THE BELSUND SUGA~ CO. LTD. ETC. ETC. v. THE STA TE OF BIHAR AND ORS. ETC.

A THE BELSUND SUGA~ CO. LTD. ETC. ETC. v. . THE STA TE OF BIHAR AND ORS. ETC.

AUGUST 10, 1999

B

Constitution of India, 1950 :

c Articles 19(/)(g) and 19(6)-Bihar Agricultural Produce Markets Act, I 960-Providing for regulation of transactions of sale and purchase of agricultural produce in market areas-Held, is not unconstitutional.

Seventh Schedule, List II, Entries 26 to 28-List III, Entries 33 and 47- List I, Entry 52-'Markets and Fairs' and 'Trade and Commerce '-Market D fee-Regulation of transactions ofpurchase and sale of agricultural produce within market area under the Bihar Agricultural Produce Markets Act, 1960-Held, transactions of purchase of sugarcane by sugar factories are covered under the specific provisions of Bihar Sugarcane ·(Regulation of . Supply and Purchase) Act, 1981 and Sugarcane (Control) Order, 1966 and, ~ therefore, are excluded from the general sweep of the Market Act-Similarly E transactions of sale and purchase of sugar are covered under Sugar(Control) Order, 1966 and other Orders issued under s.3 of the Essential Commodities Act, 1955, and. transactions of sale and purchase of molasses are covered under Bihar Molasses (Control) Act, 1947 and, are, therefore, excluded from general sweep of the Market Act-Wide sweep of general notification under F s.3 of Market Act will have to be read down with regard to these three commodities-Doctrine of occupied field-Doctrine of reading down. . / Transactions of sale and purchase in the market area of wheat, and wheal products i.e. Atta, Maida, Suji, Bran etc., paddy and rice, edible oils and packed lea-Held, are not outside the sweep of regulatory provisions of G Markel Act-Sale or purchase of any product resulting after processing '> • >-, basic agricultural produce wheat is not covered by Industries (Development and Regulation) Act, 1951-The various Orders with regard to edible oils issued u/s. 3 of Essential Commodities Act, 1955 do not deal with sale and purchase of vegetable oils-Neither Tea Act, 1953 nor various Tea (Control) Orders framed uls.30 thereofprovide/or regulating sale ofpurchased roasted H 146 tea leaves after they are subjected to manufacturing process of blending and are brought in market area for sale as packed tea.

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Article 142-Refund/Collection of market fee under Bihar Agricultural Produce Markets Act, 1960 on transactions ofpurchase and sale ofsugarcane, sugar and molasses-Held, Act is not applicable to these commodities-The judgment will have only prospective operation-Jn view ofpeculiar facts and circumstances market fee paid in past shall not bs refunded and market fee not collected in past shall not be collected-Doctrine of unjust enrichment.

Bihar Agricultural Produce Markets Act, 1960/Bihar Agricultural Produce Market Rules, 1975: C Ss. 2(1) (a), 3, 15 and 27 Rule 82-'Agricultura/ Produce'-Sale and purchase of in market areas-Regulation of-Wheat and wheat products i.e. Atta, Maida, Suji, Bran, 'Edible Oils', Paddy, rice and packed tea-Held, are agricultural produce-Definition of agricultural produce would include not only primary produce of agriculture but also any other commodity processed D or manufactured out of such primary agricultural produce-Inclusion of these items in the Schedule enacted under s.2(J)(a) cannot be found fault with-Sale and purchase of these agricultural produce will attract regulatory provisions of the Act. E Ss.2(J}(a),3,15,27 and 42-Sugarcane, sugar and molasses-Purchase and sale in market area-Regulation of -Notification No. S. 0. 550 dated 22.3.1976 issued by state of Bihar exempting all sugar mills in the State from application of provisions of s. 15 with regard to their sale and purchase of agricultural produce -Held, though sugarcane, sugar and molasses are agricultural produce as per s.2(J)(a), but sale and purchase of these F commodities being regulated by Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981; Sugarcane (Control) Order, 1966 and Sugar (Control) Order, 1966 and Bihar Molasses (Control) Act, 1947, they are outside the purview of s. 15 of Market Act-Consequently, entire regulatory machinery and infrastructural facilities to be made available by marke( committees for O regulating sale and purchase of such agricultural produce would get totally excluded.

'Milk produce '-Baby food under trade names 'LACTODEX' and 'RAPTAKOS S.I.F' are not product of 'Milk' and, therefore, not being agricultural produce are outside the purview of the Act. H

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'A S.27-Market fee-Nature of-Held, market fee is a 'fee' and not a 'tax'-For levy of marketfee on any transaction, services to be rendered by .. market committee must be in connection with the sale and purchase transactions of agricultural produce falling for regulation under the Act- Since s.15 as a whole is out of picture for controlling purchase and sale of B sugarcane, sugar and molasses by sugar factories operating in market area, charge of market fee would not get attracted at all.

Tea Act, 1953-s.30-Power of Central Government regarding control, price and distribution of tea or tea waste-No such control order has been issued by Central Government-Therefore the field remains wide open for C State Legislature to exercise its concurrent legislative power under Entry 33 of List III of Seventh Schedule to the Constitution.

Doctrines-Doctrine of unjust enrichment; Doctrine of occupied field and; Doctrine of reading down-Applicability of

D Locus standi-Sugar factories-Challenging imposition of market fee on transactions ofpurchase and sale ofsugarcane, sugar and molasses under Bihar Agricultural Produce Markets Act, 1960-Held have sufficient locus standi to challenge the imposition of market fee.

The Bihar Legislature, in order to provide regulated markets for / E agricultural produce, enacted the Bihar Agricultural Produce Markets Act, 1960 (Market Act) providing for levy of market fee on various agricultural produce. Levy of market fee on sugarcane, sugar, molasses, wheat products namely, Atta, Maida, Suji, Bran etc. Vegetable oils and Tea was challenged in writ petitions before the High Court. The rice milling industries filed writ petitions challenging the notices issued to them by the Agricultural Produce Market Committees concerned requiring them to shift their trade to principal market yards. Another writ petition was filed by a company claiming to produce baby food under the trade names of'LACTODEX' and 'RAPTAKOS' S.I.F. ' (Special infant food). It challenged the notice issued to it to obtain licence under the Market Act as according to the authorities the said items were 'milk products' and as such covered under the Act. The High Court dismissed all the writ petitions. Aggrieved, the writ petitioners filed the present appeals. A writ petition was also filed under Article 32 of the Constitution with regard to sugar matters.

In respect of sugar matters, i.e. sugarcane, sugar and molasses, it was contended· for the sugar factories that general sweep of the Market Act would not cover the transactions of purchase of sugarcane and sale of sugar A· and molasses by them as these transactions were specifically regulated by Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981, Sugarcane (Control) Order, 1966, Sugar (Control) Order, 1966 and other Sugar (Control) Order issued under s.3 of the Essential Commodities Act, 1955, and the Bihar Molasses (Control) Act, 1947. It was submitted that once the State of Bihar, in exercise of its power of exemption under Section 42 of the B Market Act, exempted the appellant-sugar factories from applicability of Section 15 of the Market Act, the entire machinery under the Market Act became inapplicable to regulate the transactions of purchase of sugarcane and sale of sugar and molasses as entered into by the said sugar factories and consequently, there remained no occasion for the authorities functioning C under the Market Act to demand any market fee from them under Section 27 of the Market Act. In the alternative it was contended that imposition of market fee by the respective market committees would not be justified in absence of any service rendered to sugar factories and consequently the levy of market fee would not be supported by any quid pro quo. D For the respondents, namely the State of Bihar and the market committee, it was contended that the appellant sugar factories had no locus standi because so far as their challenge to levy of market fee on transactions of sale of sugar and molasses was concerned, the levy was imposed on buyers / of these commodities and the appellants were not affected by the levy. On E merits it was contended that exemption under Section 42 was confined to exclude the operation of Section 15(2) of the Market Act qua the appellant- sugar factories and if the exemption was treated to cover entire Section 15, even then once the transaetion of sale and purchase took place within the market area, charge under Section 27 would get settled on these transactions. It was also contended that there was enough return benefit made available to the sugar factories situated within the market areas as they would utilise the link roads for transportation of sugarcane and also the facilities of supply of necessary information regarding the prevalent price of sugarcane.

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With regard to wheat products, i.e. Atta, Maida, Suji, Bran etc. it was intended for the appellant-flour mills that under the Industries (Development and Regulation) Act, 1951, the Union of India having taken over the control of wheat industry, no transaction of purchase and sale of products of that industry could be regulated by the Market Act It was also submitted that the Wheat Rolling Flour Mills (Licensing and Control) Order, 1957 and the Bihar Trading Articles (Licenses Unification) Order, 1984 issued under H

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A Section 3 of the Essential Commodities Act, 1955 laid down a complete scheme for regulating purchase and sale of wheat products and, therefore, these transactions could not be covered by the general sweep of the Market Act. Raising similar contentions in support of the Vegetable Oils industry, reliance was placed on Vegetable Oil Products Control Order, 1947, the B Pulses, Edible Oil seeds and Edible Oils (Storage Control) Order, 1977, and the Vegetable Oil Product. Producers (Regulation of Refined Oil Manufacture) Order, 1973, all framed under section 3 of the Essential Commodities Act, 1955.

As regards rice milling industries, it was contended for the appellants that on account of Rice Milling Industry (Regulation) Act. 1958, the field for regulation of purchase and sale of products of rice milling industries would be fully occupied by the said Central Act. It was also contended that the rice mills also import paddy from other States outside the market areas falling under the Market Act, and such imported paddy was processed and after manufacturing activities qua them, rice was manufactured; therefore, such activity could not be governed by the Market Act.

For the company claiming to produce baby food under the trade names 'LACTODEX' and 'RAPTAKOS' S.l.F.' it was contended that direction of the marketing a:uthorities requiring it to take licences under the marketing Act was ultra vires illegal as the said two products were not 'agricultural produce'. E So far as levy of market fee on tea was concerned, it was contended for the tea company that in order to protect the agriculturists from middlemen the Market Act was enacted for the purpose of regulating sale and purchase of agricultural produce grown within the market area and also the subsequent sale of any manufactured item out of such basic agricultural produce taking place within the market area, and the large scale manufacturers like the appellant-company who manufactured tea outside the State did not require the protection of the Act; and that, in any case, purchase and sale of tea were governed by the Tea Act, 1953, and, therefore, the insistance on the part of the authorities that the sale transactions should be carried on only within the mark~t yards or sub-market yards was clearly illegal and violative of Article 19 of the Constitution. It was also contended that no quid pro quo existed between the demand for market fee by the market committees and the sale transactions effected by appellant's selling agents so far as tea in packed form was concerned.

H Disposing of the matters, the Court

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1.2. Sugarcane being a primary agricultural produce, sugar manufactured by utilising it is an agricultural produce and; molasses being B a by-product resulting from manufacture of sugar by utilising the basic agricultural produces namely, sugarcane, would be an agricultural produce as defined by s.2(l)(a) of the Market Act. [203-A)

1.3. So far as wheat and its products namely, Atta, Maida, Suji etc. are concerned, wheat being a produce of agriculture, any product resulting after processing such basic raw material or which results after process of manufacture is carried on qua such basic raw material would remain agricultural produce. (214-A-B)

1.4. Vegetable Oils manufactured by the oil mills by crushing oil seeds, the basic agricultural produce, are agricultural produce. All vegetable oils are treated to be 'agricultural produce' as per serial No. 4 of the Schedule framed under Section l(l)(a) of the Market Act. (214-E-F)

1.5. Paddy is an 'agricultural produce' being item No.I in the category of 'Cereals' as found in the Schedule to the Market Act. Rice manufactured out of such basic agricultural produce would also remain agricultural produce. Even apart from that, rice is mentioned separately as item No. 2 in the category of 'Cereals' in the Schedule to the Market Act. (216-D-E)

1.6. Tea leaves are primary agricultural produce. After plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets they still remain all the same agricultural produce. It is also not in dispute that tea (leaf and dust) is a schedule item. (227-C-DJ

1.7. Baby food under the trade names 'LACTODEX' and 'RAPTAKOS' G S.I.F.' (Special infant food) can not be treated as agricultural produce as defined under s.2(1)(a) of the Market Act. (218-CJ

SUGAR MAITERS (i.e. Sugarcane, sugar and molasses)

LOCUS STAND!: H

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A 2.1. The sugar factories operating in the !Ilarket area within the jurisdiction of the market committee concerned are buyers of sugarcane, an·, · 'agricultural produce'. All the purchase centres at which the appellant- sugar factories purchase sugarcane as raw material are not only situated within the market area but are also declared as sub-market yards. The charge under Section 27 of paying market fee is imposed on the sugar B factories as buyers of sugarcane within the market area and, therefore, they have to be treated to be having sufficient locus standi as buyers of sugarcane to challenge the imposition of market fee on their purchase transactions. [170-E; HJ

C 2.2. If the sugar factories sell manufactured sugar and molasses out of the purchased raw material-sugarcane, and if the buyers are not licensed, then as per the provisions of Rule 82(iii) of the Bihar Agricultural Produce Markets Rules, 1975 the sugar factories as sellers have to realise the market fee from the buyers and have to deposit the same with the market committees. That obligation by itself would give sufficient locus standi to the· D sugar factories which sell sugar and molasses within the market area to challenge the statutory obligation imposed on them by the Act and the Rules and to submit as to how they are not covered by the provisions of the Act. (171-A-C]

MARKET ACT IS NOT APPLICABLE TO SUGAR MATTERS: E (i) Purchase of sugarcane:

3.1. In view of the provisions ofspedfic enactment, namely, the Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981 and the Sugarcane (Control) Order, 1966 the regulation of sale and purchase of sugarcane in the entire market area for which the general Act, namely, the Market Act is enacted, is fully governed and highlighted by these two special provisions harmoniously operating in the very same field. Therefore, there would remain no occasion for the State authorities to rationalise and reasonably visualise any need for regulating the purchase, sale as well as storage of sugarcane in the market !)rea concerned. [193-C-E]

3.2. Entry 28 of List II of Seventh Schedule to the Constitution of India dealing with 'Market ~nd Fairs' has to be read jointly with Entries 26 and 27 dealing with 'Trade and Commerce' and once the State Legislation deals with these topics then it also squarely invokes legislative powers under H Entry 33 of List Ill. If location of markets and fairs simpliciter and the management and maintenance thereof are only contemplated by the Market A Act, then they would fall squarely within the topic of legislative power envisaged by Entry 28 of List II. However, the Market Act, deals with supply and distribution of goods as well as 'trade and commerce' therein as it seeks to regulate the sale and purchase of agricultural produce to be carried on in the specified markets under the Act To that extent the provisions of Entry 33 of List III override the legislative powers of the State Legislature in connection with legislations dealing with trade and commerce in, and the production, supply and distribution of goods. [172-C-D}

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3.3. Entry 33 of the Concurrent List, on the topic of trade and commerce in, and the production, supply and distribution of, goods enumerated therein at sub-clause (b), listed items of foodstuffs, including edible oilseeds and oils. Thus to the extent to which the Market Act seeks to regulate the transactions of sale and purchase of sugarcane and sugar which are foodstuffs and trade and commerce therein, the Market Act being enacted under the topics of legislative powers under Entries 26, 27 and 28 of List II will be subject to any other legislation under Entry 33 of the Concurrent List. p 72-D-E-FJ D 3.4. So far as the Market Act is concerned, it is an Act to provide for better regulation of buying and selling of agricultural produce and - establishment of markets for agricultural produce in the State of Bihar and for matters connected therewith. The Act is enacted essentially to protect the growers of agricultural produce in the State. But the Bihar Legislature E itself has enacted the Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981, in exercise of its legislative powers under Entry 33 of the Concurrent List and the provisions of the Sugarcane Act clearly indicate that the need for regulating the purchase, sale, storage and processing of sugarcane is completely met by the comprehensive machinery provided by p the said Act. Therefore, the field covered by the Sugarcane Act would obviously remain exclusively governed by the special Act being the Sugarcane Act and to the extent it carves out an independent field for its operation, the sweep of the general field covered by the Market Act which cover~ all types of agricultural produce, would pro tanto get excluded qua sugarcane and the products prepared out of it. (172-F-H; 173-A] G MC. V.S. Arunacha/a Nadar Etc. v. The State of Madras & Others, (1959) Supp. 1 SCR 92, relied on

Vascr.Ji Traders v. State of Karnatka & Ors., (1982) 2 Karnataka Law Journal 357, approved. H

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A 1. T.C. Ltd. and Ors. v. State of Karnataka and Ors., [1985) Suppl. SCC 476, referred to.

Juga/ Kishore v. State of Maharashtra and Ors., (1989) Supp. 1 SCC 589, distinguished.

B S. Satyapa/ Reddy and Ors. v. Govt. ofA.P. and Ors., [1994) 4 SCC 391, held inapplicable.

Recommendations of Royal Commission in India (appointed in 1928), referred to.

C 3.5. Section 15 of the Market Act enables the market committee concerned to monitor and regulate the sale and purchase of the agricultural commodity which is covered by the protective umbrella of the Act. Once such an agricultural produce is brought for sale in the market yard or sub- market yard, the sale is to be effected by auction or by inviting tenders. Such a scheme is in direct conflict with scheme of the Sugarcane Act wherein there is no question of sugar factory being called upon to enter into a public auction for purchasing sugarcane which is specially earmarked for it out of the reserved area. In fact, provisions of the Sugarcane Act and the provisions of the Market Act, especially Section 15 read with Section 3(1), cannot harmoniously co-exist. Keeping this in view, state Government in exercise .. E of its exemption power under section 42 of the Market Act issued a notification dated 22nd March, 1976 which shows that the State Government h.ad given up its intention of regulating the sale and purchase of sugarcane as per Section 3(1) of the Market Act which could not survive any further after the issuance of the aforesaid exemption notification. (187-C-E]

F 3.6. It is, of course, true that the Union Parliament has not ex~rCised its concurrent legislative powers under Entry 33 of List III for regulating the sale and purchase of sugarcane. But, the Sugarcane (Control) Order 1966 promulgated under the general legislation of the Essential Commodities Act, 1955 when read harmoniously and in conjunction with the Sugarcane G Act carves out a special field for their operation and by the sweep of their combined operation the general provisions of the Market Act pro tanto get excluded so far as the transactions of purchase and sale of sugarcane in the market area are concerned. The wide sweep of general notification of Section 3 of the Market Act, therefore, will have to be read down by excluding from its general sweep sugarcane and its products as the definition of'agricultural H produce' would otherwise include not only primary produce of agriculture but also any other commodity processed or manufactured out of such primary A agricultural produce. (175-E-FJ

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- SALE OF SUGAR

4.1. The relevant provisions of the various Sugar (Control) Orders, namely, Sugar(Control) Order, 1966, Sugar (Packing and Marketing) Order 1970, Sugar (Restriction on Movement) Order, 1970 and Levy Sugar Supply B (Control) Order, 1979, issued under Section 3 of the Essential Commodities Act clearly indicate that all sale transactions of sugar by factories manufacturing sugar out of sugarcane, the basic 'agricultural produce' and raw material, are regulated by these provisions. Section 15 of the Market Act is out of picture qua even these transactions. The sale of sugar c manufactured out of sugarcane and fixation of price thereof would also, therefore, go out of the sweep of Section 15(1) and (2) of the Market Act and would be governed wholly by these special provisions of the Control orders. (198-G-H]

4.2. On the parity of reasons governing the transactions of sale and D purchase of sugarcane, transactions of sale of sugar manufactured out of purchased sugarcane by the very same sugar factories functioning in the

- market area would also be governed by special provisions of the Sugar (Control) Orders and would pro tanto get excluded from the general sweep of the Market Act. (198-H; 199-AJ E 4.3. The provisions of Sugar (Control) Orders have not to be read in isolation but will have to be read with the special provisions controlling the production, sale and purchase of sugarcane out of which sugar is manufactured by the very same sugar factories functioning in the market area. They are all integrated transactions and are subject to a well knit statutory scheme of control of these commodities. They together, therefore, provide a complete machinery for controlling the production, sale and purchase not only of the raw material, i.e., sugarcane, but also finished product i.e., sugar. In this background has to be visualised legislative intent underlying the enactment of the Sugarcane Act on the one hand and the exclusion of Section 15 of the Market Act to such transactions by the delegate of the legislature, namely, the State of Bihar, on the other. (199-F; 200-A-B)

SALE OF MOLASSES ~ 5.1. Molasses is a by-product of the sugar industry and the sale of H

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A molasses by the sugar factories is wholly controlled by the statutory provisions contained in the Bihar Molasses (Control) Act, 1947. As per Section 5 of , the Act, a sugar factory cannot even enter into an agreement or contract with any person other than the Government or person licensed by the controller for supply of molasses. AU molasses haye to be sold by sugar factories in accordance with the directions of the Molasses Controller issued under Section 6 of the Molasses Act. [201-B-C]

5.2. The State Legislature felt the need of having special provisions for. regulating the sale and purchase of molasses and that by itself would exclude the need to get these transactions generally controlled and regulated by the sweep of the Market Act. Resultantly, the State of Bihar has also excluded the applicability of Section 15 of the Market Act, so far as the sale transactions of molasses by the sugar factories operating in the market area are concerned. The Molasses (Control) Act specially enacted laying down a detailed statutory .... scheme of control of sale and purchase of molasses produced by the sugar factories in the market area will remain within the statutory framework of the special statute. The general provisions of the Market Act have, therefore, to give way to the special statute. [203-C; E~F-G]

SIEL Ltd. and Others v. Union of India and others, [1998) 7 SCC 26, referred to.

E 6.1. Once the State of Bihar itself has exempted the purchase of sugarcane and the sale transactions of sugar and molasses from the operation of Section 15 of the Market Act, they would be out of sweep of the general provisions of the Market Act and would not statutorily enjoin the market committees to provide any infrastructure for regulating purchase and sale of such agricultural produce to enable them to bring home the charge of market fee on their purchase or sale transactions as per Section 27 of the Market Act. (203-F-G)

6.2. Market fee levied under the Market Act is a 'fee' and not a 'tax'. The Market Act in so far as it enacts Section 27 levying market fee is referable to Entry 66 of the State List read with Entry 47 of the Concurrent List. Both of them deal with topics of legislation pertaining to fees in respect of the matters enumerated in the respective lists. Before justifying levy of market fee on any transaction the services to be rendered by the Market Committee must be in connection with the sale and purchase transactions· of agricultural produce falling for regulation under the Market Act. On the facts of the present case, Section 15 of the Market Act as a whole is out of picture for controlling purchase and sale of sugarcane, sugar and molasses A by sugar factories operating in the market area, and, therefore, the charge of market fee as envisaged by Section 27 would not get attracted at all for , them. [204-C; 205-E; 207-E-F)

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Kewal Krishan Puri and Anr. v. State of Punjab and Anr. etc., (1980) 1 sec 416, relied on. B Market fee paid in past shall not he refunded and Market Fee not collected in past shall not be collected:

7.1. Keeping in view the p~culiar facts and circumstances of these cases, in exercise of powers under Article 142 of the Constitution, it is directed that the present decision will have only prospective effect. After the pronouncement of this judgment all future transactions of purchase of sugarcane by the sugar factories concerned in the market area as well as the sale of manufactured sugar and molasses produced therefrom by utilising the purchased sugarcane by these factories will not be subjected to the levy of market fee under Section 27 of the Market Act by the market committees concerned. All past transactions upto the date of this judgment which have suffered the levy of market fee will not be covered by this judgment and the collected market fees on the past transactions prior to the date of this judgment will not be required to be refunded to any of the sugar mills which might have paid the market fees. (209-A-B-C] E 7.2. However, if any of the market committees has been restrained from recovering market fee from the writ petitioners in the High Court or if any of the writ petitioners in the High Court has, as an appellant before this Court, obtained stay of the payment of market fee, then for the period during which such stay has operated and consequently market fee was not paid on the transactions covered by such stay orders, there will remain no occasion for the market committee concerned to recover such market fee from the concerned sugar mill after the date of this judgment even for such past transactions. (209-D-E)

8. The present judgment will be applicable in connection with the purchase of sugarcane by the sugar factories as well as the sale of manufactured sugar and molasses by these factories functioning in the areas of market committees concerned and whose transactions are governed by the provisions of the Sugarcane (Control) Order, 1966 as well as the Bihar Sugarcane Act of 1981 and also by the relevant provisions of the Sugar Orders and the provisions of Molasses (Control) Act. Any other H

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A transactions of purchase and sale, in principal market yard or sub-market yards, of sugarcane, sugar or molasses by any other licensed dealers not governed by the aforesaid provisions will not be covered by the ratio of this judgment. [209-H; 210-A)

WHEAT PRODUCTS-ATTA, MAIDA, SUJ!, BRAN ETC. B 9.1. Wheat being a produce of agriculture, and Atta, Maida and Suji being products resulting after processing such basic agricultural produce, would squarely get covered by the sweep of the term 'agricultural produce' and hence their inclusion in the Schedule enacted under Section 2(1)(a) of the Market Act as types of cereals cannot be found fault with. [214-C-D)

- 9.2. It is true that the Union Parliament in exercise of its legislative power under Entry 52 of List I of the Seventh Schedule to the Constitution has enacted the Industries (Development and Regulation) Act, 1951 which deals with industries in general. It is also true that flour industry is listed as one of the scheduled industries as item no. 27(4) under the caption 'food processing industries'. However, production of wheat as raw material or its sale is not covered by the said Act. Further, unless the Central Government in exercise of its statutory power under Section 18G of the said Act promulgates any statutory order covering the field, it cannot be said that mere existence of a statutory provision for entrustment of such power by itself would result into regulation of purchase and sale of flour even if it is a scheduled industry. Admittedly no such Order has been promulgated by the CentralGovernment for regulating·purchase and sale of flour in the market areas. The Wheat Rolling Flour Mills (Licensing and Control) Order, 1957 F was neither concerned with agriculturists nor was it concerned with pricing, purchase and sale of wheat and wheat products. Similarly Bihar Trading Articles (Licenses Unification) Order, 1984 does not cover the field. Therefore, it cannot be said that the field for regulation of sale and purchase of products of flour industry like Atta, Maida, Suji, Bran etc. would remain outside the sweep of Market Act. (210-H; 211-A; D-E; 213-E) G SIEL Ltd. and Ors. v. Union of India and Ors., [1998) 7 SCC 26, relied on.

The Hingir-Rampur Coal Co. Ltd and Ors. v. The State ofOrissa and H Ors., [1961)·2_SCR 537, distinguished.

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VEGETABLE OILS A 10.1. All vegetable oils are treated to be 'agricultural produce' as per serial no. 4 of the schedule framed under Section 2(l)(a) of the Market Act. In view of the general sweep of the said definition, oil manufactured by the oils mills functioning within the areas of the Market Committees concerned by crushing oil-seeds which are undisputedly agricultural produce and B subjecting them to manufacturing process, cannot be said to be outside the sweep of the regulatory provisions of the Market Act. [214-E-F]

10.2. Vegetable Oil Products Control Order, 1947, the Pulses, Edible - Oilseeds and Edible Oils (Storage Control) Order, 1977, and the Vegetable Oil Product Producers (Regulation of Refined Oil Manufacture) Order, C 1973, all framed under Section 3 of the Essential Commodities Act, 1955, do not deal with the topic of regulation of prices and sale and purchase of vegetable oil products. Consequently, the field is wide open for the legislation of the State, namely, the Market Act for its applicability to the transactions ofsale and purchase ofvegetable oil products in the market areas concerned. D [214-G-H; 215-A]

RICE MILLING INDUSTRIES

11.1. Rice milling industries locatel1 and functioning in the market area when purchase, within the market area, raw material paddy, whether grown in the market area concerned or outside, then such purchase will attract the regulatory provisions of the Market Act. So far as the manufacture ... of rice out of such paddy is concerned, once manufacturing takes place within the market area, it would get squarely covered by the wide sweep of definition of Section 2(l)(a). The Rice Milling Industry (Regulation) Act, 1958 regulates the working of rice milling industries and it does not seek to cover the field of regulation of purchase and sale of products of rice milling industries. (216-C-D)

11.2. However, if the appellant rice mills import paddy already purchased from outside the market area then on such transactions of outside purchase and import of paddy in the market area, there would remain no occasion for the market committees concerned to subject such transactions to the regulating machinery of the Market Act or demand any market fee thereon. [216-B]

1.2. So far as the regulation of sale and purchase of rice within the market area is concerne<t, Section 15 of the Market Act applies to the H r 160 SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A transactions of licensed dealers dealing with such agricultural produce in the market area. Hence the entire machinery of the Market Act will be , - ·" I applicable to regulate transactions of sale and purchase of paddy by the rice mills within the market area as well as sale of rice by them within that area as all these transactions will have to take place in the market yard or sub- B market yards as per Section 15 of the Act. [216-E-F)

13.1. The statutory mandate of Section 15 does not go beyond the regulation of transactions regarding pur~hase and sale of agricultural produce and that can be required to be effected only at the relevant principal market yard or sub-market yard or yards. None of the provisions of the Market Act C would entitle the market committee to insist on shifting of the business premises of any milling company or factory processing agricultural produce located within the market area to any particular market yard or sub-market I- yards. The directions in the notice issued to appellant-rice milling companies requiring them to shift their establishments of business in the main market yard or sub-market yards are accordingly read down. The said notice when so read down would remain well sustained. (217-C-D]

13.2. The appellants will not be required to shift the location of the rice mills to principal market yard or sub-market yards if otherwise they arc not already so located but are functioning at any place within the market area. However, their sale and purchase transactions of paddy and rice will, of course, be required to be carried on only in market yard or sub-market yards concerned as mandated by Section 15 of the Market Act. [217-E-F)

MILK AND MILK PRODUCTS

14.1. The term agricultural. produce as defined in s.2(1)(a) of the F Market Act clearly indicates that the agricultural produce which is to be covered by the sweep of the Act has to be one which should be specified in the Schedule to the Act framed as per s.2(1)(a). The Schedule contains one of the animal husbandry products at item VIII, sub-item 20 as milk ex-cept liqui<i milk. Thus any product consisting of solidified milk, like milk powder, is contemplated by the said item. By no stretch of imagination, tinned baby food containing various ingredients which may include some milk fats or proteins though in powder form can be said to be milk powder simpliciter •. or whole milk not in liquid form. It is also pertinent to note that there is no item of milk products in the Schedule to the Act under the caption 'Animal Husbandry Products', whereas Butter and Ghee are separately mentioned as items 7 and 8 which are wholly manufactured out of milk. Therefore, save and except butter and ghee no other milk product is sought to be covered by the sweep of the Act, as Animal Husbandry products and the basic 'Animal Husbandry Produce' like 'milk' only in solid form is sought to be covered by a separate solitary item no. 20 as one of the 'Animal Husbandry Products'. Therefore, any other manufactured product namely, 'LACTODEX' and 'RAPT AKOS' S.I.F. (Special infant food) utilising some ingredients of milk powder as one of the ingredients but which are processed by addition of all other extra items with the result that finished products like baby foods emerges as manufactured items for serving as substitute of milk to be fed· to infants who cannot digest liquid milk or solidified milk as such, cannot be treated to be 'agricultural produce' as part and parcel of listed 'Animal Husbandry products' mentioned in the Schedule. C (218-F; 220-E; G-H; 221-A-B]

p. 161 Copy page pinpoint

14.2. On the material before the High Court in connection with the ingredients of the two products of the appellant, namely, 'LACTODEX' and 'RAPTAKOS' S.I.F. (Special infant food) it could not be effectively shown by the respondents beyond any doubt that these two products also were D 'agricultural produce' being Animal Husbandry products of 'milk' in a non- liquid form. Consequently, there was no occasion for the respondent ·- authorities to insist that the appellant for the sale of the aforesaid two products within the market area governed by the Market Act in the State of Bihar was required to take any licence under that Act. The impugned E notice calling upon the appellant to take licences under the Market Act is quashed. (221-E-F-Gl

14.3. Since only grievance of the appellant was with regard to taking of licence by it, the question of refund of any market fee does not survive for consideration. (221-Fl F 1FA

15.1. Manufactured tea being 'agricultural produce' under the Market Act, sale of it in packed condition within the market area would squarely attract the charge under Section 27 of the M~rket Act which is widely G worded. The moment the agricultural produce as defined by Section 2(1)(a), is bought or sold in the market area, Section 27 would get attracted to cover such transaction. It is also pertinent to note that Section 15 sub-section (1) of the Market Act is applicable in the present case to cover such transactions of sale of packed tea within the market areas of the concerned market committees governed by the Act. Save and except such quantity as may be H

p. 162 Copy page pinpoint

A prescribed for retail sale or personal consumption to be outside the sweep of Section 15(1) of the Act, rest of these sale transactions regarding manufactured agricultural produce would remain governed by the sweep of the Act. [227-D-F)

15.2. On a conjoint reading of Section 2(1)(a), Section 15 and the B relevant entry in the Schedule, it is clear that whether the manufactured agricultural produce has undergone manufacturing process within the market area or not or whether such agricultural produce in its raw form is grown in the market area or outside or whether the processed 'agricultural produce' is imported only for sale within the market area, the applicability of the Act C cannot be said to be ruled out to cover all these types of sale transactions. Even if an agricultural produce initially is not within the market area and it is brought in manufactured form within the market area for sale, such sale transaction in connection with such a produce would be covered by the swew of the Market Act. [227-G; 228-G)

D 15.3. It cannot be said that merely because the tea leaves produced in tea gardens outside the State of Bihar are processed by the appellant in its factories outside Bihar and are converted into blended and branded qualities of packed tea like red label tea or green label tea etc., and even though such packed tea is sold within Bihar Market areas, the Market Act cannot be applied to such sale transactions of manufactured tea after importing it in E the State of Bihar. [230-E-F)

Ram Chandra Kailash Kumar and Company and Ors. v. State of U.'P. and Anr. etc. etc., [1980) Suppl. SCC 27, relied on.

Rameshchandra Kachardas Porwal and Ors. v. State of Maharashtra F and Ors. etc. etc., [1981) 2 sec 722, affirmed. 16.1. The provisions of the Tea Act, 1953 which are enacted by the Union Parliament under Entry 52 of List I read with Entry 33 of List Ill of Seventh Schedule to the Constitution of India deal with the control of tea industry in public interest. The basic feature of the Tea Act is to provide for G control of extensio.J.1 of tea cultivation in the areas where tea leaves are grown in tea gardens. However, it is pertinent to note that the said.Act does not provide for regulating the sale of purchased roasted tea leaves after they are subjected to manufacturing process of blending and are brought in the market for sale as packed tea. The place where such packed tea is to be sold and the price at which it has to be sold are matters on which the Tea Act, H 1953 does not contain any statutory provisions. The objective of the Tea Act > is focussed on tea cultivation/tea export and establishment of tea A manufacturing plants. It is quite different from that of the Market Act, 1960 enacted by the Bihar Legislature. The Tea Act has no concern with the establishment of markets in the State of Bihar or other States wherein packed tea could be sold in wholesale or retail markets so as to ultimately reach the Indian consumers. Similarly none of the following, viz. Tea B Committee, 1934, Indian Tea Control Act, 1938 and Central Tea Board Act, 1949, Tea (Distribution and Export) Order, 1957, Tea (Marketing) Control Order, 1984, Tea Warehouses (Licensing) Order, 1989, Tea (Waste) Control Order, 1959 have occupied the field of regulation of sale and purchase of packed tea in market areas. [233-H; 234-A-B; 237-B]

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16.2. It is true Section 30 found in Chapter VI of the Tea Act deals with c control by the Central Government and lays down the power of the Central Government regarding control, price and distribution of tea or tea waste. However, till date no such control order has been issued by the Central Government under the said provision. In the absence of any Order under Section 30 sub-section (1) clauses (a) & (b) passed by the Central Government D with regard to regulation of prices and location of market places where packed tea could be sold to wholesale dealers or even to retailers, the field remains wide open for the State Legislature to exercise its concurrent legislative power under Entry 33 of List Ill for effectively dealing with these matters. This is precisely what has been done by the State Legislature by E enacting the Market Act. Mere possibility of issuance of any future order under Section 30(1) of the Tea Act by the Central Government, in the absence of any existing express order to that effect, cannot be said to have occupied the field regarding purchase and sale of manufactured tea and fixation of maximum or minimum price thereof or the location of such sales. 1234-C; 236-E-FI F Ch. Tika Ramji & Ors. etc. v. The State of Uttar Pradesh & Ors., (19561 SCR 393.

SIEL Ltd. and Ors. v. Union of India and Ors., 119981 7 SCC 26, affirmed. G Shyamkant Lal v. Rambhajan Singh, (1939) F.C.R. 188 212, referred to. 16.3. The various Tea Orders indicate that the Central Government in its wisdom did not think it fit to issue any Order under Section 30 of Tea Act, sub-section (1), clauses (a) & (b) and therefore, kept the field wide open H

164 SUPREME COURT REPORTS [1999] SUPP. I S.C.R.

A in connection with the topics covered by the said provisions of Section 30 for the State Governments to exercise their legislative powers and enact suitable legislations under Entry 33 of the Concurrent List of the Seventh Schedule to the Constitution. [239-E-F] 16.4. The insertion of the item pertaining to Tea (leaf and dust) in the B Schedule to the Market Act, therefore, cannot be said to be an unauthorised e~erciseon the part of the delegate of the State Le~islature, namely, the State Government which has exercised its power under Section 39 of the Market Act. (236-F) 16.5. Under the relevant Orders issued by the Central Government C under Section 30 of the Tea Act, the purchasers of tea have also to be licensed. Such licensed purchasers can bid at the auction to be held as per section 15, sub-section (2) of the Market Act for purchasing such packed tea. At that stage, there is no inconsistency Qr conflict between the earlier public auction held under the relevant statutory Orders issued under Section 30 of the Tea Act concerning roasted tea leaves and the auction of packed and processed tea by the appellant selling such commodities in the market areas through their stockists to wholesale dealers and traders operating in the market area and the market yard or sub-market yards concerned. (240-H; 241-A-B)

17. So far as the appellant is concerned, all that is required of it is to take licence for selling packed tea in market yards or sub-market yards from the market committee concerned. The appellant is not required to bear the burden of any market fee. As per Section 27 of the Market Act, the burden of market fee is to be borne by the purchasers of such packed tea, namely, the wholesale dealers licensed to purchase such Tea as per the F Central Orders mentioned earlier. Such purchasers have not brought in challenge levy of market fee on them. Once the appellant's stockist sells the pa_cked tea in the market yard or sub-market yards maintained by the market committee, as laid down by s.15 which remains fully operative to cover such transactions, the entire infrastructural facilities made available by the market committee to all the purchasers and sellers of agricultural G produce in the market yard, would automatically become available to the appellant's stockist.. It can, therefore, not be said that there is no quid pro quo underlying transactions of sale of packed tea by the appellant's stockist in the market yard or sub-market yards maintained by the market committee concerned. (242-E-G)

H 18. The contention that the Market Act would be unconstitutional cannot be countenanced for twin reasons. Firstly such a contention was not canvassed either before the High Court or before this Court in the present proceedings. Secondly, in any case, on the applicability of the Act once the transaction of sale of packed tea takes place in the market area, it cannot but be said to be imposing reasonable restriction under Article 19 sub- article (6) on the appellant's fundamental right. It is pertinent to note that the appellant has not challenged the vires of Section 27 of the Market Act. Besides, the appellant, as a seller of manufactured tea, has not to bear any burden of the imposed market fee on sale transactions. All that it gets is the benefit of the infrastructural facilities made available by the market committee for regulating such transactions. [246-C-D; B-E)

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CIVIL APPEL LA TE JURISDICTION : Civil Appeal No. 398 of c 1977 Etc. Etc. From the Judgment and Order dated.20.4.76 of the Patna High Court in C.W.J.C. No. 3296of1975. R.N. Trivedi, Additional Solicitor General, Shanti Bhusan, Y.V. Giri, D Dipankar Gupta, G.L. Sanghi (A.K. Goel) Addi.Adv. General, Subodh Markeandeya, Rakesh Dwivedi, H.N. Salve, H.L. Agrawal, Ram Janam Ojha, Shri Narain, Ramesh K. Agrawal, H. Deorajan, Sandeep Narain, Dhruv Agarwal, Praveen Kumar, Ranjit Kumar, Ms. Vinu Tamta, Chandra Bhushan, Ms. Parul Gupta, Gopal Jain, R.N. Karanjawala, Ms. Nandani Gore, Sandeep Mittal, Ms. E Manik Karanjawala, Ms. Meera Mathur, A.K. Srivastava, R.B. Misra, K. Misra, Sunil Jain, Gauri Rasgotra, S.S.Khanduja, C.N. Sree Kumar, A. Subba Rao, Saket Singh, B.B. Singh, D. Goburdhan D.N. Goburdhan, Ravinder Narain, Ms. A.K. Verma, Sanjiv Sen, lrshad Ahmad, Sudhir Kumar Gupta,M.P. Jha, Anis Ahmad Khan, S. Ganesh, Ram Ekbal Roy and Ms. Pinki Anand for appearing parties. F