WALAITI RAM CHARAN DASS Vs STATE OF PUNJAB .
Bench: HON'BLE MR. JUSTICE DEEPAK GUPTA, HON'BLE MR. JUSTICE ANIRUDDHA BOSE
Judgment by: HON'BLE MR. JUSTICE DEEPAK GUPTA
Case number: C.A. No.-008015-008016 / 2019
Diary number: 8724 / 2010
Advocates: AMITA GUPTA Vs JAGJIT SINGH CHHABRA
IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.80158016 OF 2019 (Arising out of SLP (C) Nos.2439724398 of 2010)
WALAITI RAM CHARAN DASS & ORS. ETC. …APPELLANT(S)
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)
J U D G M E N T
Deepak Gupta, J.
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
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
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
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
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
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