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PETITIONER: SREENIVASA GENERAL TRADERS & ORS. ETC.

       Vs.

RESPONDENT: STATE OF ANDHRA PRADESH & ORS. ETC.

DATE OF JUDGMENT06/09/1983

BENCH: SEN, A.P. (J) BENCH: SEN, A.P. (J) VENKATARAMIAH, E.S. (J) MISRA, R.B. (J)

CITATION:  1983 AIR 1246            1983 SCR  (3) 843  1983 SCC  (4) 353        1983 SCALE  (2)422  CITATOR INFO :  F          1985 SC 218  (1,6,8,9,10,11)  F          1985 SC 756  (5)  D          1986 SC 726  (6,9)  APL        1989 SC 100  (16)  F          1989 SC 317  (34)  F          1989 SC2091  (11)  RF         1991 SC 672  (20)  RF         1991 SC1676  (61)  RF         1992 SC1383  (13)

ACT:      Andhra Pradesh  (Agricultural  Produce  and  livestock) Market Act  1966-Sections  7(6).12(1)  scope  of-Prohibiting sale/purchase of  agricultural produce  outside the  market- Whether encroaches  upon citizen’s right under Art. 19(1)(g) Levy of  market fee  on  transactions  from  one’s  business premises if invalid-Rule 74(1)-Scope of.      Tax and Essential differences-What are.      Jurisprudence-Decision of  a Court-To  what  extent  an authority.

HEADNOTE:      The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act,  1966 was  enacted to regulate the purchase and sale of  agricultural produce,  livestock  and  products  of livestock  (compendiously   referred  to   as   agricultural produce), to  establish markets  in connection therewith, to eliminate middlemen  and to  protect the  producers in  such agricultural produce  from exploitation and to ensure them a fair price  for their  produce. The  Act empowers  the State Government  to   establish  Market   Committees.  Section  7 prohibits the setting up of any Place for the purchase, sale etc.  Of   any  notified   agricultural  produce  except  in accordance with  the conditions  of a licence granted by the Market Committee. Sub-section (6) of section 7 prohibits the purchase  or  sale  of  any  notified  agricultural  produce outside the market in the notified area. Section 12 empowers the State  Government to  authorise the Market Committees to levy a  fee on agricultural produce purchased or sold within the      The market  fee which  in 1970  was 25  paise for every

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hundred  rupees  of  the  aggregate  amount  for  which  the notified agricultural  produce was  purchased  or  sold  was raised to  50 paise in 1972. It was eventually raised to Re. 1.      It was  contended on behalf of the petitioners that (i) section 7(6)  which totally  prohibits the purchase and sale of any  notified agricultural  produce outside the market in that area  encroaches upon the right of the citizen to carry on trade or business and is repugnant to Article 19(1)(g) of the Constitution  and is therefore void; (ii) levy of market fee under  section 12(1)  on transactions  effected  by  the petitioners from  their business  premises which are located in the notified market area but outside the market proper is per se  illegal and  unconstitutional as  such levy  is  not correlated to any services rendered to them, 844      Dismissing the appeal, ^      HELD: Having  regard to  the purpose  and object of the legislation the  restriction imposed  by section 7(6) of the Act is  reasonable restriction within the meaning of Article 19(6) of the Constitution. [865 A-B]      Marketing legislation  which seeks  to enable producers to get  a fair price for the commodities produced by them by eliminating  middlemen   and  providing  regulated  markets, cannot be  said to impose an unreasonable restriction on the citizen’s  right   to  do  business  unless  it  is  clearly established that  the provisions  are too drastic to achieve the object  for which  the law was enacted. In order to make such legislation  effective it  would be  reasonable for the legislature to control transactions between traders and also the sale within the market area of produce grown outside the market area. [859 D-F]      The liberty  of the individual must yield to the common good. There  can be  no protection  of the  right themselves unless there  is a  measure of control and regulation of the rights of each individual in the interest of all.                                                      [863 G]      In  order   to  determine   the  reasonableness   of  a restriction the  court must  have regard  to the  nature and conditions  prevailing  in  that  trade.  Section  7(6)  was enacted for  the very purpose of controlling the business in agricultural  produce  by  the  establishment  of  regulated markets  in  connection  therewith.  Therefore  the  section cannot be  said to  be arbitrary  or of  an excessive nature which is  beyond what  is required  in the  interests of tho community. If  the  agricultural  produce  is  sold  in  the notified area the transactions would be carried on under the supervision  and   control  of  the  market  committee.  The producers can  get  tho  best  competitive  prices  and  the transactions will  be in  ready cash.  The producers  do not have to  pay the  middlemen. The use of standard weights and measures would  eliminate the  possibility of  the  producer being victimized by malpractices of the traders. Supervision of tho  operations in  the notified  market area can be more conveniently done  if business  is carried on in a specified area. [873 H, 864 B-C, F-G]      M.C.V.S. Arunachala  Nadar etc.  v. State of Madras and Ors., [1959] Supp. 1 SCR 92; Mohammad Hussain Gulam Mohammad and Anr.  v. State  of Bambay and Anr., [1962] 2 SCR 659 and Mohammadbhai Khudabux  Chhipa and  Anr. v.  State of Gujarat and Anr., [19621 Suppl. 3 SCR 875, relied on. .-:      The  contention  that  no  liability  is  cast  on  the petitioners to  pay market  fee on  transactions of sale and purchase of  notified agricultural  produce if they carry on

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such trade  from their own premises in the notified area but outside the market in that area proceeds on wrong assumption because firstly in view of the express prohibition contained in Section  7(6) the  petitioners cannot carry on such trade by not  resorting to the market proper. Contravention of the provisions of  section 7(6)  is made  a penal  offence under section 23(1). Secondly, establishment  of regulated markets for agricultural  produce is a service rendered to those who are engaged  in the  business of  purchase and  sale of such commodities. The  duty of  the market committee does not and with 845 the establishment  of such markets but extends under section 15 of the Act to providing facilities in the market. Service rendered by a market committee and facilities so be provided are not confined to the market proper but extend through the notified area. [865 F-H, 866 D-E]      Immidisetti Ramakrishnaiah v. State of A.P., [1976] ILR (AP) 878, approved.      There  is   no  irreconcilable   conflict  between  the provisions of  section 7(6) and 12(1) because they are meant to achieve  two distinct and separate objects operate on two different planes. [868 B]      The argument  of the  petitioners that since the market committees do  not  provide  any  additional  facilities  to justify increase  in the  rate of  market fee  is devoid  of substance. The  decision of  this  Court  in  Kewal  Krishan Puri’s case does not lay down any legal principle of general applicability and  is clearly  distinguishable on  facts. In that case the increase in the market fee was quashed because the income of the market fee had become a source of revenue. The market  committees throughout  the State  were left with huge surplus funds and the State Government had directed the market committees  to contribute  a large  sum to  a Medical College and  deposit the  surplus  amounts  with  the  State Agricultural Marketing  Board and the Board in turn advanced interest free  loans to  Marketing Federations.  Even  after incurring  these   unauthorised  expenditures,   the  market committees were  left with  huge surpluses and were required to make  donations to  many  educational  institutions.  The marketing  committees  also  spent  large  sums  on  general improvement of the Municipal areas. The Punjab Act permitted diversion of funds for any purpose calculated to promote the general interest of the committees or the national or public interest. [870 C, F-H]      Kewal Krishan  Puri and  Anr. v.  State of  Punjab  and Ors.,  [1979]   3   SCR   1217,   distinguished   and   held inapplicable.      The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra  Thirtha Swamiar  of Sri Shirur Mutt, [1954] SCR 1005  and Matthews  v. Chicory  Marketing Board, 60 Com. L.R. 263, referred to.      A case  is an  authority  only  for  what  it  actually decides and not for what may logically follow from it. Every judgment must  be read as applicable to the particular facts proved, or assumed to be proved; since the generality of the expressions which  may be found there are not intended to be expositions of  the whole  law but  governed or qualified by the particular facts of the case in which expressions are to be found.  In Kewal  Krishan Puri’s  case there  are certain observations which were really not necessary for purposes of that decision  and go beyond the occasion and therefore they have no  binding authority though they may have a persuasive value. [871 H, 872 A-B]      The traditional view that there must be actual guid pro

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quo for  a fee  has undergone  a sea change. The distinction between a tax and a fee lies primarily 846 in the fact that a tax is levied as part of a common burden, while a  fee  is  for  payment  of  a  specific  benefit  or privilege although the special advantage is secondary to the primary motive  of regulation  in public  interest. If  the, element  of   revenue  for  general  purpose  of  the  State predominates, the  levy becomes  a tax.  In regard  to  fees there is,  and must  always be,  correlation between the fee collected and  the service intended to be rendered. In deter mining whether  a levy is a fee or a tax, the true test must be whether  its primary  and essential  purpose is to render specific services to a specified area or class; it may be of on consequence  that the State may ultimately and indirectly be benefited  by it.  The power of any legislature to levy a fee is  conditioned by  the fact  that it  must be  "by  and large" a  quid pro  quo for  the services rendered. However, correlationship between  the levy  and the services rendered is  one   of  general  character  and  not  of  Mathematical exactitude. All  that is necessary is that there should be a reasonable "relationship"  between levy  of the fee, and the service rendered. [872 D-G]      The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra  Thirtha Swamiar  of Sri Shirur Mutt, supra; H. H.  Sundhundra Thirtha  Swamiar v. Commissioner for Hindu Religious &  Churitable Endowments,  Mysore, [1963] Suppl. 2 SCR 302;  The Hingir-Rampur Coal Co. Ltd. v. State of Orissa JUDGMENT: Mutt etc.  v. The Commissioner, Hindu Religious & Charitable Endowments Department  & Ors.,  [1980] 1  SCR 368;  Southern Pharmaceuticals & Chemicals, Trichur & Ors. etc.  v.   State of Kerala  & Ors.  etc., [1982]  1  SCR  519  and  Municipal Corporation of  Delhi &  Ors., v. Mohd. Yasin, AIR [1983] SC 617, referred to.      There is no generic difference between a tax and a fee: both  arc   compulsory  exactions   of   money   by   public authorities. Compulsion  lies in  the fact  that payment  is enforceable  by   law  against   a  person  inspite  of  his unwillingness or  want of consent. A levy in the nature of a fee does  not cease  to be  of that character merely because there is an element of compulsion or coerciveness present in it, nor  is it a postulate of a fee that it must have direct relation to  the actual service rendered by the authority to each individual  who obtains  the benefit of the service. It is  now   increasingly  realized  that  merely  because  the collections for  the services  rendered or  for grant  of  a privilege or  licence arc  taken to the consolidated fund of the  State  and  not  separately  appropriated  towards  the expenditure for  rendering the  service  is  not  by  itself decisive. Presumably,  the attention  of the  Court  in  the Shirur  Mutt   case  was  not  drawn  to  Art.  266  of  the Constitution. The Constitution nowhere contemplates it to be an essential  element of fee that it should be credited to a separate fund  and not to the consolidated fund. The element of quid pro quo in the strict sense is not always a sine qna non  for  a  fee.  The  element  of  quid  pro  quo  is  not necessarily absent in every tax. [873 B-F]      There is  no force  in the contention that the increase in, the  rate of  market fee  from 50  paise to  1 rupee was illegal on  the ground that there was no correlation between the increase  in the  services rendered. The levy of market- fee under  section 12(1)  of the  Act is  co-related to  the purposes  mentioned  in  section  15  that  all  the  monies received by  a market  committee from tho traders on sale of

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agricultural produce have. to be paid into a fund called 847 the Market  Committee Fund, and all expenditure incurred has to be  defrayed out  of that  fund and any surplus has to be invested in the proscribed manner. The purposes mentioned in section 15  are all  purposes which are extremely beneficial to the growers and the traders. [874 F-H, 875 A.B]      In the  instant case,  there  was  no  allegation  that expenditure  incurred   by  the  Market  committee  was  not authorised  by   the  Act.  When  the  petitioners  had  not challenged the  increase of  the market fee from 25 paise to 50 paise in 1972 there could be no basis for challenging the increase in  the rate  of fee  to Re. 1 in 1978. Apparently, the cost of rendering services has correspondingly increased over  the   years.  Moreover,   the  Market  committees  are rendering services some of which are obligatory duties. [875 C-E]      It is not always possible to work out with mathematical precision the  amount of fee required for the services to be rendered each  year and  to collect  only just  that  amount which is  sufficient for  meeting the  expenditure  in  that year. In some years, the income of a market committee by way of market fee and licence fee may exceed the expenditure and in another  year when  the development works are in progress for  providing   modern  infra-structure   facilities,   the expenditure may  be far in excess of the income. It is wrong to take  only one  particular  year  or  a  few  years  into consideration to decide whether the fee is commensurate with the services rendered. An overall picture has to be taken in dealing with the question whether there is guid pro quo i.e. there is correlation between the increase in the rate of fee from 50  paise to  rupee one and the services rendered. [852 D-F]      On the  plain language  of section 12(1) of the Act the market fee  is leviable  both on purchase of paddy by a rice miller from a purchaser and also on purchase or sale of rice by a  miller to  a trader or by a trader to a trader because there is service rendered by market committee at each of the stages. Rice  and paddy are not the same commodity. There is distinction between  the two  although paddy  is milled into rice by the process of de-husking, they arc two separate and distinct commercial  commodities and  have  been  separately specified as  individual agricultural produce in schedule of the Rules.                                             [879 G-H, 880 A]      On a  reasonable construction  of r.  74(1), the  legal consequences as  set forth must ensue. IF paddy is subjected to levy  of a market fee on purchase or sale by the producer to a  rice miller  in a  notified market  area by  a  market committee within  the State  and is  taken into the notified market area  of another  market committee of being processed i.e. de-husked  into rice  and sold  by a  rice miller  to a trader or  by a  trader to  a trader  in  the  course  of  a commercial transaction,  there cannot  by any levy of market fee on  such purchase  or sale  of rice  in another notified market area.  If that  be so  then it  must logically follow that the subsequent sale of rice in the notified area of the market committee  cannot be  subjected to levy of market fee on purchase  or sale of rice by a miller to a trader or by a trader to a trader, if sale or purchase of paddy within such notified market area has suffered the levy of market fee. This is  of course  subject to  the qualification  that such sale or  purchase has  taken place  in the  notified  market area, but outside the market in that area as enjoined by the proviso to r. 74(1). [881 H, 882 A-B]

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848

&      ORIGINAL JURISDICTION:  Writ Petitions Nos. 2727, 2840- 42, 2765, 2868, 2869, 2911, 3137, 3138, 3568-71, 3680, 7485- 7580,3817  20,4190,9018-62,4553,4554-55,   4690,4773,  6617- 6663,4774,6665-71,4775,6672-81, 4919,  4929,7588-7606, 8824, 7039-96,7129,8285 8311,8506-8653,  8654-8854, 7946-65,  9485 of 1981,2642-84, 3584, 4114-22,4409, 5485-5509 of 1982,4246- 72  of   1973,5519-34,5665-85,  6983,7000,7252-60,7478-7637, 7925-42, 8386,9372-90,  9291-9440, 9605, 9804-9921, 9922-26, 9958-78, 9979-9994  of 1982, 199-318, 834-50,2862-2893,3644- 48, 3660-3665,2901-2983  of 1983,  1286 and  1924,1925-49 of 1973,9383-9407, 8009-8036  of 1981,1650-82,1683-1704,  1763- 88, 1789-1917,  1964-2113, 2287-91,  2461-78, 2846-49, 3107- 27, 3128-48,3637-55,  3707,4652-4788, 4790-4919,  7093-7121, 8088 of 82,1174-80,4435 4565,4838-4909,4825 5074 of 1983.      (Under Article 32 of the Constitution of India)                             WITH      Special Leave Petition No. 728/81 and Civil Appeal Nos. 1486, 2108,2469/1972, 4013/82, 10/73 and 7502/81.      For the Appearing Petitioners      G. L.  Sanghi, Dr.  L.M. Singhvi, D. Sudhakara Rao, Mrs Urmila sirur,  T. V.  S. N.  Chari,  B.  Kanta  Rao,  G.  R. Subbarayan, B. Kanta Rao, A. M. Singhvi, B. Parthasarthi, C. Seetharamiah, A.  Subba Rao,  Upendra Gupta,  A. V.  Rangam, Mrs. Sarla  Chandra, N. Bhatakatsalam, Mrs. C. K. Sucharita, J.  M.   Khanna,  G.   Narayana  Rao,   M.  Veerappa,   Raju Ramachandra, G. S. Narayana Rao, and M. M. S. Srivastava.      For the Appearing Appellants.      P. P.  Rao and  B. Parthasarthi  with him  in CA.  Nos. 1485, 2108, 2469/72,1073 and 4013 of 1982.      Mrs. Shyamala  Pappu, Mrs. Indra Sawhney and Miss Kittu Bansilal, with her for the Appellants in CA. No. 2502/81.      For the Appearing Respondents.      P. Ram Reddy and G. N. Rao with him.      The Judgment of the Court was delivered by      SEN,J.  These   Petitions  Under   Art.   32   of   the Constitution   principally    lay   a   challenge   to   the constitutional validity  of the  increase  in  the  rate  of market fee levied by the market committees in the state 849 of Andhra  Pradesh under  Sub-s. (1)  of s. 12 of the Andhra Pradesh (Agricultural  Produce and  Livestock) Markets  Act, 1966 (’Act’  for short)  from 50 paisa to rupee one on every one hundred  rupees of  the aggregate  amount for  which the notified agricultural  produce,  livestock  or  products  of livestock are purchased or sold in their respective notified market areas  on the  ground that  there was no quid pro quo i.e. there  was no  correlation between  the increase in the rate of market fee and the service rendered.      There are  also certain  subsidiary questions raised in these petitions  viz.: As to (1) The constitutional validity of sub-s.  (6) of  s. 7  of  the  Act  which  prohibits  the carrying on  of any  transaction  of  purchase  or  sale  of notified agricultural  produce, livestock  or pro  ducts  of livestock in a notified market area or outside the market in that  area   as  violative   of  Art.  19  (1)  (g)  of  the Constitution. (2)  As to  the power of the market committees to levy  market fee  under sub-s. (1) of s. 12 of the Act at rupee. One  per hundred  rupees of  the aggregate amount for which such  agricultural produce,  livestock or  products of livestock is  purchased or  sold outside  their markets  but

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within their  respective  notified  market  areas.  And  (3) Whether under  r. 74 (1) of the Andhra Pradesh (Agricultural Produce and  Livestock)  Markets  Rules,  1969  (Rules’  for short) if  purchase or sale of paddy has suffered market fee in the  hands of  a rice  miller, the subsequent purchase or sale of  rice by  a miller  to a trader, or by a trader to a trader, can be subjected to payment of market fee again.      Writ Petition  No. 1286  of 1973 questions the validity of a notification issued by the State Government being G. O. M. S. No. 2095 dated October 29, 1968 declaring rice to be a notified agricultural  produce  under  s.  2  (i),  and  the notification  issued  by  the  State  Government  of  Andhra Pradesh under  sub-s. (4)  of s. 4 of the Act being G.O.M.S. No. 971  dated July  16, 1971  declaring an  area of 20 kms. around Kothavalasa  to be  the notified  market area  of the Kothavalasa Agricultural  Market Committee  for the district of Visakhapatnam,  as well as the constitutional validity of sub-s. (6) of s. 7 of the Act and sub-s. (1) of s. 12 of the Act. Civil  Appeal No.  1485 of 1972 is directed against the judgment of the Andhra Pradesh High Court dated July 7, 1971 upholding the constitutional validity of sub-s. (ii) of s. 7 of the  Act and sub-s. (1) of s. 12 of the Act. Civil Appeal No. 2108  of 1972  is directed  against the  judgment of the Andhra i  Pradesh High  Court dated  July 27, 1971 upholding the increase  in the  rate of  market fee  from 13 paise per quintal to 25 paise per 850 hundred rupees  by the Agricultural Market Committee, Guntur in the  year 1970  on the  ground that there was no quid pro quo i.  e. there  was no correlation between the service and the increase  in the  rate of  market fee.  Civil Appeal No. 2502 of  1981 is directed against the judgment of the Andhra Pradesh High  Court dated  April 21, 1981 upholding the levy of market fee at 50 paisa per hundred rupees on cotton seeds by  an  agro-based  industry  engaged  in  the  business  of manufacture and  sale of  cotton seed  oil. Civil Appeal No. 4013 of  1982 is directed against the judgment of the Andhra Pradesh High  court dated  September 17,  1982 upholding the increase in the rate of market fee from 50 paisa per hundred rupees to  rupee one  by the  Agricultural Market Committee, Guntur upon  the basis that there need be no quid pro quo to justify the levy of such market fee.      It appears that initially in the year 1970 the bye-laws of all  the market  committees throughout the State provided for the  levy of  market fee  @ 25  paisa for  every hundred rupees of  the  aggregate  amount  for  which  the  notified agricultural produce  livestock or products of livestock was purchased or  sold. Subsequently, in 1972 the rate of market fee was  increased to  50 paisa  per hundred  rupees of  the value of such agricultural produce, livestock or products of livestock. The  State Advisory  Board at its meeting held or January  27   and  28,   1976  resolved   to  recommend  the enhancement of the existing rate of market fee to rupees one per hundred  rupees so as to enable the market committees to build up  adequate finances  to  meet  the  increasing  cost towards acquisition  of land  and establishment  of  markets with  modern  infrastructure  facilities.  The  Director  of Marketing accordingly  addressed a letter dated February 16, 1976 to  all the agricultural market committees in the State inviting their  attention to  the resolution of the Advisory Board and  requesting them  to place  the proposal  for  the enhancement of the existing rate of market fee from SO paisa to rupee  one before  the market  committees and communicate their consent  for levy  of the  enhanced rate of market fee under sub-s.  (1) of  s. 12 of the Act read with bye-law No.

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24  (i)   of  the   concerned  market   committee  bye-laws. Accordingly, all  the market committees throughout the State accepted  the  recommendation  of  the  Advisory  Board  and resolved to  enhance the market ’ fee from 50 paisa to rupee one requesting  the Director  to forward the amended bye-law No. 24  (i) to  the State Government for their approval. The State Government  of Andhra  Pradesh by  notification  dated January 1,  1978 published  in the  Andhra  Pradesh  Gazette dated February  23, 1978  accorded  their  approval  to  the amended bye law, 851 In  pursuance   of  the  impugned  notification  the  market committees throughout  the State  began to levy market fee @ rupee one per hundred rupees.      Some of  the petitioners challenged the increase in the rate of  levy of  market fee  from 50  paisa to rupee one by filing petitions  under Art.  226 of the Constitution before the Andhra Pradesh High Court. All these writ petitions were disposed of  by the High Court by its judgment in Sri Vijaya Cotton Traders  and Ors., v. The State of Andhra Pradesh and Ors.(1) by  which  it  negatived  many  of  the  submissions advanced before  us. Aggrieved  by the  decision of the High Court, the  petitioners applied  to this  Court for grant of special leave  under Art. 136. After hearing learned counsel appearing  for   them  at  considerable  length,  the  Court dismissed the special leave petitions by its order dated May 1, 1981.  Undaunted by  the dismissal  of the  special leave petitions, these  petitioners along  with  others  have  now filed petitions  under  Art.  32  of  the  Constitution  and secured a  rule nisi  on the  pretext that similar questions were involved  in Civil  Appeal No.  2108 of  1972 and  Writ Petition No. 1286 of 1973.      The pattern  of working of the market committees in the State is more or less the same although the circumstances in which each  market committee  is placed may differ. Facts as far as  they can  be gleaned from some of the writ petitions where counters  have been  filed may  be briefly stated. The Malakpet Agricultural Market Committee, Hyderabad has in its counter  in   Writ  Petition  No.  2911  of  1981  furnished sufficient material  to show the nature of services rendered by the  Market Committee.  It has  established and has under its control  various Markets in the twin cities of Hyderabad and Secunderabad  viz. (i) Osmanganj Market for the purchase and sale  of food  grains and  other  notified  agricultural produce, (ii)  Jambagh Market  for  sale  of  fruits,  (iii) Miralam Mandi  and Sabzi Mandi for the sale of vegetables in Hyderabad, and  Hissamgunj Market  in Secunderabad  for  the purchase and  sale of  food grains  and vegetables.  In  all those  markets,   the  Committee   is  providing   necessary facilities to  the traders  and  producers  of  agricultural produce. The  Market Committee  during  the  financial  year 1981-82 incurred  an expenditure  of Rs. 8.28 crores for the construction of  godowns,  shops,  platforms,  formation  of internal  roads,   approach  roads,  construction  of  press building etc.  So far as the Malakept area is concerned, the Osmangang Market  was  not  sufficient  for  regulating  the transactions of sale 853 and purchase  of agricultural  produce. The Market Committee therefore permitted  the traders  of Malakept  to  carry  on their business  from  their  respective  licensed  premises, subject to  the supervision and control of the functionaries of the  Market Committee. Due to the location of the present markets in busy and congested places, it was not possible to extend the market areas any further. The Committee therefore

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acquired an  area of  41 acres  22 guntas  at Malakpet  on a permanent lease  from the  Andhra Pradesh  Housing Board  in April 1980  It also  applied for  acquisition of 20 acres 20 guntas at  Bahadurpura, 70 acres at Mansoorabad and 50 acres at Kukatpally. The aforesaid construction work for expansion of the  markets was in progress when the writ petitions were filed.  It   appears  from   the  statement  of  income  and expenditure for  the years 1978-79, 1979-80 and 1980-81 that the income  from the market fee even after its increase from 50 paisa  to  rupee  one  is  not  sufficient  to  meet  the expenditure of the Market Committee.      It is not always possible to work out with mathematical precision the  amount of fee required for the services to be rendered each  year and  to collect  only just  that  amount which is  sufficient for  meeting the  expenditure  in  that year. In some years, the income of a market committee by way of market fee and licence fee may exceed the expenditure and in another  year when  the development works are in progress for  providing   modern  infra-structure   facilities,   the expenditure may  be far in excess of the income. It is wrong to take  only one  particular  year  or  a  few  years  into consideration to decide whether the fee is commensurate with the services rendered. An overall picture has to be taken in dealing with  the question  whether there is quid pro quo i. e. there  is correlation between the increase in the rate of fee from  50 paisa  to rupee  one and the services rendered. The High Court in Sri Vijaya Cotton Traders’ case, supra has dealt with  the Nizamabad  Agricultural Market Committee. It observed from  the statement  showing the  details of income and expenditure for three years 1977-78, 1978-79 and 1979-80 that there  was a  closing balance  of about Rs. 39 lakhs at the end  of the  year 1977-78,  of about Rs. 15 lakhs at the end of 1978-79 and of about Rs. 66 lakhs at the end of 1979- 80. The  Market Committee  filed a counter affidavit showing that it  had taken up constructional works with a spill over for the year 1978-79, estimated at over Rs. 16 lakhs and had to complete  new works  costing about  Rs.  21  lakhs.  That apart,  the  expenditure  for  development  of  the  eastern portion of  the market  yard at Shraddhaland Gunj, Nizamabad came to nearly Rs. 24 lakhs 853 and that  on the  western side came to Rs. 134 lakhs. It was that for  the year  1977-78 the  Committee derived  a  total income of  Rs. 18  lakhs by  way of  market fees and licence fees and the expenditure was to the tune of Rs. 16 lakhs. At the end  of the  year 1977-78 the closing balance was Rs. 39 lakhs but  it was  not sufficient  to meet  the cost of land acquisition, cost  for development  works and  providing  of modern facilities. In these thousand and odd writ petitions, it is difficult to expect each and every market committee to file their  counter but  some of  the market committees like the  Agricultural  Market  Committee,  Guntur,  Kothavalasa, Bheemavaram and  Ambajipeta have filed their counter showing the nature  of services  rendered. Learned counsel appearing for the  State Government  has filed a statement showing the income and  expenditure  of  the  market  committees  and  a detailed chart  indicating the  nature of  development works undertaken by  each. It  is clear  from the  material placed before us that the income from the market fee even after its increase from  50 paisa  to rupee  one is  not sufficient to meet the expenditure of the market committees.      In all fairness to learned counsel for the petitioners, we must  state at the very outset that they do not challenge the levy of market fee of 50 paisa per hundred rupees in the year 1972  and have  confined their  submissions questioning

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the increase  in the  rate of  market fee  from 50  paisa to rupee one per hundred rupees of the price.      In support  of these  petitions, three main contentions were raised, namely: (1) Sub-s. (6) of s. 7 of the Act which totally  prohibits   purchase  or   sale  of   any  notified agricultural produce, livestock and products of livestock in a notified  market area,  outside the  market in  that area, encroaches upon  the right of citizens to carry  on trade or business  and   is  repugnant   to  Art.   19(1)(g)  of  the Constitution and  is in  consequence void,  (2) The  levy of market fee  by the  market committees under sub-s. (1) of s. 12 of  the Act  on transactions  of purchase  or sale of any notified agricultural  produce,  livestock  or  products  of livestock in  the  notified  market  area  effected  by  the petitioners from their business premises therein but located outside  the   market  proper   is  per   se   illegal   and unconstitutional  as   such  levy   of  market  fee  is  not correlated to  any service rendered to them. (3) If paddy is brought by  the producer  into the  notified market area for purposes of  the de-husking  and is  sold to  the miller, no market fee  is leviable on subsequent transaction of sale or purchase of  rice by  the miller to a trader, or by a trader to a trader, or by a trader to a 854 consumer. At any rate, there should be no levy of market fee on sale of food grains by a trader to a consumer.      It is  a common feature throughout the country wherever there is  such marketing legislation whether be it the State of Andhra  Pradesh or  any other  State, that  there is  the usual reluctance  of the traders who deal in foodgrains etc. to shift  from their established trading premises situate in a notified market area to the market proper. The petitioners before us  are all merchants licensed under sub-s. (1) of s. 7 of  the Act  to carry on the business of purchase and sale of noticed  agricultural produce,  livestock and products of livestock by different market committees in various parts of the State:  They are  therefor subject  to the  restrictions contained in  sub-ss. (1)  and (6)  of s 7 and the terms and conditions of their licence.      The  object   and  purpose   of  the   Andhra   Pradesh (Agricultural Produce  & Livestock)  Markets  Act,  1966  as reflected in  the long title is to consolidate and amend the law relating  to the  regulation of  purchase  and  sale  of agricultural produce,  livestock. and  products of livestock and the  establishment of  markets in  connection therewith. The  legislation  is  designed  to  eliminate  middlemen  in notified agricultural  produce, livestock  and  products  of livestock, to  protect the  producers of  such  agricultural produce,  livestock   and   products   of   livestock   from exploitation and  to ensure  to them  a fair price for their produce. The  material provisions of the Act may be referred to. s. 2 is the definition clause and defines the expression ’agricultural produce’  in cl. (i) to mean anything produced from land  in the  course of agriculture or horticulture and includes forest produce or any produce of like nature either processed or  unprocessed and  declared by the Government by notification to  be agricultural produce for the purposes of this Act.  The term ’market’ as defined in s. 2 (vi) means a market established  under sub-s.  (3) of  s. 4  and includes market  yard   and  any  building  therein.  The  expression ’notified area’  as defined  in s.  2 (xi)  means  any  area notified under  s, 3,  and ’notified  market area  in clause (xii) means  any area  declared  to  be  a  market  area  by notification under  s. 4.  Under s.  3 of the Act, the State Government  is  empowered  to  declare  their  intention  or

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regulating  the  purchase  and  sale  of  such  agricultural produce, livestock  or products of livestock in such area as may be  specified in  such notifications.  After considering the objections and suggestions, if any, the State Government is authorized  to publish  a final notification under sub-s. (3) thereof  declaring such  area to  be a notified area. By sub-s. (1) of 855 s. 4,  the State  Government is  empowered to  constitute  a market committee  for every  notified area  which shall be a body corporate  having perpetual  succession  and  a  common seal. The  duty of  enforcing the  provisions of the Act and the rules  and bye-laws  is entrusted  to a market committee under sub-s.  (2) thereof.  Sub-s. (3)  of s. 4 empowers the market committee  to establish such number of markets as the State Government  may, from  time to  time, direct  for  the purchase and  sale of  any  notified  agricultural  produce, livestock or  products of  livestock. Sub-s.  (3)  of  s.  4 provides such  facilities in  the market as may be specified by the  Government from time to time by a general or special order. Sub-c.  (4) provides that the State Government shall, after the  establishment  of  a  market  under  sub-s.  (3), declare, by notification the market area and such other area adjoining thereto a as may be specified in the notification, to be  a notified  market area  for the purposes of the Act. Section 7 insofar as material provides as follows:           "7. Trading  etc., in  notified  agricultural      produce, livestock  and products  of livestock  in      the notified  area : (1) No person shall, within a      notified  area,  set  up,  establish  or  use,  or      continue or  allow to continued, any place for the      purchase,  sale,   storage,   weighment,   curing,      pressing   or    processing   of    any   notified      agricultural produce  or products  of livestock or      for the purchase or sale of livestock except under      and in accordance with the conditions of a licence      granted to him by the market committee.           (2) Nothing in sub-section (1) shall apply to      a person purchasing notified agricultural produce,      livestock or  products of  livestock for  his  own      domestic consumption.           ...       ...       ...       ...       ...           (5) A  person to  whom a  licence is  granted      under  sub-section   (1)  shall  comply  with  the      provisions of this Act, the rules and the bye-laws      made thereunder  and the  conditions specified  in      the licence.           (6) Notwithstanding  anything in  sub-section      (1), no person shall purchase or sell any notified      agricultural produce,  livestock and  products  of      livestock in  a notified  market area, outside the      market in that area." 856 Section 12  of the Act which provides for the levy of market fee ant as an important bearing, reads:      "12 Levy of fees by the market committees      (1)   The market  committee shall levy fees on any           notified agricultural  produce, livestock  or           products of  live stock  purchased or sold in           the notified  market area  at such  rate, not           exceeding one  rupee, as  may be specified in           the bye-laws  for every hundred rupees of the           aggregate  amount   for  which  the  notified           agricultural produce,  livestock or  products           of livestock  is purchased  or sold,  whether

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         for  cash   or  deferred   payment  or  other           valuable consideration.                Explanation 1:  For the purposes of this           section, all  notified agricultural  produce,           livestock or  products of livestock taken out           of a  notified market  area shall, unless the           contrary is  proved, be presumed to have been           purchased or sold within such area.      ...         ...        ...       ...         ...      (2)  The fees referred to in sub-section (1) shall           be paid  by the  purchaser  of  the  notified           agricultural produce,  livestock or  products           of livestock:           Provided that  where the  purchaser cannot be      identified, the fees shall be paid by the seller."      Under the  scheme of  the Act,  the market committee is ’enjoined by  sub-s. (1)  of s. 14 to pay into a fund called the ’Market  Committee Fund’  all moneys  received from  the traders as market fee on transactions of sale or purchase of agricultural produce taking place within the notified market area and  they are  to be credited in the nearest Government treasury or  in a  Bank, with  the previous  sanction of the State Government.  All expenditure  incurred by  the  market committee under  and for  purposes of  the Act  have  to  be defrayed out  of the  said Fund  and any  surplus  remaining after such expenditure, has to be invested in such manner as may be  prescribed. Under sub-s. (2), every market committee has to  pay to the State Government out of its Fund the cost of any special or additional 857 staff employed  by the  Government with  their consultation. Where such  additional staff is employed for the purposes of one or  more market  committees, the State Government has to apportion the cost of such special or additional staff among the market committees concerned in such manner as they think fit. Under  sub-s. (3), the market committee may grant loans to another  market committee  out of its surplus funds, with the previous sanction of the State Government, at such rates of interest as may be prescribed. The purposes for which the market Committee  Fund may  be expended are set out in s. 15 which reads:           (i) the acquisition of site for the market;           (ii)  the   establishment,  maintenance   and                improvement of the market;           (iii) the  construction  and  maintenance  of                buildings, necessary  for the market and                for the  health, convenience  and safety                of the  persons  using  the  market  and                maintenance  of   buildings  under   the                control of the market committee;           (iv)  the   provision  and   maintenance   of                standard weights and measures;           (v)   the  pay,  pensions,  leave  allowance,                gratuities, compassionate allowances and                contribution towards  leave  allowances,                pensions or  provident fund  of officers                and  servants  employed  by  the  market                committee;           (vi) the  payment of  interest on  loans that                may be raised for purposes of the market                ant the  provisions of a sinking fund in                respect of such loans;           (vii)the  collection   and  dissemination  of                information   regarding    all   matters                relating   to    crop   statistics   and

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              marketing   in   respect   of   notified                agricultural  produce,   livestock   and                products of livestock;           (viii) schemes  for the extension or cultural                improvement  of   notified  agricultural                produce, 857                livestock  and   products  of  livestock                within the  notified area, including the                grant., subject  to the  approval of the                Government,  of  financial  aid  to  the                schemes   for    such    extension    or                improvement within such area, undertaken                by other bodies or individuals;           (ix)  propaganda   for  the  improvement.  Of                agriculture, livestock  and products  of                livestock and thrift;           (x)   the expenses of, and incidental to, the                conduct of elections;           (xi) the promotion of grading services;           (xii)  measures   for  the   preservation  of                foodgrains;           (xiii)  such   other  purposes   as  may   be                specified by  the Government  by general                or special order.      Sub-s (1) of s. 16 of the Act provides that there shall be formed for the whole of the State a fund to be called the ’Central Market Fund’. Every market committee is required to contribute 10%  of its  annual income  to the Central Market Fund and  the contribution  so paid  shall be  placed to the credit of the said Fund. Sub-s. (2)  of s.  16 provides that the Central  Market  Fund  shall  be  vested  in  the  State Government and  deposited  in  the  Government  treasury  at Hyderabad. It is administered and applied by the Director of Marketing for  all or  any of  the purposes  set out therein viz.:           (i)   grant-in-aid of  the market  committees                for   the   first   year   after   their                constitution under this Act;           (ii)  grant-in-aid   of  a   deficit   market                committee for  a  period  not  exceeding                three years;           (iii) grant of loans to the market committees                at such rates of interest as are charged                on loans  granted by  the Government for                development purposes; and 859           (iv) such other similar or allied purposes as                may be  specified by  the Government  by                general or special order.      In exercise  of the  powers conferred  by s.  33 of the Act, the  State Government of Andhra Pradesh have framed the Andhra Pradesh  (Agricultural Produce  & Livestock)  Markets Rules, 1969.  Chapter IV  of the Rules deals with the powers and functions  of the  market committees and Chapter V deals with the  regulation of  trading. Chapter  VI relates to the levy and collection of market fee, Chapter VII regulates the manner  in   which  the   Market  Committee  Fund  shall  be maintained and  Chapter VIII  the manner in which the market committees shall function. The Act and the Rules provide for a complete  scheme for  the establishment  and regulation of markets for  the purchase  and sale of notified agricultural produce, livestock and products of livestock in the State of Andhra Pradesh. We are here concerned with Chapter V.      Marketing legislation  which seeks  to enable producers

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to get  a fair  price for  the  commodities  by  eliminating middlemen and  providing a  regulated market, cannot be said to impose  ’unreasonable restriction’  on the citizens right to do  business unless  it is  clearly established  that the provisions are  too drastic  to achieve the object for which it was  enacted. In order to make effective such legislation for the  control of a market, it would be reasonable for the legislature to control transactions between traders and also the sale  of produce  grown outside the market area, if sold in the market area. In M.C.V.S. Arunachala Nadar etc. v. The State of  Madras &  Ors. (1)  Subba Rao, J. speaking for the Court, upheld  the validity  of the  Madars Commercial Crops Markets Act,  1933 which  provided for  the establishment of certain controlled  markets for the sale of commercial crops and provided  that after  the establishment of such markets, no person  would be  allowed to  establish any  other market within the  specified distances of the controlled markets so that the growers of such crops would be obliged to resort to the controlled  markets only  for the sale of their produce. The learned Judge thus explained the scheme, in these words:           "The Madras  Commercial Crops Markets Act was      passed on  July 25,  1933. The preamble introduces      the 860      Act with  the recital  that  it  is  expedient  to      provide for  the better  regulation of  the buying      and selling  of commercial crops in the Presidency      of  Madars  and  for  that  purpose  to  establish      markets  and   make   rules   for   their   proper      administration. The Act, therefore, was the result      of a  long exploratory investigation by experts in      the field,  conceived and  enacted to regulate the      buying  and   selling  of   commercial  crops   by      providing  suitable   and  regulated   markets  by      eliminating middlemen  and bringing  face to  face      the producer  and the  buyer so that they may meet      on equal terms, thereby eradicating or at any rate      reducing the scope for exploitation in dealings". The learned  Judge brought out the purpose and object of the legislation and stated:           "The  Act,  Rules  and  the  Bye-laws  framed      thereunder have  a long-term target of providing a      net work of markets wherein facilities for correct      weighment are  ensured, storage  accommodation  is      provided, and  equal powers of bargaining ensured,      so that  the growers  may bring  their  commercial      crops to  the market  and sell  them at reasonable      prices. Till  such markets  are  established,  the      said    provisions,    by    imposing    licensing      restrictions, enable  the buyers  and  sellers  to      meet  in   licensed   premises,   ensure   correct      weighment, make  available to them reliable market      ’information’  and   provide  for  them  a  simple      machinery for  settlement of  disputes. After  the      markets are  built  or  opened  by  the  marketing      committees,  within  reasonable  radius  from  the      market, as  prescribed by the Rules, no licence is      issued; thereafter all growers will have to resort      to the  market for vending their goods. The result      of the  implementation of  the  Act  would  be  to      eliminate, as  far as  possible, the middlemen and      to give  reasonable facilities  for the growers of      commercial crops  to secure  best prices for their      commodities". The Act  did not directly prohibit the business of middleman

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engaged 7  in the trade of selling commercial crops, but the result of  the operation  of the  Act was  to eliminate  the middlemen. It  was held  that both the restriction as to the place where  transactions of  purchase or sale of commercial crops would be effected and the total 861 or substantial  elimination of  middlemen was  a  reasonable restriction in order to prevent the exploitation of the poor cultivators engaged  in the  production of  commercial crops which necessitated  such marketing  legislation. In Mohammad Hussain Gulam Mohammad Anr. v. The State of Bombay & Anr.(1) and Mohammadbhai  Khudabux Chhipa  & Anr.  v. The  State  of Gujarat &  Anr.(2) this  Court held  following the  view ill Arunachala Nadar’s case, supra, that the Bombay Agricultural Produce Markets  Act, 1939  did not  violate Art. 19 (1) (g) and further  upheld the  levy of market fee as a fee charged for services  rendered by  the market  committees. Following the  decision  in   Arunachala  Nadar’s   case,  supra,  the regulatory  provisions   of   such   marketing   legislation throughout India  have been  upheld as  imposing  reasonable restrictions in the interests of the growers of agricultural produce in  particular and  of the  community at  large. The specific question whether a fee levied by a market committee under the Bihar Agricultural Produce Markets Act, 1960 was a fee or  a tax  came up for consideration before the Court in Lakhan Lal  & Ors. etc. v. The State of Bihar & Ors. etc.(3) In that  case the  entire area under the jurisdiction of the Gaya  Municipality   and  several  villages  around  it-were declared as  the market  area for  the sale  and purchase of certain  agricultural   produce.  The   Court  repelled  the contention that the market committee had not established any market inasmuch  as a  market must  be a  well-defined  site fully equipped  as a  market  and  made  no  provisions  for rendering services, and observed:           "According to  counsel, a  market must  be  a      well  defined   site  with  market  equipment  and      facilities. The  argument overlooks the definition      of market in section 2 (h). The market consists of      market proper  and the  market yards.  The  market      yards are  well-defined enclosures,  buildings  or      localities but  the market proper is under Section      2 (k)  read with Section 5 (2) (ii) a larger area.      For establishing a market it is sufficient to make      a  declaration   under  Section  5(2)  fixing  the      boundaries of  the market  proper and  the  market      yards  on   the  recommendation   of  the   market      committee made  under Rule 59(2). Under section 18      (1) the market committee must provide 862      for such  facilities in  the market  as the  State      Government may from time to time direct. It is not      shown that  the market  committee refused to carry      out any  direction of  the Government.  The market      committee may,  in view  of Sections 28 (2) and 30      (i), acquire  and own  lands and buildings for the      market, but it is not always obliged to do so. The      market  is   established  on   the  issue   of   a      notification under  Section 5  (2)  declaring  the      market proper and the market yards". The Court  then rejected the contention that the fees levied by the  market committee  were in the nature of a tax as the committee did  not render  any services  to the users of the market and therefore the levy of fee was illegal, and stated           "The market committee has taken steps for the      establishment of a market where buyers and sellers

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    meet  and  sales  and  purchases  of  agricultural      produce  take  place  at  fair  prices.  Unhealthy      market practices  are eliminated,  market  charges      are defined  and  improper  ones  are  prohibited.      Correct weighment  is  ensured  by  employment  of      licensed weighment  and by  inspection of  scales,      weights and  measures and  weighing and  measuring      instruments. The  market committee has appointed a      dispute  committee   for   quick   settlement   of      disputes. It has set up a market intelligence unit      for collecting and publishing the daily prices and      information  regarding  the  stock,  arrivals  and      despatches  of   agricultural  produce.   It   has      provided a  grading unit  where the  technique  of      grading  agricultural   produce  is   taught.  The      contract   from   for   purchase   and   sale   is      standardized. The  provisions of  the Act  and the      Rules arc  enforced through  inspectors and  other      staff appointed  by the market committee. The fees      charged by  the market committee are correlated to      the expenses  incurred by  it for  rendering these      services. The  market fee of 25 naye paisa per Rs.      100 worth  of agricultural produce and the licence      fees  prescribed  by  Rules  71  and  73  are  not      excessive.  The   fees  collected  by  the  market      committee form  part of  the market committee fund      which is set apart and ear-marked for the purposes      of the  Act. There  is sufficient quid pro quo for      the levies  and they  satisfy the test of ’fee’ as      laid down in 863      Commissioner, Hindu  Religious Endowments,  Madras      v. Sri  Lakshmindra Thirtha  Swamiar of  Sri Sirur      Mutt (1954) SCR 1005." These observations are of some relevance as the Bihar Act is more or  less on  similar lines as the Act with which we are concerned.      The contention  that the  provision contained in sub-s. (6) of s. 7 of  the Act  which prohibits  the carrying on of any transaction of purchase or sale of agricultural produce, livestock or  products of  livestock in  a  notified  market area, outside  the market  in that area, infringes the right of a  citizen to trade "as and where he wills" and therefore must be  struck down  as obnoxious to Art. 19 (1) (g) of the Constitution.  It   is  urged   that  the  limitation  which arbitrarily or  excessively invades the right cannot be said to contain  the quality  of  reasonableness  and  unless  it strikes a  balance between the freedom guaranteed in Art. 19 (1) (g)  and the social control permitted by cl. (6) of Art. 19, it  must be held to be void. The contention is obviously based  on  the  following  passage  in  Halsbury’s  Laws  of England, 3rd  edn., vol. 32 p. 15 para 9 which explains what freedom of business signifies:           "It is  the general  principle of  the common      law that  a man is entitled to exercise any lawful      trade or  calling as  and where  he wills; and the      law has always regarded jealously any interference      with trade,  even at the risk of interference with      freedom of  contract, as  it is  public policy  to      oppose all  restraints upon  liberty of individual      action which are injurious to the interests of the      State."      The fundamental  right of  all citizens to practise any profession or  to  carry  on  any  occupation  or  trade  or business guaranteed  under Art.  19  (1)  (g)  has  its  own

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limitations. The  liberty of  an  individual  to  do  as  he pleases is  not absolute.  It must yield to the common good. Absolute or unrestricted individual rights do not and cannot a exist  in any  modern State. There is no protection of the rights themselves  unless there  is a measure of control and regulation of the rights of each individual in the interests of all.      In  order   to  determine   the  reasonableness   of  a restriction imposed upon the right guaranteed by Art. 19 (1) (g), the  Court must  have regard  to  the  nature  and  the conditions Prevailing in that trade. 864 It is  obvious that  these factors must differ from trade to trade and  no hard  and fast rules concerning all trades can be laid  down. In  other words,  the pursuit  of any  lawful trade or business may be made subject to such conditions and restrictions as  may be  deemed essential by the legislature to be  in the interests of the general public. Sub-s. (6) of s. 7 undoubtedly restricts the freedom of a citizen to trade "as and  where he wills"; indeed it was enacted for the very purpose of  controlling business  in  agricultural  produce, livestock and  products of livestock by the establishment of regulated markets  in connection  therewith. It is difficult to conceive  how the restriction imposed by sub-s. (6) of s. 7 which interdicts that no person shall purchase or sell any notified agricultural  produce, livestock  and  products  of livestock in  a notified  market area, outside the market in that area,  can be  said to  be arbitrary or of an excessive nature beyond  what is  required in  the  interests  of  the community. In  Arunachala Nadar’s  case,  supra,  the  Court repelled the  contention based  on similar  provision that a person who  is having  a licence  to trade  in or  about the place where  the market  is fixed  will be  deprived of  his livelihood unless  he resorts to the market and therefore it was  an  unreasonable  restriction  upon  his  right  to  do business.  It   was  observed  that  such  a  provision  was necessary for  preventing the  business in such agricultural produce being diverted to other places and the object of the scheme being defeated.      It is  obviously in  the interests  of the producers of agricultural produce  that they can get the best competitive prices in  an open  market and that they have not to pay the middlemen. Sale  or purchase of agricultural produce in such a market  under the  supervision and  control of  the market committee is  likely to  be  in  ready  cash  and  therefore advantageous to the producers and the use of standard weight must eliminate  the possibility  of his  being victimized by malpractices. Supervision  of the operations in the notified market area  can be  more conveniently  done if  business is carried on  in a  specified area  or areas intended for that purpose. The  Act is  an integrated one and it regulates the buying  and   selling  of   notified  agricultural  produce, livestock and  products  of  livestock  from  a  centralized place. The  petitioners being  licensed traders under sub-s. (1) of  s. 7  are bound by sub-s. (5) thereof to comply with the provisions of the Act, the Rules and the bye-laws framed thereunder. They  are therefore  subject to  the restriction contained in sub-s. (6) of s. 7 of the Act. The non obstante clause in  sub-s. (6)  of s. 7 provides that no person shall purchase or sell any notified agricul- 865 tural produce,  livestock and  products of  livestock  in  a notified market  area, outside  the  market  in  that  area. Having regard  to the purpose and object of the legislation, it must  be held  that the restriction imposed by sub-s. (6)

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of s.  7 of  the Act  is a reasonable restriction within the meaning of  cl. (6) of Art. 19 on the fundamental right of a citizen to carry on trade or business under Art. 19 (1) (g). It was  sought to  be impressed  upon us  that at any rate a transaction between  a retail  dealer and  a consumer should not be  subjected to the restriction placed by sub-s. (6) of s. 7.  The  Legislature  has  already  taken  care  of  this eventuality under sub-s. (2), of s. 7 of the Act.      That takes  us to  the  contention  that  there  is  no liability cast  on the  petitioners to  pay  market  fee  on transactions of  sale and  purchase of notified agricultural produce, livestock  and products  of livestock  taking place from their  business premises  in the  notified market area, but outside  the market  in that  area.  Alternatively,  the contention is  that there  is  no  correlation  between  the service and  the increase  in the rate of market fee from 50 paisa to  rupee one  per hundred  rupees of the price. It is suggested that  there were amounts held in surplus by almost all the  market committees and therefore there was no lawful justification for  the increase  in the  rate of market fee. There is no warrant for any of the contentions.      The contention  that there  is no liability cast on the petitioners to  pay market  fee on  transactions of sale and purchase of  notified agricultural  produce,  livestock  and products of livestock proceeds on a wrongful assumption that they can  still carry  on such  trade from their premises in the notified  market area,  but outside  the market  in that area. In  view of  the express  prohibition contained  in 1’ sub-s. (6)  of s  7, the  petitioners cannot  carry on  such trade by not resorting to the market proper. It is pertinent to observe  that a contravention of the provisions of sub-s. (6) of  s. 7  by persons engaged in the business of purchase and sale  of notified  agricultural produce,  livestock  and products of livestock is a penal offence under sub-s. (1) of s. 23  of the Act. The petitioners cannot be heard to say by committing a  breach of  sub-s. (6)  of s. 7 that since they effect their  transactions in  the notified market area, but outside the  market, there is no liability to pay market fee because there  is no  quid pro  quo i.  e. services  are not rendered outside the market.      There is  a fallacy  underlying the argument that since the services  are rendered  by the  market committees within the market 866 proper, there  is no  liability  to  pay  a  market  fee  on purchase or  sale taking  place in  the notified market area but outside the market. The contention does not take note of the fact  that the  establishment of  a regulated market for the purchase  or  sale  of  notified  agricultural  produce, livestock or  products of  livestock  is  itself  a  service rendered to  persons engaged  in the business of purchase or sale of  such commodities.  The duty  of a  market committee constituted under sub-s. (1) of s. 4 of the Act does not end with establishing  such number  of markets  in the  notified market area  under the  first part  of sub-s.  (3) but  also extends to the providing of such facilities in the market as the Government  may from  time to time by general or special order specify  under the  second  part  of  sub-s.  (3).  In exercise a of their powers under s. 33 of the Act, the State Government have  framed  the  Andhra  Pradesh  (Agricultural Produce & Live stock) Markets Rules, 1969. Chapter V relates to ‘Regulation of trading’. It would appear that Rules 48 to 53 are the machinery provisions for controlling the trade in notified agricultural  produce, livestock  and  products  of livestock in  a notified  area while  Rules 54  to 73 impose

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restrictions on  the carrying  on of  all such trade in such area. It  is clear  from the  provisions of s. 15 of the Act that the services to be rendered by the market committee and facilities to  be provided  are not  confined to  the market proper but extend throughout the notified area. We find that Chinnappa Reddy,  J. speaking  for himself and Jeevan Reddy, J.  in   Immidisetti  Ramakrishnaiah   &  Sons,  Anakapalli, represented by  I. Ramakrishana  Rao &  Ors. v. The State of Andhra  Pradesh,   represented  by  its  Secretary,  Food  & Agricultural by  Penta Kota  Sitaram &  Ors.(1)  repelled  a similar contention and observed:      "The argument proceed on the assumption that sales      and purchases  of notified  agricultural  produce,      livestock and  products of livestock in a notified      market area  could take  place  even  outside  the      market. That is an unfounded assumption. Section 7      (6) of  the Act  prohibits sales  or purchases  of      notified  agricultural   produce,  livestock   and      products of  livestock outside the market. It says      "notwithstanding anything  in sub-section  (1), no      person  shall   purchase  or   sell  any  notified      agricultural produce,  livestock and  products  of      livestock in  a notified  market area  outside the      market in that area." 867      Another  unfounded   assumption  of   the  learned      counsel was  that the  activities  of  the  market      committee and  the facilities  provided by it were      confined by  Act to  the  market  area  only.  The      establishment, maintenance  and improvement of the      market is one of the purposes for which the market      committee fund  might be expanded under Section 15      of  the  Act.  The  other  services  such  as  the      provision and  maintenance of standard weights and      measures,  the  collection  and  dissemination  of      information regarding all matters relating to crop      statistics and  marketing in  respect of  notified      agricultural produce,  livestock and  products  of      livestock, schemes  for the  extension or cultural      improvement of  notified  agricultural  produce  s      including the  grant of  financial aid  to schemes      for such extension or improvement within such area      undertaken by  Ir  other  bodies  or  individuals,      propaganda for  the  improvement  of  agricultural      produce, livestock  and products  of livestock and      thrift,  the   promotion  of   grading   services,      measures for  the preservation  of the foodgrains,      etc., are  not services  which are confined to the      market area  only. They  are  services  which  are      required to  be performed  by the market committee      and which  may be rendered throughout the notified      market area without being confined to the market."      In Sri  Vijaya  Cotton  Traders’  case,  supra,  Alladi Kuppuswami, C.  J. speaking for himself and Jeevan Reddy, J. followed the  earlier decision in Immidisetti Ramakrishnaiah & Sons’  case, supra,  and held  that  the  services  to  be rendered and  the facilities  to be  provided by  the market committees extended  throughout  the  notified  market  area without being  confined  to  the  market  proper.  The  view expressed by the High Court in these two cases is clearly in consonance with  the scheme  of the  Act.  lt  appears  that taking advantage  of the  ad-interim orders  issued by  this Court staying  prosecution under  sub-s. (1) of s. 23 of the Act, the  petitioners who  are big  merchants engaged in the business of  purchase  and  sale  of  agricultural  produce,

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livestock and  products of  livestock throughout  the State, are with  impunity  committing  breach  of  the  prohibition contained in  sub-s. (6)  of s.  7 of the Act. We trust that the market  committees in various parts R of the State shall take immediate  steps to  shift all  these  traders  to  the markets proper  of the  respective notified  market areas in the interests 868 of the  general public  and shall  also strictly enforce the provisions of  the Act,  the Rules  and the  bye-laws framed thereunder.      We   are   unable   to   appreciate   that   there   is irreconcilable conflict  between sub-s. (6) of 8. 7 and sub- s. (1)  of s.  12. These provisions are meant to achieve two distinct and  separate  objects  and  they  operate  on  two different planes.  Sub-s. (6)  of s. 7 imposes a restriction on a  trader  licensed  to  deal  in  notified  agricultural produce,  livestock   and  products  of  livestock  that  no purchase or sale in such commodities shall take place in any notified  area,   outside  the  market  in  that  area.  The constitutional validity  of sub-s.  (6) of  s. 7  is  beyond question as a reasonable restriction in the interests of the general public.  It would  frustrate  the  very  object  and purpose of  the legislation  if such  a restriction  was not imposed on  the traders.  Sub-s. (1)  of s. 12 is a charging provision and it empowers a market committee to levy fees on any notified  agricultural produce, livestock or products of livestock purchased  or sold  in the notified market area at such rate,  not exceeding  one rupee  as may be specified in the bye-laws,  for every  hundred rupees  of  the  aggregate amount for  which such  commodities are  purchased or  sold, whether for  cash or  deferred  payment  or  other  valuable consideration. Explanation  I thereto  by  a  legal  fiction provides that  all notified  agricultural produce, livestock or products of livestock taken out of a notified market area shall, unless  the contrary  is proved,  be presumed to have been purchased or sold within such area. Sub-s. (2) of s. 12 casts the  liability to  pay market  fee on the purchaser of such  agricultural   produce,  livestock   or  products   of livestock.      It was  contended that many of the petitioners are food grains dealers  licensed under the Andhra Pradesh Foodgrains Dealers Licensing  order, 1964 issued under sub-s. (1) of s. 3 of  the Essential  Commodities Act, 1955 and that they are required under  the terms of their licence to carry on their business  from   their  licensed  premises,  maintain  stock registrar, exhibit  price list  etc. The  petitioners having been licensed  as dealers under sub-s. (1) of s. 7 are bound by the  terms and  conditions of their licence and also they are subject  to the restrictions imposed by sub-s. (6) of s. 7. They  must comply  with the  provisions of  the Act,  the Rules and  the bye-laws  framed thereunder,  and effect  all sales  of   notified  agricultural  produce,  livestock  and products of  livestock under  the supervision and control of the market committee established under the Act. 869      Arguments in  these proceedings  have  revolved  around certain observations  of Untwalia,  J. in Kewal Krishan Puri and Anr  v. State  of Punjab  and Ors (1) where he, speaking for the Court, after referring to the judgment of Mukherjea, J. (as he then was) in the leading case of the Commissioner, Hindu  Religious   Endowments,  Madras  v.  Sri  Lakshmindra Thirtha Swamiar  of Sri  Shirur Mutt(2)  known as the Shirur Mutt case,  and the  dictum of  Latham, C. J. in Matthews v. Chicory Marketing  Board(3) upon which it was based, and the

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subsequent decisions  on the  subject,  drew  a  distinction between a  tax and  a fee.  Stress was  particularly laid on these observations  which, torn  out  of  context,  tend  to suggest that  there must  be actual quid pro quo between the prayer and  the market  committee i.e.  there must be actual correlation  between   the  service  rendered  by  a  market committee and  the prayer  of the  market fee, and that such service must  be In  relation to  each transaction. Emphasis was placed  on the following observations of Untwalia, J. in Kewal Krishan Puri’s case, supra:      1.     It  must  be  shown  with  some  amount  of           certainty, reasonableness or preponderance of           probability that  quite a substantial portion           of the  amount of  fee realized  is spent for           the special benefit of its prayers (p. 1230 &           H).      3.    A  fee is  levied essentially  for  services           rendered and  as such  there is an element of           quid pro  quo between the person who pays the           fee and  the public  authority which  imposes           it. (p. 1232 G)      2.       Service   means  service  in  relation-to  the           transaction,  property   or  the   institution  in           respect of  which he  is made  to pay the fee. (p.           1233 D) With utmost respect, these observations of the learned Judge are not  to be  read as Euclid’s theorems, nor as provisions of a statute. These observations must be read in the context in which they appear. 870      It is  however strenuously  urged on  the  strength  of these observations made in Kewal Krishan Puri’s case, supra, that the  market committees  have not  placed  all  relevant material to  show with reason able certainty that at least a good and  substantial portion  of the  amount  collected  on account of fees, may be in the neighborhood of two-thirds or three-fourths, was being spent for rendering services to the petitioners, nor  was there  any material  to  show  that  a substantial portion  of the  fee realized was actually spent for rendition of any special benefit to them. In relation to the  transactions  of  purchase  and  sale  of  agricultural produce, livestock and products of livestock effected by the petitioners, it  was. urged  that the  market committees did not  provide   any  additional  facilities  to  justify  the increase in  the rate  of levy  of  market  fee.  There  was therefore no  quid pro  quo between the increase in the rate of fee  from 50  paisa per  hundred rupees  in the  price to rupee one  and the  services rendered. To say the least, the contention is wholly devoid of substance.      There was  quite some  discussion at  the Bar as to the binding effect  of the  aforesaid observations  made by this Court in  Kewal Krishan  Puri’s case,  supra. With  greatest respect, the  decision in Kewal Krishan Puri’s case does not lay down  any legal  principle of general applicability. The decision  in   Kewal  Krishan   Puri’s   case   is   clearly distinguishable on facts. In that case, there was sufficient material showing  that the income from the market fee in the State  of  Punjab  had  become  a  source  of  revenue,  and therefore the increase the rate of market fee from Rs. 2 per hundred rupees  to Rs.  3 was  quashed. It  appears that the income of  almost all  the market committees was to the tune of several  lakes  of  rupees  per  year  and  every  market committee was  required under sub-s. (2) (a) of s. 27 to pay 30 per centum of its income to the Punjab State agricultural Marketing  Board   as  its  contribution  to  the  Marketing

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Development Fund  maintained under s. 25 of that Act. Due to the progressive increase in the rate of market fee from 0.50 p. to  Rs. 2  per hundred  rupees during  the course  of few years both the State Agricultural Marketing Board as well as the market  committees throughout  the State  were left with huge surplus  funds. The State Government in exercise of the powers vested  under s.  26 (xvii) and s. 28 (xvii) directed the  State  Agricultural  Marketing  Board  and  the  market committees throughout  the State  to contribute  rupees  one crore to  Guru Gobind  Singh Medical College at Faridkot. In the year  1974 under the directions of the State Government, all the  market committees  were  required  to  deposit  the surplus amounts lying with 871 them with  the State  Agricultural Marketing  Board and  the Board advanced  an interest-free  loan of rupees five crores to the  Punjab State  Co-operative  Supplies  and  Marketing Federation,   known   as   ’Markfed’.   Apart   from   these unauthorized expenditure,  the judgment  reveals that  there were surplus  funds to  the tune  of rupees nine crores with market committees and each of them was required to make huge donations of  Rs.  50,000  and  above  to  many  educational institutions.  Besides,   the  statement   of   income   and expenditure of  the Board for the year 1975-76 showed that a sum of  Rs. 1,28,000 was spent on general improvement of the municipal areas  and a sum of Rs. 95 lakhs and odd was spent on setting  up a  gober gas  plant. It would appear that the increase in  the rate  of market  fee from Rs. 2 to Rs. 3 in the year  1978 was  largely brought  about to compensate the market committees  for having  contributed Rs.  One crore to the medical  college at Faridkot. The decision really turned on the  provisions of  cl. (xvii)  of ss.  26 and  28 of the Punjab Agricultural  Produce Markets Act, 1961 which permits diversion of  the monies  lying in the Market Committee Fund and the  Marketing Development Fund by the market committees and the State Agricultural Marketing Board with the sanction of the  Board or  the State  Government, as the case may be, for any  purpose calculated to promote the general interests of the  Board or  the committees,  or the national or public interest.  The   decision  of  the  Court  was  rendered  by Untwalia, J. in these words:           "How ill-conceived  the second part of clause      (xvii) is?  Is it  permissible to spend the market      fees realized  from the  traders for  any  purpose      calculated  to  promote  the  national  or  public      interest ?  obviously not. No market committee can      be permitted  to utilize  the fund for an ulterior      purpose   howsoever   benevolent,   laudable   and      charitable the object may be. The whole concept of      fee will  collapse if  the amount  realized by the      market fees could be permitted to be spent in this      fashion."      In the  ultimate analysis,  the  Court  held  in  Kewal Krishan Puri’s  case, supra,  that so long as the concept of fee remains  distinct and  limited in  contrast to tax, such expenditure of the amounts recovered by the levy of a market fee cannot  be countenanced  in law.  A case is an authority only for  what it  actually decides  and not  for  what  may logically follow  from it.  Every judgment  must be  read as applicable to  the particular facts proved, or assumed to be proved, 872 since the  generality of  the expressions which may be found that there  are not  intended to be expositions of the whole law but governed or qualified by the particular facts of the

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case in  which such  expressions are  to be  found. It would appear that  there are  certain observations  to be found in the judgment in Kewal Krishan Puri’s case, supra, which were really not  necessary for  purposes of  the decision  and go beyond the  occasion and  therefore  they  have  no  binding authority though  they may have merely persuasive value. The observation made  therein seeking  to quantify the extent of correlation between the amount of fee collected and the cost of rendition  of service,  namely:  "At  least  a  good  and substantial portion  of the  amount collected  on account of fees, may  be in  the neighborhood  of two-thirds  or three- fourths, must  ba shown  with reasonable  certainty as being spent for  rendering services  in the market to the payer of fee", appears to be an obiter.      The traditional view that t ere must be actual quid pro quo for  a fee has under gone a sea change in the subsequent decisions. The  distinction between  a tax  and a  fee  lies primarily in  the fact  that a  tax is  levied as  part of a common burden,  while a  fee is  for payment  of a  specific benefit or  privilege  although  the  special  advantage  is secondary to  the primary  motive of  regulation  in  public interest. If  the element  of revenue for general purpose of the State predominates, the levy becomes a tax. In regard to fees there  is, and  must always be, correlation between the fee collected  and the  service intended  to be rendered. In determining whether  a levy  is a fee, the true test must be whether its  primary and  essential  purpose  is  to  render specific services to a specified area or class; it may be of no consequence  that the State may ultimately and indirectly be benefited  by it.  The power of any legislature to levy a fee is  conditioned by  the fact  that it  must be  "by  and large" a  quid pro  quo for  the services rendered. However, co-relationship between  the levy  and the services rendered expected is one of general character and not of mathematical exactitude. All  that is necessary is that there should be a "reasonable relationship"  between the  levy of  the fee and the services  rendered. If  authority  is  needed  for  this proposition, it  is to  be found in the several decisions of this Court  drawing a  distinction between  a  ’tax’  and  a ’fee’. Sea:  The Commissioner,  Hindu Religious  Endowments, Madras v.  Sri Lakshmindra  Thirtha Swamiar  of  Sri  Shirur Mutt, supra: H. H. Sudhundra Thirtha Swamiar v. Commissioner for Hindu Religious and Charitable Endowments, 873 Mysore;(1) The  Hingir-Rampur Coal  Co. Ltd. v. The State of Orissa and  Ors;(2) H.  H. Shri  Swamiji of  Shri Admar Mutt etc. v.  The Commissioner,  Hindu Religious  and  Charitable Endowments Department  and Ors  (3) Southern Pharmaceuticals and Chemicals  Trichur and Ors., etc. v. State of Kerala and Ors. etc.(4)  and Municipal Corporation of Delhi and Ors. v. Mohd. Yasin.(5)      There is  no genic  difference between a tax and a fee. Both  are   compulsory  exactions   of   money   by   public authorities. Compulsion  lies in  the fact  that payment  is enforceable  by   law  against   a  person  inspite  of  his unwillingness or  want of consent. A levy in the nature of a fee does  not cease  to be  of that character merely because there is an element of compulsion or coerciveness present in it, nor  is it a postulate of a fee that it must have direct relation to  the actual service rendered by the authority to each individual  who obtains  the benefit of the service. It is  now   increasingly  realized  that  merely  because  the collections  for   the  services  rendered  or  grant  of  a privilege or  licence are  taken to the consolidated fund of the  State  and  not  separately  appropriated  towards  the

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expenditure for  rendering the  service  is  not  by  itself decisive. Presumably,  the attention  of the  Court  in  the Shirur  Mutt   case  was  not  drawn  to  art.  266  of  the Constitution. The  Constitution no  where contemplates it to be an  essential element:  of fee that it should be credited to a  separate fund  and not to the consolidated fund. It is also increasingly  realized that the element of quid pro quo in the  strict sense is not always a sine qua non far a fee. It is needless to stress that the element of quid pro quo is not necessarily  absent in  every tax: Constitutional Law of India by  H. M.  Seervai, Vol.  2, 2nd  Edn., p.  1252, para 22.39.      Viewed  from   this  perspective,   the  conclusion  is inevitable that the observation made in Kewal Krishan Puri’s case that  "At least  a good  and substantial portion of the amount  collected   on  account  of  fees,  may  be  in  the neighborhood of  two-thirds or  three-fourths, must be shown with reasonable  certainty  as  being  spent  for  rendering services in the market to the payer of fee" was not intended to lay  down a  rule of  universal application  but it was a decision which must 874 be confined  to the special facts of that case. Otherwise it may  affect   the  validity   of  many   similar   marketing legislations undertaken during the past 50 years relating to the regulation of purchase and sale of agricultural produce, livestock and products of livestock and the establishment of markets in connection there with and the levying of a market fee in  lieu thereof  towards the  cost  of  rendering  such service by  different States  on the recommendations made in the Report  of the Royal Commission on Agriculture in India, 1928 and  of those  of many  high-powered bodies  of experts constituted  from  time  to  time  by  the  Centre  and  the different States.  In  the  subsequent  decision  in  Ramesh Chandra etc.  v. State of U.P. etc.,(1) Untwalia, J speaking for  the   Court  has   considerably   narrowed   down   his observations in  Kewal Krishan  Puri’s case at p. 116 of the Report saying  that ’the free realized from the payer of the fee has,  by and  large, to be spent for his special benefit and for  the benefit  of other  persons connected  with  the transactions of purchase and sale in the various Mandis.’ If the quantum  of quid  pro quo  was to  be quantified  to the extent as  indicated in  Kewal Krishan  Puri’s case  for the levy of  a fee  or cess, it may affect many other beneficent legislations brought  in by  the Centre  and the  States for rendering service  to a  specified area or a specified class or persons or trade or business in any local area. There are many other  observations in  Kewal Krishan Puri’s case which were really  not necessary  for purposes  of the decision in that case  and need  to be, clarified. The word ’fee’ cannot be said  to have  acquired a  rigid technical meaning during the past three decades and should not be given such a narrow construction.      The levy of market fee under sub-s. (1) of s. 12 of the Act is  correlated to the purposes mentioned in s. 15 of the Act. All  the moneys received by a market committee from the traders as market fee on transactions of sale or purchase of agricultural produce,  livestock and  products of  livestock taking place within the notified market area have to be paid into a fund called the Market Committee Fund under sub-s.(1) of s.  14 of the Act. All expenditure incurred by the market committee under  and for  purposes of  the Act  have  to  be defrayed out  of the  said Fund  and any  surplus  remaining after such expenditure, has to be invested in such manner as may be  prescribed. Under  sub-s. (2)  thereof, every market

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committee has to pay to the State Government out of its fund the cost  of any special or additional staff employed by the Government with 875 their consultation.  Under sub-s.  (3) the  market committee may grant  loans to  another market  committee  out  of  its surplus funds,  with the  previous  sanction  of  the  State Government, at  such rates of interest as may be prescribed. The purpose  for which  the proceeds of the Market Committee fund can  be expended are set out in s. 15 of the Act. There can be no doubt that the purposes mentioned viz. acquisition of site  for  the  market,  establishment,  maintenance  and improvement  of   the  market,  construction  of  buildings, maintenance of  standard weights  and measures, promotion of grading  services,   measures  for   the   preservation   of foodgrains etc.  etc. are  all purposes  which are extremely beneficial to the growers and the traders.      In the present case, there is no allegation anywhere by any of the petitioners, nor was any contention advanced that there was  any unauthorized expenditure by any of the market committees for  purposes not authorized by the Act. There is only a  bare assertion  on their part that there are surplus funds available with the market committees and therefore the increase in the rate of market fee from 50 paisa per hundred rupees to  rupee one  was without lawful justification. From the material  on record it is quite apparent that the income from  the  market  fee  derived  from  some  of  the  market committees  is   not  sufficient  to  meet  the  expenditure incurred by  them. That  apart, when the petitioners concede that they  do not  challenge the levy of market fee 50 paisa per hundred  rupees in  the year 1972, there can be no basis for challenging  the increase in the rate of market fee from 50 paisa  to rupee one in 1978. Surely the cost of rendering services has  correspondingly increased with the fall in the value of  rupee. In  the economic sense, 50 paisa of 1972 is certainly equivalent  to at least rupee one of today, if not more.      There  is   no  material   placed  on   record  by  the petitioners to show that the market committees are rendering no service.  Under the  scheme of the Act, there are certain obligatory duties  of a market committee. Sub-s. (3) of s. 4 provides that  every market committee shall establish in the notified area  such number of markets as the Government may, from time  to time,  direct for the purchase and sale of any notified agricultural  produce,  livestock  or  products  of livestock and shall provide such facilities in the market as may be  specified by  the Government  from time to time by a general or  special order.  Chapter V  provides for  various regulatory measures  in Rules  54 to 73 for the control of a market in that correct weigh- 876 ments would  be secured,  storage  facilities  provided  and equal powers  of bargaining  assured so that the growers may bring their  agricultural produce, livestock and products of livestock to the market and sell them at a reasonable price. There was  not a  whisper during the course of the arguments that the  market committees  were not providing the services as enjoined  by Rules  54 to  73. All  that was said is that there was  no due observance of the directions issued by the State Government  and the  Food  &  Agricultural  Department GOMs. No.  719 dated December 27, 1979 drawing the attention of the  market committees  to certain  basic amenities  like drinking water  for users  of the market, drinking water for the cattle,  shed for use of the users of yards etc. We were not referred  to any  specific instance  where  any  of  the

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market committees  have not  provided these basic amenities. Much emphasis  was however  laid on  the second  part of the aforesaid G.O. which reads :           "The Governor  of Andhra Pradesh also directs      the  market   committees  to   provide  the  other      facilities mentioned  below at the market yards in      course of time as and when funds permit.      1.   Rest House for Ryots.      2.   Electrification of Market yard.      3.   Auction-cum-Weighing shed.      4.   Auction Platforms.      5.   Internal Roads.      6.   Telephone Booth.      7.   Canteen.      8.   Office Building.      9.   Godown for use of Producer-Seller.      10.  Approach Roads.      11.  Library-cum-Club Building.      12.  Resting House for traders." 877      It will  be noticed  that these  facilities are  to  be provided by  the market committees in course of time ’as and when funds permit’. It  is   needless  to  stress  that  the question of  providing these  facilities would depend on the financial capacity of each market committee. That      would depend on  whether there  are sufficient  funds available at its disposal  in the  Market  Committee  Fund.  We  are  not impressed by  the submission that if a market committee does not have  sufficient funds to provide the special amenities, it should  borrow loans from the State Government under sub- s. (1)  of s.  18 of  the Act or the State Government should provide grant-in-aid  to such  market committee under sub-s. (2)(iii) of  s. 16  of the  Act. If  any  particular  market committee persistently  makes default  in not performing the duties imposed  on it  by or  under the  Act, or neglects or refuses to carry out any general or special direction issued by the  State Government under sub-s. (3) of s. 4 as regards providing  of   facilities  or   abuses  its   powers,   the petitioners have  the remedy  to take up the matter with the State Government. The State Government has ample power under s. 22  of’ the  Act to  direct the  supersession of  such  a market committee.      It is  obvious that the phrase ’prayer of the fee’ used by  this   Court  in   the  authorities  referred  to  above represents collectively  the class  of persons  to whom  the benefit is  directly intended  by  the  establishment  of  a regulated market in notified agricultural produce, livestock of products  of livestock  and not the actual individual who belongs to  that  class  i.e.  the  trader.  No  doubt,  the petitioners initially pay the market fee under sub-s. (2) of s. 12  of the  Act, but  there is passing on of liability by them to  the consumer  as part of the price. The observation in Kewal  Krishan Puri’s  case, supra,  as to the service to the ’payer  of the  fee’ must,  therefore, be  understood as meaning service to the users of the market. The services are rendered to  the users  of the  market i.e  the  growers  of agricultural produce, livestock or products of livestock and persons engaged  in the  business of purchase or sale of the same.      The contention  that the increase in the rate of market fee levied  by the market committees in the State under sub- s. (1)  of s.  12 of  the Act from 50 paisa to rupee one was illegal and invalid on the ground that there was no quid pro quo i.e.  there was  no correlation  between the increase in the rate  of  market  fee  and  the  service  rendered  must

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therefore fail. 878      There still  remains the  question that  if purchase or sale of paddy has suffered market fee in the hands of a rice miller, whether  subsequent purchase  or sale  of rice  by a miller to  a trader  or by a trader to a trader should again be subjected  to payment  of market  fee. The  contention is that under  Rule 74(1)  of the  Andhra Pradesh (Agricultural Produce &  Livestock) Markets Rules, 1969 no such market fee is payable  on rice  produced from  paddy. The  same is  the contention with regard to cotton seed extracted from cotton. Rule 74(1) of the rules reads as follows:           "74. Market Fees: (1) The fees leviable under      sub-section  (1)   of  section   12  on   notified      agricultural produce,  livestock and  products  of      livestock, if  paid to  a Market  Committee within      the State shall not be collected by another Market      Committee when such notified agricultural produce,      livestock or  products of  livestock  are  brought      into the  notified market  area of  another Market      Committee for  the purpose of processing, pressing      packing, storage,  export and on sales effected in      the course  of commercial transactions between the      licensed traders,  and the  licensed  traders  and      consumers subject  to production  of such evidence      as may  be prescribed  in the  bye-laws about  the      payment of market fees from where it was brought:           Provided that  the fees  shall be  levied  on      notified  agricultural   produce,   livestock   or      products  of   livestock  when  such  agricultural      produce, livestock  or products  of livestock  are      sold in  auction or in any other manner prescribed      in the  bye-laws in  the Market either directly or      through Commission  Agents even  though  purchased      already in the same market or same other market or      place within the State". It is  contended that  the whole  object and  purpose behind Rule 74(1)  is to  prevent multi-point levy of market fee on the same commodity. The  submission  that  no  such  fee  is payable on  rice is also based on the following observations of Untwalia,  J., speaking for the Court in Ramesh Chandra’s case, supra:           "If paddy is purchased in a particular market      area by  a rice  miller  and  the  same  paddy  is      converted into 879      rice and  sold then the rice miller will be liable      to pay  market fee  on his  purchase of paddy from      the agriculturist-producer under sub-clause (2) of      section 17(iii)(b). He  cannot  be  asked  to  pay      market fee  over again  under  sub-clause  (3)  in      relation to the transaction of rice".      The learned Judge then went on to say:           "If, however,  paddy is  brought by the rice-      miller from  another market  area, then the Market      Committee of  the area  where paddy  is  converted      into rice  and sold  will be  entitled  to  charge      market  fee   on  the   transaction  of   sale  in      accordance with sub-clause (3)".      The view  that the market fee is payable on purchase or sale of  rice stems from the premise that since paddy is de- husked into  rice there cannot be levy of market fee at both the stages  i. e. On purchase of paddy by a rice miller from a producer  and again  on purchase or sale of rice by a rice miller to  a trader or by a traded to a trader. The question

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is whether  the fee is payable at both the stages ? It would all depend  upon the  scheme of  each Act.  The decision  in Ramesh Chandra’s  case, supra,  turned on  a construction of sub-clause (2)  of s.  17 (iii)  (b) of  the  Uttar  Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, as amended by U.P. Act 7 of  1978. It  was conceded  in that  case on behalf of the State Government and the market committees that there cannot be any  multi-point levy  of market  fee in  the same market area. Under,  sub-clause (2)  of s. 17 (iii) (b) of that Act if in  agricultural produce  is purchased  from  a  producer directly, the  trader is  liable to  pay market fee but when the trader  sells the  same produce  or any  products of the same produce  to another  trader, neither the seller nor the purchaser can be made to pay the market fee under sub-clause (3). The  scheme of  the Act  with which  we  are  concerned appears to be entirely different. Under Sub-s. (1) of. s. 12 of the  Act, a  market committee is empowered to levy market fee on  any  notified  agricultural  produce,  livestock  or products of  livestock purchased  or sold  in  the  notified market area.  It would appear that every purchase or sale of any notified  agricultural produce, livestock or products of livestock attracts  the levy  of market  fee. One  is apt to think that  rice  and  paddy  are  the  same  commodity  and therefore there  is double  taxation but,  in reality, it is not so.  There is distinction between ’paddy’ and ’rice’ and although paddy  is milled  into rice  by the  process of de- husking, they  are two  separate  and  distinct  commercials commodities and have both 880 been separately  specified as  notified agricultural produce in Schedule  II of  the Rules as items 1 and 2 respectively. On the plain language of sub-s. (1) of s. 12 of the Act, the market fee  is leviable  on both on purchase paddy by a rice miller from  a producer and also on purchase or sale of rice by a  miller to  a trader or by a trader to a trader because there is  service rendered  by a market committee at each of the stages.      It appears  that the  State Government  in the Food alc Agriculture Department  by its  memo dated  March  23,  1978 informed the  Director of  Marketing, Andhra Pradesh that it had been  decided to  amend Rule  74 in order that no market fee  shall   be  leviable   on  the   sale  or  purchase  of agricultural produce  manufactured  or  extracted  from  the agricultural produce  in which  such fee was already levied. Pending such amendment, he wag directed to advise the market committees not  to press  for recovery  of arrears of market fee on  purchase or  sale of  rice when such fee had already been collected  on purchase or sale of paddy. The matter was however re-examined  by the  State Government with reference to the  provisions contained  in sub-s.  (1) of s. 12 of the Act. The  State Government  were of the view that market fee was leviable under sub-s. (1) of s. 12 on the paddy if it is sold in  the notified marker area and it is also leviable on rice if  it is  put to  sale irrespective  of the  fact that whether market  fee was  paid earlier  on paddy or not. That view proceeded  upon the  basis that the market committee is required  to   supervise  and   control  the  sale  of  such commodities at both the stages and was therefore entitled to recover market  fees both  on  paddy  and  rice.  The  State Government accordingly  issued GOMs  No. 136 dated March 26, 1981 to the effect           "Government on  reconsideration decided  that      Rice need  not be exempted from the levy of market      fees even  if the  Paddy from  which the  Rice  is      extracted was  subject to market levy, orders were

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    accordingly issued  in the  Memo second above that      market fees  should be  levied both  on paddy  and      rice.           The  preliminary  notification  proposing  to      amend rule  74 of the A.P. (Agricultural Produce &      Livestock) Markets  Rules,  1969  issued  in  G.O.      first read above and published at pages 227-229 of      the Rules  supplement  to  Part  II  of  the  A.P.      Gazette  No.   23  dated   15.6.1978  is  here  by      cancelled." 881      In view  of this  clarification, it  follows that paddy and rice  having both  been  notified  to  be  two  separate agricultural commodities, upon the language of sub-s. (1) of s. 12  of the  Act, market  fee is  leviable both on sale of paddy by  a producer  to a  rice miller  and on purchase and sale by a miller to a trader or by a trader to a trader. The question Still  remains whether  in view  of r.  74 (1)  the power of  a market  committee to  levy market  fee  on  such transactions is  in any  way affected:  and if  so, to  what extent., The  words used  in 3  r. 74  (1)  are:  "The  fees leviable under  sub-s. (1) of 8. 12 on notified agricultural produce, livestock  and products  of livestock, if paid to a market committee within the State, shall not be collected by another market  committee",  when  the  conditions  set  out therein are  3 fulfilled.  Rule 74  (1) postulates  that  no market fee  leviable under  sub-s. (1)  of s.  12  shall  be collected  by   another  market  committee:  (1)  When  such notified agricultural  produce,  livestock  or  products  of livestock on  which market  fee has  already been  paid to a market committee  within the  State,  is  brought  into  the notified market  area of  another market  committee for  the purpose of  processing, pressing,  packing, storage,  export and (2)  on sales  effected  in  the  course  of  commercial transactions between  licensed traders, and licensed traders and  consumers.   Use  of  the  word  ’and’  makes  the  two conditions conjunctive. The exemption from payment of market fee over  again to  such other  market  committee  claimable under r.  74 (1)  is however  subject to  production of such evidence as  may be  prescribed in  the bye-laws  about  the payment of  market fee to the market committee from where it was brought.      The question  is not by any means free from difficulty; but after  carefully considering the argument which has been addressed to us we have come to the conclusion that there is no reason why the word ’and’ should be read disjunctively as ’or’. Any  such construction  would, in our opinion, produce an unintelligible and absurd result and would be against the clear  intention  of  the  Legislature.  It  would  be  more appropriate in  the context of sub-s. (6) of s. 7 of the Act and sub-s. (1) of s. 12 of the Act to read the word ’and’ in r. 74 (1) conjunctively. The critical words of r. 74 (1) are "brought into  the notified area of market committee for the purpose of  processing, pressing, packing, storage, export", subject of  course to  the condition  that  market  fee  has already been paid on such commodity under 1 sub-s. (t) of s. 12 of  the Act  to a  market committee within the State on a reasonable construction of r. 74 (1), the legal consequences set forth must ensue. If paddy is subjected to levy 882 of a  market fee  on purchase  or sale  by the producer to a miller in  a notified  market area  by  a  market  committee within the  State is  taken to  the notified  market area of another market committee for being processed i. e. de-husked into rice  and sold  by a  rice miller  to a  trader or by a

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trader to a trader in the course of commercial transactions, there cannot  be any  levy of market fee on such purchase or sale of rice in another notified market area. If that be so, it must logically follow that the subsequent sale of rice in the notified market area of the same market committee cannot be subject  to the levy of market fee on purchase or sale of rice by  a miller  to a trader or by a trader to a trader if sale or  purchase of  paddy within such notified market area has suffered  the levy  of market  fee. This  is  of  course subject to  the qualification that such sale or purchase has taken place  in the  notified market  area, but  outside the market in  that area,  as enjoined  by the  proviso to r. 74 (1).      R. 74  (1) is  not very  happily worded but one part of its meaning  is clear.  It was obviously introduced to grant exemption from  payment of market fee on sale or purchase of agricultural produce,  livestock or products of livestock on which such  fee has  already been levied under sub-s. (1) of s. 12  by a  market committee within the State. According to the terms  of r.  74 (1)  read with the proviso thereto, the fee leviable  under sub-s.  (1) of  s. 12  on  any  notified agricultural produce, livestock or products of livestock, if paid to  a market  committee within  the State, shall not be collected by  another market  committee when  such  notified agricultural produce,  livestock or products of livestock is brought into the notified , market area of such other market committee for  the purpose of processing, pressing, packing, storage, export  and on  sales effected  in  the  course  of commercial transactions  between licensed  traders, and  the licensed traders and consumers. This is of course subject to production of such evidence as may be prescribed in the bye- laws about  the payment  of market  fees from  where it  was brought. Upon  the construction  placed by us, the exemption under r.  74 (1) is also claimable if such transactions take place within  the notified  market area  of the  same market committee.      The normal function of a proviso is to except something out of  the main  enacting  part  or  to  qualify  something enacted therein  which but  for the  proviso would be within the purview of the enactment. Proviso to  r. 74 (13 is added to qualify  or create  an exception. By reason of proviso to r. 74 (1), no exemption is claimable when the 883 purchase or  sale  of  any  notified  agricultural  produce, livestock or products of livestock takes place by auction or in any other manner prescribed in the bye-laws in the market (in contradistinction  to the  notified market  area) either directly or  through commission agents even though purchased in the  same market or some other market or place within the State. In other words, r. 74 (1) lead with the proviso means that if  the notified  agricultural  produce,  livestock  or products of  livestock is  sold within the market maintained by a  market committee,  it is  liable to  pay market fee on each such sale. It does not matter whether such agricultural produce, livestock or products of livestock has already been subject to  payment of market fee within the notified market area of another market committee.      Learned counsel  for  the  State  strenuously  contends against the  taking of  this view  because  of  its  serious ramifications  on   the  income  of  the  market  committees throughout the  State. It  is no  doubt true that this would result in  the market committees being deprived of the power to levy market fee on several items of notified agricultural produce, livestock or products of livestock shown separately in Schedule II of the Rules. but that is a consequence which

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cannot be  avoided  on  the  language  or  r.  74  (1).  The exemption from  payment of market fee under r. 74 (1) on any notified agricultural  produce,  livestock  or  products  of livestock brought  into  the  notified  market  IG  area  of another market  committee for  the purpose mentioned therein is however  claimable only on production of such evidence as may be  prescribed in  the bye-laws  about  the  payment  of market fees  to the  market  committee  from  where  it  was brought. The  burden of  establishing the necessary facts to attract the  exemption would  lie on the petitioners. Unless the requirements of r. 74 (1) are satisfied, the petitioners are not entitled to any relief.      There is very little that we could add in the connected matters. The  question as  to the constitutional validity of sub-s. (6) of s. 7 of the Act and sub-s. (1) of s. 12 of the Act which is common to Writ Petition No. 1286 of 1973, Civil Appeal No.  2108 of  1972 and  Civil Appeal No. 4013 of 1982 stands disposed  of. The  question regarding the validity of the notification  issued by  the State  Government declaring rice to be a notified agricultural produce under s. 2 (i) of the Act  and that  declaring the  notified  market  area  of Kothavalasa   Market   Committee   for   the   district   of Visakhapatnam under sub-s. (4) 884 of s.  4 of  the Act  has not  been pressed  at the hearing. Arguments in  these matters  were more  or less the same and they have been dealt with in the judgment.      The result therefore is that all the writ petitions and the connected  appeals must  fail  and  are  dismissed  with costs. P.B.R.                         Appeals & Petition dismissed. 885