16 October 2019
Supreme Court


Case number: C.A. No.-008015-008016 / 2019
Diary number: 8724 / 2010





CIVIL APPEAL NOS.8015­8016 OF 2019  (Arising out of SLP (C) Nos.24397­24398 of 2010)



STATE OF PUNJAB & ORS. ETC.                    …RESPONDENT(S)


CIVIL APPEAL NOS. 8017­8026 OF 2019  (Arising out of SLP (C) Nos. 28275­28284 of 2015)

CIVIL APPEAL NOS.8028 OF 2019  (Arising out of SLP (C) No.2034 of 2017)

CIVIL APPEAL NOS.8027 OF 2019 (Arising out of SLP (C) No.33899 of 2016)

CIVIL APPEAL NOS.8029  OF 2019 (Arising out of SLP (C) No.15310 of 2017)


Deepak Gupta, J.

Leave granted.



2. Civil Appeal Nos.8015­8016/2019 @ SLP (C) Nos.24397­

24398 of 2010, arise out of judgment dated 20.05.2009 whereas

Civil  Appeal  No.8017­8026/2019 @ out of  SLP(C)  Nos.  28275­

28284 of  2015,  arise  out  of judgment  dated 06.01.2015,  Civil

Appeal No.8028 of 2019 @ out of  SLP (C) No.2034 of 2017, arise

out of judgment dated 18.05.2016, Civil Appeal No.8027 OF 2019

@ out of SLP (C) No.33899 of 2016, arise out of judgment dated

24.05.2016 and Civil Appeal No.8029 OF 2019 @ out of SLP (C)

No.15310 of 2017, arise out judgment dated 18.05.2016,

delivered by the Punjab and Haryana High Court.

3. The aforesaid appeals are being disposed of by a common

judgment since they involve common questions of law.

4. In the first case, challenge was laid to various provisions of

The Punjab State Agricultural Marketing Board (Sale and transfer

of Plots) (First Amendment) Rules, 2008 (hereinafter referred to

as the 2008 Rules), and Rule 3(iii) and (iv) of The Punjab State

Agricultural Marketing Board (Sale and Transfer of Plots) Rules,

1999 (hereinafter referred to as the 1999 Rules).  The High Court

held these Rules to be valid.  



5. In the second group of appeals, the High Court vide

judgments dated 06.01.2015 and 18.05.2016 interpreted the

Rules, holding that a person can furnish adequate proof of his

working in the de­notified market yard even if he did not hold a

licence on the cut­off date.

6. To appreciate the issues in hand it  will be pertinent to

mention that the original writ petitioners before the High Court

are licenced traders of agricultural produce and doing their

business of sale and purchase of agricultural produce in different

Mandis in the State of Punjab.   In terms of the Punjab

Agricultural Produce Markets Act, 1961 (hereinafter referred to as

the Act of 1961), this work can only be carried out in Mandis or

Markets set up for this purpose.   Most of the petitioners were

licenced dealers working in the old markets.   

7. As a town or city grows the grain market has to be shifted.

The old market is de­notified and a new market is set up.   The

dealers who were doing this work in the old market applied for

allotment of plots/shops in the new grain market.   Their

applications having been rejected, hence the writ petitions.  The

High Court did not grant any relief in the writ petitions decided in



2010, and the dealers have filed appeals before this Court.  In the

second group of petitions which were decided in 2015 & 2016 the

High Court granted some relief to the dealers.  Hence, the market

boards are in appeal before us.

8. We  are  concerned  with two  sets  of  Rules, viz., the  1999

Rules and the 2008 Rules. The case of the appellants is that the

Rules are against the judgment of this Court in Labha Ram and

Sons  and Others  vs.  State  of  Punjab and Others1  wherein

while interpreting the provisions of the Punjab New Mandi

Townships (Development and Regulation) Act, 1960 (hereinafter

referred to as the Act of 1960), it was held that the Government

has an obligation to provide sufficient accommodation to all the

existing licence dealers with regard to the handicaps they

suffered due to the creation of new market area.  This Court also

held  that the dealers who were already  functioning  in  the de­

notified markets should not be made to compete with new

entrants.   This Court, further directed that the Government

should fix a reasonable rate above the reserve price for such old

licenced dealers.   It  would be pertinent to mention that  when

1(1998) 5 SCC 207



Labha Ram’s  case (supra) was decided there was no provision

for preferential allotment to the old dealers.   They had to take

part in  auctions and pay  the  market  price.   It  was after this

judgment that the 1999 Rules were notified.  Relevant portion of

Rule 3 of the 1999 Rules reads as follows:­

“3.      Sale of plots ­  All  plots in the  markets  developed by the Board or Committees shall be disposed of by way of open auction or allotment in accordance with the provisions of these rules:

Provided that the plots will be allotted to the licenced dealers of old market which are denotified resulting in displacement of such licenced dealers on free hold basis for conducting business of  purchase or sale  of  agricultural  produce  in  the new markets on the following terms and conditions, namely:­

(i) xxx                  xxx                  xxx

(ii) the allotment price shall be fixed at thirty five percent above the reserve price in the markets where no auction has so far been held;

(iii) only those licencees shall  be eligible for  allotment  of plots on the price specified in clauses (i)  and (ii)  who have been granted licenses in the old denotified markets for a minimum period of  five years before the date of allotment.  Such licencees must have submitted returns in Form M appended to the Punjab Agricultural Produce Markets (General) Rules 1962 for the last four years out of these five years.  The eligibility in respect of five years continuity shall  be taken with effect from the date of notice inviting applications for allotment;

(iv) xxx                  xxx                    xxx

(v) the licence should have been in possession of an independent premises either as a owner or a tenant in the old market;

(vi) To    (xiii)    xxx        xxx                    xxx



9. The 1999 Rules were further amended by the 2008 Rules by

which various amendments have been made in Rule 3 of the 1999

Rules.  The relevant amendments are extracted as under:­

“4 In the said rules, in rule 3–

(a) before the existing proviso, the following proviso shall be added, namely:­

Provided that not more than fifty per cent of the available plots shall be disposed of by way of allotment and the process of  allotment shall  be completed before conducting the sale by auction.

(b) at the existing proviso, which has been re­ numbered as the second proviso:­

i for the word “provided”, the “provided further” shall be substituted; and

ii   for condition Nos.(ii) and (iii), the following conditions shall be substituted, namely–

(ii) the allotment price shall be fixed at the five per cent, above the reserve price in the markets, where no auction has so far been held;

Provided that no corner plot shall be allotted by way of allotment.   The corner plot shall be allotted by way of auction only, by adding ten per cent extra cost to the reserved  price, fixed for plots, other than the corner plots.

(iii) only those licencees shall be eligible for allotment of plots on the price, specified in clauses (i) and (ii), who have been granted licences in the old denotified markets for a minimum period of three years before the date of allotment.  Such  licences must  have submitted returns in Form M appended to the Punjab Agricultural Produce Markets (General) Rules, 1962 for  all three  years  or such licencee shall have to furnish adequate proof of working in the denotified old markets.  In accordance with the



provisions of Form ‘H’ and Form ‘J’, as specified in the Punjab Agricultural Produce Markets (General) Rules, 1962 read with the provisions of Form ‘F’, as specified in the bye­laws of the Market Committee for the aforesaid period of three years.  The period of three years referred to above shall be counted with effect from the date of notice inviting applications for allotment;

Provided that only those licensees shall be eligible for allotment of  plots,  who have  transacted  the business of sale and purchase of agricultural produce  for  an amount,  not less than  five lacs rupees per annum during last three years.

(iii­a)  to (xiii)    xxx           xxx           xxx”

It would be appropriate to make a comparative chart of both the

Rules with regard to allotment of shops which is as follows:­

1999 Rules 2008 Rules Price of plot was reserve rate +35%.

Price of plot was reserve price + 5%.

Submission of ‘M’ return was mandatory.

In case record of  ‘M’ return is not available, proof of work by producing Heap Register ‘J’ Form and Auction Register can be produced.

Business for 5 years was required for allotment of a plot.

Business for 3 years is required for allotment of a plot.

If there was new issuance of licence  during the last  5 years, firm was not eligible for allotment of plot.

In case  new  licence is issued within  3 months  in the  same name and title of the firm, the case can be considered for allotment of plot.

Only one shop could be allotted against one independent shop.

Allotment of plots of two firms working in the same premises could be considered.

There was no provision for allotment of plot in case of dissolution of the firm during the last five years.

On dissolution of  firm and on issuance of new licence in the same name and title of the previous firm, case for allotment of plot can be considered.

No discount was given for depositing the amount in lump

There is a cash discount of 2% on depositing the lump sum



sum. amount. Plot after allotment could not be transferred for a period of 7 years.

Period for transferring the plot has been reduced to 5 years.

10. An analysis of the Rules of 1999 and 2008 makes it clear

that 50% of the respective plots in any market are to be

auctioned and remaining 50% are to be given at a premium above

the reserved price.  In the 1999 Rules the premium was 35% and

under the 2008 Rules the premium is 5%.   The period of

business vide the 1999 Rules was 5 years and was reduced to 3

years under the 2008 Rules.  It is more than obvious that 2008

Rules are much more liberal.

11. As far as the Constitutional validity of these Rules is

concerned, we find nothing in the Rules which is violative of any

provisions of the  Constitution  including Article  14.  The main

contention is that the Rules violate the mandate  laid down by

this Court in  Labha Ram’s  case (supra).   Another three Judge

Bench of this Court in Prem Chand Trilok Chand and Others

vs.  State of Haryana and Others2  also made similar


2 1989 Supp(1) SCC 286



12. The contention of the appellants is that as per the law laid

down by this Court, all the old dealers should be provided

shops/plots in the new market at the concessional rate.  We are

unable to accept this contention.   The judgment relied upon by

the  appellants  were  given  in light  of the  Rules  which did  not

make any reservation  whatsoever for existing licence  holders.

Now, 50% of the shops are reserved for the existing licence

holders but some conditions have been laid down.   We are

concerned mainly with two conditions.  The first condition is that

a person must be having a licence for 3 years; and the second

condition is that the dealer must have an annual turnover of Rs.5

lakhs in each of the three financial years.   We find that these

conditions are salutary in nature.  These are necessary to ensure

that only those dealers who have been in the trade for 3 years or

more will be eligible for allotment of plots/shops.  Similarly, only

those dealers who have a minimum turnover of Rs. 5 lakhs in

each financial year are eligible.  On the one hand the old dealers

want that they should not be forced to compete with new people

in the business and, on the other hand there is a self­defeating

argument that the criteria of 3 years should not be there.  If such



a criteria was not there, then anybody would become eligible to

get a licence even if he started business a day prior to the date of

inviting applications.   

13. Similarly, the requirement of having Rs.5 lakhs as annual

turnover is to ensure that only those dealers get shops/plots who

are actually engaged in the business.  The High Court has noted

that the Government has fixed the price of wheat at Rs.1080/­

per bag/quintal and the annual turnover would be achieved by

sale or purchase of only 500 bags.   A person who does not do

business  of even 500 bags in  a  year  cannot  claim  that  he is

entitled to a shop at a concessional rate.   The allotment of shop

cannot be made a bounty or lottery for those who are transacting

no or very little business but want to get shops/plots at

concessional rate.   

14. We may also point that a new market does not come into

being overnight.  First, land has to be acquired, then plans have

to be approved and only thereafter process of setting up a new

market begins.   The public, especially those in the trade of

agricultural produce know years in advance that a new market is



being set up.  If there are no conditions like the ones laid down in

the Rules, any  person would get a licence, not transact any

business,  and after  a few months  apply for  a  new shop at  a

concessional rate.  This  would  defeat the  purpose  which  was

sought to be highlighted by this Court in Labha Ram and Prem

Chand’s  case (supra).   Therefore, according to us, both the

conditions of 3 years and having Rs. 5 lakhs turnover per

financial year are reasonable and not violative of Article 14 of the


15. Therefore, we find no merit in the appeals challenging the

Constitutional validity of the provisions.

16. The next issue relates to the judgments, in the second batch

of cases where the Market Board is in appeal before us.  We have

made reference to Rule 3(iii) above, which provides that to prove

the turnover, the dealer is required to produce Form ‘M’ which is

in the nature of a daily return, to be filed by the licensed dealer

with the Market Committee/Board under Rules 29(3) and 31(1) of

the Punjab Agricultural Produce  Markets (General) Rules, 1962

(hereinafter referred to as 1962 Rules). In the absence of Form ‘M’

the dealer can rely on Form ‘H’ and ‘J’.   Form ‘H’ is an auction



register to be maintained by every dealer under Rule 24(8) of the

1962 Rules.  Form ‘J’ is the sale voucher to be maintained by the

dealer under Rule 24(14) of the 1962 Rules.   The Rule is clear

that if the dealer produces Form ‘M’ then that will be taken into

consideration.  In case the dealer does not produce Form ‘M’ then

he can prove his turnover by producing Forms ‘H and J’.  These

have to be read along with Form ‘F’, which is the form of renewal

for licence.  The High Court held as follows:­

“...Therefore, Form ‘F’  is not the only document required for determination of eligibility of an old licensee for allotment of a plot, but the independent adequate proof of working in the de­ notified market yard is required to be considered to determine the eligibility of the old licensees for allotment of plots.

Rule 3(iii­a) of the Rules deals with a situation where after the expiry of the licence, a fresh licence is issued in the name of the same firm or even after the splitting of firm, but when the licence is issued in the name of same firm, as an entity eligible  for allotment of a plot on concessional basis.  Such provision provides the period prior to issuance of new licensee to be taken into consideration for allotment of plot.”

17. We are unable to accept the reasoning of the High Court in

this regard.   Licence is mandatory and no person can carry on

business in an agricultural market without having a licence.  The

Rules provide that renewal of the licence should be applied for

one month before the expiry of the previous licence.   The Rules

further provide that if the licence is granted within one month of



its expiry then its renewal will be from the date of expiry of the

earlier licence,  meaning that it  will relate  back to the  date  of

original licence.

18. Rule 3(iii­a) of the 2008 Rules provides an even bigger

window for allotment of plots and lands to those licence holders

whose licences have expired but were renewed or  fresh license

obtained within  3  months  of the  expiry  of the  old license.  A

dealer who gets his license renewed or obtains fresh license

within 3 months of the expiry of the old license, is not considered

a new  license,  and  for  the purpose of  allotment deemed to be

eligible.  The Rules provide that if a licence is not renewed within

1 month of its expiry, it shall be treated to be a fresh licence.  The

High Court has gone wrong in holding that even if the gap

between the expiry of old licence and issuance of new licence is

more than 3 months, the dealer can still furnish adequate proof

of working in the de­notified market yard. We are clearly of the

view that once the gap is more than 3 months the same cannot be

condoned unless the dealer gives an explanation to the

satisfaction of the Market Board, with which issue we shall deal

later on.  



19. We may point  out  that the  learned counsel  appearing  for

dealers has been at pains to point out that in some cases the

licence could not be renewed within 1 month or even within 3

months because of reasons beyond the control of licensee.   One

example given is where the original dealer died leaving a minor as

his heir.  It has also been contended that there are some dealers

who have been working for a long period of time, may be 20 years

but in the last 3 years, in one year, there is a slight short­fall to

meet the target of Rs.5 lakhs turnover.   It  is contended that if

these dealers could satisfy the Market Committee/Board for the

reasons of gap in licence or short­fall in trade they should not be

denied shops in the new markets on allotment basis.

20. On the other hand, learned counsel appearing for the Board

submits that the dealers must comply with the Rules and if they

fail to comply with the Rules and the conditions laid therein, and

if the dealers are unable to fulfil all the conditions, they cannot be

allotted shops.

21. “§271. Miscellaneous Implied Exceptions from the Requirements of Mandatory Statutes, In General.—Even where a  statute is  clearly  mandatory or  prohibitory,  yet, in many instances, the courts will regard certain conduct beyond the prohibition of the statute through the use of various devices or principles.  Most, if not all of these devices find their justification in considerations of  justice.   It is a well known



fact that often to enforce the law to its letter produces manifest injustice, for frequently equitable and humane considerations, and other considerations  of a closely related  nature,  would seem to be of a sufficient calibre to excuse or justify a technical violation of the law.”3

We are in agreement and approve the aforesaid passage because

the Rules must be read in a reasonable manner.  In cases like the

present, where the old dealers are to be allotted shops if they can

satisfy the concerned authority, be it the market committee or the

board that a particular condition could not be met for a short

period due to reasons beyond the control of the dealer, then even

though he may not be in strict compliance of the rules, the power

of relaxation must be read into the Rules.   We may refer to two

instances from the cases before us.  In the case of appellant M/s

Lachhman Dass Krishan Baldev, the dates of renewal of licence

was 06.09.2005, and the turnover for three years was Rs.

13,53,241, in 2005­06, Rs.21,19,272/­ in 2006­07 and

Rs.23,65,574/­in 2007­08.  It is stated that there was a delay of

few months in obtaining the renewal because a minor was

involved.  We are not going into the merits, but if that be so, then

a case would be made out for condonation of such minor

3  Crawford’s Interpretation of Laws, by Earl T.Crawford, Saint Louis Thomas Law book Company  1940 §271, pg. 539



variation.   Similarly, in the case of Walaiti Ram Charan Dass &

Ors., the licence was held for more than 13 years and there is a

shortfall of Rs. 1,28,000/­ and odd in the year 2005­06, whereas

the turnover in the next two years is much above Rs.5 lakhs. His

case may have to be considered sympathetically.

22.    We make it clear that since we are upholding the validity of

the Rules, deviation from the Rules can only be done if it  has

occurred due to reasons beyond the control of the dealer.   One

example of such reason can be if the dealer being the sole

proprietor is admitted in hospital, or is otherwise incapacitated,

which may either affect the turnover or the renewal of the licence.

This is done only to avoid injustice by following letter of the law

and not the spirit thereof.  Every law must be read in an equitable

and humane manner.  Only technical violations can be condoned

and not violations which go to the root of the matter.   

23. We, therefore, dispose of the appeals with the following


(1)      The Rules of 1999 and 2008 are legally valid;



(2)       Any person who has obtained a license for the first time must have a valid licence for a period of more than 3 years;

(3)     In case of renewal of license the Rules provide a window of 3 months as discussed above.  We further direct that if any dealer had submitted a  complete  application  for renewal  prior to the expiry of his licence but the licence was not renewed for 3 months for no fault of the dealer, then he would be entitled to count that period as a period of licence.

(4)   We make it clear that other than this, a dealer must have a license and a person who has not renewed his  license without justifiable cause, cannot get any benefit.

(5)     As far as proof of turnover is concerned, the primary evidence is Form ‘M’ and in the absence of form ‘M’, Form ‘H’ and ‘J’.   No other document can be taken into consideration for proving the turnover.

24. We had asked the counsel for the Board to give us a list of

the position regarding availability of plots and shops in various

Mandis.   The list has been filed which shows that even now a

large  number of  plots are available in the  State of  Punjab in

different Mandis for  allotment.  As such the Board/Committee

should reconsider the case  of those  where there  are  marginal

deficiencies, which deficiency occurred due to reasons beyond the

control of the dealer.   This reconsideration  be done  within 3




25. With the above observations all the appeals stand disposed

of.  Pending application(s) if any shall also stand disposed of.

..…………………..…J. (Deepak Gupta)

..……………………..J. (Aniruddha Bose)

New Delhi October 16, 2019