CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 73567360 of 1983 etc. etc.
From the Judgment and Order dated 28.1.83 of the Allahabad High Court in C.M.W.P. No. 6477, 6606, 6602, 6608, 6517 of 1981.
R. K. Jain, B.D. Aggrawal, Ramesh Chandra and P.K. jain for the Appellants.
E.C. Agrawala for the Respondents.
The Judgment of the Court was delivered by
MOHAN, J. Since common points of law are involved, all these appeals are dealt with under one judgment.
The appellants, commission agents were carrying on trade in the notified market area. The attack is as to the levy of market fee on them in relation to the business of Khandsari sugar. To highlight the issue involved we will set out the legal background first.
The U.P. Legislature passed an Act called U.P. Krishi Utpadan Mandi Adhiniyam in the year 1964 as Act 25 of 1964. The object of the Act was to regulate the sale and purchase of agricultural produce and for the establishment, superintendence and control of markets in U.P. Section 5 of the Act confers powers on the State Government in relation to regulation of sale and purchase of any agricultural produce in any area wherein such transactions are usually carried on and for that purpose to declare the area as a market area. This declaration is to be by way of a notification. Section 7 empowers even a portion of that market area be specified as a principal market yard, while such other portions could be specified as sub-market yard. The effect of such declaration of market area is spoken to under Section 9. In that, no person shall deal with specified agricultural produced except in accordance with the conditions of licence granted by the Committee. Subsection (9)(ii) is specific, while it says the commission agent, trader or broker will have to carry on the business in accordance with the conditions of licence. Section 10 prohibits realisation of trade purchases from the producers form the sale and purchase of specific agricultural produce except those which are permitted by the rules or bye-laws.
Section 17, about which we will deal with later talks of the powers of the Mandi Samiti. Section 40 confers rule-making power.
The commission agents, carrying on business by sale and purchase of gur, rab, shakkar and khandsari questioned the enforcement of the Act in respect of these merchandise. A Division Bench of the Allahabad High Court held they would not constitute agricultural produce within the meaning of clause (a) of Section 2 of the Act. The reason was it involves manufacture changing the nature of agricultural produce.
In order to get over this difficulty, the definition of agricultural produce was amended by U.P. Act 10 of 1970, and as a result, gur, rab, shakkar and khandsari and jagger became agricultural produce. The validity of amending Act 10 of 1970 was questioned on various grounds, which, of course, need not concern us. A Division Bench in Special Appeal No. 175 of 1973 dated 7.9.77 concurring with the Learned Single Judge repelled the contentions and upheld the validity.
It is important to note that pending this Special Appeal No. 175 of 1973, the operation of the notice dated 13.9.73 issued under Section 8 of the Act was suspended in so far as it related to khandsari. However, on 6.8.75 order of stay was modified and the Mandi Samiti was directed to keep the amounts realised by them in a separate account. This order was by agreement between the parties. It has an important bearing since arguments were raised as to the effect of the order of stay, and that is why, we are mentioning at this stage itself.
The trader carrying on business within the jurisdiction of several Market Committees challenged the levy of fee before the High Court of Allahabad from time to time. There were several rounds of litigation in which they failed. Thereupon, they came up with an appeal. This court ultimately gave a direction that the market fee should be regularised and charged in the light of the judgment. Concerning the services whenever rendered by the Market Committee, it was observed at page 1141(A.I.R. 1980 SC) as follows :
"....We do hope that services are being rendered
and will continue to be rendered by the various
Market Committees in the light of the judgment of
this Court in Kewal Krishan Puri’s case. If in
regard to any particular Market Committee it is
found that services are not being rendered or in
future lapses are made then it will be open to the
payers of fees to reagitate the matter in the High
Court in the light of that judgment."
The result of the judgment was the validity of U.P. Krishi Utpadan Mandi Act was upheld. Thereafter, the Commission Agents were called upon to submit the account for the period 11.10.73 to 12.8.75 in order to fix the liability of the market fee. An objection was raised by the Traders Association that since no notification has been issued under Section 10, market fee was not leviable. To this, a reply was sent by the Director that as early as 9.10.67, a notification had been issued. Then again, certain other objections were raised. The Mandi Samiti informed the Association that the objections were not tenable and the Samiti need not have recourse to Rule 66 to support the market fee and directed the production of account. Further to his, a demand notice was issued and the appellants were also informed should the market fee be not paid, it would be realised by way off arrear of land revenue. As a result, Writ Petitions were filed challenging the demands for the period 11.10.73 to 12.8.75. A Division Bench of the Allahabad High Court dismissed those Writ Petitions. Hence, these civil appeals by a few of the commission agents.
Though several contentions were raised before the High Court, only the following points were raised before us by the appellants:-
(i) The liability to pay market fees was on the
seller till 1973. Thereafter, till 1978 the
purchasers, were made liable. The commission
agents are only the collecting agencies from the
sellers. The liability of the commission agents is
sought to be fixed up to 1978 retrospectively from
12.6.73. The fixation of such a libaility is
unreasonable. Firstly, the commission agents were
unable to realise the said amount from the
purchasers who were scattered all over India.
After 1980, when the demand was made the relief
against such purchaser has become time-barred.
(ii) The retrospective levy would impose a
great burden on the commission agents.
The operation of notification of the State
Government dated 13.9.73 including definition of
agricultural produce under Section 8 was suspended
by the High Court on 11.10.73. The stay was in
force till 1975. Hence, no market fee could be
charged or paid by anyone for the transaction
during that period.
(iii) Admittedly, no notification has been
issued under Section 10 read with proviso of Rule
66 providing for trade charges and market fees in
respect of khandsari sugar. Therefore, the demand
is invalid.
In opposition to this, it is argued on behalf of the Samiti as early as 1975, Mandi Samiti, Muzaffarnagar passed a resolution that the market fee would be payable @ 1% with effect from 1.10.73. This resolution was given wide publicity in the market area as well as through newspapers.
The fee has been validly imposed and no exception could be taken to the same. It is incorrect to submit that notification under Section 10 has not been issued. Merely because there was a stay, it does not mean the liability disappears. The notification dated 13.9.1973 stood suspended at the instance of other traders. That cannot ensure to the benefit of the appellants herein. They were neither the petitioners north respondents. Therefore, they cannot take advantage of the stay order and plead inability to pay. In as much as the Act itself has been restrospectivley amended, the appellants cannot disown the liability.
In order to appreciate the respective contentions we will now refer to the relevant provisions of law in relation to levy of market fess. Originally (prior to 1978) Section 17 read as follows :-
"A committee shall, for the purpose of this Act,
have the power to-
(iii) Levy and collect.
(a) "Such fees as may be prescribed for the issue
or renewal of licences, and
(b) Market fees on transactions of sale or purchase
of specified agricultural produce in the principal
market yard and sub-market yards from such persons
and at such rates as may be prescribed, but not
exceeding one half per centum of the price of the
specified agricultural produce sold or purchased
therein:
Provided that no market fee shall be levied or
collected on retail sale of any specified
agricultural produce where such sale is made to the
consumer.
By President’s Act No. 13 of 1973, Section 17(iii)(b) was substituted by the following sub-section:-
"17(iii)(b) market fees, which shall be payable by
purchasers, on transactions of sale of specified
agricultural produce in the principal market yard
or a sub-market yard at such rates, being not less
than one per centum and not more than 1-1/4 per
centum of the price of the agricultural produce so
sold, as the State Govt. may specify by
notification in the Gazette."
The material change effected by this amendment was to fix the liability on the purchaser instead of the seller. Further, two limits were also prescribed viz. 1% and 1-1/2% giving the right to the State Govt. to fix any amount in between these limits relating to any Mandi Samiti. This power was exercised by the Market Committees through the bye-laws under the rules.
However, by U.P. Act 7 of 1978, a new sub-clause came to be introduced retrospectively with effect from 12.6.73. As a result, the Section reads as under:-
"Power of the committee- a committee shall for the
purpose of this Act, have the power to :-
(iii) levy and collect.
(b) Market fees which shall be payable on
transactions of sale of specified agricultural
produce in the market area at such
rate, being not less than 1 per centum and not
more than 1 -1/2 per centum of the price of the
agricultural produce so sold as the State
Government may specify by notification and such
fees shall be realised in the following manner :-
(1) If the produce is sold through a Commission
agent, the commission agent may realise the market
fees from the producer and shall be liable to pay
the same to the committee.
(2) If the produce is purchased directly by a
trader from a producer the trader shall be liable
to pay the market fees to the committee.
(3) If the produce is purchased by a trader from
another trader, the trader selling the produce may
realise it from purchaser and shall be liable to
pay the market fees to the committee, and
(4) In any other case of sale of such produce, the
purchaser shall be liable to pay the market fees to
the committee.
Two things are evident from the above-(1) the Section has got restrospective effect w.e.f. 12.6.73 and (2) Commission agents are made liable. Rule 66 runs to the following effect :-
"Market fee (Section 17 (iii) - (1) The Market
Committee shall have the power to levy and collect
fees on the specified agricultural produce brought
and sold in the Market Yards at such rates as may
be specified in the bye-laws but not exceeding one-
half of one per centum of the price of the
specified agricultural produce :
Provided that the market fee shall be payable by
the seller :
Provided further that no market fee shall be
levied and charged prior to the date on which
provisions of Section 10 of the Act are enforced.
Explanation - For the purposes of this sub-rule, a
sale of specified agricultural produce shall be
deemed to have been effected in Market Yard if it
has been weighed or measured by a licensed weighman
or measurer in the Market Yard for the purpose of
sale, notwithstanding the fact that the
proprietorship of such agricultural produce has by
reason of such sale passed to a person in a place
outside the Market Yard.
(2) No market fee shall be levied more than once
on any consignment of the specified agricultural
produce brought for sale in the Market Yard if the
market fee has already been paid on it in any
Market Yard of the same Market Area and in respect
of which a declaration has been made and a
certificate has been given by the seller in Form
No. V.
Notes : Rule 66 cannot be said to be invalid in so
far as it sub-delegated the authority to fix the
rate of market fee. Mandi Samiti v. L.P. Singh,
1972 ALJ 643."
By notification dated 27.10.65, it was declared in exercise of the power under Section 6 of the Act that from 31.1.66 the area of the following Gaon Sabha for purposes of the said Act with regard to (1) Wheat (2) Gram (3) Peas (4) Paddy (5) Rice (6) Arhar (7) Sarson and Lahi (8) Potatoes (9) Cotton (10) All kind of Gur, Rab and Deshi Shakkar and their compounds will be the Muzaffarnagar Mandi area.
Thus, it would be seen that 10 agricultural produce had come to be included. It also requires to be noted that khandsari sugar did not form part of the notification. On 26.9.67, a notification was issued under Section 7 of the Act that from 30.12.67. the principal Mandi area and subMandi area of Muzaffarnagar Mandi area came to be specified. Then came the notification dated 9.10.67 issued in exercise of the power under Section 10(1). That notification is reproduced below :-
"October 9, 1967
No. SAM-1038 (Rec) 3812
In exercise of the power delegated by the State
Government vide Krishi (kha vibhag Notification No.
R.2048/XII-8-1498-65, dated September 14, 1967, it
is hereby notified under sub-section (1) of section
10 of the U.P. Krishi Utpadan Mandi Adhiniyam 1964
(U.P. Act No. XXV of 1964), that with effect from
December 20, 1969, no person shall, in the
Muzaffarnagar Principal Market yard and the Shahpur
and Budhana Sub-Market Yards of Muzaffarnagar
market Area levy charge or realise any trade
charges other than those prescribed under rule 79
of the Uttar Pradesh Krishi Utpadan Mandi
Niyamavli, 1966, in respect of any transaction of
sale or purchase of the agricultural produce
specified vide notification No. H5353A/XII-B-
1047(2) 65, dated October 27, 1965."
The last of the notification is one issued under SubSection (1) of Section 8 on 13.9.73, which is reproduced below:-
"Government of Uttar Pradesh Agriculture Section-5
No.A-7756 12B (5) 490/72
Dated : Lucknow 13, September, 1973
Notification
Under the proviso of Sub-Section (1) of Section
8 U.P. Krishi Utpadan Mandi Act, 1964, (U.P. Act
No. 25 of 1964) in Notification No. H-7372/12B-
1200(3)69 dated 16.3.71 issued by the State
Government with regard to the Agriculture
Production in the Muzaffarnagar Mandi area District
Muzaffarnagar, under Section 6 of the said Act, in
Notification No. H-5353-A/12B- 1047(2)/65 dated
27.10.65, the Government had made a declaration of
its objects including in the specified agricultural
production in the list. And objections and
suggestions if any with regard to the proposed
declaration had to be made to the Director of
Agriculture within the period specified in the said
notification. And with regard to the said object,
consideration has been done by the State Government
of all objection and suggestion received by the
Director of Agriculture within the prescribed time.
Now therefore in exercise of the powers
conferred by part(a) of Sub-Section (1) of Section
8 of the said Act the Governor declares that from
25.9.73 for the purposes of the said Act, the
following agriculture products i.e. (1) Khatai
Amchur (2) Barseen (seed) (3) Fodder (4) khansari
will be included in the list of agricultural
products as indicated in Section 6 of the said Act
with regard to the Muzaffarnagar Mandi area
District Muzaffarnagar.
By order :
Sd/- A.P. Singh
Deputy Secretary.
The effect of the last notification is khandsari gets included to the list of agricultural produce to the notification issued under Section 6 dated 27.10.65.
As a matter of fact, Section 8 of the Act clearly postulates such a procedure. Section 8(1)(a) is reproduced below :-
"Alteration of Market Area and Modification of
the List of Agricultural produce-(1) The State
Government, where it considers necessary or
expedient in the public interest so to do, may, by
notification in the Gazette, and in such other
manner as may be prescribed and with effect from
the date specified in the notification,-
(a) include any agricultural produce in, or
exclude any agricultural produce from, the list of
agricultural produce specified in the notification
under Section 6;"
The consequence of it will be that w.e.f. December 20, 1969, no person in the Muzaffarnagar principal Market Yard may levy charge or realise any trade charges other than those prescribed under rule 79 in respect of sale or purchase of agricultural produce, specified in the notification dated 27th October, 1965.
This is apparent from the notification under Section 10 dated 9.10.67 as seen from the above extract.
On 24.9.73, acting under Section 17(iii) as amended, the State Government issued a notification providing for realisation of market fee @1% on the price on sale and purchase of specified agricultural produce in the principal Market Yard of Muzaffarnagar w.e.f. 1.10.73.
Pursuant to this notification, the U.P. Krishi Utpadan Mandi Samiti Muzaffarnagar informed as follows:-
"...all the traders and commission agents of the
Mandi Area, Muzaffarnagar, Distt. Muzaffarnagar,
are informed that they will now realise Mandi fee
on all agricultural produce at its sale value at
the rate of 1% of the total sale or purchase from
the purchaser. The amount of Mandi fee realised in
this way shall be deposited as order earlier in the
office of the Samiti by the commission agent
traders within the prescribed period and after this
notice no amount will be deducted as Mandi fee from
the seller.
Sd. Kanhaiyalal Agrawal
Pergana Officer, Muzaffarnagar
President
Krishi Utpadan Mandi Samiti
Muzaffarnagar"
From the above narration it will be clear that once the Act itself amended retrospectively w.e.f. 12.6.73, we do not know how the commission agent can escape the liability. It is one of the settled principles that because of plenary powers, the Legislature could pass legislations prospectively as well as retrospectively. This being so, the liability between 11.10.73 to 12.10.75, the period in dispute in these appeals, cannot be avoided.
It has already been seen how khandsari has come to be validly included. Therefore, for dealing in this commodity the commission agents will be liable to pay at the rate prescribed.
Turning to the stay, it has already been noted that though stay was granted on 11.10.73, it was not at the instance of the appellants herein. As a matter of fact, they never questioned the validity of the amending Act or the notification. Therefore, they cannot take advantage of the same. The said stay also came to be modified on 6.8.75 by agreement. Even to that agreement, the appellants were not the parties. Therefore, neither of the rulings viz. Jang Singh v. Brijlal and others, [1964] 2 SCR 145 and Union Carbide Corporation and others v. Union of India and others, [1991] 4 SCC 585 would have any application to the facts of the case. Merely because the commission agents cannot realise the amount from the purchasers at this distance of time or that they are scattered, the statutory liability cannot be avoided.
In the result, we hold that they are liable to pay the demands raised by the respondent Samiti against them. However, if with regard to any particular transaction it is proved by the commission agents the purchasers had paid the market fee on such transaction the Samiti will not make them liable once again. Subject to the only qualification the appeals are hereby dismissed. However, there shall be no order as to costs. G.N. Appeal dismissed.