Case: State of Madhya Pradesh and Others Vs. Galla Tilhan Vyapari Sangh and Others

In this appeal by special leave, on an application filed by the respondents before the High Court of Madhya Pradesh, the High Court struck down the constitutional validity of sub-s. (5) (a) of s. 37 of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 --hereinafter referred to as the Act--(No. 24 of 1973). The impugned sub-section runs as follows:"(5) Every commission agent shall be liable-- (a) to keep the goods of his principal in safe custody without any charge other than the commission payable to him; and"The High Court thought that this statutory provision places unreasonable restriction on the commission agent and puts great burden on him for storing the goods given to him by the principal without charging the commission for its safe custody. The Act is a social piece Of legislation and should have been liberally construed so as to advance the object of the Act and fulfil the aims to be achieved there- by. The main purpose of the Act is to secure a scientific method of storage, sale, distribution and marketing of agricultural produce and cut out as far as possible middle mans profit. The Act, therefore, contains provisions of a beneficial nature preventing profiteering tendencies. It is not, however, the hardship that can be termed unreasonable so as to make a statute unconstitutional. Moreover, the High Court does not appear to have looked to. the scheme of the Act and has in fact completely overlooked the provisions of s. 37(4) which runs as follows:"(4) The commission agent shall recover his commission only from his principal trader at such rate s as may be specified in the bye- laws including all such expenses as may be incurred by him in storage of the produce and other services rendered by him."

Court's reasoning:
This section clearly empowers the commission agent to charge such rates as may be specified by the bye-laws even for the storage of the Produce and other services rendered by him. This provision also does not prevent the commission agent from levying reasonable charges for the storage over and above his commission. All that the Act prevents is that the commission agent is prohibited from levying any charges for safe custody from the farmer or the principal. This is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges for safe custody. Section 37 (4), however, compen- sates the commission agent by authorising him to charge his commission and all expenses which may be incurred by the commission agent in connection with the storage of the produce and the services rendered by him. This section, therefore , clearly authorises the commission agent not only to charge his commission from the principal trader but also expenses incurred by him for the purpose of the storage. That apart s. 2(e) of the Act which defines a "Commission agent" empowers him to charge any commission or percentage upon the amount involved in such transaction.