THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.16293 OF 2001 AND CONTEMPT CASE NO.1072 OF 2003 DATED JULY, 2011 BETWEEN PHI Seeds Limited (formerly known as SPIC PHI Seeds Limited) …Petitioner And The Director of Marketing, Andhra Pradesh, 1st Floor, Bhurgularamakrishna Rao Building, Tank Bund Road, Hyderabad – 500 001 and others. …Respondents THE HON’BLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.16293 OF 2001 AND CONTEMPT CASE NO.1072 OF 2003 C O M M O N O R D E R W.P.NO.16293 OF 2001: Major issues stand settled but a few loose ends in this litigation still remain. Hence, this order. The petitioner company is engaged in the production and sale of hybrid seeds governed by the Seeds Act, 1966. It enters into agreements with land owners and organizers whereby foundation seed is supplied to them for multiplication and the seeds so produced, under the strict supervision of the petitioner company, are procured by it for treatment and are thereafter sold as certified seeds, used only for germination purposes. When these transactions were sought to be subjected to the provisions of the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966 (for brevity, ‘the Act of 1966’) by levying market fee thereon, the petitioner company filed Writ Petition No.3712 of 2000 before this Court seeking a declaration that its hybrid seeds were not ‘agricultural produce’ within the meaning of Section 2(i) of the Act of 1966 and that the provisions of the said Act were not applicable to it in the absence of a ‘sale’ or ‘purchase’ within the notified area. Writ Petition No.3712 of 2000 was disposed of by a Division Bench of this Court along with similar matters by the common Judgment reported in I.T.C. ZENECA LIMITED, SEC’BAD V/s GOVERNMENT OF A.P.[1]. The Division Bench held that edible as well as chemically processed non-edible seeds meant for germination purpose were exigible to the levy of market fee if sold within the precincts of the notified area/market yard and therefore, the petitioner company and others similarly situated would be liable to comply with the provisions of the Act of 1966 in their dealings in the items aforestated within the market area/market yard. However, as the Division Bench did not deal with the second aspect raised by the petitioner company with regard to the absence of a ‘sale or purchase’ within the notified area, it sought review of the Division Bench’s Judgment to that extent, which resulted in a separate order dated 25.01.2001 in Review W.P.M.P. No.29448 of 2000 in Writ Petition No.3712 of 2000. By the said order, the Division Bench clarified that this aspect of the matter could only be enquired into by the appropriate authority under the Act of 1966 and in as much as eight Agricultural Market Committees were involved, the Bench deemed it proper that the Director of Marketing take up the issue for enquiry and adjudication. The Bench accordingly ordered the Director of Marketing, Government of Andhra Pradesh, to issue notice to the petitioner company and make an enquiry, after giving a personal hearing, as to whether the transactions of the petitioner company came within the ambit of ‘sale or purchase’ and whether the same were exigible to levy of market fee under the Act of 1966. The said direction culminated in the order dated 02.06.2001 of the Director of Marketing, Government of Andhra Pradesh, Hyderabad, which is impugned in the present writ petition. By the said order, the Director held that the petitioner company was bound to obtain a licence under the Act of 1966 and was also exigible to levy of market fee under Section 12(2) of the Act of 1966. This Court, by order dated 07.08.2001, stayed the operation of the impugned order dated 02.06.2001, including the levy and collection of market fee under the provisions of the Act of 1966 on the seeds produced by the petitioner company. The said order was made absolute on 10.04.2002. In the meanwhile, the petitioner company, along with others similarly aggrieved, assailed the Judgment of this Court in I.T.C. ZENECA LIMITED1 before the Supreme Court. The Supreme Court, by its Judgment reported in SEEDSMAN ASSOCIATION, HYDERABAD V/s. PRINCIPAL SECRETARY TO GOVERNMENT OF A.P.[2], while dismissing the appeals left it open to the members of the Seedsman Association and the other appellants to seek appropriate relief in fresh proceedings instituted in accordance with law. Perusal of the said Judgment reflects that the Supreme Court, following its earlier Judgments in STATE OF RAJASTHAN V/s. RAJASTHAN AGRICULTURE INPUT DEALERS’ ASSOCIATION[3] and KRISHI UTPADAN MANDI SAMITI V/s. PILIBHIT PANTNAGAR BEEJ LTD.[4], opined that foodgrains meant to be utilized as seeds irretrievably lost their basic character, i.e., their ability to be consumed by human beings or animals or for extraction for a like purpose and that such processed seeds become a commodity distinct from foodgrains as commonly understood, thereby excluding them from the ambit of the Act of 1966. However, as the Seedsman Association had not filed adequate pleadings or material to enable the Court to arrive a factual finding on the aforestated aspect and as the Supreme Court was of the opinion that in the light of the vague pleadings it would not be possible for it to give any relief to the appellants, the appeals were dismissed making it clear that the said order would not preclude the members of the Seedsman Association or the other appellants from seeking appropriate relief in fresh proceedings instituted in accordance with law. Consequent to the above order, the petitioner company and others filed writ petitions before this Court once again. This batch of cases was disposed of by a learned Judge of this Court vide the common Judgment reported in ADVANTA INDIA LTD. V/s. STATE OF ANDHRA PRADESH[5]. The question postulated by the learned Judge for adjudication was whether market fee under the Act of 1966 was leviable on the seeds manufactured by the petitioner company and others. Taking note of the process by which certified seeds are produced, including the various steps involved in their manufacture, the learned Judge held that the principles laid down in RAJASTHAN AGRICULTURE INPUT DEALERS’ ASSOCIATION3 and KRISHI UTPADAN MANDI SAMITI4 would squarely apply to the cases before him. The learned Judge therefore held that the notices issued to the petitioners under the Act of 1966 could not be sustained. The learned Judge however thought it fit to add a rider that if the seed produce grown out of the foundation seed is not sold but used as a seed, it should be treated as agricultural produce and would therefore be liable for levy of market fee. For this purpose, the market committee was held empowered to require the manufacturer of the seeds to furnish relevant particulars to satisfy itself as to the above aspect. In effect, the above adjudication settled the controversy in so far as seeds developed, manufactured and sold as certified or labelled seeds are concerned. They were held to be outside the purview of the Act of 1966. It is the case of the petitioner company that its hybrid seeds are sold only for germination purposes and would therefore not be subject to the rider in ADVANTA INDIA LTD.5. No material is placed before this Court by the respondents that any part of the certified seeds produced by the petitioner company is used for purposes other than sowing and germination. Once the seeds of the petitioner company are held excluded from the purview of the Act of 1966, the secondary question raised by it in its earlier writ petition, W.P.No.3712 of 2000, as to whether there is a ‘sale or purchase’ in the notified area no longer survives for consideration. The impugned order dated 02.06.2001 of the Director of Marketing, Government of Andhra Pradesh, Hyderabad, proceeds on the assumption that the petitioner company’s seeds come within the ambit of ‘agricultural produce’ amenable to the provisions of the Act of 1966, which assumption now stands negatived by the Judgment in ADVANTA INDIA LTD.5. The impugned order dated 02.06.2001 is therefore unsustainable in law and on facts and is accordingly set aside. It is the complaint of the petitioner company that notwithstanding the interim order granted by this Court in the present writ petition, the Market Committees all over the State continued to levy and collect market fee upon its certified seeds under the provisions of the Act of 1966. Such levy and collection of market fee from the petitioner company upon its certified seeds is held to be without legal foundation. It is left open to the petitioner company to institute proceedings independently in accordance with law for recovery of the amounts illegally collected from it. C.C. NO.1072 OF 2003: The petitioner company alleged that despite the interim order dated 07.08.2001, which was made absolute on 10.04.2002, various Agricultural Market Committees functioning under the control of the Director of Marketing, Government of Andhra Pradesh, Hyderabad, continued to insist upon payment of market fee on its certified seeds. It claimed that it had brought this aspect to the notice of the Director of Marketing but the same failed to evoke any positive response. The petitioner company accordingly filed this contempt case alleging willful disobedience to this Court’s order. Relevant to note, only the Director of Marketing, Government of Andhra Pradesh, was impleaded in this case though as many as five Agricultural Market Committees were party to the interim order passed in the writ petition. The Director of Marketing, Government of Andhra Pradesh, Hyderabad, filed a counter stating that pursuant to the interim order of this Court he had issued Memo dated 07.10.2003 instructing the Assistant Directors of Marketing in the State to issue necessary directions to the Agricultural Market Committees of their region not to collect market fee from the petitioner company on the seeds produced by it. The Market Committees were also separately addressed under Memo dated 04.10.2003 informing them of the subsistence of the interim order passed in this writ petition; detailing the market fee alleged to have been collected by them and calling upon them to furnish information as to on what basis such market fee had been collected from the petitioner company when the Court orders were in force. The Director of Marketing, Government of Andhra Pradesh, Hyderabad, therefore stated that in the light of the aforestated action taken by him, he had complied with the order of this Court and was thus not guilty of contumacious conduct. The petitioner company however alleged that despite the instructions said to have been issued by the Director of Marketing, Government of Andhra Pradesh, Hyderabad, the Market Committees continued to levy and collect market fee upon its certified seeds. The learned Government Pleader for Agriculture produced the records to show that pursuant to the instructions issued by the Director of Marketing, individual letters were received from the Agricultural Market Committees stating that the petitioner company had not produced a copy of or intimated the existence of the Court order and had voluntarily remitted the market fee. This Court, in exercise of contempt jurisdiction, cannot decide these disputed questions of fact. Further, none of the Agricultural Market Committees are before this Court. The Director of Marketing, Government of Andhra Pradesh, Hyderabad, having issued instructions pursuant to the interim order is not shown to have wilfully and deliberately disobeyed the said order. Unless wilful disobedience to the order is made out, commission of ‘civil contempt’ as defined under the Contempt of Courts Act, 1971 is not established warranting exercise of contempt jurisdiction. The Contempt Case is therefore liable to be dismissed. In the result, Writ Petition No.16293 of 2001 is allowed setting aside the impugned order dated 02.06.2001 passed by the Director of Marketing, Government of Andhra Pradesh, Hyderabad, and holding that the petitioner company would be entitled to initiate suitable proceedings independently in accordance with law for recovery of the market fee levied and collected from it upon its certified seeds during the pendency of this writ petition. Contempt Case No.1072 of 2003 is dismissed. Miscellaneous petitions in the writ petition and the contempt case shall stand dismissed in the light of this final order. Parties shall bear their own costs. ---------------------------- SANJAY KUMAR, J. _______ JULY, 2011 PGS [1] 2000 (6) ALD 76 [2] (2004) 9 SCC 56 [3] (1996) 5 SCC 479 [4] (2004) 1 SCC 391 [5] 2005 (3) ALD 245