Case: Krishi Utpadan Mandi Samiti Vs. M/S. Baidyanath Ayurved Bhawan(P)Ltd&amp;Anr

A. Respondent no. 1 is a company registered under the Indian Companies Act, 1956 and manufactures Ayurvedic medicines including Chawanprash at Naini, Allahabad. For that purpose, the respondent no. 1 has obtained a licence under the Drugs and Cosmetics Act, 1940. For manufacturing Chawanprash the said respondent purchases certain agricultural produce e.g. Gur, Amala and Ghee etc. and use the same as raw material.B. The appellants served a notice dated 17.3.1999 calling upon the respondent no. 1 for taking a licence under section 9 of the Act 1964 as it was purchasing and processing the aforesaid agricultural produce in its ordinary course of business. Respondent no. 1 submitted reply to the said notice on 31.3.1999 pleading that it was not required to take licence as the said respondent was not doing any business in the sale or purchase of agricultural produce. The appellant found the explanation furnished by respondent no. 1 unsatisfactory and, thus, sent another notice dated 2.12.2000 calling upon respondent no.1 to take a licence failing which legal proceedings could be initiated against it. Similar notices were subsequently sent to respondent no. 1 on 3.12.2000 and 16.12.2000 but respondent no. 1 did not pay any heed to the said notices. The appellant issued notice dated 14.2.2001 to respondent no. 1 for personal appearance and furnishing the explanation as to why the licence under Section 9 of the Act 1964 was not required. The respondent no. 1 did not comply with the said notice, thus the appellant filed complaint Case No. 480 of 2002 in the court of Special Judicial Magistrate, Allahabad against the respondent no. 1, alleging violation of the statutory provisions of the Act 1964.C. Being aggrieved, the respondent no. 1 approached the High Court by filing Writ Petition No. 12372 of 2003 for quashing of the complaint Case No. 480 of 2002. The High Court vide impugned judgment and order dated 14.7.2003 allowed the writ petition holding that the said respondent had been using the agricultural produces after buying for internal purpose i.e. for consumption in its factory for manufacturing the end product and not for further transferring the agricultural produces to someone else and thus, the respondent no. 1 was not required to take licence under Section 9 of the Act 1964.Hence, this appeal.

Court's reasoning:
17. In view of the above, we are of the considered opinion that as the retail trader cannot sell the agricultural produce in quantity more than prescribed in the circular and also such retailer himself cannot purchase and store more than prescribed in the circular, therefore, the meaning ofas to be understood in such restricted sense. Thus, meaning thereby for personal use i.e. for the use of family members of the purchaser and not for any production activity, otherwise prescribing the limits of purchase and storage by the retail trader becomes redundant. The parties could not bring to the notice of the High Court the relevant provisions of the Act 1964 which were necessary to be considered to adjudicate upon the issue in controversy. Purchase of agricultural produce in bulk cannot be termed to have been made forhe Court cannot travel beyond the pleadings. The meaning of, had not been in issue in the instant case. Theer the Act 1964 has to be given a very restricted and limited meaning i.e. for personal use of the purchaser, i.e. for the consumption by the family and not for commercial and industrial activities.18. Shri Subramonium Prasad, learned counsel appearing for the respondents, has placed very heavy reliance upon the judgment of this Court in M/s. Kesarwani Zarda Bhandar v. State of Uttar Pradesh & Ors., AIR 2008 SC 2733 , wherein it has been held that market fee is leviable on specified agricultural produce and not on agricultural produce simplicitor. Zarda, the end product of the manufacturing process is not a specified agricultural produce and it can be subjected to payment of market fee provided it is held to beZafrani Zarda, does not answer the description of specified agricultural produce as defined under Section 2(a) of the Act. If it is held that Zafrani Zarda is merely a processed form ofit could be subjected to levy of market fee, but if it is manufactured it would not.The aforesaid judgment has no application in the instant case for the reason that issue involved in this case is relating to requirement of having a license under Section 9(2) of the Act 1964 for the purchase of a specified agricultural produce from the market area. The appellants have never asked the respondent company to pay market fee on the end product Chawanprash.