of single point levy of  market fee  under Rule 81 of the Rules framed under the Act,  as sought  to be  contended  by  Mr.  Rao,  though ingenuous, is devoid of any substance.      It has  been rightly  contended by  Mr. Agarwala that a

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licensed dealer  may raise  objection against  imposition of levy by  establishing with  reference to  records  that  the agricultural produce  since purchased  by  such  dealer  has already been  subjected to levy. Requirement for obtaining a licence is mandatory under Section 4 (3) of the Markets Act. Validity  of   imposition  of   levy  on  certain  items  of agricultural produce on the score of exemption on account of single point  levy, is  entirely a  different  exercise  and exemption from liability on such score in respect of trading activities  in   question  does  not  entitle  a  dealer  of agricultural produce  within  a  specified  market  area  to refuse to  take licence  under Section  4 (3) of the Markets Act.      By a  series of  decisions of  this Court, reference to which have  already been  made, the principles for upholding constitutional validity  of imposition of levy of market fee in  a   notified  market  area  have  been  laid  down.  The Agricultural Produce  Marketing Acts  have been  enacted  by various state  legislatures. The  beneficial legislation  is aimed to  prevent exploitation  of growers  of  agricultural produce in  the hands  of dealers,  traders  and  middlemen. There is commonness, by and large, in such legislations. The Marketing  Act  and  the  Rules  framed  thereunder  usually contain provisions  for establishing  organised  market  and market yards,  provisions to  ensure sale  and  purchase  of agricultural produce  at a  fair price  to be  notified,  to ensure correct weighment of such produce brought and sold in the market  yards, to ensure storage of agricultural produce by giving  reasonable advances against the produce stored in the godowns of the Market Committee so that distress sale at a lower place at the time of harvesting is prevented for the benefit of  farmers and agriculturists, to provide roads and pathways for  transport of agricultural produce to organised market yards,  to disseminate  information  to  the  farmers about improved  techniques in  cultivation, to ensure supply of good quality seeds, manures, agricultural implements etc, for intensive  cultivation, to  provide place  of  rest  for farmers bringing their produce in the organised market yards after  ensuring  sanitary  conditions  in  and  around  such organised market  yards etc.   In order to ensure generation of funds  in  the  hands  of  Market  Committee  and  Boards constituted under  the  Marketing  Act,  so  that  organised markets and  market yards  are  established  with  necessary infrastructures involving  substantial cost,  the  Marketing Act invariably contains provisions for imposition of levy of market fee at a specified rate on the traders and dealers in specified  agricultural   produce   operating   within   the specified market  area and in principal and sub-market yards established by  the  Market  Committee.    The  dealers  and traders are  required to  take  licence  for  their  trading activities in such area in respect of specified agricultural produce so  that their  trading activities are monitored and controlled  and   they  may  not  escape  the  liability  of imposition of market levy.      Levy of  market fee  being essentially  a fee and not a tax, such  imposition of  levy  of  market  fee  necessarily inheres in  it the  essence of quid pro quo between the fees levied and services returned to the payer of such fees. What should be  the extent  of service  rendered to the payers of levy of  market fees  so as to keep such levy of fees within the bounds  of accepted principle of fee involving existence of reasonable  quid  pro  quo  has  been  a  vexed  question agitated before  various High  Courts including  this  Court from time  to time.  Some of  the decisions of this Court on this  question  have  been  indicated.  The  legal  position

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regarding constitutional  validity of levy of market fee may be summarised as follows:-      (i)  Existence   of  quid  pro  quo  is  essential  for retaining the  character of  ’fee’ in  the matter of levy of market fees.      (ii) Such  quid pro quo is snot to be reckoned with any mathematical precision  with reference  to quantum  of  fees realised by  imposition of  levy and  the percentage of such fees spent  for establishing  market yards,  construction of various  infra   structures  etc,   and  providing   various amenities as envisaged under the Marketing Act and the Rules framed thereunder  for effective  implementation of aims and objectives under the Act.      (iii) The  service to  be rendered  to  the  payers  of market fee must be real and not illusory.      (iv) Such service must have an objective basis and have a direct link and not to be remote in its effect.      (v) It  is not  necessary that imposition of levy is to be effected  only on  establishment  of  principal  and  sub market yards  by completing the infrastructures required for such establishment  of market  and  sub-market  yards.  Such construction being  time consuming and expenditure oriented, it will be sufficient to justify valid imposition of levy if it  is   demonstrable  that  after  notifying  market  area, effective steps  not in  contemplation but  in reality  have been taken  to identify  market and sub-market yards have in fact been  but to  action and  the market  fees  levied  and realised are  being ploughed back for the advancement of the purpose for which market fees have been levied and realised.      (vi) In  deciding the  question of  rendering of a real and not  illusory  service  in  discharging  the  obligation emanating from  quid pro  quo, to  levy of  market  fee,  no straight jacket  formulae can  be evolved. Fact situation in the matter  of establishment  of  principal  and  sub-market yards and  the  practical  feasibility  of  construction  of infrastructures, roads,  pathways etc,  for establishment of such market  yards within  a time  frame and in the light of financial constraints  is bound to vary depending on various factors   including   imponderables.   It   is,   therefore, essentially necessary  to take  a pragmatic  approach to the problems associated  with establishing market and sub-market yards with  necessary infrastructure  etc, and  accompanying facilities and amenities to be made available to traders and producers coming  to such  yards, in order to decide whether concrete  steps   have  been  translated  into  action  with reasonable sincerity  in implementing  the schemes envisaged under the Marketing Act and the Rules framed thereunder.      In the  instant case,  it has been established that the market committee  in the  district of  Solan after notifying market area,  has taken real and effective steps to identify various sub  market yards  and some  of such yards have been commissioned after  constructing  essential  infrastructures and in  respect of  some of  such yards,  tenders have  been invited. It  is true  that the  facility of sub-market yards from the  town of Kasauli is at some distance. But it should be borne  in mind  that Solan is a hilly terrain with sparse population. The  volume  of  agricultural  produce  is  also limited  because  of  geographical  features  of  the  area. Consequently, volume  of transaction in agricultural produce is expected  to be  much less than that in good agricultural belts in  the plains. Such factors are undoubtedly operating as  constraints   in  establishing   sub-market  yards  with necessary infrastructures  within a  proximate distance from the place  of  business  of  various  traders  in  the  said district. Simply  on such  account, the  appellant cannot be

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permitted to  contend that  he has no obligation to pay levy of market  fee for  failure to comply with the obligation of quid pro  quo for  imposition of  levy of  market  fee.  The appellant has  failed to  establish that there is total lack of quid  pro quo  vis-a-vis imposition of levy of market fee in the district of Solan and also in the town of Kasauli.      In our  view, the  appellant being  admittedly a dealer under Section  2 (i)  of the  Act was  required  to  take  a licence. The question of liability to pay levy of market fee is to  be decided on the basis of actual business activities of the  appellant with  reference  to  agricultural  produce involved in  such business activities. If in respect of some agricultural produce  the  appellant  has  no  liability  of market levy  in view  of single  point levy,  it is  for the appellant to establish such claim with reference to records. It is  unfortunate  that  the  appellant  has  not  obtained licence despite  reminder. The  appellant  has  successfully prevented the  action on  the complaint made against him for not taking  the licence  under Section  4 (3) of the Markets Act by  moving the  writ petition  before the High Court and raising untenable  contentions in  such writ  petition.  We, therefore, find  no reason  to interfere  with the  impugned judgment. This  appeal is  dismissed with  cost assessed  at rupees ten thousand only.