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CASE NO.: Appeal (civil)  6301 of 2001

PETITIONER: Krishi Utpadan Mandi Samiti Pilibhit & Ors.      

RESPONDENT: Pilibhit Pantnagar Beej Ltd. & Anr.                      

DATE OF JUDGMENT: 28/11/2003

BENCH: S.B. Sinha

JUDGMENT: J U D G M E N T

S.B. Sinha, J.

       The core question involved in this appeal is as to whether ‘seed’  would come within the purview of the expression ‘Wheat’ within the  meaning of the provisions of U.P. Krishi Utpadan Mandi Samiti Adhiniyam  (’The Act’).  The Act was enacted to curb the malpractices in the old  markets.  Mandi Samitis are established under Section 12 thereof.  The  Mandis  are entitled to collect market fee on the sale and purchase of  agricultural produce in terms of Section 17 of the Act.   

Agricultural produce is defined in Section 2(a) of the Act to mean  :

"2(a) Agricultural produce means such items of  produce of agriculture, horticulture,  viticulture, apiculture, sericulture,  pisciculture, animal husbandry or forest as are  specified in the schedule and includes admixture  of two or more of such items and also includes  any such item in processed form and further  includes gur, rab, shakkar, khandsari and  jaggary."

Section 2(y) defines trader to mean :   

"’Trader’ means a person who in the ordinary  course of business is engaged in buying or  selling agricultural produce as a principal or  as a duly authorized agent of one or more  principals and includes a person, engaged in  processing of agricultural produce."   

       It is not in dispute that the respondents are engaged in  production and sale of ’seeds’ which is governed by a Parliamentary Act  known as the ’Seeds Act, 1966’ (1966 Act).    The entire  process  beginning from procurement of seeds breeder, further production thereof  as well as sale is governed by 1966 Act and Rules framed thereunder  and  Seed Control Order 1983.  The preamble of the 1966 Act suggests that the  same was enacted with a view to monitor the production and sale of  seeds.  The purport and object of enacting the 1966 Act was to bring  green  revolution in the country as would appear from the following  statement of objects and reasons thereof:-

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"In the interest of increased agricultural  production in the Country, it is considered  necessary to regulate the quality of certain  seed, such as seeds of food crops, cotton seeds  etc., to be sold for purposes of agriculture  (including horticulture).

The methods by which the Bill seeks to achieve  this object are -

(a)     Constitution of a Central Committee    consisting of representatives of the  Central Government and the State  Government, the National Seeds Corporation  and other interests to advise those  Governments on all matters arising out of  the proposed Legislation;

(b)     fixing minimum standards of germination,  purity and other quality factors;

(c)     testing seeds for quality factors at the  seed testing laboratories to be  established by the Central Government and  the State Government;

(d)     Creating of seed inspection and  certification service in each State and  grant of licences and certificates to  dealers in seeds;

(e)     Compulsory labelling of  seed containers  to indicate the quality of seeds offered  for sale, and  

(f)     restricting the export import and inter- State movement of non-descript seeds."

Section 2(11) of the Seeds Act defines seeds to mean :        "Seed means any of the following classes of  seeds used for sowing or planting :  

(i)     seeds of food crops including edible oil- seeds and seeds of fruits and vegetables;  includes seedings, and tubers and bulbs,  rhizomes, roots, cutting, all topes of  grafts and other vegetatively propagated  material, of food crops or cattle  fodder".

The definition of ’seeds’, therefore, is not exhaustive.    It is not in dispute that the entire process for procurement of   ‘breeder seeds’ to sale of ‘seeds’  is governed under the provision of  the Seeds Act as well as the rules framed thereunder.  

       Wheat is an agricultural produce within the meaning of Section  2(a) which together with thirteen other food products have been placed

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under the heading "cereals".  

The Act contains  both penal and fiscal provisions.  A trader  within the meaning of the said Act would be a person who carries on  business inter alia in the agricultural produce. The question is as to  whether in the aforementioned situation the respondent would be a trader  of Agricultural produce within the meaning of the provisions of the said  Act.  It is not disputed that ’seed’ as purchased and ’sold’ is not  meant to be used as a cereal.  The respondent buys only certified seeds  and sales the same as seeds after processing the same. ’Seeds’ which are  sold by the respondent admittedly are not consumable.  It is furthermore  not disputed that in terms of the licenses granted in their favour under  the 1966 Act, they are not permitted to deal in the commodities for any  other purpose.   In the State of Andhra Pradesh Vs. M/s. H. Abdul Bakhi & Bros.  (AIR 1965 SC 531), the Supreme Court held :-

"We are unable to agree with this view of the  High Court.  A person to be a dealer must be  engaged in the business of buying or selling or  supplying goods.  The expression ’business’  though extensively used is a word of indefinite  import; in taxing statutes it is used in the  sense of an occupation, or profession which  occupies the time, attention and labour of a  person, normally with the object of making  profit.  To regard an activity as business there  must be a course of dealings, either actually  continued or contemplated to be continued with  profit motive, and not for sport or pleasure."   

Yet again in Sri Krishna Coconut Co. Vs. East Godavari Coconut and  Tobacco Market Committee (AIR 1967 SC 973), this Court while considering  interpretation of Section 11 of the Madras Commercial Crops Markets Act  held :-

"The relevant provisions of the said Act and  the rules which fell for consideration by the  Supreme Court would be evident from paragraph 5  of the reported case which is in the following  terms :

Section 11(1) with which we are concerned in these appeals reads :

"The Market committee shall, subject to such  rules as may be made in this behalf, levy fees  on the notified commercial crop or crops bought  and sold in the notified area at such rates as  it may determine".          

        Although the dictionary meaning of business may be wide, in our  opinion, for the purpose of considering the same in the context of  regulatory  and penal statute like the Act, the same must be read as  carrying on a commercial venture in agricultural produce. The rule of  strict construction should be applied in the instant case. The intention  of the legislature  in directing the trader to obtain licence is  absolutely clear and unambiguous in so far as it seeks to regulate the  trade for purchase and sale.  Thus a person who is not buying an  agricultural produce for the purpose of selling it whether in the same

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form or in the transformed form may not be a trader.  Furthermore, it is  well known that construction of a statute will depend upon the purport  and object of the Act, as has been held in Sri Krishna Coconut’s case  (supra) itself.  Therefore, different provisions of the statute which  have the object of enforcing the provisions thereof, namely, levy of  market fee, which was to be collected for the benefit of the producers,  in our opinion, is to be interpreted differently from a provision where  it requires a person to obtain a licence so as to regulate a trade.   It  is now well known that in case of doubt in construction of a penal  statute, the same should be construed in favour of the subject and  against the State.          In the case of London and North Eastern Railway Company and  Berrriman, 1946  AC 278 Lord Simonds quoted with approval the following  observations of Lord Esher N. K. in the case of Tuck & Sons Vs.  Priester, (1887) 19 QBD, 629, 638. "We must be very careful in  construing that section, because it imposes a penalty.  If there is a  reasonable interpretation which will avoid the penalty in any particular  case, we must adopt that construction.  If there are two reasonable  construction we must give the more lenient one.  That is the settled  Rule for the construction of penal sections."   It is trite that fiscal  statute must not only be construed literally, but also strictly.  It is  further well known that if in terms of the provisions of a penal statute  a person becomes liable to follow the provisions thereof it should be  clear and unambiguous so as to let him know his legal obligations and  liabilities thereunder.

The matter may be considered from another angle, "Expressio unius  (persone vel rei)est exclusio alterius",   is a well known maxim which  means the express intention of one person  or thing is the exclusion of  another.  The said maxim is applicable in the instant case. [See M/s  Khemka & Co. (Agencies) Pvt. Ltd. etc. vs. State of Maharashtra etc. -  (1975) 2 SCC 22 paras 47 and 48]

Having regard to the fact that in the event it is held that  buying   of seeds which is a commodity governed by a Parliamentary Act  would attract payment of market fee in terms of the said Act, a conflict  would arise.  In ordinary parlance at particular stages in which seeds  are grown from breeder seeds may take the form of wheat but the said  production which is bought by the respondents is also governed by the  provisions of the Seeds Act and the Rules framed thereunder.  The  definition of ’seed’ as noticed hereinbefore is of wide amplitude.  It  includes seedling of food crops. It is, thus, necessary to construe both  the statutes harmoniously.  Both, the Statutes must be given proper  effect and allowed to work in their respective fields. Even if there is  some over-lappings, the same should be ignored.  

Taking into consideration the totality of the situation and upon  giving harmonious construction to both the 1966 Act as well as the said  Act, we are of the opinion that the respondent cannot be said to be a  trader of agricultural produce as in the ordinary course of business, he  is engaged in buying or selling agricultural produce.  Once it is held  that the respondent is not a trader, no market fee can be demanded from  it by the appellant.

’Seed’ is also an essential commodity within the meaning of the  provisions of the Essential Commodities Act 1955 which has been enacted  by the Parliament in exercise of its power conferred under  Entry 33 of   List III of the 7th Schedule of the Constitution of India.  Further more,  if a Parliamentary Act governs the entire field, the ’seeds’ which are  bought and  further seeds produced therefrom  and processed upon  being  governed by the Parliamentary Acts and Statutory Rules must be held to  have been excluded from the purview of  the provisions of the said Act.

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The Central Government, made Foodgrains Market Restrictions  (Exemption of Seeds) Order, 1970 and Seeds Control Order, 1983 in  exercise of its power under Section 3 of the Essential Commodities Act,  1955.  In terms of sub-section (2) of Section 4 of the Act, the  provisions of Section 3 of Essential Commodities Act, 1955 and the  orders made thereunder shall have effect, notwithstanding anything  inconsistent therewith contained in the said Act or in any law made  thereunder, thus, the seeds which are subject matter of not only a  Parliamentary Act but also an order made under Section 3 of Essential  Commodities Act would by necessary implication are not meant to be  included within the definition of ’agricultural produce’ under the said  Act.             Furthermore the interpretation Clauses contained in Section 2 of  the said Act is  prefaced with the expressions "unless there is anything  repugnant in the subject or  context".

       This Court in State of Maharashtra Vs. Indian Medical Association  and Others [(2002 (1) SCC 589], inter alia, held that the expression  contained in one Statute may have to be read differently in a particular  context.   Recently in S. Samuel, M.D., Harrisons Malayalam & Anr. Vs. Union   of India & Ors. [J.T. 2003(8) SC 413], this Court has held that  ’tea’  does not come within the purview of the expression ’food stuff’  contained within the meaning of the provisions of Essential commodities  Act, holding :-

"It is thus clear that in common parlance food is  something that is eaten. In  a wider sense   ’food’  may include not only solid substances but  also a drink.  Still the fact remains that  whether a solid or a liquid, the substance called  ’food’ should possess the quality to maintain  life and its growth; it must have nutritive or  nourishing value so as to enable the growth,  repair or maintenance of the body.  

       As the purpose for which the respondents purchase the ‘seeds’ is  not  meant to be used as a ’cereal’ which is an  agricultural produce  within the meaning of the provisions of the said Act, the High Court, in  our opinion, has rightly held that the respondents are not liable to pay  any market fee.   

I respectfully agree with the proposed judgment of Brother Dr. AR.  Lakshmanan that the appeal be dismissed.

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