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PETITIONER: M.C. V. S. ARUNACHALA NADAR ETC.

       Vs.

RESPONDENT: THE STATE OF MADRAS & OTHERS

DATE OF JUDGMENT: 06/10/1958

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. DAS, SUDHI RANJAN (CJ) BHAGWATI, NATWARLAL H. SINHA, BHUVNESHWAR P. WANCHOO, K.N.

CITATION:  1959 AIR  300            1959 SCR  Supl. (1)  92  CITATOR INFO :  R          1959 SC1124  (25,27)  F          1962 SC  97  (5)  R          1966 SC 385  (8)  RF         1967 SC 973  (4)  R          1973 SC 106  (102)  D          1974 SC1489  (6)  E          1980 SC1008  (22)  F          1983 SC1246  (15,18)  D          1984 SC1772  (15,16)  R          1985 SC 218  (3)  R          1986 SC1506  (6)

ACT:        Fundamental Right-Reasonable restrictions-Statute regulating        buying   and  selling  of  commercial   crops-Constitutional        validity  Madras Commercial Crops Markets Act (Mad.   XX  Of        1933) Constitution of India, Arts. 19(1)(g) and 19(6).

HEADNOTE: The  Madras legislature enacted the Madras Commercial  Crops Markets  Act for providing satisfactory conditions  for  the growers  of commercial crops to sell their produce on  equal terms  with  the purchasers and at reasonable  prices.   The Act,  Rules and the Bye-laws framed thereunder have  a  long term  target  of  providing a net work  of  markets  wherein facilities  for  correct  weighment  are  ensured,   storage accommodation  is provided, and reliable market  information is  given.   Till  such  markets  are  established  the  Act provides  for  the imposition of licensing  restrictions  to enable the buyers and sellers to meet in licensed  premises. After the establishment of the markets no licenses would  be issued  within a reasonable radius from the markets and  all growers will have to resort to the markets for selling their crops.   The  result  would  be  to  eliminate,  as  far  as possible,  the middlemen and to give  reasonable  facilities for  the growers of commercial crops to secure  best  prices for their commodities. Held,  that  the  impugned  provisions  of  the  Act  impose reasonable  restrictions  on  the  citizen’s  right  to   do

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business  and are valid.  Such a statute cannot be  said  to create  unreasonable restrictions on the citizen’s right  to do  business  unless  it is  clearly  established  that  the provisions  are too drastic, unnecessarily harsh  and  over- reach the object for which they were made. Chintaman Rao v. The State of Madhya Pradesh, [1950]  S.C.R. 759  and  State of Madras v. V. G. Rao, [1952]  S.C.R.  597, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 169-171  of 1955. Appeals from the judgment and order dated July 10, 1953,  of the Madras High Court in Writ Petitions Nos. 75, 87 and  135 of 1953. R.   Ganapathy Iyer and Shanmugavel, for the appellants. V.   K. T. Chari, Advocate-General for the State of  Madras, V. V. Raghavan and R. H. Dhebar, for the respondents. 93 H.   N. Sanyal, Additional Solicitor General of India and R. H. Dhebar, for Intervener No. 1 T.   M. Sen, for Interveners Nos. 2 and 3. S.   B. Sen, Additional Government Advocate for the State of Madhya Pradesh and I. N. Shroff, for Intervener No. 4. 1958.  October 6. The Judgment of the Court was delivered by SUBBA  RAO J.-These three appeals by certificate granted  by the High Court are directed against the common order of  the High  Court  of Judicature at Madras, dated July  10,  1953, dismissing  three  writ petitions filed  by  the  appellants impugning  the  validity  of the provisions  of  the  Madras Commercial  Crops Markets Act (Mad XX of 1933),  hereinafter referred to as the Act, and the Rules framed thereunder, and certain notifications issued by the first respondent  herein in pursuance thereof. The  Act was passed to provide for the better regulation  of the  buying and selling of commercial crops in the State  of Madras  and for that purpose to establish markets  and  make Rules for their proper administration.  On May 18, 1951, the State  Government issued G. 0. No. 1049 (Food &  Agriculture Department)   extending  the  provisions  of  the   Act   to Ramanathapuram  and  Tirunelveli  Districts  in  respect  of cotton  and  groundnuts.  On February 25,  1952,  the  State Government  issued  G.  0.  No.  251  (Food  &   Agriculture Department) ordering the constitution of a Market  Committee at Koilpatti and Sankarankoil in Tirunelveli District.  By a similar  G.  O., viz., G. 0. No. 356  (Food  &-  Agriculture Department) dated March 8,1952, the Government directed  the constitution  of  a  Market Committee  at  Virudhunagar  and markets at (1) Virudhunagar; (2) Rajapalayan and (3)  Sattur in  Ramanathapuram  District.  The Market  Committees.  were duly  constituted,  and,  on January  9,  1953,  the  Market Committee  at Virudhunagar issued a notice stating that  the Act  and  the Rules had come into  force  in  Ramanathapuram District  on January 1, 1953, and requiring persons who  did business in cotton                              94 and  groundnut to take out licences as provided therein.   A further  notice dated January 17, 1953, stated that all  the traders  in  cotton and groundnut, who failed  to  take  out licences  on  or before February 15, 1953,  were  liable  to prosecution.   Similar notices dated January 22,  1953,  and February 14, 1953, were issued by the Chairman,  Tirunelveli Market  Committee  at Koilpatti calling  upon  all  traders,

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producers  and  weighmen  dealing  in  cotton  to  take  out licences   before   February  28,  1953,   and   threatening prosecution for failure to comply therewith.  The appellants in  the above three appeals and others filed writ  petitions in the High Court of Madras against (1) the State of Madras; (2)  the Collectors of the concerned Districts and  (3)  the Chairmen  of the Market Committees, for the issue of a  Writ of  Mandamus  directing  the  respondents  to  forbear  from enforcing  any or all the provisions of the Act  as  amended and the Rules and Bylaws framed thereunder. A Bench of the Madras High Court, consisting of Rajamanna C. J. and Venkatarama Aiyar J. by an order dated July 10, 1953, dismissed the applications.  The learned Judges held that s. 5(4)(a)  of the Act was void to the extent it  conferred  on the  Collector  authority  to refuse a licence  at  his  own discretion  and rule 37 was void in so far as it  prohibited persons  whose names had not yet been registered  as  buyers and sellers, from carrying on business in the notified area. Subject to that, the impugned Act and the Rules were  upheld under  Art.  19(6) of the Constitution as a valid  piece  of marketing legislation.  In the result, the applications were dismissed.  The aforesaid three appellants have filed  these appeals against the order of the High Court in so far as  it dismissed their applications. Learned  counsel  for  the  appellants  contends  that   the provisions  of  the  Act and  the  Rules  framed  thereunder constitute an unreasonable restriction upon the  appellants’ fundamental  right to do business and that they not only  do not achieve the object for which they are enacted but defeat their  purpose.   Elaborating  this  argument,  he  took  us through some of the provisions 95 of  the Act and the Rules made thereunder in an  attempt  to establish  that the provisions cripple the business  of  the appellants, restrict the rights of the small traders,  cause unnecessary  and unintentional hardship to the  growers  and thereby  exceed the purpose of the enactment and defeat  its object. Before  we scrutinize the provisions of the Act, the law  on the subject may be briefly noticed.  Under Art. 19 (1)(g) of the  Constitution  of India all persons have  the  right  to practice  any  profession, or to carry  on  any  occupation, trade  or business.  Clause (6) of that Article enables  the State  to make any law imposing in the interest  of  general public reasonable restrictions on the exercise of the  right conferred by sub-cl. (g) of el. (1).  It has been held  that in  order  to  be  reasonable, a  restriction  must  have  a rational relation to the object which the legislature  seeks to  achieve  and must not go in excees of that  object  (See Chintaman Rao v. The State of Madhya Pradesh) (1).  The mode of approach to ascertain the reasonableness of a restriction has  been  succinctly stated by Patanjali Sastry C.  J.,  in State of Madras v. V. G. ROW (2) thus: It  is  important in this context to bear in mind  that  the test  of  reasonableness,  wherever  prescribed,  should  be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be  laid down  as applicable to all cases.  The nature of  the  right alleged  to have been infringed, the underlying  purpose  of the restrictions imposed, the extent and urgency of the evil sought  to  be remedied thereby, the  disproportion  of  the imposition,  the prevailing conditions at the  time,  should all enter into the judicial verdict." Bearing the aforesaid principles in mind, we shall ascertain the object of the Act, from the circumstances under which it

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was  passed,  and  its  provisions,  and  see  whether   the provisions have any reasonable relation to the object  which the legislature seeks to achieve. There  is  a historical background for this  Act.  Marketing legislation is now a well-settled feature of (1) [1950] S.C.R. 759. (2) [1952] S.C.R. 597, 607. 96 all commercial countries.  The object of such legislation is to  protect  the producers of commercial  crops  from  being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce.  In Madras State, as  in other parts of the country, various  Commissions  and Committees  have been appointed to investigate the  problem, to  suggest ways and means of providing a fair deal  to  the growers of crops, particularly commercial crops, and find  a market  for selling their produce at proper rates.   Several Committees,  in their reports, considered this question  and suggested   that  a  satisfactory  system  of   agricultural marketing  should  be introduced to achieve  the  object  of helping the agriculturists to secure a proper return for the produce grown by them.  The Royal Commission on  Agriculture in India appointed in 1928, observed: "That cultivator suffers from many handicaps: to begin  with he  is  illiterate  and in general  ignorant  of  prevailing prices  in the markets, especially in regard  to  commercial crops.   The  most  hopeful  solution  of  the  cultivator’s marketing  difficulties seems to lie in the  improvement  of communications  and the establishment of  regulated  markets and  we recommend for the consideration of  other  Provinces the  establishment of regulated markets on the Berar  system as modified by the Bombay legislation.  The establishment of regulated markets must form an essential part of any ordered plan  of  agricultural  development in  this  country.   The Bombay Act is, however, definitely limited to cotton markets and the bulk of the transactions in Berar market is also  in that crop.  We consider that the system can conveniently  be extended  to  other  crops  and, with  a  view  to  avoiding difficulties,  would suggest that regulated  markets  should only be established under Provincial legislation." The Royal Commission further pointed out in its report: "  The  keynote  to the  system  of  marketing  agricultural produce  in  the  State is the predominant  part  played  by middlemen." It is the cultivator’s chronic shortage of money 97 that  has allowed the intermediary to achieve the  prominent position he now occupies." The  necessity  for marketing legislation  was  stressed  by other  bodies also like the Indian Central  Banking  enquiry Committee, the All India Rural Credit and Survey  Committee, etc.  Recently the Government of Madras appointed an  expert Committee  to review the Act.  In its report  the  Committee graphically  described the difficulties of  the  cultivators and their dependence upon the middlemen thus: " The middleman plays a prominent part in sale  transactions and  his terms and methods vary according to the  nature  of the  crop and the status of the cultivator.  The  rich  ryot who is unencumbered by debt and who has comparatively  large stocks  to  dispose of, brings his produce to the  taluk  or district  centre and entrusts it to a commission  agent  for sale.  If it is not sold on the day on which it is  brought, it  is  stored  in  the commission  agent’s  godown  at  the cultivators’  expense  and as the  latter  generally  cannot afford  to wait about until the sale is effected  he  leaves

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his  produce to be sold by the commission agent at the  best possible  price,  and it is doubtful whether  eventually  he receives  the best price.  The middle class ryot  invariably disposes of his produce through the same agency but,  unlike the rich ryot he is not free to choose his commission agent, because  he  generally  takes  advances  from  a  particular commission agent on the condition that he will hand over his produce  to  him for sale.  Not only, therefore,  he  places himself in a position where he cannot dictate and insist  on the  sale being effected for the highest price but he  loses by  being  compelled to pay heavy interest  on  the  advance taken  from  the  commission  agent.   His  relations   with middlemen  are more akin to those between a creditor  and  a debtor, than of a selling agent and producer.  In almost all cases of the poor ryots, the major portion of their  produce finds its way into the hands of the village money-lender and whatever  remains  is  sold to petty traders  who  tour  the villages and the price at which it changes hands is governed not so much by the  13 98 market rates, but by the urgent needs of the ryot which  are generally   taken  advantage  of  by  the   purchaser.   The dominating  position  which the middleman occupies  and  his methods of sale and the terms of his dealings have long  ago been realized." The aforesaid observations describe the pitiable ’dependence of  the  middle-class and poor ryots on  the  middlemen  and petty traders, with the result that the cultivators are  not able  to  find markets for their produce  wherein  they  can expect reasonable price for them. With  a  view  to provide satisfactory  conditions  for  the growers  of commercial crops to sell their produce on  equal terms  and at reasonable prices, the Act was passed on  July 25, 1933.  The preamble introduces the Act with the  recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish markets and make rules for their proper administration.  The Act,  therefore, was  the result of a long exploratory investigation  by  ex- perts  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 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.   Such  a statute  cannot be said to create unreasonable  restrictions on  the citizens’ right to do business unless it is  clearly established   that   the   provisions   are   too   drastic, unnecessarily harsh and overreach the scope of the object to achieve which it is enacted. It  is therefore necessary to scrutinize the  provisions  of the  Act and the Rules made thereunder to ascertain  whether the  restrictions  imposed  are not  reasonable.   The  said provisions  fall under two groups: the first group  provides the machinery for controlling the trade in commercial  crops and  the second group of provisions imposes restrictions  On the carrying on of the said trade.  Section 2(1-a) defines I commercial  crop’ to mean cotton, groundnut or  tobacco  and includes any 99 other  crop or product notified by the State  Government  in the  Fort  St. George Gazette as a commercial crop  for  the purposes  of  this Act.  Under s. 3,  the  State  Government issues a notification declaring their intention to  exercise

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control  over the purchase and sale of such commercial  crop or  crops in a particular area and calls for objections  and suggestions to be made within a prescribed time.  After  the objections are received, the State Government considers them and  declares the areas to be specified in the  notification or any portion thereof to be a notified area for the purpose of the Act in respect of commercial crop or crops  specified in the notification.  Under s. 4-A, the State Government has to establish a market committee for every notified area  and it shall be the duty of the market committee to enforce  the provisions  of  the Act.  Sections 6 to 10 provide  for  the constitution  of  Market  Committees and  s.  16  for  their supersession for the reasons mentioned therein.  In exercise of  the  powers  conferred by s. 18 of  the  Act  the  State Government made Rules which provide for the manner in  which the members of Market Committees should be elected, and also for the constitution of sub-Committees.  In exercise of  the powers conferred by s. 19 of the Act and also subject to the Madras Commercial Crops Markets Rules, 1948, the  Committees for  the  various districts made,  bye-laws  for  regulating their meetings and for the discharge of their duties by  the various subordinate bodies.  The said provisions which bring into existence a machinery for regulating the trade are  not attacked by the learned counsel for the appellants. Under  the second group, there are provisions providing  for matters  which are succinctly stated in the ’Report  of  the Expert  Committee  on the review of  the  Madras  Commercial Crops Markets Act, 1933 at p. 7 as under: "(1) A common place is provided for seller and buyer to meet and  facilities are offered by way of space,  buildings  and storage accommodation. (2)  Market practices are regularized and Market 100 charges clearly defined and unwarranted ones prohibited. (3)  Correct  weighment is ensured by licensed weighmen  and all weights are checked and stamped. (4)  Payment on hand is ensured. (5)  Provision is made for settlement of disputes. (6)  Daily prevailing prices are made available to the   grower  and  reliable  market   information   provided regarding arrivals, stocks, prices, etc. (7)  Quality standards are fixed when necessary and contract forms standardized for purchase and sale." Section  5 says: ’No person shall, within a  notified  area, set  up,  establish  or  use, or continue  or  allow  to  be continued, any place for the purchase or sale of a  notified commercial  crop,  except under and in accordance  with  the conditions  of  a licence granted to him by  the  Collector. The  first proviso to that section provides that  after  the establishment in such area of a market for the purchase  and sale  of  a  notified commercial crop, no  licence  for  the purchase or sale of such commercial crop shall be granted or renewed  in  respect  of  any  place  situated  within  such distance of the market as may from time to time be fixed  by the State Government.  The second proviso enables the Market Committee  to exempt from the provisions of the  above  sub- section any person who carries on the business of purchasing or  selling any commercial crop in quantities not  exceeding those  prescribed  by Rules made under the Act.   The  third proviso  authorizes  the said Committee to exempt  a  person selling  commercial crop which has been grown by him,  or  a cooperative  society registered or deemed to  be  registered under the Madras Co-operative Societies Act, 1932, selling a commercial crop which has been grown by any of its  members, and also empowers it to withdraw the exemption.  Sub-section

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(2)  of s. 5 gives exemption to a person purchasing for  his private  use a commercial crop in quantities  not  exceeding those  prescribed by Rules made under the Act.   Sub-section (3) prohibits any person within a notified area from setting up, 101 establishing   or  using,  continuing  or  allowing  to   be continued, any place for the storage, weighment, pressing or processing of any notified commercial crop except under  and in  accordance with the conditions of a licence  granted  to him by the Collector.  Under proviso to sub-s. (3) a  person is  exempted from the operation of that Rule in  respect  of any notified commercial crop grown by him.  Sub-section  (4) enables the Collector, on the report of the Market Committee and after such inquiry as he deems fit, to cancel or suspend any  licence  granted  under the said  section.   There  are provisions  providing for penalties for infringement of  the statutory   regulations  and  for  referring   disputes   to compulsory   arbitration.   The  bye-laws  framed   by   the Committees  prescribe  graded  scales  of  licence  fees  in respect  of various licences required under the  Act;  these show  that a trader has to take separate licences  under  s. 5(1)  and s. 5(3).  The licence fee payable  for  additional premises  is comparatively smaller than the  amount  payable for  the  main  premises.  Licence fee  is  also  fixed  for brokers,  weighmen,  etc.   Rule 28(3) (iii)  of  the  Rules states that it shall not be necessary for a poison to obtain more  than  one  licence for  setting  up,  establishing  or continuing  or allowing to be continued more than one  place in  the same notified area for the purchase, sale,  storage, weighment,  pressing  or processing of the  same  commercial crop.  A combined reading Of the Rule and the bye-laws shows that though different licences may have to be obtained under s. 5(1) and s. 5(3), one licence is sufficient for different places  and  only small payments have to be made  for  every additional  premises  for  the  same  purpose.   It  is  not necessary  to notice the other provisions as  nothing  turns upon  them  in the present ease.  Shortly stated,  the  Act, Rules  and the Bye-laws framed thereunder have  a  long-term target of providing a net work of markets wherein facilities for correct weigbment are ensured, storage accommodation  is provided,  and equal powers of bargaining ensured,  so  that the  growers may bring their commercial crops to the  market and sell them at reasonable prices.  Till such markets are 102 established,  the  said provisions,  by  imposing  licensing restrictions,  enable  the  buyers and sellers  to  meet  in licensed premises, ensure correct weighment, make  available to  them reliable market information and provide for them  a simple  machinery  for settlement of  disputes.   After  the markets  are  built or opened by the  marketing  committees, within a reasonable radius from the market, as prescribed by the  Rules,  no licence is issued ; thereafter  all  growers will  have to resort to the market for vending their  goods. The  result  of the implementation of the Act  would  be  to eliminate,  as  far as possible, the middlemen and  to  give reasonable facilities for the growers of commercial crops to secure best prices for their commodities. Learned  counsel  for  the  appellants  contends  that   the restrictions imposed by the provisions of s. 5 are not  only unreasonable  but  tend to defeat the very  purpose  of  the legislation.  Elaborating this argument, the learned counsel says  that they are unreasonable from the standpoint of  the big  trader, the small trader and also the grower of  crops. The  trader, his argument proceeds, can only buy or sell  in

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the  licensed  premises paying heavy  licensing  fees  under different beads and paying also heavy overhead charges, with the  inevitable consequence that he will not be able to  run his business with profit.  It is also said that he cannot go wherever he likes to buy the produce at cheap rates and  can negotiate  for or enter into contracts of sale only  in  the licensed premises, with the result that be has to pay higher prices   to   the  sellers.   The  first   argument   rather exaggerates  the situation; for, the rates of  licence  fees shown  in the bye-laws framed by the Marketing Committee  at Virudhunagar  do not appear to be so high as to cripple  the trader’s business.  No material has been placed before us to establish  that the rates are so high and the burden  is  so unbearable  that a trader, who is otherwise  making  profit, cannot  carry on his business.  The second objection of  the learned  Counsel in itself affords a reasonable - basis  for the  legislation ; for, what the learned counsel  in  effect says is that the trader is exploiting the small growers 103 and  that he is prevented from doing so under the  licensing regulations. From the standpoint of the seller it is said that though  he may be exempted from the operation of the said Act under the second proviso to s. 5 (1) he is prevented from selling  his produce  by  insisting that he should trade  only  with  the licensed trader and in the licensed premises.  Assuming that that is the legal position under the Rules, nothing prevents the grower from selling his produce to another grower  whose requirements  are  greater  than what he produces  or  to  a smaller trader exempted under the third proviso to s. 5 (1). After  the market is established, it is contended, a  grower will be obliged to carry the goods to a centralised place if he is to dispose of the goods, which can hardly be described as increasing the facilities for marketing the goods.  It is true that the growers may be under some difficulties in this regard,  but  that  is  counter-balanced  by  the  marketing facilities provided for them under the Act. It  is  also  said that when a  market  is  established,  no licence  to  purchase,  or sell, commercial  crops  will  be granted  or renewed in respect of any place situated  within such  distance from the market as may from time to  time  be fixed by the State Government and that nothing under the Act prevents  the  Government from fixing a long distance  as  a prohibited  area;  with  the result that a  person,  who  is having a licence to trade ,in and about the place where  the market is fixed, is deprived of his livelihood, which is  an unreasonable restriction upon his right to do business.  But in  our view, such a provision is necessary  for  preventing the  local business being diverted to other places  and  the object of the scheme being defeated.  Further, ,in practice, it  is seen that the Government fixes by notification  under s.  5  (1) a radius of five miles around  the  building  and occasionally ten miles.  It is also not likely that it would fix  a longer distance in the present circumstances,  having regard   to  the  inadequate  facilities  for   transporting commodities.  That apart, the establishment of a market does not  prevent a trader from carrying on the business  in  the market established, 104 but he could not run a market for himself in respect only of the  commodities declared to be commercial crops within  the radius prescribed. While  the object of the Act is to protect the growers,  the argument proceeds, the small traders are compelled to resort to distant markets, with the result that some of them  would

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be forced to give up their business and others would have to incur  unnecessary expenditure which they could not  afford. The  Act is an integrated one, and it regulates  the  buying and  selling of commercial crops.  If the small traders  are exempted,  it creates loopholes in the scheme through  which the  big trader may operate, and thereby the  object  itself would  be defeated.  That apart, the second proviso  enables the Committee to exempt small traders in appropriate  cases. The  constitution of the Committee, in which there  will  be representatives  of  the  traders  and  the  buyers,  is   a sufficient  guarantee  against  the  implementation  of  the provisions of the Act to the detriment of all concerned.  If a  packed  Committee abuses its powers, there is  a  further provision  to  enable the Government to supersede  it.   We, therefore, hold that, having regard to the entire scheme  of the  Act,  the  impugned provisions of  the  Act  constitute reasonable restrictions on a citizen’s right to do business, and therefore, they are valid. The   next  contention  of  the  learned  counsel  for   the appellants  is  that  the  G.  0.  No.  356  dated  8-3-1952 directing  the establishment of a market at Virudhunagar  is an  unreasonable restriction on the appellants’ right to  do business,  and  is, therefore,  invalid.   In  Viradhunagar, there  is already a well-established market  which  provides facilities  for  the purchase and sale of cotton  and  other goods.   It  is  stated  that  the  said  market  has   been functioning  for over fifty years, that it has been  largely used by the merchants of the community, and that it contains stalls  for  effecting sales, godowns  for  stockina  goods, halls, parks and other amenities.  Certain charges called  I mahimai’  are collected on all transactions that take  place within  the  market; and they are constituted into  a  trust fund which is utilised for the maintenance of schools 105 and  for  religious  purposes.  The  argument  is  that  the appellants  in C. A. No. 169 of 1955 are running the  market as  an occupation or business with high standards  and  that the  notification directing the constitution of a market  in the  same  locality, when admittedly the  entire  scheme  of building a net work of markets could not be finished  within a,  predictable  time, is not a  reasonable  restriction  on their  right to do business.  It is also said that the  same advantages  could be given to the growers by continuing  the said  market with suitable restrictions and controls as  the market established by the Market Committee would conceivably provide  for  them,  and in those  circumstances,  when  two alternative  methods would equally achieve the objects,  the notification  directing the constitution of a market to  the exclusion  of  the  existing one would  be  an  unreasonable restriction.    The  learned  Advocate  General  of   Madras contends  that  the appellants have really  two  fundamental rights:  one is to carry on trade or business and the  other is to hold their property, i.e., the market; that by  reason of the notification they are not prevented from doing  their business,  for  they  can still do business  in  the  market established subject to the regulations and also do  business outside  the  prescribed  area  ;  and  that  they  are  not prohibited  from  holding the market as property,  for  they could  still  utilise  it for  commodities  other  than  the notified  crops.  In respect of the contention that  holding the market is only an incident of ownership of the property, reliance  is placed upon the decisions in T. B.  Ibrahim  v. Regional Transport Authority, Tanjore (1); Ramunni Kurup  v. The  Panchayat Board, Badagara (2); Captain Ganpati  Singhji v.  The State of Ajmer (3) ; and Valia Raja of Edappally  v.

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The Commissioner for Hindu Religious Charitable  Endowments, Madras (4).  It is unnecessary to express an opinion on  the question  whether  the right of the appellants  falls  under Art. 19(1)(f) or (g) of the Constitution of India, or  under both the sub-clauses; for, the (1)  [1953] S.C.R. 290. (3)  [1955]  S.C.R. 1065. (2)  I.L R. [1954] Mad. 513. (4)  I.L.R. [1955] mad. 870. 14 106 question  whether the notification imposes  an  unreasonable restriction  on the appellants’ right cannot be  decided  on the   material   placed  before  us.   That   question   may conveniently be left open to be decided at the time when the market  is  established  at Virudhunagar,  pursuant  to  the notification  issued by the Government.  It does not  appear from  the record that there is any early prospect of such  a market being established in that place.  The  reasonableness of  the  restrictions would depend  upon  the  circumstances obtaining at the time the market is established. It  depends upon   the  conditions  then  obtaining  in  the  trade   in commercial  crops, the standards that will be maintained  in the  present market at that time, the comparative merits  of the existing market and the market to be built up and  other relevant considerations which cannot now be visualized.   We would, therefore, leave open that question to be decided  at the  proper time by the authorities concerned when a  market is sought to be established in the manner provided by law. The next argument relates to I mahimai’ allowances collected by  the appellants from the sellers and buyers of the  crops in  the market.  The learned judges of the High  Court  held that  the question relating to this allowance did not  arise for decision at that stage, but having heard full  arguments on  the  question, they expressed the  view  that  ’mahimai’ could  not be claimed as a trade allowance.  They  concluded their discussion on the subject in the following words: " It has nothing to do with -the transaction as such and  is really a contribution levied at the time of the  transaction for  a purpose unconnected with it.  It cannot therefore  be properly regarded as a trade allowance, and bye-law 25(b) is perfectly valid." We  cannot share the opinion of the learned judges that  the question  does  not arise for decision at this  stage.   The appellants prayed for issue of a writ of mandamus  directing the  respondents  to forbear from enforcing any or  all  the provisions of the Act as amended and the Rules and  bye-laws framed thereunder by the Ramanathapuram Committee; and,  the provisions of 107 the Act read with the bye-laws prohibited the collection  of ’mahimai’ by the appellants.  The question whether the  bye- law  prohibiting the collection off I mahimai’ allowance  is valid  or not does directly arise for consideration in  this case.   There  is  also some  ambiguity  in  the  conclusion arrived  at by the learned judges of the High  Court.   They stated  that  the  allowance  had nothing  to  do  with  the transaction  as  such and could not  therefore  be  properly regarded as a trade allowance.  The learned counsel for  the appellants contends that if it is not a trade allowance,  it is  not  covered either by s. 14 of the Act or  by  bye-laws framed thereunder, as s. 14 prohibits the deduction of trade allowance and does not operate upon any other payments  made which are not trade allowances.  There is considerable force in this argument, but we think that the learned judges meant

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only  that  the  said allowance is not an  admissible  or  a permissible trade allowance prescribed by the bye-law.   The question, therefore, is whether the allowance described as I mahimai’  is  a  trade  allowance and  if  so,  whether  the allowance  is permitted to be received by the rules or  bye- laws  made under that section.  The relevant provisions  may be noticed at this stage.  Section 14 says "No  trade allowance, other than an allowance prescribed  by rules  or  by-laws  made under this Act, shall  be  made  or received in a notified area by any person in any transaction in respect of the commercial crop or crops concerned and  no Civil Court shall, in any suit or proceeding arising out  of any such transaction, have regard to any trade allowance not so prescribed. Explanation:Every deduction other than deduction on  account of  deviation  from  sample, when the purchase  is  made  by sample, or of deviation from standard, when the purchase  is made  by  reference to a known standard, or  on  account  of difference between the actual weight of the sacking and  the standard  weight, or on account of the admixture of  foreign matter,  shall  be  regarded as a trade  allowance  for  the purposes of this Act ". 108 Section  19:  " (1) Subject to any rules made by  the  State Government  under section 18 and with the previous  sanction of  the Director of Agriculture, Madras, a market  committee may  in  respect  of  the notified area  for  which  it  was established  make bylaws for the regulation of the  business and the conditions of trading therein." By-law  25: Trade allowance applying to the market  and  the notified area: (a)................................................. "   (b)  Deductions such as I mahimai’ are  prohibited.  The weight  of  alien substance such as mud and stone,  if  any, contained  in  the lint or kapas borahs or in  the  bags  of groundnut pods or kernels shall be deducted." The  gist  of the aforesaid provisions may be  stated  thus: Trade  allowance cannot be received in any notified area  by any person in any transaction in respect of commercial  crop or crops.  Every deduction in any transaction in respect  of the said crop other than those specified in the  explanation is  trade  allowance for the purpose of the Act.   A  market committee generally may make bye-laws for the regulation  of the   business  and  conditions  of  trading   therein   and particularly  it  can  make bye-laws  prescribing  what  are permissible  trade  allowances  under  the  section.    Such allowances as are prescribed by a bye-law can be deducted in any transaction notwithstanding the fact that they are trade allowances.   The  argument of the learned counsel  is  that that  bye-law is bad, because the market committee  did  not name the allowance or allowances taking them out of the pro- hibition  under  s. 14 which they are entitled to  do  under that section, but made the bye-law mentioning the ’ mahimai’ allowance  as  one not deductible in any  transaction.   The validity  of  that  part  of  the  bye-law  prohibiting  the deduction of ’ mahimai ’ as trade allowance depends upon the nature  of  that deduction.  If ’ mahimai’ is  not  a  trade allowance,  the said part of the bye-law would obviously  be invalid  as inconsistent with the provisions of s. 14.   If, on  the other hand, mahimai’ is a trade allowance, the  said part of the 109 bye-law  will be superfluous, as the allowance falls  within the  terms  of  the  section itself This  leads  us  to  the question whether ’ mahimai’ is a trade allowance, within the

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meaning of s. 14 of the Act. What  is  a  trade allowance?  Trade  involves  exchange  of commodities  for money, the business of buying  and  selling and  the  transaction involves the seller,  the  buyer,  the commodity  sold and the price paid for the sale.   Allowance means something given as compensation, rebate or  deduction. Under  the  section,  the said deduction should  be  in  any transaction  in respect of commercial crops.  The  deduction may  be  out  of the commodity or out  of  the  price.   The recipient  may  be the seller, the buyer or a  third  party. When A sells a quantity of cotton to B for a hundred rupees, B,  the purchaser, may deduct one rupee from the sale  price and pay ninety-Dine rupees to A; he may keep that amount for himself  or  pay the same to C. So too, A, the  seller,  may purport  to  sell one maund of cotton but in fact  deduct  a small part of it, retain that part for himself or give it to C;  or  both  A and B may fix the  price  of  the  commodity purchased  at Rs. 102 but the purchaser pays one rupee to  C and the seller retains or pays one rupee to C; or it may  be that  payments  have  nothing to do with the  price  or  the transaction,  but both the parties pay C a specified  amount as  consideration  for the user of the premises or  for  the services rendered by him.  The question whether a particular payment is a trade allowance or not, depends upon the  facts of  each  case.   Firstly, it must be  a  deduction  in  any transaction  in  respect of commercial crops.  If  it  is  a deduction out of the price or commodity agreed to be paid or transferred,  it would be a trade allowance.  On  the  other hand, if the payment is de hors the terms of the transaction but  made towards consideration for the use of the  premises or  services rendered, it would not be a deduction from  the price  or in any transaction.  No material has  been  placed before  us  to arrive at a definite finding in  the  present case  whether  ’mahimai’ is a deduction from  the  price  or commodity  within  the  meaning of s. 14 of  the  Act.   The learned judges, having expressed the view that the 110 question did not arise for consideration at that stage,  did not also consider any material to support their finding.  In the  circumstances, the only reasonable course is  to  leave that question open so that it may be decided in  appropriate proceedings. In  the result, subject to the aforesaid  observations,  the appeals are dismissed but without costs.                              Appeals dismissed.