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TMI Blog1958 (10) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ir proper administration. On May 18, 1951, the State Government issued G. 0. No. 1049 (Food Agriculture Department) extending the provisions of the Act to Ramanathapuram and Tirunelveli Districts in respect of cotton and groundnuts. On February 25, 1952, the State Government issued G. 0. No. 251 (Food Agriculture Department) ordering the constitution of a Market Committee at Koilpatti and Sankarankoil in Tirunelveli District. By a similar G. O., viz., G. 0. No. 356 (Food - Agriculture Department) dated March 8,1952, the Government directed the constitution of a Market Committee at Virudhunagar and markets at (1) Virudhunagar; (2) Rajapalayan and (3) Sattur in Ramanathapuram District. The Market Committees. were duly constituted, and, on January 9, 1953, the Market Committee at Virudhunagar issued a notice stating that the Act and the Rules had come into force in Ramanathapuram District on January 1, 1953, and requiring persons who did business in cotton and groundnut to take out licences as provided therein. A further notice dated January 17, 1953, stated that all the traders in cotton and groundnut, who failed to take out licences on or before February 15, 1953, were liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profession, or to carry on any occupation, trade or business. Clause (6) of that Article enables the State to make any law imposing in the interest of general public reasonable restrictions on the exercise of the right conferred by sub-cl. (g) of el. ([1950] S.C.R. 759.). It has been held that in order to be reasonable, a restriction must have a rational relation to the object which the legislature seeks to achieve and must not go in excees of that object (See Chintaman Rao v. The State of Madhya Pradesh) (1). The mode of approach to ascertain the reasonableness of a restriction has been succinctly stated by Patanjali Sastry C. J., in State of Madras v. V. G. ROW ([1952] S.C.R. 597, 607.) thus: It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duce in the State is the predominant part played by middlemen. It is the cultivator's chronic shortage of money that has allowed the intermediary to achieve the prominent position he now occupies. The necessity for marketing legislation was stressed by other bodies also like the Indian Central Banking enquiry Committee, the All India Rural Credit and Survey Committee, etc. Recently the Government of Madras appointed an expert Committee to review the Act. In its report the Committee graphically described the difficulties of the cultivators and their dependence upon the middlemen thus: The middleman plays a prominent part in sale transactions and his terms and methods vary according to the nature of the crop and the status of the cultivator. The rich ryot who is unencumbered by debt and who has comparatively large stocks to dispose of, brings his produce to the taluk or district centre and entrusts it to a commission agent for sale. If it is not sold on the day on which it is brought, it is stored in the commission agent's godown at the cultivators' expense and as the latter generally cannot afford to wait about until the sale is effected he leaves his produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens' right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and overreach the scope of the object to achieve which it is enacted. It is therefore necessary to scrutinize the provisions of the Act and the Rules made thereunder to ascertain whether the restrictions imposed are not reasonable. The said provisions fall under two groups: the first group provides the machinery for controlling the trade in commercial crops and the second group of provisions imposes restrictions On the carrying on of the said trade. Section 2(1-a) defines I commercial crop' to mean cotton, groundnut or tobacco and includes any other crop or product notified by the State Government in the Fort St. George Gazette as a commercial crop for the purposes of this Act. Under s. 3, the State Government issues a notification declaring their intention to exercise control over the purchase and sale of such commercial crop or crops in a particular area and calls for objections and suggestions to be made within a prescribed time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a licence granted to him by the Collector. The first proviso to that section provides that after the establishment in such area of a market for the purchase and sale of a notified commercial crop, no licence for the purchase or sale of such commercial crop shall be granted or renewed in respect of any place situated within such distance of the market as may from time to time be fixed by the State Government. The second proviso enables the Market Committee to exempt from the provisions of the above sub- section any person who carries on the business of purchasing or selling any commercial crop in quantities not exceeding those prescribed by Rules made under the Act. The third proviso authorizes the said Committee to exempt a person selling commercial crop which has been grown by him, or a cooperative society registered or deemed to be registered under the Madras Co-operative Societies Act, 1932, selling a commercial crop which has been grown by any of its members, and also empowers it to withdraw the exemption. Sub-section (2) of s. 5 gives exemption to a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by Rules made under the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure correct weighment, make available to them reliable market information and provide for them a simple machinery for settlement of disputes. After the markets are built or opened by the marketing committees, within a reasonable radius from the market, as prescribed by the Rules, no licence is issued ; thereafter all growers will have to resort to the market for vending their goods. The result of the implementation of the Act would be to eliminate, as far as possible, the middlemen and to give reasonable facilities for the growers of commercial crops to secure best prices for their commodities. Learned counsel for the appellants contends that the restrictions imposed by the provisions of s. 5 are not only unreasonable but tend to defeat the very purpose of the legislation. Elaborating this argument, the learned counsel says that they are unreasonable from the standpoint of the big trader, the small trader and also the grower of crops. The trader, his argument proceeds, can only buy or sell in the licensed premises paying heavy licensing fees under different beads and paying also heavy overhead charges, with the inevitable consequence that he will not be able to run his busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable restriction upon his right to do business. But in our view, such a provision is necessary for preventing the local business being diverted to other places and the object of the scheme being defeated. Further, ,in practice, it is seen that the Government fixes by notification under s. 5 (1) a radius of five miles around the building and occasionally ten miles. It is also not likely that it would fix a longer distance in the present circumstances, having regard to the inadequate facilities for transporting commodities. That apart, the establishment of a market does not prevent a trader from carrying on the business in the market established, but he could not run a market for himself in respect only of the commodities declared to be commercial crops within the radius prescribed. While the object of the Act is to protect the growers, the argument proceeds, the small traders are compelled to resort to distant markets, with the result that some of them would be forced to give up their business and others would have to incur unnecessary expenditure which they could not afford. The Act is an integrated one, and it regulates the buying and selling of commercial crops. If the sma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects, the notification directing the constitution of a market to the exclusion of the existing one would be an unreasonable restriction. The learned Advocate General of Madras contends that the appellants have really two fundamental rights: one is to carry on trade or business and the other is to hold their property, i.e., the market; that by reason of the notification they are not prevented from doing their business, for they can still do business in the market established subject to the regulations and also do business outside the prescribed area ; and that they are not prohibited from holding the market as property, for they could still utilise it for commodities other than the notified crops. In respect of the contention that holding the market is only an incident of ownership of the property, reliance is placed upon the decisions in T. B. Ibrahim v. Regional Transport Authority, Tanjore ([1953] S.C.R. 290.); Ramunni Kurup v. The Panchayat Board, Badagara (I.L R. [1954] Mad. 513.); Captain Ganpati Singhji v. The State of Ajmer ([1955] S.C.R. 1065.) ; and Valia Raja of Edappally v. The Commissioner for Hindu Religious Charitable Endowments, Madras (I.L.R. [1955] mad. 870.). It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;mahimai' by the appellants. The question whether the bye- law prohibiting the collection off I mahimai' allowance is valid or not does directly arise for consideration in this case. There is also some ambiguity in the conclusion arrived at by the learned judges of the High Court. They stated that the allowance had nothing to do with the transaction as such and could not therefore be properly regarded as a trade allowance. The learned counsel for the appellants contends that if it is not a trade allowance, it is not covered either by s. 14 of the Act or by bye-laws framed thereunder, as s. 14 prohibits the deduction of trade allowance and does not operate upon any other payments made which are not trade allowances. There is considerable force in this argument, but we think that the learned judges meant only that the said allowance is not an admissible or a permissible trade allowance prescribed by the bye-law. The question, therefore, is whether the allowance described as I mahimai' is a trade allowance and if so, whether the allowance is permitted to be received by the rules or bye- laws made under that section. The relevant provisions may be noticed at this stage. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are entitled to do under that section, but made the bye-law mentioning the ' mahimai' allowance as one not deductible in any transaction. The validity of that part of the bye-law prohibiting the deduction of ' mahimai ' as trade allowance depends upon the nature of that deduction. If ' mahimai' is not a trade allowance, the said part of the bye-law would obviously be invalid as inconsistent with the provisions of s. 14. If, on the other hand, mahimai' is a trade allowance, the said part of the bye-law will be superfluous, as the allowance falls within the terms of the section itself This leads us to the question whether ' mahimai' is a trade allowance, within the meaning of s. 14 of the Act. What is a trade allowance? Trade involves exchange of commodities for money, the business of buying and selling and the transaction involves the seller, the buyer, the commodity sold and the price paid for the sale. Allowance means something given as compensation, rebate or deduction. Under the section, the said deduction should be in any transaction in respect of commercial crops. The deduction may be out of the commodity or out of the price. The recipi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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