IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No. 3542 of 2008 Date of Decision: May 20, 2009 M/s Nohar Chand Amrit Lal and others …Petitioners Versus State of Punjab and others …Respondents CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE AUGUSTINE GEORGE MASIH For the petitioner(s): Mr. Arun Palli, Senior Advocate, with Mr. Tushar Sharma, Advocate, Mr. A.K. Walia, Advocate, For the respondent(s): Mr. Piyush Kant Jain, Addl. AG, Punjab, Mr. R.S. Cheema, Advocate, Mr. Sanjeev Sharma, Advocate, Mr. Vinod Mahendru, Advocate. 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporters or not? Yes 3. Whether the judgment should be reported in the Digest? Yes M.M. KUMAR, J. This order shall dispose of a bunch of 11 petitions2 because common question of law and facts are involved therein. 2. The petitioners have approached this Court by filing these petitions under Article 226 of the Constitution with a prayer for declaring Rule 3(a), proviso and Rule 3(b)(iii) as well as Rule 3(d)(v) including its proviso as amended by the Punjab State Agricultural Marketing Board (Sale and Transfer of Plots) (First Amendment) Rules, 2008 (for brevity, ‘the 2008 Rules’) as well as Rule 3(iii) & (iv) of the Punjab State Agricultural CWP No. 3542 of 2008 Marketing Board (Sale and Transfer of Plots) Rules, 1999 (for brevity, ‘the 1999 Rules’) claiming that these rules are patently against the law laid down by Hon’ble the Supreme Court in the case of M/s Labha Ram & Sons v. State of Punjab, (1998) 5 SCC 207. The petitioners have further sought issuance of direction to the respondents to allot plots to all the existing licencees on preferential basis by charging 5% above the reserve price and to consider their applications for allotment of plot. 3. Brief facts of the case are that the petitioners in these petitions are licensed traders of agricultural produce and doing their business in different mandies in the State of Punjab under various Market Committees. On 10.1.2008, the Estate Officer, Punjab Mandi Board, Chandigarh, issued an advertisement proposing to allot plots at reserve price plus 5% in various new Grain Markets. Applications were invited in Form-A from the licencees carrying on business in the old mandies, under Section 10 of the Punjab Agricultural Produce Markets Act, 1961 (for brevity, ‘the 1961 Act’). 4. The grievance of the petitioners is that though they are licenced dealers but their claims were not considered because they did not fulfill various conditions laid down in the 1999 as amended by 2008 Rules concerning allotment of plots/shops in new Grain Markets. It is conceded position that the petitioners in this bunch of petitions do not fulfill the basic two conditions for allotment of plots/shops in the new grain markets. Firstly, some of them do not possess a valid licence for a period of three years whereas the other ones have not transacted the business worth Rs. 5 lacs or above per annum during the last three years preceding the date of advertisement, even though they are paying sales tax/income tax and also submitting returns in Form-M to the concerned Market Committees. The 2 CWP No. 3542 of 2008 petitioners have also questioned reservation of only 50% plots for the old licencees whereas remaining 50% would be sold through open auction. It has been asserted that the respondents are required to rehabilitate all the existing licencees by allotting plots/shops to them in the new grain markets because they enjoy all the rights available under the provisions of the 1961 Act. In that regard, reliance has been heavily placed on the judgment of Hon’ble the Supreme Court rendered in the case of M/s Labha Ram and Sons (supra). 5. Before proceeding further it is appropriate to notice observations of Hon’ble the Supreme Court in the case of M/s Labha Ram and Sons (supra) and various provisions of the 1999 and 2008 Rules. The massive development in the field of agriculture and manifold increase in the food grains has necessitated construction and development of new market areas all over the country. However, in their endeavour to develop new market areas, the old established traders are also required to be rehabilitated. Hon’ble the Supreme Court in the case of M/s Labha Ram and Sons (supra) while interpreting the provisions of the Punjab New Mandi Townships (Development and Regulation) Act, 1960, has laid down that the Government has inherent obligation to provide sufficient accommodation to all the existing licenced dealers having regard to the handicaps they suffered due to creation of the new market area. The aforesaid obligation could not be deemed to be discharged merely by allowing them to compete with the new entrant to the trade of food grains. It has been held that the Government may fix a reasonable rate above the reserved price for such old licenced dealers. 6. According to the petitioners, as a consequence of the amendment made in 2008 in Rule 3 of the 1999 Rules, a large number of 3 CWP No. 3542 of 2008 existing traders have been rendered ineligible for being considered for allotment of plots because either they do not fulfill the condition of holding of licence of three years as contained in Rules 3(b)(iii) of the amended Rules or they have not transacted business of not less than Rs. 5 lacs per annum during the last three years as stipulated in the proviso to condition No. (iii) of the amended Rule 3(b). 7. In the written statement filed on behalf of respondent Nos. 2 and 3, the stand taken is that during the pendency of the writ petition, the applications of the petitioners for allotment of plots were rejected and the orders of rejection have been conveyed to them. It has been asserted that they could file appeal under Rule 12 against the rejection orders before the Secretary, Mandi Board, within a period of 30 days of the receipt of the order. The petitioners have neither challenged such orders nor amended the writ petition. It has further been asserted that prior to 1998, the allotments were made under the provisions of the Punjab New Mandi Township (Development and Regulation) Act, 1961 and the rules framed thereunder and 100% allotments used to be made by way of auction. It has been pointed out that under the 2008 Rules only 50% of the plots are sold by auction and balance 50% are allotted to the old traders at reserve price plus 5%. 8. According to the respondents, the traders now stand on a much better footing because of the following comparison between 1999 Rules and the 2008 Rules:- 1999 Rules 2008 Rules Price of plot was reserve rate + 35%. Price of plot reserve price + 5% 4 CWP No. 3542 of 2008 Submission of ‘M’ return was mandatory. In case record of ‘M’ return is not available, proof of work by producing Heap Register ‘J’ Form and Auction Register can be produced. Business for 5 years was required for allotment of a plot. Business for 3 years is required for allotment of a plot. If there was new issuance of licence during the last 5 years, firm was not eligible for allotment of plot. In case new licence is issued within 3 months in the same name and title of the firm, the case can be considered for allotment of plot. Only one shop could be allotted against one independent shop. Allotment of plots to two firms working in the same premises could be considered. There was no provision for allotment of plot in case of dissolution of the firm during the last five years. On dissolution of firm and on issuance of new licence in the same name and title of the previous firm, case for allotment of plot can be considered. No discount was given for depositing the amount in lump sum. There is a cash discount of 2% on depositing the lumpsum amount. Plot after allotment could not be transferred for a period of 7 years. Period for transferring the plot has been reduced to 5 years. 9. With regard to addition of the condition of transacting the business of not less than Rs. 5 lacs per annum during the last three years as per amendment made in 2008, the respondents have pleaded that the said condition has been rightly included after carefully examining all the aspects and especially taking into account the figures of main hari/sauni crops in the State of Punjab. It has been pointed out that after collection of data it was considered reasonable to make such firms eligible who have been doing the business of sale and purchase of agricultural produce for a minimum 300 quintals of paddy/wheat/cotton or any such crops on minimum support 5 CWP No. 3542 of 2008 price. If calculations are made in respect of business of 250 quintals during a year by keeping in view the rates of agricultural produce, the amount comes to Rs. 5 lacs. According to the respondents the said amendments are justified and liable to be sustained. 10. We have heard learned counsel for the parties at a considerable length and have also perused the 1999 Rules as amended in the year 2008. The Government of Punjab has legislated the 1999 Rules in exercise of power conferred by Section 43 read with Section 18 of the 1961 Act. The 1999 Rules were notified on 17.2.1999 (Annexure P-1 with CWP No. 3542 of 2008). Rule 3 of the 1999 Rules deals with sale of plots and provided that all the plots in the markets developed by the Board or Committee are to be disposed of by way of open auction or allotment. The first proviso to Rule 3 stipulates that the plots would be allotted to the licenced dealers of old market which are denotified resulting in displacement of such licenced dealers on free hold basis for conducting business of purchase or sale of agricultural produce in the new markets, subject to fulfillment of certain terms and conditions. For the present purpose, terms and condition Nos. (ii) (iii) and (v) as laid down in Rule 3 of the 1999 Rules are relevant and the same reads thus:- “3. Sale of plots - All plots in the markets developed by the Board or Committee shall be disposed of by way of open auction or allotment in accordance with the provisions of these rules. Provided that the plots will be allotted to the licensed dealers of old market which are denotified resulting in displacement of such licensed dealers on free holds basis for conducting business of purchase of sale of agricultural produce 6 CWP No. 3542 of 2008 in the new markets on the following terms and conditions, namely:- (i) xxx xxx xxx (ii) The allotment price shall be fixed at thirty five per cent above the reserve price in the markets where no auction has so far been held; (iii) Only those licensees shall be eligible for allotment of plots on the price specified in clauses (i) and (ii) who have been granted licencees in the old de-notified markets for a minimum period of five years before the date of allotment. Such licencees must have paid market fee for the last four years out of these five years. The eligibility in respect of five years continuity shall be taken with effect from the date of notice inviting applications for allotment. (iv) xxx xxx xxx (v) The licence should have been in possession of an independent premises either as a owner or a tenant in the old market. (vi) to (xiii) xxx xxx xxx” 11. As per above condition No. (ii) the price of the plots has to be fixed at thirty five per cent above the reserve price in the markets where no auction has so far been held. As per condition No. (iii) only those licencees who possess a licence in the old de-notified market for a minimum period of five years before the date of allotment are eligible provided that they have paid the market fee for the last four years out of these five years. The eligibility in respect of five years continuity has to be reckoned from the 7 CWP No. 3542 of 2008 date of notice inviting applications for allotment. 12. The 1999 Rules were further amended by the 2008 Rules which were notified on 2.1.2008 (P-2 with CWP No. 3542 of 2008). By 2008 Rules various amendments have been made in Rule 3 of 1999 Rules. The relevant amendments are extracted as under:- “4. In the said rules, in rule 3 – (a) before the existing proviso, the following proviso shall be added, namely:- Provided that not more than fifty per cent of the available plots shall be disposed of by way of allotment and the process of allotment shall be completed before conducting the sale by auction. (b) at the existing proviso, which has been re- numbered as the second proviso:- (i) for the word “Provided”, the “Provided further” shall be substituted; and (ii) for condition Nos. (ii) and (iii), the following conditions shall be substituted, namely- (ii) the allotment price shall be fixed at the five per cent, above the reserve price in the markets, where no auction has so far been held. Provided that no corner plot ……… (iii) only those licensees shall be eligible for allotment of plots on the price, specified in clauses (i) and (ii), who 8 CWP No. 3542 of 2008 have been granted licenses in the old denotified markets for a minimum period of three years before the date of allotment. Such licensees must have submitted returns in Form-M appended to the Punjab Agricultural Produce Markets (General) Rules, 1962 for all three years or such licensees shall have to furnish adequate proof of working in the denotified old markets. In accordance with the provisions of Form-H and Form-J, as specified in the Punjab Agricultural Produce Markets (General) Rules, 1962 read with the provisions of Form-F as specified in the bye-laws of the Market Committee for the aforesaid period of three years referred to above shall be counted with effect from the date of notice inviting applications for allotment; Provided that only those licensees shall be eligible for allotment of plots, who have transacted the business of sale and purchase of agricultural produce for an amount, not less than five lacs 9 CWP No. 3542 of 2008 rupees per annum during the last three years. (iii-a) xxx xxx xxx (c) xxx xxx xxx (d) xxx xxx xxx (v) xxx xxx xxx (e) xxx xxx xxx” (emphasis added) 13. From a bare perusal of the amendment incorporated in Rule 3, two conditions of eligibility become obvious. Firstly, an applicant for allotment of a plot in the new market/mandi must have licence of transacting foodgrain business for a period of three years preceding the last date of inviting applications for allotment. This condition is evident from Rule 3(b)(iii) as amended in the year 2008. The other condition which an applicant is required to satisfy is that he must have transacted the business of sale and purchase of agricultural produce for an amount not less than Rs. Five lacs per annum. It has not been disputed that in the present cases some of the petitioners do not fulfill the first condition whereas the others have failed to answer the second one. For the sake of illustration the following table of 13 petitioners in C.W.P. No. 3542 of 2008 has been prepared which would amply demonstrate that the petitioners did not fulfill one or the other condition and even in some cases they fail to fulfill either of the two conditions:- Sr. No. Name of the petitioner Turnover during last three years Year Amount (in Rs.) Date of issuance of licence In possession of premises 1 M/s Nohar Chand Amrit Lal 2005-06 2006-07 2007-08 20,54,470/- 5,58,009/- 2,00,714/- 25.10.199 3 Yes 10 CWP No. 3542 of 2008 2 M/s Lachhman Dass Krishan Baldev 2005-06 2006-07 2007-08 13,53,241/- 21,19,272/- 23,65,574/- 6.9.2005 Yes 3 M/s Punjab Khad Bhandar 2004-05 2005-06 2006-07 2007-08 10,55,572/- 94,668/- 1,72,292/- 1,37,212/- 29.4.1995 Yes 4 M/s Kundan Lal Prakash Chand 2005-06 2006-07 2007-08 Nil 25,92,468/- 51,59,293/- 10.3.2006 Yes 5 M/s Walaiti Ram Charan Dass 2005-06 2006-07 2007-08 3,71,697/- 7,16,457/- 9,62,060/- 10.4.1995 Yes 6 M/s Jagan Nath Suresh Kumar 2005-06 2006-07 2007-08 10,22,917/- 1,21,571/- 51,060/- 30.9.2002 Yes 7 M/s Banarasi Dass Jagan Nath 2005-06 2006-07 2007-08 4,37,856/- 4,07,345/- 5,39,193/- 1.4.1995 Yes 8 M/s Sada Ram and Co. 2005-06 2006-07 2007-08 6,05,46,541/ - 89,07,747/- 4,61,97,105/ - 28.12.200 5 Yes 9 M/s Jagdish Rai Rakesh Kumar 2005-06 2006-07 2007-08 4,21,643/- 8,41,885/- 11,649/- 1.4.2005 Yes 10 M/s Sansar Chand Raj Narian 2005-06 2006-07 2007-08 53,749/- 52,249/- 18,85,512/- 21.3.2006 Yes 11 M/s Des Raj Ashok Kumar 2005-06 2006-07 2007-08 15,28,120/- 1,32,859/- 81,517/- 20.7.2004 Yes 12 M/s Kundan Lal Net Ram 2005-06 2006-07 2007-08 1,00,648/- 95,792/- Nil 10.7.2002 Yes 13 M/s Harbilas Hukam chand 2005-06 2006-07 2007-08 6,18,886/- 1,66,288/- 10.75,354/- 18.4.2000 Yes 11 CWP No. 3542 of 2008 14. The cut off date as per the public notice inviting applications (P-3) was 25.1.2008. It is, thus, evident from the aforementioned table that petitioner No. 1 fails to satisfy the condition of transacting business of sale and purchase of agricultural produce worth Rs. Five lacs per annum during the last three years. Petitioner No. 2 although fulfilled the condition of transacting business of more than Rs. Five lacs but it fails to qualify because it obtained the licence on 6.9.2005. In the case of petitioner No. 10 none of the two conditions could be fulfilled. 15. The question then is whether imposition of such like conditions is rationale and reasonable or it violates the mandates of law propounded by Hon’ble the Supreme Court in the case of M/s Labha Ram and Sons (supra). Much emphasis has been laid by the learned counsel for the petitioners on the observation made by Hon’ble the Supreme Court in para 10 of the judgment rendered in the case of M/s Labha Ram and Sons (supra). It would be appropriate to extract the aforesaid para, which is as under:- “10. It is noted that learned Judges did not doubt the correctness of the principle that Government has an inherent obligation to provide all the licensed dealers sufficient accommodation for carrying on their trade. But can it be said that such obligation stands discharged merely by allowing them to compete with outsiders in the open auction. It must be remembered that even without any special provision the existing traders can have such a right to compete with rest of others. We find much force in the contention of the learned counsel for the appellant that merely providing an opportunity 12 CWP No. 3542 of 2008 to compete with the rest of the public for getting accommodation in the new market is not sufficient to discharge the inherent obligation of the Government to provide the existing traders at the new market area. Hence, it is difficult to concur with the view adopted in Chint Ram Ram Chand v. State of Punjab [(1996) 9 SCC 338].” 16. In the aforesaid para a pointed reference has been made to a three-Judge Bench decision of Hon’ble the Supreme Court rendered in the case of Prem Chand Trilok Chand v. State of Haryana, (1998) 5 SCC 213. Their Lordships’ have observed that ‘normally once the Government starts regulating the place of sale of agricultural produce/covered by the Act and does not permit any other place to be used for the purpose, there is an inherent obligation for the Government to provide at the new site for all the licensed dealers sufficient accommodation for carrying on their trade and until that is done it would not be possible for the Government to direct closure of the old site’. It has been contended on the basis of the aforesaid observation in para 10 and in Prem Chand Trilok Chand’s case (supra) that all the licenced dealers irrespective of any condition are required to be adjusted and, therefore, the conditions of having licence for a period of three years coupled with the fact that business worth Rs. Five lacs must be transacted annually during those three years, are unsustainable. 17. The argument cannot be accepted because the process of setting up a new mandi commences much earlier than the actual allotment is made or even applications are invited. The issue becomes wide open to the public. In order to avail the benefit of allotment of a plot ‘at a reserve price plus five percent’, any person could enter the business, acquire a licence under Section 10 of the 1961 Act after spending six months/one year, would 13 CWP No. 3542 of 2008 be successful in claiming eligibility. Such a person cannot at the first place be considered as displaced person as he has acquired the licence which is as old as six months or one year. The period of three years, therefore, to our mind, is absolutely reasonable and satisfies the requirement of being an old licencee. We further find that the requirement of fulfilling the condition of transacting the business of sale and purchase of agricultural produce worth Rs. Five lacs per annum during those three years is also not unreasonable. The minimum support price for wheat in the current season was fixed by the Government at Rs. 1,080/-. The sale and purchase of about 500 bags of wheat make such licencee as eligible. This condition also has a direct relationship with the idea of allotment of a plot at a reserve price plus five percent because those who are not serious traders are unlikely to contribute to the revenue and, therefore, such persons have been rightly made ineligible. The judgments in the cases of Prem Chand Trilok Chand (supra) and M/s Labha Ram and Sons (supra) do not suggest that no condition of allotment could be laid down. The Rules incorporating the aforesaid two conditions, in fact, advance the basic object of helping the old licencees by discouraging the newly established business concern which may be with the sole motive of acquiring a plot in the new mandi. As has already been observed in the preceding para, the process of establishing a new mandi commences much before the applications for allotment of plots are invited. Therefore, the Rules are based on rationale premise and cannot by any stretch of imagination be declared as ultra vires of Article 14 of the Constitution. We also do not find anything in these two conditions which may violate the views expressed by Hon’ble the Supreme Court in the judgments rendered in the case of Prem Chand Trilok Chand (supra) and M/s Labha Ram and Sons (supra). The writ petitions are wholly without 14 CWP No. 3542 of 2008 merit. 18. Moreover, prior to amendment in 2008 the 1999 Rules required a licencee to have licence for five years preceding the last date of inviting applications for allotment, whereas the period has been reduced to three years by incorporating the amendment. The Rule as it stood in 1999 and after amendment have been juxtaposed in para 8. A glance on the table juxtaposing 1999 and 2008 Rules would show that the amendment has liberalised the rules and have made a large number of people eligible for consideration. Apart from reducing the period of five years to three years, the reserve price to be offered to this category of licenced dealers has also been reduced. Under the un-amended rules, the reserve price of the plot used to be ‘reserve price plus 30 percent’ whereas under the amended rules ‘reserve price plus 5 percent’ is to be the price of the plot. 19. Before parting it would be necessary to mention that the vires of the newly added proviso by the 2008 Rules in Rule 3(a) would not be relevant for consideration. According to the proviso only 50% of the available plots are to be