CIVIL WRIT JURISDICTION CASE No.10145 OF 2001 With CIVIL WRIT JURISDICTION CASE No.11638 OF 1993 With CIVIL WRIT JURISDICTION CASE No.12258 OF 1993 ------ In the matter of applications under Article 226 of the Constitution of India. ****** In C.W.J.C. No.10145 of 2001 1. M/S DHARAMPAL SATYAPAL LTD, a company incorporation under the companies Act, 1956 having its registered office at 1711, S.P. Mukherjee Marg, Delhi-110006 and one of the depots at New bye pass road, Anishabad, P.S. Gardanibagh, Patna through its Accountant Rajiv Ranjan. 2. PUESH GUPTA, son of Shri Sri Krishna Gupta, resident of 43/1, Rajpur Road, Delhi-110054. .... Petitioners. Versus 1. State of Bihar, through Secretary, Department of Agriculture, Government of Bihar, Patna. 2. Bihar Agriculture Marketing Board established under Section 33A of the Bihar Agriculture Produce Markets Act, 1960 having its Principal office at Pant Bhawan, Bailey Road, Patna through its Managing Director. 3. Agriculture Produce Market Committee, Musallahpur (Patna) through its Secretary. 4. The Secretary, Agriculture Produce Market Committee, Musallahpur, Patna. 5. Union of India, through Secretary, Ministry of Industries, Udyog Bhawan, New Delhi. .... Respondents. ****** For the petitioners: Mr. Ramesh Kumar Agrawal, Advocate with Mr. Shantanu Kumar, Mr. Sanjay Pathak and Mr. Anupa Nand Jha, Advocates. For the Marketing Board: Mr. B.K. Singh, Chauhan Mr. Binod Kumar Singh For the S t a t e: Mr. P.K. Shahi, Advocate General with Mr. Ritesh Kumar, A.C. to A.A.G.-I. 2 In CWJC No.11638 oF 1993 1. M/s. Prabhat Zarda Factory (India) Ltd., a Company incorporated under the Companies Act, 1956, having its registered office at New Area Sikandarpur, P.S. Muzaffarpur Town, District- Muzaffarpur, through one of its Director and authorised Signatory Sri Lalit Prasad. 2. Lalit Prasad, son of Sri Raghunandan Prasad, resident of Club Road, P.S. Mithanpura, Muzaffarpur, District- Muzaffarpur. .... Petitioners. Versus 1. State of Bihar, through Secretary, Department of Agriculture, Govt. of Bihar, Patna. 2. Bihar Agriculture Marketing Board established under Section 33A of the Bihar agriculture Produce Market Act, 1960 having its Principal Office at Pant Bhawan, Bailey Road, Patna through its Managing Director. 3. Agriculture Produce Market Committee, Muzaffarpur through its Secretary. 4. Union of India through Secretary, Ministry of Industries, Udyog Bhawan, New Delhi. .... Respondents ****** For the petitioners: Mr. K.N. Jain, Sr. Advocate with Mr. Rohitab Das and Dr. R.Usha, Advocates. For the State: Mr. P.K. Shahi, Advocate General Mr. P.K. Tekriwal, G.A.I Mr. Shashi Bhushan Kumar, Standing Counsel No.16, For the Marketing Board: Mr. S.K. Mazumdar, Sr. Advocate with Mr. B.K. Singh, Chauhan and Mr. Binod Kumar Singh, Advocates. In CWJC No.12258 oF 1993 M/S D. Lall & Sons Agency, Samrat Hotel Marketing Complex, Fraser Road, Patna through its Proprietor Shri Rajesh Bajaj, son of Shri Santoshi Bajaj, resident of Bajaj Bhawan, Kadam Kuan, Patna. .... Petitioner. Versus 3 1. The State of Bihar, through the Secretary, Department of Agriculture, Government of Bihar, Patna. 2. The Bihar Agriculture Produce Marketing Board, Established under Section 33A of the Bihar Agriculture Produce Market Act, 1960 having its Principal Officer at Pant Bhawan, Bailey Road, Patna through its Managing Director. 3. The Agriculture Produce Market Committee, Musallahpur, Patna through its Secretary. 4. Union of India through Secretary, Ministry of Industries, Udyog Bhawan, New Delhi. ....Respondents. ****** For The Petitioner: Mr Ramesh Kumar Agrawal, Advocate. For the Marketing Board: Mr. B.K. Singh Chauhan & Mr. Binod Kr. Singh, Advocates. For the S t a t e: Mr. Shashi Bhushan Kumar, Standing Counsel No.16. ****** P R E S E N T THE HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR THE HON'BLE MR. JUSTICE KISHORE KUMAR MANDAL ***** S.K. Katriar, J. Common issues have been raised in this batch of writ petitions, have been heard together, and are being disposed of by a common judgment. The representative facts shall be drawn from C.W.J.C. No.10145 of 2001 (M/s Dharampal Satyapal Ltd.& Another Vs. the State of Bihar & Others). 2. A brief narration of facts essential for the disposal of the writ petitions may be indicated. The Petitioners call in question different notices contained in Annexure 6,7 and 9, issued by 4 respondent no.4 (The Secretary, Agriculture Produce Market Committee, Musallahpur, Patna) (for short Market Committee), whereby the writ petitioners have been assessed to pay market fee on „Zafrani Zarda‟ under the provisions of the Bihar Agriculture Produce Market Act, 1960 (for short „the Act‟ ). The petitioners have also called in question the notification dated 18th July, 1991, under Section 39 of the Act, and published in the official gazette on 31st July 1991, whereby the schedule appended to the Act has been amended and under head “11 (Narcotics)”, two items, namely, Zarda and Zafrani Zarda etc., have been added. 3. Petitioner no.1 is a company incorporated under the Companies Act 1956, and is engaged in the manufacture, inter alia, of Tulsi brand of Zafrani Zarda in its different factories located outside the State of Bihar and selling the same from its various depots situate throughout India including the State of Bihar at New Bye-pass Road, Anishabad, within Gardanibag Police Station, in the township of Patna. The company is also engaged in marketing and sale of spices under the brand name „CATCH‟. The raw-material used for manufacture/ production of Zafrani Zarda is tobacco which is already incorporated in the Schedule of the Act. The petitioners‟ case is that the process of manufacture 5 of Zafrani Zarda is a sophisticated and cumbersome process. The manufacturers purchase tobacco grown by the agriculturist which is then sorted out and bundled. Plain water is then sprinkled on the bundles of tobacco, and then allowed to ferment for a few days which generate heat in order to cure it. The stalks of tobacco are then separated and removed. The impurities in the tobacco are then sifted out, and are then blended with permissible colours and chemicals, cut into strips sheared by machine, and allowed to dry. This product of tobacco is then called Sada Zarda. Manufacturers of Zafrani Zarda like the petitioners purchase Sada Zarda from various places, brought to the factory premises and thereafter various other ingredients are mixed in fixed proportion which is ultimately called Zafrani Zarda. It is thereafter packed in special pouches, or tin containers of various sizes, for marketing and sale in different brand names. 4. The petitioners applied for license under the provisions of the Act under mistaken impression of law and started filing returns. 5. The expression „Agricultural Produce‟, occurring in the Act, was amended by Act no.60 of 1982, and the words „manufactured or not‟ was inserted therein with effect from 30.04.1982. By yet another notification dated 18.07.1991, published in 6 the official gazette on 31. 07.1991 (Annexure-2), in purported exercise of powers conferred by Section 39 of the Markets Act, products/items „Zarda‟ and „Zafrani Zarda‟ etc. were included in the schedule to the Act, (Annexure-2). Invoking powers under Section 3 of the Act, the State Government issued draft notification on 12.5.1992, inviting objections from affected parties for regulation of sale, purchase, storage and processing of all agriculture Produce included in the schedule of the Act (Annexure-3). The final notification under Section 4 of the Act in relation to all the market committees in the State of Bihar was issued on 31.8.1992 (Annexure-4), for regulation of sale, purchase, storage and processing of all agriculture produce included in the schedule of the Act. 6. This batch of writ petitions was dismissed by this Court by a common order dated 7th of October, 2002. Aggrieved by the order, the writ petitioners preferred Civil Appeal no. 5779 of 2005 (M/s Dharampal Satyapal Limited & Another Vs. The State of Bihar & Others), before the Supreme Court which was heard along with cognate appeals, and were disposed of by a common judgment dated 14.5.2008. The order of this Court was set aside, and the matters were remitted back for reconsideration and disposal afresh. That is how these matters have come up before 7 us and are being disposed of. Paragraph nos. 7 and 8 of the order of Supreme Court are reproduced hereinbelow: “7. The High Court by reason of the impugned judgment did not go into other contentions raised by the parties. It was held that the market fee would be leviable with effect from 31st August, 1992. It failed to take into consideration the important question raised by the petitioners that the Notifications were ultra vires the Act and/or would have no application in relation to Zafrani Zarda. It also did not take into consideration the contention of Market Committee that having regard to the provisions of Section 4-A of the Act, Sections 3 and 4 thereof were not required to be complied with. 8. The questions raised by the parties are of significance. They should have been dealt with by the High Court.” 7. Mr. Ramesh Kumar Agrawal, learned Advocate appearing on behalf of the petitioners submits that after insertion of any item in the schedule to the Act, notifications under Sections 3 and 4 are mandatory for application of regulatory provisions. By these notifications, the State Government have notionally notified the Market yards/ places followed by no further orders, circular regulating the sale/purchase of those items. It is contended that the liability of charging fee under Section 27 of the Act on an item is subject to regulation of such item under the provisions of the Act and the Rules framed 8 thereunder. Zafrani Zarda and spices are not being regulated under any provision of the Act and the Rules framed thereunder and, therefore, question of payment of fee under Section 27 of the Act does not arise. It is further pointed out that neither the State Government, nor the Bihar Agricultural Marketing Board (for short „the Board‟) have provided any infrastructural facility as mandated by the Act or the Rules, either to sellers or buyers. It is further highlighted that by reason of the notification issued under Section 4 of the Act, almost entire area of the Patna town has been declared as a sub-market yard with the sole purpose of collecting market fee without providing any mechanism to regulate them. Learned counsel for the petitioner draws our attention to rules 80 and 81 of the Rules, framed under the Market Act. 7.1) It is further contended while interpreting the provisions of an Act that the entire statute has to be read in its entirety including the purport and purpose of the case as reflected from the preamble of the Statute, as also the statement of objects and reasons. Counsel relied upon (2003) 7 SCC 589 (Indian Handicrafts Emporium and others Vs. Union of India and others) paragraph nos.97 and 98 and (2006)12 SCC 573 paragraph nos.97 and 104. 9 7.2) Highlighting the provisions contained in Section 15(2), it is submitted that sale and purchase contemplated therein is to be made by means of open auction or tender system which is not the case in hand. The end product (Zafrani Zarda) is covered by different provisions of the Standards of weights and Measures Act, 1976, and Standards of Weights and Measures (Enforcement) Act, 1985, enacted by the Parliament. The said Act has been given effect to by the State of Bihar by means of a notification dated 1st July, 1998. Referring to different provisions of the said Act, it is contended that the same would relate to the commodities sold in packaged form and shall bear information regarding the unit, weight and sale price of the commodities. In order to support his contention that Section 15 is mandatory in nature and violation thereof will entail penal consequences, counsel relied on the judgment reported in 1992 (2) PLJR 535 (Keshoram Agarwala and others Vs. The State of Bihar and others). 7.3) The sum and substance of the argument advanced on behalf of the petitioner is that Zafrani Zarda cannot be regulated under the Act and, in fact, is not being regulated at all and, as such, the authorities cannot justifiably impose and realize market fee from the petitioners Under 10 Section 27 of the Act. Referring to the notification dated 6.4.1999 (Annexure-12/A), it is contended that the entire length and breadth of Patna town has been declared Sub-market yard for the rest of the items including Zafrani Zarda without indicating the methods of regulation in respect of sale, purchase, and processing of “Zafrani Zarda”. He submitted that the Act is confiscatory in nature in so far as the manufacturers like the present petitioners are concerned. 7.4) Learned counsel for the petitioners further sought to contend that Zafrani Zarda is an industrial product and is incapable of being subjected to fee under the Market Act. 7.5) He also submits that the agriculturist in this country is not subjected to any tax at all, whereas the industrialist is subjected to diverse imposts like duties of excise, sales-tax, income-tax, import duty etc., to which has been added the market fee with the help of fictional concept of “all agricultural produce”, and manufactured or not, and declaration of the entire township of Patna as Market Yard/Sub-Market Yard. 11 8. Mr. Ramesh Kumar Agrawal, learned Counsel appearing in C.W.J.C. No.12258 of 1993, submitted that he has no instructions in the matter. 9. Mr. K.N. Jain appearing for the petitioners in CWJC No.11638 of 1993 (M/s Prabhat Zarda Factory (India) Ltd. and another Vs. State of Bihar and others), submitted that it is evident on a plain reading of the aims and objects and the preamble of the Act, that the Act is meant to protect the agriculturist from the exploitation of the middle man, tobacco really being an agricultural produce is liable to market fee, but not Zarda and Jafrani Zarda. He relies on the judgment of the Supreme Court in ITC Ltd. Vs. Agricultural Produce Market Committee and others, reported in (2002)9 S.C.C. 232, paragraph 89 which lays down to the effect that agricultural products, not industrial products, can be subjected to levy. In his submission, an industrial product to reach this stage has to cover three stages, namely, raw material, processing, and the end product. The end product is an industrial product and cannot be subjected to levy. 10. The learned Advocate General appearing for the respondent-Board (respondent no.2) submitted that the petitioners have not challenged the validity of the Act. The definition 12 of agricultural produce, as applicable during the period in question, includes all produces whether processed or non-processed, manufactured or not. The matter is now concluded by judgment of the Supreme Court in Kesarwani Zarda Bhandar Vs. State of Uttar Pradesh and others, reported in (2008)8 S.C.C. 305, paragraphs 4 and 15. The definition of agricultural produce in the Bihar Act is wider than in the U.P. Act. A large number of items which are not apparently agricultural produce have been declared by the Supreme Court to have been validly included in the Schedule to the Act and are, therefore, liable to market fee. He relies on the judgment of the Supreme Court in Belsund Sugar Co. Ltd. Vs. State of Bihar and others, reported in (1999)9 S.C.C. 620, paragraphs 141, 142, 149, 152 and 153. He next submits that in order that an item can be subjected to market fee, it must satisfy three conditions, namely, it must be an “agricultural products‟ within the meaning of Section 2(a) of the Act, it must be used as raw material, and must be included in the schedule to the Act. In his submission, Zarda and Zafrani Zarda satisfy the three conditions. The case of the petitioners is entirely based on the judgment of the Supreme Court in I.T.C. Ltd. Vs. State of Karnataka reported in (1985) Supp. S.C.C. 476 13 (hereinafter referred to as „the first ITC case‟), which has been overruled in the second I.T.C. case. It is also based on the judgment in Prabhat Zarda (Supra) which dealt with the unamended definition of agricultural produce inapplicable in the present case. 10.1) He next submitted that the issues raised on behalf of the petitioners relating to Quid Pro Quo is covered by the authoritative pronouncements of the Supreme Court, wherein it has been held that the services to be rendered in lieu of fees need not be made available on individual basis. Community service is enough. 10.2) He lastly submitted that all kinds of imposts, except income tax, is capable of being passed on to the buyer/ultimate consumer. 11. Mr. S.K. Mazumdar appearing for some of the respondents has adopted the arguments of the learned Advocate General. 12. We have perused the materials on record and considered the submissions of learned counsel for the parties. The unamended definition of agricultural produce is reproduced hereinbelow: 2. Definitions.- (1) in this Act, unless there is anything repugnant in the subject or context- “agricultural produce” includes all produce, whether processed or non- processed, of agriculture, horticulture, 14 animal husbandry and forest, specified in the schedule.” The same was substituted by Bihar Act 60 of 1982, and was enforced with effect from 30.11.1982. The definition in Hindi, and its unauthorised English translation, is reproduced hereinbelow: “(a)d`f"k mit ls vfHkizsr gS d`f"k m|ku&d`f"k (ckxokuh), cxkuks, i’kq&ikyu, ou, js’ke&mRiknu, eRL;ikyu dh lHkh mit, pkgs og fo/kkfr (rS;kj) gks ;k vfo/kkf;r; fofufeZr gks ;k ugh, vkSj blds vUrxZr vuqlwph es ;Fkk- fofuZfn"V i’kq/ku ;k dqDdqV, vkfn Hkh gS@” “(a) „Agricultural produce‟means all produce whether processed or non- processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture, and includes livestock or poultry as specified in the Schedule.” (Emphasis added) 13. The change in the content and sweep of the definition after amendment is evident on a plain reading when read in juxtaposition. The petitioners have not challenged the validity of the Act, nor that of the amended definition. It is thus manifest that “agricultural produce” has a much wider sweep than the quondam definition, and now covers all produces whether processed or non- processed, manufactured or not, agriculture, horticulture, plantation, animal husbandry, forest, sericulture, pisciculture, and includes livestock or poultry as specified in the schedule. In that 15 view of the matter, we do not find it possible to agree with the submission advanced on behalf of the petitioners that those of the agricultural produce which are used as raw material are alone included in the definition. In view of the position that the Act is covered by Entry No.28, List No.2, read with Entry Nos. 14 and 24, of the Constitution, it was open to the Legislature to define „agricultural produce‟ as has been done. The Court is always reluctant to interfere with the policy and wisdom of the Legislature. On the heels of Amending Act 3 of 1982, came the amendment in the schedule whereby Zarda and Zafrani Zarda have been included in the Schedule under the heading 11 entitled “Narcotics”, vide Notification dated 18.7.1991, published in the Bihar Gazette (Extra-ordinary) on 31.7.1991 (Annexure-2). The amendment in the Schedule is reproduced hereinbelow: Lka’kks/ku mDr lwph esa&& 'kh"kZd 11 eknd&rEckdw ds v/khu en 1 ds ckn dh fuEu ensa tksMh tk,@ tnkZ tkQjkuh tnkZ oxSjg bl la’kks/ku dk izHkko fcgkj d`f"k mit cktkj vf/kfu;e 1960 ds ykxw gksus dh frfFk ls izHkkoh ekuk tk;sxk@ 16 It is thus evident that the essential conditions for imposition of market fee on Zarda and Zafrani Zarda are satisfied in the present case. The tobacco produced in fields is covered by the definition of „agricultural produce‟, within the meaning of Section 2(a) of the Act, which is within the legislative competence of the Bihar Legislature and has been included in the Schedule to the Act. The petitioners are unmindful of the position that the content and sweep of an enactment has to be determined after taking into account the relevant definitions, the charging section, and the scheme of the Act. The policy and the wisdom of the Legislature in creating new definitions in the enactment may not often times meet the common sense view of the citizen, and generally described as artificial definition. We think that the more accurate way to describe it is by stating that such is the policy and the wisdom of the Legislature. We are thus convinced that the essential conditions for imposition of market fee on Zarda and Zafrani Zarda are satisfied in the present case. To conclude this part, we are of the view that Zarda and Zafrani Zarda are “agricultural produce” within the meaning of section 2(a) of the Act and, therefore, liable to market fee. 17 14. Learned counsel for the petitioners has strenuously contended that the definition of „agricultural produce‟ must be read in the background of its aims and objects, and the preamble. It appears to us that the petitioners are picking out one or two expressions here and there in the aims and the objects, and the preamble of the Act, which, if read in isolation, may afford narrow interpretation of „agricultural produce‟, canvassed by the petitioners. We are of the view that the aims and objects, and the Preamble of the Act, have a very limited role to play in interpreting an enactment, particularly if the provisions of the Act are sound and clear. In case of doubt or difficulty in interpreting the provisions of an enactment, help can be obtained from the objects and the preamble of the Act. It is, inter alia, for this reason that the same are not part of the substantive provisions of an enactment. 15. We must first of all notice the judgment in Kesherwani Zarda Bhandar Vs. State of Uttar Pradesh (Supra) relied on by the learned counsel for the respondents wherein the Supreme Court considered the liability of market fee on Zafrani Zarda under the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (25 of 1964). The definition of 18 “agricultural produce” under the U.P. Act is set out hereinbelow for the facility of quick reference: “2.(a) „agricultural produce‟ means such items of produce of agriculture, horticulture, viticulture, apiculture, sericulture, pisciculture, animal husbandry or forest as are specified in the Schedule, and includes admixture of two or more of such items, and also includes any such item in processed form and further includes gur, rab, shakkar, khandsari and jaggery.” The definition in the U.P. Act does not include processed, non-processed, manufactured or not, of agriculture produce. Presence of these expressions in the definition in the Bihar Act makes the difference in the applicability of the Bihar Act. The Supreme Court also considered the definitions of „agricultural produce‟ in the U.P. Act, and the unamended as well as amended definitions in the Bihar Act, and came to the conclusion that Zafrani Zarda cannot be exigible to market fee under the U.P. Act. In view of the distinct and different definitions of „agricultural produce‟ in the Bihar Act, Zarda and Zafrani Zarda would be liable to market fee. 16. The judgment of the Constitution Bench of the Supreme Court in Belsund Sugar Com. Ltd. Vs. State of Bihar (Supra), may be also noticed. That was also a case under the Bihar Act, whereby 19 market fee was sought to be imposed on Sugar. The Supreme Court came to the conclusion that sugarcane, sugar and molasses are covered. The field is, therefore, covered by the Special Legislation of the Central and the State and applicability of the Bihar Act being a general law, to sugarcane, sugar and molasses. Sugar is, therefore, completely ruled out. The Supreme Court further noticed that the Parliament and the State Legislation have enacted a number of legislations to govern and control sugarcane, sugar, and molasses, with respect to its sale, purchase etc. and is covered by a special set of legislations of the Parliament and the State Legislature. The learned Advocate General rightly submits that the judgment has held that items like vegetable oil, rice mill industries, tea, wheat products, like Ata, Maida, Suji are within the sweep of the Act, though the same may not by a common man‟s perception be Per Se agricultural produce. In that view of the matter, manufactured products are also