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PETITIONER: BRITISH INDIA CORPORATION LTD.

       Vs.

RESPONDENT: MARKET COMMITTEE, DHARIWAL & ANOTHER

DATE OF JUDGMENT16/12/1982

BENCH: VARADARAJAN, A. (J) BENCH: VARADARAJAN, A. (J) TULZAPURKAR, V.D.

CITATION:  1983 AIR  162            1983 SCR  (2) 159  1983 SCC  (1) 196        1982 SCALE  (2)1339

ACT:      Punjab Agricultural  Produce Markets  Act, 1961 Section 23-Rule 29  (7)-Scope of-Goods  purchased by head office but weighed and  delivered within  the market  committee area-If attract fee.

HEADNOTE:      The appellant,  with its head office at Kanpur in U.P., runs two  woollen mills-one  of which  is in Dhariwal in the State of  Punjab. The  raw material  purchased by  the  head office at  Kanpur was sent from various centres to the mills and no  raw material used in the mills was purchased locally or within the area of the Market Committee.      On demand  of market fee by the Committee under section 23 of  the Punjab Agricultural Produce Markets Act, 1961 the appellant stated  that  no  purchase  or  sale  of  the  raw material received by the mills took place within the area of the Market  Committee and that for this reason the Committee had no  jurisdiction to  levy any  fee in  respect of  those materials.      A Writ  Petition filed  by the  appellant in  the  High Court was dismissed a infructuous since the Market Committee agreed  to   withdraw  the  assessment  and  to  make  fresh assessment according to the rules.      Some time  later, however,  the Market  Committee  once again levied  market fee  and penalty. A single Judge of the High Court quashed the demand notice of the Market Committee on  the   ground  that  the  assessment  order  was  not  in accordance with  the provisions  of the Act and Rules. But a Division Bench  of the  High Court  allowed the  Committee’s Letters Patent Appeal.      On  the  question  whether  the  Market  Committee  was competent to levy fees.      Dismissing the appeal, ^      HELD: Clauses  (b) and (c) of rule 29 (7) of the Punjab Agricultural Produce  Markets (General) Rules, 1962 would be attracted bringing  the transaction  within the term ’bought or sold’  if in  pursuance  of  the  agreement  of  sale  or purchase, even if entered at the head office of the mills at Kanpur, the  agricultural produce  was weighed in the market area or if in pursuance of the

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160 agreement of  sale or  purchase the agricultural produce was delivered in the said area to the purchaser or to some other person on behalf of the purchaser. [163 E-F]      In the  instant case  both clauses (b) and (c) would be applicable provided  the transaction  of sale  was completed immediately on  the delivery  of the  goods to  the mills on weighment within  the market  area, if  the delivery  and/or weighment are such that without both or either of them there will no sale at all in law.                                                    [164 A-B]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 681 of 1978.      Appeal by  special leave  from the  judgment and  order dated the 2nd day of September, 1976 of the Punjab & Haryana High Court in Letters Patent Appeal No. 208 of 1974.      Y.S. Chitale,  Mrs. A.K.  Verma and Ashok Gupta for the Appellant.      Hardev Singh and R.S. Sodhi for the Respondents.      The Judgment of the Court was delivered by      VARADARAJAN,  J.   This  appeal  by  special  leave  is directed against  the judgment  of a  Division Bench  of the Punjab and  Haryana High  Court  at  Chandigarh  in  Letters Patent Appeal  No. 208  of 1974  by the  respondent in  that appeal. The  appellant who  filed the Writ Petition, has its head office  at Kanpur and is running two woollen mills, one at Dhariwal,  in the  name and  style of New Egerton Woollen Mills’ (hereinafter  referred to  as ’Dhariwal  Mills’)  and another at  Kanpur  in  the  name  and  style  of  ’Lal-Imli Cawnpore Woollen  Mills’ (hereinafter referred to as ’Kanpur Mills’). The  case of  the appellant-company  was that after the purchase  of raw  material made  by its  head office  at Kanpur the  raw material  is sent  from various  centres  in India as well as from abroad to both the mills in accordance with their  requirements and  no raw  material used  in  the Dhariwal Mills  is purchased  locally or  within the area of the Market  Committee, Dhariwal  excepting that  during  the years 1969  and 1970  two contracts  for the purchase of raw wool of  the value  of Rs.  6,000/-  and  Rs.  5,000/-  were entered into  within the  area of the said Market Committee. The appellant’s case was that no purchase or sale of the raw material received  by the  Dhariwal Mills takes place within the area  of the  Market Committee  and that,  however,  the Market Committee  made a demand for payment of market fee on all raw  wool purchased  by the  appellant from  7.3.1962 to 29.6.1968 by a letter dated 21.6.1968 on pain of 161 recovery of  that amount  and penalty  as  arrears  of  land revenue, if  not paid  within the  specified time.  After  a series of  correspondence  between  the  appellant  and  the Market  Committee-first   respondent,  the  latter  made  an assessment of market fee due from the appellant and demanded a sum of Rs. 3,67,200/- made up for Rs. 2,44,800/- being fee payable for  the period from 26.5.1961 to 31.12.1970 and Rs. 1,22,400/- being  penalty. As  the amount  was not  paid the Market Committee  took steps  under s.  41 (2) of the Punjab Agricultural Produce  Markets Act,  1961 for the recovery of the amount  as arrears  of land  revenue.  It  is  in  these circumstances that  the appellant  filed a Writ Petition No. 4247  of   1971  which   was  dismissed  as  infructuous  on 15.11.1972 as  the Market  Committee agreed  to withdraw the

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assessment and  to make  a fresh assessment according to the rules.      The appellant  contended in  the present  Writ Petition out of  which this  appeal has  arisen that although it made all efforts for associating itself with the fresh assessment proceedings by  producing the  necessary records, the Market Committee once again levied market fee of Rs. 4,26,000/- and penalty of a like sum and made a demand for the total sum of Rs. 8,52,000/-  by notice  dated 16.8.1973. The present Writ Petition was  filed  under  Articles  226  and  227  of  the Constitution for quashing that demand notice and restraining the Market Committee from recovering the amount. The learned Single Judge allowed the Writ Petition on a legal point that the  assessment  order  made  is  not  accordance  with  the provisions of  the aforesaid  Act  and  the  Rules,  without expressing any opinion on the merits of the case. The Market Committee, therefore  filed  the  aforesaid  Letters  Patent Appeal.      There is  no dispute  that the raw material received by the Dhariwal  Mills is an agricultural produce as defined is s. 2A  of the  Act and  that the  said commodity after being received  by  the  Dhariwal  Mills  is  weighed  within  the notified area  of the  Market Committee. The contest between the parties  is on the question whether in the circumstances of the  case the  provisions  of  s.  23  of  the  Act  were attracted or not.      Section 23 of the Act reads thus:           "A Committee  shall, subject  to such rules as may      be made by the State Government in this behalf, levy on      ad 162      valorem basis  fees on  the agricultural produce bought      or sold  by licensees  in the notified market area at a      rate not  exceeding two  rupees and  twenty  paise  for      every one hundred rupees.           Provided that:-           (a)  no fee  shall be  leviable in  respect of any                transaction  in   which   delivery   of   the                agricultural produce  bought or  sold is  not                actually made; and           (b)  a fee  shall be  leviable only on the parties                to  a   transaction  in   which  delivery  is                actually made."      A perusal  of the  records produced  by  the  appellant reveals the  existence of  a number  of  original  contracts entered  into  by  the  appellant  at  Kanpur  with  various suppliers of  raw wool in India with a provision practically in all  the transactions  that 80  per cent of the goods was payable against  the documents and the balance after receipt and examination  of the goods which were to be despatched to Dhariwal  Mills   directly.  There  are  certain  terms  and conditions on  the back  of the  contract forms in regard to the procedure  for scouring  yield. It  will be necessary to state only  a few  of those  terms and  conditions. Clause A relating to the procedure for scouring yield read thus:-      (A)  Two bales  at  random  are  taken  and  issued  to           Scouring Department.  The weight  recorded at  the           time of receipt of the consignment is taken. After           scouring in three bowl Scouring Machine using warm           water, the  wool is  dried in the dryer and spread           in a  covered place  for about  12 hours to regain           normal moisture.  The wool  is  then  weighed  and           yield calculated".      Clauses 2 and 3 read thus:      ’2.  The Mills  have every right to reject a portion or

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         bulk if  the quality  is not  up to the suppliers’           samples given at the time of offers.      3.   Weight received  in the  mills will  be  taken  as           final weight." 163      Rule 29  of  the  Punjab  Agricultural  Produce  Market (General) Rules  1962 framed under the Act provides for levy of the  fees on  agricultural  produce  bought  or  sold  by licensees in  the notified  market area.  Rule 29  (7)  read thus:           "29 (7) For the purposes of this rule agricultural      produce shall  be deemed to have been bought or sold in      a notified market area:           (a)  if the  agreement of sale or purchase thereof                is entered into the said area;           (b)  if in  pursuance of  the agreement of sale or                purchase the  agricultural produce is weighed                in the said area; or           (c)  if in  pursuance of  the agreement of sale or                purchase   the    agricultural   produce   is                delivered in  the said  area to the purchaser                or to  some other  person on  behalf  of  the                purchaser."      Clauses (b)  and (c)  would be  attracted bringing  the transaction within the term ’bought or sold’ if in pursuance of the  agreement of  sale or purchase, even if entered into at Kanpur, the agricultural produce is weighed in the market area or if in pursuance of the agreement of sale or purchase the agricultural  produce is  delivered in  the said area to the purchaser  or to  some other  person on  behalf  of  the purchaser.      The Division  Bench of  the High  Court in  the Letters Patent Appeal  was of  the opinion that both clauses (b) and (c) are  applicable to the facts of the present case even on the admitted  facts of  this case as the transaction of sale is completed immediately on the delivery of the goods to the Dhariwal Mils.  In that  view the learned Judges allowed the appeal and  set aside  the judgment  of the  learned  Single Judge and  left it  open to the appellant-company to satisfy the Market  Committee in  respect of  any transaction  which does not fall within the scope of their judgment.      The question  is as  regards the  sites of the sale. If the sale  transaction took place within the Market Committee either by delivery of the goods or by weighment thereof, the transaction would  fall within  the ambit  of Rule  29  (7). After having heard 164 learned counsel  for the  parties we are of the opinion that no interference with the judgment under appeal is called for except that  it is  necessary to  make  it  clear  that  the delivery and weighment to be taken into consideration by the market  Committee   in  respect  of  the  past  transactions regarding which  the demand  has been  made and  also future transactions must  be delivery an/or weighment without which there will  be no  sale at  all  in  law.  Subject  to  this clarification we  dismiss the  appeal and direct the parties to bear their own costs. P.B.R.                                     Appeal dismissed. 165