1980 (3) TMI 256 - SC - Indian Laws

Issues Involved:
1. Notification of large areas as Market Areas without rendering services.
2. Validity of creation of Market Areas or Market Yards.
3. Validity of the appointment of Mandi Samitis (Market Committees).
4. Absence of machinery for adjudication of disputes in the Rules.
5. Fixation of minimum market fee by all Market Committees.
6. Alleged lack of application of mind in issuing the notification dated 11-4-1978.
7. Prohibition of multi-point levy of market fees.
8. Retrospective operation of the law brought by U.P. Act 7 of 1978.
9. Levy of market fee on goods not produced within a particular market area.
10. Levy of market fee on both paddy and rice.
11. Levy of market fee on hides and skins but not on animals.
12. Levy of market fee on wood but not on furniture or Catechu.
13. Levy of market fee on wood cut from jungles by manufacturers.
14. Levy of market fee on Kirana goods brought from outside the market area.
15. Levy of market fee on tobacco, Tendu leaves, and bidis.
16. Levy of market fee in municipal areas or Nyaya Panchayats.
17. Levy of market fee on rab salawat and rab galawat.
18. Levy of market fee if goods are brought into a market area and dispatched without transactions.
19. Levy of market fee on controlled commodities.
20. Levy of market fee if no license is issued or taken.
21. Levy of market fee on matchboxes, soyabin products, Kisan Products Ltd. articles, and Pan (betel leaves).
22. Levy of market fee from vendors of fruits and vegetables through their Commission Agents.
23. Levy of market fee only on transactions where the seller is a producer.
24. Levy of market fee only on transactions where the seller is the purchaser of agricultural produce.

Detailed Analysis:

Points 1 to 4:
The court found no substance in these points. Large areas can be declared as Market Areas under Section 6 of the Act. Market Yards have been established under Section 7, and the temporary Market Committees are legally constituted under the Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam, 1972. The absence of a dispute adjudication machinery in the Rules does not invalidate the levy or collection of market fees. The court expressed hope that such machinery would be established soon.

Point 5:
The fixing of a minimum market fee at 1% by the legislature is not illegal, provided adequate services are rendered. The facts did not indicate that services to the extent of the fee levied at 1% were not being rendered. The court upheld the levy of market fees at 1% throughout Uttar Pradesh.

Point 6:
The notification dated 11-4-1978, which constituted 250 Market Committees and specified 115 items for market fee, was found to be valid. The definition of agricultural produce is broad and includes various items specified in the Schedule.

Point 7:
The court held that there cannot be any multi-point levy of market fees in the same market area. Market fees can be levied only once on a specific transaction of agricultural produce within a market area. However, fees can be levied on fresh transactions in different market areas.

Point 8:
The retrospective amendment of Section 17(iii)(b) by U.P. Act 7 of 1978 is valid. Market fees already realized cannot be re-levied, but fees not yet realized can be collected under the amended law. The court found no reason to invalidate the retrospective operation of the law.

Point 9:
Market fees can be levied on transactions of goods not produced within the limits of a particular market area, provided the transactions take place within that area. The court found no provision in the Act or Rules limiting the operation of the law to agricultural produce produced within a specific market area.

Point 10:
The court clarified that market fees can be levied on either paddy or rice but not both within the same market area. If paddy is purchased and converted into rice, the fee is levied on the paddy transaction. If paddy is brought from another market area, the fee can be levied on the rice transaction.

Point 11:
Market fees can be levied on transactions of hides and skins, but not on animals, as animals are not included in the notification. The court rejected the argument that hides and skins are not agricultural produce.

Point 12:
Market fees can be charged on the purchase of wood but not on the sale of furniture. The court left the question of Catechu to be decided by the Market Committees and courts, as it involves factual determination.

Point 13:
The court held that the license to cut wood involves a sale transaction, making the licensee liable to pay market fees. The use of wood by the manufacturer is immaterial for fee liability.

Point 14:
Market fees can be levied on Kirana goods included in the notification, even if brought from outside the market area, provided the sale takes place within the market area.

Point 15:
Market fees can be levied on transactions of tobacco and Tendu leaves but not on bidis. Bidi manufacturers purchasing tobacco and Tendu leaves are liable to pay market fees on those transactions.

Point 16:
The court rejected the argument that no market committee can be constituted in a municipal area or Nyaya Panchayat, finding no substance in this point.

Point 17:
Market fees can be levied on the first transaction of rab, but not on rab galawat and rab salawat if they are by-products. The court left factual disputes to be decided by the Market Committees and courts.

Point 18:
Market fees cannot be levied if goods are brought into a market area and dispatched without any transaction of sale taking place within that area.

Point 19:
The court rejected the argument that market fees cannot be levied on controlled commodities, holding that such transactions still qualify as sales.

Point 20:
A producer-trader must take out a license and pay market fees. The court distinguished this case from Raunaq Ram Tara Chand & Ors. v. The State of Punjab & Ors., finding that market fees can be charged even if no license is taken.

Point 21:
Market fees can be charged on the purchase of wood, soyabin, and other agricultural produce but not on the sale of processed products like matchboxes or soyabin products.

Point 22:
Market fees can be charged on transactions of fruits and vegetables sold through commission agents, with the liability falling on the commission agent and ultimately the purchaser.

Points 23 and 24:
The court rejected the argument that market fees can only be charged on transactions where the seller is a producer or purchaser of agricultural produce. The court approved the Patna High Court's view, holding that traders can also be liable for market fees.

Conclusions:
The court directed that market fees should be regularized and charged in light of this judgment. Any fees realized contrary to this judgment should be refunded within six months, and fees due should be paid within the same period. Disputed questions of fact should be decided by the Market Committees and, if necessary, by the High Court. The court expressed hope that services would continue to be rendered by the Market Committees in light of the judgment in Kewal Krishan Puri's case. The appeals and writ petitions were partly allowed and partly dismissed with no order as to costs.

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