1996 (7) TMI 558 - SC - Indian Laws

Summary

Issues Involved: Interpretation of the term "agricultural produce" under the Rajasthan Agricultural Produce Markets Act, 1961 and the Schedule, and whether seeds fall under this definition.

Summary:
In the case of The State of Rajasthan v. Rajasthan Agriculture Input Dealers Association, the Supreme Court addressed the issue of whether seeds, specifically Bajra seeds, should be considered agricultural produce under the Rajasthan Agricultural Produce Markets Act, 1961. The State Government had amended the Schedule under Section 40 of the Act to include seeds as agricultural produce, requiring dealers to obtain licenses for trading in seeds. The respondents, engaged in the business of purchasing and selling seeds, argued that seeds should not be classified as agricultural produce as they undergo processing and treatment with chemicals, making them unfit for human or animal consumption. The High Court ruled in favor of the respondents, stating that processed foodgrains becoming seeds do not automatically fall under the definition of agricultural produce in the Act.

The Supreme Court analyzed the Schedule of the Act, noting that while certain foodgrains and their derivatives were listed as agricultural produce, seeds were not specifically mentioned. The Court emphasized that processed seeds lose their original character as foodgrains and become a distinct commodity, separate from food grains. The Court rejected the State's argument that seeds should be included under the definition of agricultural produce based on a notification excluding certified and foundation seeds from the Schedule. The Court held that the State Government needed to explicitly specify processed foodgrains as seeds in the Schedule for them to be considered agricultural produce under the Act.

Ultimately, the Supreme Court dismissed the appeals filed by the State of Rajasthan and the Krishi Upaj mandi Samiti, upholding the High Court's decision that dealers trading in seeds like Bajra seeds do not require licenses under the Act. The Court concluded that the processed seeds should not be classified as agricultural produce based on the existing provisions and definitions in the Act.