Case: Mohammadbhai Khudabux Chhipa &amp; Another Vs. State of Gujarat &amp; Others

One of the petitioners before us in these petitions was also a party in that petition, which was with respect to a market established in Ahmedabad. In that petition the challenge to the constitutionality of the main provisions of the Act failed but the provisions of certain rules, namely Rr. 53, 65, 66 and 67 were held to be ultra vires the provisions of S. 11 and S. 5A of the Act. In consequence, a direction was issued prohibiting the respondents in that petition from enforcing the provisions of the Act, Rules andagainst the petitioners in that petition till a market was established in law for that area under S. 5AA and from levying any fee under S. 11 till the maximum was prescribed under the Rules. Consequent on that decision, the State of Gujarat amended R. 53 by notification dated June 23, 1961. Further the ordinance was promulgated on June 26, 1961 by which certain amendments were made in certain sections of the Act and a new S.was inserted in the Act validating certain acts or things done prior to the promulgation of the Ordinance. The present petitions were filed thereafter.2. Four of the petitions (namely, Nos. 226 to 229) are wit respect to Ahmedabad while the fifth petition (No. 233) is with respect to Nadiad. Two of the petitioners of Ahmedabad are wholesale dealers while the other two claim to be retail dealers.The majority of the petitioners in the Nadiad case are wholesale dealers but a few of them claim to be retail dealers.

Court's reasoning:
Some other points have also been raised by the Nadiad petitioners; but as they are not pressed, we shall not refer todo we think it necessary to set out the previous history as to the establishment of the market in Ahmedabad as that will be found in the earlier judgment; nor is it necessary to set out the previous history as to the establishment of the market in Nadiad, for it is not it dispute that that history is similar to the history in the case of the Ahmedabad market, we shall therefore proceed to indicate the points which alone have been pressed on behalf of the petitioners and then consider them one by one. Some of the points are not common; but as they have been raised in one petition or the other and these petitions have been with together and the decision on any point will affect even other petitions in which it has not been raised, we shall proceed on the basis that all the points have been raised in all the petitions, particularly as the learned counsel appearing in the various petitions adopted the arguments of one another during the hearing.We may however point out that the notification by itself does not impose any fee on any commodity what it does is to carry out the terms of S. 11 which require the maxima to be prescribed subject to which the market committee can levy fees on agricultural produce. The imposition of the fees still remains to be made by the market committee under the power conferred on it by S. 11 subject to the maxima prescribed in the notification and therefore the notification by itself cannot be said to be discriminatory.7. Let us, however, examine the two contentious raised on behalf of the petitioners on the basis that though the notification may not actually impose fees on any commodity, it still allows discrimination to be practised by the market committee, when it proceeds under S. 11 to levy fees within the maxima prescribed by the notification. Taking the first contention it may be that by using one method in the case of one agricultural produce and another method in the case of another agricultural produce, there may be, some difference in the incidence of the fees charged, if one were to judge that incidence on the basis of only one of the modes prescribed in the notification. But that in our opinion cannot be said to result in discrimination for each produce must for this purpose be treated to be a class by itself. Therefore, so long as the market committee uses one method of levying fee with respect to one kind of agricultural produce, it cannot be said that it is discriminating if it uses another method for levying fee on another kind of agricultural produce. It is well known even in systems of taxation that taxes are levied with different incidence depending upon the nature of the article taxed, and a fee levied under S. 11 is only the exercise of the power of taxation using that word in its widest sense. Therefore, the fact that under this rule, the market committee may levy fees by one method on one agricultural produce and by another method on another agricultural produce will not be a ground of discrimination, for each commodity must be treated as a class by itself.8. Turning now to the second contention, it is true that there is nothing in the rule expressly to prevent the market committee from using two of the modes prescribed therein for the purpose of levying fees on the same agricultural produce. It must be remembered however that the rule is a general provision for levying fees within the maxima prescribed on agricultural produce by market committees in market areas all over the State. Various methods of levying fees have been included in the rule, for we assume that the rule making authority knew that there were various ways in which things are brought into various market areas. The rule is meant to apply to all situations that may arise in the State and there may be different ways in which things may be brought to the market areas in different parts of the State. That is why the rule has a wide sweep and allows the market committee to levy fees either by cart load, or by value, or by weight or by containers. It may be that if for the same Agricultural produce fees are levied subject to the maxima in two different modes, the rates fixed may result in discrimination. It would however not be improper to assume that in framing thein which the rated for any particular agricultural produce will be fixed the market committee shall pay due regard to the prohibition against discrimination contained in Art. 14 of the Constitution. The practical consequence of this is likely to be that for one agricultural produce the market committee will fix one rate only in one of the four modes. If that is done no discrimination can be said to arise. It will not also in our opinion be unreasonable to think that in issuing the notification the Government proceeded on the assumption that for any particular agricultural produce one mode of fixing feeswhether according to cart load or according to value or according to weight or according to the number of containerswill be adopted. Nor would it be difficult if the rate is fixed in one of the modes, say according to cart load, to calculate the fees to be levied where the produce is brought in any other manner, say in baskets, for then the proportional fee can be charged on each basket on the basis of so manybeing equal to one cart load. Similarly where thefixes the fees according to containers and a dealer brings the produce in cart load, it will be possible to calculate the fee due on the basis of containers, by calculating how many containers would be equal to one cart load. Where the fee is fixed by weight or value there would be no difficult in any case. Therefore one may reasonably conclude that the market committee when acting under S, 11 read with the notification will levy the fees on a single commodity in one only of the permitted modes. If that happens in actual practice there will be no question of any discrimination.discrimination.10. Turning now to the facts of the present case we find that theframed by the market committees have fixed only one mode of levying fees in these cases for one kind of produce. It is not the petitioners case that the market committees with which we are concerned in the present cases have used more than one made for levying fees on the same agricultural produce. There is therefore no case for discrimination made out on the basis of the actualwhich have been framed by the market committees, under the power conferred on them under S. 11 read with the notification. In these circumstances, the attack on the notification on the ground of discrimination mustsee no force in this argument for the provisions as they stand certainly validate the defects pointed out in the earlier judgment of this Court. It is true that the relevant sections and the Rules have not been retrospectively amended by the ordinance, but this in our opinion was unnecessary. Retrospective amendment may be necessary when it is desired to change the law; but it seems that so far as S. 11 is concerned, the legislature did not intend that the control of the State Government over levy of fees should be done away with for the future also. Therefore, all that was necessary in that respect was to validate the past actions and this is specifically provided for by(3) of S.As for the establishment of market committees, an amendment has been made in S.of the Act deleting the provision by which a market could be established only if so required by the State Government. This amendment is prospective. It could have been made retrospective also and in that case(1) of S.may not have been necessary. The legislature, however, adopted the method of amending S.prospectively and making a separate provision for validating the establishment of markets in(1) of S.We see no reason why it should be held that the validation made by(1) is not sufficient because the legislature has adopted one method father than the other for carrying out its purpose. We are therefore of opinion that S.is sufficient to cure the defects pointed out in the earlier judgment of the court and to validate actions taken and things done before the promulgation of the Ordinance which would otherwise have been invalid in view of the earlier judgment of this Court. The contention on this head must also be rejected.aws as they now stand two classes of traders are mentioned, namely A class traders and B class traders. A class traders are those who hold licences to buy and/or sell agricultural produce in quantities not below 10 lbs. in the market yard, and thewhich they have to pay per year is Rs. 75. B class traders are those who have licences to buy agricultural produce in quantities not below 10 lbs, in the market yard and to sell in retail to consumers anywhere in the market area. They have been divided into three classes, namely, (a)(b) lari holders, and (c) Toplawala (hawkers), with a licence fee of Rs. 12, Rs. 6, and Rs. 3 respectively. It is urged that this amounts to discrimination between A class and B class traders inasmuch as A class traders are charged much higher fees than the B class traders It is however clear that there is a basis for classification between the two classes of traders. A class traders are those who can both buy and sell agricultural produce in the market yard while B class traders can only buy in the market yard but cannot sell there. It is submitted on behalf of the State Government that B class traders are those persons who generally sell in retail to consumers after buying wholesale in the market yard from A class traders or producers. The reason why B class traders have been permitted to buy in the market yard is to allow for competition, as otherwise there would have been a monopoly of the few A class traders who operate in a particular market yard. This classification in our opinion is reasonable. A class traders are wholesale traders who are permitted both to buy and sell in the market yard and are thus charged a higherB class traders are ordinary retailers who in order to carry on their retail trade are permitted to buy in the market yard but they are not permitted to sell there. They are small traders and are therefore charged lower licence fees. It appears to us that in order to avoid the monopoly of A class traders, who are a few in number, with the result that prices might be depressed by such traders, B class traders are permitted only to buy in the market yard on payment of a small licence fee in order that the producer who brings his produce in the market yard may have a fair price. We see no reason therefore to hold that there is any discrimination in creating the two classes of traders for there is a fair basis of classification of traders into A class and B class. Nor can this restriction be deemed to be an unreasonable restriction on the right to carry on trade and business, for such regulation is obviously envisaged by the Act in order to carry out its purposes and this Court has already held in the earlier judgment that the Act is a valid piece of legislation. It is unnecessary to repeat the reasons given in the earlier judgment, where it was held that the restrictions placed by the Act Rules andframed thereunder are reasonable restrictions in the interest of generalthe fact that thehas added the words "to sell in retail to consumers anywhere in the market area" in the case of B class traders is of no consequence, for B class traders, as they are retailers, would be entitled in any case, without being controlled under the Act, to sell to consumers anywhere they like. It is not the addition of these words which gives that right to B class traders, for that right of theirs is not controlled by the Act and they would be entitled to exercise it without the addition of these words, which we consider as surplusage in the circumstances. As for A class traders they are admittedly wholesalers and there is no question of their selling in retail. We are therefore of opinion that the addition of the words mentioned above with respect to B class traders is a mere surplusage and makes no difference to the basis of classification. There is no force therefore in the contention under this head and it must be rejected.As for R. 64, it merely provides for incidental powers in connection with the regulation of market yards and it has already been held valid in the earlier judgment. We see no reason to bold that that rule is invalid on the ground that the market committee is using that rule to control retail trade. We have already pointed out that type market committee cannot be said to control retail trade by providing for A and B class licences and there is no question therefore of R. 64 being used in a manner not intended thereunder.17. Lastly, it seems that there is some dispute by some petitioners in Petitions Nos. 228 and 229 as to whether they hold certain shops in the market yard from the municipal committee or must be deemed to hold them from the market committee and what rights the market committee has over those petitioners in that connection. It appears that there have been suits in courts with respect to that dispute. That is a matter which in our opinion has to be decided by the courts where the suits are said to be pending and cannot be the subject of adjudication in a petition under Art. 32.In any case R. 64 cannot be declared bad because of any dispute between the market committee, the municipal committee andas to their respective rights river the stalls in the market yard. There is therefore no force in this contention either and it must becontention requires a consideration of the provisions of the Act as they stand after the amendment by the Ordinance and it will have to be seen whether there has been any radical departure from the scheme of the Act as it was before the amendment, if there has been no radical departure after the amendment and the control envisaged by the Act as amended is still type same, as it was before the amendment, the basis on which the earlier judgment of this Court upheld the main provisions of the Act would still apply and the Act as amended would be constitutional. Let us therefore see if there has been any radical departure from the main provisions of the Act as they stood before the amendment. The Act still deals with the regulation of purchase and sale of agricultural produce and establishment of markets for such produce. Section 3 stands unamended and provides for the constitution of market areas and market committees and gives power to the Commissioner by notification to declare his intention of regulating the purchase and sale of such agricultural produce and in such area as may be specified in the notification. Section 4 (1) is also unamended and gives power to the Commissioner, after holding such inquiry as may be necessary and considering the objections and suggestions if any made after the notification under S. 3, to declare a particular area as a market area for the purposes of the Act. There has been some amendment in S. 4(2) but it is not of a radical character and does not make any difference to the main provisions of the Act, "Sectionhas also been amended by providing for declaration of a market proper and consequential changes necessary due to such provision. This amendment only brings into the Act what was formerly in R. 51. This amendment also therefore makes no radical change in the Act. Sectionhas also been amended and the provision which made it necessary for the State Government to require a market committee to establish a market has been deleted. Sectionas it now stands makes it the duty of the market committee to enforce the provisions of the Act etc. and when a market is established thereunder to provide for such facilities in the market as the State Government may from time to time direct in connection which the purchase and sale of agricultural produce with which it is concerned. The change in S.therefore is also of an incidental character and does not in any way affect the scheme of the Act as it was before the amendment. Section 5A has also been amended and it now reads asa market is established under Section 4A, the market committee may issue licences in accordance with the rules to traders, commission agents, brokers, weighmen, measurers, surveyors, warehousemen and other persons to operate in the market area or any partmain argument of the petitioners is based on this amendment. It is urged that under the unamended Act after a market was established the market committee had to issue licences for operation in the market so that the business of sale land purchase of agricultural produce was concentrated in the market which consisted of a principal market yard and one or moreyards with the consequent advantage to the agricultural producers that they had a place or places where they could find a large number of buyers for their produce and could thus secure fair prices under regulated conditions. Now, however, it is urged that under S. 5A it is open to the market committee, after the market is established under S. 4A to give licences to traders and others to operate in the market area or any part thereof with the result that it would not be necessary to have a principal market yard oryard. There would be some force in this argument if we were to ignore the rules framed under the Act. But the Rules which were framed by the State Government are still the same. Rule 51 provides for the declaration of market yards and market proper by the State Government. Rule 60 provides that agricultural produce brought into the market shall pass through the principal market yard orsubmarket yards andshall not, subject to the provisions of(2), be sold at any place outside such yards. The only exception to this iswhich provides at processed agricultural produce may be sold either in the principal market yard, oryard, or in the market proper, or in the market area in accordance with the provisions of theThe reason for this distinction is clear, for where produce is to be processed, as for example, ginned cotton, it has to be taken to a ginning factory in which case it would be most inconvenient to bring the produce to the market yard for sale and that may also add to the price by further transport charges. Reading S. 5A therefore a along with the Rules, it is clear that the present provisions are materially the same as the agricultural produce (except that which is processed) shall have to pass through the principal market yard orsubmarket yards andbe sold there.The only difference that the amendment has made is that whereas formerly under S. 5A traders could only operate in the market by virtue of the provisions of the Act, now they will operate in the market by virtue of the provisions of the Act read with the Rules. The rules, however are still the same and therefore in effect the provisions of the Act and the Rules read together still provide for the same kind of regulation which was intended under the unamended Act. It is urged that it will be open in the future for the market committee to do away with the necessity of having market yards andsubmarket yards andconcentrating wholesale trade only in market yards andyards in view of the provisions in the amended S. 5A, for the market committee would be entitled to issue licences in accordance with the Rules in case they are changed to traders etc. to trade in the market area or any part thereof. It will be seen however that the power to change the Rules is not in the market committee and until the Rules are changed the position us it was under the unamended Act would remain the same. We have no reason to suppose that the State Government intends to change the Rules as they are now and to permit the market committee to grant licences under S. 5A for trade anywhere in the market indiscriminately. It is true that such a possibility can arise if the State Government changes the Rules as they exist at present. But there is no reason to suppose that such a change is intended. So long therefore as the Rules stand as they are, there is no radical departure from the scheme of the Act as it was before its amendment, and the reasons which impelled this Court to uphold the Act and the Rules framed thereunder would still hold good. If and when the Rules are so changed as to make a radical departure from the present position, a question may well arise whether the scheme of control envisaged under the Act has failed in its purpose. It may then be necessary to decide whether the Act and the Rules framed thereunder are unconstitutional; but so long as the Rules stand as they are, we have to read S. 5A along with the Rules, for licences are issued under that section in accordance with the Rules, and reading S. 5A and the present Rules together it must be held that there has been no radical departure from the scheme of the Act as it was before the amendment and therefore the reasons which impelled this Court to uphold the Act, Rules andframed under it in the earlier judgment still stand.Besides this main argument certain subsidiary contentions are also urged on behalf of the petitioners to challenge the constitutionality of the Act, and the Rules framed thereunder on the ground that it was an unreasonable restriction on the fundamental right to carry on trade or business. It is urged that a trader who has business all over the State may have to take 80 or more licences to trade in different market areas and that will mean a heavy burden on him resulting in increase in price of agricultural produce. This in our opinion is a theoretical consideration and in any case if a trader is so big as to carry on trade in all the 80 or more market areas established in the State we see no mason why he should not take licence in each market area. He will be in a position to bear the burden and it need not necessarily affect the price of agricultural produce seriously. Then it is urged that the Act affects transactions between traders outside the market area. We have not been able to understand what exactly is meant by this. It is only when the sale takes face within the market area that the produce has to pass through the principal market yard oryard, but if a trader gets something from outside the market area and the sale takes place outside the market area and the thing is brought into the market area by the trader after the purchase, such transaction will not be subject to any fees, for fees have only to be charged on agricultural produce bought and sold in the market area under r. 53 read with S. 11. But where the sale takes place outside the market area and the commodity is merely brought into the market area by the wholesale trader, there will be no question of any fee being charged on that transaction; of course, if there is a further sale in the market area or in the market yards by the wholesale trader to some one locally that may be liable to fee. We do not see how in the circumstances it can be said that this is a case of unreasonable restriction on the right to carry on trade andis undoubtedly so. But if control has to be effective in the interest of the agricultural producer such incidental control of produce grown outside the market area and brought into the market yard for sale is necessary as otherwise the provisions of the Act would be evaded by alleging that the particular produce sold in the market yard was not grown in the market area. For the same reasons transactions between traders and traders have to be controlled, if the control in the interest of agricultural producers and the, general public has to be effective. We are therefore of opinion that the Act and the Rules andthereunder cannot be struck down on this ground. The contention under this head therefore mustthese rules do not exist. Consequence of this, it is alleged, is that it is not open to the market committee to issue licences which were provided by these rules. Rule 65 provides that no person shall do business as a trader or a general commission agent in agricultural produce in any market area except under a licence granted by the market committee under this rule. Rule 67 provides that no person shall do business as a trader, commission agent, broker, weighman, measurer, surveyor,or operate in any other manner in any market area except under licence granted by the market committee. It is urged that licences are granted under these rules read with S. 5A, which now provides that where a market is established the market committee may issue licences in accordance with rules to traders, commission agents, brokers etc. to operate in the market area or any part thereof. Section 5A, it is urged is a mere enabling provision and becomes effective when the rules are framed and that licences under the enabling provisions of S. 5A are to issue in accordance with the rules; and it there are no rules as to issue of licences the enabling provisions of S. 5A cannot be availed of by the market committee to require the taking out of licences. It is rr. 65 and 67 which prohibit business in the market area without taking licences mad provide for the manner in which applications for licence shall be made, the period for which the licence shall remain valid and other incidental matters.It is urged that as these rules were struck down by this Court and have neither beenreframed nor validatedunder the Ordinance there is no power in the market committee to require traders to take out licences merely because S. 5A enables it to issue licences. The argument on behalf of the State is that even though these rr. 65 and 67 were struck down because they were inconsistent with S. 5A as it stood before the amendment, now that S. 5A has been amended, these rules must be held to have revived and reliance in this connection is placed on certain decisions of this Court where it was held that an Act which was valid when it was passed before the Constitution came into force and some provisions of which became invalid for certain purposes in view of the provisions in the Constitution relating to fundamental rights and Art. 13 thereof, became wholly effective again when the Constitution was amended and the inconsistency with the fundamental rights removed.This matter was further considered in Deep Chand v. State of Uttar Pradesh, 1959 Supp (2) SCR 8 : (AIR 1959 SC 648  ), and it was held by majority that "there was a clear distinction between the two clauses of Art. 13. Under cl. (1),law subsisted except to the extent of its inconsistency with the provisions of Part III whereas under cl. (2) any post Constitution law contravening those provisions was a nullity from its inception the extent of such contravention", and therefore a law which was badab initio under Art.13 (2) either wholly or to the extent of the contravention could not be revived by the application of the doctrine of eclipse and the doctrine could only apply in the case of a law that was valid when made but was rendered invalid for certain purposes by a supervening constitutional inconsistency.It has not been disputed in this case that the doctrine of eclipse applies to cases of rules. The only dispute was whether rr. 65 and 67 in the present form were in existence before 1953 when S. 5A was inserted in the Act and if so whether they were valid in that form before 1953. Time was taken by the parties to trace the history of the Act and these two rules and the form in which the Act and these rules stood before 1953. Investigation in this matter shows that rules were framed for the first time in 1941 after the Act came on the statute book. Rule 65 (1) was in the same form as it existed when it was struck down by the earlier judgment. Rule 67 (1) was also substantially in the same form except that it did not originally include a trader or a commission agent or warehouseman as it did at the time when it was struck down. The addition of the words "the traders, and commission agents" in r. 67 (1) is however not material, for these classes were already, covered by r. 65 (I). As for the warehousemen which were added sometime later to r. 67 (1) that addition need not detain us because we are not concerned in these petitions with warrhousemen. So it seems that r. 65 (1) And r. 67(1) were paretically the same when they were first framed in 1941 as they existed when they were struck down. The Act as Originally passed in 1939 did not contain a section like S. 5A. The scheme of the Act then was that under S. 4 (2) the Government alone could grant licences for setting up any place for the purchase and sale of agricultural produce notified under the Act and thereafter under S. 5 it was the duty of the market committee established under the Act for every market area to enforce the provisions of the Act and the conditions of the licence granted by the Government setting up a place as above and to establish a market therein, if so, required by the Government section 26 gave power to the Government to frame rules fur the purposes of carrying out the provisions of the Act.It will be seen that these provisions by which miles could be framed for grant of licences did not confer power for issuing licences only for the market established under S. 5 as it originally stood. These powers were general in terms and the Government could frame rules empowering the market committee to issue licenses for carrying on business throughout the market area Rules 65(1) and 67 (1) therefore would be within the power granted to the state Government under S. 26 when they were originally framed in 1941 and would thus be validIt will be seen that though the words "market area" do not appear in this provision, it is still of a general nature and does not restrict the operation of the licence only to the market. So Rr, 65 and 67 would not be inconsistent withThen we come to the amendment of 1953 which introduced S. 5A(as it was before the amendment by the Ordinance) in the Act and that provided that "where a market is established under S. 5, the market committee may issue licences in accordance with the rules to traders, commission agents, brokers, weigh men, measurers, surveyors, warehousemen and other persons to operate in the market". This section was considered in the earlier judgment and it was held there on the basis of this section that Rr. 65 and 67 when they gave power to the committee to issue licences for operation in the market area as distinguished from the market were bad after the enactment of S. 5A.It is however clear from the above narration of facts that r 65(1) and r. 67 (1) were valid when they were originally framed and remained valid till S. 5A was enacted in 1953 and became bad on the insertion of S. 5A in the Act. Now that S. 5A has been amended by the Ordinance, rr. and 67 are obviously in conformity with it, r. 66 being merely consequential. Therefore they will revive by the application of the doctrine of eclipse as they are no longer overshadowed by S. 5A as it was before he Ordinance. The contention under this head must thereforehave not been able to understand this contention, for it is not disputed that the legislature has power to legislate retrospectively even with respect to taxation(see M.P. V Sunderamier and Co. v. State of Andhra Pradesh, 1958 SCR 1422 : (AIR 1958 SC 468   where Sales Tax Laws Validation Act, 1956 war held constitutionally valid. Fees are also included within the taxing power of the legislature in the broadest sense. Article 31 (I) therefore has no application in the pre sent case and we have to look to Art.26 which says that "no tax shall be levied or collected except by authority of law". Sub section(3) of S.is the law which retrospectively authorises the levy of licence. fees collected in this case. Retrospective power of the legislature to make a law being there even in the case of taxation, we fail to see how the provisions of) of S.which validate the levy and collection ofcan be held to be invalid under Art. 31(l). We may add that the same will apply to fees collected under S. II and validated byThere is therefore no force in this contention. It is hereby rejected,