1986 (4) TMI 312 - SC - VAT and Sales Tax

Whether the abolition of the kachhi adhat system by issuance of the directive under section 32(5) of the Act was violative of article 19(1)(g) of the Constitution? Held that - Appeal dismissed. Failure to see how article 19(1)(g) of the Constitution will be violated if no commission agent shall act in the manner prohibited by section 32(5) of the Act or he cannot deduct any commission or dalali from the sale proceeds payable to the producer or that he cannot act both for the buyer as also for the seller. In prohibiting such practices article 19(1)(g) of the Constitution cannot be said to be violated in any manner. Such restrictions being in the interests of the general public are protected by article 19(6) of the Constitution.

Summary

Issues:
1. Validity of the resolution passed by the Market Committee abolishing the "kachhi adhat system."
2. Violation of article 19(1)(g) of the Constitution due to the abolition of the "kachhi adhat system."

Issue 1: Validity of the resolution passed by the Market Committee abolishing the "kachhi adhat system."

The case involved a petition under article 136 of the Constitution of India challenging the validity of a resolution passed by the Market Committee to abolish the "kachhi adhat system." The petitioners, a commission agent and an agriculturist, contested the abolition, claiming the system provided essential services to agriculturists and had been in place for years. However, the Court held that the purpose of the Act was to prevent exploitation by commission agents and protect producers. Citing historical reports and previous judgments, the Court emphasized the need to eliminate middlemen to ensure fair prices for agricultural produce. The Court concluded that the abolition of the "kachhi adhat system" was in the public interest and not unconstitutional.

Issue 2: Violation of article 19(1)(g) of the Constitution due to the abolition of the "kachhi adhat system."

The petitioners argued that the abolition of the "kachhi adhat system" infringed upon their rights under article 19(1)(g) of the Constitution, claiming it imposed unreasonable restrictions on traders. However, the Court disagreed, stating that the restrictions imposed by the Act, including prohibiting commission agents from certain practices, were in the public interest and protected under article 19(6) of the Constitution. The Court held that preventing commission agents from exploiting their dominant position was essential to safeguard innocent agriculturists. Therefore, the Court found no merit in the petition and dismissed it.

In conclusion, the Supreme Court upheld the validity of the resolution passed by the Market Committee to abolish the "kachhi adhat system," ruling that it was not violative of the Constitution. The Court emphasized the importance of protecting agricultural producers from exploitation by middlemen and upheld the public interest in eliminating such practices. The petition challenging the resolution was dismissed, affirming the legality of the Market Committee's decision.