Case: Krishna Coconut Co. &amp; Another Vs. East Godavari Coconut &amp; Tobacco Market Committee

According to him it is only when a person bought goods and sold those identical goods within the notified area that the fee under, S. 11 (1) could be levied. According to him, the transactions effected by the appellants consisted in their purchasing the said goods; they stopped at the stage of goods "bought". Therefore, the other ingredient for a valid levy of the fee not being present the fee levied in the present case was not in accordance with the requirements of S. 11 (1) and was unwarranted. This contention raises the question as to the meaning of the words "bought and sold" in S. 11 (1). At first sight they would appear to be susceptible of three meanings; viz.? (1) that they mean duality of transactions where the same person buys goods and sells these identical goods in the notified area, (2) that they mean "bought" or "sold" the conjunctive "and" meaning in the context of the sub-section the disjunctive "or" and (3) that they apply to a transaction of purchase as the concept of purchase includes a corresponding sale. When a person buys an article from another person, that other person at the same time sells him that article and it is in that sense that S. 11 (1) uses the words "bought and sold". The incidence of the fee under S. 11 (1) is on the goods thus bought and sold". This last interpretation was favoured by the High Court of Madras in Louis Dreyfus and Co. v. South Arcot Groundout Market Committee AIR 1945 Mad 383 , which has been accepted by the High Court in the present case.13. If the construction commended to us for acceptance by Mr. Agarwala were to be correct, viz. that the appellants transactions stopped at the stage of goods "bought", they would not be transactions in respect of goods "bought and sold". If the fee was vied on sales effected by the appellants with their customers its levy would not be valid under S. 11 (1) and would also be repugnant to Art. 286 where goods were delivered outside the State. But it is a well settled rule of construction that the Court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the manifest intention of the legislature enacting that statute. The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. The mischief to prevent which the Act was enacted was the exploitation of these producer by middlemen and those buying goods from them and therefore, the Act provided facilities such as a market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated and controlled market and a fair price was obtained by them. If the construction suggested by Mr. Agarwala were to he accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer end the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them. Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer. The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price. The Act thus aims at transactions which such a producer would enter into with those who buy from him. The words "bought and sold" used in S. 11 (1) aim at those transactions whereunder a dealer buys from a producer who brings to the market his goods for sale. The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in S. 11 (1) but is consistent with the object of the Act as expressed through its various provisions. The construction on the other hand canvassed by the appellants is defeative of the purpose of the Act and should, unless we are compelled to accept it, be avoided. The construction which we are inclined to accept acquires some support from the fact that S. 11 (1) makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable.14. Mr. Agarwala at first also urged that the fee under S. 11 (1) amounted to a tax and that it was in fact a sales tax. But at the last moment he stated that he did not wish to press that contention and requested us not to express any opinion thereon. Since the contention is not pressed we need not express any opinion on that question and confine ourselves to the question as to the interpretation of the words "bought and sold" in that section.15. In our view the construction placed by the High Court on S. 11. (1) was a correct construction and, therefore, the respondent committee had rightly charged the appellants with the said fee.16.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is true that in Para. 3 of their plaint the appellants averred that their business activities consisted of buying coconuts and copra in East Godavari District and selling them to customers outside the notified area and even the State and that those sales were completed at the respective places of those customers. The appellants case, therefore, was that in respect of these sales with customers some of whom were outside the notified area and the rest outside the State, the levy of fee was in the former case beyond the ken of S. 11 (1) and in the latter case repugnant to Art. 286 of the Constitution. The written statement of the respondent committee denied these allegations. The Committee asserted that both the purchases and sales took place in the notified area and that though the fee levied by it was on sales by the appellants and though delivery of the said goods thereunder took place outside the notified area the sales in respect thereof were made within the notified area and, therefore, the question of the levy under S. 11 (1) being repugnant to Art. 286 of the Constitution did not arise.Besides these pleadings Mr. Agarwala drew our attention to certain notices of demand and circulars issued by the Committee in which it was stated that the said fee was being levied on goods exported outside East Godavari District and that the traders were liable to pay it both on coconuts exported to outsiders and also consumed internally. That presumably was stated because if the goods were "bought and sold" within the notified area, even if they were subsequently exported outside, S. 11(1) would apply. The practice followed by the appellants and not denied by the Committee was that they used to despatch these goods by rail to their customers. Railway receipts and hundies were then sent to their bankers at the destination and railway receipts were delivered to the customers on their honouring the hundies. Thus the goods were delivered outside the notified area and the sales effected by the appellants to their customers were also completed at places outside the notified area and in some cases outside the State.If the construction commended to us for acceptance by Mr. Agarwala were to be correct, viz. that the appellants transactions stopped at the stage of goods "bought", they would not be transactions in respect of goods "bought and sold". If the fee was vied on sales effected by the appellants with their customers its levy would not be valid under S. 11 (1) and would also be repugnant to Art. 286 where goods were delivered outside the State. But it is a well settled rule of construction that the Court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the manifest intention of the legislature enacting that statute. The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. The mischief to prevent which the Act was enacted was the exploitation of these producer by middlemen and those buying goods from them and therefore, the Act provided facilities such as a market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated and controlled market and a fair price was obtained by them. If the construction suggested by Mr. Agarwala were to he accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer end the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them. Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer. The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price. The Act thus aims at transactions which such a producer would enter into with those who buy from him. The words "bought and sold" used in S. 11 (1) aim at those transactions whereunder a dealer buys from a producer who brings to the market his goods for sale. The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in S. 11 (1) but is consistent with the object of the Act as expressed through its various provisions. The construction on the other hand canvassed by the appellants is defeative of the purpose of the Act and should, unless we are compelled to accept it, be avoided. The construction which we are inclined to accept acquires some support from the fact that S. 11 (1) makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable.In our view the construction placed by the High Court on S. 11. (1) was a correct construction and, therefore, the respondent committee had rightly charged the appellants with the said fee.