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PETITIONER: JAN MOHAMMAD NOOR MOHAMMAD BEGBAN

       Vs.

RESPONDENT: STATE OF GUJARAT AND ANOTHER

DATE OF JUDGMENT: 18/08/1965

BENCH: SHAH, J.C. BENCH: SHAH, J.C. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. HIDAYATULLAH, M. SIKRI, S.M.

CITATION:  1966 AIR  385            1966 SCR  (1) 505  CITATOR INFO :  D          1974 SC1489  (6)  R          1979 SC1149  (24,27)

ACT: Gujarat  Agricultural  Produce Marketing Act,  1964  (20  of 1964), ss. 5, 6, 27(2) and 30 validity of-Whether  violative of  Arts. 14, 19 and 31 of the Constitution-Rules under  the Act, validity of.

HEADNOTE: The  Bombay  Agricultural Produce Markets Act (22  of  1939) was,  enacted  by the Provincial Legislature of  Bombay  and under  the said Act the Bombay Agricultural  Produce  Market Rules, 1941 were framed.  By a notification issued under the Act, the whole area within a radius of 12 miles of Ahmedabad City  was  declared  in  respect  of  certain   agricultural produce,  a  market  area for the purposes of  the  Act.   A market  yard and a market proper were also  established  for transactions  in  specified commodities.  Under  the  Bombay Reorganisation Act 11 of 1960 which became operative as from May  1, 1960 two States-Maharashtra and Gujarat were  carved out  of the territory of the former State of Bombay and  the town of Ahmedabad was included within the State of  Gujarat, but  Bombay Act 22 of 1939 continued for the time  being  to remain  applicable to the Gujarat region by virtue of s.  87 of  Act 11 of 1960.  Subsequently the  Gujarat  Agricultural Produce Markets Act 20 of 1964 was passed but under s. 64 of the  Act the Bombay Agricultural Produce Market Rules,  1941 remained  in  operation.  The petitioner  filed  a  petition under Art. 32 of the Constitution seeking a declaration that Gujarat   Act   20  of  1964  was  illegal,   ultra   vires, unconstitutional and violative of Arts. 14, 19 and 31 of the Constitution  of India and therefore null and void and  that the  rules framed thereunder (being the Bombay  Agricultural Produce   Market  Rules,  1941)  were  also   ultra   vires, unconstitutional,  illegal, null and void.  He prayed for  a writ  of  mandamus  forbidding the  State  of  Gujarat  from enforcing  any of the provisions of the Act and  the  Rules. The following grounds were urged in support of the  petition

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:  (1) The powers conferred by ss. 5 and 6 of the  Act  were unfettered,  wide  and  unguided and  on  that  account  the fundamental  rights  of the petitioner were  infringed.  (2) Retail  sales which were not regulated by the provisions  of the  earlier Act were sought to be regulated by Gujarat  Act 20  of 1964. (3) Retail trade was completely  prohibited  by the  Act  and the prohibition amounted  to  an  unreasonable restriction  upon the fundamental rights of the  petitioner. (4) Section 30 of the Act gave wide powers to evict a person carrying on business without a licence from the market area. (5)  Section 27(2) not having provided the  maximum  licence fee chargeable was illegal. (6) The market committee had  no power  to  function as it was not constituted  according  to law.  The period of office of the old committee which was to function  for  three years under Bombay Act 22 of  1939  had expired in 1961 but the committee continued to function  and no  fresh  elections were held. (7) The  rules  pursuant  to which  the market committee was constituted  and  functioned not  having been placed before the Legislature in the  first meeting  after  the rules were promulgated under Act  22  of 1939  as required by that Act, the rules  were  unauthorised and   so  there  was  complete  absence  of  machinery   for enforcement  of the Act.  Despite the suspension of Art.  19 by virtue 506 of  the  operation of Art. 358 of the  Constitution  in  the state  of  Emergency declared by the President  in  December 1962,  the  Court  decided the petition  on  merits  because breach of fundamental rights under Arts. 14 and 31 was  also alleged. HELD:     (i) The object of the Act being to ameliorate  the condition  of agriculturists and to do away with  middlemen, who,  it  is a matter of common knowledge,  make  large  and unconscionable  profits out of the transactions carried  out through  them,  declaration  under s.  5,  of  intention  to regulate trade in agricultural produce in a specified  area, after  hearing the objections and suggestions of  interested parties,   cannot  be  regarded  as  imposing   unreasonable restrictions  on the right to carry on trade.  The  preamble to  the Act and the scheme of the Act clearly indicate  that the  powers conferred upon the Director are to be  exercised for  the  purpose  of  regulating  buying  and  selling   of agricultural  produce  and  for that  purpose  to  establish markets for sale and purchase of agricultural produce.   The powers  under s. 6 are also to be exercised after giving  an opportunity to persons interested to raise objections or  to make suggestions as to the proposed introduction of  control on sale and purchase of agricultural produce.  The authority conferred upon the Director is not wide and arbitrary merely because no principles are indicated for guidance. [515 D-H] (ii) If  regulation of trade in agricultural produce by  the declaration  of market area and imposition  of  restrictions may  be  regarded  as  reasonable  when  operating  on   the wholesale  trade  it  would be difficult to  hold  that  the identical restriction when operating on retail trade may  be per se unreasonable.. [516 F] Mohan  Hussain Gulam Mohammud and Anr. v, State of  Bihar  & Anr., [1962] 2 S.C.R. 659, referred to. (iii)     Apart  from the generality of the provisions  made in the Gujarat Act and the omission of retail sales from the scheme of exclusion, the Act and the rules clearly  indicate that  retail  sales are not sought to be  regulated  by  the provisions  of the Act.  It was rightly conceded  on  behalf ,of the State that the Act read together with the rules does not   purport   to  place  any   restriction   upon   retail

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transactions in agricultural produce.  Therefore no  licence is  required under the Act for carrying on retail  trade  in Agricultural  produce  in the market area, and there  is  no prohibition  against  the  carrying on  of  retail  sale  in agricultural produce in the market area. [518 C-D] (iv) Section 30 of the Act authorises the eviction from  the market  of  any person found to be operating in  the  market without  holding a valid licence.  The power of eviction  by the  market  committee  is  limited  to  eviction  from  the precincts  of  the  market.   The  provision  is  apparently enacted  for the purpose of imposing an  additional  penalty against infraction of the prohibition contained in s.  6(2). ’Operating in the market area’ can in the context only  mean using a place in the market area for the purchase or sale of agricultural produce specified in the notification under  s. 6(2) otherwise than in accordance with the provisions of the Act.   The  apprehension  of the petitioner  that  a  person infringing  the  regulatory  provisions of the  Act  may  be compelled  to leave his hearth and home at the  instance  of the market authorities, was totally unfounded. [518 H-519 C] (v)  In  terms  s. 27(2) provides that the licences  may  be granted  in such forms for such periods, on such  terms  and conditions   and  restrictions  as  may  be  prescribed   or determined by the bye-laws and on payment of fees determined by  the  market  committee  within such  maxima  as  may  be prescribed,.   This clearly contemplated fixation of  maxima by the rules                             507 made under s. 59. Therefore the suggestion that s. 27(2) not having  provided  the  maximum licence  fee  chargeable  was illegal, could not be accepted. (519 D] (vi) The  life of the market committee elected in  1958  was validly  extended from time to time by legal  enactments  or steps  taken thereunder.  Finally by virtue of s. 64 of  Act 20  of  1964  the market  committee  established  under  the earlier Act was deemed to be a market committee  established under  the  new  Act and members  of  the  market  committee holding  office immediately before the commencement  of  the new  Act  continued to hold office under the new  Act.   The contention  that  there was no  legally  constituted  market committee had therefore no force. [521 D] (vii)     Section  26(5) of Bombay Act 22 of 1959  does  not prescribe  that  the rules acquired validity only  from  the date  on  which  they  were  placed  before  the  Houses  of Legislature.   The  rules are valid from the date  on  which they  are made under s. 26(1).  Failure to place  the  rules before  the  Houses  of  Legislature  does  not  affect  the validity  of the rules.  Having regard to the  purposes  for which  it is made and in the context in Which it occurs,  s. 26(5)  cannot be regarded as mandatory.  The rules had  been in  operation since the year 1941 and by virtue of s. 64  of the  Gujarat  Act  20 of 1964 they continued  to  remain  in operation. [522 B-D]

JUDGMENT: ORIGINAL JURISDICTION : Writ Petition No.11 of 1964. Petition under Art. 32 of the Constitution of India for  the enforcement of fundamental rights. Ahmedmiyen  Miyasaheb  Peerzada,  J. B.  Dadachanji,  O.  C. Mathur    and Ravinder Narain, for the petitioner. S.   V. Gupte, Solicitor General, N. S. Bindra and B. R.  G. K. Achar, for the respondents The Judgment of the Court was delivered by

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Shah,  J. By this petition the petitioner seeks to  restrain the State of Gujarat from enforcing the Gujarat Agricultural Produce  Markets  Act 20 of 1964, on the plea  that  certain provisions  of  the Act infringe  the  fundamental  freedoms guaranteed  to petitioner under Arts. 14, 19 and 31  of  the Constitution. The Bombay Agricultural Produce Markets Act 22 of 1939,  was enacted  by the Provincial Legislature of Bombay  and  rules were framed thereunder.  By a notification issued under  the Act, he whole area within a radius of 12 miles of  Ahmedabad City  was  declared  in  respect  of  certain   agricultural produce,  a market area for the purposes of that Act  and  a market  yard  and  a  market  proper  were  established  for transactions in specified commodities.  A, market  committee was  established  under  s. 5 of the Act  for  he  Ahmedabad market  area.   In  1959 a locality known  as  the  ’Kalupur market"  was declared a sub-market yard for the purposes  of the  Bombay  Act, and traders carrying on  business  in  the Kalupur market yard were required by the market committee to 508 take out licences authorising them to carry on their  trade. Certain  traders in agricultural produce faild petition  No. 129 of 1959 in this Court under Art. 32 of the  Constitution challenging diverse provisions of the Act and the rules  and bye-laws framed thereunder on the plea that those provisions placed unreasonable restrictions on their right to carry  on trade  in agricultural produce and thereby  infringed  their fundamental  right guaranteed under Art. 19 (1) (g)  of  the Constitution.   This  Court by judgment dated  May  2,  1961 (Mohammad Hussain Gulam Mohammad and another v. The State of Bombay and Anr) (1) upheld the validity of s. 4 (authorising declaration of market areas), s. 4A (authorising declaration of  principal and sub-market yards), S. 5  (authorising  the constitution  of market committees), s. 5A  (specifying  the duties  of market committee), s. 5A (authorising the  market committee  to  issue licences in accordance  with  rules  to traders,  commission agents, brokers,  weighmen,  measurers, surveyors, were housemen and other persons to operate in the market)  of  the Bombay Act and further held  that  the  fee authorised  to  be levied by s. II was a  levy  charged  for services rendered by the market committee in connection with the  enforcement  of the various provisions of the  Act  and therefore s. II was valid, that under s. 29 the power  given to the State Government to add to, or to amend, or to cancel any  of the items of the agricultural product  specified  in the  Schedule  in  accordance  with  the  local   condition, prevailing in different parts of the State was intra  vires, and  that  r.  64  being a mere  method  for  enforcing  the regulatory  provision with respect to market yards and  sub- market yards was also valid.  But the Court held that r.  53 insofar  as it authorised the market committee. to  fix  the rates of fee to be collected on agricultural produce  bought and sold in the market area, and rr. 65 66 and 67 insofar as they authorised the market committee to grant a licence  for doing  business  in  any  market  were  beyond  the   powers conferred  on the market committee by s. 5A and  were  ultra vires. When  the petition in Mohammad Hussain’s case(1)  was  filed the  town  of  Ahmedabad was part of the  State  of  Bombay. Under the Bombay Reorganisation Act 11 of 1960 which  became operative  as  from May 1, 1960 two  States-Maharashtra  and Gujarat were carved out of the territory of the former State of Bombay and the town of Ahmedabad was included within  the State of ’Gujarat, but Bombay Act 22 of 1939 continued until it  was altered to remain applicable by s. 87 of Act  11  of

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1960 to the (1)  [1962] 2 S. C. R. 659 509 Gujarat  region.   After  the  decision  of  this  Court  in Mohammad  Hussain’s case(1) the Governor of Gujarat  amended in  certain  matters  the Act, the rules  and  the  bye-laws framed thereunder in their application to the Gujarat  State by  Ordinance  I  of 1961.  The Ordinance  was  intended  to rectify  the defects pointed out by this Court  in  Mohammad Hussain’s  case(2).   Four petitions were then  filed  under Art.   32   of  the  Constitution   challenging   the   con- stitutionality of the Amending Ordinance and especially  the notification  which amended r. 53 (specifying the maxima  of fees   to   be  charged)  as  offending  Art.  14   of   the Constitution.  It was also contended that s. 5A (authorising the  grant  of  licences in accordance  with  the  rules  to traders,  commission agents, brokers,  weighmen,  measurers, surveyors, warehousemen and other persons to operate in  the market  area)  which was amended was  only  prospective  and therefore  the infirmity noticed in the earlier judgment  of this  Court  still remained, and that the new  section  29-B which  rectified the defect in the establishment of  markets under  the Act was insufficient, to validate what  had  been done  before  the Ordinance came into force.   It  was  also contended that the bye-law under which the market  committee issued  licences to dealers was discriminatory  and  imposed unreasonable restrictions on the fundamental right to  carry on  trade and business and was therefore unlawful  and  that the  market  committee was not entitled  to  control  retail trade  as the same was not within the provisions of the  Act and in consequence the market committee was using r. 64 in a manner in which it was not intended to be used and therefore that  rule though it was upheld in the earlier judgment  had become ultra vires.  This Court rejected all the contentions raised by the petitioners. Thereafter  Writ Petitions Nos. 71 of 1964 and 112  of  1964 were filed by three traders carrying, on business at Baroda. The  petitioners  claimed a declaration  that  the  bye-laws framed  by  the  market committee were  void  in  that  they infringed  the fundamental rights of the  petitioners  under Arts.  14 and 19 (1) (g) and also Arts. 301 and 304  of  the Constitution, and that in any event the bye-laws were  ultra vires  the  Act and the Rules.  Those petitions  were  heard before  this Court on November 9, 1964 and  after  arguments were  fully  heard, the petitioners -applied  for  leave  to withdraw the petitions. In  the  meantime on September 25, 1964 the  petitioner  Jan Mohammad  Noor  Mohammad Bagban filed this  petition  for  a declaration  that the Gujarat Agricultural  Produce  Markets Act (1)  [1962] 2 S. C. R. 659 510 20  of 1964 was "illegal, ultra vires, unconstitutional  and violative  of  Arts. 14, 19 and 31 of  the  Constitution  of India  and therefore null and void," that the  rules  framed thereunder  being  the Bombay  Agricultural  Produce  Market Rules,  1941  were  "also  ultra  vires,   unconstitutional, illegal,  null  and void," and for a writ of mandamus  or  a writ   in  the  nature  of  mandamus,  direction  or   order forbidding  the State of Gujarat from enforcing any  of  the provisions of the Act and the Rules.  Numerous grounds  were set  up  in  the petition, but counsel  for  the  petitioner restricted  his  arguments at the hearing to  the  following only:               (1)   that  the powers conferred by ss. 5 &  6

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             of the Act were unfettered, wide and  unguided               and on that account the fundamental rights  of               the petitioner were infringed;               (2)   that   retail  sales  which   were   not               regulated by the provisions of the earlier Act               were sought to be regulated by the Gujarat Act               20 of 1964;               (3)   that   retail   trade   was   completely               prohibited  by  the Act  and  the  prohibition               amounted  to an unreasonable restriction  upon               the fundamental rights of the petitioner;               (4)   that  S. 30 of the Act gave wide  powers               to evict a person carrying on business without               a licence, from the market area;               (5)   that  s. 27(2) not having  provided  the               maximum licence fee chargeable was illegal;               (6)   that  the market committee had no  power               to   function  as  it  was   not   constituted               according to law.  The period of office of the               old committee which was to function for  three               years under Bombay Act 22 of 1939 had  expired               in  1961,  but  the  committee  continued   to               function and no fresh elections were held; and               (7)   that  the  rules pursuant to  which  the               market    committee   was   constituted    and               functioned  not having been placed before  the               Legislature  in  the first meeting  after  the               rules   were  promulgated  under  the   Bombay               Agricultural  Produce  Markets Act,  1939,  as               required   by   that  Act,  the   rules   were               unauthorised and there was com-               511               plete absence of machinery for enforcement  of               the Act. Counsel  submitted that the petitioners  fundamental  rights under  Arts. 14, 19 & 31 of the Constitution were  infringed by  enactment of the Act and the promulgation of  the  Rules and  byelaws and the exercise of the authority by the  State of  Gujarat and the market committee pursuant  thereto.   It may  at once be observed that the President of India  having declared in the month of December 1962 a state of  emergency in  exercise of the powers reserved under the  Constitution, the right to enforce the fundamental rights guaranteed under Art.  19 of the Constitution remains suspended by virtue  of Art.  358 for the duration of the period of  the  emergency. On  this ground alone, a large majority of  the  contentions raised by counsel for the petitioner may fail.  But we  have heard  full arguments on the petition and as the  petitioner has attempted to urge that by the Act and the Rules and  the Bye-laws  the  guaranteed freedoms under Arts. 14 &  31  are also  infringed, we propose to decide this petition  on  the merits,  apart  from  the preliminary objection  as  to  the suspension  of  Art.  19 which  disentitles  the  petitioner during  the subsistence of the emergency from obtaining  any relief from this Court oil the footing of the breach of  his fundamental right to carry on business. We  may  usefully  refer in the first  instance  to  certain provisions of the Act which are material for the purpose  of this petition.  The Act is enacted to consolidate and  amend the law relating to the regulation of buying and selling  of agricultural produce     and  the establishment  of  markets for agricultural produce in   the State of Gujarat.  Section 2 defines various expressions in   the  Act.   "Agricultural produce"   is  defined  is  meaning  all  produce,   whether processed  or not, of agriculture, horticulture  and  animal

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husbandry, specified in the Schedule, [el. (i)] :  "licEnce" means a licence granted under s. 6, or, as the case may be a general or special licence granted tinder S. 27, [cl.  (ix)] : "market" mean,, a market declared or deemed to be declared under  the Act, [cl. (xii) ] : "market area" means any  area declared or deemed to be declared to be a market area  under the  Act, [cl. (xiii)] : "market committee" means  a  market committee established or deemed to be established under  the Act,  [cl. (xiv)] : "market proper" means any area  declared or  deemed  to be declared to be a market proper  under  the Act,   [(cl.  xv)]  :  "principal  market  yard"  means   an enclosure,  building  or locality declared or deemed  to  be declared to be a principal market yard under the Act, 512 [cl.   (xvii)]  :  "retail  sale"  means  a  sale   of   any agricultural produce not exceeding such quantity as a market committee  may by bye-laws determine to be a retail sale  in respect  of such agricultural produce, [cl. (xviii)]  :  and "trader"  means any person, who carries on the  business  of buying  or selling of agricultural produce or of  processing agricultural  produce  for sale [cl.  (xxiii)].   Section  5 authorises the Director (appointed by the State  Government) to declare his intention of regulating the purchase and sale of  such  agricultural produce and in such area, as  may  be specified  therein.   Section 6 authorises the  Director  to declare  an  area specified in the  notification  as  market area.   It  provides  that after the expiry  of  the  period specified  in the notification issued under s. 5  and  after considering  the objections and suggestions received  before its expiry and holding such inquiry as may be necessary, the Director  may,  by  notification  in  the  Official  Gazette declare  the  area  specified in  the  notification  or  any portion thereof to be a market area for the purposes of  the Act  in respect of all or any ,of the kinds of  agricultural produce  specified in the said notification.  By sub-s.  (2) of  S.  6  it  is  provided  that  notwithstanding  anything contained  in any law for the time being in force, from  the date on which any area is declared to be a market area under sub-s. (1), no place in the said area shall be used for  the purchase  or sale of any agricultural produce  specified  in the notification except in accordance with the provisions of the Act.  By sub-s. (3 it is provided that nothing in sub-s. (2)  shall  apply  to  the purchase  or  sale  of  any  such agricultural produce, if its producer is himself the  seller and   the  purchaser  purchases  it  for  his  own   private consumption.  Section 7 provides that for each market  area, there  shall  be  a market which shall  consist  of-(i)  one principal  market yard, (ii) sub-market yards, if  any,  and (iii)  all markets proper notified under sub-ss. (2) &  (3); by  sub-s.  (2) the Director is authorised  to  declare  any enclosure,  building or locality in any market area to be  a principal market yard and any other enclose re, building  or locality to be a sub-market yard, and a specified area as  a market proper.  Section 8 prohibits operations in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act.   Section 9  deals with the establishment and constitution  of  market committee or committees.  Incorporation. and constitution of market committees and their powers and duties are dealt with by Ch.  IV of the Act which consists of ss. 10 to 31.  By S. 26 it is provided that it shall be the duty of every  market committee  to  maintain and manage the market, to  take  all possible  steps  to  prevent  adulteration  and  to  promote grading and standar- 513

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disation  of the agricultural produce as may be  prescribed, to provide such facilities in the market as the Director may from  time to time direct and to enforce in the market  area the  provisions  of  the Act, the rules,  bye-laws  and  the conditions  of licences granted under the Act in  connection with the purchase and sale of the agricultural produce  with which  it is concerned.  It shall also be the duty of  every market  committee to collect and maintain  such  information relating to market intelligence as may be prescribed and  to supply the same to Government whenever so required.  Section 27   by   the  first  sub-section  provides  that   on   the establishment of a market, the market committee may, subject to  rules  made  in that behalf, grant or  renew  a  general licence or a special licence for the purpose of any specific transaction or transactions to a trader, general  commission agent,  broker,  weighman,  surveyor,  warehouseman  or  any person  to  operate in the market area or part  thereof,  or after  recording its reasons therefore, refuse to  grant  or renew  any such licence.  By sub-s. (2) it is provided  that licences may be -ranted under sub-s. (1) in such forms,  for such periods, on such terms and conditions and  restrictions as  may be prescribed or determined by the bye-laws  and  on payment  of fees determined by the market  committee  within such  maxima as may be prescribed.  By sub-s. (3)  power  is conferred  upon the market committee to suspend or cancel  a licence.  Section 28 authorises the market committee to levy from time to time prescribed fee and to collect the same  on the agricultural produce bought or sold in the market  area. Chapter  V  deals with the Market Committee Fund  and  State Agricultural Produce Market Fund.  Chapter VI prohibits  the collection  of  trade  allowances,  other  than   allowances prescribed by rules or byelaws made under the Act.   Chapter VII  deals  with  offences,  penalties,  investigation   and procedure  for  the trial of offences.  Chapter  VIII  deals with the control by the Director and the State Government in the  matter of administration of the Act and Ch.   IX  deals with  miscellaneous  matters, including the power  to  frame rules  and  bye-laws.   The Act was, as is  clear  from  its preamble  and this review of its provisions, enacted with  a view  to provide satisfactory conditions for the growers  of agricultural  produce  and to sell their  produce  on  equal terms and at reasonable prices.  The ordinary cultivator  in our  country suffers from many handicaps : he  is  generally illiterate,  and often ignorant of the prevailing prices  in the  market  of  agricultural  produce.   Establishment   of regulated markets is a well-known expedient for ameliorating the  condition of the agricultural producers by  eliminating the  middlemen and bringing the consumers in direct  contact with the 514 producers   and   thereby  securing  an  ordered   plan   of agricultural development.  The Legislature has, by the  Act, attempted, with this object in view, to set up machinery for declaring certain areas as markets and for setting up market yards   in  which  the  business  of  selling   and   buying agricultural  produce may be carried on.  The  Act  provides for  the  constitution of market  committees  authorised  to maintain  and  manage the markets and to  effectuate  super- vision,   prevent  adulteration  and  promote  grading   and standardisation  of the agricultural produce and to  enforce in  the market area -the provisions of the Act and the  bye- laws.  For that purpose the market committees are authorised to grant licences and levy fees within the maxima as may  be prescribed by the rules framed under the Act.  The scheme of the  Act is substantially the same as under the, Bombay  Act

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22 of 1939 which by S. 87 of the Bombay Reorganisation  Act, 1960  continued  to apply to the territory of  Gujarat  even after  the territory was constituted into a separate  State. Power to frame rules under S. 59 for generally carrying  out the  provisions  of  the Act is  conferred  upon  the  State Government by the Act, and until that power is exercised  by virtue  of s. 64, anything done or action  taken  (including any  appointment, order, notification, rule,  bye-law  made, licence  issued, or fee imposed) under the Bombay Act 22  of 1939  shall be deemed to have been done or taken, under  the corresponding  provisions of the Act and shall  continue  in force  until  it is superseded by anything  done  or  action taken  under  this Act.  It appears that till  the  date  on which  this petition was filed and even thereafter no  rules were framed in exercise of the powers conferred under s.  59 by  the  State Government of Gujarat, and the  rules  framed under Bombay Act 22 of 1939 continue to remain in operation. Even  the market committees which had been formed under  the Act of 1939 continue to function and bye-laws framed by them hold the field. This Court in M.C.V.S. Arunachala Nadar etc. v. The State of Madras and Ors(1) was called upon to deal with the  validity of  the Madras Commercial Crops Markets Act 20 of 1933.   In that  case  certain traders had challenged the  validity  of Madras Act 20 of 1933) on the -round that the provisions  of the  Act imposed unreasonable restrictions upon their  right to do business, and the Court on an exhaustive review of the provisions of the Act hold that the provisions which imposed liability  to  take out a licence for carrying on  trade  in "commercial  crops",  and the restrictions relating  to  the place where the business may be carried (1) [1959] 1 S.C.R. 92. 515 on were reasonable and did not infringe the right guaranteed by Art. 19(1)(g) of the Constitution.  In Mohammad Hussain’s case(1) this Court held following the judgment in Arunachala Nadar’s case (2 ) Nadar’s that the impugned provisions  viz. ss. 4, 4A, 5, 5A and 5AA of the Bombay Agricultural  Produce Markets  Act 22 of 1939 were not unconstitutional.   It  was pointed  out by this Court that the provisions  impugned  in that  case were substantially the same as were contained  in Madras Act 20 of 1933 and therefore the restrictions imposed by  the  impugned  provisions  could  not  be  regarded   as unreasonable. Section  5  of the Gujarat Act authorises  the  Director  to declare  his  intention  to regulate purchase  and  sale  of agricultural  produce  in a specified  area  after  inviting objections   or  suggestions  from  the  local   authorities functioning in the area, and from other persons.  By s. 6 of the   Director   after  considering   the   objections   aid suggestions  received  within the period  specified  in  the notification  is  authorised  to declare the  area  or  part thereof a market area for the purposes of the Act in respect of  all  or  any  of  kinds  of  produce  specified  in  the notification.  The object of the Act being to ameliorate the condition  of  agriculturists  and  to  do  away  with   the middlemen,  who,  it is a matter of common  knowledge,  make large  and  unconscionable profits out of  the  transactions carried out through them, declaration of intention to  regu- late  trade  in agricultural produce in  a  specified  area, after  hearing the objections and suggestions of  interested parties,   cannot  be  regarded  as  imposing   unreasonable restrictions on the right to carry on trade. The argument that the authority conferred upon the  Director is  wide and arbitrary, because no principles are  indicated

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for guidance has no force.  The Director is appointed by the State  Government to exercise such powers and  perform  such functions  and duties as are conferred or imposed on him  by or  under  the Act, and the exercise of the powers  and  the performance  of the duties is for the purpose of  regulating the  purchase and sale of agricultural produce  and  thereby doing  away with malpractice in the trade.  The preamble  to the Act and the scheme of the Act clearly indicate that  the powers  conferred upon the Director are to be exercised  for the purpose of regulating buying and selling of agricultural produce  and for that purpose to establish markets for  sale and purchase of agricultural produce.  The powers under s. 6 are  to be exercised after giving an opportunity to  persons interested  to raise object ions or to make  suggestions  to the pro- (1) [1962] 2 S.C.R. 659 (2) [1959] Supp.  1 S.C.R. 92 516 posed  introduction  of  control on  sale  and  purchase  of agricultural  produce.  It is only after the objections  and suggestions  are received and considered by the Director  in the  light of the object and purpose of the Act, and  he  is satisfied that it is in the interest of the producer and the general public that there should be regulation of the  trade in  agricultural produce in the specified area that  he  may proceed to declare the market area. It  was urged on behalf of the petitioner that  in  Mohammad Hussain’s  case(1)  this Court had upheld  the  validity  of provisions in the Bombay Act 22 of 1939 analogous to ss. 5 & 6  of the Gujarat Act only on the ground that by the  Bombay Act retail trade was not intended to be controlled,  whereas under  the  Gujarat Act authority is given  to  control  the retail trade also, and on that account the provisions of ss. 5 & 6 would be regarded as infringing the fundamental  right to carry on trade and business.  The question whether by the provisions  of the Act and the rules framed  thereunder  the Legislature has attempted to impose restrictions upon retail trade  in agricultural produce will be presently  considered when  we  deal  with the second and  the  third  contentions advanced by the petitioner.  But assuming that such a  power is  conferred,  we  fail to appreciate how  solely  on  that account  it  can  be said that the  provisions  of  the  Act infringe  Art.  19(1)(g)  of  the  Constitution  or  may  be regarded  as conferring an arbitrary authority.   Reasonable restrictions  on the right of a citizen to carry  on  trade- retail  as well as wholesale-may be placed  by  legislation. The  test  of the validity of the restrictions lies  in  the nature  of the restrictions and not in the nature of  trade. If  regulation  of  trade in  agricultural  produce  by  the declaration  of market area and imposition  of  restrictions may  be  regarded  as  reasonable  When  operating  on   the wholesale  trade,  it would be difficult to  hold  that  the identical restrictions when operating on retail trade may be deemed unreasonable.  We do not think that the  observations made by this Court in Mohammad Hussain’s case(1) justify the argument urged by the petitioner.  Challenge to the validity of ss. 5 & 6 must therefore fail. It  was  urged by counsel for the  petitioner  that  whereas retail  sales  were not regulated by the provisions  of  the Bombay  Act  22  of  1939, those sales  were  sought  to  be regulated  by  the  Gujarat  Act, and as  a  result  of  the provisions  enacted in that Act retail trade was  completely prohibited.   It was urged that there was no  provision  for licensing retail trade in agricultural produce, and in (1)  [1962] 2 S.C.R. 659

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517 view   of  the  prohibition  contained  in  s.  6   (2)   an unreasonable  restriction was placed upon the right  of  the petitioner to carry on retail trade in agricultural produce. Section 6 (2) expressly provides that no place in any market area  shall  be  used  for  the  purchase  or  sale  of  any agricultural produce specified in the notification except in accordance with the provisions of the Act, and by sub-s. (3) it  is provided that nothing in sub-s. (2) shall  apply  to, the  purchase or sale of any such agricultural  produce,  if its  producer  is  himself  its  seller  and  the  purchaser purchases it for his own private consumption.  It may appear at   first  sight  that  subject  to  the   reservation   of transactions  covered by sub-s. (3), all trade  in  agricul- tural  produce  in the market area is sought to  be  brought within  the  r  regulatory  provisions  of  the  Act.    The exception clause in s. 6(3) is somewhat more restricted than the  exception  clause in s. 4(2A) of the Bombay Act  22  of 1939.   By  s. 4(1) of the Bombay Act the  Commissioner  was authorised to constitute a market area and by sub-s. (2)  it was  provided that no place in such area shall,  subject  to the provisions of s. 5A, be used for the purchase or sale of any  agricultural  produce  specified  in  the  notification issued  thereunder.  Sub-section (2A) of s. 4 provided  that nothing in subs. (2) shall apply to the purchase or sale  of such  agricultural produce, if the producer of such  produce is  himself  its seller and the purchaser is  a  person  who purchases  such produce for his own private use or  if  such agricultural  produce  is sold to such person by  way  of  a retail  sale.   There was an express provision made  in  the Bombay  Act 22 of 1939 which excluded from the operation  of sub-s.  (2)  sale of agricultural produce by way  of  retail sale.  Under the Gujarat Act no such exclusion is  expressly prescribed.    But,  apart  from  the  generality   of   the provisions  made  in  the Gujarat Act and  the  omission  of retail  sales from the scheme of exclusion, the Act and  the rules  clearly indicate that retail sales are not sought  to be  regulated  by  the provisions of the  Act.   It  may  be noticed  that  the State of Gujarat has not framed  any  new rules  the  rules  framed under the Bombay Act  22  of  1939 remain in operation by virtue of s. 64 and the rules  framed under  the  Bombay Act 22 of 1939 have been  framed  on  the footing  that  no  retail sale is  sought  to  be  regulated thereby.  Clause (4) of r. 53 excludes from the levy of  fee sellers  who  are themselves producers of  the  agricultural produce offered for sale and buyers who by such produce  for their own private and/or household use.  Rule 60 which deals with sales of agricultural produce and trading in markets by the  first  clause provides that  all  agricultural  produce brought  into  the market shall pass through  the  principal market  yard or sub-market yards and shall not,  subject  to the provisions 518 of  sub-rule  (2) be sold at any place outside  such  yards. Sub-rule (2) deals with processed agricultural produce.   By sub-rule  (3)  it  is  provided that  such  details  of  all agricultural produce resold in the market area shall also be reported  to  the market committee in  accordance  with  the provisions  of the bye-laws.  Sub-rule (4) enacts  that  the price  of agricultural produce brought into the  market  for sale  shall be settled by open auction or by open  agreement and not by secret signs and no deductions shall be made from the   agreed  price  of  the  consignment  except  for   any authorised  trade allowance.  The provisions with regard  to information  and  report to the market committee  about  the

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resale   of  the  agricultural  cultural  produce  and   the prohibition  of sales otherwise than by open auction  or  by open  agreement  clearly indicate that r. 60 does  not  deal with retail sales.  The learned Solicitor-General  appearing on behalf of the State of Gujarat has conceded, and we think that  the  concession  is rightly made, that  the  Act  read together  with  the  rules does not  purport  to  place  any restriction   upon  retail  transactions   in   agricultural produce.  Therefore no licence is required under the Act for carrying  on  retail trade in agricultural  produce  in  the market  area,  and  there  is  no  prohibition  against  the carrying  on of retail sale in agricultural produce  in  the market area. In  this connection bye-law 35 (1) (a) of  the  Agricultural Produce  Market Committee, Ahmedabad also indicates that  no retail  sales  are intended to be regulated.   That  bye-law states  that there will be two classes of  licensed  traders viz.  "A" class traders and "R" class traders: those holding "A"  class traders’ licence shall be entitled to buy  and/or sell agricultural produce in quantities not below 10 lbs. in the  market yard : those holding "B" class traders’  licence shall be entitled to purchase agricultural produce in  quan- tities  not below 10 lbs. in the market yard and to sell  in retail  to ,consumers anywhere in the market area.  The  "B" class   trader’   licence  is  manifestly   for   purchasing agricultural produce. It  was then contended that s. 30 conferred power  upon  the market  committee of summarily evicting from the market  any person, if he is found in the market area without holding  a valid licence.  This, it was urged, made a large inroad upon the  fundamental  right guaranteed to the citizens  to  move freely throughout the territory of India, and to reside  and settle  in  any part of the territory in India.  But  s.  30 authorises the eviction from the market any person found  to be operating in the market without holding a valid  licence. The power of eviction by the market committee is limited  to eviction from the precincts of the market.  The provision is apparently enacted for the purpose of imposing an                             519 additional  penalty  against infraction of  the  prohibition contained  in s. 6 (2).  "Operating in the market area"  can in  the context only mean using a place in the  market  area for  the purchase or sale of agricultural produce  specified in  the  notification  under  s.  6(2)  otherwise  than   in accordance with the provisions of the Act.  The apprehension of  the petitioner that a person infringing  the  regulatory provisions  of the Act may be compelled to leave his  hearth and home, at the instance of the Chairman, the Vice-Chairman of the Market Committee, or members, officers, or  Secretary of  the  Market  Committee, who may be  authorised  in  that behalf,  is  wholly  unfounded.   The  power  conferred   is disciplinary in character, and its exercise is restricted to the  precincts  of the market, and only if the  offender  is found  operating in the market area without a licence.   The language  of  the  section  does not  at  all  warrant  the, submission  that a person carrying on trade in  agricultural produce without obtaining a licence may be evicted from  the market area. The  argument that s. 27 (2) does not provide fee in  excess of the maximum licence fee may not be charged by the  market committee  is also without substance.  In terms  sub-s.  (2) provides that the licences may be granted in such forms, for such periods, on such terms and conditions and  restrictions as  may be prescribed or determined by the bye-laws  and  on payment  of fees determined by the market  committee  within

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such maxima as may be prescribed.  That clearly contemplated fixation of maxima by the rules made under s. 59. It was then urged that the market committee was not lawfully constituted  because no fresh elections had been held  after the expiry of three years from September 18, 1958 for  which the  members of the committee were entitled to  hold  office under  s. 6(3) of Bombay Act 22 of 1939.  Section 64 by  the first  sub-section repeals the Bombay  Agricultural  Produce Markets  Act  22  of 1939 and  by  the  second  sub-section, notwithstanding   the   repeal,   every   market   committee established  for  any market area under any of the  Acts  so repealed shall, notwithstanding anything contained in s.  11 but subject to the other provisions of the Act, be deemed to be  a market committee established for the said market  area under  the  Act  and  the  members  thereof  holding  office immediately  before  the  commencement of  the  Act-  shall. continue to hold office for the period for which they  would have held office, had the Act not been enacted or until  the market  committee  is  duly  reconstituted  under  s.  1   1 whichever is earlier.  A market committee constituted  under the Bombay Act 22 of 1939 is therefore entitled to  function under the Gujarat Act, subject to the restrictions contained in L7Sup.165-5 520 S.   64(2)  (ii).   It  is  common  ground  that  no   fresh elections  were  held  for the election of  members  of  the market committee since, May 1958.  Under s. 6 of Bombay  Act 22  of  1939  which dealt with the  constitution  of  market committees  by sub-s. (3) it was provided that every  member of a market committee elected or nominated, when it is first constituted,  shall hold office for a term of two years  and every such member elected or nominated thereafter shall hold office for a term of three years.  In the normal course, the members  of  the committee elected in 1958 would  have  held offence for three years.  But by sub-s. (3A) it was provided that the term of office of the outgoing members of a  market committee  shall be deemed to extend to and expire with  the day  before  the date of the first general  meeting  of  the market  committee constituted in its place.  This  provision was enacted by Bombay Act 26 of 1951, presumably with a view to provide for the interrenum between the expiration of  the period  of office of the members and the constitution  of  a fresh  committee after elections.  The lawful  authority  of the members of the market committee was, notwithstanding the expiry of the period, extended by sub-s. (3A) till the  date of the first general meeting of the market committee. It may be noticed that there has been no deliberate  refusal to  hold elections.  The period of the market committee  was to  end  on  September 18, 1961 and  before  that  date  the Collector of Ahmedabad had taken steps to hold elections  to the market committee, but as a petition was pending -in this Court  challenging the vires of the Act the elections  could not be held.  This Court declared certain provisions earlier referred  to  as invalid and an Ordinance had to  be  issued modifying  or validating those provisions of the Act.   That Ordinance  was later replaced by The Bombay  and  Saurashtra Agricultural   Produce   Markets  (Gujarat   Amendment   and Validating  Provisions) Act 21 of 1961.  The  constitutional validity  of Act 22 of 1939 as amended by Gujarat Act 21  of 1961  was  again  challenged  before  this  Court  and   the elections had further to be postponed. This Court upheld the validity of the impugned provisions by judgment dated  March 15, 1962: see Mohammadbhai Khudabuux Chhipa v. The State  of Gujarat(1). Steps were again taken to hold elections, but in

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the  meanwhile  a declaration of emergency was made  by  the President,  and  Ordinance  1 1 of 1962 was  issued  by  the Governor of Gujarat in exercise of the powers conferred upon him  by the Constitution by virtue of which under S.  3  the term  of  office,  inter alia, of the member  of  the  local authority was extended for a period during (1)  [1962] Supp. 3 S. C. R. 875. 521 which  the  proclamation  of  emergency  was  in  force  and thereafter  for  a  period not exceeding  six  months.   The market  committee  constituted or deemed to  be  constituted under the Bombay Agricultural Produce Markets Act 22 of 1939 was included in the definition of the term "local authority" under the said Ordinance.  This Ordinance was substituted by The Gujarat Local Authorities (Extension of Term) Act, 1962. That  Act  was  repealed by The  Gujarat  Local  Authorities (Extension  of  Term) (Repeal) and  the  Gujarat  Panchayats (Amendment)  Act 35 of 1963, by the operation of  which  the terms of members of local authorities were to stand extended upto the end of March 1964 or such earlier date as the State Government or a person authorised by it may by  notification in  the  Official Gazette specify.  Thereafter  the  Gujarat Local Authorities (Further Extension of Term) Act 9 of  1964 was enacted.  By that Act the term was extended up to  March 1965 by s. 2 thereof. in the meanwhile the Gujarat Act 20 of 1964 being the Gujarat Agricultural Produce Markets Act  was enacted  and was brought into force and by virtue of  s.  64 thereof  the market committee established under the  earlier Acts was deemed to be a market committee established for the said  market  under the new Act and members  of  the  market committee holding office immediately before the commencement of  the new Act continued to hold office under ,he new  Act. The  contention that there is no legally constituted  market committee has therefore no force. Finally,  the validity of the rules framed under the  Bombay Act 22 of 1939 was canvassed.  By s. 26(1) of the Bombay Act the  State Government was authorized to make rules  for  the purpose  of carrying out the provisions of the Act.  It  was provided by sub-s. (5) that the rules made under s. 26 shall be  laid  before  each  of  the  Houses  of  the  Provincial Legislature at the session thereof next following and  shall be  liable  to be modified or rescinded by a  resolution  in which  both  Houses  concur  and  such  rules  shall,  after notification in the Official Gazette, be deemed to have been modified  or  rescinded accordingly.  It was  urged  by  the petitioner that the rules framed under the Bombay Act 22  of 1939 were not placed before the Legislative Assembly or  the legislative Council at the first session and therefore  they had no legal validity.  The rules under Act 22 of 1939  were framed  by the Provincial Government of Bombay in 1941.   At that   time  there  was  no  Legislature  in  session,   the Legislature  having  been  suspended  during  the  emergency arising  out  of World War II.  The session  of  the  Bombay Legislative  Assembly was convened for the first time  after 1941  on May 20, 1946 and that session was prorogued on  May 24, 1946.  The second session of the Bombay Legislative 522 Assembly was convened on July 15, 1946 and that of the  Bom- bay  Legislative Council on September 3, 1946 and the  rules were  placed  on the Assembly Table in  the  second  session before  the  Legislative Assembly on September 2,  1946  and before  the  Legislative  Council  on  September  3,   1946. Section  26(5) of Bombay Act 22 of 1939 does  not  prescribe that the rules acquired validity only from the date on which they  were  placed before the Houses  of  Legislature.   The

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rules  are valid from the date on which they are made  under S.  26(1).  It is true that the Legislature  has  prescribed that  the  rules  shall  be  placed  before  the  Houses  of Legislature,  but  failure  to place the  rules  before  the Houses  of Legislature does not affect the validity  of  the rules,  merely because they have not been placed before  the Houses of the Legislature.  Granting that the provisions  of sub-s.  (5) of s. 26 by reason of the failure to  place  the rules before the Houses of    Legislature were violated,  we are of the view that sub-s. (5) of S.   26 having regard  to the  purposes  for which it is made, and in the  context  in which it occurs, cannot be regarded as mandatory.  The rules have been in operation since the year 1941 and by virtue  of s. 64 of the Gujarat Act 20 of 1964 they continue to  remain in operation. All  the  contentions raised by counsel for  the  petitioner must  therefore  fail  and the petition  is  dismissed  with costs. Petition dismissed. 523