Agricultural Produce Market Committee vs Biotor Industries Ltd. & Anr

2. The brief facts of the case are stated below to appreciate the rival claims of the parties and to find out as to whether the appellant-APMC is entitled for the relief sought for in these appeals:

3. The APMC filed a Special Application No. 13606 of 2005 under Articles 226, 14 & 19 of the Constitution of India before the High Court against the said order of the State Government. The learned single Judge of the High Court after hearing the parties at length partly allowed the said application holding that the sale of the castor seeds in question took place within the market area of APMC, Baroda, therefore, APMC was right in levying the market fee on the castor seeds purchased by the respondent within the market area of APMC. The learned single Judge in respect to exemption clause in sub-rule 2 of Rule 48 held that the said exemption was available to the agricultural produce brought by the industrial concern itself from outside the market area into the market area of APMC and the exemption was not available where the castor seeds were bought within the market area by the seller and sold to the industrial concern within the market area. As such the learned single Judge upheld the plea of APMC for levy of market fee on the castor seeds purchased by the respondent-Company. In respect to the levy of market fee on de-oiled cake by APMC the learned single Judge accepted the contention urged on behalf of the respondent- Company and held that de-oiled cake could not be treated as oil cake, and therefore, it was not eligible for levy of market fee since it was not mentioned in the Schedule. Both the respondent-Company as well as the APMC being aggrieved by the judgment and order dated 22.12.2005 of the learned single Judge preferred Letters Patent Appeal No.139 of 2006 and Letters Patent Appeal No. 195 of 2006 respectively. The Division Bench of the High Court allowed the appeal preferred by the respondent-Company and dismissed the appeal preferred by the APMC and stated that as soon as the agricultural produce, namely, castor seeds, bought by the representatives of the Company, is brought from outside the market area into the market area, after payment of octroi on such produce in their capacity as owner of the goods, the same would be treated as completion of sale outside the jurisdiction of the market area. The Division Bench of the High Court, therefore, held that the collection of market fees from the respondent- Company by APMC is contrary to the provisions of the Rules, namely, Rule 48, sub-rule (2) of the Rules, which grants exemption to agricultural produce brought from outside into market area by the industrial unit for its own use. On the second issue, the High Court held that the by-product, namely, de-oiled cake contains less than 1% oil and is not notified in the Schedule as per Section 2(i) of the Act and hence, the above product being totally different from oil cake, there is no liability upon the respondent- Company to pay the market fees. Hence, the present Civil Appeals.

4. It is the case of the APMC that on 31.3.2004, the Director of APMC, Baroda and Rural Finance, Gujarat State, in exercise of the power vested in him under the Act, issued Notification including castor seeds and castor cake in the regulated agricultural produces of APMC, Baroda. On 19.4.2004 the Notification issued by the APMC, Baroda through its Director was published in the daily newspaper intimating that the trading of those produces is liable for paying of market fees/cess to the APMC, Baroda. On 28.6.2004 the APMC issued notices to the respondent-Company asking it to produce the accounts for the period 19.4.2004 to 30.11.2004 in respect of the goods being used in the mill and further asked to obtain license from Market Committee for the year 2004-2005. The respondent-Company failed to submit the accounts and further failed to obtain license within the stipulated period as mentioned in an earlier letter dated 28.6.2004, and therefore, the APMC sent the reminder to the respondent-Company and asked to comply with the direction. Vide letter dated 7.12.2004 the respondent- Company submitted monthly statement for the period 19.4.2004 to 30.11.2004 in respect of the purchases of castor seeds made by the Company. APMC on the basis of the details provided by the respondent-Company prepared a statement showing the names of the suppliers, weight, price, quantity and amount paid by the company as per the weighment made by the Company which clearly shows that as per bills, different parties were selling castor seeds to the respondent-Company for which weighment was done at the mill site in the market area Baroda and payment made to the parties as per the weighment done by the respondent-Company. On 27.12.2004 on the basis of statement submitted by the respondent-Company, the APMC assessed the market cess for the purchases of the castor seeds in the market area in respect of the same being used for processing and converting them into castor oil and oil cake and on the basis of assessment the respondent-Company was directed to pay the market cess of [pic] 1,27,46,349.38 within a period of 10 days.

5. Being aggrieved by the said assessment made by APMC on 27.12.2004, the respondent-Company preferred Revision Application No. 2 of 2005 under Section 48 of the Act before the State of Gujarat on 05.01.2005 challenging the decision of the APMC directing it to pay the market cess as per its letter dated 27.12.2004. To the said Revision Application, APMC filed its reply on 23.01.2005. The respondent-Company filed rejoinder on 23.02.2005 to the reply filed by the APMC. The Deputy Secretary, (Appeal) allowed the Revision Application No. 2 of 2005 by its cryptic order dated 19.04.2005 and set aside the order dated 27.12.2004 passed by APMC. It is the case of the APMC that the Revisional Authority erroneously arrived at the conclusion that Rule 48(1) is not applicable and wrongly held that Rule 48(2) was applicable to the fact situation and further wrongly held that no market fee is to be paid by the respondent-Company on the de-oiled cake.

7. Being aggrieved by the said judgment dated 22.12.2005, the respondent- Company filed Letters Patent Appeal No. 139 of 2006 on 18.1.2006 before the Division Bench of the Gujarat High Court challenging the findings of learned single Judge that market fee is exigible on the purchase of castor oil seeds by the industrial concern. The APMC also being aggrieved by the said order dated 22.12.2005 of learned single Judge filed Letters Patent Appeal No. 195 of 2006 for rejecting of claim of APMC, Baroda for market fees/cess on de-oiled cake. The Division Bench of the High Court on 24.4.2007 after hearing the parties allowed the appeal of the respondent- Company and dismissed the appeal of the APMC, Baroda after setting aside the order of the learned single Judge holding that Rule 48(2) is applicable and that the castor seeds were brought from outside the market area. The Division Bench upheld the rejection of the Special Civil Application No. 13606 of 2005 filed by the APMC, Baroda not accepting the case pleaded by it that market fee is levied on de-oiled cake which is a by-product sold by it and is not exigible goods as it is not an agricultural produce. Aggrieved by the common judgment, present appeals are filed.

8. On the basis of the legal grounds urged in these appeals questioning the correctness of the findings and reasons recorded by the Division Bench of the High Court on both the points which have been formulated by it, the following points would arise for the consideration of this Court in these appeals:-

(2) No fee shall be levied on agricultural produce brought from outside the market area into the market area for use therein by the industrial concerns situated in the market area of for export and, in respect of which declaration has been made and a certificate has been made and a certificate has been obtained in Form V:-

11. It is the case of the respondent-Company that the demand and assessment made and levying the market fee on the castor seeds for the period from 19.04.2004 to 30.11.2004 is erroneous as castor seeds were purchased from outside the market area of APMC, Baroda and the same were brought for the use of the industrial concern which is situated within the market area of APMC, Baroda for the purpose of using the same for manufacturing of the oil. In this regard, the APMC has called upon the respondent-Company to produce the accounts for the period 19.04.2004 to 30.11.2004 in respect of the goods being used in the mill and was further asked to obtain license from the Market Committee for the year 2004-2005. On 07.12.2004, the respondent-Company submitted monthly statement for the aforesaid period in respect of the purchases made of castor seeds by the company. The APMC on the basis of details provided by the respondent- Company prepared the statement showing the names of the suppliers, weighment, quantity of the agricultural produce goods purchased and amount paid by the company to its trader as per the weighment made by the company. According to the committee, the purchases made by the company clearly show, as per the bills issued to different parties for castor seeds sold to the respondent-Company, that the weighment of castor seeds was made at mill site in Baroda and payment was made to the parties as per the weighment done by the respondent-Company. Therefore, on the basis of the assessment, the respondent-Company was directed to pay the market cess of [pic]1,27,46,349.38 vide its order dated 27.12.2004. The respondent-Company aggrieved by the said assessment order preferred Revision Application No. 2 of 2005 under Section 48 of the Act before the State of Gujarat questioning the correctness of the assessment order made by the APMC. The Deputy Secretary (Appeal) after hearing the parties passed a cryptic order dated 19.04.2005 by allowing the Revision Application and setting aside the order of assessment of the market Committee dated 27.12.2004. While allowing the Revision Application, the Revisional Authority arrived at the conclusion that Rule 48(1) of the Rules is not applicable and held that Rule 48(2) will be applicable to the fact situation. The correctness of the same was challenged before the learned single Judge of the High Court of Gujarat by filing a petition under Article 226 of the Constitution i.e. Special Civil Application No. 13606 of 2005.

12. The learned single Judge after giving opportunity to the respondent- Company and hearing both the learned counsel appearing on behalf of the parties has held that castor seeds have been bought within the market area of APMC, therefore, sub-rule (1) of Rule 48 is applicable to the fact situation and not sub-rule (2) of Rule 48 upon which reliance was placed by the respondent-Company’s counsel. In arriving at the said conclusion the learned single Judge has referred to the factual aspects with reference to certain documents such as invoices, bill receipts etc. exchanged between the respondent-company and its suppliers of castor seeds. The bill issued by one Manish Trading Company of Naroda, Ahmedabad dated 03.05.2004 for supply of 150 bags of castor seeds weighing 75 kilos each was examined. The rate charged was [pic]305/- per 100 kg. The total quantity shown was 112.50 quintals and the total amount claimed was [pic]1,71,562/-. In the said bill dated 03.05.2004, it was indicated that payment was yet to be made. At page 28 to the compilation, there is a purchase voucher/remittance note issued by the respondent-Company. It is not in dispute that the said purchase voucher/remittance note pertains to the same consignment transported by the Manish Trading Company under the bill dated 03.05.2004. The purchase voucher indicates that the quantity of the castor seeds received was short by 37.50 kilos. Weight of bags of 150 kilos was also deducted from the quantity of castor seeds. The agreed rate of [pic]305/- for 100 kilos remained constant and the respondent-Company therefore agreed to remit a total amount of [pic]1,70,991/- to the Manish Trading Company referred to supra. To the query from the court, the learned counsel appearing on behalf of the company, on instructions, made submissions that consignments were received from the sellers within the market area for the purpose of finding out shortfall or pilferage and the payment is made to the extent of actual quantity received. The learned single Judge has also referred to the total quantity of castor seeds weighing 112.50 quintals which was transported to the respondent-Company by Manish Trading Company and it had made payment after weighing consignment and after finding out the correct weight of the castor seeds received by it.

13. On the basis of the said material facts the learned single Judge arrived at the conclusion that the respondent-Company placed order for purchase of castor seeds from its suppliers from outside the market area but no payment was immediately made for the same. On the demand of the respondent-Company, the quantity of castor seeds so requisitioned by it was transported by the supplier which was received by it within the market area. It is an undisputed fact that the consignment so received was weighed by the Company within the market area. Thereafter, on finding out the exact weight of castor seeds received by it, the payment at the agreed rate was made by the Company to the supplier. Therefore, the learned single Judge came to the conclusion on the basis of appreciation of the aforesaid facts and held that the sale was not effected till the consignment was received by the respondent-Company and the same was weighed within the market area. The learned single Judge has rightly rejected the assertion made by the learned counsel on behalf of the Company holding that in case of shortfall or loss or damage during transport, the seller could claim damage from the transporter and that would further demonstrate that the respondent-Company did not become owner of the goods till it took the physical delivery thereof, weighing the same and satisfying itself about the quantity received by it. It was held that it was not a mere formality to find out the quantity by it but it has the essential element of making payment depending on the extent of quantity received and in case of any drastic shortfall in the quantity, the issue would be between the supplier and the transporter. Further finding was recorded that if against the quantity of 100 quintals of castor seeds supplied by the trader, the respondent-Company received only half of it on account of loss, damage or pilferage, the company would make payment only for such quantity leaving it for the trader to recover the damages from the transporter. There would also be a case where on account of some untoward and unforeseen circumstances, such as natural calamity or theft, the respondent-Company did not receive the full quantity of castor seeds, the payment shall be made only for the quantity received by it and not for the entire quantity to be supplied by the trader. The learned single Judge has further rightly recorded the finding of fact that when the castor seeds reach the market area, it was weighed by the Company and payment thereof was agreed to be made to the tune of quantity received and till then the castor seeds continue to be in the ownership of the seller. The Company becomes the owner of the property only once the exact weight of the castor seeds was ascertained and purchase voucher was obtained. The learned single Judge rightly held that APMC is justified in contending that the sale of castor seeds did take place within the market area and the appellant was authorized to charge fees from the respondent-Company for such purchase. Therefore, the learned single Judge held that the castor seed was bought by the respondent-Company within the market area of APMC, Baroda and therefore Rule 48(1) of the Rules is applicable to the fact situation and not Rule 48(2) as contended by the counsel. The said conclusion was arrived at after referring to the provisions of Sections 19, 20 and 21 of the Sale of Goods Act, 1930 and the Privy Council judgment in Hoe Kim Seing v. Maung Ba Chit[1]. Sections 19, 20 and 21 of Sale of Goods Act are extracted hereunder :-

19. For the reasons recorded by us on the point Nos. 1 to 3 in C.A. No. 3130 of 2008 the APMC must succeed. Accordingly, we allow the appeal and set aside the order of the Division Bench of the High Court in Letters Patent Appeal No. 139 of 2006 and uphold the levy of market fee on the castor seeds purchased by the respondent-Company for the period in question, and it is liable to pay the said market fee.

20. For the reasons recorded in answer to the point No. 4, we dismiss the C.A. No. 3131 of 2008 filed by APMC, Baroda against order passed in Letters Patent Appeal No. 195 of 2006, upholding the order of the learned single Judge which was affirmed by the Division Bench of the High Court.

21. In view of the aforesaid reasons, Civil Appeal No.3130 of 2008 is allowed and Civil Appeal No.3131 of 2008 is dismissed. There will be no order as to costs.

2008 upon which we have pronounced the judgment today.

3. The brief necessary facts for the purpose of examining the legality and validity of the impugned order are stated herein:-

7. This Civil Appeal is accordingly allowed in the above terms by setting aside the impugned order of the Division Bench and remanding the matter to the High Court to place the same before the roster of learned single Judge with a request to him to examine the validity of the impugned Rule if the APMC so desires and the impugned order passed by the Revisional Authority and decide the same on merits. The interim directions given by the learned single Judge by way of interim order dated 13.11.2008 directing to deposit 50% of the demanded amount towards the market fee is restored. If the company has not complied with that interim order, it shall comply with the same within two weeks from the date of receipt of the copy of this judgment.

…………………………………………………………J. [G.S. SINGHVI] ………………………………………………………J. [V. GOPALA GOWDA] New Delhi, November 29, 2013 ITEM NO.1A COURT NO.13 SECTION IX (For Judgment) S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS CIVIL APPEAL NO(s). 3130-3131 OF 2008 AGRICULTURAL PRODUCE MARKET COMMITTEE Appellant (s) VERSUS BIOTOR INDUSTRIES LTD. & ANR. Respondent(s) WITH Civil Appeal NO. 4860 of 2009 Date: 29/11/2013 These Appeals were called on for pronouncement of judgments today.

C.A. No. 3130 of 2008 is allowed, C.A. No. 3131 of 2008 is dismissed and C.A. No. 4860 of 2009 is allowed in terms of the signed reportable judgments.

[Two separate signed reportable Judgments are placed on the file]