06 July 1996
Supreme Court


Case number: C.A. No.-007431-007431 / 1994
Diary number: 75581 / 1994
Advocates: Vs IRSHAD AHMAD






DATE OF JUDGMENT:       06/07/1996




JUDGMENT:                           W I T H Civil  Appeals  Nos.  9092/94,  9093/94,  9094/94,  9095/94, 7437/94,  7438/94,   7439/94,  7433/94,   7434/94,  7436/94, 8570/94,  9171/94,   9172/94,  9173/94,   9174/94,  1332/95, 1333/95, 6310-6322/95 and S.L.P. No. 9466/92.                       J U D G M E N T G.N. Ray, J.      These appeals  and the  special leave  petition involve common question  of law  and they  arise out  of the  common judgment dated  January 20,  1994, passed  by  the  Division Bench of the Patna High Court. By the impugned judgment, the Division Bench  of the  Patna High Court allowed in part the writ  petitions  filed  by  several  sugar  mills  of  Bihar challenging the  validity of  Section 4A  and 4B inserted by the Bihar  Agricultural  Produce  Markets  (Amendment)  Act, 1993, Section  33M as  inserted by  the  BIhar  Agricultural Produce Markets  (Amendment) Act,  1992; notification  dated August  31,  1992  issued  under  Section  4  of  the  Bihar Agricultural Produce Markets Act, 1960 (hereinafter referred to as the Markets Act), and also challenging the validity of imposition of  market fee  under the  Markets Act in view of exemption of all the sugar mills in Bihar from the provision of Section  15 of  the Markets  Act under notification dated March 22,  1976. The  High Court  on the basis of respective contention  of  the  parties  in  the  said  Writ  Petitions formulated the  following points  for the  decision  of  the Court : a)   Whether sub-section  (1) and (2) of Section 4A is valid or constitutional  so far as prospective part of the same is concerned? b)   If answer  to (a)  is in  the affirmative,  whether the said provisions  are valid  and constitutional so far as the retrospective part of the same is concerned? c)   Whether Section 4B is valid and constitutional? d)   Whether Section 33M of the Markets Act as introduced by amendment of 1992 is valid and constitutional? e)   Whether Rule 68 (iii) of the Bihar Agricultural Produce Markets Rules  (hereinafter referred  to as  the  Rules)  as inserted by  Notification No.  4 dated  November 30, 1992 is valid?



f)   What is  the effect  of grant  of exemption  made under Section 15 of the Markets Act? g)   What is  the effect  of Bihar  Ordinance No.  8 of 1988 having lapsed so far as levy of market fee is concerned? h)   Whether a  limited and  restricted meaning can be given to the  expression agricultural  produce  by  excluding  the industrial products  produced by industry from the scope and ambit of the Markets Act? i)   Is  the  Notification  dated  June  31,  1992  a  valid Notification under Section 4 of the Markets Act?      The High  Court by  the impugned  judgment answered the said points formulated by it in the following manner : i)   Neither sub-section  (1) nor sub-section (2) of Section 4A is  valid or  constitutional prospectively. Both the sub- sections are ultra vires of Article 14 and 19 (1) (g) of the Constitution and  not protected  by Article  19 (6)  of  the Constitution. ii)  Even if  it is assumed that prospective part of Section 4A is  valid, the  retrospective  part  is  ultra  vires  of Articles 14 and 19 (1) (g) of the Constitution. iii) Section 4B  is partly valid and partly invalid. Section 4B can be divided into four parts. The first part of Section 4B is invalid and cannot be given effect to. The second part is valid  and can  be given  effect to. The third and fourth part of Section 4B are merely ancillary and consequential to first and second part. iv)  Section  33M  of  the  Markets  Act  as  sought  to  be introduced by  the Amending  Act of  1912 by  replacing  the amending  Ordinances   is  invalid   and  ultra   vires  the Constitution.  The   said  legislation   lacks   legislative competence. v)   Rule 68  (iii) of  the Rules  is invalid in view of the invalidity of Section 33M. vi)  The grant  of exemption  made under  Section 15  of the Markets Act so far as sugar is concerned does not affect the applicability of  the other provisions of the Act, rules and by laws, if they are otherwise valid and applicable. vii) Bihar Ordinance  No. 8  of 1988 having lapsed, the rate of market  fee provided  under Section  27 of the Act before the Ordinance  No. 8  of 1988  was promulgated, revived. The rate will be Re. 1/- and it will continue to be so until and unless it is modified according to law. viii) No  limited or  restricted meaning can be given to the expression "agricultural  produce" by  excluding  industrial products from the ambit of the Markets Act. ix)  In view  of the decisions on various points formulated, no opinion need be expressed on the validity of Notification dated June  31, 1992  issue under  Section 4  of the Markets Act.      For the  purpose of  appreciating the rival contentions of the parties, the following facts need by noted : i)   On August 6, 1960, the Markets Act, 1960 (Act No. 16 of 1960) came  into force and at the time of enforcement of the said Act, sugar was one of the scheduled items in respect of which  the   provisions  of   the  Markets   Act  were  made applicable. On March 22, 1976, all sugar mills were exempted from the provisions of 15 of the Markets Act. ii)  By Notification  dated May  2, 1977  bearing no. 80 75, sugar and  some other  items were  deleted from the Schedule under the Markets Act in exercise of the power under Section 39 of the Act. iii) On May  21, 1977,  by another  Notification bearing No. 857, issued  in exercise  of power  under  Section  39,  the previous Notification dated May 2, 1977 was cancelled. iv)  Till July  23, 1976,  four  notifications  were  issued



under Section  39 of  the Markets Act by which various items like rice  bran, milk  (only liquid  milk) etc. were deleted from the Schedule under the Act. v)   Section 27  of the  Markets Act  was amended  by  Bihar Ordinance No.  8 of  1988 by  substituting the  word "at the rate of rupee one". This Ordinance elapsed subsequently. vi) The Notification dated May 21, 1977 issued under Section 39 of  the Markets  Act cancelling  the earlier notification dated May  2, 1977  (by which  sugar was  deleted  from  the Schedule under  the Markets  Act) was challenged in a series of Writ  Petitions filed  before the  Patna High Court. Such Writ Petitions  were disposed  of by a common judgment dated March 30,  1992. Such  decision has  been reported  in Delhi Cloth and  General Mills Company and others Vs. Agricultural Produce Market Committee and others (AIR 1993 Patna 43). The question raised before the Patna High Court in the said Writ Petitions was  as to  whether or not the cancellation of the earlier notification  by the  subsequent notification  dated May 21,  1977 had  the effect  of restoring  the  situations prevailing  prior to May 2, 1977.      The  High  Court  considered  the  following  questions raised Before it, namely,: a) Whether  or not  the Notification   dated  May  21,  1997 cancelling  the  earlier  Notification  dated  May  2,  1977 automatically  restored  the  state  of  affairs  which  had existed prior  to May  2,1977, and if it did so, then did it mean that  sugar was  automatically included in the Schedule under the  Markets Act  and, became  subjected  to  levy  of market fee  as agricultural produce" in "the specified area" under the Act? b)   Even if  it is  assumed that Notification dated May 21, 1977 validly cancelled the earlier Notification dated May 2, 1977 which  resulted  in  the  inclusion  of  sugar  in  the Schedule, was  it necessary that procedure etc. contemplated by Sections  3 and  4 of  the Act  had to  be applied afresh before levying market fee?      The High  Court, inter  alia,  held  that  Notification dated May  21,  1977,  even  though  cancelled  the  earlier Notification dated  May 2,  1977, did  not tantamount  to an automatic revival  of sugar  being an  item in the Schedule. For including  sugar as  an item  in  the  Schedule  of  the Markets   Act,   positive   action   of   issuing   separate notification adding sugar in the Schedule was necessary. The High Court  also held  that even  if it was assumed that the effect of  notification dated  May 21, 1977 was to add sugar in the  Schedule of  the Markets Act, such inclusion did not authorise imposition  of market  fee under Section 27 of the said Act  because  it  was  necessary  to  comely  with  the requirements under  Section 3  and of the Markets Act before including any item in the Schedule of the Markets Act. vii) The  Bihar State  Agricultural  Marketing  Board  filed Special  Leave   Petition  No.  9529/92  before  this  Court impugning the  said judgment  passed by the High Court. Such special leave  petition was  admitted but  no stay order was granted by this Court. viii) On  May 23,  1992, Memo  No. 3027  dated may  12, 1992 issued under  Section 39  of the Markets Act adding sugar to the Schedule  under the  Markets Act,  was published  in the Bihar Extraordinary Gazette. ix) By  Notification no GSR 40 dated November 30 , 1992 sub- rule (iii)  of Rule  68 of  the framed under the Markets Act was inserted by which every market committee was required to transfer 20% of the total receipt to the State Fund. x) On  October  13,  1992,  an  Ordinance,  known  as  Bihar Agricultural produce  Markets (  Second Amendment) Ordinance



1992, was  promulgated. The  said ordinance  being Ordinance No. 25/92  was repealed on February 3, 1993 and in its place the Bihar Agricultural produce Markets (Amendment) Act, 1993 was enacted.  By the  said Amending  Act, Section  4A and 4B were inserted in the Markets Act. xi) The  market Committees  issued notice to the sugar Mills in view  of the  amendment of the Act incorporating Sections 4A and 4B.      It will  be appropriate  at  this  stage  to  refer  to Sections 3, 4 4A, 4B 15 33M and 39 the Markets Act:      3.  Notification  of  intention  of      exercising control  over  purchase,      sale,  storage  and  processing  of      agricultural produce  in  specified      area  ---     (1)   Notwithstanding      anything to  the contrary contained      in any other Act for the time being      in force, the State Government may,      by   notification,    declare   its      intention   of    regulating    the      purchase,   Sale,    Storage    and      processing  of   such  Agricultural      produce and in such area, as may be      specified in the notification.      (2)  A   notification  under   sub-      section (1)  shall state  that  any      objection or  suggestion which  may      be received by the state Government      within a  period of  not less  than      tow months  to be  specified in the      notification, shall  be  considered      by the State Government.      4. Declaration  of market  area,  -      (1) After  the expiry of the period      specified   in   the   notification      issued under  Section 3  and  after      considering  such   objection   and      suggestions  as   may  be  received      before  such   expiry   and   after      holding  such  enquiry  as  it  may      consider  necessary.   the    State      Government  may   by  notification.      declare the  area specified  in the      notification under Section 3 or any      portion thereof to be a market area      for the  purposes of  this Act , in      respect of  all or any of the kinds      or agricultural  produce  specified      in the notification under Section 3.      (2)  On   and  after  the  date  of      publication  of   the  notification      under  sub-section   (1),  or  such      later  date  as  may  be  specified      therein, no  municipality or  other      local authority,  or other  person,      other       local        authority,      notwithstanding anything  contained      in any  law for  the time  being in      force,  shall,  within  the  market      area, or  within a distance thereof      to  be  notified  in  the  Official      Gazette  in  this  behalf  set  up,      establish, or continue, or allow to      be   set    up,   established    or      continued,  any   place   for   the



    purchase, sale, store or processing      or  any   agricultural  produce  so      notified, except in accordance with      the provisions  of  this  Act,  the      rules and by laws.      Explanation  -  a  municipality  or      other local authority on any person      shall not  be  deemed  to  set  up,      establish or  continue or  allow to      be set  up, establish or continue a      place as a  place for the purchase,      sale,  storage   or  processing  or      agricultural produce the meaning of      this section, if the quantity is as      may be prescribed and the seller is      himself   the   producer   of   the      agricultural  produce  offered  for      sale at  such place  or any  person      employed  by   such   producer   to      transport the same and the buyer is      a person who purchases such produce      for  his   own  use   or   if   the      agricultural  produce  is  said  by      retail  sale   to  a   person   who      purchases such  produce for his own      use.      (3) Subject  to the  provisions  of      Section 3, the State Government may      at   any   time   by   notification      exclude from a market area any area      of   any    agricultural    produce      specified therein or include in any      market area of agricultural produce      included  in   notification  issued      under sub-section (1).      (4) Nothing in this Act shall apply      to a  trader whose  daily or annual      turnover  does   not  exceed   such      amount as may be prescribed.      4A. Sections  3 and  4 not to apply      to Section  39 - (1) The provisions      of Sections 3 and 4 shall not apply      to the   exercise  of powers by the      State Government  under Section  39      to amend  the Schedule  by addition      of any item of Agricultural produce      not specified therein.      (2) The  State shall  not order the      deletion of any item in exercise of      its power  under Section 39 without      giving an  opportunity for  hearing      to the affected parties.      4B. Validating of market fee levied      and collected - Notwithstanding any      judgment. decree  or order  of  any      Court to  the contrary,  any market      fee levied  and collected  shall be      deemed to  be valid as if such levy      and collection  was made  under the      provisions of  this Act  as amended      by this  Act and  notification  No.      730 dated  2nd May,  1977 shall  be      deemed never  to have  been  issued      and  no   suit   or   other   legal      proceedings shall  be maintained or



    contained  in  any  Court  for  the      refund of  the fee  collected under      the provisions  of this  Act and no      Court    shall     entertain    any      proceedings  challenging   the  fee      merely on the ground that liability      had ceased  on the  issuing of  the      notification no.  730,  dated  May,      1977."      15. Sale  of Agricultural  produce-      (1)   No    agricultural   produce,      specified  in   notification  under      sub-section (1)  of Section 4 shall      be bought  or sold by any person at      any place  in the market area other      than the  relevant principal market      other than  the relevant  principal      market yard  or sub-market  yard or      yards  established  therein  expert      such quantity as may on this behalf      be prescribed  for   retail sale or      personal consumption.      (2) The  sale and  purchase of such      agricultural produce  in such  area      notwithstanding anything  contained      in any law be made by means of open      auction or  tender system except in      case of  such class  or description      of produce  as may  be exempted  by      the Board.      33-M. Every  Market committee shall      out of  its fund  contribute to the      State    Government    Fund    such      percentage of  its  income  derived      from licence  fees and  market fees      as may  be prescribed by Rules form      time   to   time   by   the   State      Government.      39. power  to amend  the Schedule -      The  State   Government   may,   by      notification   add, amend or cancel      any of  the items  of  agricultural      produce specified in the Schedule."      The reasonings  indicated by the High Court in deciding the vires  of Section  4A and   4  B   of the Markets Act as contained in  the impugned judgment may be broadly indicated as hereunder: a) Notification  dated May 21, 1977 cannot be treated as re- introduction  of   sugar  in   the  Schedule   without   the requirement of Section  3 and 4 of the Markets Act which are valid and operative have been complied with. Even if Section 24  of   the  Bihar   General  Clauses  Act  is  treated  as applicable, it  will have  the effect of adding sugar in the Schedule; but without a proper notification under Sections 3 and 4  of the Markets Act, the regulatory provisions for fee were not  applicable merely  because sugar  was added in the Schedule. b) Validating/Amending  Act of  1993 introducing Section  4A and 4 B into the Markets Act after Section 4; could not have the effect  of making  the Act  applicable  to  sugar  under Notification dated  May 21,  1977 in  view of  the fact that Sections 3  and 4 still remained integral and vital parts of the Markets  Act and  compliance of  Sections 3  and  4  was essential. c) The  scheme of  the Markets  Act is an integrated one and



mere introduction  of a Commodity into the Schedule will not proprio vigore  attract the  provisions of  the Act  without following the provisions of Sections 3 and 4 of the Act. d) The  Validating/amending Act had merely the effect making Section 3  and 4  of the  Act not applicable to Action taken under Section  39 of  the Act.  but  having  regard  to  the continuance of Sections 3 and 4 of the Act, other provisions of the  Act cannot  be made applicable merely because of the Re-introduction of  sugar into the Schedule, To make the Act applicable to  the items added by Notification dated May 21, 1977, there  must  have  been  a  fresh  notification  under Section 3 and 4 of the Act. e) Section 3 and 4 of the Act constitute the core of the Act for the  application of  the provisions  of the  Act,  Which mandates  fresh   notification    before  the  Act  is  made applicable to  items included  in the  Schedule,  After  the commencement of the Act introduction under Section 39 cannot Achieve that  purpose. f) A  notification  under  Section  3 (1)     is     not    a    mere  notification    introducing agricultural   produce  under  the Schedule of  the Act  but the   said notification        is    also  concerned    with prescribing   the   area   within   which   the agricultural produce  will have  to be  sold and  purchased. Notification under Section  4 can  be brought  into existence only  after considering   the   objections   presented  under Sections 3 and 4   of  the   Act, pursuant  to the  notification issued under   Section    (1)  of   the Act.  The  introduction  of commodity into  the Schedule  of the  Markets  Act  must  be combined with  notification under  Section 4 (1) of the said Act. The requirements under Sections 3 and 4 of the Act must be complied  with together and they cannot be severed. It is only after  issuance of  notification under  Section 4(1) of the Act that the fee leviable under the Act becomes payable. f) Section  27  of  the  Act  is  wholly  dependent  upon  a notification under  Section 4 (1) of the Act because levy of market fee  can be  made only on agricultural produce bought or sold in the market at the specified rates. As Section 4 (1) of  the Markets  Act still remains operative and has bot been excluded,  mere inclusion  of a commodity under Section 39 of  the Markets  Act will  not ioso  facto attract  other provisions of the Act. g) section  4A and  4B are  invalid as  they constitute  two different procedures,  namely, the procedure for items which are added  subsequent to the commencement of the Act and the procedure which  has to be followed in the case of the items already included  in  the  Schedule.  There  cannot  be  tow separate procedures for the items existing prior to August 6 and those  which are  added subsequently,  Accordingly,  the provisions for  non-application  of  Sections  3  and  4  of markets Act.  by Section  4A (1)  of the  Act, is arbitrary, without intelligible  basis and has the effect of destroying the scheme of the markets Act, Any contention that Section 3 and 4  of the Markets Act will not apply to an item which is added in  the Schedule  will make mockery of the entire Act. Section 4A  purports to  destroy the  entire fabric   of the Act, Therefore,  Section 4A  (1) of the Act has to be Struck down deep the other provisions of the Act alive. h) Sections 4A and 4B introduced by the amending Act violate Articles 14  and 19  (1) (g)  of the  Constitution. The said Section 4A  and 4B  create  tow  separate  classes  for  the application of  the Act,  one for those who would be traders in  the   area  concerned  and  the  other  for  the  market committee. i) Section  4B is  partly valid and partly invalid. The Said Section has four parts out of which firs part is invalid and



cannot be  given effect to. The Second part is valid and can be given  effect. The  other two  parts of  Section  4B  are merely ancillary  and consequential to the first and  second part.      The High  Court has  also held  that Notification dated August 31,  1992, issued  under Section 4 of the Markets Act in continuation  of the  Memo No.  3028 issued  by the State Government of  Bihar under  Section 3   of  the Markets  Act declaring its  intention  of  regulating  the  purchase  and processing of  items mentioned  in the  Schedule was bad and inoperative.      Against the  impugned decision of the Patna High Court. Bihar State Agricultural Marketing Board, State of Bihar and Several sugar  missal have  preferred  appeals  before  this Court, It  appears that  each of the appellants is aggrieved by one  part or  the other  of the  impugned decision of the High  court   Mr,  Venugopal   Senior  Advocate.  Mr.  Gopal Subramaniam, Sr Advocate, Mr. A.K. Ganguly, Sr. Advocate has argued for  the Bihar State Agricultural Marketing Board and Mr. S.B.  Sanyal, Sr.  Advocate has made submissions for the State of  Bihar at  the hearing  of  these  appals.  At  the arguments advanced  by the  learned counsel  for  the  sugar mills are more or less on the same strain, instead of noting the arguments  of each  of the learned counsel appearing for the respective sugar mill separately, it is proposed to deal with the   submissions  made on  behalf of  the sugar missal jointly in order to avoid repetitions.      Mr. A.K.  Sen, Learned  Senior Advocate,  appearing for the Bihar  State Agricultural Marketing Board, has submitted that  the  disputes  involved  in  the  Writ  Petitions  and determined  by   the  High   court  had   their  genesis  in Notification dated May 2, 1977 issued under the Markets Act. That Notification  deleted sugar  inter alia, as and item in the Schedule  of the Act being item no. XII thereof and also other items  in the  Schedule  which  were  already  in  the Schedule at the commencement of the Act, The power to delete is conferred  by Section  39 of  the Act  whereby the  State Government has  been given  the power to amend or cancel any of the  item specified  in the  Schedule to the Act, Mr. Sen has submitted  that this  power to  amend or  cancel is  not controlled by  Sections 3 or 4 of the markets Act as the Act form the  very Beginning.  Notification   dated May  2, 1977 was, however, cancelled or rescinded by a fresh notification dated May  21, 1977. There was no notification under Section 39 of  the Act  including sugar  in the Schedule nor was any notification issued under Section 3 and 4 of the Markets Act in relation to sugar. Mr. Sen has further submitted that the patna High  Court in Writ Petition in the case of D.C.M. Vs. Agricultural Produce Marketing committee (Air 1993 Patna 43) accepted the  contention that  section 24  of the  Bihar and Orissa General Clauses Act did not have the effect of having the original  position, before  deletion of  sugar form  the Schedule, restored,  The High  Court held  that sugar having been deleted  by Notification  dated May  2,  1977  for  the Schedule, subsequent  notification of  May 21,  1977 did not have the  effect of re-introducing sugar as one of the items of the  agricultural produce. Even if notification dated May 21,  1977   is  treated   as  re-introducing   sugar  as  an agricultural produce  within the meaning of the Act, that by itself, would  not make  the Act  applicable to sugar unless there was  a fresh notification under Section 3 and 4 of the Markets Act.  Therefore, the  fees levied and claimed by the concerned Marketing Committee could to be sustained.      Mr. Sen  has submitted that if the judgment of the High Court was  correct, then  this defect could only be cured by



fresh legislation  and not  by a  fresh  notification  under Section 39  of the markets Act. Though the  State Government of Bihar  and the  Marketing committee  had appealed against the judgment  of the  High Court  by filing  a Special Leave Petition against  the same before this court, The appeal has not been  heard yet,  Hence, the  position flowing  from the Judgment of  the High  court had  to be rectified. The State Government, therefore,  exercised its  power of promulgating ordinance  under   Article  213   of  the   Constitution  by introducing Section  4A and  4B in  the  Markets  Act.  Such Ordinance was  later on  replaced by  an Mending  Act.  such Ordinance was  later on replaced by an Amending Act. Mr. Sen has  also  submitted  that  the  contentions  which  were  w accepted by  the High Court in the D.C.M. s case and also in the present case are based on the hypothesis that Section 39 of  the   Act  can   have  no  effect  without  the  aid  of notifications  under  Section  3  and  4.  Such  a  premise, according to  Mr. Sen,  is incorrect. Mr. Sen submitted that Section 15 of the Markets Act only prevents any municipality or local  authority or any private any municipality or local authority  or   any  private  person  form  establishing  or continuing or  allowing to set up continuing a place for the purchase sale,  store or processing of any such agricultural produce notified  under Section  4(2). Except  in  accedence with the  provision of  this Act. Mr. Sen has submitted that Section 39  is the  instrumentality   by which  a produce is brought into the Schedule, where such produce was not in the Schedule. It  is only  when a produce finds its place in the Schedule,  that   its  control   under  the  Market  Act  by notifications under  Sections 3  and 4  of the  Act  becomes relevant and  possible. Before  Sections 3  and 4 of the Act can be  applied,  the  concerned  produce  must  be  in  the Schedule, as defined in Section 2(1) (a) of the Markets Act, The first  step is  to look to the Schedule to find out what produces can  be controlled. Control under the Act is not in vacuum but  is in respect of the scheduled produces, through the mechanism of Sections 3 and 4 for controlling them.      Mr. Sen  has submitted  that  Section  15  of  the  Act provides one  of the teeth for Section 4 read with Section 3 of the  Act. It  prescribes that  all goods specified in the Notification under  section  4(1)  of  the  Act  shall  pass through the  principal market yard or yards, as the case may be, and  shall not  be sold  or purchased at any other place within the  market proper  and sales  and purchases  of such agricultural produce  in such  yards, shall be made by means of open auction.      Mr. Sen  has contended that the effect of the amendment of  Section  15(2)  of  the  Act  is  that  if  a  scheduled agricultural produce is subjected to control by notification under Section  4(1), the  subsequent  steps  under  Sections 5,.6,16  etc.  come  into  force,  But  before  steps  under Sections 3 and 4 are taken, the produce concerned must be in the Schedule, It may be in the Schedule originally or it may included by  a subsequent  notification  under  Section  39, which alone  provides  the  machinery  for  such  subsequent inclusion. According  to Mr.  Sen, it  is an  error to argue that Section  3 and  4 of  the Markets  Act must be used for such introduction,  and not Section 39. Mr Sen has submitted that Section  15 is  confined only  to such produce which is included in  the notification under Section 4(1) of the Act: and this  is not  applicable to produce which was originally in  the  Schedule  or  is  brought  in  the  Schedule  by  a notification under  Section 39  or the  Act. Mr Sen has also submitted that  without such notification under Section 4(1) of the  Markets Act,  the sellers and buyers of a produce in



the  Schedule   originally  or  subsequently  introduced  by notification under  Section 39  of the Act, would not suffer from the  disability under  Section 15(1) of the Markets Act and such  produce would  also not  be bond by the fetters of Section 4  and 15 of the Act and the same can be sold in any place in  the market  area or  outside  and  such  sale  and purchase would  nought be subject to the other provisions of the Act  providing for  control or  levy of fees and matters connected therewith as provided under Section 27A and 27B of the Act.  It is only after the notification under Section 4, that the control of the Act visits the Scheduled produce(s). The control  does not  come by  the inclusion  of a  produce propio vigore,  in other  words,  Section  39  of  the  Act, without the  aid of a notification under Section 4(1) of the Act, would  not attract  the restrictions and control of the Act Imposed  by Sections 4,5, and 15 and the traders will be allowed to  by and sell goods anywhere in the market area or outside.      It has  also been  contended by Mr. Sen that Section 39 is an  independent provision  and  is  not  subject  to  the provisions of  Section 3  and 4  of  the  Markets  Act,  The Original Act  did not  contain Section   4(2) of the Act. It only came  in 1974  by Amending  Act 60  of  1980.  It  only provides for  declaration    of  a  market  area  for  goods notified under  Section 4(1)  of the  markets  Act  and  the Restrictions under Section 15 of the Act are applicable only to such  goods; for  any other  goods, including  the  goods originally  in  the  Schedule,  the  Act  provides  no  such restrictions. According  to Mr.  Sen. Sections  5 and 18 and the Rules imposing various restrictions and also levy of fee under Section  27 of  the Markets  Act apply  to  all  goods including goods  notified under  Section 4(1) of the Markets Act.      It is  further contended  by Mr, Sen that even if it is assumed that  Section 39  alone cannot  add to  the Schedule without the  aid of Sections 3 and 4. the infirmity is cured by the amending/validation Act by introducing Section 4A and 4B. Mr.  Sen has  submitted that Section 4A frees Section 39 from the  Fetters of  Section 4  and Section  15 of the Act. Hence, even  if there  are fetters,  exercise of  the  power under Section  39 will  be protected  by Section  4A of  the Amending Act  because the fetters imposed by Section 4(2) of the Act  would be  inapplicable in the matter of exercise of power by  the State  Government  under  Section  39  of  the Markets Act.  The exercise  of the power under Section 39 is only for  inclusion or  alteration of  the Schedule. Mr. Sen has also submitted that Sections 4(1) and (2) of the Markets Act are  to be  read together  and they  are not  severable, Section 4B  of  the  amending  Act  protects  the  levy  and collection of fee in the past by enacting that such levy and collection are  to be  deemed valid  and  that  Notification dated May,  1977 shall  be deemed never to have been issued. According to  Mr.Sen, the  effect  of  Section  4B  is  that Notification dated  May 2,  1977 will  be  no-est  from  the beginning, Therefore,  no  question  of  Re-introducing  new goods into  the Schedule  arises in  this case because sugar had always ben in the Schedule.      Mr.   Sen    has    further    submitted    that    the amending/validation Act  gives protection  (a) to levies and collections of  fee made  already and  (b) to keep the items existing in the Schedule prior to may 2.1977 in the Schedule without any  necessity  of  following    the  provisions  of Sections 3  and 4  were not amended. It should be noted that Section 4A  or the  Act gives  effect  to  amendments  under Section 39  to  the  Schedule  without  complying  with  the



provisions of  Sections 3  and 4  of the Act so that as form the commencement  of the  Act, the items added under Section 39 if  the Act  form part  of  the  Schedule  as  originally enacted or  modified, Mr. Sen has further contended that the intention of  the State  Legislature is  clear. It wanted to include the  goods brought into Schedule under Section 39 of the Act without the conditions of Section 3 and 4 of the Act being notified.  The exercise  of the power under Section 39 is freed  from the  condition imposed by Sections 3 and 4 of the Markets  Act.  Therefore.,  Sections  24  of  the  Bihar General Clauses  Act will  apply, as  the intention  of  the Legislature in  enacting Sections  4A and  4B of  the Act is clearly to  include  the  items  deleted  on  May  2,  1977, notwithstanding the  not-compliance  of  the  conditions  in Section 3  and 4  of the Act. Mr Sen has also submitted that the  legislature  itself  has  made  the  classification  of agricultural  produces   and  has   specified  them  in  the Schedule, Thereafter,  it has left to the State to alter the Schedule under Section 39 of the Act. The classification for the purpose  of selection scheduled produces and control are left entirely to the State government under Sections 3 and 4 of the  Markets Act,  so that  the  classification  for  the purpose of control is made by the State Government according to the  procedure laid  down under  Sections 3  and 4 of the Act. The  only condition  is that  the State  Government has intend to declare its intention to control such agricultural produce for  such area  as may  be specified in the relevant notifications. Exercise  of the  power under  section  4  is conditioned by  Section 3(2)  of the Act read with Section 4 (1) of  the Act.  This dichotomy follows the pattern of many economic enactments like the Essential Commodities Act 1955, where certain essential commodities are specified by Section 3(a) and then the addition of other essential commodities is left to  the Central  Government by  a notified  order.  The power under  Section 2(a)  (xi) is  not conditioned  by  any prior right  of hearing  or objections  but is  left to  the judgment of  the  Central  Government  only.  The  power  of control under  Essential Commodities  Act, is  also given to the Central Government under Section 3 of the Act and leaves it to  be performed on the opinion of the Central Government such control was need for maintaining of increasing supplies of the concerned commodities or for securing their equitable distribution.      Mr. Sen  has also  submitted that  the law  is now well settled that  a classification  under any law may be made by the law  itself or  the law  may  leave  it  to  some  other authority to  devise the  classification for  the purpose of achieving the objects of the Act. When such a classification is left  to an authority other than the Legislature, the Law may  provide   conditions   for   the   exercise   of   such classification or  leave it  again to  the judgment  of  the authority concerned.  In support of  this contention, Mr Sen has referred  to the  decision of  this Court in Ram Krishan Dalmia Vs.  Shri Justice  S.R. Tendukar  (1959 SCR 279). Mr. Sen has  submitted that  various actions of the authorities, other than  the Legislature,  exercised under such delegated power like fixing of price of mustard oil or other essential commodities  have   been  upheld  on  the  ground  that  the delegates knew  the need and the reasons for the exercise of such powers. In this connection, Mr. Sen has referred to the decision of  this Court  in Prao Ice and Oil Mills Vs. Union of India (1978 (3) SCR 293).      Mr. Sen  has submitted  that  the  Markets  Act  adopts different procedures  for control  and  regulation  and  the setting up  and running of regulated markets which have been



found to be the principal  objects of the Act. But machinery of  control   imposed  under   the  Act   rests  on  several provisions. The  first step is to select the item of control by specifying  the goods  in  the  Schedule.  The  power  of altering the Schedule is given to the State government under Section 39  of the  Markets Act,  like the  power    of  the Central Government  to specify  essential commodities  under Section 2(a)  of the  Essential Commodities  Act other  than those specified by the Legislature, It has been contended by Mr. Sen  that this  is  a  case  where  the  first  step  of Classification  is   performed  by  the  Legislature  itself leaving it to the State to add or alter the field of control by deleting  or adding  to or  amending the  Schedule  under Section 39  of the  Markets Act.  There is  no condition for hearing Act,  for the  purpose of  such a  function in  part material with  the Essential Commodities Act. Then, when the area of  control  is  circumscribed  by  the  items  in  the Schedule, the  Actual control part of it including selection of scheduled  goods to  be controlled, the market area where the control  will operate  and where  the controlled produce will have  to be  soldered left to the judgment or the State government,  Subject   to  statuary  conditions  imposed  by Sections 3  3(1) and  4(1) of  the Markets  Act. Mr. Sen has submitted that once the notifications under Sections 3 and 4 of the  Act have  been  made  specifying  the  goods  to  be controlled and  the areas  where the  control will  operate, other provisions  of control  contained in Section 5 onwards including the  levy of  fee under  Section 27 of the Act and the provisions  under Section  39, 42,  48, 52,  53 and  the Rules framed under Act, spring into operation, The Selection of the  Goods for control i.e. the broad field of the Act is done by the Legislature itself with a further power given to the  state  government  to  alter  the  boundaries  and  the contents of  the field.  For defining the field of control , no procedure  for hearing the objections has been prescribed by the  statute nor it is feasible to do so. It must be left to the  judgment of the Legislature and the State Government concerned. But  for the purpose of bringing the control into operation and for opening the gate for the stream of control to flow,  a procedure  is prescribed  in sections 3 and 4 of the Markets Act.      Mr. Sen  has contended  that it has not been alleged in the Writ  petitions not  has it  been founding  the judgment under appeal  that by  following the procedure of Sections 3 and 4  of the  Markets Act  Agricultural  produce  has  been included in  the Schedule.  In Fact,  even since  control of sugar was  imposed by fixing the market areas concerned, the Act has  been operating  for controlling  sales of sugar and the purchases  have been  levied with  fee and  regulated by other provisions  of control.  Mr. Sen has further submitted that it  is not  argued not  is it  possible to  argue  that notification under Section 39 had to take the aid of Section 3 and  4 of  the Markets  Act. The  deletion of sugar by the first Notification had the effect of  shrinking the field of control of  the  original  Schedule,  It  should  better  be appreciated that it was not a deletion under Section 4(1) of the act  and therefore  it was  sought to  be  done  without following the  procedure prescribed  in Sections  3 and 4 of the Act.      Mr. Sen  has contended  the there was no challenge from the Writ Petitioners against the exclusion of sugar from the Schedule by  the Notification  of May  2,  1977  made  under Section 39  of the  markets Act  of  the  Ground  that  such Exclusion was  made without taking recourse to the procedure prescribed in  Sections 3  and 4  of the  Markets  Act.  The



reason  is  obvious.  Section  3  would  apply  in  case  of inclusion or  exclusion of the produce or markets which have been brought  under control  already under  Section 4 (1) of the Act  Section 4  (3) does  not contemplate  inclusion  or exclusion of  the Schedule  under Section 39 of the Act, but makes Section  3 applicable  only to inclusion and exclusion of the  produces or  the areas of the market concerned which have been  notified for  control in  a specified  market  by State Government.  Mr. Sen has submitted that on a parity of reasoning  there   cannot  be   any  complaint  against  the notification of  May 21, 1977 under Section 39 of the Act or under Section  24 of  the Bihar General Clauses Act or under Section 24  or the  Bihar general clauses Act rescinding the earlier notification. The step for control having been taken by the  delegated authority  and control having been imposed already on  sugar, any  exclusion of  the control  of  sugar would have  to follow the procedure of Section 3 of the Act. The not  having been done, the State Government was entitled to cancel the Notification of May, 1977.      Mr. Sen  has contended that the High Court was wrong in holding that  such notification  could nullify  the  control imposed earlier  on sugar  as a  scheduled commodity  and it needed re-introduction  of control of sugar by following the procedure of a commodity under Section 39 of the Markets Act are functionally different from imposing control of produces already in  the Schedule  under Sections  3  and  4  of  the Markets Act.  The Schedule  fixes the  contents of the field from which  the items  covered therein  are intended  to  be selected for  control. But  notification under Section 4 (1) of the  Act fixes  the area of the control and the commodity to be  controlled within  that area.  The latter can only be altered by following the procedure under Sections 3 and 4 of the Act.      With regard  to challenge  under  Articles  14  of  the Constitution, Mr.  Sen has submitted that the High Court has held  that  the  amending  Act  has  created  tow  different procedures one  for the  items which  were introduced or re- introduced by  Section 39  of the  markets Act  without  the fetters of  Sections 3  and 4  of the  markets Act read with Section 15 of the Markets Act and the other for the Articles which are introduced or re-introduced under Sections 3 and 4 of the  markets Act  which gives  a  right  of  hearing  and marking objections  against inclusion  of an item not in the schedule .  Mr. Sen   has submitted that this reasoning with respect is not correct. According to Mr.  Sen, the amendment only cancels or rescinds the Notification or May 2, 1977 and preserves the  status quo as on that date including sugar in the Schedule  as it was before. If the deleting notification is  made   nor  est,  then  there  is  no  question  of  any introduction by  following the  procedure of Section 3 and 4 of the  Markets Act.  Mr. Sen  has also  submitted  that  it should be  borne in  mind that Section 39 of the markets Act is not subordinate to Sections 3 and 4 of the Act and it can exist independently, Only for the purpose of bringing in the restriction under Section 15 of the Act, aid from Sections 3 and 4  of the  markets Act  is necessary.  Once an  item  is included in  the Schedule  under Section  39 of  the Markets Act, it  will be  subject to  all the provisions of the Act, excepting Section  15, which is confined to items dealt with under Section  3 and  4 of the Markets Act. As from the date of the amending Act there will be no difference of procedure for the exercise of power under Sections 3 and 4 and for the exercise of  poser under Section 39 of the Act, following of the provisions of Sections 3 and 4 of the markets Act is not necessary. Mr.  Sen has  submitted that  the Legislature  is



competent to  say that  come of  the provisions would not be subject to some other provisions, New Sections 4A and 4B are now parts  of the  Act and  these new  provisions are  to be construed harmoniously  with Sections  3  and  4  read  with Section 15 of the Act. Mr. Sen has submitted that it must be presumed that  the exercise of the powers under Sections 39, as under  Sections 3  and 4, will be made reasonably and not arbitrarily and  indiscriminately, In  exercising the powers under section 3 of the markets Act, all that is necessary is a declaration of intention include a particular article in a particular market  and then followed by hearing. In the case of Section 39, the power is only freed from the duty to hear objections. Mr.  Sen has submitted that in almost all fiscal legislations like  the Sales  Tax Act,  the Excise  Act, the Customs Act,  the  right  or  hearing  is  not  a  necessary condition  for  the  regulation  and  levy  under  the  said enactment. A  simple notification  is enough  to include  an item even  by a delegated power which has been considered to be legislative  in character,  So long as the main provision delegating the  power does  not suffer  from any  bias,  the delegated authority  can validly exercise the power. Mr. Sen has submitted  that the  Legislature may very well be of the view that for including certain items in Sections 3 and 4 or the Act benefit of hearing is necessary.      Mr Sen  has also  submitted that  the  challenge  under Article 19 of the constitution is very weak as it is founded on the ground that Section 3 and 4 still continue to operate and that  Sections 4A  and 4B  were  not  proper  validating provisions as the Legislature had no power to enact the same with retrospective  effect. Mr. Sen has submitted that it is only  where   the  previous  law  is  subjected  to  certain infirmities, that  a validation  enactment comes  to protect it. It  is true  that the Legislature would not be competent to  validate   the  provisions  which  are  not  within  its legislative competence;  but this question cannot arise here as the  Legislature was  fully competent to legislate on the subject. The  Act is  for the  public benefit  and  for  the protection of  agricultural  producers  from  middleman  and brokers, so  also for  the regulation  of quality and weight and for  providing facilities  in the markets and the market areas concerned  with the aid of the fees collected. Mr, Sen has, therefore, submitted that challenge under Article 19(1) (g) to the Constitution is without any basis and must fail.      Mr. Sen  has  therefore  submitted  that  the  impugned decision of  the High  Court should  be set  aside  and  the appeals preferred  by the Bihar Agricultural State Marketing Board should  be allowed  and the  appeals preferred  by the sugar mills should be dismissed by upholding the validity of the Notification  dated  may  21,  1977,  so  too  vires  of Sections 4A, 4B and Section 33M.        The   arguments     advanced   by    the   respective counsel appearing   for   various   sugar   mills        may summarised  as follows: (I) The  title to the Markets Act itself      delineates its  scope, which  is to      provide for  better  regulation  of      buying and  selling of Agricultural      produce and  the  establishment  of      markets for agricultural produce in      the State and for matters connected      therewith.  In   the  Statement  of      Objects and  Reasons of the markets      Act, it has been indicated that the      Act   is    aimed   to   constitute      regulated markets  so as  to secure



    to the  cultivator  better  prices,      fair  weighment  and  freedom  from      illegal deductions, a fair deal for      the  agriculturists   provide  good      incentive for the agriculturists to      adopt     improved     agricultural      programme etc.  The main objects of      the  Markets   Act  are  to  create      market area and markets with a view      to ensuring  constitution of market      committees fully representatives of      growers, traders, local authorities      and Government  for supervising the      working of  regulated  markets  and      regulation of  market  charges  and      prohibition of  realisation charges      etc. (II)(a)  When   the   State   Government      decides  to  exercise  its  control      over the purchase, sale, storage or      processing  of   any   agricultural      produce in a specified area. it can      do   so    only   by    issuing   a      notification     declaring      its      intention to  that  effect  and  by      inviting objections  of suggestions      within a  period of  not less  than      two months, The State Government is      required    to     consider    such      objections or suggestions. (b) Any  inclusion of  an  item  in  the      Schedule to  the Markets  Act under      Section 39 does not bring about any      control  or   regulation  of  sale.      purchase, storage  or processing or      such produce.  In order to regulate      and   bring   the   produce   under      control,  it   is  necessary   that      intention to  regulate a produce is      to be  notified.  When  is  finally      decided after hearing objections to      the Notification under Section 4(1)      is to  be issued declaring the area      specified   in   the   notification      issued  under   Section  3  or  any      portion thereof  to be  market area      for the  purpose of the Markets Act      in   respect    of   any   of   the      agricultural  produce.  Sub-Section      (2)  of  Section  4  provides  that      after the  date of  publication  of      notification under  subsection  (1)      of Section  4 or such later date as      may  be   specified   therein,   no      municipality ,  local authority  or      other person  shall within the area      notified in  the  official  gazette      set up,  establish or  continue any      place for  the  purchase  of  sale,      purchase, storage  or processing of      any   agricultural    produce    so      notified, except in accordance with      the provisions  of markets Act, the      Rules and  by law,  Sub-section (3)      of Section 4  provides that subject



    to the provisions of Section 3, the      State Government  may at  any time,      by  notification,  exclude  from  a      market area  or  any  area  or  any      agricultural   produce    specified      therein or  include in  any  market      area or  any area  or  agricultural      produce. (c) It  is thus clear that the scheme of      the  Act   is  that   after  it  is      determined legislatively as to what      are the agricultural produce within      the meaning  of the  Act and  which      are provided in the Schedule to the      Act,   the    second    stage    of      contemplated exercise of control of      regulation  can  be  undertaken  by      following the  procedure laid  down      under  Section   3   and   4   read      together. It is quite apparent that      unduly declaration  under Section 4      is   notified    by    the    State      Government,  the  question  of  any      regulation  and  control  of  sale,      purchase, storage  of processing of      any agricultural  produce mentioned      in the Schedule to the Act does not      arise at all. (III)  The   Markets  Act  presents  and      integrated scheme and section 39 of      the Act cannot be read in isolation      of other  provisions of the Act, it      is a  settled rule  of construction      that  the  provisions  of  the  Act      should be  read as a whole so as to      determine the  scope and  effect of      each of them. The provisions of the      Act    should    be    harmoniously      construed so  as to  allow each  of      the provisions  to have full effect      no particular  provision should  be      so construed  as would render other      provisions      inaffective      or      redundant. Moreover, the provisions      are to  be so  construed  as  would      subserve  the   basic  scheme   and      object of the legislation. (IV)  The   Amending/   Validation   Act      introducing Section  4A and Section      4B  to   revive  control   of   any      agricultural produce, even if it is      included  in   the  Schedule  under      Section  of   the  Act,  until  and      unless the  provision of  Section 3      and 4  of the Act read with Section      15 are complied with Section 4A and      Section 4B are invalid. Sub-section      (1) of  Section 4A, in so far as it      dispenses with  the requirement  of      complying with  the  provisions  of      Sections 3  and 4 before market fee      can  be   validly  levied   on   an      agricultural produce,  is  bad  and      void for  being  repugnant  to  the      scheme of  the Act,  It is also bad



    and void  for  truncation  valuable      right given  to citizens and others      under Section  3 and 4. Sub-section      (1) of  Section 4A also obliterates      the concept of market area which is      the sole basis of operating the Act      and for  imposing the  levy.  As  a      result  of   sub-section   (1)   of      Section 4A,  the basis  of the  Act      gets transmuted form an Act levying      a fee  to an Act imposing tax. Sub-      section (2)  of Section  4A is also      bad because  it renders invalid the      notifications for deletion of items      issued  by  the  State  Government,      which have  been acted  upon by the      citizens  and  all  concerned,  The      introduction of  Sub-section (2) of      Section  4A   retrospectively  with      effect form  6.6.1960 would lead to      invalidation notification  by which      teems have  been deleted and enable      the market  committee to impose fee      and to  collect the fee in  respect      of items  which have  been deleted,      the same is bad inasmuch as it does      the certainty  with which  citizens      had   acted    upon   issuance   of      notification under  Section  39  of      the Act  deleting  items  from  the      Schedule.      Section 4A (2) is also bad inasmuch      as the  Legislature has provided an      opportunity  for   hearing  at  the      stage of deletion of the items from      the Schedule  and not  at the stage      of addition of the items. Since the      process of  addition  and  deletion      are both legislative Acts, unless a      rational    basis     exists     to      differentiate the circumstance when      an item  is being  deleted from the      Schedule,      no-affording      of      opportunity  to   the  members   of      general public  when  and  item  is      being added to the Schedule, is per      se discriminatory and as such void.      Sub-Section (1)  and (2) of Section      4A cannot  co-exist with 3 and 4 of      the  statue,   The  continuance  of      Sections 3 and 4 after the Amending      Act is  entirely futile  and  these      sections have  been  reduced  to  a      dead letter,  such  cannot  be  the      scheme of  the  Act,  particularly,      when Sections  3 and  4 have always      been adverted  to by  this  Hon’ble      Court while analysing the scheme of      the provision  of the  Act both  in      relation to  the declaration  of  a      market   area    and    also    the      declaration    of    a    principal      market/sub market  yard  and  while      adjudging    the     validity    of      imposition of fee.



    Section  4A   by  obliterating  the      right  to  object  conferred  under      section 3 introduces an unnecessary      hardship  and  exposes  the  entire      scheme of  the Act  to a  charge of      unreasonableness.  The  substantial      nature of  the  objections  of  the      appellant  as   depicted   in   the      objections  filed   would  indicate      that they  had a  right at least to      set  forth   the   grievances   for      consideration    by    the    State      Government.      Section   4B    of   the   Act   is      consequential provision, Section 4B      is    a     validating    provision      proceeding on  the basis  of curing      the  defects  pointed  out  by  the      Division bench of the High Court in      the D.C.M.  case through the medium      of 4  A and consequently validating      all collections as  if the same was      authorised by  the Amending Act and      also removing  the  impediments  of      any judgment  by  a  court  to  the      contrary.   It    is,    therefore,      submitted    that     Section    4B      containing the  Words: "as  if such      levy and  collection was made under      the  provisions   of  this  Act  as      amended by this Act....                      (emphasis supplied)      indicate that  4B cannot  have  any      existence independent  of its  own.      The effect  of the  judgment of the      Division  Bench  in  striking  down      Section 4A  entirely and  upholding      the fiction contained in Section 4B      would lead  to an  anomalous result      that without  curing the defects, a      judgment can  be overruled  by  the      legislature by  a simple process of      amendment, It  is well settled that      a mere  attempt to  overrule    the      decision of  the courts by amending      the law is not sufficient and would      itself be  an encroachment  on  the      judicial power  of the State. It is      only upon  the defects  pointed out      by  the  judgment  being  cured  in      proper   manner   that   validation      enactments can be upheld.      The legal  fiction  in  Section  4B      must    stand     the    test    of      reasonableness.     The     fiction      occuring in  4 is  consequential to      the removal  of defects pointed out      but  the   Division  bench  in  the      judgment dated  30.3.92 and  cannot      be divorced  from the  same Section      4B is  inseverable for  the purpose      of    either    interpreting    the      provisions or  for the  purpose  of      considering its validity.      The Notification  of 31.8.92 is pad



    and illegal  because the objections      raised by  the appellants  have not      been considered.  On the  basis  of      the  pleadings   submitted  by  the      parties, the  High Court  ought  to      have   answered    the    questions      relating to  the  validity  of  the      notification dated  31.8.92 in  the      affirmative. It  is also  contended      the no  satisfactory  material  has      been  placed by the Marketing Board      before the Court to suggest that to      objections   were   considered   in      serious manner  as is  expected  of      statutory authority under Section 3      of the Act. (V)  It   is  well   settled  that   the      provisions of  an Act  have  to  be      read as  a whole  in order  to give      effect     to      a      purposive      interpretation of  the Act,  viewed      from  this  cardinal  principal  of      construction, it  evident that  the      purpose  of  the  Act  to  regulate      activities in relation to specified      agricultural  produce a market area      is being  defeated by  the Amending      Act. Viewed  from this principle of      statutory interpretation,  Sections      4A and  4B of  the Amending Act are      bed,  as   being  contrary  to  the      Scheme  of   the   Act,   In   this      connection reference  has been made      to the  decision of  this Court  in      Commissioner Commercial  Taxes  vs.      R.S. Jhaver (1968 (1) SCR 148). (VI) Legislation  relating to imposition      of   a    restriction   under   the      provisions of the various Marketing      Regulation Acts  have  always  been      viewed in  an integrated  manner by      this  court,  In  support  of  such      contention, reference has been made      to the  decision in  MSVS  Aunachal      Naddar  Vs.  State  of  Madras  and      others  (1959   (suppl)  SCR   92).      Considering  the   scheme  of   the      Madras Commercial  Crops Act, 1953,      which is  in pari  materia with the      provisions of  the markets  Act, it      was  observed   by  this  Court  in      Naddars case that "under Section 3,      the  State   Government  issues   a      Notification    declaring     their      intention to  exercise control over      the  purchase   and  sale  or  such      commercial  crop  in  a  particular      area and  calls for  objections and      suggestions  to   the  made  within      prescribed    time.    After    the      objections are  received, the State      government   considers   them   and      declares the  area 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." (VII) In  this connection  reference has      also been  made to  the decision of      this court  in Lakhan Pal Vs. State      of Bihar  (1968 (3)  SCR  534).  In      Lakhan pal’s  case, this  Court had      noted that power under Section 4(1)      should be  exercised reasonably. It      is contended  that the intention or      the   judgment    is    that    the      reasonableness of  the exercise  of      the power  under  section  4(1)  is      amenable  to  judicial  review,  By      dispensing with  Sections 3  and 4,      the Markets  Act has become plainly      vulnerable. (VIII) Referring to Kewal Krishan Puri’s      case (1980  (1)  SCC  418),  it  is      contended that  for  a  fee  to  be      valid, levy  must be  impose on the      agricultural produce bought or sold      by  licencees  in  notified  market      area and must also be earmarked for      rendering services to the licencees      in the  notifies  market  area  and      good and  substantial portion of it      must be  shown to  be expanded  for      that purpose. It the requirement of      regulatory control  as envisaged in      Sections. 3  and 4 are sought to be      dispensed  with   by  the   aid  of      Sections 4A  and 4B, the imposition      of levy  of market  fee  loses  its      character as fee and it essentially      partakes the character of tax, Such      imposition  of   tax  suffers  from      legislative incompetence. (IX) A  valid law  must cure the defects      pointed  out  in  the  judgment  of      court  and   unless  it   does   so      effectively, the validation statute      would be  liable to be struck down.      mere  amendment   to  overrule   or      annual a  decision of courts is not      permissible inasmuch as the  as the      same amounts to encroachment on the      judicial power  of  the  state.  In      this connection,  reliance has been      made on  the decision of this court      in Prithvi  cotton Mills Vs. Broach      Borough Muncipality  &  Ors.  (1969      (2) SCC  283 at  286-287  para  4),      Municipal Corporation  of the  City      of   Ahmedabad   Vs.   New   Shrock      Spinning and  Weaving Co Ltd. (1970      (2) SCC at paces 285-287 paras 6,7,      & 8),  Madan Mohan Pathak Vs. Union      Of India  and Ors  (1978 (2) SCC 50      at  pages   65.67),  Cauveri  Water      Disputes Tribunal’s  case  (Special      Reference NO.  1 1991) (1992 Suppl.      SCC 6 paragraph 142). (X)  A   validating  law  must  also  be



    reasonable. The validating law must      satisfy  the   requirement  of  the      Constitution  after   taking   into      account the  accrued  and  acquired      rights of  the  parties  today.  In      this connection, reference has been      made to  the decision  in State  of      Gujarat Vs.  Ramanlal   Keshav  Lal      (page 52 at pages 61-63). (XI) Whilst  it is  true that Sections 3      and 4 do not influence the exercise      of power  under Section  39 of  the      Markets Act  and are not therefore,      condition precedent,  yet  once  an      item is  added to  the Schedule, it      should be  operative  in  a  market      area   through   the   process   of      Sections  3   and  4.   Section  39      contemplates  a   positive  act  of      addition   or   alteration.   While      amendment to  the Schedule  may  be      effected by  deletion of an item in      the Schedule,  yet addition  can be      effected only  by positive  Act  of      insertion.    Rescission    of    a      notification  deleting   the  items      will not  lead to  or tantamount to      addition  of   the  item   in   the      schedule.      The Notifications  of 2.5.1977  and      21.5.1977 are  referable to Section      39.    The    Notification    dated      21.5.1977    expressly     rescinds      notification issued  under  Section      39  on   2.5.31977.   Hence,   this      notification   is    referable   to      Section 39  and not  Section  4(3).      For exercise of power under Section      4(3), the procedure under Section 3      is to be followed.      On the  basis of  aforesaid submissions,  it  has  been contended by the learned counsel appearing for various sugar mills that  sugar having  been deleted  from the Schedule by the Notification  of 2.5.1977, its inclusion could have been made only by taking integrated actions as contemplated under Sections 3  and 4  of the  Markets Act;  and any attempts to include sugar  in the schedule for imposition of levy either by amending/validating  Act or  by purporting to rescind the Notification dated  2.5.1977 by Notification dated 21.5.1977 is illegal,  arbitrary, unreasonable  and repugnant  to  the scheme of  the Act.  The impugned decision of the High Court therefore, should be modified by allowing the writ petitions by declaring  Sections 4A,  4B and 33M of the Markets Act as ultra vires  and void and also declaring that at the present no imposition  of levy  on sugar  under the  Markets Act  is permissible.      Mr. S.B.  Sanyal, the learned Senior Advocate appearing for the  State of  Bihar, has adopted the arguments advanced by Mr. A.K. Sen in so for as the validity of Sections 4A and 4B of  the Markets Act and validity of imposition of levy on sugar are  concerned. Mr.  sanyal  has submitted that by the impugned judgment,  the High   Court     has   struck   down Section    33M     requiring contribution to  the State fund certain percentage  of income derived from  licence fees  as may   be prescribed. Mr Sanyal has submitted that Rule 68 of



the Bihar  Agricultural Produce  Market  Rules,    1975  was consequently amended   and   sub-rule  (iii)  of    Rule  68 provides  that     the   Market    Committee  will  pay,  as contribution to   the  state Government,  10 to  20% of  its total  income out  of the  market fee on a graded basis. The principal  attack on  the validity of Section 33M before the High   court was  the ground  that no  fee can be raised for general purposes  of the  State because  in that  case  such realisation will  amount to  tax and  in that  event it will alter the entire scheme of the Act. Mr. Sanyal has submitted that Section  33M was introduced in the Markets Act with the object to  defray the cost, grant, loan etc. which the State Government had  provided and  is providing  to the Marketing Board and different Market Committees from time to time.      Mr. Sanyal   has  submitted   that substantial  finance may   be necessary  in   future for  further  expanding  the activities of  Marketing Board and for advancing  the object of the Markets Act. He  has submitted  that at  the  hearing of   the  Writ Petitions before  the Patna  High court,  the State of  Bihar specifically  submitted   that   the  amount which   should   be collected  under   Section 33M  would be spent  exclusively     for   rendering  services     to  the agricultural markets  constituted under  the act and for the purposes of the Markets Act.      Mr. Sanyal  has further  submitted that  in view of the financial crunch  which the  State Government was facing, it was not  possible for the State to perform and discharge the responsibilities and  duties cast  on the  State  Government under the  various  under  the  various  provisions  of  the Markets  act,   so  also   to  translate   into  action  the improvement  Scheme   which  the   Government  proposes   to introduce for  advancing the  object of the Act, In order to protect the  interests of  the agriculturists  which is  the prominent object  of the  Markets Act,  the State Government proposes  to   introduce  measures   for  the   raising  the agricultural produce  of the growers and to secure them fair return of  their produce  in order to increase their holding capacity so  that they are nor required to sale their entire stock in  the harvest season when the price is very low. The produce of the agriculturists brought in the market areas or yards is to be stored in  the Government godowns and pledged to meet  the immediate need and to enable them to sell their produce at  a later  point of  time when  the standard price will prevail in the market. The State implementation of such scheme and  the Government  order has  been issued  to  that effect. Mr. Sanyal has submitted that although it is for the Market committee  to establish market in the market area and to maintain  market yard  and sub  market yard  as  per  the directions of  the State  Government, but  for  implementing such objects,  the Market  Committee is authorised to obtain loan from  the Sate Government as envisaged under Section 28 of the  Markets Act.  The marketing Board which exercise the power of   superintendence  over the  Market committees  can also obtain  loan from  the State  government for  Marketing Development Fund  as envisaged  under Section 33C (3) of the Markets  Act.  Mr.  Sanyal  has  submitted  that  the  State Government is  also guarantor  to repay  the loan in case of default by  the Board  in making  payment to  the  financial institutions. As  a matter  of fact,  the  state  Government stands as  a guarantor  for the grant of loan for 14 million dollars by  the World  bank to  carry out the objects of the Markets Act.  Mr. Sanyal  has also  submitted that crores of rupees  have   been  funded  by  the  State  Government  for acquisition of  lands for  different market areas. Such fact is revealed  in the  letter No. 1066 dated February 26, 1993



written by  the Secretary,  Bihar State  marketing Board  to Under Secretary,  Department of  Agriculture, Government  of Bihar.  as   on  account  of  financial  crunch,  the  State Government felt  difficulty  in  releasing  more  funds  for carrying out  the object  of the  Act, it felt the necessity that out  of the  realisation made  under the Act, a certain percentage should  be handed over to the State Government so that such  an amount is ploughed back as and when necessary. Mr. Sanyal  has submitted  that the  State Government  fully undertakes that the money which will be made available to it under  Section   33M  will  not  be  spent  for  the  genera expenditure of  the State Government and such amount will be exclusively spent  for the purposes as envisaged in the Act. In  such  view  of  the  matter,  it  cannot  be  reasonably contended that  the realisation to be made under Section 33M loses the  essential characteristic of fee, namely, quid pro quo consistent with the scheme of the Markets Act.      Mr. Sanyal  has submitted  that it  has been decided by this Court  in  Jagannath Ramamirig Dass Vs. State of Orissa (1954 SCR  1046)   that annual  contribution taken  from the religious institutions  for  meeting  the  expenses  of  the Commissioner  of   Hindu  Religious    Endowments  of    due administration   of   the affairs of religious institutions, do not lose the character of fees  so long  it is not merged in  general  revenue  of  the  State  for    general  public purpose. Mr   Sanyal  has submitted  that similar   view has also been  expressed  in  the  later decision of  this Court in Chief   Commissioner,  Delhi  and another Vs. Delhi Cloth and General  Mills Co.  Ltd. and  Ors. (1978 (3)  Scr 657  ) and   in municipal  Corporation of  Delhi and Ors. Vs. Mohd, Yasin etc. (1983 (2) SCR 999). Mr. Sanyal has submitted that the High Court has wrongly understood the import of  Section 33M   and aims  and objects for introducing the same.  These have   only indicated   that  in   view of    the  financial situation   of  the    State,  it  needed  fund  by  way  of contribution of  certain percentage  out of  market fees and licence fees,  but it  was nowhere  stated in  the aims  and objects that  such fund was needed by way of general revenue of the  State for  General public  purpose. Mr.  Sanyal  has submitted that  even if  the objects for introducing Section 33M   may not  be happily  worded, the  State Government has made its  position very  clear that entire amount to be made available under Section 33M to the State Government of Bihar will be  ploughed pack  for advancing  the objects under the Markets Act  and no  part  of  suction  collection  will  be utilised  for   general  public  purpose,  Mr.  Sanyal  has, therefore, submitted  that in  the aforesaid facts, there is no need  to strike  down the Section 33M and the decision of the High Court in that regard must be set aside.      After giving our careful consideration to the facts and circumstances of  the case  and the  submissions made by the learned counsel  for the  parties, it  appears  to  us  that unsell agricultural  produce is  included in the Schedule to the  Markets   Act,  the  provisions  of  the  Act  have  no application to  such produce.  An agricultural  produce  may find its  place in  the  Schedule  to  the  Markets  Act  as originally  included   by  the   Legislature,  or   it   may subsequently be  added to  the Schedule  under Section 39 of the Act.  Section 39  is the only provision in the Act which authorises the  State government  to add  any  item  to  the Schedule of the Act or delete any item therefrom. Section 39 being  an   independent  provision,   it  does  not  require sustenance from  other sections.  It  operates  on  its  own strength.      The power  of altering  the  Schedule  by  addition  or



deletion so  as to  determine the  area of  control and  the goods to  be controlled  other than  those specified  in the Schedule has  been delegated by the Legislature to the State Government  in  the  same  manner  as  the  power  has  been delegated to  the Central  Government under  Section 2(a) of the  Essential   Commodities  Act   to   specify   essential commodities other  than those  specified by  the Legislature itself.      For drawing  up the  field  of  control  by  specifying agricultural produce  in the  Schedule so  that  control  in respect of  the same  under other  provisions of  the Act is made, no  hearing has  been prescribed by the Statue, In our view, such  hearing is  not contemplated  because it may not always be  feasible or  even desirable  to give  hearing for determining which produce is to be included in the Schedule, The wisdom  in selecting  the field  of control by including the produce  in the  Schedule was exercised initially by the Legislature and  thereafter such wisdon has been left to the discretion of  the  delegated  authority  namely  the  State government, It  may be  noted here  that such hearing in the matter of  selecting the  field of  control by  adding items also not contemplated in the Essential Commodities Act.      Mr. Sen,  In our  view, has rightly contended that when the field  of control  is circumscribed  by the items in the Schedule, the  actual control part of it including the goods to   be controlled,  the market  area where the control will operate and  where the  controlled products  will have to be sold are  left to  the  judgment  of  the  State  Government subject to  the statutory conditions imposed by Section 3(1) and Section  4(1) of  the Markets Act. Once the notification under Sections 3 and 4 are issued specifying the goods to be controlled and the areas where the control will operate, the other provisions  of control  contained in Section 5 onwards including the  levy of  fee under  Section 27 of Markets Act spring into action.      It is  nobody’s case not it has been found as a fact in the impugned judgment that sugar was not in the Schedule and the same  was not  brought under  control by  following  the procedure of  Sections 3  and 4  of the  Act As  a matter of Fact, ever  since control on sugar was imposed by fixing the market  areas,  the  Markets  Act  had  been  operating  for controlling sale  of sugar and purchase has been levied with fee.      In exercise pose under Section 39 of the Markets Act, a notification was  issued on  May 2, 1977 deleting sugar from the  Schedule,   admittedly,  the  said  notification  under Section 39  was issued  without following  the procedure  of Sections 3  and 4  of the Markets Act. As result of the said notification sugar  was deleted  from the  Schedule and such deletion had the effect of shrinking the field of control of the original Schedule.      It may  be  noted  here  that  the  invalidity  of  the deletion of  sugar on  the basis  of the  said  notification dated 2.5.1977  is not  alleged by  the sugar  mills.  As  a matter of  fact, they  accept that  by the said notification sugar  stood  deleted  from  the  Schedule.  But  when  such deletion is  sought to  be negatived by issuing notification dated May 21, 1977 rescinding the earlier notification dated May 2,  1977, challenge  as to  the validity  of  the  later notification was  made by  filing writ  petitions before the High Court.  In the  judgment in  D.C.M.’s case (supra) such notification  dated   May  21,   1977   rescinding   earlier notification has  been held invalid by the High Court on the ground that  once control  has been effected in respect of a scheduled good by following provision under Section 3 and 4,



reintroduction of an item in the Schedule is not permissible without following  the provisions of the Section 3 and 4. In our view, such decision can not be sustained for the reasons indicated hereafter,  inclusion or  deletion of  an item  in selecting the  field or control is to be made in exercise of poser  under  Section  39  of  the  markets  Act  and  State Government is  clothed with such power which can be exercise without any aid of the provisions of Sections 3 and 4 of the Act. It  should also  be noted  that since deletion of sugar from the  Schedule was  made  in  exercise  of  power  under Section 39,  and such  deletion was  not  a  deletion  under Section  4(1)  of  the  Act,  the  procedure  prescribed  in Sections 3  and 4  of  the  Act,  was  not  required  to  be followed. Section  4(3) does  not contemplate  inclusion  or exclusion of  produce under  Section 39  of the  Act but  is applicable only  to the  inclusion or  exclusion of any area from the  area of market or any produce specified therein as have been notified for control in a specified market already by notification issued under Section 3 and 4 of the Act.      Since  the   decision  in   DCM’s  case   that  by  the notification  of   May  21,   1977  rescinding  the  earlier notification May 2, 1977 was invalid and the said subsequent notification had  not the effect of introducing sugar in the schedule for  want or  compliance of  Scions  3  and  4  was binding on the State government, although appeal before this Court against the judgment was pending, the State Government intended to  remove the  hurdles or  fetters in  deleting or including items   under  Section   39 without  following the provisions of  Section 3 and 4 by introducing Section 4A and 4B  by the validating/amending Act of 1993,      Sub-section (1) of Section 4A makes Sections 3 and 4 of the Act  non- applicable  in the  matter of  exercise of the power by  the State   Government under Section 39 of the Act to  amend   the  Schedule   by  addition   of  the  item  of agricultural produce  not specified therein. Sub-section (2) of Section  4A provides  that the  State shall not order the deletion of  any of  the item  without giving an opportunity for hearing to the affected parties, It is apparent that the legislature has  given a chance of hearing to the parties to be effected  if deletion  of an item already included in the Schedule is  to be  effected. But for addition of an item of agricultural produce  in the  Schedule in  the  exercise  of agricultural produce  in the  Schedule in  the  exercise  of power under section 39, no hearing has been contemplated.      In our  view, subsection  (2) of Section 4A has for the first  time   circumscribed  the  power  of  deletion  of  a scheduled item  in exercise of power under Section 39 of the Act without affording any hearing to the party aggrieved. It has already  been indicated  that Section  39  is  the  only provision  in  the  Markets  Act  which  has  delegated  the authority to  the State  Government to  modify the  Schedule either by  adding or  by deleting  any agricultural produce, Before the  introduction of  section 4A by the amending Act, even for  deletion in exercise of poser under Section 39, no hearing was necessary.      The Legislature  is quite  competent to  make provision for hearing  only in  case of  deletion of  a scheduled item without making  such provision  for inclusion  of an item in the Schedule. Whether an item deserves to be included in the Schedule so  that control  under the  Act may  be brought in respect of  such item  is a  matter of decision of the State Government according  to its perception to the felt need for such inclusion.  But when  the State Government has felt the need of  inclusion in  the schedule  but later on intends to change its  mind by deleting the item from the schedule. The



Legislature in  its wisdom  has thought  it fit  that before deletion, a  second  thought  is  desirable  by  noting  the objection that  might be   given by party  aggrieved. In our view, both  the sub  sections of  Section 4A  are within the legislative competence  and are also informed by reasons. In the aforesaid  facts, there  is no  occasion  to  hold  that Section 4A  is ultra  vires. In  our view,  High  Court  has laboured under an erroneous view that power under Section 39 can not  be exercise  without the aid of Sections 3 and 4 of the Act  and in  view of  such misconception about the power and authority  under Section  39, the  impugned decision has been made by holding Section 4A as ultra vires.      Even if  it is  held that  the decision  in DCM’s case, though erroneous,  was binding  inter-parte, the requirement of following  the procedures  under Sections 3 and 4 of  the Act   in  the    matter  of  inclusion  or  deletion  of  an agricultural produce  as held  in DCM’s  case  by  the  High Court, has  been expressly removed by introducing Section 4A In our  view, the amending/validation Act does not intend to overrule or  annul  any  decision  of  the  Court,  but  the amending Act  has brought  in a change in the requirement of following the  procedure under  Sections 3  and 4 of the Act while amending  the Schedule  under section  39 of  the Act. Hence, the basis of the decision in DCM’s case has undergone a legislative  charge, therefor,  Section 4  does not suffer form encroachment of judicial power of the State.      Section  4A   does  not   offend  Article   14  of  the Constitution. In view of Section 4A of the Act, any exercise of power  under Section  39 of  the Act  is to be uniformly exercised in  accordance with Section 4A of the Markets Act. In our  view, no  objection as to the validity of Section 4A can be  raised on  the ground  that different procedures for inclusion and  deletion  of  an  item  for  the  purpose  of exercising power under Section 39 and power under Sections 3 and 4 of the Act have been provided for in the Act. Exercise of power under section 39 is altogether a different exercise form the exercise of power under section 39 in the matter of inclusion and  deletion of  an agricultural produce overlaps or comes  in conflict  with  the  exercise  of  power  under Sections 3  and 4,  the Legislature by incorporating Section 4A has  given overriding poser to section 39, subject to the limitation under Section 4A(2). Viewed fro this perspective, Sections 3  and 4  stand modified  on account  of Section 39 read with Section 4A of the markets Act.      First part   of  Section  4B contemplates validation of Market fee  levied and  collected by  treating such levy and collection under  the Act as amended. Second part of Section 4B legislatively  annuls the notification dated May 2, 1977. The other  parts relate  to consequential  actions following from the  first two  parts. Levy  of  Market  fee  was  held invalid for  item like  sugar which  was excluded  from  the Schedule by  notification dated May, 1977 on the ground that once deleted  from the Schedule, its reintroduction can take effect only  after complying  with Sections  3 and  4 of the Act. It  should be  noted that  in view of Section 4A, which has  been   inserted  in  the  Market  Act  by  specifically indicating in  Section 2  of  Amending  Act  that  the  said Section "shall  always be  deemed to  have  been  inserted", deletion of  an item  and subsequent  inclusion of  the same under Section 39 is to be made in accordance with Section 39 read with Section 4A. Sub-section (2) on Section 4a makes it imperative  that   deletion  can   be  made   after  hearing objection. Hence,  even if  notification dated  May 21, 1977 purporting to  rescuing the  notification dated May 2, 1977, by which  sugar was  deleted  form  the  Schedule,  is  held



invalid for  the reason  indicated by  the High  Court, such deletion stands invalidated under sub-section (2) of Section 4A. Hence,  declaration of  annulment of  notification dated May 2,  1977 flows  from Section  4A (2). The result is that sugar must be deemed to be always in the Schedule in respect of which  controls have  been operative.  Both the  parts of Section 4B  therefore, If  deletion is non-est, annulment of notification dated  may 2,  1977  is  a  matter  of  course, Similarly, levy  and realisation  of market fee on the items which were  included in the Schedule, but exclusion of which was of  no consequence,  cannot be  held invalid.  In sense, first tow  parts  of  Section  4B  are  declaration  of  the consequence of  invalidation of  deletion notification.  We, therefore, find no difficulty in upholding the fires of both Sections 4A and 4B of the Markets Act.      Section 33M  cannot also be held ultra vires inspite of the fact  that the  object for  inclusion of Section  33M in the Act  is not  happily worded.  It has  been categorically stated by  the State  Government that  the collection  to be made by  the State  government  under  Section  33M  of  the Markets Act  are not to be utilised for general purposes but entire collection  are to be ploughed back for achieving the purposes under  the Act.  In that  view of  the  matter.  it cannot be  reasonably contended that the imposition has lost the character of fee and it partakes the character of tax.      In the  result, (2) Section 4A and 4B are held valid by declaring that  Section 4A  and 4B  are intra  vires and (b) Section 33M is also valid. Further, the imposition of market fee and  collection of  such levy  in respect  of sugar  are legal and valid.      The appeals and SLP are accordingly disposed of without any order as to costs. SLP (C) NOS.                C.A.NOS. ------------                -------- 10150_60/94,10554_58/92     8352_62/96, 7776_80/96 10709_10/94,10767-68/94     8395_96/96, 8537,8548/96 11186,11308_11/95           8624,8632,8588_90/96 11657,11661_62/95           8623, 8626_27/96 11770_74,11807/94           8552_56,8559/96 1200_07/95                  8612,8613_14,8609,8615,                             8625,8696,8557 13045_48/94,13275_76/95     8561_63,8566,8603_04/96 13644_52/94,13799_13800/94  8567_75,8592_93/96 14441,15491_97              8449,8498_99,8451_54,8450/96 15851_52,15974_78/94        8458,8456,8281,8316_19/96 15980_81,16097/94           8348,8351,8397/96 16549_53,16557_58/94        8549_51,8557_58/96,8496_97/96 16702_04,16845_54/94        8560,8564_65,8538_47/96 16878_81,16884_87/94        8503,8506,8511_12/96,8507_10/96 16934_36,17258_90/94        8500_02,8459_91/96 17297_98/94,17640/95        8535_36,8629/96 17990_91,18064,18189/94     7905-06,8521,7907/96 18203_06,18208_09/94        7908_13/96 18298_99,18301_04/94        8516_17,7914_17/96 18404,18954,19016_28/94     8457,8520,8522_34/96 19221_22,19787,19791/94     7918_19,8493,8492/96 20353_54,20362_63/94        8513_14,8639,8641/96 20371_72/94,20787/95        8504_05,8645/96 21367,21402_03/94           8494,8518_19/96 21752,21872/94,723721/95    8515,8495,8648/96 4574_76,4581,4583_84/95     8642_44,8631,8646,8630/96 4586_87,4591_92,4594/95     8597_98,8607,8628,8647/96 4596,4819_24,493/95         8619,8633_34,8605_06,                             8610_11,8636/96 5191,5205,5278/95           8618,8638,8608/96



5679_79,6178/95             8594_95,8599_8600,8600,8640/96 6451,7066_67/95             8602,8576_77/96 7216,7611/95,7945_52/94     8591,8637,8320_27/96 8139_56,8359_60/94          8328_45,8346_47/96 8638_46,8985_9004/94        8578_86,8398_8417/96 8789_9819/94                8418/8448 of 1996                             WITH W.P.(C) Nos.106/95,  118/95,  139/95,  14_20/95,  194_95/95, 267_  68/95,   273/95,  309/95,  31_33/95,  334/94,  350/95, 379/94, 408/94 449/95, 459_60/94, 465-66/95, 469/95, 478/95, 523_26/94, 543-44/94,  554/94, 558/95,  563/94, 572/95, 605- 605/95, 626_27/94,  688/95, 709_710/94, 718/95, 723/94, 748- 49/94, 797-98/94, 804/94, 91/95 AND 93/95. Vikas Sales Corporation and Anr. etc etc. V. Commissioner of Commercial Taxes & Anr. etc. etc.                           W I T H               CIVIL APPEAL NOS.        OF 1996 [ARISING OUT  OF S.L.P.(C)  NOS.  10150-60/94,  10554-58/92, 10709- 10/94,  10767-68/94, 11186/95, 11308-11/95, 11657/95, 11661-62/95, 11770-74/94, 11807/94, 1200-07/95, 11308-11/95, 11657/95, 11661-62/95,  11770-74/94,  11807/94,  1200-07/95, 13045-48/94,   13275-76/95,    13644-52/94,    13799-800/94, 14441/94,  15491-97/94,   15851-52/94,  15974-78/94,  15980- 81/94,  16097/94,   16549-53/94,  16557-58/94,   16702-4/94, 16845-54/94, 16878-81/94,  16884-87/94, 16934-36/94,  17258- 90/94,   17297-98/94,   17640/95,   17990-91/94,   18064/94, 18189/94,  18203-06/94,   18208-09/94,  18298-99/94,  18301- 04/94,   18404/94,   18954/94,   19016-28/94,   19221-22/94, 19787/94, 19791/94,  20353-54/94, 20362-63/95,  20371-72/94, 20787/94,   21367/94,   21402-03/94,   21752/94,   21372/94, 25721/95,  3128-29/95,   4500/95,  4554-56/95,   4574-76/95, 4581/95,  4583-84/95,   4586-87/95,   4591-92/95,   4594/95, 4596/95,  4819-24/95,  493/95,  5191/95,  5205/95,  5278/95, 5676-79/95, 6178/95,  6451/95, 7066-67/95, 7216/95, 7611/95, 7945-52/94, 8139-56/94, 8359-60/94, 8638-46/94, 8985-9004/94 AND 9789-819/94                           W I T H W.P.(C) NOS.106/95,  118/95,  139/95,  14-20/95,  194-95/95, 267-68/95, 279/95, 309/95, 31-33/95, 334/94, 360/95, 379/94, 408/94, 449/95,  459-60/94, 465-66/95,  469/95, 478/95, 523- 26/94,  543-44/94,  554/94,  558/95,  563/94,  572/95,  605- 606/95, 626-27/94,  688/95, 709-710/94, 718/95, 723/94, 748- 49/94, 797-98/94, 804/94, 91/95 AND 93/95. VIKAS SALES CORPORATION AND ANR.ETC.ETC. V. COMMISSIONER OF COMMERCIAL TAXES AND ANR. ETC.ETC.                     J U D G M E N T B.P.JEEVAN REDDY.J.      Leave granted in Special Leave Petitions.      This batch  of appeals  and writ  petitions  raise  the question -  whether the transfer of an Import Licence called R.E.P. Licence/Exim  Scrip by  the holder thereof to another person constitutes a sale of goods within the meaning of and for the  purposes of the Sales Tax enactments of Tamil Nadu, Karnataka and  Kerala. If  it does,  it is exigible to sales tax. Otherwise  not. The  Karnataka and  Madras High  Courts have  taken   the  view  that  R.E.P.  Licences/Exim  Scrips constitute goods  and, therefore on their transfer sales tax is leviable.  Their judgment appears to be influenced mainly



by the  decision of  this Court in H.Anraj etc. v Government of Tamil Nadu etc. [1985 Suppl.(3) S.C.R. 342]. 2. With  a view to conserve precious foreign exchange and to channelise  the  nation’s  economy  on  desired  lines,  the Central  Legislature   enacted  the   Imports  and   Exports (Control) Act  in  1947.  Section  3  empowers  the  Central Government to  make provisions  by order  published  in  the official gazette  for prohibiting  restricting or  otherwise controlling the import into and export of the goods from the country. The  expression "licence"  is defined in clause (i) of Section 2 to mean, a licence granted, including a customs clearance permit  issued, under  any Control order. Pursuant to Section  3 and Section 4(a) of the said Acts, the Central Government issued  the imports (Control) Order, 1955. Clause (3) of  the Order  provides that "save as otherwise provided in this  Order, no  person shall  import any  goods  of  the description specified  in Schedule  I except  under  and  in accordance with  a licence  or a  customs  clearance  permit granted  by   the  Central  Government  or  by  any  Officer specified in  Schedule II".  The  Order  contains  elaborate provisions governing  the grant and cancellation of licences and conditions  subject to  which the  licences have  to  be operated. 3. The  Central Government  has been  issuing, from  time to time, what is called the Import and Export Policy, published in the form of a brochure. The import Policy in vogue during the years  concerned herein provided for issuance of what is called   "replenishment    licence"   (for   short   "R.E.P. Licences"). The objective behind the licences was to provide to the  registered exporters  the facility  of importing the essential  inputs   required  for  the  manufacture  of  the products exported.  The  essential  idea  was  to  encourage exports and  for that  purpose import licences called R.E.P. Licences were  issued equal  to the prescribed percentage of the value  of  exports.  These  licences  were  made  freely transferable. It  was provided  that the  transfer  of  such licences did  not require any endorsement or permission from the licensing authority. It was clarified that such would be "governed by  the ordinary  law". It  only required a letter from the  transferor recording  and evidencing the transfer. On that  basis, the  transferee became  the due  and  lawful holder of  the licence  and could  either import  the  goods permitted thereunder or sell it to another in turn. 4. With  effect from  July 3,  1991, the name of the licence was changed  to  Exim  Scrip  (Export-Import  Licence).  The provisions governing the Exim Scrip were broadly the same as those  governing  the  R.E.P.  Licence  with  certain  minor variations, which are not relevant for our purposes. 5.  Several   registered  exporters   who  obtained   R.E.P. Licences/Exim Scrips  sold them  to others  for  profit.  In fact, these licences/Exim Scrips were being traded freely in the market and on stock exchanges. The sales tax authorities of certain  States proceeded  to subject such sales to sales tax  under   their  respective   enactments.  The  assessees immediately protested  contending that  these  licences/Exim Scrips do  not constitute  "goods" within the meaning of the relevant sales  tax enactments  and, therefore, not exigible to tax.  The matter  came up  for consideration in the first instance before a learned Single Judge of the Karnataka High Court  in   Bharat  Fritz   Werner   Ltd.v.Commissioner   of Commercial Taxes  [(1992) 86  S.T.C. 170].  It  was  a  writ petition challenging  the validity  of a  circular issued by the Commissioner  of Commercial  Taxes,  Karnataka,  stating that whenever  an Import Licence is transferred, it attracts tax under  Section 5(1) of the Karnataka Sales Tax Act, 1957



as unclassified  goods at  the rate  of  seven  percent  and directing the  assessing  authorities  and  other  concerned authorities to  levy  tax  accordingly.  The  learned  Judge considered the  definition of "goods" in Section 2(m) of the Karnataka Act and held following Anraj that having regard to the nature and character of the said licences and their free transferability, they  constitute goods, the sale whereof is subject  to  sales  tax.  The  learned  Judge  rejected  the argument that  the  said  licences  are  in  the  nature  of actionable claims.  He held:  "the import licence not merely enables a  person the  right of  indulging in  a business of importing goods but it also excludes competition. Therefore, it cannot  be said  that it is only a beneficial interest in respect of  a movable  property not  in  possession  of  the person but  is itself  a valuable  right which, according to the petitioners  themselves,  is  freely  transferable.  The import licence  therefore must be treated as merchandise for the purposes  of  the  Act  and  clearly  falls  within  the definition of  ’goods’". The learned Judge further held that the right  under this licence is, in fact, more concrete and substantial than the right under a lottery ticket considered in Anraj.  On appeal, a Division Bench of the Karnataka High Court affirmed the judgment of the learned Single Judge. The Division Bench  too relied  upon  the  ratio  of  Anraj  and dismissed the appeal in the following words:      "In the  instant case, the transfer      of R.E.P.  Licences confer upon the      transferee the  immediate right  to      clear goods covered by the licences      at the Customs barrier. This is not      an inchoate or incomplete right. It      cannot be  held to  materialise  in      future  because   its  exercise  is      dependent   upon   the   transferee      buying goods covered by the licence      and bringing them to Indian shores.      Nor can  R.E.P. licences be held to      be actionable  claims  because  the      Customs authorities might not clear      the goods  and the transferee would      have to  commence an action against      them in  a Court  of  Law.  In  our      view, the  transfer  of  an  R.E.P.      licence confers upon the transferee      a  right   which  is   choate   and      perfected   and         exercisable      immediately he  presents  to    the      Customs barrier goods of the nature      covered thereby.           It  must,   therefore,  follow      that  R.E.P.   licences  are  goods      within the  meaning of the said Act      and the  premium or  price received      by the transferor thereof is liable      to sales tax thereunder." 7. A  Division Bench of the Madras High Court has also taken the same  view in  P.S.Apparels  v.  Deputy  Commercial  Tax Officer, T.  Nagar disposed  of on  April 4, 1994. Under the said Judgment a large number of writ petitions were disposed of. 8. Number  of appeals  have been  preferred by the assessees against the  decisions of Karnataka and Madras  High Courts, while a  number of  other assessees have approached directly by way  of petitions under Article 32 of the Constitution of India, raising identical questions.



9.  The   main  contention   of  the   learned  counsel  for appellants/petitioners,    S/Sri    K.K.Venugopal,    Joseph Vellapally,  Vidyanathan   and  K.V.Mohan,   is  that  these licences/scrips are  not goods;  they are not property; they represent  merely   a  permission  to  import  goods,  which permission can  be revoked  at  any  the  by  the  licensing authority; they  are really  in the  nature  of  shares  and securities which  have  been  expressly  excluded  from  the definition  of  "goods"  in  the  relevant  enactments.  The expression "goods"  has been  understood by  this  Court  in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd (1959 S.C.R.379) in  the sense  it is defined in the Sale of Goods Act and  the said  definition cannot and does not comprehend the licences  of the  nature concerned  herein. The meanings assigned to  the expression "licence" and "goods" in various law dictionaries  have been  brought to  our notice, besides several  decisions,   Indian  and  English  by  the  learned counsel. On  the basis  of the  said material,  it is argued that property is a bundle of rights but every strand in that bundle does  not by itself constitute property. On the other hands  Sri  A.K.Ganguly  and  Sri  Chandrasekharan,  learned Additional Solicitor  General, supported  the reasoning  and conclusion arrived  at by  Karnataka and  Madras High Courts and commended it for our acceptance. 11. Entry  54 in  List-II of  the Seventh  Schedule  to  the Constitution of  India empowers  the State  Legislatures  to make laws  with respect to "taxes on the sale or purchase of goods other  than newspapers  subject to  the provisions  of Entry 92-A of List-I". Entry 92-A of List-I speaks of "taxes on the  sale or  purchase of  goods other  than  newspapers, where such  sale or  purchase takes  place in  the course of inter-State trade  or commerce".  The Karnataka,  Tamil Nadu and Kerala  Sales Tax  Acts are referable to Entry 54, while Central Sales  Tax Act,  1956 is  referable to  Entry  92-A. These  entries   empower  the  State  Legislatures  and  the Parliament respectively  to  levy  sales  tax  on  sales  or purchase of goods with the difference that if it is a intra- State sale,  it is  the State Legislature which is competent to levy the tax , whereas in the case of Inter-State sale it is the Parliament alone that can levy tax. Entry 54 in List- II, which  is the  one we  are immediately concerned with in these matters,  is a  legislative head,  a  of  legislation. Being a  legislative heads  it must be construed liberally a not narrowly.  There  appears no reason why Entry  54 should not be given its full and due meaning and content. By giving full effect to Entry 54 in List-II, the field and content of Entry 92-A  in List-I is in no way affected or curtailed. So far as  the meaning  of the  expression "good" is concerned, these two  entries cannot be called competing entries. there is no  overlapping between  them. The  meaning given  to the Said expression  in Entry  54  in  List-II  can  equally  be attributed to  the said  expression in  Entry 92A in List-I. This is  a consideration which must certainly weigh with the Court in approaching the question at issue herein. 12. Clause  (12) in  Article 366 of the Constitution defines the expression  "goods" in  the  following  words:  "’goods’ includes all  materials, commodities  and articles".  Clause (29A)  in  Article  366,  as  amended  by  the  forty  sixth Amendment Act,  defines the  expression ’tax  on the sale or purchase of goods" in the following words:      "(29A).  "Tax   on  the   sale   or      purchase of goods" includes-      (a)  a   tax   on   the   transfer,      otherwise than  in pursuance  of  a      contract, of  property in any goods



    for cash, deferred payment or other      valuable consideration;      (b)  a   tax  on  the  transfer  of      property in goods (whether as goods      or in  some other form) involved in      the execution of a works contract;      (c) a  tax on the delivery of goods      on hire-purchase  or any  system of      payment by instalments;      (d) a  tax on  the transfer  of the      right to  use  any  goods  for  any      purpose  (whether   or  not  for  a      specified   period)    for    cash,      deferred payment  or other valuable      consideration;      (e) a tax on the supply of goods by      any unincorporated  association  or      body of persons to a member thereof      for cash, deferred payment or other      valuable consideration;      (f) a  tax on the supply, by way of      or as part of any service or in any      other manner  whatsoever of  goods,      being food  any other  article  for      human  consumption   intoxicating),      where such supply or service is for      cash,  deferred  payment  or  other      valuable consideration;      and  such   transfer  delivery   or      supply of any goods shall be deemed      to be  a sale of those goods by the      person   making    the    transfer,      delivery or  supply and  a purchase      of those  goods by  the  person  to      whom  such  transfer,  delivery  or      supply is made." The definition  in   clause (29A)  was inserted by the forty sixth Amendment Act with a view to give an expansive meaning to the  words "tax  on the   sale  or  purchase  of  goods". Clauses (c)  and (d)  in this definition are relevant to the present controversy.  Clause (d)  provides that even where a right to  use any  goods is  transferable for cash, deferred payment or  other valuable  consideration, it will be a sale or purchase of goods for the purpose of the Constitution. 13. Clause  (7) in  Section 2 of the Sale of Goods Act, 1930 defines the  expression "goods"  thus: "’goods’  means every kind of  movable property  other than  actionable claims and money; and  includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to  be severed  before sale  or under the contract of sale" [Emphasis  added]. Since  the said  definition defines the "goods"  to mean  "every kind  of movable property other than actionable   claims and money", it would be appropriate to notice  the definition  of "property"  in Clause (11). It reads: "’property’  means the central property in goods, and not merely  a special  property". It is noteworthy that both these  definitions  seek  to  spread  the  net  as  wide  as possible. While  the definition of goods includes every kind of movable  property within  its ambit,  the  definition  of property says  that it  includes not merely special property but general property in goods as well.      The  General   Clauses  Act,   1897  defines   "movable property" to  mean "property  of  every  description  except immovable property".  The expression "immovable property" is defined to  "include land, benefits to arise out of land and



things attached  to the  earth or  permanently  fastened  to anything  attached   to  the   earth".  The  definitions  in Karnataka, Tamil  Nadu and  Kerala General  Clauses Acts are identically worded.  In the  absence of  definition  of  the expressions in  the Sales Tax enactments, the definitions in the respective  General Clauses Acts become applicable. None of these  Acts, it  may be  mentioned defines the expression "property". 14. The  Central Sales  Tax Act, 1956 defines the expression "goods" in Clause (d) of Section 2 in the following words:      "’Goods’ includes   all  materials,      articles, commodities and all other      kinds of movable property, but does      not include  newspapers, actionable      claims,    stocks,    shares    and      securities." What is relevant to note is that this definition is not only inclusive in  nature, but  takes in  all  kinds  of  movable property. It  excludes from  its ambit  certain items, which but for  such exclusion,  may well  have fallen  within  the ambit of the said definition. 15.  The   Tamil  Nadu  Sales  Tax  Act,  1959  defines  the expression "goods"  in  Clause  (j)  of  Section  2  in  the following terms:      "’goods’  means   all     kinds  of      movable   property    (other   than      newspapers,   actionable    claims,      stocks and  shares and  securities)      and   includes    all    materials,      commodities, and articles including      the goods  (as  goods  or  in  some      other   form)   involved   in   the      execution of  a works  contract  or      those  goods  to  be  used  in  the      fitting out,  improvement or repair      of movable property and all growing      crops, grass  or things attached to      or forming  part of  the land which      are agreed  to  be  severed  before      sale  or   under  the  contract  of      sale."      This definition  too  includes  all  kinds  of  movable property within  the definition  of  goods  while  excluding certain  specified   items,  viz.,   newspapers,  actionable claims, stocks,  shares and  securities. The  Act  does  not define the  expression "movable  property" which  means that definition in  the General  clause Act has to be adopted for the purposes  of the  Tamil Nadu General Sales Tax Act, 1957 is no different. It reads:      "goods’ means  all kinds of movable      property  (other  than  newspapers,      actionable   claims,   stocks   and      shares   and    securities),    and      includes live stock, all materials,      commodities, and articles including      goods, as  goods or  in some  other      form involved in the execution of a      works contract  or, those  goods to      be  used   in   the   fitting   out      improvement or  repair  of  movable      property  and  all  growing  crops,      grass or  things  attached  to,  or      forming part of, the land which are      agreed to be severed before sale or      under the contract or sale."



    This Act  too does  not define  the expression "movable property". 17. The  definition of  "goods" in  the kerala General Sales Tax Act may now be set out:      "’goods’ means all kinds of movable      property  (other  than  newspapers,      actionable   claims,   electricity,      stocks and  shares and  securities)      and   includes   live-stocks,   all      materials, commodities and articles      (including those  to be used in the      constructions     fitting      out,      improvement or  repair of immovable      property or used in the fitting out      improvement or  repair  of  movable      property) and  all  growing  crops,      grass or  things  attached  to,  or      forming part  of the land which are      agreed to be severed before sale or      under the contract of sale." 18.  Inasmuch  as  all  the  aforesaid  definitions  of  the expression "goods" say that it includes all kinds of movable property, it  becomes necessary to notice the meaning of the expression "movable  property". Inasmuch  as the  Sales  Tax enactments do  not define  the said  expressions, we have to adopt  the  definition  in  the  respective  State’  General Clauses Act.  But these  definitions in  the General Clauses Act too  are not  very helpful.  All that  they say  is that movable  property   means  property  of  every  kind  except immovable property.  The counsel have accordingly brought to our notice  the several  meanings of  property  and  movable property in various legal dictionaries. 19. In  Black’s  Law  Dictionary  (6th  Edition,  1990)  the expression  "property"   has  been   given   the   following meanings:-      "Property: That  which is  peculiar      or proper to any person; that which      belongs exclusively  to one. In the      strict legal sense, an aggregate of      rights  which  are  guaranteed  and      protected by the government. Fulton      Light, Heat  & Power  Co. v. State,      65 Misc.Rep.263 121 N.Y.S. 536. The      term is  said to  extend  to  every      species  of   valuable  right   and      interest.    More     specifically,      ownership;  the   unrestricted  and      exclusive right  to  a  thing;  the      right to  dispose  of  a  thing  in      every legal  way, to possess lt, to      use it,  and to  exclude every  one      else from interfering with it. That      dominion or indefinite right of use      or  disposition   which   one   may      lawfully exercise  over  particular      things or  subjects. the  exclusive      right of  possessing, enjoying, and      disposing of  a thing.  The highest      right of  man can have to anything;      being used  to refer  to that right      which   one   has   to   lands   or      tenements, goods or chattels, which      no way  depends  on  another  man’s      courtesy.           The word is also commonly used



    to denote  everything which  is the      subject of  ownership, corporeal or      incorporeal,      tangible       or      intangible, visible  or  invisible,      real or  personal; everything  that      has an  exchangeable value or which      goes to  make up  wealth or estate.      It  extends  to  every  species  of      valuable right  and  interest,  and      includes    real    and    personal      property,  easements,   franchises,      and incorporeal  hereditaments, and      includes every  invasion  of  one’s      property   rights   by   actionable      wrong. Labberton v. General Cas.Co.      of  America,   53  Wash.2d  180,332      P.2d.250,252,254.           Property  embraces   everthing      which is  or may  be the subject of      ownership,    whether    a    legal      ownership, or  whether  beneficial,      or a  private ownership.  Davis  v.      Davis. Tex.Civ.App.,495 S.W.2d 607,      611.   Term   includes   not   only      ownership and  possession but  also      the right  of use  and enjoyment of      lawful   purposes.    Hoffmann   v.      Kinealy, Mo.389 S.W.2d.745,752.           Property,               within      constitutional protection,  denotes      group   of   rights   inhering   in      citizen’s  relation   to   physical      thing, as right to possess, use and      dispose of  it. Cereghino  v. State      By  and   through   State   Highway      Commission, 230  Or .,439  370 P.2d      694,697.           Goodwill is  property,  Howell      v.  Bowden,Tex.Civ.App.,368  S.W.2d      842,848; as  is an insurance policy      and   rights    incident   thereto,      including a  right to the proceeds,      Harris v.  Harris, 83  N.M. 441,493      P.2d 407,408."      The Dictionary  further says  "property is either: real or, immovable; or, personal or movable". It then proceeds to give   the    meaning   of    the    expression    "absolute property","common property",  "intangible property’ "movable property",  "personal  property,  "private    property"  and "public property"  among others.  The above definition shows the wide  meaning attached  to the expression. It is said to extend to  every species  of valuable right and interest. It denotes every  thing which  is  the  subject  of  ownerships corporeal or incorporeal, tangible or intangible, visible or invisible, real  or personal.  It includes  "everything that has an  extendable value".  It extends  to every  species of valuable right and interest.      To the  same effect is the definition in the Dictionary of Commercial  Law by A.H.Hudson (published by Butterworths, 1983. it reads:      Property. In  commercial  law  this      may carry  its ordinary  meaning of      the subject  matter of  ownerships,      e.g. in bankruptcy referring to the      property of  the  debtor  divisible



    amongst creditors. But elsewhere as      in sale  of goods it may be used as      a synonym  for ownership and lesser      rights in  goods. The Sale of Goods      Act, 1979, s.2(1) makes transfer of      property central  to sale.  Section      61(1)  provides   that   ’property’      means  the   general  property   in      goods, and  not  merely  a  special      property. ’General    Property’  is      tantamount  to  ownership;  bailees      who   have   possession   and   not      ownership and  others with  limited      interests  are   said  to   have  a      ’special   property’    as    their      interest." 20. Jowitt’s Dictionary of English Law (Sweet & Maxwell Limited, 1977) Volume-I also sets out the meaning of the expression  "property"   as  well  as  the  meaning  of  the expression "general property" and "special property".      We may set them out:      "Property  (Norm.Fr.proprete;  Lat.      proprietas; proprius,  one’s  own),      the highest right a man can have to      anything, being  that  right  which      one  has  to  lands  or  tenements,      goods or  chattels which  does  not      depend on another’s courtesy.           In its  largest sense property      signifies   things    and    rights      considered as having a money value,      especially   with    reference   to      transfer  or   succession,  and  to      their capacity  of  being  injured.      Property    includes    not    only      ownership, estates,  and  interests      in  corporeal   things,  but   also      rights   such   as   trade   marks,      copyrights, patents,  and rights in      personam  capable  of  transfer  or      transmission, such as debts.           Property is of two kinds, real      property   (q.v.)    and   personal      property (q.v.).                Property  in  reality  is      acquired by  entry, conveyance,  or      devise; and in personality, by many      ways, but  most  usually  by  gift,      bequest, or  sale. Under the Law of      Property         Act,         1925,      s.205,"property" includes any thing      in action  and any interest in real      or personal property. There must be      a  definite   interest;   a.   mere      expectancy as  distinguished from a      conditional  interest   is  not   a      subject of property.           ’Property’  also  signifies  a      beneficial right  in or to a thing.      Sometimes  the   term  is  used  as      equivalent to  ownership; as  where      we speak  of the  right of property      as  opposed   to   the   right   of      possession  (q.v.),   or  where  we      speak of  the property in the goods



    of a  deceased person  being vested      in  his   executor.  The  term  was      chiefly used  in  this  sense  with      reference ’so  chattels  (Finch,Law      176).           Property in  this    sense  is      divided into general and special or      qualified.           General property is that which      every    absolute     owner     has      (Co.Litt.145b.). See OWNERSHIP.           Special   property   has   two      meanings first,  it may  mean  that      the subject  matter is incapable of      being in  the absolute ownership of      any person.  Thus a  man may have a      property in  deer in  a park, hares      or rabbits  in a  warrens fish in a      ponds  etc.;   but  it  is  only  a      special or  qualified property  for      if at  any time  they regain  their      natural   liberty    his   property      instantly ceases  unless they  have      animus revertendi  (2 B1.Comm.391).      See ANIMALS FERAE NATURAE...."      This  definition   also  shows   that  the   expression signifies "things  and rights  considered as  having a money value".  Even   incorporeal   rights   like   trade   marks, copyrights,  patents  and  rights  in  personam  capable  of transfer or  transmission, such  as debts, are also included in its  ambit. The  meaning given  to "general property" and "special property" are self-explanatory and need no emphasis at our  hands. It  is worth  recalling that movable property means  "property   of  every  description  except  immovable property"-- the definition in all the General Clauses; Acts. 21. The  above material  uniformly emphasises  the expansive manner in  which the  expression "property"  is  understood. Learned counsel  for the  petitioners brought  to our notice the meanings  of the  term "property" set out in Chapter-13, "The Law  of Property",  in. Salmond’s  Jurisprudence  (12th Edition, 1966). in this chapter, several meanings attributed to "property"  are discussed  in extenso, to all of which it may not  Be necessary to refer. Suffice to say that property is defined  to include material things and immaterial things (Jura in  re propria)  and leases  servitudes and securities etc. (Jura  in re  aliena). The  material things are said to comprise land  and chattels  while immaterial things include patents,  copyrights  and  trade  marks,  which  along  with leases,  servitudes   and  securities   are   described   as incorporeal property.  The expression  "movable property" is stated  to   include  (Page   421)  corporeal   as  well  as incorporeal property.  Debts, contracts and other choses-in- action are  said to  be chattels,  no less than furniture or stock-in-trade. Similarly,  patents,  copyrights  and  other rights in  rem which  are not  rights  over  land  are  also included within  the meaning  of movable  property.  We  are unable  to  see  anything  in  the  said  Chapter-13,  which militates  against   the  meanings   ascribed  to  the  said expression in  the Judicial  dictionaries referred to above. indeed, they are consistent with each other. 22. Learned  counsel for the petitioners have brought to our notice the  several meanings  of the expression "licence" in various law  dictionaries. But  as those  very  dictionaries make it clear, the expression has several meanings - and one has  to  choose  the  appropriate  one  depending  upon  the



context. we  do not  think lt  necessary  to  refer  to  the material cited  by the  learned counsel  for the reason that the  characters  nature  and  content  of  the  licences  in question should  be ascertained  with reference  to the  law governing them and not with reference to the general meaning of the expression "licence". We have already referred to the provisions of the "Export and Import Policy" governing these licences. We may now refer to a few more paragraphs from the ’Import and  Export Policy"  1990-93, relevant to the R.E.P. Licences/Exim Scrips. 23.  Para   184(1),  which  deals  with  "Extent  of  import Replenishment",   says,   "the   extent   of   replenishment permissible against  export products  (other  than  Gen  and Jewellery) enumerated  in Column  2 of Appendix 17 Part l of this book shall be that set out in Column 3."      Para 185(1),  which deals  with "Items  permissible for Import",  says,  "REP  Licences  issued  against  export  of products listed in Column 2 of Appendix 17 Part 1 and as per para 184(4)  of this book, will be valid for import of those relevant items of raw materials, components, consumables and packing materials as are listed in Appendices 3 and 5 Part-A and related to the product exported."      Para 192  deals with "Flexibility in the utilisation of REP Licences". It says that the said licence "are also valid for import  of any  other items  of raw materials components tools,  consumables   and  packing   materials   listed   in Appendices 3 and 5 Part A" besides some other goods.      Para 199  deals with "Transferability of REP licences". It reads:      "199(1). The  REP licence  will  be      issued   in   the   name   of   the      registered exporter  only and  will      not  be   subject  to  Actual  User      Conditions". A  licence holder  may      transfer  the  licence  to  another      person. The  licence holder or such      transferee may   import  the  goods      permitted therein.      (2) The  transfer of  a REP licence      will not require any endorsement or      permission   from   the   licensing      authority,   i.e..   lt   will   be      governed  by   the  ordinary   law.      Accordingly, clearance of the goods      covered by  a  REP  licence  issued      under this  policy will  be allowed      by  the   Customs  authorities   on      production  by  the  transferee  of      only the  document of  transfer  of      the licence  concerned in his name.      Whenever   a    REP   licence    is      transferred the  transferor  should      give  a   formal  letter   to   the      transferee, giving full particulars      regarding number,  date and address      of  the  transferee.  and  complete      description of  the items of import      for   which    the    licence    is      transferred."      As mentioned  hereinbefore, the  relevant  features  of Exim Scrip are identical. 24. The  above provisions  do establish  that R.E.P.licences have their  own value. They are bought and sold as such. The original licencee  or the  purchaser is  not bound to import the goods  permissible thereunder.  He can simply sell it to



another and  that another  to yet  another person.  In other words, these  licences/Exim Scrips have an inherent value of their own and are traded as such. They are treated and dealt with in the commercial world as merchandises as goods. A REP Licence/Exim Scrip  is  neither  a  chose-in-action  nor  an actionable claim.  It is  also not  in the nature of a title deed. It  has a value of its own. It is by itself a property - and  it is   for  this reason that it is freely bought and sold in  the market,  For all  purposes and  intents, it  is goods. Unrelated  to the  goods which can be imported on its basis, it  commands a  value and  is traded as such. This is because, it  enables its  holder to  import goods  which  he cannot do  otherwise. [With  effect from  March 1,  1992, of course,  the  very  policy  and  system  under  which  these licences/scrips were being issued has been discontinued.] 25. Since  Karnataka and  Madras  High  Courts  have  placed strong reliance upon the decision of this Court in Anraj, it would be  appropriate to refer to the relevant facts and the ratio of  the said  decision. The  question in that case was whether lottery  tickets are  "goods" within  the meaning of and as  defined in  the Tamil Nadu General Sales Tax Act and Bengal Finance  (Sales Tax) Act, 1941. The contention of the State was  that they  were goods and, therefore, attract the sales tax on their sale. According to assessees, the lottery tickets were  in the  nature of  actionable claims  but  not goods. They  questioned the  legislative competence  of  the State Legislatures  to levy  sales tax  on their  sale. They contended that  the expression  ’sale of  goods" has  to  be construed in  the sense  in which  it is used in the Sale of Goods Act,  as  has  been  held  by  this  Court  in  Gannon Dunkerly. They  submitted that  the definition of "goods" in Sale of  Goods Act  excludes  from  its  purview  actionable claims and  that the  essence of  the lottery being merely a chance for a prize for a price,it does not constitute goods, but a  mere actionable claim. it was argued that the lottery ticket is  a mere  slip of  paper or a memorandum evidencing the right  of the holder thereof to claim or receive a prize if successful in the draw. 25-A. The  arguments of  the assessees were rejected by this Court. The  Court referred  to the definition of "goods" and "sale" in  both the  aforesaid enactments, the definition of "goods" in Article 366(12) and the definition of "tax on the sale or  purchase of goods" in Article 366(29A). It referred to the  meaning of  the expression  "lottery ticket"  in law dictionaries  and     decided  cases;  it  referred  to  the definition of  "movable property"  in the  General  Clause-. Act, 1897  and the  definition of the expression "actionable claims" in  Section 3  of the  Transfer of  Property Act and observed [Tulzaurkar,J.,  speaking for  the Bench comprising himself and Sabyasachi Mukharji,J.]:           "If  incorporeal   right  like      copyright or  an inchangible  thing      like   electric   energy   can   be      regarded as goods exigible to sales      there  is   no   reason   why   the      entitlement  to   a      right   to      participate in   a  draw  which  is      beneficial  interest   in   movable      property      of   incorporeal   or      intangible character  should not be      regarding  as   ’Goods’   for   the      purpose of  levying   sales tax. As      stated above, lottery tickets which      comprise   such    entitlement   do      constitute  a  stock-in  -trade  of



    every  dealer   and  therefore   is      merchandise which can be bought and      sold in the market. Lottery tickets      comprising    such     entitlement,      therefore, would fall within in the      definition of  ’Goods ’given in the      Tamil Nadu Act and the Bengal Act.           In the  light of the aforesaid      discussion my  conclusion are  that      lottery tickets  to the extent that      they comprise  the entitlement   to      participate   in   the   draw   are      ’goods’properly so called, squarely      falling within  the  definition  of      that expression  as given  in  Act,      1941,  that  extent  they  are  not      actionable claims and that in every      sale thereof a transfer of property      in the goods is involved." With respect  to the  nature  and  content  of  the  lottery tickets,the learned  judge observed that it confers upon the holder thereof  "the right to participate (in the draw ) and the right  to claim  a prize  if  successful.....  in  other words, lottery tickets not as physical articles but as slips of paper or memoranda evidencing the right to participate in the draw  must in  a  sense  be  regarded  as  the  dealer’s merchandise and,  therefore, goods,  capable of being bought or sold  in the  market. They  can also  change from that to hand as goods."      We are  of the  opinion the  ratio of the said decision fully supports  the contention  of  the  States  herein.  As rightly pointed out by the Karnataka High Court, the content of R.E.P.  Licence/Exim Scrip  is far  more substantial  and real than  that of  a lottery ticket. If lottery tickets are goods, there  is no reason why these licences/scrips are not goods.      We see  no substance  in the  argument based  upon  the decision in Gannon Dunkerley. On the basis of this decision, it is  contended that  the expression  "goods" and  "sale of goods" must  be understood in the sense they are used in the Sale  of   Goods  Act.   We  need   not  quarrel  with  this proposition. We  have not  only  referred  hereinbefore  the definition of  "goods" and  ’property" in  the Sale of Goods Act but  have also  pointed out that in material particulars it is  similar to  the definition  of "goods" in Tamil Nadu, Karnataka and  Kerala Sales  Tax Acts. All of them uniformly say "goods"  mean "every  kind of movable property" (Sale of Goods Act)  and "all kinds of movable property" (Tamil Nadu, Karnataka and  Kerala Acts).  As  a  matter  of  fact,  this submission was  made but  not pursued  by any of the counsel for the petitioners. 26. We  are also  of the  opinion that these licences/scrips cannot be treated as actionable claims. "Actionable claims"  is defined in Section 3 of the Transfer of Property Act in the following words:      "’Actionable claim’  means a  claim      to any  debt,  other  than  a  debt      secured by  mortgage  of  immovable      property  or  by  hypothecation  or      pledge of  movable property,  or to      any beneficial  interest in movable      property  not  in  the  possession,      either actual  or constructive,  of      the  claimant,   which  the   Civil      Courts   recognise   as   affording



    grounds for  relief,  whether  such      debt  or   beneficial  interest  be      existent, accruing,  conditional or      contingent."      When these  licences/scrips are  being bought  and sold freely in  the market as goods and when they have a value of their own  unrelated to  the goods  which  can  be  imported thereunder, it  is idle  to contend  that they  are  in  the nature of  actionable claims.  Indeed, in  Anraj,  the  main contention of  the petitioners was that a lottery ticket was in the  nature of an actionable claim. The said argument was rejected  after  an  elaborate  discussion  of  law  on  the subject. We  agree with  the said decision and on that basis hold that  the R.E.P.  Licences/Exim Scrips  are not  in the nature of actionable claims.      Learned counsel  for the petitioners submitted that the licence  is   something  less  than  property,  because  the licencing authority can always cancel it, in which event, it becomes a  mere scrap of paper. That feature, in our opinion has no  relevance on the question at issue. Cancellation can be effected  by the appropriate authority in accordance with the procedure  prescribed by law and on proof of permissible grounds. We  are unable  to see how the said factor detracts from the  inherent value of these  licence. For that matter, many  a   grant  is   subject  to  such  a  condition.  That circumstance  is in no way affects the content of the grant. The further contention that the licence/scrip merely gives a right   to import certain goods, that in case the licence is lost, one  can always  obtain a copy from the authority and, therefore, the  licence has  no value of its own is  equally unacceptable. We have already pointed out how the commercial world  treats  these  licences  and  trades  in  them.  They represent merchandise for all practical purposes. 27. Learned  counsel for  petitioners have  brought  to  our notice certain  decisions, to which a brlef referenre  would be in order:      The decision  on which strong reliance is placed by Sri K.K.Venugopal is in State of Oricsa & Ors. v. Titaghur Paper Mills Company  Limited & Anr. (1985 (Suppl.) S.C.C. 280). It was a  case arising  under the  Orissa Sales  Tax Act. Under Section 3-B  of the  Orissa Act,  the State  Government  was empowered to  declare from  time to time by notification any goods or  class of goods to be liable to tax on turn-over of purchases. Notifications  were issued  under this  provision from time  to time declaring that standing trees and bamboos agreed to  be severed shall be liable to tax on turn-over of purchases at  the rate  prescribed. The  contention  of  the assessee was  that the  said levy  was not  a tax an sale or purchase of  goods within the meaning of Entry 54 in List-II and, therefore,  beyond the  legislative competence  of  the State Legislature. Construing the relevant notifications and contracts, (called  Bamboo contracts  and Timber  contracts) this Court held that the Bamboo contracts were in the nature of a grant of interest in immovable property and; therefore, beyond the  purview of  the Act.  So far as Timber contracts are concerned,  the Court held that inasmuch as the property in  the   trees,  which   were  the  subject-matter  of  the contracts, passed  to the  forest  contractor  only  in  the felled trees,  i.e., in  timber, after all the conditions of the contract  had been  complied with  and after such timber was examined  and checked  and removed  from contract  area, they too  were not  governed by  the Notifications concerned therein. On  the basis of this decision, it was contended by Sri Venugopal that taxable event, if at all, will arise only at the  time of  transfer of the actual goods imported under



and by  virtue of  the said  licences/scrips, but not at the time of  transfer of  documents. We  are unable to agree. We are  unable   to  see   how  the  above  holding  helps  the petitioners  herein,  more  particularly,  in  view  of  our finding that  these licences/scrips have value of their own, are freely  transferable and are openly traded in the market and on stock exchanges. 29.  Sri Vaidyanathan  relied upon  a decision  of the Patna High Court in State of Bihar v. Rameshwar Jute Mills (A.I.R. 1953 Patna 236) where the sale of loom hours was held not to be a  sale of  goods. It  was held  by the  Court  that  the expression "goods"  in Section  2(d) of  the Bihar Sales Tax Act cannot  be given  a wider  connotation which is given to that term  in the  sale of  Goods Act or for that matter the wider connotation given to "movable property" in the General Clauses  Act.   It  was  held  that  having  regard  to  the definition in  that Act,  the expression "goods" refers only to tangible  goods or  tangible movable  property and not to any kind  of intangible  right like  room hours,  actionable claims, stocks,  shares or  securities. We  are  afraid,  we cannot agree  with the  said reasoning  which appears  to be contrary to the one affirmed by this Court In Anraj. 29.  Reliance was then placed upon the dissenting opinion of Mudholkar, J.  in Joint  Chief  Controller  of  Imports  and Exports v.  Aminchand Mutha (1966 (1) S.C.R. 262) to contend that transfer  of a right to quota is not sale of goods. The observations relied  upon are  to the effect that the Import Export policy  issued by  the Government or India "would not confer a  legal right  upon an  exporter for the division of the quota rights of a dissolved firm." Firstly, the majority opinion (Gajendragadkar,  CJ, Wanchoo,  Shah and Sikri, JJ.) is  to  the  contrary.  Secondly,  quota  rights  considered therein   were    not   freely    transferable   like    the licences/scrips concerned herein. The last mentioned comment holds good  for the  other decision  relied  upon  S.Chandra Sekharan & Ors. v. Government of Tamil Nadu & Ors. (1974 (2) S.C.C. 196). This decision deals with the transferability of a licence/authorisation in respect of a ration shop. 30.  Sri  K.K.Venugopal  placed  strong  reliacne  upon  the decision/authorisation of  the Court of Appeal in Frank Warr & Co.  v. London  County Council  (1904 (1)  K.B.  713).  In particular, the learned counsel relied upon the observations of Romer  L.J. at  Pages 720  to 722.  It was a case where a contract was  entered into  between lessees of a theater and the plaintiffs.  Under this  contract, the  plaintiffs  were given the  exclusive right for a particular period to supply refreshments  in   the  theater.   For  that   purpose,  the plaintiffs were  entitled to use the refreshment rooms, bars and wine  cellars in  the theater  and were  also given  the exclusive  right   to  advertise   and  to  let  spaces  for advertisement in  certain parts  of the theater. It was held by the court of Appeal that the said contract did not convey to the  plaintiffs an  interest in the land which could form the subject-matter  of compensation  under the Lands Clauses Consolidation Act,  1845. In hat connection, Romer L.J. held that the  contract created  only a  licence in favour of the plaintiffs, but  did not  create any  estate or  interest in land in  their favour. It was also held that the right given to the plaintiffs to use refreshment rooms and bars etc. was to  enable   the  plaintiffs   to  supply   refreshments  at appropriate times  and did  not involve  absolute parting of possession of  those parts  of the theater by the lessees to the plaintiffs.  Referring to the earlier decision in Thomas v. Sorrell  [(1674) Vaugh.  351], the learned Judge held, "a dispensation or  licence properly  passeth no  interest, nor



alters or  transfers property in anything, but only makes an action lawful  which without  it had  been unlawful."  It is evident, the  decision dealt  with the  question whether the interest created  in  the  plaintiffs  under  the  aforesaid contract was  a lease  or a licence. It was held that it was only the  latter. With respect, we are unable to see how the said   observations   are   of   any   assistance   to   the appellants/petitioners herein. 31.  Sri Ganguly,  learned counsel  for the  State of  Tamil Nadu, relied  upon the disentitling opinion of S.R.Das,J. in Chiranjitlal Chowdary  v. Union  of India  (1950 S.C.R. 869) [at Pages 920 to 922] where the learned Judge dealt with the meaning of  the expression  "property" in  Article 199(1)(f) and Article  31 of  the Constitution.  Having regard  to the context in  which the  said question  had arisen,  we do not think it  necessary to  refer to the observation relied upon since the  material referred  to by us on the meaning of the expression "movable  property" and  the decision in Anraj is more to the point. 32.  In the written submission filed by Sri K.V.Mohan, a new contention, not  urged at  the bar,  is raised,  viz.,  that R.E.P. Licences/Exim  Scrips are  incentives granted  by the Union of  India as  concessions from  customs duty  and that this is a matter which comes within the exclusive competence of the  Union Legislature  under Entry  41 in  List I of the Seventh Schedule  to the  Constitution of  India  and  that, therefore, the  State Legislature has no power to levy sales tax upon  their sale/purchase.  We are  unable  to  see  any substance in  this submission  either. Applying  the rule of pith and  substance, it  must be held that the enactments in question are  referable to  Entry 54  in List  II and not to Entry 41 in List I. By no stretch of imagination can they be related to  Entry 41  in List  I. The State Legislatures are not seeking  to make  a law  with respect to customs duties. They are  seeking only  to levy  tax upon the sale of goods. The  test   to  be   applied  in   this  behalf   has   been authritatively stated  by the  Constitution  Bench  of  this Court in A.S.Krishna v. State of Madras (1957 S.C.R. 399). 33.  Another contention raised in the written submissions of Sri K.V.Mohan  is that  even if  the said licence/scrips are treated as  goods, the tax must be levied at the first point of sale,  viz., upon  the authority  issuing the licence. We cannot  agree.   The  grant  of  licence  by  the  licencing authority to  the registered exporter or the purchaser sells it to another person for consideration. 34.  The last   submission urged by Sri Vaidyanathan is that these  licences/scrips   constitute  securities  within  the meaning of  Clause  (h)  of  Section  2  of  the  Securities Contracts  (Regulation)  Act,  1956,  and  therefore,  stand excluded from  the definition  of "goods" contained in Tamil Nadu, Kerala and Karnataka Sales Tax Acts as well as Central Sales Tax  Act. The  contention is  misconceived. It is true that the  definition  of  "goods"  in  the  said  Sales  Tax enactments does  exclude securities,  but  the  question  is whether these  licences/scrips are securities. They are not. Before the  definition of  the  expression  "securities"  in Clause  (h)   of  Section  2  of  the  Securities  Contracts (Regulation)  Act  was  amended  by  Act  15  of  1992,  the definition reads thus :      "(h) ’securities’ include --      (i) shares,  scrips, stocks, bonds,      debentures,  debenture   stock   or      other marketable  securities  of  a      like   nature    in   or   of   any      incorporated company  or other body



    corporate;      (ii) Government securities ;      (iii)  rights   or   interests   in      securities." By the said amendment Act, sub-clause (iia) was added in the said definition, which reads :      "(iia) such  other  instruments  as      may  be  declared  by  the  Central      Government to be securities;" Firstly,  it   is  not   brought  to  our  notice  that  any declaration has  been made  by the Central Government to the effect that  these licences/scrips are securities. Secondly, any such  declaration can  only be for the period subsequent to the  coming into  force of  the said Amendment Act, i.e., subsequent to  January 30,  1992. All  the cases  before  us pertain to the period earlier to the said date. In this view of the  matter, it  is not necessary to pursue this argument further.      For  the  above  reasons,  all  the  appeals  and  writ petitions fail and are dismissed herewith. No costs.