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

Learned senior counsel for the iespondents, on the other hand, tried to salvage the situation by submitting that even though the Tea Act may control the sale and purchase of tea which is a highly monopolistic and export earning commodity, once the blended tea in deliverable state duly packed in tins and other packages by the appellant tea company enters the Bihar markets for sale, it cannot be said that the sale of this commodity cannot be treated to be sale of agricultural produce by the appellant within the market area in the State of Bihar as agricultural produce defined by Section 2(1 )(a), would cover not only the purchase and sale of agricultural produce in its raw form but also in its processed and manufactured form as per the wide sweep of the said definition. He submitted that it cannot be disputed that tea in its raw form is an agricultural produce because tea leaves are grown in tea gardens and then they are plucked and processed in tea factories and after blending the manufactured tea in deliverable state becomes available to be sold in wholesale markets and then in the retail markets. That even though the appellant's factory manufacturing the blended tea may be outside the State ofBihar, the moment the blended tea in packed form is sold in the State of Bihar in the market areas concerned, it cannot be said that the provisions of the Market Act would not apply to such sale transactions. On a conjoint reading of Section 2(l)(a) and the Schedule under Miscellaneous item XII G sub-item 30, therefore, it has to be held that the Market Act would squarely get attracted to regulate the sale of such produce of tea by the appellant in the Bihar markets. So far as the Tea Act is concerned, it is submitted that it only regulates the sale of plucked tea from the tea gardens and provides machinery for sale by auction of such tea at the relevant centres and even in such auction when the appellant purchases these roasted tea \eaves, it H

226 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A cannot be said that the Tea Act would cover any further transactions of ;. ~- manufactured tea out of the purchased tea leaves by auction purchasers like I the appellant at its factories situated outside the Bihar State. That auction purchased tea leaves are processed by the appellant and blending work is done thereafter. That what is relevant for the applicability of the Market Act B is the fact that this manufactured tea packed in suitable packets and tins is brought for sale within the market area in the Bihar State and these are the transactions of sale of manufactured tea out of the basic agricultural produce tea leaves that would attract the sweep of the Market Act, notwithstanding the provisions of the Tea Act. That once the Market Act applies to such sale transactions, the entire infrastructural facilities would be available to the appellant as these sales have to take place in the market yard or sub-market yards as required by Section 15 of the Act. Once the appellant gets the benefit of this infrastructure, it cannot be said that no sufficient quid pro quo is made available under the Act by the market committees concerned to justify them to levy the market fee from the buyers of tea. That so far as the appellant is concerned, there is no burden of paying market fee as a seller of manufactured tea. The burden will be borne by the buyers who are not making any grievance in this connection.

In the light of the aforesaid contentions, the following points arise for our consideration : ;..._

E I. Whether the basic agricultural produce i.e. "tea leaves" which is subjected to manufacturing process outside the Bihar State and is imported and sold in manufactured condition as packed tea within the Bihar State in the market areas concerned, attracts the provisions of the Market Act for regulating such transactions I

F of sale. I

2. ·Whether the Tea Act of 1953 and the relevant orders promulgated l thereunder fully occupy the field regarding regulation of purchase I and sale of tea and, consequently, the Market Act, being a general Act, would get excluded for regulating the transactions of sale of manufactured tea in Bihar State and G

3. Whether there is adequate quid pro quo supporting the levy of market fee on such transactions of sale of manufactured and packed blended tea in markets governed by the Market Act.

We will now deal with the aforesaid three points in the same sequence r- H in which they were pressed for consideration. ''

BELSUND SUGAR CO. LTD. v. STATE [S.B. MAJMUDAR, J.] 227

POINT NO. I: A At first blush, learned senior counsel for the appellant Shri Shanti Bhushan appeared to be on a firm footing when he submitted that the legislative intention underlying the enactment of the Market Act was to protect illiterate and unwary agriculturist from middlemen so that he may not be exploited by them and may get appropriate price for his basic agricultural produce. But on a closer scrutiny, the said contention does not appear to be well sustained. Section 2(l)(a) of the Market Act, as seen earlier, includes in the definition of agricultural produce not only the primary produce grown in the field but also covers all processed or non-processed, manufactured or non-manufactured agricultural produce as specified in the Schedule. In the light of the afore.said wide sweep of this definition, it cannot be said that tea leaves which are produced in tea gardens being primary agricultural produce would cease to be agricultural produce once they got processed. 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 so manufactured out of the basic agricultural raw material 'tea leaves'. It is also not in dispute that Tea (leaf and dust) is a Scheduled item. Once that is so, sale of manufactured tea in packed condition within the market area would squarely attract the charge under Section 27 of the Act which, as noted earlier, is widely worded. The moment the agricultural produce as defined by Section 2( I )(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 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 prescribed for retail sale or personal consumption to be outside the sweep of Section 15(1) of the Act, F rest of these sale transactions regarding manufactured agricultural produce would remain governed by the sweep of the Act. On a conjoint reading of Section 2(1 )(a) and Section 15 and the relevant entry in the Schedule, there is no escape from the conclusion that whether the manufactured agricultural produce has undergone manufacturing process within the market area or not G 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 cannot be said to be ruled out to cover all these types of sale transactions. The question posed by Shri Shanti Bhushan learned senior counsel appearing for the appellant for qur consideration is no longer res integra. A Constitution Bench H

228 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A of this Court in the case of Ram Chandra Kai/ash Kumar and Company and Ors. v. State of UP. and Anr. etc. etc., [1980] SuppLSCC 27, speaking through Untwalia J., had to consider.the question of imposition of market fee under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 on transactions of purchase and sale of agricultural produce in the market area. While considering this question, various contentions raised by traders operating in the agricultural market in U.P. were listed in para 9 of the report. Contentions no.9 and 23 listed in para 9 of the report are relevant for our purpose. Contention no.9 reads as under :

"No market fee could be levied on goods not produced within the limits of a particular market area and if produced outside and brought in such area."

Contention no.23 reads as under :

"Fee can be charged only on those transactions in which the seller is producer and not on any other transaction."

Repelling these contentions, the Constitution Bench held that market fee could be levied on transactions of sale of goods even though such goods are· produced outside the State of Uttar Pradesh or outside the market area of that particular market committee, provided the transactions of sale take place within the limits of that market area. It was also held that, on the other hand, there was no provision in the Act or the Rules to limit the operation of the law in a particular market area only in respect of the agricultural produce produced in that area.

So far as Contention no.23 was concerned, approving the Patna view it was held that in the U.P. Act even traders under certain circumstances had been made liable to pay such fee. Similarly, the argument that the market fee can be charged only on those transactions in which the seller is the producer of agricultural produce and not on any other transaction, was also found devoid of any substance by the Constitution Bench. G In view of the aforesaid pronouncement of the Constitution Bench, therefore, it must be held that even if an agricultural produce initially is not grown in the market area and it is brought in manufactured form within the market area for sale, such sale transaction in connect.ion with such a produce would be covered by the sweep of the Market Act. 1.'he same view was taken ( H by two later judgments of this Court. In the case of Rameshchandra Kachardas \

BEL SUND SUGAR CO. LTD. v. ST ATE [S.B. MAJMUDAR, J.] 229

l'orwal and Others v. State of Maharashtra and Others etc. etc., [1981] 2 SCC A 722, wherein a three Judge Bench of this Court, speaking through Chinnappa Reddy, J. amongst others, had to consider the question whether change of location of market under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 could be held to be legally justified. It was held that the power to establish principal market or a subsidiary market carried with it the power to "dis-establish" such market and that power to establish principal or sub-market yard could be exercised from time to time. In para 11 of the report the further contention was examined as to whether agricultural produce which is imported into the market area from outside the market would be covered by the sweep of the Market Act. While answering this contention in affirmative, it was held that even if agricultural produce is imported into the market area and subjected to sale and purchase thereof in the market area, the provisions of the Market Act would get attracted. The very same contention which learned senior counsel Shri Shanti Bhushan urged for our consideration that the Act is enacted for the interest of agriculturists only and for their sole benefit was repelled. For coming to that conclusion reliance was placed on a decision of the Constitution Bench of this Court in the case of Rameshchandra D Kachardas Porwa/ and Others (supra). In this connection, the following pertinent observations were made at page 735, para 11 of the report. " .. The basic assumption of the submission was that the Maharashtra Agricultural Produce Marketing (Regulation) Act was conceived in the interests of the agriculturists only and intended for their sole benefit. This basic assumption is not well founded. xxxx xxxx xxxx xxxx It is also clear to our mind that the regulation of marketing of agricultural produce, if confined to the sales by produce~s within the market area to traders, will very soon lead to its circumvention in the guise of sales by traders to traders or import of agricultural produce from outside the market area to within the market area." In our view the aforesaid observations are in Rameshchandra Kachardas Porwal's case (supra) are in consonance with the decision of the Constitution Bench of this Court in Ram Chandra Kai/ash Kumar and Company and G Others (supra) and are well sustained. This very question was once again examined by another three Judge Bench of this Court in the case of Rathi Khandsari Udyog and Others v. State of Uttar Pradesh and Others, [1985) 2 SCC 485 wherein Fazal Ali J., speaking for majority, relying upon the earlier decisions of this Court including , H

230 SUPREME COURT REPORTS (1999] SUPP. I S.C.R.

A the Constitu:ion Bench judgment in the case of Ram Chandra Kai/ash Kumar and Company and Others, (supra}, considered the very same contention as canvassed by learned senior counsel Shri Shanti Bhushan, namely, that the Market Act was meant to protect the agriculturists who produce basic agricultural produce and was not meant to protect big producers having factories wherein they process the raw agricultural produce and manufacture marketable commodity out of it. Repelling such narrow view of the regulatory provisions of the Market Act, at para 35 of the report, the following pertinent observations were made :

"The Legislature, it is also argued, 'could not have intended' to cover the produce turned out by producers like the petitioners.

Xxxxxxx xxxxxx xxxxxx. While this is one of the objects of the Act, it is not the sole or only object of the Act. The Act has many more objects and a much wider perspective such as development of new market areas, efficient collection of data, and processing of arrivals in Mandis with a view to enable the World Bank to give substantial economic assistance to establish various markets In Uttar Pradesh;j as also protection of consumers and even traders from being exploited in the matter of quality, weight and price .. "

E In view of this settled legal position, therefore, it cannot be held 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 F areas, the Market Act cannot be applied to such sale transactions of manufactured tea after importing it in the State of Bihar. The first point, therefore, has to be rejected. That takes us to the second contention in ·support of the appeal.

POINT NO. 2: G 1"I!e Tea Act of I 953 provides for control by the Union Government of the .Tea Industry, including the control, in pursuan~e of the International Agreement now in force, of the cultivation of tea in, and of the export of tea from, India and for that purpose to establish a Tea Board and levy a duty of excise on tea produced in India. It is necessary to have a bird's eye view of H its relevant provisions; Section .4 deals with a board called~Tea Board'. The

I BELSUND SUGAR CO. LTD. v. STATE [S.B. MAJMUDAR, J.) 231 l members of the board not exceeding forty are to be appointed by the Central A Government by notification in the official gazette and would consist of various persons representing -

(a) owners of tea estate and gardens and growers of tea; (b) persons employed in tea estates and gardens; B (c) manufacturers of tea; (d) dealers including both exporters and internal traders of tea; (e) consumers; (f) Parliament; c (g) the Government of the principle tea-growing States.

Amongst others, Section I 0 deals with the Functions of the Board - It provides as under :

"(I) It shall be the duty of the Board to promote, by such measures D as it thinks fit, the development under thf control of the Central Government of the tea industry. ,

(2) Without prejudice to the generality of the provisions of sub- section (1), the measures referred to therein may provide for - • E (a) regulating the production and extent of cultivation of tea; (b) improving the quality of tea; (c) promoting co-oPerative efforts among growers and manufacturers of tea; F (d) undertaking, assisting or encouraging scientific, technological· and economic research and maintaining or assisting in the maintenance of demonstration farms and manufacturing stations; (e) assisting in the control of insects and other pests and diseases affecting tea; G (f) regulating the sale and export of tea; (g) training in tea testing and fixing grade standards of tea; (h) increasing the consumption in India and elsewhere of tea and carrying on propaganda for that purpose; H

232 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A (i) 'registering and licensing of manufacturers, brokers, tea waste dealers and persons engaged in the business of blending tea;

G) improving the marketing of tea in India and elsewhere;

(k) Xxxx. xxx xxxx" B Section 12 deals with method of control of extension of tea cultivation.

Section 14 deals with grant of permission to plant tea.

Section 15 provides for grant of permission to plant tea in special circumstances. c Owners of tea estate can establish tea nurseries as provided by Section 16.

Chapter IIIA deals with management or control of tea undertakings or tea units by the Central Government in certain circumstances. D Section l 6E provides for power of the Central Government to take over tea undertaking or tea unit without investigation under certain circumstances.

Chapter IV deals with control over the export of tea and tea seed . .... E Section 30 in Chapter IV deals with power of the Central Government to control price and distribution of tea or tea waste.

"Power to control price and distribution of tea or tea waste:--(1) The Central Government may, by order notified in the Official Gazette, fix in respect F of tea of any description specified therein : -

(a) the maximum price or the minimum price or the maximum and minimum prices which may be charged by a grower of tea, manufacturer or dealer, wholesale or retail, whether for the Indian market or for export;

G (b) the maximum quantity which may in one transaction be sold to any person."

Sub-section (3)·of Section 30 enables the Central Government by general or special order to -

H "(a) prohibit the disposal of tea or tea waste except in such

BEL SUND SUGAR CO. LTD. v. ST ATE [S.B. MAJMUDAR, J.] 233

circumstances and under such conditions as may be specified in the order;

(b) direct any person growing, manufacturing or ho!ding in stock tea or tea waste to sell the whole or a part of such tea or tea waste so grown or manufactured during any specified period, or to sell the whole or a part of the tea or tea waste so held in stock, to such person or class of persons and in such circumstances as m~y be specified in the order."

Sub-section (4) of Section 30 reads as under :

"Where in pursuance of any order made with reference to clause (b) C of sub-section (3), any person sells the whole or a part of any quantity or tea or tea waste, there shall be paid to him as price therefor-

(a) where the price can be fixed by agreement consistently with the order, if any, relating to the fixation of price issued under sub-section (l ), the price so agreed upon; D (b) Xxxxxxxxxx

(c) Xxxxxxxxx."

Section 32 deals with appeal to the Central Government. E Section 33 deals with licensing of brokers, tea manufacturers, etc.

Section 39 deals with penalty for illicit cultivation.

Section 40 deals with removal of tea planted without permission. F It is not in dispute between the parties that, as per the scheme of the Tea Act, tea leaves which are plucked in tea gardens in different States of the country, especially, in North-eastern State like Assam, West Cengal and other States and which are roasted in tea factories are auctioned at Calcutta, Guwahati, Siliguri and other notified places. It is also an admitted position that G the appellant purchases roasted tea leaves at such auctions and then they are blended and packed according to different brands and rates by the appellant at its factories outside the Bihar State and then markets it throughout India at fixed prices, local taxes varying from place to place.

The aforesaid provisions of the Tea Act which are enacted by the Union H

234 SUPREME COURT REPORTS (1999) SUPP. I S.C.R.

A Parliament under Entry 52 of List I read with Entry 33 of List III deal with the control of tea industry in public interest. The basic feature of the Tea Act is to provide for control of extension 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 B 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, 1953 does not contain any statutory provisions. However, Shri Shanti Bhushan, learned senior counsel for the appellant, strongly relied upon Section 30 of the Act. It is true, as seen earlier, that the said section found in Chapter C VI deals with 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, it is to be noted that till date no such control order has been issued by the Central Government under the said provision. Learned senior counsel submitted that once the Central Legislature has enacted the aforesaid provision and evinced its intention to control price and distribution of tea or tea waste, the field gets occupied by legislation under Entry 33 of the Concurrent List and to that extent the provisions of Market Act would get excluded. It is not possible to accept this contention for the simple reason that so long as the Central Government does not issue any order under Section 30 of the Tea Act, the field dealing with fixation of maximum price or minimum price to be charged by a grower of tea, manufacturer or dealer, wholesale or retail, for Indian market leaving aside the question of export, ;. would not be occupied. In other words, it would remain open for the State Legislature to cover that field by exercising its legislative power under Entry 33 of the Concurrent List. Even this aspect of the matter is also not res integra. It is covered by a decision of the Constitution Bench of this Court F in Ch. Tika Ramji & Others etc. v. The State of Uttar Pradesh & Others (1956 SCR 393). In that case, the Constitution Bench was concerned with the question whether the U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953 could be said to have been legally enacted by the Uttar Pradesh State Legislature despite the operation of the l.D.R. Act which contained a G declaration whereby sugarcane industry was sought to be regulated by the l.D.R. Act. Section 18G of the Act referred to earlier whereunder there was a possibility of the Central Government issuing appropriate control order to occupy that field was held not to bar the legislative competence of the State Legislature to enact appropriate provisions regarding the said industry. Such a mere possibility of promulgation of order under Section I 8G of the l.D.R. H Act was held not to have occupied the field whereby the State Legislature

BELSUND SUGAR CO. LTD. v. STATE [S.B. MAJMUDAR, J.] 235

could not enact appropriate statutory provisions by exercise of its legislative A power under Entry 33 of List III.

Bhagwati, J., speaking for the Constitution Bench, placing reliance on the observations of Sulaiman J., in the decision of the Federal Court in Shyamakant Lal v. Rambhajan Singh, ( 1939) F.C.R. 188, 212 extracted, with approval, the following passage from the said decision at page 427 of the · B report as under :

"When the question is whether a Provincial legislation is repugnant to an existing Indian law, the onus of showing its repugnancy and the extent to which it is repugnant should be on the party attacking its validity. There ought to be a presumption in favour of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other; and care should be taken to see whether the two do not really operate in different fields without encroachment. Further, repugnancy must exist in fact, and not depend merely on a possibility. Their Lordships can discover no adequate grounds for holding that there exists repugnancy between the two laws in districts of the Province of Ontario where the prohibitions of the Canadian Act are not and may never be in force: (Attorney-Genera/for Ontario v. Attorney-Genera/for the Dominion)"

Thereafter the following pertinent observations were made by Bhagwati, J., E speaking for the Constitution Bench :

"In the instant case, there is no question of any inconsistency in the actual terms of the Acts enacted by Parliament and the impugned Act. The only questions that arise are whether Parliament and the State Legislature sought to exercise their powers over the same subject F matter or whether the laws enacted by Parliar.1ent were intended to be a complete exhaustive code or, in other words, expressly or impliedly evinced an intention to cover the whole field."

and thereafter Section 18-G of the l.D.R. Act was considered and it was held as under : G "Even assuming that sugarcane was an article or class of articles relatable to the sugar industry within the meaning of Section 18-G of Act LXV of 1951, it is to be noted that no order was issued by the Central Government in exercise of the powers vested in it under that section and no question of repugnancy could ever arise because, as H

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

A he has noted above, repugnancy must exist in fact and not depend merely on a possibility. The possibility of an order under Section 18- G being issued by the Central Government would not be enough. The existence of such an order would be the essential pre-requisite before any repugnancy could ever arise."

B The aforesaid decision of the Constitution Bench, therefore, clearly repels the submission of learned senior counsel Shri Shanti Bhushan that merely because there is a possibility of issuance of a Control Order under Section 30 of the Tea Act by the Central Government, the field is fully occupied in connection with fixation of the maximum and minimum prices of packed tea to be charged by manufacturer or dealer, wholesale or retail or regulating the maximum quantity of packed tea to be sold to any person. In a later decision of the Bench of two learned judges to which one of us, Sujata V. Manohar J., was a party, the very same view has been reiterated relying upon the aforesaid decision in Ch. Tika Ramji & Others etc. v. The State of Uttar Pradesh & Others, (supra). The latter decision is rendered in the case of SIEL Ltd and Others v. Union of India and Others, (supra), as noted earlier.

It must, therefore, be held that 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. these topics cannot be said to be legitimately covered by the Tea Act. Hence, the field is wide open for the State Legislature to exercise its concurrent legislative power under Entry 33 of List III for effectively dealing with these matters. This is precisely what has been done by the State Legislature by enacting the Market Act. The insertion of item pertaining to Tea (leaf and dust) in the Schedule, therefore, cannot be said to be an unauthorised exercise on the part of the delegate of the State Legislature, namely, the State Government which has exercised its power under Section 39 of the Market Act. G Before parting with the discussion on the Tea Act, it is also necessary to keep in view the history of tea industry in India.

It is apparent that the Tea Committee 1934, Indian Tea Control Act, 1938 and Cenfral Tea Board Act, 1949 had been made with a view to control export H of tea and tea cultivation. The Tea Act, 1953 was enacted to provide for taking

BEL SUND SUGAR CO. LTD. v. ST ATE [S.B. MAJMUDAR, J.] 237

It thus, becomes at once clear that this Control Order does not command licencee to carry on distribution of tea for sale at any particular place/market. The aforesaid Control Order has nothing to do with the establishment of H

238 SUPREME COURT REPORTS (1999] SUPP. l S.C.R.

A markets for selling packed tea.

The requirement of packing and marketing is again not contemplated by the Market Act, 1960. Hence, it is difficult to appreciate how this Control Order has occupied t.he field of regulation of sale and purchase of packed tea in market areas. B The next Order on which Shri Shanti Bhushan, learned senior counsel for the appellant, strongly relied was the Tea (Marketing) Control Order, 1984. The said Order was promulgated by the Central Government in exercise of its power under sub-sections (3) and (5) of Section 30 of the Tea Act, 1953. It C pertains to licensing of the distributors and exporters.

A mere look at the said Order shows that it does not provide for any regulation of sale and purchase of tea in the markets in different States in India. Clause 3 requires registration of manufacturer of tea and such manufacturer has to submit monthly return under Clause 5 in.Form C. Clauses D 6 and 7 pertain to Organiser of Tea Auction and Broker in Tea Auction. Clause 14 declares that the licence is personal and non-transferable. These persons are to maintain records as per Clause 16. Clause 17 directs the manufacturer to sell not less than 75% or such higher percentage, as specified by the Board, of tea manufactured by him in a year through public tea auctions in India held under the control of organisers of tea auction. Clause 19 exempts tea marketed directly by the manufacturer as packet tea, instant tea, tea bags, aromatic tea and green tea from computation of the total production under para 17.

Firstly, 1984 Order deals with manufacturers and organisers of tea auction and brokers of tea auction and its basic concern is to require them to have licences in the form of authority. It is obvious that even this Order cannot advance the case of the appellant.

The next Order which was pressed in service was the Tea Warehouses (Licensing) Order, 1989. G The said order was also promulgated by the Central Government in exercise of the power conferred by sub-sections (3) and (5) of Section 30 of the Tea Act, 1953. A mere look at the salient features of 1989 Order shows that it has not covered the field tried to be occupied by the Market Act.

H The public tea auctions contemplated by 1984 Order are those which are

BELSUND SUGAR CO. LTD. v. STATE [S.B. MAJMUDAR, J.] 239

...,.._ held under Clause 3 of the Tea Warehouses (Licensing) Order, 1989. In fact A Clause 14(7) prohibits the warehouse owner from entering into any transaction with the manufacturer/broker/organiser of tea auction unless they have licences under the 1984 Order. The public tea auctions are held in specified areas in

- Calcutta, Siliguri, Guwahati, Cochin, Coimbatore and Amritsar. Thus, the 1984 Order and the Tea Warehouses (Licensing) Order 1989 are basically concerned with the public tea auctions and the licensing of manufacturer/broker/organiser B

of public auction and warehouses with regard to holding of poblic tea auctions.

The warehouse is to be governed as per Clause 10(7) of the 1989 Order. This Order does not apply to the storage godowns in the markets established under the Market Act, 1960. But assuming it applies, the only effect would be that the storage places in markets should be in conformity with Clause 10(7). As far as obtaining of licence is concerned, it has to be obtained by the warehouse owner who carries on the activities of storing, blending or packing of tea in the warehouse. Once the manufacturer or trader takes space from the Market Committee in the godown in the Market Yard, then he would be the warehouse owner under Clause 2( 1) of the 1989 Order and would have to take a licence, as authority, from the Tea Board.

Both under the 1984 Order and 1989 Order, there ls no requirement to carry on the business at any particular place/market. These Orders do not concern themselves with establishment of market or fixing place of business. E The aforesaid Orders on which reliance was placed by learned senior counsel Shri Shanti Bhushan indicate that the Central Government in its wisdom did not think it fit to issue any Order under Section 30, sub-section (1), clauses (a) & (b) and, therefore, kept the field wide open in connection with the topics covered by the said provisions of Section 30 for the State F Governments to exercise their legislative powers and enact suitable legislations under Entry 33 of the Concurrent List III of the Seventh Schedule of the Constitution.

Our attention was then invited by Shri Shanti Bhushan, learned senior counsel for the appellant, to the Tea Waste (Control) Order, 1959. Even this G order is issued by the Central Government under sub-sections (3) and (5) of Section 30.

The Tea Waste (Control) Order, 1959 applies only to tea waste as defined in Clause 2 (f). Thereunder a person selling/offering for sale/buying/ holding any stock in tea waste is required to have licence. (Clauses 3,4,5, and H

240 SUPREME COURT REPORTS [1999] SUPP. 1 S.C.R.

A 6). Clause 9 provides that licence is not transferable. Clause 13 provides that .~ licensee shall have in possession tea waste not exceeding that which may b,e fixed by the licensing authority. Under Clause 19A false declaration is prohibited. I=

On a conjoint reading of the aforesaid statutory Orders issued under B the Tea Act and the relevant scheme of the Tea Act, it becomes at once clear that the provisions regarding fixation of appropriate price at which blended and packed tea can be sold to wholesalers in any established market or particular place at which sale transactions of such manufactured tea between the manufacturers on the one hand and the traders or other wholesale ~ c producers/dealers on the other are outside the sweep either of the Tea Act or of the relevant statutory Orders framed under Section 30 by the Central Government under the very same Act. The places at which public auctions can be held in connection with sale of roasted tea leaves to be purchased by manufacturers like the appellant are the earmarked six places indicated in 1984 ~ and 1989 Orders. These auctions have nothing to do with the later sales of manufactured blended tea by such auction purchasers of tea leaves, who manufacture packed tea by blending and packing roasted tea leaves in their factories. The public auctions as contemplated by these Orders, therefore, serve out their purpose once the manufacturers of blended tea, like the appellants, purchase roasted tea leaves in public auctions. Once such purchased tea leaves are further processed after blending and packed in suitable receptacles for sale in local markets the stage is reached for regulating such sale transactions by manufacturers of tea when they are subjected to further auctions to be held in the market areas wherein the licensed distributors .., and manufacturers of tea can be subjected to the procedure of Section 15, sub-section (2) of the Market Act. So far as these later transactions are concerned, neither the Tea Act nor any of the aforesaid Orders can hold the field. Such sale transactions of manufactured tea in packed condition will, therefore, necessarily have to be governed by the provisions of the Market Act applicable to the area wherein such sale transactions in favour of wholesalers or retailers are effected by the stockists of the appellant operating in the market areas concerned. It is also pertinent to note that Section 15 of the Market Act gets attracted to such transactions of sale. It is not possible to agree with the contention of learned senior counsel Shri Shanti Bhushan \._

that once the retail prices are fixed by the appellant there is no necessity of auctioning this tea in packed condition as per Section 15 sub-section 2 of the Market Act. It has to be kept in view that under the relevant Orders issued by the Central Government under Section 30 of the Tea Act, as noted earlier, <.-

BELSUND SUGAR CO... LT.Q. v.• STATE [S.B. MAJMUDAR, J.] 241

the purchasers of tea have also to be licensed. Such licensed purchasers can bid at the auctions 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

.. or 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 B -·· 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.

In this connection, we may note one other submission of learned senior counsel Shri Shanti Bhushan for the appellant. He submitted that for almost C 16 years tea was not a scheduled item governed by the Market Act. In fact, the Bihar Legislature did not think it fit to include Tea (leaf and dust) as a scheduled item from the inception but it is only the delegate, namely, the State of Bihar in exercise of its power under Section 39 thought it fit to introduce Tea (leaf and dust) as a scheduled item. The procedure of Sections 3 and 4 has not to be followed while undertaking this exercise. In this connection, it D was submitted that no reasonable person could have undertaken such an exercise as tea was already a controlled commodity under the Tea Act and also governed by the relevant Orders issued thereunder.

As we have seen earlier, under the relevant provisions of the Tea Act E and the operative Orders promulgated thereunder the Central Government has left untouched the field of regulation of prices and the location of market places where such packed tea could be sold to the wholesale dealers or even to the retailers. When that field was wide open, the State Government in its wisdom, could legitimately try to cover the field by issuing appropriate Orders under Section 39 of the Act. It cannot be said, therefore, that such an exercise was totally ultra vires or amounted to non-application of mind. In fact, what the Central Government should have done and did not do by issuing appropriate Orders under Section 30, subsection (1) Clauses (a) & (b) of the Tea Act could legitimately be done by the State Government. It was not required to wait indefinitely till the Central Government could find time to issue such an Order. Shri Shanti Bhushan, in this connection, further submitted that if that is so, then if in future the Central Government wakes up and issues such an Order, would the then existing Entry in the Schedule regarding tea get superseded or become inoperative ? This is a hypothetical question raised which does not require any answer obviously at this stage. As and when in future such an eventuality occurs, then the question of continuation of H

242 ·SUPREME COURT REPORTS (1999) SUPP. I S.C.R.

A regulation of sale and purchase transactions of Tea (leaf and dust) by retaining this item in the. Schedule may have to be examined. But as the statutory provisions stand at present, in the absence of any such existing Order under Section 30 sub-section (1) Clauses (a) & (b) by the Central Government, the field remains wide open and at least it was definitely open when the State Government introduced the Entry of ·Tea (leaf and dust) in the Schedule to B the Market Act in 1976. This exercise, by no stretch of imagination, could be said to be unauthorised, illegal.or amounting to non-application of mind. The second contention, therefore, is answered .in negative against the appellant and in favour of the respondent. That. takes us to the consideration of contention no. 3 . c POINT NO. 3:

· Once it is held that the Market Act covers the transactions of sale of packed blended tea in sealed packets and receptacles by the appellant's · stockist in the market areas concerned especially when these transactions D take placft in the market yard or sub-market yards as laid down by Section 15 of the Act which remains fully operative to cover such transactions, there is no escape from the conclusion that the entire infrastructural facilities for regulation of such sale transactions as made available by the market committee concerned would enure for the benefit of sellers of such packed blended tea. E It is also pertinent to note that so far as the appellant is concerned, all that is required of it is to take licence for selling packed tea in market yards, 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 Act, the burden of market fee is to be borne by the purchasers of such packed L F tea, namely, the wholesale dealers licensed to purchase such tea as per the .I ) Central Orders mentioned earlier. Such purchasers have not brought in challenge levy of market fee on them. So far as the appellant is concerned, once its stockist sells the packed tea in the market yard or sub-market yards maintained by the market committee, the entire infrastructural facilities made G available by the market committee to all the purchasers and sellers of agricultural produce in the market yard, would automatically become available to the appellant's stockist who sells its goods, namely, packed tea in the m~rket yard or sub-market yards concerned.

In this connection, it has also· to be kept in view that establishment of ; H markets and maintenance thereof is a topic of legislation squarely covered by "'' .

BELSUND SUGAR,_CO. LTD. v. STATE [S.B. MAJMUDAR, J.) 243 Entry 28 of List II of the Seventh Schedule. For maintaining such markets, the A market committees obviously have to spend large amounts for providing necessary infrastructure for the benefit of those who use such established markets. In this connection, Section 30 of the Market Act, as noted earlier, becomes relevant for our consideration. Amongst others, the Market Committee Fund has to be utilised under Section 30 for the following purposes : B "(i) the acquisition of a site or site for the market; (ii) the maintenance and improvement of the market;

(iii) the provision and maintenance of standard weights;

(iv) the construction and repair of buildings [check posts, market C gates and other fixtures] necessary for the purpose of such market and for the health, convenience and safety of the persons using it;

(v) Xxxxxxxxxx (vi) X:Xxxxxxxxx D (vii) Xxxxxxxxxx

(viii) The construction, repair and maintenance of means of communication which are useful for the purposes of [regulation, control and] development of a market or for the convenience and E safety of the persons using it;

(viii-a) link roads connecting the main road from the villages in the Market Area of the concerned market committee shall be constructed on priority basis from the Development Fund to facilitate the farmers to go to and from the villages;]

(ix) the planting and rearing of trees, and making arrangements for providing to the persons and cattle coming to a market and like purposes;

(x) Xxxxxx xxxxx xxxxx G (XI) Xxxxx XXXX XXXXX

(xiO Xxxxx xxxx xxxx"

All these provisions clearly indicate that once the transaction of sale or purchase of any agricultural produce is governed by the Act and once Section 15 of the Act applies to such transaction, the entire machinery of the H

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

A Act would get attracted to regulate such transaction and the complete infrastructure for which provisions are made by the market committee including the facilities available at such markets would become available to the purchasers and sellers of such commodities in the market. For providing these infrastructural facilities the market committee has to spend from its funds. This would supply adequate quid pro quo for levying market fee on the buyers of commodities sold at its market yard or sub-market yard. It is, therefore, not possible to agree with the learned senior counsel for the appellant 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. The third contention, therefore, is to be answered in affirmative against the appellant and in favour of the respondent.

Before parting with this appeal, it is necessary to briefly deal with the' written submissions furnished in support of the appeal by learned counsel after arguments were over and which have already been dealt with by us in detail hereinabove.

So far as the written submissions filed by the appellant on gm May, 1999 are concerned, we may state that to the extent they tried to re-iterate what was submitted earlier and considered by us, will stand repelled in the light of the detailed reasons recorded by us earlier in this connection. Processing of packed tea manufactured out of tea leaves purchased by the appellant in the auction at six places obviously is not covered by the applicability of the Market Act in the present case. All that the M~rket Act seeks to cover is the sale transactions pertaining to packed tea branded and marked in accordance with the regulations made by the Tea Board to the extent these sealed packets are sold by the appellant within the market area. These transactions of sale of packed tea, as discussed by us earlier, would squarely attract the applicability of the Market Act as they take place within the market area governed by the Market Act. As seen earlier, manufacturing activities concerning this packed tea h~s no relevance for arriving at an appropriate answer to this question. G Contention raised ·in para 2 of the written submissions is also besides the point, whether other States levy market fee or not is not at all relevant. The Bihar legislation may be a pioneer in this field. The short question is whether the Market Act can govern the transaction of sale of packed manufactured tea by the appellant within the market areas in the State of H Bihar? So far as this question is concerned, the aforesaid contention can be

BEL SUND SUGAR CO. LTD. v. STATE [S.B. MAJMUDAR, J.] 245

of no assistance to the appellant. A Contention in para 3 of the written submissions about the basic object of the Bihar Market Act and whether it should ensure only the protection to the grower of the agricultural produce within the market area stands repelled by a Constitution Bench Judgment of this Court to which a detailed reference has been made in the earlier part of this judgment. B Para 4 of the written submissions deals with various statutory provisions of the Tea Act of 1953 and the relevant Control Orders thereunder. As discussed earlier, the schemes of the Tea Act and the Control Orders do not cover the field carved out by the Market Act for bringing within its sweep transactions of sale of agriculture produce encompassed by the wider definition thereof under that Act insofar as such produce is sold within the market area to which the Market Act applies.

It is difficult to appreciate the contention in para 8 of the written submissions to the effect that the State had not applied its mind in bringing tea within the sweep of the Market Act in exercise of its power under Section 39 of the Act. As discussed earlier, this contention is devoid of any substance.

Contention in para 9 of the written submissions is also devoid of any merit. It is not the case of the appellant that the sale of manufactured tea in Bihar markets within the market area of the concerned market committee requires the appellant to bear the burden of the market fee. It is obvious, as seen earlier, that charge of market fee is on the buyer of branded tea and not on the seller thereof, like the appellant. The purchas~rs of branded market tea manufactured by the appellant who purchase the said produce in market areas governed by the Market Act have made no grievance in this connection. Even otherwise, as seen earlier, once the wide definition of "agricultural produce" as found in the Market Act governs such sale transactions and when Section 15 of the Act covers such transactions, the charge under Section 27 would obviously get settled on these transactions. As a logical corollary thereof, even if the appellant may have tb act as a collecting agent for the market committee concerned as per its legal obligation in given circumstances, that by itself cannot exonerate it, once the statutory scheme of the Act covers transactions of sale of branded tea carried out by the appellant in the market area governed by the Market Act.

Contentions found in para I 0 of the written submissions are to be stated to be rejected. Once the sale transactions of packed tea are governed H

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

A by the sweep of the Market Act, and once such sale transactions have to be regulated as per the machinery of the Market Act, on the applicability of Section 15 of the Act, the entire infrastructure available for regulating such sale transactions at the market yard or sub-market yards whose benefit would obviously be available to the appellant cannot entitle the appellant to contend B that its fundamental right under Article 'I 9( I )(g) of the Constitution is violated. To say the least, it would be a reasonable restriction on exercise of such a right. It is pertinent to note that the appellant has not challenged the vires of Section 27 of the Market Act. It is difficult to appreciate the submission that compelling the sealed and packed tea to be brought into the market yard and to be auctioned thereof cannot be considered to advance the public c interest in any manner. Public interest obviously gets advanced as the sale transactions will get regulated by the infrastructural machinery at the market yard and sub-market yards concerned, where such transactions take place. The contention that the Bihar Act would be unconstitutional cannot be countenanced for twin reasons. Firstly, such a contention was not canvassed " D 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. 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 and if the appellant is likely to get more price fm its branded tea by subjecting its sale transactions to auction, the said provision instead of adversely affecting the appellant would, on the contrary, be more beneficial to it. Maybe, the appellant from commercial point of view may not like to charge higher price for the packed tea from its customers but that does not mean that the infrastructural facilities made available by the market committees to the appellant to get more price of its branded tea if so desired by it can be construed in any way to be adversely affecting its commercial business interests. For obvious reasons, therefore, none of the contentions found in the written submissions can advance the case of the appellant's and they necessarily have to stand repelled.

These were the only contentions canvassed by learned senior counsel in support of the appeal and as they fail, the inevitable result is that this appeal fails and will be liable to be dismissed. .~

BELSUND SUGAR CO. LTD. v. STATE [S .. B. MAJMUDAR, J.] 247

FINAL ORDER: A As a net result of the aforesaid discussion, therefore, the following orders are passed :

1. SUGAR GROUP MATTERS: B These appeals, namely, Civil Appeal Nos. 398 and 399/1977, 234/1995, 8163/1994, 7432/1994, 2632-33/1982, 1282/1995 are allowed. The judgments and orders passed by the High Court impugned in these appeals are set aside. The Writ Petition No. 1250/1986 filed by the petitioner will stand allowed accordingly as detailed in this judgment subject to the riders mentioned hereinabove. c Civil Appeal Nos.4500-05 of 1992, so far as they seek to challenge the levy of m.arket fee on sugar are concerned, will stand allowed. The respective six petitions filed before the High Court dealing with levy of market fee on sugar will stand allowed.

Civil Appeal arising out ofS.L.P. (C) No.9684of1992 will stand allowed D to the extent Civil Writ Petition No.5974 of 1988 filed b.efore the High Court deals with the contention regarding market fee on sugar. Instead of the relief granted by the High Court limiting to the non-levy of market fee on sugar after 2.5.1977, it is directed that levy of market fee on sugar for the entire period covered by the writ petition will be treated to be unauthorised. E ·This judgment will have only prospective operation and will not affect past transactions entered into prior to the date of this judgment.

. 2. WHEAT PRODUCTS LIKE ATTA, MAIDA, SUJJ, ETC.

These appeals, namely, Civil Appeal Nos. 2951, 2952 and 2953of1992, F 350~ & 3506 of 1992 and 82911993 are dismissed.

3. VEGETABLE OIL MATTERS:

Civil Appeal No.1427 of 1979 is dismissed. G Civil Appeal Nos.4500-05of1992, so far as they deal with levy of market fee on Vanaspati Oil are concerned, will stand dismissed and the High Court's decision in all six writ petitions pertaining to levy of market fee on edible oil shall remain confirmed.

Civil Appeal arising out of S.L.P. (C) No.9684 of 1992, so far it challenges H

248 SUPREME COURT REPORTS (1999) SUPP. l S.C.R.

A the levy of market fee on edible oil is concerned, stands dismissed. The order of the High Court in C.W.J.C. No.5974of1984 concerning the vegetable oil is .confirmed and the writ petition to that extent will stand dismissed.

4. RICE MILLING INDUSTRY:

B These Civil Appeals arising out of SLP (C) Nos.3159-60 of 1994 are. dismissed.

5. MILK AND MILK PRODUCTS

This Civil appeal No.1880 of 1988 is allowed. The judgment and order C of the High Court are set aside. However, the past transactions will not be reopened and this judgment will have only prospective effect governing future transactions that are to be entered into after the date of this judgment.

6. TEA MA ITER

D This Civil Appeal No.2532of1980 is dismissed.

In the facts and circumstances of the case, there will be no order as to costs in all these appeals.

RP. Appeals allowed/dismissed and Petition allowed.