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PETITIONER: CHIMANLAL PREMCHAND

       Vs.

RESPONDENT: THE STATE OF BOMBAY

DATE OF JUDGMENT: 15/09/1959

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. IMAM, SYED JAFFER

CITATION:  1960 AIR   96            1960 SCR  (1) 764

ACT: Agricultural  produce-Packed or Pressed-If  loses  identity- State  Government-Powers  to  make rule  for  regulation  of business  and  condition   of  trading-Bombay   Agricultural Produce  Market Act, 1939 (Bom. 22 of 1939), ss. 2  and  26- Bombay Agricultural Produce Market Rules 1941, r. 65.

HEADNOTE: The  appellant as a trader made purchases of  full  pressed, cotton bales in the market area of Broach without  requisite licence from the market committee, thereby contravening  the provisions  of r. 65(1) of the Bombay  Agricultural  Produce Market Rule 1941.  The appellant, inter alia, contended that the Act and Rules passed thereunder did not apply to pressed cotton  which  having been pressed into bales had  lost  its identity and was no more an agricultural produce and that r. 65 was ultra vires inasmuch as its provisions were in excess of the rule making power of the State Government. Held,  that  an  agricultural produce  by  being  packed  in containers or pressed into bales does not in any way  change its essential character, and continues to be an agricultural produce, 765 The fact that the cotton ginned or unginned is pressed  into bales,  or  packed otherwise does not make it any  less  the cotton and is an agricultural produce as defined under S.  2 of the Bombay Agricultural Market Act, 1939. Under  S.  26  of the Act, the State  Government  has  ample powers  to  make rules for the regulation  of  business  and conditions  of trading in the market and sub-s. (1)  of  the said s. 26 confers power on the State Government to make  r. 65.

JUDGMENT: CRIMINAL  APPELLATE JURISDICTION Criminal Appeal No. 200  of 1957. Appeal  by special leave from the judgment and  order  dated the  September  11,  1956,  of the  Bombay  High  Court,  in Criminal Appeal No. 742 of 1956, arising out of the judgment and order dated December 31, 1955, of the Joint Civil  Judge

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(J.D.)  and  Judicial Magistrate, First Class,  ’Broach,  in Criminal Case No. 605 of 1953. Purshottam  Tricumdas,  J. B. Dadachanji, S. N.  Andley  and Rameshwar Nath, for the appellants. H.   J. Umrigar and R. H. Dhebar, for the respondent. 1959.   September  15.   The  Judgment  of  the  Court   was delivered by SUBBA RAO J.-This is an appeal by special leave against  the judgment  of the High Court of Judicature at Bombay  setting aside  that  of  the First  Class  Magistrate,  Broach,  and convicting the appellant for contravening the provisions  of r. 65 (1) of the Bombay Agricultural Produce Markets  Rules, 1941,  hereinafter called the Rules, and imposing on  him  a fine of Rs. 25. The appellant was a trader carrying on business in cotton at Broach.   On  February  7 and 9,  1953,  he  purchased  full pressed  cotton bales from M/s.  Ratanji Faramji &  Sons  in two instalments of 200 bales each through a licensed broker, Dahyabhai  Acharatlal.   He also purchased  100  bales  from Halday   Multi-Purpose  Co-operative  Society.   All   these purchases  were  made by the appellant as a  trader  in  the market area of Broach without the requisite licence from the Market Committee.  He was charged in the Court of 97 766 the  Joint  Civil  Judge  (Junior  Division)  and   Judicial Magistrate,  First Class, Broach, for committing the  breach of  r.  65 (1) of the Rules.  The Judicial  Magistrate  held that  pressed  cotton was not cotton,  ginned  or  unginned, within  the  meaning of one of the items  mentioned  in  the schedule  to  the Bombay Agricultural  Produce  Markets  Act (hereinafter  called  "  the Act  "),  and,  therefore,  the appellant  did not commit any offence under the Act  or  the Rules  framed thereunder.  The State of Bombay  carried  the matter  by way of appeal to the High Court of Bombay, and  a Division  Bench  of  the  said  High  Court,  consisting  of Chainani and Shah, JJ., allowed the appeal and convicted the appellant for contravening the provisions of r. 65(1) of the Rules  and imposed upon him a fine of Rs. 25.   This  appeal challenges  the  correctness  of the judgment  of  the  High Court. Learned  Counsel  for  the appellant raised  before  us  the following  three  contentions:  (i) the Act  and  the  Rules framed  thereunder  did not apply to  pressed  cotton,  and, therefore,  the appellant did not contravene the  provisions of  r.  65  (1)  of the Rules; (ii) r.  65  is  ultra  vires inasmuch as its provisions are in excess of the rule  making power of the State Government; and (iii) the transactions in question were forward contracts for future delivery, and, as no  delivery  was intended or in fact  made,  the  appellant cannot  be said to have traded in cotton within  the  market area. The   answer  to  the  first  contention  turns   upon   the interpretation  of cl. (1) of sub-s. (1) of s. 2 of the  Act read along with the relevant items or items in the Schedule. The relevant provisions read: S.   2  (1): In this Act unless there is anything  repugnant in the subject or context,- (i)  "Agricaltural   Produce"   includes  all   produce   of agriculture, horticulture and animal husbandry specified  in the schedule; *                       *                      * (vi) "Market  Area " means any area declared to be a  market area under section 4. 767

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Schedule E. 1. Fibres: (i) Cotton (ginned and unginned) The.Bombay Agricultural Produce Markets Rules, 1941: Rule  65. (1): No person shall do business as a trader or  a general commission agent in agricultural produce  in     any market area except under a licence granted   by  the  market committee under this rule. *                     *                            * (7): Whoever    does   business   as   a   trader    or    a general  commission  agent in agricultural  produce  in  any market  area  without a licence granted under this  rule  or otherwise  contravenes  any of the provisions of  this  rule shall,  on conviction, be punishable with a fine  which  may extend   to  Rs.  200  and  in  the  case  of  a   continued contravention with a further fine which may extend to Rs. 50 for every day during which the contravention continues after the date of the first conviction, subject to the maximum  of Rs. 200. The  gist of ’the aforesaid provisions may be  stated  thus: Agricultural  produce  includes all produce  of  agriculture specified in the Schedule.  Cotton, ginned and unginned,  is specified  in  the Schedule as an agricultural  produce.   A trader cannot do business in the said produce in any  market area  without obtaining licence from the  Market  Committee. If he does such business without a licence, he is liable  to punishment under r. 65 of the Rules. If pressed cotton is " cotton, ginned or unginned  specified in  the  Schedule,  the appellant,  having  admittedly  done business  in  the  said  cotton  in  the  market  area,  has contravened  the provisions of r. 65, and therefore,  he  is liable to be convicted under r. 67 of the Rules. It  is contended that ginned cotton which has  been  pressed into  bales  is not cotton within the meaning  of  the  Act. What  is " pressed cotton " in bales ? It involves a  simple process  described as pressing, and cotton is  pressed  into bales  only  to facilitate its transport from one  place  to another; it does not involve 768 any chemical change or even a manufacturing process.  Ginned cotton,  after  it is pressed into bales,  continues  to  be ginned cotton, and it is sold and purchased only as  cotton, though  in  bales.   We  find it  difficult  to  accept  the argument that pressed cotton is a different commodity.   Nor do  we  find any relevancy in the argument  that  stockists, industrialists  and exporters deal with pressed  cotton  and not loose cotton, because the said fact does not in any  way change the essential character of the agricultural  produce. If  a  trader  carries on business in  that  commodity,  the consideration  whether  the  trader  or  the  buyer  is   an agriculturist or a non-agriculturist is not relevant to  the enquiry. Items  11  to XI of the Schedule  specify  cereals,  pulses, oilseeds,  narcotics, sugarcane, fruits, vegetables,  animal husbandry products, condiments, spices and others, and grass and  fodder.  A perusal of the items indicates that most  of them  would  be sold in containers like  baskets,  packages, tins etc.  It cannot be argued that when the pulses,  fruits or  vegetables are packed in a basket, the basket  with  its contents  becomes a different commodity from that  contained in  it.   So  too, when tobacco is pressed  and  packed,  it cannot  be  suggested that packed tobacco  has  changed  its character.  So also in the case of other products  mentioned in the Schedule.  We do not, therefore, see any principle or reason  for  treating cotton in a different way  from  other

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agricultural products. It  is  said that the primary object of the Act is  to  help agriculturists,  that agriculturists do not ordinarily  deal or  do business in bales of cotton and that the  legislature could  not,  therefore,  have  intended  to  make  the   Act applicable  to pressed cotton.  It cannot be  disputed  that one  of the objects of the Act is to protect the  producers. That  object  would  certainly be defeated,  if  within  the market area a trader, whether he is an agriculturist or not, can  do business of buying and selling cotton  pressed  into bales, for by that simple process he would be free from  the restrictions  imposed  to protect the  agriculturists.   The object  of such legislation is to protect the  producers  of agricultural crops from being exploited by the middlemen and profiteers 769 and  to  enable  them  to secure a  fair  return  for  their produce.  This object would certainly be defeated if we were to  accept  the contention of the learned  Counsel  for  the appellant. Shortly  stated  the  position is this:  Cotton,  ginned  or unginned, continues to be cotton till it loses its  identity by  some  chemical or industrial process.  So  long  as  the identity is not lost, the fact that it is pressed into bales or  packed  otherwise does not make it any the  less  cotton specified  in  the Schedule to the Act.  In this  view,  the pressed  cotton  in  bales is  an  agricultural  produce  as defined  in  s.  2(1)(i) of the  Act,  and,  therefore,  the appellant  in  doing business in the  said  produce  without licence has contravened r. 65 of the Rules. The second contention is that r. 65 is in excess of the rule making  power  of the State Government.   This  argument  is elaborated  by the learned Counsel in the following  manner: Purporting to exercise the powers conferred by s. 26 of  the Act,  the  Government of Bombay made r. 65  prohibiting  any person  from doing business as a trader, or as a  commission agent, in any agricultural produce in any market area except under  a licence granted by the Market Committee under  that rule.   Under s. 26(2)(e) of the Act, the  State  Government has  power only to make rules fixing the maximum fees  which may  be  levied  by  the  Market  Committee  in  respect  of agricultural  produce, bought and sold by persons holding  a licence under the Act in the market area.  Under the Act the State Government is only empowered to grant a licence to any person  to use any place in the market area for the  purpose of buying or selling of any agricultural produce; therefore, under s. 26(2) (e) of the Act, the Government can only  make a  rule prescribing the fees in respect of a licence  issued to  a  person  to use any place in the  said  area  and  not prohibiting  any other person from doing business without  a licence in that area.  So stated the argument appears to  be plausible, but a scrutiny of the relevant provisions of  the Act,  the  Rules  made by the Government  and  the  Bye-laws framed by the Market Committee shows that there is no  basis for this contention.  The relevant provisions read: 770 The Bombay Agricultural Produce Markets Act, 1939. S.26 (1): The Provincial Government may, either generally or specially  for any market area or market areas,  make  rules for the purposes of carrying out the provisions of this Act. (2).      In   particular  and  without  prejudice  to   the generality  of  the  foregoing provisions,  such  rules  may provide for or regulate *                      *                                  * (e)  the management of the market, maximum fees which may be

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levied  by the market committee in respect  of  agricultural produce  bought and sold by persons holding a licence  under the Act in the market area. S.   27  (1):  Subject to any rules made by  the  Provincial Government  under section 26 and with the previous  sanction of the Director or any other officer specially empowered  in this  behalf  by  the  Provincial  Government,  the   market committee  may  in  respect of the  market  area  under  its management make bye-laws for the regulation of the  business and the conditions of trading therein. The Bombay Agricultural Produce Markets Rules, 1941. Rule  65 (1): No person shall do business as a trader  or  a general  commission  agent in agricultural  produce  in  any market  area  except under a licence granted by  the  market committee under this rule. (2).      Any  person  desiring to hold such  licence  shall make  a  written  application for a licence  to  the  market committee and shall pay such fee as may be’ specified in the bye-laws. (3). On receipt of such application together with the proper amount  of  the fee the market committee may,  after  making such  enquiries,  as  may be considered  necessary  for  the efficient  conduct  of  the market, grant  him  the  licence applied  for.   On the grant of such licence  the  applicant shall  execute  an  agreement in such  form  as  the  market committee  may  determine, agreeing to  conform  with  these rules  and the bye-laws and such other conditions as may  be laid down by the market committee for holding the licence. 771 (4).      Notwithstanding  anything  -contained  in  subrule (3),  the market committee may refuse to grant a licence  to any  person,  who, in its opinion, is not solvent  or  whose operations  in  the market area are not  likely  to  further efficient  working  of the market under the control  of  the market committee. (5).      The  licence shall be granted for a period of  one year,   after  which  it  may  be  renewed  on   a   written application, and after such enquiries as are referred to  in sub-section  (3)  as  may be considered  necessary,  and  on payment of such fees as may be specified in the bye-laws. (6).      The  names  of  all  such  traders  and   general, commission  agents  shall  be entered in a  register  to  be maintained for the purpose. (7).      Whoever  does  business as a trader or  a  general commission agent in agricultural produce in any market  area without  a  licence  granted under this  rule  or  otherwise contravenes  any  of the provisions of this rule  shall,  on conviction, be punishable with fine which may extend to  Rs. 200  and  in the case of a continued  contravention  with  a further fine which may extend to Rs. 50 for every day during which  the  contravention continues after the  date  of  the first conviction, subject to the maximum of Rs. 200. Bye-laws  of  the  Agricultural  Produce  Market  Committee, Broach. Bye-law  33: (1).  All traders, general  commission  agents, brokers, weighmen, measurers, and surveyors operating in the market area shall pay full fees for each market year or  any part  thereof  as per Schedule given in Appendix No.  2  for obtaining  licences,  required to be taken  by  them,  under Rules 65 and 67. The  said provisions may be summarized  thus: Section 27  of the Act empowers the Market Committee, subject to any  rules made  by  the  State Government under s.  26  and  with  the previous  sanction  of  the Director, to  make  bye-laws  in respect of a market area for the regulation of the  business

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and conditions of trading therein.  Section 26(1) of the Act enables the State Government to make rules for the  purposes of carrying out the provisions of the Act, In exercise of 772 that  power conferred under s. 26(1), the  State  Government made  r.  65 prohibiting any trader from doing  business  in agricultural  produce except under a licence granted by  the Market Committee.  In exercise of powers conferred under  s. 27  on the Market Committee, it made bye-law 33  prescribing the  fee payable in respect of a licence under r. 65 of  the Rules. The question is whether under s. 26(1) the State  Government is  empowered  to  make r. 65 prescribing the  taking  of  a licence as a condition for doing business in a market  area. It can do so for the purposes of carrying out the provisions of  the Act.  Section 27, which is a provision of  the  Act, enables  the  Market  Committee to  make  bye-laws  for  the regulation of the business and the conditions of trading  in the  market  area.   To  enable  the  Market  Committee   to discharge  its  functions  under  s.  27  of  the  Act  more effectively, the Government made a rule prohibiting a trader from  doing business in a market area without  licence,  and the Market Committee prescribed the fees payable in  respect of  the  licence.  The rule was certainly one made  for  the purpose  of  facilitating the Market Committee  to  function effectively  under s. 27 of the Act.  That  the  legislature conferred  such  a  power on the State  Government  is  also supported  by the provisions of s. 27 of the Act.  Under  s. 27(1),  the  bye-laws made by the Market Committee  for  the regulation  of  business and conditions of  trading  in  the market  area  are  subject to the rules made  by  the  State Government under s. 26.  This indicates that under s. 26  of the  Act, the State Government has also power to make  rules for the regulation of business and conditions of trading  in the market area, and that power can be spelled out from  the provisions  of  s.  26(1) of the Act,  Therefore,  s.  26(1) confers  ample power on the State Government to make r.  65. In  this view, it is not necessary to invoke the  provisions of s. 26(2)(e) to sustain the power of the State  Government to make r. 65. The  third contention though raised was not pursued in  View of  the word ,business" in r. 65(1) which  is  comprehensive enough to take in even forward contracts. In the result the appeal fails and is dismissed, 773