http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

CASE NO.: Appeal (civil)  4824 of 2000

PETITIONER: Krishi Utpadan Mandi Parishad & Anr.             

RESPONDENT: I.T.C. Ltd.                                                              

DATE OF JUDGMENT: 16/11/2006

BENCH: ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.

       In this appeal challenge is to the judgment rendered by a  learned Single Judge of the Allahabad High Court allowing the  writ petition filed by the respondent.  The matter came to be  placed before learned Single Judge as there was difference of  opinion between two Hon’ble Judges constituting the Division  Bench and the learned Single Judge as the third judge decided  the Writ Petition.

       The facts giving rise to present petition, filtering out  unnecessary details are as follows:-

Respondent ITC Ltd is a company incorporated under the  Companies Act, 1956 (in short ’Company’) having its registered  office at 37, Chowringee Road, Calcutta. This company is  engaged in manufacture of cigarette and has established  several factories for this purpose including a factory at Sardar  Patel Marg, Saharanpur. For manufacture of cigarette, leaf  tobacco is required which is excisable to fee levied and  collected by the Tobacco Board (in short the ’Board’)  constituted under Tobacco Boards Act, 1975 (in short ’Tobacco  Act’). The Company purchases tobacco in its raw form from  the auction body established by the Tobacco Board at various  places throughout the country.  The raw tobacco so purchased  is brought to the factory at Saharanpur where it is processed  and cut tobacco is prepared.  This cut tobacco is further  processed and then such tobacco is used for manufacture of  cigarette.  The cut tobacco prepared in the factory at  Saharanpur is dispatched to the factories of the company at  Calcutta where it is used for manufacturing cigarettes. Some  of the cut tobacco produced at Saharanpur factory is  dispatched to certain contract manufacturers who entered into  agreements with the respondent for manufacture of cigarettes.  Respondent company’s supplies them raw material i.e. cut  tobacco paper and packing materia1 etc. and pays them  manufacturing charges.

Under Section 12 of the Uttar Pradesh Krishi Utpadan  Mandi Adhiniyam, 1964 (hereinafter referred to as the ’Act’), a  committee called Mandi Samiti is established for every market  area which is a body corporate having perpetual and official  seal. Mandi Samiti is entitled to levy and collect fee under

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

Section 17 of the Act in respect of all transactions of sale of  specified agricultural produces in the market area at such   rates, being not less than 1% per centum and not more than  2% of the price of aricultura1 produce as sold, as the State  Government may specify by notification. By U.P. (Amendment)  Act No.12 of 1987 an explanation was inserted which provided  that for the purpose of clause (iii) unless the contrary is  proved, any specified agricultural produce taken out or  proposed to be taken out of the market area by or on behalf of  licensed dealer shall be presumed to have been sold within  such area for levying Mandi fee, and in such case, the price of  such produce presumed to be sold shall be deemed to be such  reasonable price as may be ascertained in the manner  prescribed. This explanation came into force w.e.f. 31st March,  l987.

Respondent filed a Writ Petition before the High Court  alleging that appellants for the first time demanded market fee  it on cut tobacco being transported from Saharanpur for the  purpose of use in its another factory at Calcutta or to be used  by the contract manufacturers for manufacturing cigarettes. It  represented against the said demand on 22nd April. 1987.  Authorities allowed respondent to take their stock of cut  tobacco without payment of market fee and it continued to do  so except on two occasions in the year 1995 and 1996. On  9.9.1998, the President of the Mandi Samiti, Saharanpur by  his order dated 28th October, 1998 held that respondent- Company is not liable to pay market fee on the consignment of  cut tobacco dispatched to its Calcutta Factory. However, with  regard to the consignments dispatched to contract  manufacturers he sought a direction from the Director, Mandi  Parishad. In response to the notice served on the respondent  by Director, it furnished its reply and placed materials before  the Director, Mandi Parishad on 2.12.1998.  The Director,  Mandi Parishad however, by order dated 14.1.1999 rejected  the case of the respondent-Company and required the  President  Mandi Samiti to take fresh decision with regard to  the levy of market fee in the light of the guidelines provided in  the order. Aggrieved by this order petitioners have filed present  writ petition was filed under Article 226 of the Constitution of  India, 1950 (in short the ’Constitution’)  

       The High Court held that the Director could not have  exercised the power of revision under Section 32 of the Act  and therefore, the order impugned i.e. one dated 14.1.1999  was without jurisdiction.  Even on merits it was held that the  Director had reopened all the cases since 1987, and even in  respect of proceedings which was not referred to him at all.

       According to learned counsel for the appellant the  approach of learned Single Judge constituting the majority  suffer from various infirmities.  The High Court has  erroneously considered the provisions to hold that the Director  had no power. Even otherwise on merits, it is submitted that  the view of learned single judge cannot be sustained.   

       Learned counsel for the respondent-writ petitioner on the  other hand supported the judgment of learned Single Judge.

       The position of various provisions, more particularly  Section 26 (I) (L), Section 32 and Section 33 at different points  of time need to be noted: ORIGINALLY Sec. 32. Powers of the State Government to  call for the proceedings of a Committee and pass

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

order thereon.- The State Government may, for the  purpose of satisfying itself as to the legality or  propriety of any decision of, or order passed by, a  Committee, at any time call and examine the  proceedings of the Committee, and, where it is of  the opinion that the decision or order of the  Committee should be modified, annulled or  reversed, pass such orders thereon as it may deem  fit. Sec. 33. Delegation of powers.- The State  Government may, by notification in the Gazette,  delegate, subject to such conditions and restrictions  as may be specified therein, any of its powers or the  powers of any other authority under this Act, to any  officer or authority subordinate to it.

AMENDEMENT BROUGHT BY PRESIDENT ACT  NO. 13 OF 1973

Sec. 26-I.  Delegation of powers. Subject to the  provisions of this Act, the Board may, by general or  special order, delegate, either unconditionally or  subject to such conditions as may be specified in  the order, to any sub-committee appointed by it or  to the Member-Secretary or any other officer of the  Board such of its powers and duties under this Act,  as it may deem fit.

Sec. 26-L. Powers and functions of the Board. \027  (1) The Board shall subject to the provisions of this  Act, have the following functions and shall have  power to do anything which may be necessary or  expedient for carrying out those functions-

(i)     superintendence and control over  the working of the Market  Committees and other affairs thereof  including programmes undertaken  by such Committees for the  [construction of new Market Yards  and development of existing Markets  and Market Areas];

(ii)    giving such directions to  Committees in general or any  Committee in particular with a view  to ensure efficiency thereof;

(iii) any other function entrusted to it by       this Act;

(iv) such other functions as may be  entrusted to the Board by the State  Government by notification in the  Gazettee.

2.      Without prejudice to the generality of the  foregoing provision, such power shall include  the power-

(i) to approve proposals of the new sites  selected by the Committee for the  development Markets; (ii) to supervise and guide the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

Committees in the preparation for site- plans and estimates of construction  programmes undertaken by the  Committee; (iii) to execute all works chargeable to the  Board’s fund;

(iv) to maintain accounts in such forms  as may be prescribed and get the same  audited in such manner as may be laid  down in regulations of the Board; (v) to publish annually at the close of the  year, its progress report, balance-sheet,  and statement of assets and liabilities  and send copies to each member of the  Board as well as to the Chairman of all  the Market Committees; (vi) to make necessary arrangements for  propaganda and publicity on matters  related to regulated marketing of  agricultural produce; (vii) to provide facilities for the training of  officers and servants of the Market  Committee; (viii) to prepare and adopt budget for the  ensuing year; (ix) to make subventions [and loans] to  Market Committees for the purposes of  this Act on such terms and conditions as  the Board may determine; (x) to do such other things as may be of  general interest to Market Committees or  considered necessary for the efficient  functioning of the Board as may be  specified from time to time by the State  Government."

32. Powers of the State Government to call  for the proceedings of a Committee and  pass order thereon.- The Board may, for the  purpose of satisfying itself as to the legality  ’propriety of any decision of, or order passed  by, a Committee, at any time call and examine  the proceedings of the Committee, and, where  it is of the opinion that the decision or order of  the Committee should be modified, annulled or  reversed, pass such orders thereon as it may  deem fit. 33. Delegation of powers.- The State  Government may, by notification in the  Gazette, delegate, subject to such conditions  and restrictions as may be specified therein,  any of its powers under this Act, to the Board  or to any of its officers.

AMENDMENT BROUGHT BY U.P. ACT NO. 6 OF  1977

26-I. Delegation of powers.- Subject to the  provisions of this Act, the Board may, by  general or special order, delegate, either  unconditionally or subject to such conditions  as may be specified in the order, to the  Director or the Member-Secretary or any other  officer of the Board such of its powers and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

duties under this Act, as it may deem fit. 33. Delegation of powers.- The State  Government may, by notification in the  Gazette, delegate, subject to such conditions  and restrictions as may be specified therein,  any of its powers under this Act, to the Board  or to the Director.

AMENDMENT BROUGHT BY U.P. ACT NO. 10 OF  1991

33. Delegation of powers.- The Board  may, by regulations, delegate subject to  such conditions and restrictions and in  such manner, as may be specified therein  any of its powers to the Director.

       The position of Section 32 and Section 33 prior to 1973,  after Amending Act, 1973, after Amending Act, 1977 and after  the Amending Act 1999 reads as follow:

Prior to 1973 Section 32: The State Government may, for the purpose of  satisfying itself as to the legality or propriety of any decision of,  or order passed by a Committee, at any time call and examine  the proceedings of the Committee and where it is of the  opinion that the decision or order of the Committee should be  modified, annulled, or reversed, pass such orders thereon as it  may deem fit.  Section 33: The State Government may, by notification in the  Gazette, delegate, subject to such conditions or restrictions as  may be specified therein, any of its powers o the powers of any  other authority under this Act, to any officer or authority  subordinate to it.

After 1973 Amending Act Section 32: The Board may, for the purpose of satisfying itself  as to the legality or propriety of any decision of’, or order  passed by a Committee, at any time call and examine the  proceedings of the Committee and where it is of the opinion  that the decision or order of the Committee should be  modified, annulled, or reversed, pass such orders thereon as it  may deem fit.  Section 33: The State Government may, by notification in the  Gazette, delegate, subject to such conditions or restrictions as  may be specified therein, any of its powers tinder this Act, to  the Board or to any of its officers. After the 1977 Amending Act Section 32: The Board may, for the purpose of satisfying itself  as to the legality or propriety of any decision of, or order  passed by a Committee, at any time call and examine the  proceedings of the Committee and where it is of the opinion  that the decision or order of the Committee should be  modified, annulled, or reversed, pass such orders thereon as it  may deem fit. Section 33: The State Government may, by notification in the  Gazette, delegate, subject to such conditions or restrictions as  may be specified therein, any of its powers under this Act, to  the Board or to the Director.

After the 1991 Amending Act Section 32: The Board may, for the purpose of satisfying itself  as to the legality or propriety of any decision of, or order  passed by a Committee, at any time call and examine the  proceedings of the Committee and where it is of the opinion

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

that the decision or order of the Committee should be  modified, annulled, or reversed, pass such orders thereon as it  may deem fit.  Section 33: The Board may, by regulations, delegate subject to   such condition and restrictions and in such manner, as may  be specified therein, any of its powers to the  Director.

After the 1973 amendment power was given to the Board  to delegate its powers.  After the 1977 amendment, power to  delegate was given to State Government under Section 33  relating to exercise of power to the Board or the Director.  After  1991 amendment  under Section 33, the State had no power  of delegation and it was vested on the Board.   

A comparison of the provisions shows that Sections  32 and 33 relate to provisional powers while Section  26(L) deals with powers and functions of the Board.   Section 26(L)(iv) deals with powers and functions of the  Board.  After the 1973 amendment, in Section 32 the  word "State" was substituted by the word "Board" while  the power exercisable under Section 33 continued with  the State Government.  The High Court seems to have  erroneously proceeded on the basis that the sole  repository power was the State Section 33 A deals with  powers of Director to ensure performance of duties of  Market Committees.  Section 33-B deals with State  Governments’ power relating to general power of  supervision but there was no scope for revising the  delegatees’ decision.   On 22.11.1973 the Board resolved  to delegate powers.  On 21.3.1974 there was a specific  order of Board to delegate powers to the Director.  From  1974 till 1991, Director was exercising power under  Section 26(I).  According to the High Court after 1991  Director cease to have authority because of Section 33.   Regulations in terms of Section 26(X) were brought in by  the 1973 amendment.  Submissions of the appellant is  that when Section 26(F) came into question and was not  repealed and was continued, repository of the power was  the Director and the source of power continued.  Till  1991, the existing arrangements continued  notwithstanding amendment to Section 33.   Arrangements and delegations made under the whole  regime continued.  According to Section 24 of the General  Clauses Act, 1897 (in short the ’General Clauses Act’)   post 1991 all delegations (after Regulation came to  become operative) has to be with prior sanction of the  Board.  Comparison Section 26-I becomes otiose and  irrelevant and cannot be operative if the High Court’s  view is accepted.  Every statute has to be read as a whole  and no part of the statute cannot be rendered inoperative  by another provision.  The power of revision continued  with the State Government up to 1973.  After 1973  amendment the revisional power was with the Board and  not with State Government and it was not a case where  delegation under Section 33 had to play any role.  After  1991 delegation can be either under Section 26 \026 I or  Section 33.   

In reply it is submitted that Section 26-I did not  stipulate delegation the Director Office of Director came  in 1977and he was not an officer of the Board. Only  delegation was made was on 21.3.1974.  The Director  could not have been the delegatee and could be delegated  power after 1977.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

Section 26-I relates to the exerts  covered by Section  26(L)(i)(ii)(iii), while Section 33 deals with the area relatable to  Section 26(L)(iv).  Since the same is not a power under the Act,  has to be covered by the Regulation.  It is not conferred by  either Section 33 or by Statute.

As rightly contended by learned counsel for the  appellant, the High Court’s view would render Section 26- I  otiose and irrelevant.  After 1991, the delegation can be either  under Section 26-I and under Section 33. In the statute there  is no power to reopen unlike some other statutes. The  Chairman hold that there were two transactions i.e. one was  outside Saharanpur and the other relatable to job-work.   According to the Chairman the first was not covered by the  Actand for the second transactions reference was made to the  Director.  Contrary to what the Chairman had told, the  Directors held that both the transactions were covered under  the Act and issued guidelines for transactions from 1987  onwards.  Reference appears to have been made to Section 17  (iii) (b). But there is no analysis of that provision to support  the stand of the Director. Admittedly there is no power of  reopening of assessments. Transactions for the assessment  year 1997-98 fell for consideration.  The complaint was made  on 20.10.1998 therefore the factual position could have been  determined with effect from 01.08.1998 onwards.  The stand  of the respondent that the office of the Director came into  effect in 1977 is not correct.  In fact the office of the Director  came into existence in 1973 but  not as an officer of the  Board.  The delegation was done on 21.3.1974 to the Director.   Under Section 32 after 1973 there is a substantive power of  revision.  After 1991 under two provisions power of delegation  i.e. Section 26-I and Section 33 could be exercised. While  Section 26-I is supervisory in character.  Section 33 confers  the revisional power of the Board to the Director.  The manner  of delegation is in terms of the "Regulation" and therefore it  precludes any other mode.  Prior to 1991, Section 26 -I did not  pertain to power of revision.  It operated dehors Sections 32  and 33. The revisional power went out of the domain of the  State Government and the same remained with the Board.   After 1991 the situation is that Section 33 deals with aspects  other than those covered under Section 32.  That is because  the revisional power was already with the Board.  Post 1991,  the delegation could be done only under the regulation.  That  being so, the High Court’s vis-‘-vis, conclusions i.e. Section 32  of the Act are not correct.  On the merits there is no scope for  interference with the High Court’s order because there was no  power to reopen.  The respondent shall, however, produce the  accounts relating to the period subsequent to 1.8.1998, and  the factual aspects have to be considered by the appellants.

The appeal is disposed of accordingly without any order  as to costs.