Case: Mohammad Hussain Gulam Mohammadand Another Vs. The State Of Bombay And Another

The petitioners are businessmen of Ahmedabad. Their case is that by a notification under the Act the whole area within a radius of 12 miles of Ahmedabad city was declared to be a market area under S. 4 of the Act for the purposes of the Act in respect of certain agricultural produce from June 1, 1948. At the same time a market yard and a market proper were established for dealing in the commodities mentioned above and simultaneously a market committee was established under S. 5 of the Act for the Ahmedabad market area by the name of "The Agricultural Produce Market Committee, Ahmedabad." By later notifications certain other agricultural produce was declared to be regulated under the provisions of the Act in this market area. In 1959 a locality known as the "Kalupur market" in the Telia Mill compound near the railway station Ahmedabad was declared to be a sub-market yard for the purposes of the Act. The petitioners apparently were carrying on business in the Kalupur market and therefore after the declaration of that area as sub-market yard, the market committee required the petitioners to take out licences under the Act without which they were not to be allowed to carry on business.

Court's reasoning:
We are of opinion that there is no force in this contention. The Madras Act which dealt with commercial crops specified certain crops as commercial crops in the definition section and added that the words "commercial crop used in that Act would include any other crop or product. notified by the State Government in the Fort St. George Gazette as a commercial crop for the purposes of that Act. In view of this inclusive definition of "commercial crop" in the Madras Act, it was open to the State Government under that Act to include any crop within the meaning of the words "commercial crop" which was regulated by that Act. The Act had a schedule when it was originally passed in which certain crops were included. The State Government was however given the power to add to or amend or cancel any of the items mentioned in the Schedule by S. 29. It is true therefore that under the Act it is open to the State Government to bring any crop other than those specified originally in the Schedule within its regulatory provisions; but the fact that it is possible to bring any crop within the regulatory provisions of the Act by amendment of the Schedule would not necessarily make the Act an unreasonable restriction on the exercise of the fundamental right guaranteed under Art. 19(1)(g). As we have already pointed out, the definition of the words "commercial crop" in the Madras Act was also wide enough to bring any crop which the State Government considered fit to be included as a commercial crop for the purposes of that Act. There is thus in our opinion no difference in the ambit of the Madras Act and of the Act. Besides we see no reason why a crop which can be dealt with on a commercial scale should not be brought under the regulatory provisions of the Act. Section 4(2A) makes it clear that the Act does not apply to the purchase or sale of specified agricultural produce, if the producer of such produce is himself its seller and the purchaser is a person who purchases such produce for his own private use or if such agricultural produce is sold to such person by way of a retail sale. Thus it is clear from this exception that the provisions of the Act do not apply to retail sale and are confined to what may be called wholesale trade in the crops regulated thereunder. This would suggest that the Act also deals with commercial crops in the same way is the Madras Act, for the notion of wholesale trade implies that the crop dealt with therein is a commercial crop. There is thus no distinction so far as the main provisions are concerned between the Act and the Madras Act, and for the reasons that have been elaborately considered in Arunachala Nadars case, 1959 Supp (1) SCR 92: (AIR 1959 SC 300  )we are of opinion that Ss. 4, 4A, 5, 5A and 5AA of the Act are constitutional and intra vires and do not impose unreasonable restrictions on the right to carry on trade in the agricultural produce regulated under theis true that S. 19 itself does not provide for any criterion for determining which crop shall be put into the Schedule or which shall be taken out therefrom but the guidance is in our opinion writ large in the various provisions of the Act itself.As we have already pointed out, the scheme of the Act is to leave out of account retail sale altogether; it deals with what may be called wholesale trade and this in our opinion provides ample guidance to the State Government when it comes to decide whether a particular agricultural produce should be added to, or taken out of the Schedule.The State Government will have to consider in each case whether the volume of trade in the produce is of such a nature as to give rise to wholesale trade. If it comes to this conclusion it may add that produce to the Schedule. On the other hand if it comes to the conclusion that the production of a particular produce included in the Schedule has fallen and can be no longer a subject-matter of wholesale trade it may take out that produce from thesame considerations in our opinion apply to S. 29 of the Act and the power is given to the State Government to add to, or amend, or cancel any of the items of the agricultural produce specified in the Schedule in accordance with the local conditions prevailing in different parts of the State in pursuance of the legislative policy which is apparent on the face of the Act. Therefore, in enacting S. 29, the Legislature had not stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate power which was deemed necessary to carry out the purpose and policy of the Act. We therefore reject the contention that S. 29 of the Act gives uncontrolled power to the State Government and is thereforethe circumstances it cannot be held that the fee charged for services rendered by the market committee in connection with the enforcement of the various provisions of the Act and the provisions for various facilities in the various markets established by it, is in the nature of sales tax. It is true that the fee is calculated on the amount of produce bought and sold but that in our opinion is only a method of realising fees for the facilities provided by the committee. The attack on S. 11 must thereforepetitioners in their application have not specifically said that there is no provision for refund and in the circumstances all that we need say is that R. 54 will be valid if proper provision for refund is made in the bye-laws with respect to the produce brought into the market on which fees have been charged but which has been taken back because it is not sold, for then it would only be a method of levying the fee permitted under S. 11.In the connected petition Yograj Shankersingh Parihar v. The State of Bombay (57 of 1957) which was heard along with this petition there was an attack on R. 53; but the attack was confined to the fee being analogous to a sales-tax and there was no ground taken that the fee could not be levied under R. 53 because the maxima had not been specified in the Rules. However, it is not in dispute in this case that maximum has not been specified in any rule and R. 53 itself leaves it open to the market committee to prescribe such rates as may be specified in the bye-laws. We have already said that it would not be possible for the market committee to prescribe any fees under S. 11 through bye-laws till the State Government prescribes the maximum under S. 11. As no such maximum has been prescribed in the Rules, the contention that fees which are being charged under the bye-laws for the purposes of S. 11 are ultra vires of that section, mustState Government cannot practically abdicate that power as it seems to have done under R. 53 by leaving it to the Committee to fix any rates it likes. We are therefore of opinion that unless the State Government fixes the maxima by rule it is not open to the committee to fix any fees at all and the construction urged on behalf of the respondent is notpower of the market committee to grant licences under S. 5A arises only after a market is established and is confined to operation in the market. Rule 65 therefore in our opinion when it authorises the market committee to grant a licence for doing business in any market area goes beyond the power conferred on the market committee by S. 5A and entrenched on life power of the Commissioner under the proviso to S. 4.(2). It must therefore be struck down as ultra vires of the provisions in S. 5A read with the proviso to S. 4(2). Rule 66 which is incidental would fall along with ruleseems to us that rules 65 and 67 as they are framed show a confusion in the mind of the rule making authority. It would have been enough if the Rules had been confined to grant of licences for operation in the market for under the law as soon as the market area is declared and a market is established S.4(2) comes into force and no place in the said area can be used for the purchase and sale of any agricultural produce except as provided by S. 5A.It seems to us therefore that the intention probably was to confine the issue of licences under rules 65 and 67 to markets which the market committee has the power to do where a market is established under S. 5A; but the two rules as drafted refer to the market area and not to the market and must therefore be held to be beyond the power granted to the market committee under S.the circumstances the curious situation that was noticed with respect to another market area by Chagla C. J., is there with respect to the Ahmedabad market area and the Ahmedabad market, with the result that the market committee cannot issue licences under S. 5A of the Act and exercise such other powers as may be exercisable on the establishment of a market under the law. In the result therefore the petition must be allowed and the market committee forbidden to enforce any of the provisions of the Act, the rules and the bye-laws with respect to the market until a market is properly established under S. 5AA. No other point has been urged beforeseems to use that the curious situation which the Bombay High Court noticed as far back as March, 1955 still continues with respect to the market in this case and no proper steps have been taken in law even after the formal direction made by notification No. PMA 7055 in August 1955 to establish a market. It is true that in fact the State Government before the amendment of 1954 and the Commissioner after that amendment have established a principal market and a sub-market yard for this market area, but there is nothing to show in the case of the principal market yard that it was established at the instance of the market committee on a direction given by the State Government as required by S. 5 of the Act as it was before the amendment of 1954 or that the sub-market yard at Kalupur which was established in 1959 was so established at the instance of the market committee.