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PETITIONER: KEWAL KRISHAN PURI & ANR.

       Vs.

RESPONDENT: STATE OF PUNJAB & OTHERS

DATE OF JUDGMENT04/05/1979

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. CHANDRACHUD, Y.V. ((CJ) BHAGWATI, P.N. FAZALALI, SYED MURTAZA PATHAK, R.S.

CITATION:  1980 AIR 1008            1979 SCR  (3)1217  1980 SCC  (1) 416  CITATOR INFO :  E          1980 SC1037  (1,6)  C          1980 SC1124  (3,10,11,24,36)  RF         1981 SC1127  (7)  E          1981 SC1863  (25)  RF         1982 SC1012  (6)  R          1983 SC 634  (20)  R          1983 SC1246  (26,27,28,29,32,37)  R          1984 SC1870  (16)  F          1985 SC 218  (1,7,8,10,12,13,15)  R          1989 SC 100  (16)  RF         1992 SC1383  (12,13)  RF         1992 SC2084  (8)

ACT:      Punjab Agricultural  Produce Market.  Act, 1961 Ss. 23, 26 and  28 &  Punjab Agricultural Produce (General) Rules, R 29-Marketing Development  Fund & fee-Validity-Principles for satisfying the rest for a valid levy of market fees.

HEADNOTE:      Punjab Agricultural  Produce Markets  Act, 1961 Ss. 23, 26 and  28 &  Punjab Agricultural Produce (General) Rules, R 29-Marketing Development  Fund &  Marketing Committee  Fund- Utilisation of  market fees-Validity  of purposes enumerated in clauses of Ss. 26 and 28 examined      The Punjab Agricultural Produce Markets Act, 1961 which was passed  by the  composite State  of Punjab is an Act for the better  regulation of  the  purchase,sale,  storage  and processing of  agricultural produce and the establishment of markets for  agricultural produce  in the  State. Section  3 envisages  the   establishment  of  the  State  Agricultural Marketing Board  for the  entire State and it is provided in sub-sec (9)  that "The  Board shall exercise superintendence and control over. the committees" Section 6(1 ) provides for "declaration  of   notified  market   area"  and  the  State Government is  empowered to  declare the area notified under s. S or any portion thereof to be a notified market area for the purpose  of the  Act  in  respect  of  the  agricultural produce notified  under s. 5 or any part thereof. The market

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areas and market yards were declared. putting restriction on the traders  to carry on their trade under a licence granted by  the   various   Markets   Committees   established   and constituted within  the specified boundaries or areas. After the declaration  of the  notified market  area no person can establish or  continue any  place for  the  purchase,  sale, storage and  processing of  the agricultural  produce except under a licence granted in accordance with the provisions of the Act, the Rules and the Bye-laws. Section 23 empowers the committee to  levy the  fees subject to such rules as may be made  by   the  State  Government  in  this  behalf  on  the agricultural produce  bought or  sold by  licensees  in  the notified market  area at  a  certain  percentage.  Under  s. 27(1), all Moneys received by a Committee shall be paid into a fund  to be  called the  Market  Committee  Fund  and  all expenditure incurred  shall be  defrayed out  of such  fund, while under  s. 25  all receipts  of the  Board  are  to  be credited into  a fund to be called the Marketing Development Fund and  the purposes  for which  it may  be  expended  are enumerated in  s. 26  viz. better  marketing of agricultural produce on  co-operative lines, collection and dissemination of market  rates and  news. grading  and standardisation  of agricultural produce etc. Section 28 catalogues the purposes for which  the Marketing Committee Fund may be utilised viz. acquisition  of   sites  for  the  market.  maintenance  and improvement  of  the  market,  construction  and  repair  of buildings which  are necessary for the purpose of the market etc.      In the  composite State  of Punjab  and even  after the bifurcation of  the State  for about a period of three years the maximum rate of market fee which could 1218 be levied  by the various market communities under s. 23 was 50  paise   for  every  one  hundred  rupees.  the  fee  was thereafter raised from time to time.      A number of writ petitions were Filed in the High Court challenging the  power of  the Board  to incease the levy of fee. All  the writ  petitions were  heard together  and  the increase Ind  levy of fee upto Rs. 2/- by the various Market Committees in  the State  of Haryana was upheld and the writ petition of  the Haryana  dealers were dismissed while those of the Punjab dealers were allowed and the increase of u-a e brought about  by Act  13 of  1974 to the extent of Rs, 2.25 Was struck  down. [M/s.  Hanuman Dall & General Mills, Hisar v. State of Haryana & others AIR 1976 P & H 1]      In Punjab,  by amendment  Act 14  of 1975, s. 23 of the Act was  again amended  authorising the imposition of market fee at a rate not exceeding Rs. 2.20 per hundred rupee only, and this  increase in  the rates of fee was again challenged in the  High Court  and a  Full Bench  upheld the  increase. [Kewai Puri & Anr. v. State of Punjab & Ors., AIR 1977 P & H 347]. This view was challenged in the appeal to this Court.      Both in  the State  of Punjab  and the State of Haryana the rate  of market  fee was  further raised from Rs. 2/- to Rs. 3/-.  It was unsuccessfully challenged in the High Court by the  dealers  of  each  of  the  States,  who  thereafter preferred appeals  to this Court against the Judgment of the High Court and also challenged the increases in fee, in writ petitions in this Court.      In the appeals and writ petitions it was contended that the levy of the market fee realised from the buyers under s. 23 of  the Act could not be correlated I with the service to be rendered  to the payers of the fees, and therefore cannot be justified  and sustained on the well known concept of fee as pointed  out by this Court in several decisions, and that

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the items of expenditure authorised and enumerated in ss. 26 and 28 of the Act, go beyond the scope of the purpose of the utilisation of the market fees.      On the  question of  the validity  of the  fixation  of market fee  under s. 23 of the Act from time to time and the scope and the purpose of the utilisation of such fees: ^      HELD: 1.  The impost of fee and the liability to pay it is on  a particular  individual or  a class  of individuals. They are under the obligation to submit accounts, returns or the  like  to  The  authorities  concerned  in  cases  where quantification of the amount of fee depends upon the same. I hey have  to  undergo  the  botherations  and  harassmentss, sometimes justifiably  and sometimes  even unjustifiably, in the process  of discharging  their liability to pay the fee. The authorities  levying the  fee deal with them and realise the fee  from them.  By operation  of the  economic laws  in certain kinds  of imposition of fee the burden may be passed on to  different other  persons one after the other. [1229H- 1230B]      In the  instant case,  the Market  Committees  and  the Market Board  assumed to themselves the liberty of utilising and  spending   the  realisations  from  market  fees  to  a considerable extent. as if it was a tax, although in reality it was not so. [1240D]      2. Rendering  some service,  however remote the service may be, cannot strictly speaking satisfy the element of quid pro required to be established in cases 1219 of the  impost of  fee. Registration  fee, however has to be taken to  stand on  a different  footing altogether.  In the case of  such a  fee the  test of  quid pro quo is not to be satisfied with  such direct  close or proximate relationship as in the case of many other fees. By and large registration fee is charged as a regulatory measure. [1241B]      3. This  Court in  a large  number  of  cases  had  the occasion to  examine the  nature of  fee and  tax and from a conspectus  of   the  various   authorities  the  following, principles for  satisfying the  test for  a  valid  levy  of market fees  on the  agricultural produce  bought or sold by licences in a notified market area are deducible :-      (i) That  the amount  of fee realised must be earmarked for rendering  services to  the licencees  in  the  notified market area and a good and substantial portion of it must be shown to be expended for this purpose. [1243H]      (ii) That  the services  rendered to the licensees must be in relation to the transaction of purchase or sale of the agricultural produce. [1244B]      (iii) That  while rendering services in the market area for the purpose of facilitating the transactions of purchase and sale with a view to achieve the objects of the marketing legislation it  is not  necessary to confer the whole of the benefit on  The licensees  but some special benefits must be conferred on them which ‘have a direct, close and reasonable correlation between  the  licensees  and  the  transactions. [1244C]      (iv) That while conferring some special benefits on the licensees it  is permissible  to render  such service in the market which may be in the general interest of all concerned with the transaction taking place in the market. [1244D]      (v) That  spending the  amount of  market fees  for the purpose of augmenting the agricultural produce. its facility of transport  in villages.  and to  provide other facilities meant mainly or exclusively for the benefit of agriculturist is not  permissible on  the ground  that such in services in

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the long  run go  to increase  the volume of transaction, in the market  ultimately benefiting  the traders also. Such an indirect and  remote benefit to the traders is in no sense a special benefit to them. [1244E-F]      (vi) That  the element  of quid  pro  quo  may  not  be possible,  or   even  necessary,   to  be  established  with arithmetical exactitude  but even  broadly and reasonably i; must be  established by  the authorities who charge the fees that the  amount is  being spent  for rendering  services to these on whom falls the burden of the fee. [1244G]      (vii) At  least a  good and  substantial portion of the amount  collected   on  account  of  fees,  may  be  in  the neighbourhood of  two-thirds or three-fourths, must be shown with reasonable  certainty  as  being  spent  for  rendering services of the kind mentioned above. [1244 H]      The  Commissioner Hindu Religious Endowments, Madras v. Sri Lakshmindra  Thirtha Swamiar  of Sri Shirur Mutt, [1954] SCR 1005;  Matthews v. Chicorv Marketing Board, 60 CLR. 263; Attorney General  for British Columbia & Esquimalt & Nanaimo Railway Co. & Ors., (1950) Appeal Cases. 87: H. H. 1220 Sudhundra  Thirtha   Swamiar  v.   Commissioner  for   Hindu Religious &  Charitable Endowment, Mysore [1963 Suppl. 2 SCR 302; Mahant Sri Jagannath Ramanuj Das & Anr. v. The State of Orissa &  Anr., [1954] SCR 1046; Ratilal Panachand Gandhi v. The State  of Bombay  and ors.  [1954] SCR 1055; The Hingir- Rampur Coal  Co. Ltd.  & ors. v. The State of Orissa & Ors., [1961] 2  SCR 537;  Parton v.  Milk Board  (Victoria) 80 CLR 229; Corporation  of Calcutta  &  Anr.  v.  Liberty.  Cinema [1965] 2  SCR 477;  Har Shankar  & ors. etc. etc. v. The Dy. Excise &  Taxation    Commr.  & ors. [1975] 3 SCR 254; Nagar Mahapalika Varanasi v. Durga Das Bhattacharya & ors., [1968] 3 SCR 374; The Delhi Cloth & General Mills Co. Ltd. v. Chief Commissioner Delhi  & Ors.,1970]  2 SCR  348; Indian  Mica & Micanite Industries  Ltd. v  State of  Bihar &  Ors.  [1971] Suppl.  SCR   319;  Secretary   Government  of  Madras  Home Department &  Anr. v. Zenith Lamp & Electrical Ltd. [1973] 2 SCR 973;  State of Maharashtra & Ors. v. The Salvation Army, Western India  Territory,[1975] 3  SCR 475;  Govt. of Andhra Pradesh & Anr. v. Hindustan Machine Tools Ltd. [1975] Suppl. SCR 394; The Municipal Council Madurai v. R. Narayanan etc., [1976] 1  SCR 333;  The Chief Commissioner Delhi and Anr. v. The Delhi Cloth & General Mills Co. Ltd. & Anr. AIR 1978, SC 1181; P  P. Kutti Keya & Ors. v. The State of Madras & Ors., AIR 1954  Madras, 621;  MCVS Arunachala  Nadar etc.  v.  The State of  Madras &  Ors., [1959]  Suppl. 1  SCR 92;  Mohmmad Hussain Gulam & Anr. v. State of Bombay & Ors., [1962] 2 SCR 659;Lakhan Lal  & Ors.  etc. v.  The State  of Bihar & Ors., [1968] 3 SCR 534; referred to.      4. (i)  A dispute  arose  between  the  parties  as  to whether the  licence is granted for the whole of the area or for particular  places therein.  On examining  Form  in  the Rules meant  for grant  of licence  under s. 10, it is found that the  licence is  granted for  one  or  more  places  of business specified  in  col.  6  situated  in  a  particular notified market  area named at the top of the licence. There will be  no sense in specifying the place of business in the licence if  the licensee is to be permitted to establish his place of  business any where in a notified market area which is too  big and extensive for the control and supervision of a particular  Market Committee.  Market yards  are  declared under s.  7. For  each notified market area there can be one principal market  yard and  one or  more sub-market yards as may be necessary. The marginal note of sec 8 is, "No private market to  be opened  in  or  near  places  declared  to  be

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markets." [1246D-E]      (ii) There  is no special provision in this statute for an establishment  of markets  or markets  proper as  per the definition contained  in cl. (i) and (k) of s. 2 of the Act, it is  reasonable  to  assume  that  the  intention  of  the legislature is  to constitute the market yards as the market proper and  ordinarily and generally the market would be the same but may include some other places where transactions of purchase of  agricultural produce  by the  traders from  the producers has  been allowed  in order  to avoid  rush in the precincts of  the market  proper. But  one thing  is certain that the whole of the market area in no sense can be equated with market  or market  proper. Nobody  can be’  allowed  to establish a  purchasing centre  of his  own at  any place he likes  in  the  market  area  without  there  being  such  a permission or authority from The Market Committee. After all the whole  object of  the Act is the supervision and control cf the  transactions of  purchase by  the traders  from  the agriculturists in  order  to  prevent  exploitation  of  the latter by the former. [1240H-1247A] 1221      5. The  whole object  of the Act is the supervision and control of the  transactions of purchase by the traders from the agriculturists  in order  to prevent exploitation of the latter by  the former.  The supervision  and control  can be effective only  in specified  localities and  places and not throughout the extensive market area. [1247B]      6. Rule  24(1) in  both the States framed under the Act provides that  "all agricultural  produce brought  into  the market for  sale shall  be  sold  by  open  auction  in  the principal or  sub-market yard",  which indicates that market is  generally  the  principal  and  sub-markets  yards.  The benefit of  market fee, therefore, has to be correlated with the transactions  taking place at the specified place in the market area and not in the whole of the area.[1247D]      7. The  duties and  powers of  a market  committee  are enumerated in s. 13 and this indicates that the Committee is primarily concerned with the establishing of a market in the notified area  and with  providing facilities  in the market for  persons   visiting  it   and  in  connection  with  the transactions taking place there. [1247F]      8. Reading  s. 23  along with r. 29 it would be noticed that the  power of  the Committee to levy fees is subject to the Rules as may be made by the State Government. The fee is levied on ad valorem basis at a rate which cannot exceed the maximum mentioned in s. 23 by the legislature. But the power to fix  the rate  from time to time within the maximum limit has been  conferred on the Board and the Committee is merely bound to follow it. [1248G-H]      9. Section 23 in express language controls the power of the Committee  to levy  fees subject to the rules. The power given to  the Board to fix the rate of market fees from time to time  under rule  29 is not ultra vires the provisions of the Act,  as sub-sec.(a)  of s. 3 confers power on the Board to exercise superintendence and control over the committees, which power,  in the context and the scheme of the marketing law, will  take within  its ambit the power conferred on the Board under rule 29(1). [1249C]      State of Punjab & Anr. v. Hari Krishan Sharma, [1966] 2 SCR 982; distinguished      10. The  fee levied  is not on the agricultural produce in the  sense of  imposing any  kind of  tax or  duty on the agricultural produce.  Nor is it a tax on the transaction of purchase or  sale. The levy is an impost on the buyer of the agricultural  produce   in  the   market  in   relation   to

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transactions of  his purchase.  The agriculturists  are  not required to  share any portion of the burden of this fee. In case the  buyer is not a licensee then the responsibility of paying the  fees is  of the  seller who may realise the same from the  buyer. But  such a  contingency  cannot  arise  in respect of  the transactions  of sale by an agriculturist of his agricultural  produce in the market to a dealer who must be a  licensee. Probably  such an  alternative provision was meant to  be made  for outside  buyers who are not licensees when they  buy the  agricultural produce from or through the licensees.[1249D-E]      11. Every  Market Committee  is obliged  under sub-sec. (2) (a)  of s.  27 to  pay out of its funds to the Marketing Board as  contribution such percentage of its income derived from licence fee, market fee and fines levied by the 1222 courts as  specified in sub-cl. (i) and (ii). The purpose of this contribution  as mentioned  in sub-sec.(2)  (a)  is  to enable  the   Board  to   defray  expenses  of  the  office, establishment of  the Board and such other expenses incurred by it  in the  interest of  the Committees  in general.  The income of  almost all  the Market  Committees  were  several lakhs of rupees per year and, therefore, each is required to pay 30  per centum  of its  income to the Board by virtue of the amendment  brought about  by Punjab Act 4 of 1978. Under s. 25  all receipts  of the  Board are to be credited into a fund to  be called  the Marketing Development Fund. Purposes for which the Marketing Development Fund may be expended are enumerated in  s. 26  and the  purposes for which the Market Committee  Funds  may  be  expended  are  catalogued  in  s. 28[1250A-C]      12. No  serious objection  to the  items of expenditure mentioned in  clauses (xii),  (xiv), (xv)  and (xvi)  can be taken. Clause  (x) and clause (xi) cannot  form the items of expenditure of  the market  fees. The  whole of the State is divided into  market areas.  The  propaganda  in  favour  of agricultural improvement  and expenditure for production and betterment of  agricultural produce  will be  in the general interest of  agriculture in  the market area. So long as the concept of  fee remains  distinct and limited in contrast to tax such  expenditure  out  of  the  market  fee  cannot  be countenanced in law. [1252F-G]      13. The  first part  of cl.  (xiii) may be justified in the sense  of imparting  education in marketing to the staff of  the   Market  Committee.   But  imparting  education  in agriculture in  general cannot be correlated with the market fee. [1252H]      14. How  ill-conceived the second part of clause (xvii) is ?  Is it  permissible to  spend the  market fees realised from the  traders for  any purpose calculated to promote the national or  public interest  ?  Obviously  not.  No  market Committee can  be permitted  to  utilise  the  fund  for  an ulterior  purpose   howsoever   benevolent,   laudable   and charitable the  object may be. The whole concept of fee will collapse if  the amount  realised by  market fees  could  be permitted to be spent in this fashion. [1253A-B]      Technically and legally, one may not have any objection to the  expenditure of such money for the purposes mentioned in clauses (x), (xi), (xiii) and (xvii). [1253D]      15. It  is not  necessary to strike down any clauses of s. 28  as being  unconstitutional merely  on the ground that the expenditure  authorised therein goes beyond the scope of the purpose  of the  utilisation of  the  market  fees.  The authorities have  to bear  this in  mind  and  on  a  proper occasion the  matter will have to be dealt with by courts in

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the light  of this  Judgment where  a concrete case comes of raising of a loan, spending the money so raised which cannot be reasonably  connected with  the purposes  for  which  the market fee  can be  spent, as  to whether such a loan can be repaid or interest on it can be paid out of the realisations of the market fees. [1253G]      16. The  Board in  the State is the Central Controlling and superintending authority over all the Market Committees, the primary  function of  which is  to render service in the market. Parting  with 30%  income by  a Market  Committee in favour of  the Board  is not so excessive or unreasonable so as to  warrant any  interference with the law in this regard on the  ground of violation of the principle of quid pro quo in the utilisation of the market fee realised 1223 from the  traders in  the market  area. Emphasised  that the Marketing Development  Fund can  only be  expended  for  the purposes of the Market Committees in a general way, or to be more accurate,  as far  as practicable,  for the purposes of the   particular    Market   Committee   which   makes   the contribution. [1254C-D]      17. Section  26 of  the Act  provides for  purposes for which the  Marketing Development  Fund may  be expended. The Marketing Development  Fund constituted primarily and mainly out of  the contributions  by  the  Market  Committees  from realisation of  market fee  can also  be  expended  for  the purposes of  the market  in  the  notified  market  area  in relation  to  the  transactions  of  purchase  and  sale  of agricultural produce  and for no other general purpose or in the   general   interest   of   the   agriculture   or   the agriculturists. The purposes mentioned in clauses (i), (ii), (iii), (iv),  first part of clause (v), clauses (vi), (vii), (viii), (ix),  (xii), first  part of  clause (xiii), clauses (xiv), (xv)  and (xvi) held valid. The Marketing Development Fund constituted  out of  the Market fees cannot be expended for the  purposes mentioned  in second  part of  clause (v), clauses (x),  (xi), second  part of clause (xiii) and clause (xvii). As  the  purpose  of  the  law  will  be  served  by restricting the  operation of  s. 26, it is not necessary to strike  down  those  provisions  as  being  constitutionally invalid. [1254E, 1255F-1256A]      18. The  High Court  has extracted s. 28 of the Act but has failed  to scan  the effect  of the  various purposes in some of the clauses. [1256H-1257A]      19. The  High Court  seems to be of the view that since transportation is  very essential  for the  development of a market and to enable the growers of the agricultural produce to bring  the same  to the  market, the construction of link roads becomes an essential purpose of the market committees. It may  be so  but the  purpose  cannot  be  allowed  to  be achieved at  the cost  of the  market fee  realised from the dealers. [1257G]      20. The  impost must  be correlated with the service to be rendered  to the  payers of  the fees in the sense and to the extent pointed out. [1260A]      21. Everybody  seems to  have  allowed  himself  to  be carried too  far by  the sentiment of the laudable object of the Act of doing whatever is possible to do under it for the amelioration  of  the  conditions  and  the  uplift  of  the villagers and  the agriculturists.  Undoubtedly the  Act  is primarily meant  for that  purpose and  to the  extent it is permissible  under   the  law  to  achieve  that  object  of utilising the  money collected  by the market fee, it should be done.  But if  the law  does not  permit carrying  on the sentiment too  far for achieving of all the laudable objects

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under the  Act, then  primarily it  becomes the  duty of the Court to  allow the  law to  have an  upper  hand  over  the sentiment and not vice versa. [1263G-H]      22. If  insecticides and  pesticides are for use at the place where actually the marketing operations are carried on it would be a justifiable expenditure. But if they are meant to be  supplied to  the  agriculturists  for  use  at  their village homes or in their fields surely they cannot be valid expenditure out  of  the  collections  of  the  market  fee. [1267G-H]      In the  instant cases the authorities took full liberty to treat  the realisation  from  market  fee  as  a  general realisation of  tax which  they were  free to  spend in  any manner  they   liked  for  the  purposes  of  the  Act,  the development of the area, for giving a fillip to agricultural production and so forth and so on. The 1224 sooner the  authorities are  made  to  realise  the  correct position in  law the  better it  will be  for all concerned. [1269F]      23. Taking  a reasonable  and  practical  view  of  the matter  and   on  appreciation   of  the   true  picture  of justifiable and  legal expenditure in relation to the market fee income,  even though  it had  to be done on the basis of some reason-  able guess work, the court did not disturb the raising of  an imposition of the rate of market fee upto Rs. 2/- per  hundred by  the various  Market Committees  and the Boards both  in the  State of Punjab and Haryana. After all, considerable development  work seems  to have  been done  by many Market  Committees in  their  respective  markets.  The charging of fee @ Rs. 2/- therefore, is justified and fit to be sustained. [1269G-1270A]      24. The  dealers of Haryana did not feel aggrieved when the High  Court maintained  the raising of the market fee to the extent  of Rs. 2/- per hundred rupees. The court did not uphold the  raising of  the fee  from Rs.2/- to Rs. 3/-as on the materials  placed before  it, it  is clear that this has been done  chiefly because  of the  wrong impression  of law that  the  amount  of  market  fee  can  be  spent  for  any development work  in the notified market area and especially for the  development of  agriculture and  the welfare of the agriculturists. The High Court was wrong in maintaining this use on an erroneous view of the matter.[1270B-C]      25. In  future if the market fee is sought to be raised beyond  the  rate  of  Rs.2/-  per  hundred  rupees,  proper budgets, estimates,  balance-sheets showing  the balance  of the money  in hand  and in deposit, the estimated income and expenditure, etc.  should carefully  be prepared. On drawing the correct  balance  sheets  and  framing  of  the  correct estimates and  budgets the  authorities as  also  the  State Government will  be able to know the correct position and to decide reasonably  as to  what extent  the  raising  of  the market fee  can be  justified taking  an over-all picture of the matter  and  keeping  in  view  the  reason  behind  the restrictions of  sales tax  laws concerning the transactions of foodgrains  and the other agricultural produce. Then, and then only,  there may  be a  legal justification for raising the  rate   of  the  market  fee  further  to  a  reasonable extent.[1270E-G]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1083 of 1977.

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    (Appeal by  Special Leave  from the  Judgment and Order dated 28-1-1977  of the  Punjab Haryana  High Court in Civil Writ No. 5697/75)                CIVIL APPEAL NO: 1616 OF 1978      (Appeal by  Special Leave  from the  Judgment and Order dated 18-9-1978  of the  Punjab &  Haryana High Court in CWP No. 3849/78)              CIVIL APPEAL NOS;1700-1761 OF 1978      (Appeals by  Special Leave  from the Judgment and Order dated 30-8-1978  of the Punjab & Haryana High Court in Civil Writ Petition  Nos. 3351,  2662, 3094,   3221,  3303,  3330, 3347, 3348, 3349, 3350, 1225 3384, 3390,  3393, 3459, 3460, 3489, 3517, 3533, 3548, 3551, 3563, 3570,  3576, 3598, 3615, 3665, 3673, 3773, 3775, 3776, 3826, 3827,  3883, 4024, 4171/77, 37/78, 178, 212, 283, 335, 381, 423,  483, 577,  666, 751,  887, 976, 1021, 1058, 1104, 1164, 1280,  1469/78, 2625/77, 1556/78, 1578/78, 1635, 1859, 1980, 1997 and 2095/78.             CIVIL APPEAL NOS. 1762-1773 OF 1978.      (Appeals by  Special Leave  from the Judgment and Order dated 30-8-1978  of the Punjab & Haryana High Court in Civil Writ Petition  Nos. 45/78,  888, 1251 1451, 1556 3300, 3330, 3293/77, 3292, 3337, 3385 and 3426/77)             CIVIL APPEAL NOS.1626-1627 OF 1978.      (Appeals by  Special Leave  from the Judgment and Order dated 30-8-1978  of the Punjab & Haryana High Court in Civil Writ Petition Nos. 4171/77 and 1356/78)                             AND WRIT PETITION  NOS. 4436, 4470, 4472, 4481, 4485,4564, 4420, 4450, 4460, and 4484 OF 1978            (Under Article 32 of the Constitution)      For the  Appellants in  CA No.  1083/77:A. K.  Sen  Mr. Ravinder Bana,  and Bhal  Singh Malik  For the RR. 1-2 in CA No. 1083/77:  S. N.  Kackar, Sol. Genl., Hardev Singh and R. S. Sodhi, For the Intervener-State Agricultural Market Board and Market  Committee, Nai  Mandi in  CA No.  1083/77: V. M. Tarkunde, and  S. C. Patel. For the Applicant Intervener: in CA No.  1083/77 Mrs. Urmila Kapoor. For the Respondent No. 3 in CA No. 1083/77 H. L. Sibbal, G. G. Garv and Mr. Atma Ram. For the  Petitioner in  the W.P.  except in  WPs. Nos. 4481, 4470, 4564  Bhal Singh  Malik, B. Datta and K. K. Manchanda. For the  Petitioners in  W.P. Nos.4481,  4564, and  for  the Appellants in  CA No.  1616/78 S.K. Walia, and Mr. M.P. Jha. For the  Petitioner in W.P. No.4470/78 Sarva Mitter. For the Respondents in  WP.4430, 4472,  4481, 4485/78 and CA 1616/78 W.P.4564/78: Hardev  Singh, G.  C. Garg and R. S. Sodhi. For the Appellants  in CA  Nos. 1700-1761/78  Anil Diwan, (1703) Adarsh Kumar  Goel (in  all  appeals)  Praveen  Kumar,  Adv. (1703) Miss  Bina Gupta, Adv. (1703) Madan Gopal Gupta (1703 to 1752)  Sarva Mitter  (1751-1761 and  all other)  For  the Petitioners in  W.P. Nos.  4420, 4450,  4460, 4484/78: A. K. Sen, (4420)  Dr. L.  M. Singhvi,  (4460)  B.  Dutta,  K.  K. Manchanda and  Bhal Singh  Malik, For  R. 1  in Appeal  Nos. 1700-1761/78 and WP Nos. 4420, 4450, 4460 and 4484/78: 1226 P. N.  Lekhi, (FP  4420) and  R. N. Sachthey, For RR. 2-3 in Appeal Nos.  1760-1761/78 and  WP Nos.  4420, 4450, 4460 and 4484/78:V. M. Tarkunde, (in CA 1700 and WP 4420) Gian Singh, (WPs. 4420,  4450 4460, 4484 and CAs 1760-1761) S. C. Patel. For the  Appellants in  CA Nos.  1626-1627/78:  Mrs.  Urmila Kapoor, For  the Appellants  in CA  Nos. 1762-1773/78: K. K. Mohan.      For the other appearing RR. in CA Nos. 1762-1763: S. C. Patel,

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    The Judgment of the Court was delivered by      UNTWALIA, J.-In  these groups of Civil Appeals and Writ Petitions, broadly  speaking, the  question which  falls for determination is  the validity  of certain provisions of the Punjab Agricultural  Produce Markets  Act, 1961  (Punjab Act No. 23 of 1961). hereinafter referred to as the Act, and the Rules framed  by the  State of  Punjab and Haryana under the said Act as also the validity of the fixation of market fees from time  to time  by the  various Market Committees in the States aforesaid  under the  direction of  the Punjab  State Agricultural Produce  Marketing Board  and the Haryana State Agricultural Produce  Marketing Board.  All these cases have been heard  together and  are being  disposed of by a common judgment.      In the  erstwhile composite State of Punjab the Act was passed in  the year  1961 to  consolidate and  amend the law relating to  the better  regulation of  the purchase,  sale, storage and  processing  of  agricultural  produce  and  the establishment of  markets for  agricultural produce  in  the State. Under  section 3  of the  Act the  State Agricultural Marketing Board  was constituted  for the entire area of the composite State,  which later,  in the  year 1966 came to be bifurcated into  the States of Punjab and Haryana. Under the various provisions of the Act, which will be noticed shortly hereinafter, market  areas and  market yards  were  declared putting restrictions  on the traders to carry on their trade under a  licence granted  by the  various Market  Committees established and  constituted in  accordance with sections 11 and 12,  within  the  specified  boundaries  or  areas.  The traders were  required to  take out licences on payment of a licence fee.  Under section 23 of the Act a Market Committee was required and authorised to levy on ad-valorem basis fees on the  agricultural produce  bought or sold by licensees in the notified  market area  at a  rate not exceeding the rate mentioned in  section 23  from time  to time  for every  one hundred rupees. 1227      In the  composite State  of Punjab  and even  after the bifurcation of  the States for about a period of three years the maximum  rate of  market fee which could be levied under section 23  was 50  paise  for  every  one  hundred  rupees. Various Market  Committees levied  a fee  of  50  paise  per hundred rupees and no dealer made any murmur of grievance of it. In  the bifurcated State of Punjab by Act 25 of 1969 the rate of  50 paise  was raised  to Re.  1/-. It  was  further raised to  Rs.  1.50  by  Act  28  of  1973.  Thereafter  by Ordinance 4 of 1974 which was replaced by Act 13 of 1974 the rate was  raised to Rs. 2.25. Several dealers filed a number of Writ  Petitions in  the High  Court of Punjab and Haryana challenging the increase in the rate of market fee from time to time,  the last one being by Act 13 of 1974. Similarly in the State  of Haryana the rate of 50 paise was raised to Re. 1/- by  Haryana Amendment  Act 28  of 1969.  It was  further raised to Rs. 1.50 by Act 21 of 1973. By Ordinance 2 of 1974 which was replaced by Act 17 of 1974 in the State of Haryana the fee  was raised  to Rs.2/- for every one hundred rupees, as against  the rise  of Rs.  2.20 in  the State  of Punjab. Several dealers  of the  State of Haryana also challenged in the High Court the levy and increase of market fee from time to time.  All the  Writ Petitions  were heard  together. The increase and  levy of fee upto Rs. 2/- by the various Market Committees in  the State  of Haryana was upheld and the Writ Petitions of  the Haryana dealers were dismissed while those of the  Punjab dealers were allowed and the increase of rate brought about  by Ordinance  4 and  Act 13  of 1974  to  the

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extent of  Rs. 2.25  was struck  down. This  decision of the High Court is reported in M/s. Hanuman Dall & General Mills, Hissar v.  The State  of Haryana and others. The date of the decision is  November 8, 1974. In Punjab by Amendment Act 14 of 1975  section 23 of the Act was again amended authorising the imposition  of market  fee at  a rate  not exceeding Rs. 2.20  per  hundred  rupees.  Telegraphic  instructions  were issued by  the Punjab Board to the various Market Committees directing them  to charge  Rs. 2/-  only  with  effect  from August 23,  1975 after  the passing of the Act 14 of 1973 on August 8,  1975. The  increase in the rates of fee, the last one being in August, 1975, were again challenged in the High Court. But  the Full  Bench which  finally  heard  the  Writ Petition upheld  the increases  by its judgment delivered on January 28,  1977, which  is reported  in Kewal Krishan Puri and another  v. The State of Punjab and others. Civil Appeal 1083 of  1977 has been preferred in this Court from the said judgment of the High Court. 1228      Both in  the State  of Punjab  and the State of Haryana the rate  of market  fee was  further raised from Rs. 2/- to Rs.3/-. It  was unsuccessfully challenged in the High Court. The dealers have preferred appeals from the judgments of the High Court  as also  filed Writ  Petitions in this Court. In the State  of  Punjab  the  fee  was  raised  to  Rs.  3/-by Ordinance 2 of 1978 which must have been replaced by an Act. The Ordinance  was promulgated  on April  28, 1978. The Writ Petition  4436   of  1978  has  been  filed  in  this  Court challenging the previous increases in the fee along with the last increase  of Rs.  3/-. The  High Court upheld it by its judgment dated  May 18, 1978. Special Leave Petition (Civil) 2768 of 1978 was preferred from this judgment. Writ Petition No. 3849  of 1978  was filed  in the  High Court  by a large number of  dealers, which  was dismissed  in limine by order dated September  18, 1978.  Civil Appeal 1616 of 1978 arises out of  this Writ Petition. Several other dealers have filed separate Writ  Petitions also  being  Writ  Petitions  4470, 4472, 4481,  4485  and  4564  of  1978  challenging  in  the increase of market fee in the State of Punjab.      In the State of Haryana the rate of fee was raised from Rs. 2/-  to Rs.3/-  with effect  from September  5, 1977  by Ordinance 12 of 1977 replaced by Act 22 of 1977. The Haryana State Marketing  Board directed all the Market Committees in that State  to collect market fee @ Rs. 3/- with effect from 5-9-1977. A  number of Writ Petitions were filed in the High Court challenging  the said  increase  and  the  High  Court dismissed all  the Writ  Petitions  by  its  judgment  dated August 30,  1978. Civil  Appeals 1700  to 1773  of 1978  and Civil Appeals 1626 and 1627 of 1978 are from the judgment of the High  Court dated August 30, 1978. The said increase has also been  challenged by filing Writ Petitions in this Court and they  are Writ  Petitions 4420,  4450, 4460  and 4484 of 1978.      Although by  now there  is a  catena of  cases of  this Court pointing  out the  difference between  "tax" and "fee" with  reference   to  the   constitutional  provisions   and otherwise also, the problem before us has presented some new angles and  facets. We,  therefore, think  it advisable  and necessary to  review many  of the  earlier decisions to pin- point the  precise difference as far as practicable in order to  resolve  the  rival  contentions  of  the  parties.  The arguments of  the learned  counsel for  the parties whenever thought necessary  would be  referred to  at the appropriate places hereinafter in this judgment.      Clause (2) of Article 110 and clause (2) of Article 199

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of the  Constitution, the former occurring in the Chapter of Parliament and the 1229 latter  in   relation  to  the  State  Legislature,  are  in identical terms as follows:-           "A Bill  shall not be deemed to be a Money Bill by      reason only  that it  provides...........for the demand      or payment  of fees  for licences  or fees for services      rendered.......      The   Constitution,    therefore,   clearly   draws   a distinction between  the imposition of a tax by a Money Bill and the impost of fees by any other kind of bill. So also in the Seventh Schedule both in List I and in a distinction has been maintained  in relation to the entires of tax and fees. In the  Union List  entries 82  to 92A  relate to  taxes and duties and  entry 96  carves out  the legislative  field for fees in  respect of  any of  the matters  in the  said  list except the  fees taken  in any Court. Similarly in the State List entries  relating to  taxes are  entries 46  to 63  and entry 66  provides for fees in respect of any of the matters in List  II but not including fees taken in any Court. Entry relating to  fees in List III is entry 47. Our Constitution, therefore, recognises  a different  and distinct connotation between taxes and fees.      The leading  case of this Court which has been referred and followed in many subsequent decisions is the case of The Commissioner, Hindu  religious  Endowments,  Madras  v.  Sri Lakshmindra Thirtha  Swamiar of  Sri Shirur  Mutt. The point decided therein  was that  the  provision  relating  to  the payment of annual contribution contained in section 76(1) of the Madras  Hindu Religious  and Charitable  Endowments Act, 1951 is  a tax  and not  a fee  and so  it  was  beyond  the legislative competence  of the  Madras State  Legislature to enact such  a provision. The meaning given to the word "tax" by Latham C.J. of the High Court of Australia in Matthews v. Chicory Marketing  Board has  been quoted  with approval  at page  1040  and  has  been  often  repeated  in  many  other decisions. Generally  speaking a  fee is  defined  to  be  a charge for a special service rendered to individuals by some governmental agency.  A  question  arises-"special  service" rendered  to  whom  which  kind  of  individuals?  Mr.  V.M. Tarkunde  who  appeared  for  the  Haryana  Marketing  Board stressed  the   argument  that   service  rendered  must  be correlated to  those on  whom the ultimate burden of the fee falls. In  our opinion  this argument is neither logical nor sound. The impost of fee and the liability to pay it is on a particular individual  or a  class of  individuals. They are under the obliga- 1230 tion  to  submit  accounts,  returns  or  the  like  to  the authorities concerned  in cases  where quantification of the amount of  fees depends  upon the same. They have to undergo the botherations  and harassments, sometimes justifiably and sometimes even  unjustifiably, in the process of discharging their liability  to pay the fee. The authorities levying the fee deal  with them  and  realize  the  fee  from  them.  By operation  of   the  economic   laws  in  certain  kinds  of impositions of  fee the burden may be passed on to different other persons  one after the other. A few lines occurring at page 119 in the judgment of the Privy Council in the case of Attorney-General for  British  Columbia  and  Esquimalt  and Nanaimo Railway  Company  and  others  may  be  quoted  with advantage. They are as follows:-           "It is  probably true  of many  forms of tax which      are indisputably  direct that the assessee will desire,

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    if he  can, to  pass the  burden of  the tax  on to the      shoulders of  another but  this  is  only  an  economic      tendency. The  assessee’s efforts  may be  conscious or      unconscious, successful  or unsuccessful;  they may  be      defeated in  whole or in part by other economic forces.      This type  of tendency appears to their Lordships to be      something fundamentally different from the "passing on"      which is regarded as the hall-mark of an indirect tax."      The  authorities,   more   often   than   not,   almost invariably, will  not be  able to  know  the  individual  or individuals on  whom partly or wholly the ultimate burden of the fee will fall. They are not concerned to investigate and find  out  the  position  of  the  ultimate  burden.  It  is axiomatic that  the special  service rendered must be to the payer of  the fee.  The element  of quid  pro  quo  must  be established between  the payer  of the fee and the authority charging it.  It may  not be the exact equivalent of the fee by  a   mathematical  precision,   yet,  by  and  large,  or predominantly, the  authority collecting  the fee  must show that the  service which they are rendering in lieu of fee is for some  special benefit of the payer of the fee. It may be so intimately  connected  or  interwoven  with  the  service rendered to  others that  it may  not be  possible to  do  a complete dichotomy and analysis as to what amount of special service was  rendered to  the payer  of  the  fee  and  what proportion  went   to  others.  But  generally  and  broadly speaking it  must be  shown with  some amount  of certainty, reasonableness or  preponderance of probability that quite a substantial portion  of the  amount of fee realised is spent for the special benefit of its payers. 1231      We  may  now  extract  some  very  useful  and  leading principles from  the decision of this Court in Shirur Mutt’s (1954 S.C.R.,  1005,  supra)  pointing  out  the  difference between tax  and fee. At pages 1040-41 says Mukherjea J., as he then was:           "The second characteristic of tax is that it is an      imposition made for public purpose without reference to      any special benefit to be conferred on the payer of the      tax. This  is expressed  by saying that the levy of tax      is for  the purposes  of general  revenue,  which  when      collected forms  part of  the public  revenues  of  the      State. As  the object  of a  tax is  not to  confer any      special benefit  upon any  particular individual, there      is, as  it is  said, no element of quid pro quo between      the tax-payer and the public authority...."           "a ’fee’ is generally defined to be a charge for a      special  service   rendered  to   individuals  by  some      governmental agency."      At  page   1042  the   learned  Judge.  enunciates-"The distinction between  a tax  and a  fee lies primarily in the fact that  a tax  is levied  as a  part of  a common burden, while a  fee is a payment for a special benefit or privilege Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives." After  pointing out the  ordinarily there are two classes  of   cases  where  Government  imposes  ’fee’  upon persons, the  first being  the type  of cases of the licence fees for  Motor Vehicles  or the like and in the other class of cases  ..the Government  does some  positive work for the benefit of  persons and the money is taken as the return for the work  done or services rendered" (vide page 1043), it is said further-"If  the money  thus  paid  is  set  apart  and appropriated specifically  for the  performance of such work and is  not merged in the public revenues for the benefit of

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the general  public, it  could be  counted as fees and not a tax. There  is really  no generic difference between the tax and fees  and as  said by  Seligman, the  taxing power  of a State may  manifest itself  in three  different forms  known respectively  as   special  assessments,   fees  and  taxes. "Finally at page 1044 the striking down by the High Court of the imposition  of fee  under section 76. Of the  Madras Act was upheld  on the  ground-"It may be noticed, however, that the contribution  that has  been levied  under section 76 of the Act  has been  made to  depend upon  the capacity of the payer and  not upon  the quantum of benefit that is supposed to be  conferred on  any particular  religious institution." Benefit conferred  or any  particular religious  institution would have  been undoubtedly  benefit conferred on the payer of the fee. 1232      After the  decision of  this Court in Shirur Mutts case (supra) section 76 of the Madras Act was amended. The effect of the  amendment came to be considered by this Court in the case of  H. H. Sudhundra Thirtha Swamiar v. Commissioner for Hindu  Religious  &  Charitable    Endowments.    Mysore.(1) Pointing out the various differences between the earlier law and the  amended one  at pages  320-21 the imposition of fee was upheld.      In two other cases of this Court following the ratio of Shirur Mutt’s  decision the  imposition of  fee was  upheld, vide, Mahant  Sri Jagannath   Ramanuj Das and another v. The State of  Orissa and another and Ratilal Panachand Gandhi v. The State of Bombay and other . (3)      We now proceed to consider. some more decisions of this Court in  which apparently  some different phrases were used for explaining  the  meaning  of  the  word  ’fee’  and  its distinction from  ’tax’. Both  sides  placed  reliance  upon those decisions.  But if  the phrases  are understood in the context they were used and with reference to the facts those cases it would be noticed that the leading principle has not basically undergone any change.      In the  case of The Hingir-Rampurr Coal Co. Ltd. & Ors. v. The  State of  Orissa and  others(4) the challenge was to the cess  levied by the orissa Mining Areas Development Fund Act, 1952.  The petitioners’ stand in the first instance was that the  cess levied  was not a fee but a duty of excise on coal  and   hence  beyond   the  competence   of  the  State Legislature. Alternatively  they contended  that even  if it was a  fee  it  was  beyond  the  competence  of  the  State Legislature for  some If  other reason   not necessary to be mentioned here.  The cess  imposed was  upheld  as  a  ’fee’ relatable to  Entry 23  of List  II read  with Entry  66. In other  words  it  was  upheld  as  a  ’fee’  in  respect  of regulation of mines and  mineral development. Gajendragadkar J., as  he then was, delivered the judgment on behalf of the majority and discussed the point at some length. At page 545 are to  be found  a few  words which go directly against the contention of  Mr. Tarkunde.  Says the  learned Judge:-"...a fee is  levied essentially for services rendered and as such there is  an element  of quid pro quo between the person who pays the fee and the public authority which imposes it." 1233 (Emphasis supplied).  Mr. Tarkunde,  however, relied  upon a passage at the same page which runs thus:-           "If specific  services are  rendered to a specific      area or  to a  specific class  of persons  or trade  or      business  in   any  local  area,  and  as  a  condition      precedent for  the said  services or in return for them      cess is  levied against the said area or the said class

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    of  persons   or  trade   or  business   the  cess   is      distinguishable from a tax and is described as a fee."      The above  passage  does  not  mean  that  the  service rendered is  unconnected with  or not meant for the payer of the fee.  As pointed  out earlier,  service rendered  to  an institution like  a Math  is a service rendered to the payer of the  fee. Similarly  services rendered to a specific area or to  a specific  class of  trade or  business in any local area must  mean, and  cannot but  mean, that  it is  for the special benefit  of the  person operating  in that area. The service rendered  was to  the mining area for the benefit of the mine owners at that area. The area or trade does not pay the fee  nor does  it get  the benefit in vacuum. The fee is paid by  the person  who is  liable to pay it and service to the payer  does not mean any personal or domestic service to him but  it means  service in  relation to  the transaction, property or  the institution  in respect of which he is made to pay the fee. Says the learned Judge at page 549:-           "It is true that when the Legislature levies a fee      for rendering  specific services to a specified area or      to a  specified class  of persons or trade or business,      in the  last analysis such services may indirectly form      part of  services to  the public  in  general.  If  the      special service  rendered is  distinctly and  primarily      meant for  the benefit of a specified class or area the      fact that  in benefitting  the specified  class or area      the State  as a  whole may ultimately and indirectly be      benefitted would  not detract from the character of the      levy as  a fee. Where, however, the specific service is      indistinguishable from  public service,  and in essence      is directly  a part of it, different considerations may      arise. In  such a  case it is necessary to enquire what      is the  primary object  of the  levy and  the essential      purpose which  it is  intended to  achieve. Its primary      object and  the essential purpose must be distinguished      from  its   ultimate     or  incidental     results  or      consequence .  That is the true test in determining the      character of the levy." (underlining, ours)      At pages  549-50 in  the decision  of The Hingir-Rampur Coal Co. Ltd. (supra), reference has been made in passing to the decision of 1234      the Australian  High Court  in Patron   v.  Milk  Board (Victoria).(1) The  majority which, amongst others, included Dixon J.,  held the  purported levy to be invalid because it was the  imposition of  a duty  of excise,  there being   no element of  quid qua to the person on whom the levy had been imposed. Since  a few  lines from  the judgment of Dixon J., occurring at  pages 258-259 will be very helpful in tackling with the problem we are faced with, we may quote them. here. They are as follows:-           "It is an exaction for the purposes of expenditure      out of  a  Treasury  fund.  The  expenditure  is  by  a      government agency  and the objects are governmental. It      is  not   a  charge   for   service.   No   doubt   the      administration of  the Board  is regarded as beneficial      to what  may loosely be described as the milk industry.      But the  Board performs  no  particular service for the      dairyman or  the owner  of a  milk  depot for which his      contribution  may   be   considered   as   a   fee   or      recompense......................On the other hand it is      a trading  tax. "Customs  and excise   duties  are,  in      their essence,  trading taxes,  and may  be said  to be      more concerned  with the  commodity in respect of which      the taxation is imposed than with the particular person

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    from whom  the tax  is exacted":  Attorney General  for      British Columbia v. Kingcome Navigation Co  [1934] A.C.      45, at p. 59.      At page  554 is  to be  found the  final conclusion  of Gajendragadkar J.,  which is  the crux  of  the  matter.  It runs:-           Thus the  scheme of the Act shows that the cess is      levied against the class of persons owning mines in the      notified area  and it  is levied  to enable  the  State      Government to  render specific  services  to  the  said      class by developing the notified mineral area. There is      an element  of quid  pro quo   in  the scheme, the cess      collected is  constituted into  a specific  fund and it      has not  become a  part of  the consolidated  fund, its      application is  regulated by a statute and is con fined      to its  purposes, and  there is  a definite correlation      between the  impost and the purpose of the Act which is      to render service to the notified area."  (underlining,      ours).      In the  case of  Corporation of Calcutta and another v. Liberty cinema(2) the respondent was charged by the Calcutta Corporation a 1235 very   high licence fee assessed according to the sanctioned seating    capacity  of the  Cinema house.  The  High  Court quashed the  imposition. In  appeal to the Supreme Court the stand of  the appellant  Corporation was that the levy was a tax and section 548(2) of the Calcutta Municipal Act did not suffer from  the vice  of excessive  delegation:  while  the respondent cinema  contended that the levy was a fee and had to be  justified as  being imposed in return for services to be rendered.  Alternatively the respondent submitted that if it was  a tax  it was  invalid as  it amounted to an illegal delegation of  legislative functions.  The majority view was expressed by  Sarkar J.,  as he then was, and the impost was upheld as  a tax.  In  the  minority  opinion  delivered  by Ayyangar J.,  it was held that even in the case of a licence fee a  correlation between  the fee  charged and the service rendered was necessary to be established. It was, therefore, held to  be a  tax  but  invalidly  imposed  under  a  power suffering from  the  vice  of  unconstitutional  legislative delegation. In  the cases before us the licence fees charged from the  various  traders  in  the  market  areas  are  not excessive  and   have  not   been  attacked  on  any  ground whatsoever. We  are. therefore,  not concerned  to find  out whether an  element of quid pro quo is necessary in cases of all kinds  of licence  fees. Some licences are imperative to be taken  only by way of regulatory measure, some are in the nature of  grant of  exclusive right  or  privilege  of  the State, such  as, excise  cases noticed  by this Court in the case of  Har Shankar  & ors.  etc. etc.  v. The Dy. Excise & Taxation Commr. & Ors  (1) Some may be cases of licence fees where  element   of  qid   pro  quo    is  necessary  to  be established. But  what is  important to  be pointed out from the case  of Liberty Cinema (supra) is that in the case of a fee of the kind with which we are concerned in this case the element of   quid pro quo must be established. Otherwise the imposition of  fee will  be bad. In the majority opinion, it is stated at page 490:-           "The conclusion  to which  we then  arrive is that      the levy  under s.548  is not a fee as the Act does not      provide for any service to him. No question here arises      of correlating  the to    the  person  on  whom  it  is      imposed. The work of inspection done by the Corporation      which is  only to see that the terms of the licence are

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    observed by  the licensee  is not  a service to him. No      question here  arises of  correlating the amount of the      levy to the costs of any service. The levy is a tax." 1236      Ayyangar J.,  also said at page 526 that there being no correlation    between  the  fee  charged  and  the  service rendered the impugned levy was not authorised.      Mr. Tarkunde at one stage of the hearing endeavoured to submit, although  the Solicitor-General  appearing  for  the State of  Punjab  and  Mr.  H.  L.  Sibbal  for  the  Punjab Marketing Board  had made  no  such  submissions,  that  the impugned impost  could be  justified as  a tax. There was no lack of legislative competence in imposing a tax of the kind under issue.  Counsel further  submitted that  in almost all the cases in absence of quid pro quo the levy was held to be bad and  unsustainable as  a tax  for  want  of  legislative competence. On   the  other hand  learned  counsel  for  the appellants and  the petitioners  M/s. A. K. Sen, Anil Dewan, B. S. Malik and A. K. Goel pointed out that at no pointed of time the  respondent sought  to justify  the impost as a tax obviously because it would have then violated the provisions of the  Sales Tax law which did not authorise the imposition of such a  tax  beyond a certain percentage, and as a tax it could not  be but  a sales tax. Finally this controversy was not pursued  when we  pointed  out  that  at  no  stage  the question was  raised and  no attempt  any stage  was made to justify it  as a  tax. Obviously the Market Committees could not be  competent under  the Act  to impose  any tax: on the sale and  purchase of the agricultural produce in the market nor did  it ever  purport to  do so The nature of the impost and the  power. under  which  it  was  levied  squarely  and uniformally remained  within the realm of the fee and fee of the kind  which could not but sustained on the establishment of the  element  of  quid  pro  quo  between  the  authority charging the fee and its payer.      The next  case to be considered is the decision of this Court in Nagar Mahapalika Varanasi v. Durga Das Bhattacharya & ors.(l)  in which  it was held that the annual licence fee charged from  the rickshaw  owners and  the drivers  by  the Varanasi Municipal  Board could  be justified    only on the basis of the element of quid pro quo. The fee was held to be ultra vires  and illegal  because  after  excluding  certain items  of   expenditure  the   balance  did  not  constitute sufficient quid  pro quo  for the  amount of the licence fee charged. It  could not  be sustained as a tax. Certain major items of  expenditure incurred  by the  Municipal Board were attributable to  the discharge  of its  statutory duty  and, therefore, at  page 386  it was  said by Ramaswami J.,-it is manifest  that   the  licence  fee  cannot  be  imposed  for reimbursing the  cost of ordinary municipal serves which the Municipal 1237 Board  was bound under the statute to provide to the general public." The expenditure incurred by the Municipal Board for the benefit  of the  licensees constituted 44%  of the total income of  the Municipal  Board and  hence it  was held that there was  no sufficient  quid   pro quo  established in the circumstances of  the case.  In Delhi  Cloth & General Mills Co. Ltd.  v. Chief  Commissioner Delhi  & ors.(l)  the  High Court had  found the   60%  of the  amount of  licence  fees charged from  the  mills  was  actually  spent  on  services rendered to  the factory  owners. On  that basis  sufficient quid pro  was found  to exist  and the  impost was upheld by this Court  also. We  may, however, add that the rule of 60% cannot be of universal application. It is not a static rule.

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The cases  of licence  fees are, generally speaking, on some different  footing.   There  is  a  substantial  element  of regulatory measure  involved in  them. Over and above that a good portion  of the fee, may be in the neighbourhood of 60% or more,  must be  correlated to the service rendered to the person from  whom the fee is charged. But there may be cases where, as in the instant one, the licence fee charged by way of regulatory  measure is  not exorbitant  or excessive. But the other kind of fee charged has got to be justified on the ground of existence of sufficient quid pro  quo  between the payer of  the fee  and the  authority charging it. In such a case from  a practical  point of view it may be difficult to find out  with arithmetical  exactitude as to what amount of fee has  gone in incurring the expenditure for the services. But, broadly  speaking, a good and substantial portion of it must be shown as being spent for the services rendered.      Now we  come to   the  decision of this Court in Indian Mica & Micanite Industries Ltd . v. State of Bihar & ors.(2) wherein Hegde J., speaking on behalf of a Constitution Bench of this  Court, reviewed  all the  earlier cases and pointed out at  page 323  that-"While a tax invariably goes into the consolidated fund,  a fee  is earmarked  for  the  specified services in  a fund  created for the purpose." Concludes the learned Judge at pages 324-25:-           "From the above discussion it is clear that before      any levy  can be upheld as a fee, it must be shown that      the  levy   has  reasonable  co-relationship  with  the      services rendered by the Government. In other words the      levy must  be proved  to be  a  qui  pro  quo  for  the      services rendered.  But in  these matters  it  will  be      impossible to  have an  exact co-relationship.  The co-      relationship expected is one of a general character and      not as of arithmetical exactitude." 1238 Difference between  a licence  to regulate a trade, business or profess  on in  public interest  and in  a case  where  a Government which  is the  owner of a particular property may grant permit or licence to some one to exploit that property for his  benefit for  consideration has  been pointed out at page 325.  The State  of Bihar had failed to place materials in  the   High  Court   to  establish   the  reasonable  co- relationship between the value of the services rendered with the fee  charged. For  some special  reasons  the  case  was remanded. But  one thing  may be  pin-pointed from a passage occurring at  page 327  that the  expenses of maintaining an elaborate staff  by the  Excise Department were not only for the purposes of ensuring that denaturing is done properly by the manufacturer but also for the purpose of seeing that the subsequent possession  of  denatured  spirit  in  the  hands either of  a wholesale  dealer or retail seller or any other licensee or  permit-holder is  not misused by converting the denatured spirit  into alcohol fit for human consumption and thereby evade  payment of  heavy  duty.  But  the  appellant before the  Supreme Court  or other  similar  licensees  had nothing to do with the manufacturing process. They were only the purchasers  of manufactured  denatured spirit.  In  that context it  was said-"Hence  the  cost  of  supervising  the manufacturing process  or any  assistance  rendered  to  the manufacturers cannot  be recovered  from the  consumers like the appellant."  When we  come  to  discuss  even  from  the admitted facts  in relation  to the  levy of impugned market fees, we  shall point  out that the authorities concerned as also the  High Court  labour   under the impression that the fee realized  from the  traders in the market could be spent for any  purpose of  development of agriculture by providing

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all sorts  of facilities to the agriculturists including the facilities of  link roads  for the  purpose of trans port of their agricultural  produce  to  the  markets  how  so  ever distant these  link roads  may be  from the market proper or any other purchasing centre in the market.      In the  case of  Secretary, Government  of Madras, Home Department and  another v.  Zenith Lamp & Electrical Ltd.(1) the character  of Court fees came up for consideration as to whether they  are taxes  or fees  or whether  they  are  sui generis. Although  after referring to the various Entries of the Seventh  Schedule in  the different lists it was noticed that Court  fees were  not taxes  and they  were covered  by separate Entries  of fees  exclusively meant for Courts, yet the broad principles of the requirement of quid pro quo were made applicable  in the  cases of  Court fees also. Even so, Sikri C.J.  speaking for  the Court pointed out at page 982- "But even if the meaning is the same, 1239 what is  ’fees’ in a particular case depends on the subject- matter ill  relation to which fees are imposed." The learned Chief Justice  further observed  at the  same page-"In other words, it  cannot tax  litigation, and make litigations pay, say for  road building  or  education  or  other  beneficial schemes that  a State  may have.  There must  be a broad co- relationship  with  the  fees  collected  and  the  cost  of administration of  civil justice."  If the view taken by the High Court  in the  market fee cases were to hold good, then pushing it  to the  logical conclusion  one will have to say that giving  all sorts  of facilities  to the  litigants for their travel from the village homes to the Courts would also be a  service of them In cases of court fees one has to take broad view  of the matter to find out whether there exists a broad co-relationship  with the fees collected and the cause of administration  of justice.  Even mixing  the  amount  of court  fee   collected  with   the  general   fund  will  be permissible. It  may not  be kept  in  a  separate  fund  or earmarked separately.  The very  fact that  in  relation  to court-fees  there   are  separate  Entries  in  the  Seventh Schedule e.g.  Entry 77  List I  and Entry  3  of  List  II, indicates that  even though the character of the levy is not very much  different from that of the general types of fees, in the  matter of  approach for  finding out  the element of quid pro quo quite a different test has not to be applied as indeed, to some extent it has to be applied in many kinds of fees  depending   upon  the   totality  of   the  facts  and circumstances. Each  case has to be judged from a reasonable and practical  point of  view for finding out the element of quid pro quo.      In the  case of  State of  Maharashtra &  ors.  v.  The Salvation  Army,   Western  India  Territory(1)  Mathew  J., speaking  for   the  Court  after  resume  of  some  earlier decisions of  this Court  upheld to a certain extent the fee charged under  the Bombay  Public Trust  Act,  1950  on  the ground that taking precautionary measures to see that Public Trusts are  administered for  the purpose  intended  by  the authors of  the Trust and exercising control and supervision with a  view to  preserve the  trust properties  from  being wasted or misappropriated  by trustees are certainly special services for the benefit of the trust. Thus special benefits for the  payer of  the fee  were established, as benefits to the trust  were benefits to the trustees who are required to pay the  fees out  of the  trust income.  But  then  it  was further pointed  out that  in spite  of accumulation  of the surplus from  1953 onwards  the authorities went on charging the fee  of 2%  which has  assumed the  character of  a tax.

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After giving  certain guidelines the levy was declared to be without the     authority of law after 31st March, 1970. 1240      Observations of  one of  us (Chandrachud J., as he then was), speaking  for the  Court in  the case of Government of Andhra Pradesh  & Anr. v. Hindustan Machine Tool  Ltd.(1) at page 401  are quite  apposite and  may  be  usefully  quoted here:-           One cannot  take into account the sum total of the      activities of  a public  body like  a Gram Panchayat to      seek justification  for the  fees imposed  by  it.  The      expenses incurred by a Gram Panchayat or a Municipality      in discharging  its obligatory  functions, are  usually      met by  the imposition  of  a  variety  of  taxes.  For      justifying the  imposition of fees the public authority      has to  show that  services are rendered or intended to      be rendered  individually to  the particular  person on      whom the  fee is  imposed. The  Gram Panchayat here has      not even  prepared an  estimate of  what the - intended      services would cost it.’      The levy  of house-tax  was held  to be  lawful but the levy of  Permission Fee  had to  be  struck  down  as  being illegal. In  the instant  case also it would be noticed that the Market  Committees and  the  Market  Boards  assumed  to themselves  the   liberty  of  utilizing  and  spending  the realizations from  market fees to a consider able extent, as if it  was a  tax, although in reality it was not so. In The Municipal Council  Maduri v.  R. Narayanan etc.(2) endeavour was made as in the case of Nagar Mahapalika Varanasi (supra) to justify  the impost  by the  Municipal Council  as a tax. Krishna Iyer  J.,  speaking  for  the  Court  repelled  that argument and  since the impost could not to justified as fee the resolution  of the  Municipal Council  was  held  to  be invalid. In the Chief Commissioner, Delhi and another v. The Delhi Cloth  and General  Mills Co.  Ltd. and  others(3) the question for  consideration was whether the registration fee charged on  the document satisfied the two conditions of fee which were enumerated in the fol- lowing language:-           "(i) there must be an element of quid pro quo that                is to  say the authority levying the fee must                render  some   service  for  the  fee  levied                however remote the service may be;           (ii) that the  fee realised  must be spent for the                purposes of  the imposition  and  should  not                form part  of the  general  revenues  of  the                State." 1241      The second  condition was found not to be fulfilled and hence the  impost was held to be bad. We would like to point out that  the first condition is rather couched in too broad and general  a language.  Rendering  some  service,  however remote the  service may be, cannot strictly speaking satisfy the element  of quid  pro quo  required to be established in cases of  the impost  of fee.  But then,  as pointed out, in some of  the cases  noticed earlier the registration fee has been taken  to stand  on a  different footing altogether. In the case  of such  a fee the test of quid pro quo is not  be satisfied  with   such  direct,   close  or   proximate  co- relationship as  in the case of many other kinds of fees. By and large  registration  fee  is  charged  as  a  regulatory measure.      The history  of the marketing legislation was traced by Venkatarama Aiyar  J. in  the case  of P.  P. Kutti Keya and others v.  The State  of Madras  and others.(1)  A number of Writ Petitions were disposed of by one judgment delivered on

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10-7-1953. Appeals  in some  of these  Writ  Petitions  were brought to  this Court  in the  case of M.C.V. S. Arunachala Nadar   etc. v.  The State of Madras & others.(2) Al- though the Courts  were concerned  mainly with  the question of the constitutional validity of the marketing law which is beyond any pale  of challenge  now, it would be interesting to note that the Madras High Court had taken the view that the funds raised from  the merchants  for construction  of a market in substance amounted to an exaction of a tax. We are not going to approve such a narrow view in relation to the application of the amounts realized by market fees, yet we are not going to make  it too broad either, so as to take within its sweep any remote  service which may ultimately or tangentically be of some  benefit to the grain trade in the market. Subba Rao J., as  he then  was, speaking  for the  Court in Arunachala Nadar’s. case  (supra) traced  the history  of the marketing legislation at  pages 95-96 and pointed out at page 98:-"The Act,  therefore,  was  the  result  of  a  long  exploratory investigation by experts in the field, conceived and enacted to regulate  the buying  and selling  of commercial crops by providing suitable  and  regulated  markets  by  eliminating middlemen and  bringing face to face to the producer and the buyer  so  that  they  may  meet  on  equal  terms,  thereby eradicating  or   at  any   rate  reducing   the  scope  for exploitation in  dealings." At  page 102 is to be found some discussion with  regard to  the licence fees which, says the learned Judge,  "do not  appear to  be so high as to cripple the trader’s business." The question of charge of the market fee  apart   from  the   licence  fee   did  not   fall  for consideration in this case. The Bombay 1242 Marketing Statute  came to  be considered  in  the  case  of Mohammad Hussain  Gulam Mohammad and another v. The State of Bombay and  another.(1) Wanchoo J., as he then was, speaking for the  Court repelled the attack at page 669 on section 11 of the  Bombay Act which gives power to the Market Committee subject to  the provisions  of the rules and subject to such maxima as may be prescribed to levy fees on the agricultural produce bought and sold by licensees in the market area. The attack was  that the  impost was in the nature of sales tax. It was repelled on the ground that:-           "Now there  is no  doubt that the market committee      which is  authorised to  levy this fee renders services      to the  licensees,  particularly  when  the  market  is      established. Under  the circumstances it cannot be held      that the  fee charged  for  services  rendered  by  the      market committee  in connection with the enforcement of      the various  provisions of  the Act  and the provisions      for  various   facilities  in   the   various   markets      established by it, is in the nature of sales tax. It is      true that  the fee  is  calculated  on  the  amount  of      produce bought and sold but that in our opinion is only      a method  of realising fees for the facilities provided      by the Committee." Since the  market  was  not  found  to  have  been  properly established it  was held that the market committee could not enforce any  of the  pro  visions of the Act or the Rules or the bye-laws.  Therefore, the question of the rate of market fee did  not fall  for consideration. The Bihar Statute came up for  consideration of  this Court  in the case  of Lakhan Lal and   others  etc. v.  The State  of Bihar  and  others. Bachawat J.,  upheld the  validity of  the  various  actions taken by  the State  Government under  the Act and the Rules and finally  said at  page 539:-"But there is no material on the record to show that the Government acted unreasonably or

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that the  market is  so wide  that the  sale and purchase of agricultural  produce   within  it   cannot  be  effectively controlled by  the market  committee  or  that  the  growers within the  area cannot  conveniently bring their produce to the market yards." In contrast in the present case the whole of the  State has  been divided into different market areas, although the  principal market  yard is only one in one area with some  sub market  yards appertaining  to it.  We do not mean to  suggest in  pointing out  this difference  that the declaration of  the whole  market area  is unreasonable. But the market  fee has  to be  realized from the traders on the purchase of  the agricultural  produce in  the market  which consists of the market yards and some purchas- 1243 ing centres established at some other places in the area due to the      urgency or exigency of the situation. Such a fee cannot be utilised for the purpose of rendering all sorts of facilities   and   services   for   the   benefit   of   the agriculturists throughout the area. It may be very necessary to render  such services to the agriculturists; rather, they must be  rendered. But  the laudable  and in  itself  cannot justify the  means to achieve that end if the means have got no sanction  of the  law. In  the Bihar case it was found at page 540:-           "The market  committee  has  appointed  a  dispute      subcommittee   for quick settlement of disputes. It has      set up  a market  intelligence unit  for collecting and      publishing the  daily prices  and information regarding      the  stock,  arrival  and  despatches  of  agricultural      produce. It  has provided  a  grading  unit  where  the      techniques of  grading agricultural  produce is taught.      the  contract   form   for   purchase   and   sale   is      standardised. The  provisions of  the Act and the Rules      are  enforced   through  inspectors   and  other  staff      appointed by  the market committee. The fees charged by      the market  committee are  correlated to  the  expenses      incurred by it for rendering these services. The market      fee,  of   25  naya   paise  per   Rs.  100/  worth  of      agricultural produce and the licence fees prescribed by      Rules 71  and 73  are not excessive. The fees collected      by  the  market  committee  form  part  of  the  market      committee fund which is set apart and earmarked for the      purposes of  the Act.  There is sufficient quid pro quo      for the  levies and  they satisfy  the test of "fee" as      laid down  in Commissioner  Hindu Religious  Endowments      Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur      Mutt-[954] S.C.R., 1005." It would  be noticed  that even  the rate  of 25  paise  per hundred rupees  had to  satisfy  all  these  tests.  In  the instant cases  we are concerned with the rates of market fee which are  much higher  than  the  Bihar  rate.  Correlative service also, therefore, must satisfy the tests of rendering more services  in  the  market  area.  The  fund  cannot  be permitted to be utilised for an end, such as, augmenting the agricultural produce etc., if it has no reasonably direct or close connection with the services rendered to the payers of the fee.      From a  conspectus of  the various  authorities of this Court we  deduce the following principles for satisfying the tests for  a valid  levy of  market fees on the agricultural produce bought  or sold  by licensees  in a  notified market area:-           (1)  That the  amount  of  fee  realised  must  be                earmarked  for   rendering  services  to  the                licensees in the notified

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1244                market  area   and  a  good  and  substantial                portion of   it  must be shown to be expanded                for this purpose.           (2)  That the  services rendered  to the licensees                must be  in relation  to the  transaction  of                purchase or sale of the agricultural produce.           (3)  That while  rendering services  in the market                area for  the  purpose  of  facilitating  the                transactions of purchase and sale with a view                to  achieve  the  objects  of  the  marketing                legislation it is not necessary to confer the                whole of  the benefit  on the  licensees  but                some special  benefits must  be conferred  on                them  which   have  a   direct,   close   and                reasonable correlation  between the licensees                and the transactions.           (4)  That while  conferring some  special benefits                on the  licensees it in permissible to render                such service  in the  market which  may be in                the general  interest of  all concerned  with                the transactions taking place in the market.           (5)  That spending  the amount  of market fees for                the purpose  of augmenting  the  agricultural                produce,  its   facility  of   transport   in                villages  and  to  provide  other  facilities                meant mainly  or exclusively  for the benefit                of the  agriculturists is  not permissible on                the ground  that such service in the long run                go to  increase the volume of transactions in                the market ultimately benefitting the traders                also. Such  an indirect and remote benefit to                the traders  is in no sense a special benefit                to them.           (6)  That the  element of  quid pro quo may not be                possible,   or    even   necessary,   to   be                established with  arithmetical exactitude but                even  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 the fee.           (7)  At least  a good  and substantial  portion of                the amount  collected on account of fees, may                be in  the  neighbourhood  of  two-thirds  or                three-fourths, must  be shown with reasonable                certainty  as   being  spent   for  rendering                services of the kind mentioned above. 1245      In  the   light  of   the  principles  culled  out  and enunciated above,  we    now proceed to examine the relevant provisions of  the Act and the rules framed thereunder as in force in  the States of Punjab and Haryana. We shall examine the relevant provisions with reference to the Punjab Act and the Rules  and will only refer to those of Haryana when some difference of some significance or consequence has got to be pointed out.      Under clause  (f) of  section 2  of the Act "dealer" is defined to mean :-           "any person  who within  the notified  market area      sets up,  establishes or  continues  or  allows  to  be      continued any  place for the purchase, sale, storage or      processing of  agricultural produce notified under sub-      section (l) of section 6 or purchases, sells, stores or      processes such agricultural produce."

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Clause (hh) inserted by Punjab Act 4O of 1976 says:-           "licensee" means  a person  to whom  a licence  is      granted under  section 10 and the rules made under this      Act  and   includes  any   person  who  buys  or  sells      agricultural produce  and to  whom a licence is granted      as Kacha  Arhtia or  commission agent  or otherwise but      does not include a person licensed under section 13." As per clause (i):-           market" means  a market  established and regulated      under this  Act  for  the  notified  market  area,  and      includes a  market proper,  a principal market yard and      sub-market yard." The definition  of "market  proper" is to be found in clause (k) to mean:-           "any area  including all  lands with the buildings      thereon, within  such distance  of the principal market      or sub-market  yard, as may be notified in the official      gazette  by  the  State  Government,  to  be  a  market      proper." "Notified market area" in clause (b) means any area notified under section 6 and clause (n) provides:-           " "Principal  market yard"  and "sub-market  yard"      mean an  enclosure, building or locality declared to be      a principal  market  yard  and  sub-market  yard  under      section 7." As already  stated the State Agricultural Marketing Board is constituted under section 3 and while enumerating the powers and duties of the 1246 Board it  is provided  in sub-section  (9) that  "The  Board shall  exercise   superintendence  and   control  over   the Committees."  The  provision  of  "Declaration  of  notified market area"  is to  be found in section 6(1) which empowers the State  Government to  declare the  area  notified  under section 5  or any  portion thereof  to be  a notified market area  for  the  purposes  of  the  Act  in  respect  of  the agricultural produce  notified under  section 5  or any part thereof. As  already pointed  out the whole of the State was intended to  be divided in various market areas and was also declared as  such under  section 6. Under sub-section (3) of section 6  after the declaration of the notified market area no person  can establish  or  continue  any  place  for  the purchase, sale,  storage and  processing of the agricultural produce except  under a  licence granted  in accordance with the provisions  of the  Act, the  Rules and  the byelaws.  A dispute arose  between the  parties before  us as to whether the licence  is granted  for the  whole of  the area  or for particular places  therein. On  examining Form  in the Rules meant for grant of licence under section 10 we find that the licence is  granted for  one  or  more  places  of  business specified in  column 6  situated in  a  particular  notified market area  named at  the top of the licence. There will be no sense  in specifying the place of business in the licence if the licensee is to be permitted to establish his place of business any  where in  a notified  market area which is too big and  extensive for  the control  and  supervision  of  a particular market committee. Market yards are declared under section 7 and for each notified market area there can be one principal market  yard and  one or  more sub-market yards as may be  necessary. The  marginal note  of section  8 is  "No private market to be opened in or near places declared to be markets." There  is some difference in the provisions of the Act as  introduced by  the Haryana  Amendment in relation to the establishment  of notified  market area,  declaration of market yards  and the  inhibition on any person to establish

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or continue  any place  for the  purchase "sale, storage and processing of  any agricultural  produce." There  was also a controversy before  us as to the exact interpretation of the language of the two Statutes in relation to such inhibition. But for  the purposes  of the  cases before  us  it  is  not necessary to  further encumber the judgment by attempting to reconcile by  harmonious construction the various provisions of the  two Acts  in relation  to this matter. Suffice it to say that  there is  no special  provision in the Statute for establishment of  markets  or  markets  proper  as  per  the definition contained in clauses (i) and (k) of section  2 of the Act,  yet it  is reasonable to assume that the intention of the  legislature is to constitute the market yards as the market proper  and ordinarily and generally the market would be the same but may 1247 include some  other places where transactions of purchase of agricultural produce  by the  traders from the producers has been allowed  in order to avoid rush in the precincts of the market proper.  But one  thing is  certain that the whole of the market  area in  no sense  can be equated with market or market proper.  No  body  can  be  allowed  to  establish  a purchasing centre  of his  own at  any place he likes in the market  area  without  there  being  such  a  permission  or authority from  the Market  Committees. After  all the whole object of  the Act  is the  supervision and  control of  the transactions  of   purchase  by   the   traders   from   the agriculturists in  order to   prevent  exploitation  of  the latter by  the former.  The supervision  and control  can be effective only  in specified  localities and  places and not throughout the extensive market area.      We have  already pointed  out that there is no separate notification or  declaration establishing a market or market proper. But  Rule 24(1)  in both the States framed under the Act provides  that:-"All agricultural  produce brought  into the market  for sale  shall be  sold by  open auction in the principal or  sub-market yard."  This  also  indicates  that market  is generally the principal and sub-market yards. The benefit of  market fee, therefore, has to be correlated with the transactions  taking place at the specified place in the market area and not in the whole of the area.      Sections 9 to 10A deal with the procedure of taking out licences, The State Government is empowered under section ll to establish  a market  committee for  every notified market area and  to  specify  its  headquarters.  The  question  of constitution of  committees is  dealt within section 12. The duties and  powers of  a market  committee are enumerated in section 13.  It would  be seen from clause (a) of subsection (l) of  section 13  that it  is the duty of the committee to establish a  market in  the notified  market area "providing such facilities  for persons  visiting it in connection with the purchase,  sale, storage,  weighment and  processing  of agricultural produce concerned as the Board may from time to time direct."  This also  indicates that  the  Committee  is primarily concerned  with providing facilities in the market for  persons   visiting  it   and  in  connection  with  the transactions taking place there.      Now we  come to  the most important section viz section 23. It read as follows:-           "A Committee  shall, subject  to such rules as may      be made by the State Government in this behalf, levy on      ad-valorem  basis  fees  on  the  agricultural  produce      bought or sold by licensees in the notified market area      at a  rate not  exceeding three  rupees for  every  one      hundred rupees:-

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1248           Provided that-           (a)  no fee  shall be  leviable in  respect of any                transaction  in   which   delivery   of   the                agricultural produce  bought  or  section  in                which delivery is actually made."           (b)  a fee  shall be  leviable only on the parties                to  a   transaction  in   which  delivery  is                actually made." There is  a slight  variation in  section 23  as amended  by Haryana Act  21 of  1973. Therein  some market  fee  may  be charged  on   the  agricultural  produce  even  brought  for processing by licensees in the notified area. But we are not concerned with  the charge  of such  a fee  in any  of these cases.      Rule 29 of the Punjab Rules says:-           "Levy and  collection of  fees  on  the  sale  and      purchase of agricultural produce.           (1) Under  section 23  a Committee shall levy fees      on the agricultural produce bought or sold by licensees      in the  notified market area at the rate to be fixed by      the Board from time to time.           Provided that  no such fees shall be levied on the      same agricultural  produce more  than once  in the same      notified market  area. A  list of  such fees  shall  be      exhibited in  some conspicuous  place at  the office of      the Committee concerned:  ........................................................           (2)  The   responsibility  of   paying  the   fees      prescribed under sub-rule (l) shall be of the buyer and      if he  is not  a licensee  then of  the seller  who may      realise the  same from  the buyer.  Such fees  shall be      leviable as  soon as  an agricultural produce is bought      or sold by a licensee." The Haryana Rule is substantially the same.      Reading section  23 along  with Rule  29  it  would  be noticed that  the power  of the  Committee to  levy fees  is subject to the Rules as may be made by the State Government. The fee is levied on ad-valorem basis at a rate which cannot exceed  the   maximum,  mentioned   in  section  23  by  the legislature. But the power to fix the rate from time to time within the maximum limit has been conferred on the Board and the Committee  is merely  bound to  follow it.  One  of  the arguments before  us on  behalf of  the appellants  and  the petitioners was  that it  was the Board which fixed the rate of Rs. 2/- first and thereafter Rs. 3/- 1249 per hundred  rupees. The Committee abdicated its function in this regard  and, therefore,  the levy of fee is contrary to the principle  of law laid down by this Court in the case of State of  Punjab and  another v. Hari Krishan Sharma(l). But the distinction between the said case and the present one is that under the former there was no provision in section 5(l) of the  Punjab Cinemas  (Regulation) Act  of 1952  that  the power of  the  licensing  authority  to  grant  licence  was subject to  any rule, the rule in its turn providing an over riding power  in the State Government in the matter of grant of licence.  The control  of the Government provided in sub- section (2) was of a limited kind. On the other hand section 23 in  express language  controls the  power of Committee to levy fees subject to the rules. The power given to the Board to fix  the rate of market fees from time to time under rule 29 is  not ultra  vires the provisions of the Act, as in our opinion sub-section  (9) of  section 3  confers power on the Board to  exercise  superintendence  and  control  over  the

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Committees, which  power, in  the context  and the scheme of the marketing  law   will take  within its  ambit the  power conferred on the Board under rule 29(1).      It is  further to be pointed out that the fee levied is not on the agricultural produce in the sense of imposing any kind of  tax or duty on the agricultural produce Nor is it a tax on  the transaction  of purchase or sale. The levy is an impost on  the buyer  of the  agricultural  produce  in  the market in  relation to  transactions of  his  purchase.  The agriculturists are  not required to share any portion of the burden of this fee. In case the buyer is not a licensee then the responsibility  of paying  the fees is of the seller who may realise  the same from the buyer. But such a contingency cannot arise  in respect  of the  transactions of sale by an agriculturist of his agricultural produce in the market to a dealer who  must be a licensee. Nor was any such eventuality occurring in  any of  the cases before us was brought to our notice. Probably  such an alternative provision was meant to be made  for outside  buyers who are not licensees when they buy the  agricultural produce from or through the licensees. Any way we are not concerned with that question.      Under  section 27(1):-           "All moneys  received by a Committee shall be paid      into a  fund to be called the Market Committee Fund and      all expenditure  incurred by the Committee under or for      the purposes  of this Act shall be defrayed out of such      fund, and  any surplus remaining after such expenditure      has been met shall be invested in such manner as may be      prescribed." 1250 Every Market Committee, is obliged under sub-section section (2) (a)  of section  27 to  pay  out  of  its  fund  to  the Marketing Board  as  contribution  such  percentage  of  its income derived from licence fee, market fee and fines levied by the  courts as  specified in  sub-clause(i) and (ii). The purpose of  this contribution  as mentioned  in  sub-section 2(a) is to enable the Board to defray expenses of the office establishment of  the Board and such other expenses incurred by it  in the  interest of Committees in general. The income of almost  all the  Market Committees  were several lakhs of rupees per  year and, therefore, each is required to  pay 30 per centum  of its  income to  the Board  by virtue  of  the amendment brought  about by  Punjab  Act  4  of  1978  Under section 25 all receipts of the Board are to be credited into a fund to be called the Marketing Development Fund. Purposes for   which the  Marketing Development  Fund. Purposes   for which the  Marketing Development  Fund may  be expanded  are enumerated in  section 26  and the  purposes for  which  the Market Committee  Funds may  be expended  are catalogued  in section 28  We think we shall have to read both the sections in full  one by one. First we refer to section 28 which runs as follows:-           Subject to the provisions of section 27 the Market      Committee Funds  shall be  expended for  the  following      purposes:-           (i)  acquisition of sites for the market;           (ii) maintenance and improvement of the market;           (iii)construction and  repair of  buildings  which                are necessary  for the purposes of the market                and for  the health convenience and safety of                the persons using it.           (iv) provision and maintenance of standard weights                and measures;           (v)  pay.    leave     allowances,     gratuities,                compassionate  allowances  and  contributions

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              towards leave  allowances,  compensation  for                injuries and  death resulting  form accidents                while  on   duty,  medical  aid,  pension  or                provident fund of the persons employed by the                Committee.           (vi) payment of  interest on  loans  that  may  be                raised for  purpose of  the  market  and  the                provisions of  a sinking  fund  in respect of                such loans;           (vii)collection and  dissemination of  information                regarding  all   matters  relating   to  crop                statistics and  marketing in  respect of  the                agricultural produce concerned’ 1251           (viii)providing comforts  and facilities,  such as                shelter,  shade,  parking  accommodation  and                water  for   the  persons,   draught  cattle,                vehicles and  pack animals  coming  or  being                brought to  the market or on construction and                repair of  approach roads;  culverts, bridges                and other such purposes;           (ix) expenses incurred  in the  maintenance of the                offices and  in auditing  the accounts of the                Committees;           (x)  propaganda   in    favour   of   agricultural                improvements, and thrift;           (xi) production  and  betterment  of  agricultural                produce;           (xii)meeting any  legal expenses  incurred by  the                Committee;           (xiii)imparting   education    in   marketing   or                agriculture;           (xiv)payments of  travelling and  other allowances                to  the   members  and   employees   of   the                Committee, as prescribed:           (xv) loans and advances to the employees;           (xvi)expenses of and incidental to elections; and           (xvii)with the previous sanction of the Board, any                other purpose  which is calculated to promote                the general interests of the Committee or the                notified market  area or  with  the  previous                sanction of the State Government, any purpose                calculated to  promote the national or public                interest."      Let us  first scan  these clauses  one by  one  on  the footing that  the Market  Committee Fund will ordinarily and generally and  almost wholly  will be  created  out  of  the income of a particular Market Committee on account of market fees realised  by it  from the  traders  in  the  market.  A portion of it may be on account of fines, licence fees, from weighment, arbitration  fees etc. But those amounts compared to the  huge realisations on account of market fees would be almost negligible.  By and  large the purposes enumerated in clauses (i)  to (ix)  are relatable  to the  service  to  be rendered in  the market  in relation  to the transactions of purchase and sale of the agricultural produce. We shall deal with the problem of payment of interest on loans that may be raised for  purposes of  the market  as mentioned  in clause (vi)  shortly   hereinafter.  Apropos   clause  (viii)   the attention of all concerned must be focussed here because the last part of this clause had led the autho- 1252 rities and also the High Court to think that construction of link roads,  culverts and  bridges any  where in  a notified market area  is covered by this clause. In our opinion it is

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not so.  In the  context of  the language of all the clauses preceding clause (viii) and clause (viii) itself it is plain that what  is meant  by "construction and repair of approach roads; culverts,  bridges" is  only for  the purpose  of the facility of  going into  the market  from the nearest public road. Supposing  a market has been established consisting of principal market  yard or  sub-market yards  at a particular place where there is no facility for the carts or the trucks and other  vehicles to  go,  then  approach  roads,  and  if necessary even  culverts and  bridges may be constructed, or repaired  out   of  the   Market  Committee  Fund.  Such  an expenditure within the limited limit will be with the object of facilitating  the taking  place of  the  transactions  of purchase and sale in the market and will confer some special benefits to  the traders  apart from  a share of the benefit going to  the agriculturists  who are  not required to share any burden  of the  market fee.  But as  we have pointed out above, if  one were  to give  a very  wide meaning  to  this phrase  of   construction  and  repair  of  approach  roads, culverts and  bridges to  say that  such construction can be permitted any  where in  the market area for the facility of the agriculturists which ultimately will benefit the traders also, then  the whole  concept of correlation of fee and its character of  having an element of quid pro quo will dwindle down and  become an  empty formality. Uplift of villages and helping the  agriculturists by all means is the duty and the obligation of  the State  no doubt  and it  has to  do it by incurring expenses out of the public exchequer consisting of the income from various kinds of taxes etc.      One may  not have any serious objection to the items of expenditure mentioned  in clauses  (xii),  (xiv),  (xv)  and (xvi).  But  the  other  clauses  do  require  some  careful examination. Obviously  clause (x)  and clause  (xi)  cannot form the  items of  expenditure out  of the  market fees. In face of  the view  of the  law expressed  by  us  above  the propaganda in  favour of  the agricultural  improvement  and expenditure for  production and  betterment of  agricultural produce will  be in  the general  interest of agriculture in the market  area. The  whole of  the State  is divided  into market areas.  So long  as the  concept  of  fee  under  our Constitution remains distinct and limited in contrast to tax such  expenditure   out  of   the  market   fee  cannot   be countenanced in  law. The first part of clause (xiii) may be justified in  the sense  of imparting education in marketing to  the   staff  of  the  Market  Committee.  But  imparting education in  agriculture in  general cannot  be  correlated with the  market fee. The first part of clause (xvii) is too vague to merit any 1253 discussion on  the language  of the  clause itself until and unless  we  are    faced  with  concrete  examples  of  such expenditure. But how ill-conceived the second part of clause (xvii) is,  is abundantly  clear from  the decisions  of the Punjab High  Court  mentioned  above  and  to  be  discussed shortly hereinafter.  Is it  permissible to spend the market fees realised from the traders for any purpose calculated to promote the  national or public interest ? Obviously not. No Market Committee can be permitted to utilise the fund for an ulterior  purpose   howsoever   benevolent,   laudable   and charitable the  object may be. The whole concept of fee will collapse if  the amount  realised by  market fees  could  be permitted to  be spent  in this  fashion. We  may,  however, mention one  matter pointedly  in connection with the Market Committee Fund.  Under section  32 the  Committee may borrow money  for   carrying  on  the  purposes  for  which  it  is

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established on  the security  of any  property vested in and belonging to  the Committee.  It may  obtain a loan from the State Government  or the  Board. In  the various figures and charts submitted  before us  it was  shown that  the  Market Committees had  raised money by loan and other methods. That also will  form the  market committee  fund. Technically and legally, therefore,  one may  not have  any objection to the expenditure of  such money  for the  purposes  mentioned  in clauses (x),  (xi) (xiii)  and (xvii). As we indicated above clause (vi)  provides for  payment of interest on loans, but that is confined to loans that may be raised for purposes of the market and not for any other purpose, whereas, the power of the  Committee to  raise loans  under section  32 is very wide. The  Act, however, is silent as to where from interest will be  paid or the principal will be returned in regard to the amount  of loan  raised for  a purpose  other  than  the purpose of  the market.  Since we  find that  the matter has proceeded at  various stages  in the  High Court  as also in this Court  under a  great confusion of the correct position of law,  we do  not propose  to express  any opinion in this regard at this stage. Nor do we propose to strike any clause of section 28 as being unconstitutional merely on the ground that the  expenditure authorised  therein  goes  beyond  the scope of  the purpose of the utilisation of the market fees. The authorities  have to  bear this  in mind and on a proper occasion the  matter will have to be dealt with by courts in the light  of this  judgment where  a concrete case comes of raising of a loan, spending the money so raised which cannot be reasonably  connected with  the purposes  for  which  the market fee  can be  spent, as  to whether such a loan can be repaid or interest on it can be paid out of the realizations of the market fees.      One of  the points  mooted before  us was as to how far the market  committees can  be compelled to part with 30% of their income  in favour  of the  Marketing Board. If so, for what purposes the Board 1254 fund,  namely,   the  Marketing   Development  Fund  can  be expanded. It  is to  be remembered that market fee is levied by each  and every  Market Committee  separately in  its own area and  if a  good and substantial portion of this fee has got to be expanded for rendering services in the area to the payers of  the fee  in relation  to the  transactions taking place therein, then logically speaking it flows from it that any money  paid to  the Board  out of the collections of the market fee has also got to be expended in the very same area of the  particular  Market  Committee.  But  such  a  strict construction from a practical point of view is not possible. The Board  in the  State  is  the  Central  Controlling  and superintending authority over all the Market Committees, the primary function  of which  is  to  render  service  in  the market. Parting  with 30%  income by  a Market  Committee in favour of  the Board  is not so excessive or unreasonable so as to  warrant any  interference with the law in this regard on the  ground of violation of the principle of quid pro quo in the  utilisation of  the market  fee  realised  from  the traders in  the market  area. We  would,  however,  like  to emphasise that  the Marketing  Development Fund  can only be expended for  the purposes  of the  Market Committees  in  a general way,  or to be more accurate, as far as practicable, for the  purposes of  the particular  Market Committee which makes the contribution.      We shall  now read  section 26 of the Act providing for purposes for  which the  Marketing Development  Fund may  be expended. It reads as follows:-

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         "The Marketing  Development Fund shall be utilised      for the following purposes:-           (i)  better marketing of agricultural produce;           (ii) marketing   of    agricultural   produce   on                cooperative lines;           (iii)collection and  dissemination of market rates                and news;           (iv) grading and  standardisation of  agricultural                produce;           (v)  general improvements  in the markets or their                respective notified market areas;           (vi) maintenance of  the office  of the  Board and                construction  and   repair  of   its   office                buildings, rest-house and staff quarters; 1255           (vii)giving aid  to financially weak Committees in                the shape of loans and grants;           (viii)payment   of    salary,   leave   allowance,                gratuity,      compassionate       allowance,                compensation for, injuries or death resulting                from accidents  while on  duty, medical  aid,                pension or  provident  fund  to  the  persons                employed by  the Board  and leave and pension                contribution  to   Government   servants   on                deputation;           (ix) travelling  and   other  allowances   to  the                employees  of  the  Board,  its  members  and                members of Advisory Committees;           (x)  propaganda, demonstration  and  publicity  in                favour of agricultural improvements;           (xi) production  and  betterment  of  agricultural                produce;           (xii)meeting any  legal expenses  incurred by  the                Board;           (xiii)  imparting   education  in   marketing   or                agriculture;           (xiv)construction of godowns;           (xv) loans and advances to the employees;           (xvi)expenses incurred in auditing the accounts of                the Board; and           (xvii)with the  previous  sanction  of  the  State                Government,  any   other  purpose   which  is                calculated to  promote the  general interests                of  the  Board  and  the  Committee;  or  the                national or public interest.      On a  parity of  the reasoning which we have applied in the case  of Market Committee Fund we may point out that the Market Development Fund constituted primarily and mainly out of  the   contributions  by   the  Market   Committees  from realisations of  market fees,  can also  be expended for the purposes of  the market  in  the  notified  market  area  in relation to  the transactions  of purchase  and sale  of the agricultural produce  and for no other general purpose or in the  general   interests   of   the   agriculture   or   the agriculturists. On  that basis we may, as at present advised hold as  valid the  purposes mentioned in clauses (i), (ii), (iii), (iv),  first part  of clause (v) clauses (vi), (vii), (viii), (ix),  (xii), first  part of  clause (xiii), clauses (xiv), (xv)  and (xvi).  At the  same time  we hold that the Marketing Development  Fund constituted  out of  the  Market fees cannot be expended for the purposes mentioned in second part of clause (v), clauses (x), (xi), second part of clause (xiii) and  clause (xvii).  We do not propose to strike down these provisions  as being  constitutionally invalid  as the purpose of the

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1256 law will  be served  by restricting the operation of section 26 in the manner we have done.      We now  proceed to  examine the  decisions of  the High Court in  the light  of the  principles  of  law  enunciated above. The  first decision in the case of M/s Hanuman Dall & General Mills (supra) is the decision of a Division Bench of the High  Court. It should be recalled that by this judgment delivered on 8-11-1974 the High Court maintained the raising of the  market fee  from Rs.  1.50 to Rs. 2/- in Haryana but struck down the rise from Rs. 1.50 to Rs. 2.25 in Punjab. In the cases  before us a lot of new materials contained in new statements and  charts were  filed before us on either side. We shall  examine only a few of those materials and that too very cursorily  as in  our view  no useful  purpose will  be served, nor  is it  possible to  do so for the first time in this Court, by their thorough examination. The very basis of the materials  submitted on either side seems to be not well grounded on a correct appreciation of law. Too many disputes of facts  have been  raised before us. It is not possible to resolve all of them nor do we find that it will be useful to do that  exercise. We  shall presently show that even on the materials placed  before the  High Court and on the findings recorded by  it, many of which do not seem to be in dispute, the requirement  of law is not satisfied to the extent it is essential in a case of this nature.      In the  case of  Hanuman Dall and General Mills (supra) the High  Court examined  many of  the leading and important judgments of  this Court which we have reviewed, earlier and also placed reliance upon an earlier Division Bench decision of the  same High Court in Ram Sarup v. The Punjab State. In para 31  of the  judgment at  page 12  the view  of the High Court-"that the  amount of  fees so  collected are not to be spent exclusively  for rendering  services to  the payers of the fees  but can  also be  utilised for  carrying  out  the purposes or objects of the Act under which they are levied," is not  quite correct.  In the same paragraph the High Court felt constrained  to add that the amount cannot, however, be utilised for purposes which have no connection with the main purposes of  the Act  for which fee is levied, nor can it be spent for  carrying out  the governmental  functions of  the State. If  many of  the purposes mentioned in the Act, as we have shown  above, are  outside the  ambit  of  the  service element and  fall  within  the  realm  of  the  governmental functions, then  it is  plain that  to say by generalisation that the  fee money can be spent for the purposes or objects of the  Act  is  not  quite  correct.  The  High  Court  has extracted section 1257 28 of  the Act  but has  failed to  scan the  effect of  the various purposes in some of the clauses.      After  referring   to  the   income   and   expenditure statements of Market Committee, Hissar from 1969-70 to 1973- 74 the  conclusion of  fact drawn  at page  15 is  that  the market fee  constitutes more  than 80%  of the income of the Market Committee  and the  amount spent on "works" is nearly one-half of  the total  expenditure. The  further finding is "the major item on which the amount has been spent under the head ’works’  consists of  the  amount  deposited  with  the public  works   department,  Hissar,   as  contribution  for construction of  village link roads." On that finding itself it is manifest that Public Works Department was carrying out the  governmental   functions  of   construction  of   roads including village  link roads spread throughout the whole of the notified  market area  of Hissar.  The said  link  roads

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could not  be taken  to be approach roads within the meaning of clause (viii) of section 28 of the Act as seems to be the view of  the High Court. The error of law becomes writ large in the  last sentence  occurring  in  paragraph  34  of  the judgment at page 15 which says:-           "In any case, the construction of roads within the      notified market area is a work of Public importance and      promotes the  general interest of the committee and the      notified market  area which  is  one  of  the  purposes      enumerated in Cl. (xvii) of Section 26 of the Act."      The High Court further proceeds to say:-           "After giving  my careful  consideration, I  am of      the opinion that the expenditure on the construction of      link roads  for which  amounts were  deposited with the      Public Works Department is fully justified as it is for      the benefit  of the  growers, the  licensed dealers and      the general  public and  promotes the  interests of the      notified market area."      The High  Court seems  to be  of the  view  that  since transportation is  very essential  for the  development of a market and to enable the growers of the agricultural produce to bring  the same  to the  market, the construction of link roads  becomes   an  essential   purposes  of   the   market committees. It  may be  so but the purpose cannot be allowed to be  achieved at  the cost  of the  market fee we realised from the  dealers. The  High Court  point out that the money cannot be spent in construction of the government activities for providing main roads in the State. How, then, the Market Committees can  be made  to contribute  a very  big chunk of their market  fee income  in construction  of the link roads throughout all villages ? To push the matter logically, 1258 if a  link road  is to  be constructed from a village to the main road  for enabling  an agriculturist  to transport  his produce upto  the main road then the Market Committee should be under  an obligation to construct or at least to maintain the main  road also in order to enable that agriculturist to react the  market which  may be  at distance of say 20 miles from the  link road.  It is  plain that construction of such link road  is as much a part of the governmental activity as that of the main roads.      It is  interesting to find out from paragraph 36 of the judgment  that  the  Market  Committees  were  made  to  pay donations  to  educational  institutions  imparting  general education.  The   Market  Committee,   Hissar,   spent   Rs. 1,07,794/- on  the water  supply scheme  for a village. Even the High  Court was  constrained to  disapprove of  this. It also spent a sum of Rs. 6,00,000/- for the construction of a Panchayat Bhawan.  Many other  instances  are  mentioned  in paragraph 37  of the  judgment which  show that  the  Market Committees were getting enormous income from market fees and they were made to squander away a good portion of that money unauthorisedly, although  none of the purposes in itself was objectionable or  bad. Rather,  they were very laudable. But taking an  overall view  of the  matter the  High Court felt persuaded in the case of Haryana to uphold the maximum limit of Rs. 2/- by adding "no interference seems to be called for at  this   time."  In  the  case  of  Punjab,  however,  the allegation of the petitioners before the High Court was that the market  committees were collecting lakhs of rupees every month and  the Marketing  Board  was  collecting  crores  of rupees. The  Marketing Board  was asked  to  contribute  one crore of  rupees to  the Guru  Gobind Singh  Medical College which had  been recently  established at  Faridkot.  A  good portion of the money was already paid and the High Court was

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constrained to  observe that  "the State Government shall be well advised  to compensate the Agricultural Marketing Board and the  Market Committees  for the  misutilisation of their funds for  this unauthorised  purposes". The High Court held at page 19, column 2:-           "In the historical background, set out above, I am      convinced that  the enhancement  in the  amount of  fee      from one  rupee and  fifty  paise  to  two  rupees  and      twenty-five  paise  per  one  hundred  rupees  was  not      genuine and  it was  made with  a view  to  enable  the      market committees  and the Agricultural Marketing Board      to reimburse themselves for the amounts which they were      directed to  contribute to  Guru Govind  Singh  Medical      College at  Faridkot. The Market Committees were having      enough  income   and  could   meet   their   legitimate      requirements from  the amounts of fees which were being      realised prior to the enhancement." 1259 The enhancement  of fee  from Re. 1/- to Rs. 1.50 was upheld but the further increase to Rs. 2.25 was knocked down.      We may  note here that in the batch of appeals we heard there was  no appeal  from the judgment of the High Court in the case  of Hanuman Dall & General Mills. We may reasonably assume,  therefore,   that  the   dealers  of  Haryana  were reconciled for  payment of  the market fees upto the maximum limit of  two rupees  per hundred  rupees. In  the  case  of Punjab, as  we traced  the history  at the  very outset, the maximum fixed  later was  Rs. 2.20 by Act 14 of 1975. But by telegraphic instructions  issued by  the  Board  the  Market Committees were  asked to  charge Rs.  2/- only  with effect from 23-8-1975.  This was  challenged before  the High Court but unsuccessfully  in the  case of  Kewal Krishan  Puri and another v.  The State  of Punjab  and others  (supra). Civil Appeal 1083 of 1977 is from this judgment of the High Court. The Full  Bench judgment  in this  case also suffers more or less from  the same  kind of  error in  the approach  of the legal problem  as is  to be  found in  the earlier  Division Bench decision.  In paragraph 13 of the judgment at page 352 the High  Court repelled the attack on clauses (x), (xi) and (xiv) of section 26 of the Act on the ground:-           "The broad  object of  the  legislation  like  the      present  one  is  only  to  protect  the  producers  of      agricultural produce  from being exploited by middlemen      and profiteers  and to  enable them  to secure  a  fair      return of  their  produce.  The  Legislation  like  the      present one  has its root in the attempt on the part of      the nation  to provide  a fair  deal to  the growers of      crops and  also to find a market for its sale at proper      rates without  reasonable chances  of exploitation.  If      this object  is kept in view, then the clauses of which      the  constitutionality   has  been   challenged,  would      certainly fall  within the  ambit of  Entry 28. Clauses      (x), (xiii)  and (xiv)  would help  the growers to make      improvements in  the production of agricultural produce      with the  result that  their agricultural produce would      find a  better market  resulting in  getting them  high      price for their agricultural produce."      It is  to be emphasised at this stage that the question is not of the legislative competence to enact those clauses, nor is there a question of the fee assuming the character of a  tax  and  therefore,  its  imposition  being  beyond  the legislative competence of the State Legislature. The precise and the  short question is whether the Market Committees and the Board  can be authorised to spend the amount realised by market fees,  as fee  and fee  alone for  achieving all  the

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objects of the Act when such expenditure cannot be justified and sustained on the well-known 1260 concept of  fee as  pointed out  by this  Court  in  several decisions. The impost must be correlated with the service to be rendered  to the  payers of  the fees in the sense and to the extent  we have  pointed out above. Again the High Court fell into  an error  in paragraph  15 of  the judgment when, while upholding  the construction  and  repair  of  approach roads, culverts  and bridges in the larger sense of the term it said:-           "If the approach roads, culverts or bridges are in      such a  bad shape  that they  would become hindrance in      the mobility  of the  produce  from  one  part  of  the      notified market area to the principal market yard, then      the worst  sufferer  would  be  the  grower  for  whose      benefit the Act has been enacted." The Full  Bench approved  the view  of the Division Bench in the earlier  case as is apparent from paras 17 and 18 of the judgment at pages 352 and 353.      We have  said a  bit earlier  that the Market Committee and the  Board laboured  under a  mistaken notion  that they could spend  the income  from the  market fee  for all  good purposes and  objects of  the Act in the general interest of agriculture and  agriculturists in the village. We are going to extract  some of  the averments  made in the affidavit of the Secretary  of the  Market Committee  of  Moga  from  the judgment of the High Court at pages 354 and 355:-           "Besides the  above, the  answering-respondent has      undertaken the  cleaning of  mandis, lining  of village      khals (water  courses), link  roads;  constructions  of      culverts and  bridges; supply  of pesticides  and spray      pumps on  subsidized basis  as also the electrification      of villages. All these activities are going to cost the      answering-respondent an  amount  of  several  lakhs  of      rupees."           "Para 8  of the  writ petition  is denied.  It  is      wrong to  suggest that  the Board  and  the  answering-      respondent have  already given  Rs.  5  crores  to  the      Markfed without  charging any interest. The fact of the      matter is  that on  account of  the withdrawal  of  the      Cotton Corporation  of India  from the various markets,      the price  of cotton  came down  suddenly. In  order to      provide and  ensure a  reasonable price  to the farmer,      the Government  asked the  Markfed to enter the market.      For this  purpose, the Board contributed some amount of      money. So far as the answering-respondent is concerned,      it has not contributed any money at all. The answering-      respondent believes that the Board has contributed only      an amount of Rs. 1.43 crores and not 5 crores." 1261           "It may,  however, be  submitted that  the  entire      money collected  by the Market Committees is being used      for the purposes envisaged under the Act."           "The Market  Committees have to provide facilities      as envisaged  under the  Act. The petitioners had asked      for the  copies of  balance sheets.  The balance sheets      were originally  prepared  when  the  accounts  of  the      Committees  were   being  audited   by  "the  Chartered      Accountants." Now,  the accounts  are being  audited by      the Examiner, Local Fund Accounts which is a Government      Agency. The  preparation  of  balance  sheets  involved      unnecessary expenditure and wastage of time and energy.      Consequently, the  practice of preparing balance sheets      was given up a few years back."

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These paragraphs were placed before us also from the records of Civil  Appeal 1083  of 1977.  After quoting  the  various paragraphs from  counter-affidavit the  High Court  says  in paragraph 20 of the judgment at page 355:-           "From the aforesaid specific averments made in the      written statement,  referred to above, it is clear that      to carry  out the  purposes of  the Act  it had  become      necessary to  enhance the  rate of  the market  fee and      such an enhancement stands fully justified." When certain  documents were placed before the High Court to show that the Board was indulging in activities which had no correlation to  the object  to be achieved under the Act and that  the  enhancement  of  the  market  fee  could  not  be justified the  High Court,  in the  first instance,  did not feel inclined  to put absolute reliance upon those documents as they  were filed with the replication of the petitioners. But it did not stop there. It proceeded further at page 356, para 22  to say,  on an  impression of law which we have not countenanced, that:-           "So far  as Annexures W-11 and W-12 are concerned,      any expenditure  incurred by the Marketing Board on the      setting up of the rice shellers or ginning factories or      by the  Market Committees  on the  construction of  the      link  roads   would  not   be  inconsistent   with  the      provisions of  the Act  and the  object to  be achieved      under the  Act. The  setting up  of the  rice  shellers      would be  for the  benefit of  the  producers  and,  as      earlier observed,  construction of  the link roads also      would be for their advantage. So far as Annexure W-10 1262      is concerned, there can be no gainsaying that giving of      donation for  the Chief Minister’s Flood Relief Fund by      the  Board   or  the  Market  Committee  would  not  be      justified as  the same  has  no  correlation  with  the      object to  be achieved  under the  Act and  in case any      respect,  it   would  certainly   be  unauthorised  and      illegal. But, in the instant case, the petitioners have      failed to  show that any amount was contributed towards      the Chief  Minister’s Flood  Relief Fund  and that  the      enhancement in  the fee had any correlation with such a      contribution. In  this view of the matter, on the basis      of Annexures  W-10, W-11  and W-12,  the enhancement in      the fee to be levied by the Committees cannot be struck      down."      In several Civil Writ Petitions filed in the High Court by the  dealers of  the various Market Committees of Haryana the challenge,  was to the raising of the rate of market fee from Rs.  2/- to  Rs.3/-. The  High Court rejected all those petitions by  the judgment  dated  30-8-1978  which  is  the subject matter  of appeal  in Civil  Appeal No. 1708 of 1978 and the  analogous ones.  After  referring  to  the  earlier judgments of  the Court  this judgment of the Division Bench also proceeds  on the  same lines  at it  was bound to. To a large extent  we are  saved from the unnecessary botheration of examining the voluminously new materials placed before us in view  of the  counter filed  on  behalf  of  the  Haryana Marketing Board  in the  High Court  portions of  which  are extracted in  the judgment.  It will  be useful  to give the whole of the extract from the judgment of the High Court. It runs as follows:-           "It is  well known  to every  one that  the recent      floods in  Haryana were unprecedented and created havoc      in the  State Almost one-third of Haryana was submerged      under water  damaging the  standing crops and uprooting      the inhabitants  making them homeless. The State has to

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    resort to  quick measures, for removing the miseries of      the     people     and     to     rehabilitate     them      .......................................................      .......................................................      The projected  income from market-fee in the year 1977-      78 was  Rs. 9  crores. But due to the floods at the old      rate of  2% it  is expected  to be Rs. 7.77 crores. The      Committees will  only be  able to achieve the projected      income of  1977-78 as  anticipated in  the beginning of      the year only if the fee is charged at enhanced rate of      3%. Only  with the  projected income  the Board will be      able to  provide the  services envisaged  by it  to the      farmers of the area. The Board allot- 1263      ted works  amounting to  Rs. 8.53  crores in  the  year      1976-77, out  of  which  the  Board  will  be  able  to      complete the  development works  worth Rs.  5.62 crores      upto 31st March, 1978, leaving a spill over of Rs. 2.91      crores for the year 1978-79. In addition to this spill-      over, Board  also anticipated  to take  new development      works amounting  to Rs.  3 crores  during 1978-79.  The      projected income  during the  year 1978-79  taking into      account the  enhanced rate  of market-fee  will be  Rs.      6.20 crores whereas the expenditure will be to the tune      of Rs.  8.97 crores  including the  development  works,      miscellaneous  other   services   and   the   cost   of      establishment. The deficit of Rs. 2.77 crores had to be      met by  the Board  by raising  loan from other sources.      Thus even  this enhanced  fee will not be sufficient to      meet the  expenditure which the Board proposes to incur      for the purposes under the Act. Thus the enhancement of      market-fee from  2% to  3%  is  wholly  reasonable  and      justified and  has a  reasonable correlation  with  the      services rendered or to be rendered." Quoting passages  from the  earlier judgments  of  the  High Court, it  upheld the  levy of the fee @ Rs. 3/- per hundred rupees and dismissed all the writ petitions.      The  challenge  by  the  dealers  of  the  Moga  Market Committee by  Civil Writ  Petition No. 2015 of 1978 filed in the High  Court failed as per the judgment of the High Court delivered on  18-5-1978 wherein  the Full Bench decision was followed. Special  Leave Petition  No. 2768 of 1978 has been filed from the said judgment. The purposes enumerated in the Full Bench  decision and  repeated in this judgment also for the purpose  of justifying  the increase  in the rate of fee from Rs.  2/- to  Rs. 3/- per hundred rupees are the stereo- type ones  including Rural  Integrated  Development  Scheme, night-shelter, link  roads and  bridges. Every body seems to have allowed  himself to be carried too far by the sentiment of the  laudable object  of the  Act of  doing  whatever  is possible  to  do  under  it  for  the  amelioration  of  the conditions  and   the  uplift   of  the  villagers  and  the agriculturists. Undoubtedly  the Act  is primarily meant for that purpose  and to  the extent it is permissible under the law to  achieve that object of utilising the money collected by the  market fee,  it should  be done. But if the law does not  permit  carrying  on  of  the  sentiment  too  far  for achieving of  all the  laudable objects  under the Act, then primarily it  becomes the duty of the Court to allow the law to have an upper hand over the sentiment and not vice versa. We must  not be misunderstood to say that we are against the sentiment expressed in the interests of the 1264 agriculturists. Nor  are we  opposed in  the  least  to  the achievement of  all the laudable objects envisaged under the

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Act. Let  them all  be achieved by all means known to law by meeting the  expenses after augmenting the public revenue or by diverting  the expenditure  from wasteful  or unimportant channel to  the more important one under the Act. But surely we cannot  countenance the  achievement of all those objects by utilising  a good  and substantial  portion of the market fee  collections  when  the  utilisation  goes  against  the concept of  quid pro  quo which is very essential in case of fees. As  we have  already stated  Civil Appeal 1616 of 1978 arised from  the order  of the  High Court  dated  18-9-1978 dismissing the  connected  Writ  Petition  filed  by  a  few hundred dealers of various Market Committees in the State of Punjab challenging  the increase  of the market fee from Rs. 2/- to Rs. 3/-. Before us in the Writ Petitions not only the increase of  the rate  from Rs.  2/- to  Rs.  3/-  has  been challenged  but   the  previous  increases  have  also  been challenged. For the reasons to be briefly stated hereinafter we do  not feel  persuaded to interfere with the charging of the market  fee Rs.  2/- per  hundred rupees  by the various Market Committees  in the  States of Punjab and Haryana. But surely on  the facts  as they  are, the increase of the rate from Rs.  2/- to  Rs. 3/-  is not justified in law by any of the Market Committees in either of the two States.      Mr. Tarkunde  drew our  attention to  the report of the Royal Commission  submitted in 1928 and the recent Report of the  National   Commission  on   Agriculture.  It  has  been emphasised in  those reports  that  in  order  to  make  the marketing system efficient and useful link and village roads should be constructed providing transport facilities for the transport of  the  agricultural  produce  to  the  marketing centres. There  cannot be  any doubt  that in  any scheme of development of  Agriculture and marketing in a wide sense, a chain of  connections may  be found  between one activity or the other. It is not only in regard to agriculture but it is so  in  any  other  kind  of  production,  distribution  and marketing. Our  attention was  drawn also  to the use of the word "secondary"  or "indirect"  in some of the decisions in relation to  the element of quid pro quo. But in our opinion there is  a misconception in understanding the true scope of the  matter  and  not  drawing  the  dividing  line  at  the appropriate place  for  determining  the  real  controversy. Examples of trust cases were given before us that control of the trustees is not for the personal benefit of the trustees but for the beneficiaries, although the liability to pay the fee is  of the  trustees. The misconception lies in the fact that the  impost of  fee is  not a  personal impost  on  any person in the sense that unconnected with any undertaking or property or the like, it is just an impost on his person. It is not  so. When  the trustee is charged fee for the benefit of the 1265 religious institutions and the beneficiaries it is a benefit to the  trustee. Similarly, as pointed out in the Mining Act and the  factory cases charge of fee from the mine owners in the area  or the  factory owners  in  the  factory  for  the purpose of  developing and  protecting  the  mines  and  the factories is  a service  to the  owners. If one were to push the example  of a factory beyond the limit of the conception of fee,  one could say that the fee charged from the factory owners can be utilised for pushing end augmenting the output of the  raw-materials required  in the manufacturing process in the  factory, it  is also a benefit to the factory owner. Is it reasonably possible to travel as wide as that? Neither the Royal  Commission nor  the National Commission suggested as to  how the  integrated development  of marketing and the

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agricultural produce  is  to  be  financed.  They  were  not concerned with  that aspect of the matter. None can have any objection to  the carrying out of the integrated development but it  must be  carried out  by  legal  means  raising  the finance in a way known to law.      The improvements, checks, controls and regulations must be carried out in the market or in its vicinity. Much of the facilities provided  in the  market yards  or around it will also be  for the  direct benefit of the producers. But then, being intimately  connected with  marketing  operations  the benefit to  the producers  must be  deemed to  be special or direct benefit  to the  traders also.  Under  the  Marketing Rules the  auction cannot  be conducted  by any person other than the  person engaged by the Committee. [Rule 24(5)], and weighments and measurements of agricultural produce intended for sale  are to  be made  through  licensed  weighments  or measures in  the principal  or a  sub-market yard [vide Rule 28(2)].  Reading  these  Rules  in  the  background  of  the recommendations of  the Commissions,  and even otherwise, it is  plain   they  are   meant  for  the  protection  of  the agriculturists. But since they are intimately connected with the marketing  operations, just like factory cases, they are also meant  for the  special benefit  of  the  traders.  The literal meaning of the phrase "quid pro quo" is "one for the other" meaning thereby-"you charge the fee for the service." Service to  the mining  area, factory,  market or  marketing operations are services to the payer of the fee.      Mr. P.N.  Lekhi,  learned  counsel  for  the  State  of Haryana placed some new materials before us to show that big projects of  development of marketing had been undertaken in India with  the help of the World Bank loans. All very good, we wish  God speed  to all  these projects.  The only  check which the  law has  to put  is-"please don’t spread your net too wide  only on the traders. Keep it within bounds so long your levy  has got the character of fee. You may raise funds by any other means known to law or to the economic world." 1266      Now we refer to some additional documents placed before us. But  before we  do so  we repeat what we have said above that the  materials placed  on either  side before  us is so voluminous and  cumbersome that no definite finding with any accuracy could be arrived at on that basis as there seems to be disputes  in regard to the nature and accuracy of many of the figures either on the receipt side or on the expenditure side. We  have, however,  referred to  some of  the admitted facts even  from the  judgments of  the High  Court. We  may refer to a few more.      In the  affidavit of  Shri R.  K.  Singh,  Director  of Marketing, Punjab and Secretary of Punjab State Agricultural Board filed  in the  High Court  giving rise to Civil Appeal No. 1083/77,  which is  not a new material in that sense. It was stated in paragraph 6:-           "It is  submitted that  respondent No.  3 is  duty      bound to  bring about general improvement of a notified      market area,  production and  betterment of agriculture      etc. Under the Act and the answering-respondent is duty      bound to  approve such expenditure under the Act. It is      also submitted  that electricity  plays a major role in      the production  and betterment  of agriculture  and for      the  general  improvement  of  area.  In  view  of  its      importance respondent  No. 3 sought and respondent No.2      approved the  expenditure on the electrification of the      villages situate  within the jurisdiction of respondent      No. 3."      In  the   Writ  Petition,  respondent  No.  2  was  the

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Marketing Board  and respondent  No.  3  was  the  concerned Marketing Committee.  In the  same case  in the  High  Court additional  affidavit   was  filed  by  Shri  Tirath  Singh, Chairman of  the Punjab  Board. It  is stated in paragraph 7 that apart from development works in the budget estimates in the year  1975-76, there  were other development projects to be taken  in hand  some of  which were  enumerated  in  that paragraph. We may take up only two or three items out of the same to  show in  contrast how one will be within the limits of law  and the others will widely beyond it. Item No. (iii) reads as follows:-           "To provide Rest Houses, Cattle Sheds, Cart Sheds,      Light and Water arrangements in all the market yards."      A good  portion of these facilities will be utilised by the agriculturists  who would  be coming to the market yards for sale of their produce. Yet in the view we have expressed above it  will be a service to the trader directly connected with the  marketing operations.  In contrast  we quote items (x) and (xii):- 1267      (x) Continuation of programme of link-roads.      (xii)  Improvement   of  agricultural   production   by      providing improved  seeds, green  manuring seeds, plant      protection equipment insecticides and pesticides." One has  to stretch  one’s imagination  almost to a breaking point  to   say  that   the  programme  of  link  roads  and improvement of  agricultural say  production  by  the  means mentioned in item (xii) can all be carried out by the impost of fee in the market.      In a  new affidavit  of Shri N. S. Bakshi filed in this Court in Civil Appeal 1083 of 1977 it is stated in paragraph 6 that  in the  entire Khanna  market notified area there is one principal  yard; two  sub-yards and  only  two  purchase centres and  no weighing  bridge or  any weighing facilities has  been  provided  by  the  Committee.  It  is  stated  in paragraph 7  that "amount  of Rs.  3/- lacs  lying with  the Khanna Market  Committee during March, 1978 in Banks was got deposited in  the Government  Treasury under  the orders and directions of  the Board."  These facts are disputed. But we are merely  stating them  for the  future  guidance  of  the authorities  that   they  should   proceed  in   the  matter cautiously keeping  in view  the law laid down by this Court in earlier  cases, such  as, Salvation Army case, and in the light of  this judgment. In the additional affidavit of Shri K. K.  Puri it  is stated that from the information gathered it was  learnt that the Punjab Board had spent about a crore of rupees  by way of subsidy @ 75% for the metallic bins for the use of the villagers for their domestic use; a crore for air spray;  five crores  to  the  Punjab  State  Electricity Board, one  crore given  to MARKFED, one and a half crore to Soil Conservation  Department and yet nine crores were lying surplus with  the various  Market Committees. The figure may be exaggerated  but are  not quite groundless. We are merely quoting them  for the  future  caution  of  the  authorities concerned. Puri  has further  pointed out in paragraph 17 of his affidavit  that in  the  Estimated  Expenditure  in  the proposed Budget  of the Moga Committee for the years 1976-77 and  1977-78   several  lakhs   of  rupees  were  shown  for insecticides and  pesticides apart  from other  inadmissible expenses.  We   may  again   pin-point  the  difference.  If insecticides and  pesticides are  for use at the place where actually the marketing operations are carried on it would be a justifiable  expenditure. But  if they  are  meant  to  be supplied to  the agriculturists  for use  at  their  village homes or  in  their  fields  surely  they  cannot  be  valid

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expenditure out of the collections of the market fee.      Mr. Tarkunde  filed an  abstract of  the  statement  of income from  market fee  and  licence  fee  and  expenditure incurred therefrom by 1268 the Market Committee, Hissar as worked out from Annexure R-I to R-V  filed in  the High Court. It would be seen from this abstract that in the year 1974-75 the income from market fee was Rs.  24,08,141/- and  from licence fee about Rs. 6,000/- only. A  sum of Rs. 7,89,670/- was contributed under section 27 of  the Act to the Board and a sum of Rs. 14,73,732/- was spent  on  Works  including  link  roads.  Similar  was  the position in the year 1975-76. In 1976-77 income from licence fee was  only Rs.  16,000/- and  odd and incomes from market fee was  Rs. 38,27,233  /-. A  big chunk  to the tune of Rs. 12,19,383/- went  as  contribution  to  the  Board  and  Rs. 24,47,408/-  were  spent  on  works  including  link  roads. Similar abstracts  were given  in respect  of  other  Market Committees showing exactly the same position. Abstracts were also given  to us  by Mr. Tarkunde showing the income of the Haryana Board  by contribution  made by  the various  Market Committees and  the expenditure  incurred therefrom.  In the abstract statement figures of expenditure both of admissible and inadmissible  items had  been clubbed  together. It  is, therefore, not  possible to  get any  correct  picture  from these abstracts.      How admittedly the authorities concerned have travelled wide beyond  limit for the application of the fee money will be apparent  from the counter affidavit of the Haryana Board filed in  the High Court giving rise to Civil Appeal 1700 of 1978. In paragraph 10(i) it is stated:-           "The  construction   of  link   roads  within  the      notified market area is a work of public importance and      promotes the  general interest  of the farmers, traders      and the  notified market  area  which  is  one  of  the      purposes enumerated in clause XVII of section 28 of the      Act." In para 10(ii) it is admitted:-           "Thus the  enhancement of market fee from 2% to 3%      is wholly  reasonable  and  has  co-relation  with  the      services rendered  or to be rendered. 65% of its income      had to  be rightly  deposited with  the P.W.D.  and the      Government, as  the Committee  had got  its link  roads      constructed through  Government  Agency  and  is  still      getting so constructed." It is thus a clear admission that 65% of the income has gone by way  of contribution  to the P.W.D. fund for construction of the  link roads. It is in substance a contribution to the Public  Exchequer  for  helping  the  Government  Agency  in performing its  governmental functions and duties. In no way such a contribution can be justified out of the mar- 1269 ket fee income. From Annexure R-II appended to the aforesaid affidavit of  the Board  it would  be seen  that in the year 1974-75 a  sum of  Rs. 1,07,338/- was given as aid to animal husbandry for  the uplift  of cattle wealth and its product. This illustrates  to what  extent the concept of fee in lieu of service  has been  stretched. A sum of Rs. 6,00,000/- and odd was  spent for improving the quality of cotton seeds for seeds purposes.  In a  Gober Gas  Plant Rs. 15,55,000/- were invested. This  item was sought to be explained before us by Mr. Tarkunde  that this  expenditure was  incurred with  the help of  the subsidy received from the State and the Central Governments. The  scheme of the Gober Gas Plant was launched for the  promotion of  interest of  market area.  It is  not

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explained as  to how  it was  connected with  the  marketing operations in the area and how much was the subsidy and what portion of  the amount  was spent  out  of  the  market  fee Income. Similarly  in Annexure  R-III from  the statement of income and  expenditure of  the Haryana  Board for  the year 1975-76 it  would appear that a sum of Rs. 1,28,70,662/- was spent "on  general improvement  in M.C.  and other  notified area and construction of F.A.C.C." Apart from that the other items of  expenditure  are  a  sum  of  Rs.  20,00,000/-  in purchase and  acquisition of  land for  new mandies  and Rs. 10,00,000/- and  odd for  purchase of  land, construction of building for  Board’s  office  and  staff  quarters  in  the mandies. Again in this year a sum of Rs. 95,00,000/- and odd is shown  to have  been spent  on Gober Gas plant. It may be inclusive of  the figure  of the  earlier  year.  Then  from Annexure R-IV,  the statement  for the year 1976-77, it will be found that a sum of rupees one crore was given as loan to Haryana Electricity Board. We have taken some of these items just by  way of  example to  illustrate that the authorities took full  liberty to  treat the realisation from market fee as a  general realisation  of tax  which they  were free  to spent in  any manner they liked for the purposes of the Act, the development  of  the  area,  for  giving  a  filling  to agricultural production  and so  forth and so on. The sooner the authorities  are made to realise the correct position in law the better it will be for all concerned.      But taking  a reasonable  and  practical  view  of  the matter  and   on  appreciation   of  the   true  picture  of justifiable and  legal expenditure in relation to the market fee income,  even though  it had  to be done on the basis of some reasonable  guess work,  we are not inclined to disturb the raising  of an imposition of the rate of market fee upto Rs. 2/-  per hundred rupees by the various Market Committees and the  Boards both  in the  State of  Punjab and  Haryana. After all,  considerable development work seems to have been done by many Market 1270 Committees in  their respective markets. The charging of fee @ Rs.  2/-, therefore, is justified and fit to be sustained. We accordingly  do it. As pointed out earlier the dealers of Haryana  did   not  feel   aggrieved  when  the  High  Court maintained the  raising of  market fee  to the extent of Rs. 2/- per  hundred rupees.  We are,  however, not  inclined to uphold the raising of the fee from Rs. 2/- to Rs. 3/-, as on the materials  placed before  us it  is clear  that this has been done  chiefly because  of the  wrong impression  of law that  the  amount  of  market  fee  can  be  spent  for  any development work  in the  notified market area and specially for the  development of  agriculture and  the welfare of the agriculturists. On the basis of the facts and figures placed before us  from the  High Court  records and  also some  new materials filed  here we  have come  to the  conclusion that there was  no justification  in raising the fee from Rs. 2/- to Rs.  3/-. The  High Court  was wrong  in maintaining this rise on  an erroneous  view of  the matter.  We,  therefore, allow the  appeals and  the writ Petitions to the extent and in  the   manner  indicated  above  and  direct  the  Market Committees and  the State  Marketing Boards  not to  realize market fee  at the rate of Rs. 3/- per hundred rupees on the basis of  their impugned  decisions and  actions which  have been found to be invalid by us. We leave the parties to bear their own costs throughout      Before we  part with  these  cases  we  would  like  to observe that  in future  if the  market fee  is sought to be raised beyond  the rate of Rs. 2/-per hundred rupees, proper

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budgets, estimates,  balance-sheets showing  the balance  of the money  in hand  and in deposit, the estimated income and expenditure, etc.  should carefully be prepared in the light of this  judgment. It  may be,  as was  submitted before us, that it  is not  imperative either for the Market Committees or  the   Board  to  prepare  balance-sheets  because  their accounts are  audited by  government auditors  but  for  the purposes of raising the market fee any further, the balance- sheets will  give a  true picture  of the position also with the budgets  and estimates. Then, and then only there may be a legal justification for raising the rate of the market fee further to  a reasonable  extent. On  drawing of the correct balance-sheets and  framing of  the  correct  estimates  and budgets the authorities as also the State Government will be able to  know the  correct position and to decide reasonably as to  what extent  the raising  of the  market fee  can  be justified taking  on  overall  picture  of  the  matter  and keeping in  view the reason behind the restrictions of sales tax law  concerning the  transactions of food-grains and the other agricultural produce. N.V.K.                        Appeals and petitions allowed. 1271