Case: Jan Mohammad Noor Mohammad Begban Vs. State of Gujarat &amp; Another

2. The Bombay Agricultural Produce Market Act, 22 of 1939, was enacted by the Provincial Legislature of Bombay and rules were framed thereunder. By a notification issued under the Act, the whole area within a radius of 12 miles of Ahmedabad City was declared in respect of certain agricultural produce, a market area for the purposes of that Act and a market yard and a market proper were established for transactions in specified commodities. A market committee was established under S. 5 of the Act for the Ahmedabad market area. In 1959 a locality known as the "Kalupur market" was declared a sub-market yard for the purposes of the Bombay Act, and traders carrying on business in the Kalupur market yard were required by the market committee to take out licenses authorising them to carry on their trade. Certain traders in agricultural produce filed petition No. 129 of 1959 in this Court under Art. 32 of the Constitution challenging diverse provisions of the Act and the rules and bye-laws framed thereunder on the plea that those provisions placed unreasonable restrictions on their right to carry on trade in agricultural produce and thereby infringed their fundamental right guaranteed under Art. 19 (1) (g) of the Constitution.

Court's reasoning:
But assuming that such a power is conferred, we fail to appreciate how solely on that account it can be said that the provisions of the Act infringe Art. 19(1) (g) of the Constitution or may be regarded as conferring an arbitrary authority. Reasonable restrictions on the right of a citizen to carry on trade - retail as well as wholesale - may be placed by legislation. The test of the validity of the restrictions lies in the nature of the restrictions and not in the nature of trade. If regulation of trade in agricultural produce by the declaration of market area and imposition of restrictions may be regarded as reasonable when operating on the wholesale trade, it would be difficult to hold that the identical restrictions when operating on retail trade may be deemed unreasonable. We do not think that the observations made by this Court in Mohammad Hussains case, (1962) 2 SCR 659  : (AIR 1962 SC 97  ), justify the argument urged by the petitioner. Challenge to the validity of Ss. 5 and 6 must thereforeprovisions with regard to information and report to the market committee about the resale of the agricultural produce and the prohibition of sales otherwise than by open auction or by open agreement clearly indicate that R. 60 does not deal with retail sales.The learned Solicitor-General appearing on behalf of the State of Gujarat has conceded, and we think that the concession is rightly made, that the Act read together with the rules does not purport to place any restriction upon retail transactions in agricultural produce. Therefore no licence is required under the Act for carrying on retail trade in agricultural produce in the market area, and there is no prohibition against the carrying on of retail sale in agricultural produce in the market area.15.The argument that S. 27(2) does not provide fee in excess of the (sic) maximum licence fee may not be charged by the market committee is also without substance. In terms Sub-s. (2) provides that the licences may be granted in such forms, for such periods, on such terms and conditions and restrictions as may be prescribed or determined by the bye-laws and on payment of fees determined by the market committee within such maxima as may be prescribed. That clearly contemplated fixation of maxima by the rules made under S.market committee constituted or deemed to be constituted under the Bombay Agricultural Produce Markets Act 22 of 1939 was included in the definition of the term "local authority" under the said Ordinance. This Ordinance was substituted by The Gujarat Local Authorities (Extension of Term) Act, 1962. That Act was repealed by The Gujarat Local Authorities (Extension of Term) (Repeal) and the Gujarat Panchayats (Amendment) Act 35 of 1963, by the operating of which the terms of members of local authorities were to stand extended upto the end of March 1964 or such earlier date as the State Government or a person authorised by it may by notification in the Official Gazette specify. Thereafter the Gujarat Local Authorities (Further Extension of Term) Act 9 of 1964 was enacted. By that Act the term was extended upto March 1965 by S. 2 thereof.In the meanwhile the Gujarat Act 20 of 1964 being the Gujarat Agricultural Produce Markets Act was enacted and was brought into force and by virtue of S. 64 thereof the market committee established under the earlier Acts was deemed to be a market committee established for the said market under the new Act and members of the market committee holding office immediately before the commencement of the new Act continued to hold office under the new Act. The contention that there is no legally constituted market committee has therefore nosession of the Bombay Legislative Assembly was convened for the first time after 1941 on May 20, 1946 and that session was prorogued on May 24, 1946. The second session of the Bombay Legislative Assembly was convened on July 15, 1946 and that of the Bombay Legislative Council on September 3, 1946 and the rules were placed on the Assembly Table in the second session before the Legislative Assembly on September 2, 1946 and before the Legislative Council on September 13, 1946.Section 26(5) of Bombay Act 22 of 1939 does not prescribe that the rules acquired validity only from the date on which they were placed before the Houses of Legislature. The rules are valid from the date on which they are made under S. 26(1). It is true that the Legislature has prescribed that the rules shall be placed before the Houses of Legislature, but failure to place the rules before the Houses of Legislature does not affect the validity of the rules, merely because they have not been placed before the Houses of Legislature. Granting that the provisions of Sub-s. (5) of S. 26 by reason of the failure to place the rules before the Houses of Legislature were violated we are of the view that Sub-s. (5) of S. 26 having regard to the purposes for which it is made, and in the context in which it occurs, cannot be regarded as mandatory. The rules have been in operation since the year 1941 and by virtue of S. 64 of the Gujarat Act 20 of 1964 they continue to remain in operation.