1996 (9) TMI 609 - SC - Indian Laws

Summary

Issues Involved:
1. Whether the respondents who purchased khairwood and manufactured 'katha' are 'producers' under the Himachal Pradesh Agricultural Produce Marketing Act.
2. Whether the respondents are 'dealers' under the Marketing Act and required to obtain a license for their trading activities.

Issue-wise Detailed Analysis:

1. Whether the respondents who purchased khairwood and manufactured 'katha' are 'producers' under the Himachal Pradesh Agricultural Produce Marketing Act:

The respondents purchased khairwood and processed it to manufacture 'katha'. The appellants, Himachal Pradesh Marketing Board and Marketing Committee, Una, required the respondents to obtain a license and pay a market fee on the sale of 'katha'. The respondents challenged this demand, arguing that they were manufacturers of 'katha' and not producers. They contended that producers selling their manufactured products, which are also agricultural produce, are not required to obtain a license under the Marketing Act.

The High Court ruled in favor of the respondents, stating that the manufacturing processes required to obtain 'katha' from khairwood indicated that the respondents were not 'dealers' but 'producers'. The court held that a producer grows, manufactures, rears, or produces agricultural produce, while a dealer only sets up a place for purchase, sale, storage, or processing. Therefore, the respondents were not required to obtain a license or pay market fees.

However, the Supreme Court disagreed, stating that under the Marketing Act, only actual producers of agricultural produce are exempt from obtaining a license and paying fees. The respondents were purchasing khairwood grown by others and processing it into 'katha'. Therefore, they could not claim exemption as 'producers' since they did not grow the khairwood themselves.

2. Whether the respondents are 'dealers' under the Marketing Act and required to obtain a license for their trading activities:

The appellants argued that the respondents were not farmers or growers of agricultural produce but were purchasing khairwood and processing it into 'katha'. According to the appellants, the respondents should be considered 'dealers' under the Marketing Act since they established a place for the purchase, sale, storage, and processing of agricultural produce.

The respondents contended that they were not storing 'katha' for sale within the market area and that their activities did not fall within the definition of 'dealer'. They argued that the definition of 'producer' includes those who manufacture agricultural produce, and the Marketing Act exempts such producers from obtaining a license and paying market fees.

The Supreme Court, after considering the arguments, concluded that the respondents could not claim exemption from obtaining a license and paying market fees. The court emphasized that the Marketing Act is intended to benefit actual growers of agricultural produce. Since the respondents were not growing the khairwood themselves but were purchasing it and processing it into 'katha', they were not exempt from the requirements of the Marketing Act. The court held that the respondents were required to obtain a license and pay market fees for their activities.

Conclusion:

The Supreme Court allowed the appeal, setting aside the impugned judgment of the High Court. The court ruled that the respondents, who purchased khairwood and processed it into 'katha', were not exempt from obtaining a license and paying market fees under the Himachal Pradesh Agricultural Produce Marketing Act. The respondents were considered 'dealers' and were required to comply with the provisions of the Marketing Act. The appeal was allowed with no order as to costs.