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PETITIONER: LAKHAN LAL AND OTHERS ETC.

       Vs.

RESPONDENT: THE STATE OF BIHAR AND OTHERS ETC.

DATE OF JUDGMENT: 26/03/1968

BENCH: BACHAWAT, R.S. BENCH: BACHAWAT, R.S. HIDAYATULLAH, M. (CJ) VAIDYIALINGAM, C.A. HEGDE, K.S. GROVER, A.N.

CITATION:  1968 AIR 1408            1968 SCR  (3) 534  CITATOR INFO :  RF         1980 SC1008  (22)  R          1983 SC1246  (15)

ACT: Bihar  Agricultural  Produce Markets Act (16 of  1960),  ss. 2(h),  4(1),  5(2),  18(ii) and  Bihar  Agricultural  Market Produce  Rules, 1962, r. 59-Power of declaring  market  area under  s. 4(1)-Scope of-Market, if should have well  defined site,  market  equipment and facilities-Licence  fees-If  in nature  of  tax-Setting up market in one  area  of  State-If offends Art. 14 of Constitution.

HEADNOTE: The  State  Government  of  Bihar  followed  the   procedure prescribed  by the Bihar Agricultural Produce  Markets  Act, 1960, and the Bihar Agricultural Produce Market Rules, 1962, before  issuing the necessary notifications  for  regulating the  purchase  and  sale of certain  items  of  agricultural produce  and for establishing a market for them in the  Gaya area  of the :State.  Under s. 18(ii) of the Act  no  person can  do  business  as a trader -or  other  operator  in  the notified  agricultural  produce in a market except  under  a licence  granted by the market committee on payment  of  the prescribed licence fees,. The validity of the notifications declaring the market  area and  -establishing the market for the notified  agricultural produce  and  the legality of the levy of  market  fees  and licence  fees were questioned on the following grounds.  (1) the  area declared to be the market area was too  wide;  (2) the market committee had not established any market within a well-defined site with market equipment and facilities;  (3) the  fees levied by the market committee were in the  nature of taxes as the committee did not render any services to the users of the market and therefore the levy was illegal;  (4) the  setting up of a market in Gaya was discriminatory  .and violative  of  Art.  14 as the Act and Rules  had  not  been implemented in all parts of Bihar. HELD  : (1) The power of the State Government under s.  4(1) of  declaring an area or part of it to be a market  area  in

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respect   of   a  notified   agricultural   produce,   after considering  any objections and suggestions received by  it, should  no  doubt  be exercised reasonably;  But,  there  is nothing  to show that the Government acted  unreasonably  or that  the market was so wide that the sale and  purchase  of agricultural  produce  within it could  not  be  effectively controlled  by  the  market committee or  that  the  growers within  the area could not conveniently bring their  produce to the market yards. [539 D-E] (2)  For establishing a market it is sufficient to  issue  a notification  ,under  s. 5(2) fixing the boundaries  of  the ’market   proper’   and   the   ’market   -yards’   on   the recommendation of the market committee made under r.  59(2). The  definition of ’market’ does not require a  well-defined site with market equipment and facilities.  Under s.  18(1), the  market  committee must provide such facilities  as  the State  Government may direct, but it was not shown that  the market  committee refused to carry out any -such  direction. Under  ss. 28(2) and 30(i) the market committee may  acquire and  own lands and buildings for the market, but it  is  not obliged to do so. [539 F-H] 535 (3)  The  fees collected by the market  committee  were  not excessive and formed part of the market committee fund which was  set  apart and ear-marked for the purposes of  the  Act such as elimination of unhealthy market practices,  ensuring correct weighment and grading, quick settlement of disputes, dissemination  of  information  regarding  prices  of  agri- cultural  produce etc.  There is therefore, sufficient  quid pro quo for the levies add they satisfy the test of  ’fees’. [540 A-E] Commissioner,  Hindu  Religious  Endowments  Madras  v.  Sri Lakshmindra  Thirtha  Swamiar  of Sri  Shirur  Mutt,  [1954] S.C.R. 1005, referred to. (4)The State Government is not bound to implement the  Act and  the Rules in all parts of Bihar at the same  time.   It may  establish markets regulating the sale and  purchase  of agricultural  produce in different parts of Bihar  gradually and from time to time. [540 F-G]

JUDGMENT: ORIGINAL/CIVIL/CRIMINAL/APPELLATE JURISDICTION Writ Petition Nos. 103 and 199 of 1967. Petition under Art. 32 of the Constitution of India for  the enforcement of fundamental rights.                 AND    Civil Appeal No. 1971 of 1966. Appeal from the judgment and order dated December 2, 1965 of the Patna High Court in C.W.J.C. 442 of 1965.                  AND Criminal Appeals Nos. 164 to 168 of 1966. Appeals by special leave from the, judgment and order  dated December 22, 1965 of the Patna High Court in Criminal  Misc. Nos. 649, 666, 667, 668 and 669 of 1965. N.C.  Chatterjee and A. K. Nag, for the  petitioners  (in W.P. Nos. 103 and 199 of 1967). M.C. Chagla and A. K Nag, for the appellants (in C.A. No. 1971 of 1966). A.K. Nag, for the appellants (in Cr.  A. Nos. 164 to  168 of 1966). C.K.  Daphtary, Attorney-General, D. P. Singh, K.  M.  K. Nair, Anil Kumar Gupta for respondents (in W.P. Nos. 103 and 199 of 1967).

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B.P. Jha, for the respondents (in C.A. Nos. 1871 of 1966) and the respondents (in Cr.  A. Nos. 164 to 168 of 1966). The Judgment of the Court was delivered by Bachawat, J. W.P. No. 199 of 1967, C.A. No. 1971 of 1966 and Cr.  As.  Nos. 164-168 of 1966 raise common questions as  to the  validity of the notifications declaring a  market  area and estab- 536 lishing  a market for agricultural produce in Gaya  and  the legality  ,of  the  levy of market  fees  and  licence  fees therein  under the Bihar Agricultural Produce  Markets  Act, 1960  (Bihar  Act  16 of 1960) and  the  Bihar  Agricultural Produce  Markets Rules 1962.  The contentions are  that  (1) the  notification declaring the market area is void  as  the notified  market area is too wide, (2) the market  committee has  not  established  any market and in the  absence  of  a market  and a lawful market area, the provisions of the  Act and the Rules are not enforceable in the area, (3) the  fees are  in the nature of taxes and are illegally levied  as  no services are being rendered by the market committee and  (4) the  enforcement  of the Act and the Rules in  Gaya  without implementing  them in the whole of Bihar  is  discriminatory ;and violative of Art. 14 of the Constitution.  W.P. No. 199 of  1967 is a writ petition filed in this Court.   C.A.  No. 1971  of 1966 is an appeal from -an order of the Patna  High Court  dismissing a writ petition filed in that Court.   Cr. As.   Nos.  ’164-168 of, 1966 are appeals filed against  the orders  of the Patna High Court refusing to  quash  criminal prosecutions under s. 48 for refusal to take out licences in contravention of Rule 7 1. The  relevant  provisions of the Act and the Rules  and  the relevant notifications may be noticed briefly.  As stated in the  preamble, the object of the Act is to provide  for  the better  regulation  of buying and  selling  of  agricultural produce and the establishment of markets for it in the State of Bihar and for matters connected therewith.  "Agricultural produce"  as  defined  in s. 2(1)(a)  includes  all  produce mentioned in the schedule to the Act.  Sections 2, 3, 4  and 5  define  and  deal with market area,  market,  proper  and market yards.  "Market area" is the entire area within which purchase  and  sale of agricultural  produce  is  regulated. "Market"  for  the  area  consists of  a  market  proper,  a principal market yard and sub-market yard or yards, if  any. "Market proper" is an area inside the market area and within a  certain distance from a market yard.   "Principal  market yard"  and  "sub-market yard" are enclosures,  buildings  or localities within the market proper. The  State  Government may issue a notification under  S.  3 declaring its intention of regulating the purchase and  sale of  specified  agricultural  produce  in  any  Area.   After considering  the objections and suggestions received  by  it and  after  holding necessary enquiries, if any,  the  State Government may issue a notification under s. 4(1)  declaring the area or any part of it to be the market area in  respect of any notified agricultural produce.  Section 4(2) provides that on the issue of such a notification no place can be set up,  established or continued except in accordance with  the provisions  of the Act, rules and bye-laws for the  purchase or sale of the agricultural produce other, than sales by the growers and 537 retail sales to consumers.  The State Government is required by  s.  6 to establish a market committee for  every  market area.  Under Rule 61 read with s. 27 the market committee is required to levy and collect market fees on the agricultural

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produce  bought  in the market area at the rate of  25  naye paise for Rs. 100/- worth of the produce. The  relevant  provisions relating to the  establishment  of market may now be read               "2(h) market means a market established under’               this  Act for the market area and  includes  a               market  proper,  a principal market  yard  and               sub-market yard or yards, if any.               S.  5.   Declaration of market  yards-(1)  For               each market     there  shall be one  principal               market yard and there may also be one or  more               sub-market yard or yards as may     be               necessary.               (2) The State Government may, by notification,               declare-               (i)  any enclosure, building or,  locality  in               any  market  area to be the  principal  market               "yard  and  other  enclosures,  buildings   or               localities in such area to be one or more sub-               market yard or yards for the said market area;               and               (ii)  any  area,  including  all  lands,  with               buildings therein, within such distance of the               market  yard or yards as it thinks fit, to  be               market proper.               18.Objects   and  duties  of   the   Market               Committee  Subject to the other provisions  of               this  Act, the following shall be the  objects               and duties of the Market Committee :-               (i) when so required by the State  Government,               to  establish  a market for  the  market  area               providing  for  such facilities as  the  State               Government  may, from time to time, direct  in               connection  with the purchase and sale of  the               agricultural produce concerned;....               Rule 59.  Establishment of markets (1):  After               the issue of the notification under section  4               and  establishment  of  the  market  committee               under  section 6, the State  Government  shall               direct  the  market committee to  establish  a               market.               (2)  when.  directed to do so  under  sub-rule               (1),  the market committee shall  establish  a               market  for  the market area for which  it  is               established. 538 (3)After  the  establishment  of a market  by  the  market committee,  the State Government shall issue a  notification under section 5." A  market as defined in s. 2(h) is established for a  market area by following the procedure laid down in sees. 5,  18(i) and Rule 59.  The State Government issues a direction  under s.  18(i)  read  with r. 59(1) to the  market  committee  to establish a market for the market area.  On receipt of  this direction  the  market committee decides under r.  59(2)  to establish  a market by fixing the boundaries of  the  market proper and the principal market yard and sub-market yard, if any.    Thereafter  the  government  issues  the   necessary notification  under s. 5(2) declaring the market proper  and the  market  yards.  These three steps form  one  integrated process  and on the issue of the notification under s.  5(2) the   market   is  finally  established.   The   market   so established  consists  of the market proper and  the  market yard  or  yards.  There is no other separate  market  place. The  expression  "market"  is used in the  Act  as,  meaning

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either the market proper or the market yards or both.  Under section  15  read  with  r.  67  as  soon  as  a  market  is established all notified agricultural produce- brought into, produced or processed in the market proper save a prescribed quantity for retail sale or consumption must pass through  a market yard and shall not be sold at any other ’Place within the  market  proper and the price shall be settled  by  open auction  and not otherwise.  Thus the business of  sale  and purchase of the agricultural produce is concentrated in  the market yards and takes place at fair prices under  regulated conditions  in the presence of a large number of buyers  and sellers.   Under sec. 18(ii) and Rule 71 and 73, as  amended by  notification No. 4575 issued by the State Government  on March  25,  1965 no person can do business as  a  trader  or other  operator  in the notified agricultural produce  in  a market  except  under  a  licence  granted  by  the   market committee on payment of the prescribed licence fees. The  procedure prescribed by the Act and the Rules was  fol- lowed  for regulating the purchase and sale of  agricultural produce  and  for establishing a market for it in  the  Gaya area.  On December 13, 1962 the State Government issued  the necessary notification under s. 3. On September 19, 1963  it issued  a  notification under s. 4(1) declaring  Gaya  town, Gaya  Muffasil, Bodh Gaya and Paraiya Police Station  within the  Sadar sub-division of Gaya District as the market  area for  the sale and purchase of paddy, rice,  masur,  linseed, gur  and potato.  On the same date it established  a  market committee  for  the market area.  On October  22,  1963  the Government  acting under S. 18(i) and r. 59(1) directed  the market committee to establish a market.  On January 23, 1964 the market committee decided to establish a market under 539 r.59(2)  and  made its recommendations  regarding  market proper and the principal market yard.  On February 12,  1964 the  market committee made its recommendation regarding  the sub-market  yard.   The resolution of  the  committee  dated January  23,  1964  stated that as  directed  by  the  State Government "the committee appoints Gaya bazar to be area  of this  bazar."  This  clumsy  phrase  really  means  that  as directed by-the Government the committee was establishing  a market  for the Gaya market area.  The market  consisted  of the market proper and the market yards.  There was no  other separate market known as the Gaya bazar.  On April 6,  1964, the Government issued a notification under s. 5(2)(ii)  dec- laring  the entire area under the jurisdiction of  the  Gaya municipality and several villages as the market proper.   On April 7, 1964 the Government issued a notification under  s. 5(2)(i)  declaring  the locality of Mahallah  Parani  Godown within  Gaya Police Station to be the principal market  yard and  the  locality  known as Kedarnath  Market  within  Gaya Police Station to be the sub-market yard. Mr. M. C. Chagla submitted that the area declared to be  the market area by the notification on September 19, 1963 is too wide.   This  objection  is not well  founded.   It  may  be conceded  that the power under s. 4(1) should  be  exercised reasonably.  But there is no material on the record to  show that the Government acted unreasonably or 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.   The market   area  was  duly  declared  under  s.   4(1)   after considering  all  objections and suggestions  made  in  that behalf. Counsel  next  submitted that the market committee  has  not

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established any market.  According to Counsel, a market must be a well defined site with market equipment and facilities. The argument overlooks the definition of market in s.  2(h). The market consists of market proper, and the market  yards. The  market yards are well defined enclosures, buildings  or localities but the market proper is under s. 2(k) read  with s. 5(2)(ii) a larger area.  For establishing a market it  is sufficient  to  make a declaration under s.5(2)  fixing  the boundaries of the market proper and the market yards on  the recommendation of the market committee made under r.  59(2). Under  s. 18(i) the market committee must provide  for  such facilities  in the market as the State, Government may  from time  to  time  direct.  It is not  shown  that  the  market committee  refused  to  carry  out  any  direction  of   the Government.   The market committee may in view of ss.  28(2) and  30(i)  acquire  and own lands  and  buildings  for  the market,  but it is not always obliged to do so.  The  market is established on the issue of a L7 Sup.  C.I/68-10 540 notification  under s. 5(2) declaring the market proper  and the market, yards. The  next contention is that the fees levied by  the  market committee  are in the nature of taxes as the committee  does not  render any services to the users of the market and  the levy  of fees is therefore illegal.  This contention is  not tenable.   The  market  committee has  taken-steps  for  the establishment of a market where buyers and sellers meet  and sales  and purchases of agricultural produce take  place  at fair  prices.   Unhealthy market practices  are  eliminated, market charges are defined and improper ones are prohibited. Correct  weighment  is  ensured by  employment  of  licensed weighment and by inspection of scales, weights and  measures and   weighing  and  measuring  instruments.    The   market committee  has appointed a dispute sub-committee  for  quick settlement  of disputes.  It has set up market  intelligence unit  for  collecting and publishing the  daily  prices  and information regarding the stock, arrivals and despatches  of agricultural  produce It has provided a grading  unit  where the  technique  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 naye 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 ear-marked  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(1). It  is then said that the setting up of a market in Gaya  is discriminatory and violative of Art. 14 of the  Constitution as  the Act and the Rules have not been implemented  in  all parts of Bihar.  There is no force in this Contention.   The State Government is not bound to implement the, Act and  the Rules  in  all  parts of Bihar at the so  time.   I  It  may establish  markets  regulating  the  sale  and  purchase  of Agricultural  produce in different parts of Bihar  gradually and from.,time to time. In Writ Petition No. 103, of 1967 the relevant  notification relating  to  Barh  and  the levy  of  fees  by  the  market committee   are  challenged  on  the  same   grounds.    The

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notification  under S. 4(1) declaring the area  within  Barh police station to be a market area (1) [1954] S.C.R. 1005. 541 in respect of the agricultural produce mentioned therein was issued by the State Government on May 26, 1965.   Thereafter the  market for the area was established  and  notifications declaring the market proper and the market yards were issued after-following  the procedure laid down in secs. 5, 18  (i) and  r.  59.   For  the reasons already  given  we  find  no substance in any of the contentions raised in this petition. In  Thakur Prasad Gupta v. The ’,State of Bihar(’) the  High Court  of Patna upheld the constitutionality of the Act  and Rule 61 but it struck down Rule 71 then in force as the rule imposed the liability to take out licences for operating  in the entire market area and was ultra vires s. 18(ii).   This judgment  was pronounced on November 20,  1964.   Thereafter Rules 71 and 73 were amended by notification No. 4575  dated Match 25, 1965 and the word "market" was substituted for the words  "market  area"  therein.   The  amendment  cures  the objection  that these rules were ultra vires s. 18(ii).   In all  the matters before us the constitutionality of the  Act and the Rules were again; challenged.  But when the  hearing of  these  cases commenced, counsel expressly  gave  up  all contentions  regarding  the invalidity of the Act  and  the, Rules. In the result, C.A. No. 1971 of 1966, W.P. Nos. 199 and  103 of 1967 are dismissed with costs.  There will be one hearing fee.  Cr.  As.  Nos. 164-168 of 1966 are dismissed. V.P.S.               Petitions and appeals dismissed. A.I.R. 1965 Pat  267 542