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PETITIONER: RAMAKRISHNA HARI HEGDE & ANR.

       Vs.

RESPONDENT: MARKET COMMITTEE, SIRSI & ORS.

DATE OF JUDGMENT15/01/1971

BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN SIKRI, S.M. DUA, I.D.

CITATION:  1971 AIR 1017            1971 SCR  (3) 370  1971 SCC  (1) 349

ACT: Bombay  Agricultural  Produce Markets Act (22 of  1939),  as amended   in  1954,  ss.  4  and  4A-Notification   changing Principal Market Yard Time insufficient for persons carrying an  business to shift to new yard Notification, if  violates their fundamental right to carry on business.

HEADNOTE: Under  the Bombay Agricultural Produce Markets Act, 1939  as amended  in 1954, a Market area is first declared  under  s. 4(1), after which, under s. 4A, a Principal Market Yard  and one  or  more sub-,Market Yards may be constituted  for  the area.  The effect of constituting the Market Area and Market Yard is that the purchase or sale of agricultural produce in any place in the area is prohibited except in the  Principal and  sub-Market Yards.  Under s. 5 the State Government  may establish a Market Committee for the market area. In  1951, the town in which the appellants were carrying  on business  in :agricultural produce was declared, along  with surrounding  villages, as the .Market Area.  In 1954,  after the Act was amended by the addition of s: 4A, the Government notified  the area in which the appellants were carrying  on business  as the Principal Market Yard of the  Market  area. On 5th January 1965, the Government issued a Notification by which land granted to the Market Committee established under the  Act  for  the  Market Area,  was  declared  to  be  the Principal  Market Yard with effect from 15th  January  1965. The  appellants  challenged the Notification, but  the  High Court dismissed their writ petition. In appeal to this Court : HELD  :  (1)  The  Government has the  power  to  issue  the Notification in public interest, but the prohibition on  the appellants,  implicit in the Notification, was  unreasonable and  to that extent violated the fundamental rights  of  the appellants  to  carry  on their business,  because,  it  was impossible  for  them  to shift their business  to  the  new Principal Market Yard within ten days. [376 A-C, D-F] (2)  The  Government could have declared the area  in  which the appellants were carrying on the business as a Sub-Market Yard  and rectified the Notification, but this Court  cannot assume  the  functions  of the  Government  and  direct  the

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Government to do so. [376 F-G] (3)  Since the Market Committee bad however agreed to  grant a  reasonable  period of one and a half years  time  to  the appellants  to enable them to shift to the Principal  Market Yard  and to permit them to continue their business  in  the old  Market Yard during that period, the  Notification  need can be struck down.  F376 G-H, 377 A]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1072  of 1966. Appeal  by special leave from the judgment and  order  dated July 30, 1965 of the Mysore High Court in Writ Petition  No. 141 ,of 1965. 371 (Jagunohan Reddy,  J.) V. M. Tarkunde and Naunit Lal,for the, appellants. R.   B. Datar, for respondent No. 1. S.   K. Dholakia and S. P. Nayar, for respondent No. 2. The Judgment of the Court was delivered by P.   Jaganmohan  Reddy, J. This Appeal is by  Special  Leave against the Judgment of the Mysore High Court dismissing the Writ Petition filed by the Appeallants and Respondent No.  3 against Respondents 1 and 2, the Market Committee Sirsi  and the  State of Mysore respectively, by which they  challenged the  Notification  of the Govt. of Mysore No.  DPC  203  CMD 64(i)  dated  5th January 1965.  The Town of  Sirsi  in  the North Canara which was once part of the Bombay State is  one of the leading markets for Areca, Cardimom and Pepper.   The Appellants  have  been  carrying  on  business  in  these  3 commodities  on  a large scale for many years in  this  town mainly  in  the localities  comprising  Channapattan  Galli, Basti Galli and Nadged Galli, while the Respondent 3 who  is a dealer in the said commodities was carrying on business in Nadged Galli.  In the Channapattan Galli there are nearly 20 Commission Agents who own shops and godowns who also deal in these  commodities.   It was stated that  the  three  Gallis constitute  the main Market where wholesale business in  the aforesaid  commodities is being carried on for more  than  a century. The  Bombay Legislature had passed the  Bombay  Agricultural Produce  Markets Act 1939 (Act XXII of 1939) and  thereafter made  rules under the Act known as Bombay Agricultural  Pro- duce  Market  Rules hereinafter referred to as the  Act  and Rules respectively.  In 1951 under the provisions of Section 4(1)  of  the Act the Govt. of Bombay declared the  town  of Sirsi  and various surrounding villages, 59 in number  as  a market area in respect of Arerca Pepper and Cardimon and  by Notification  dated 24th April 1951 had also declared the  3 Gallis  referred to above as the Market Yard under the  Act. In  1954 the Act was amend by the addition of Section 4A  to which  a  reference  will  be  made  presently.   After  the amendment of the said Act, on 31-8-1954 the Govt. of  Bombay Notified the three Gallis of Channapattan, Basti and  Nadged which previously had been declared as a Market Yard, as  the Principal Market Yard of the said Market area under  Section 4-A(2)  proviso.   After this, declaration it  is  said  the Appellants  invested  large amounts in buildings  which  are worth   ten  lacs  of  Rupees  and  improved  their   trade. Similarly  in the Nadged Galli the properties of  Commission Agents are worth about Rs. 5 lacs and in the Basti Galli the business premises are worth about Rs. 2 lacs. 372

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It is alleged that Shri Hegde Kadve is a Congressman and  as the  Chairman  of  the  Market Committee  and  also  as  the Chairman,  of  the  Sirsi Totgars  Cooperative  Society  and President  of  the Taluka Board  had  considerable  personal influence   over  the  Congress  Ministry   &   consequently prevailed on the Government to grant to the Market Committee free  of cost land measuring about 10 acres and  37  gunthas for  a  market at a distance of more than a  mile  from  the present  market, which was divided into plots, on  which  he managed  to get shops, godowns and offices constructed  with the money secured by the Society as a loan from the  Govern- ment  at a very low rate of interest.  The Market  Committee disposed of eleven sites to private parties and also allowed the  Cooperative  Society to construct premises for  a  Rice mill,  but notwithstanding these constructions the new  site for the Market has no amenities.  The impugned  Notification had  the  effect  of prohibiting persons  from  carrying  on business  in  the  said three main commodities  at  the  old market Yard, and has thus destroyed the business of  traders including that of the Appellants.  The new site it was  said was  only  so  declared  with  a  view  to  confer  on   the Cooperative  Society a monopoly in trade as it would not  be possible  for  traders  to invest money  and  construct  new buildings  and  godowns  for carrying on trade  at  the  new market site.  The Notification was thus challenged as  being ultra   vires  of  the  provisions  of  the  Act,   illegal, arbitrary,   capricious   and   discriminatory,    violating Articles, 14, 19 ( 1 ) (g) and 31 of the Constitution. The Respondents denied the several allegations made  against them.  Respondent 1 stated that the Market Committee  having felt as early as 1958 that the area of the three Gallis  was insufficient  to cope with the expanding business  and  made efforts  to acquire a more convenient and spacious  area  to house  the market.  In furtherance of this desire  and  with the   object   of  providing  better   facilities   to   the Agriculturists,  the  Committee  from  time  to  time   made representations to the Government, which ultimately  granted in  all 35 acres-29 gunthas of land.  Thereafter steps  were taken  for the development of the said area by  leasing  out plots  to Commission Agents and traders who were induced  to build premises for. the purpose of sale and purchase of  the Agricultural  produce  in the Market  Yard.   The  Committee thereafter  resolved on 13-7-1964 to request the  Government to  declare the new area as the Principal Market Yard  while at  the same time permitting the traders to  continue  their business  in the existing place for a .period of one or  two years.  It was also pointed out that the Market Committee of which the Appellant No. 1 was a Member had never objected to the  shifting  of  the Market Yard since  1958  but  on  the contrary  had  applied  for  the  grant  of  plots  and  was complaining  that the Government was delaying the  issue  of the 373 (Jaganmohan Reddy, J.) necessary Notification.  Besides the Appellant there were 14 others, who had obtained leases of the plots and constructed buildings on these plots.  The allegation that there are  no Roads  or well was incorrect.  The new site was  only  about half  a mile from the 3 Gallis and was  centrally  situated within the Municipal limits of Sirsi as is evident from  the fact that the Totgars Society itself was transacting 30%  of the  entire  business  of Sirsi  Market  Committee  in  the- regulated commodities with an annual turnover of more than a crore  of Rupees within that area.  These  allegations  were considered by the High Court which held that it was open  to

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the  Government  under Section 4 to  alter  the  declaration regarding the Principal Market Yard.  After setting out  the history  of  the  legislation it was of the  view  that  the impugned Notification was issued in the public interest, and not with any ulterior purpose and consequently rejected  the Writ Petition.- The  short point in this appeal is whether by reason of  the impugned  Notification  the Appellants have  been  prevented from  exercising  their  right to trade and  whether  it  is discriminatory  and  affects  in any  manner  his  right  to property. The  Act under which the Notification is issued  deals  with the regulation of purchase and sale of agricultural  produce in,  the  State of Bombay including the area which  has  now become  part of Mysore State as a consequence of the  States Reorganisation  Act 1956.  An examination of the  provisions of  the Act would show that there is no warrant for  holding that there is anything which affects the freedom to carry on trade or business nor is there anything which can be said to be  discriminatory.   Section 2 of the Act is in so  far  as relevant defines Market, Market Area, Principal Market Yard, Sub-Market Yard.  Section 3 provides for the constitution of Markets  and  Market  Committees and confers  power  on  the Commissioner  by  Notification to declare his  intention  of regulating the purchase and sale of such agricultural  pro- duce  and  in  such area as may be  specified  and  inviting objections   and   suggest-ions  within  a  month   of   the publication of the Notification.  The Commissioner may after considering  the objections and suggestions if any  received by him during that period and after holding such enquiry, as may  be necessary declare the area under Section 4-A  to  be Market  area  for  the purposes of the  Act.   Section  4(2) provides that after the Market area is declared, no place in the said area shall. subject to the provisions of Section 5A be used for the purchase or sale of any agricultural produce specified  in the Notification.  Section 5 confers power  on the  State  Government after the declaration of  the  Market area  to establish a Market Committee for every Market  area and  under  Section 5AA it becomes the duty  of  the  Market Committee to en- 374 force  the  provisions of the Act and also  to  establish  a Market  therein  on  being required to do so  by  the  State Government.   In as much as there may be a time lag  between the  declaration  of a Market area and  establishment  of  a Market; the proviso to Sec. 4(2) lays down that pending  the establishment of a market in a Market area the  Commissioner may  grant a licence to any person to use any place  in  the said  area for the purpose of purchase and sale of any  such agricultural  produce  and  it is the  duty  of  the  Market Committee  under Sec. 5AA to enforce the conditions  of  the licence  granted  under Section 4(2).   Section  26  confers power on the State Government to frame rules for the purpose of  carrying out the provisions of the Act, and  Section  27 confers power on the Market Committee to frame bye-laws with the  previous sanction of the Director or any other  officer specially  empowered in this behalf by the State  Government under Sec. 26.  The State Government has power under Sec. 29 to add to, amend or cancel any of the items of  agricultural produce specified in the Schedule to the Act. The  Act  was amended in 1954 by the addition-  of  Sec.  4A which under sub-s. ( 1 ) makes it necessary for each  Market area to have one Principal Market Yard and one or more  sub- Market  Yards as may be necessary.  Sub-s. (2) of  the  said Section empowers the Commissioner by Notification to declare

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any enclosure, building or locality in any market area to be a  Principal Market Yard for the area and other  enclosures, buildings  or localities to be one or more sub-Market  Yards for  the  area.   The  proviso  requires  that  one  of  the enclosures,  buildings or localities declared to  be  market yards  before  the  commencement of the  amendment  of  that section,  shall be declared to be the Principal Market  Yard for  the Market area and others, if any, to be one  or  more SubMarket  Yards for the area, subject to such variation  as may be necessary. The  effect  of these provisions is that a  Market  area  is first declared under Sec. 4(1) after which a market yard may be constituted for the market area as Principal Market  Yard and sub-Market Yard or yards if any.  The declaration of the Market area subject to Sec. 5A has the effect of prohibiting the purchase or sale of agricultural produce in any place in that area except in the area declared as a Principal  Market Yard  or sub-Market yard or yards, if any.  This  Court  had earlier  in  Mohammed Hussain Gulam Mohammad & Anr.  v.  The State of Bombay & Anr.(1) held Section 4, 4A, 5, 5A and  5AA to  be constitutional and that none of the  said  provisions imposed  unreasonable restrictions on the right to carry  on trade in the agricultural produce (1)  [1962] 2 S.C.R. 659. 375 (Jaganmohan Reddy, J.) regulated  under the Act and as such were not  violative  of Art. 19(1)(g) of the Constitution. . It  is,  however, contended that the  impugned  Notification violative  of  Articles  19  (1  (g),  14  and  31  of   the Constitution. The  Notification  as we have already stated was  issued  on 5-1-1965  under  Section  4(A)  of the Act  and  is  in  the following terms : "In  exercise of the powers conferred by Sub-Section (2)  of Section  4A of the Bombay Agricultural Produce  Markets  Act 1939 (Bombay Act 22 of 1949) as in force in the Bombay area, and in supersession of Bombay Government notification  Deve- lopment  Department  No.  APM  4554,  dated  31-8-1954,  the Government of Mysore hereby declares the following  locality in  the  market  area of  the  Agricultural  Produce  Market Committee,.  Sirsi of Sirsi Taluka of North Kanara District, to be a Principal market yard for the area with effect  from the 15th January, 1965, namely:- Locality : An area measuring about 35 acres and 29 gunthas and 4 acres, of Sirsi Totagaras’ Cooperative Sales Society Ltd., Sirsi in R.S. No. 116, 117, 59 and 60 of Sirsi Taluka. On the North by :-Sirsi-Yellapur Main Road & R. S. No. 11  6 On  the South by:-R.S. Nos. 55, 57 and portion of  R.S.  No. 299.  On the East by :-Portion of R.S. Nos. 299, 58, 129-A & 118.  On the West by :-R.S. Nos. 61, 64 and 68." It  may be mentioned that the earlier Notification of  31-8- 1954  also made in exercise of the Powers conferred by  sub- Section  (2) of Section 4-A of the Act had declared  as  the Principal  Market Yard all godowns, storage places and  open places lying within the limits of the Sirsi Municipality and approved by the Agricultural Produce Market Committee, Sirsi for storage and for the purpose of sale of commodities under regulation including the area locally known as  Channapattan Gali,  Basti Galli and Nadger Galli which had  earlier  been declared   by   Notification  of  the  Government   in   the Development Department dated 24-4-1951 to be a Market  Yard. The  affect of the supersession of this Notification by  the impugned Notification is that as from 15-1-1965 the area  of

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the 3 Gallis ceased to be the Principal Market Yard, and  as such  no business could be transacted therein on  and  after that date. This  position  could not be seriously controverted  by  the learned  Advocate  for  the Respondents.  In  our  view  the prohibi- 376 tion  implicit in the Notification was unreasonable  and  to that   extent  violated  the  fundamental  rights   of   the Appellants  and  Respondent  3 to carry  on  their  business because  it could not have been postulated that  they  could immediately in 10 days shift their business to the Principal Market  Yard  declared by the  impugned  notification.   The learned  Advocate for the Market Committee  however  pointed out  that it was never their intention to  prohibit  at-once any  business  being  conducted in the Market  Yard  in  the Gallis,  but  they  had in fact in their  proposals  to  the Government  suggested the business in the Gallis  should  be allowed  to be continued for a year or two.  Whatever  their proposals may have been we have no doubt that the effect  of the  Notification as long as it is in force is  to  prohibit the Appellants and Respondent 3 from carrying on business in the Market Yard of the Gallis. It is submitted by the learned Advocate for the  Respondents that  the  Appellants and Respondent 3 had  sufficient  time till  now to make arrangements to shift their  business,  as such  they are not entitled to complain, but the  contention on  behalf of the Appellants is that they were  entitled  to challenge  the Notification and as they had  invested  large amounts in buildings etc. in the 3 Gallis they are justified in  asking  this Court to direct Respondents to  have  these areas  declared as a sub-Market area.  While the  Government has  the power to issue a Notification in public interest  & to  declare the area specified in the impugned  Notification as the Principal Market area, without necessarily  declaring other  areas simultaneously as sub-Market area, in our  view sufficient time should have been given for the  Appeallants, Respondent 3 and other persons doing business in the area of the  3  Gallis  to shift their business.   As  long  as  the Notification  prohibited them from doing business  in  those Gallis  they had a right to challenge the validity  of  that Notification.  No doubt the Govt. could have declared the  3 Gallis  as sub-Market Yard but it is not for this  Court  to arrogate  to  itself the functions of the Govt.  and  direct them  to do so merely because that would be one of the  ways in  which the impugned Notification can be  rectified.   The learned   Advocate  for  the  Market   Committee,   however, consistent  with the stand taken by the Market Committee  in its counter before the High Court that it had requested  the Govt.  to allow the business in the Gallis to be carried  on for  one  or two years agrees to give one and a  half  years time  for the Appellants and Respondents to enable  them  to shift  during  this  period, to the  Principal  Market  Yard declared under the impugned Notification and till then  per- mit  them to continue their business in the 3  Gallis.   The period  agreed to in our view is a reasonable period  within which  the  Appellants  and Respondents 3  can  shift  their business  to the new Market Area and till then  they  should not be prohibited from 377  (Jaganmohan Reddy, J.) doing  business  in  the  Market area of  the  3  Gallis  as heretofore.   In view of this agreement except to  give  the above  direction  there  is  no  need  to  strike  down  the Notification.

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The  Appeal  is  accordingly allowed subject  to  the  above directions.  There will be no costs in this Appeal. V.P.S.                       Appeal allowed  and  directions given. 378