Case: M.C. V. S. Arunachala Nadar Etc Vs. The State Of Madras &amp; Others

3. A Bench of the Madras High Court, consisting of Rajamannar C. J., and Venkatarama Aiyar J., by an order dated 10th July 1953, (See A. I. R. 1954 Madras 621.) dismissed the applications. The learned Judges held that S. 5 (4) (a) of the Act was void to the extent it conferred on the Collector authority to refuse a licence at his own discretion and Rule 37 was void in so far as it prohibited persons whose names had not yet been registered as buyers and sellers, from carrying on business in the notified area. Subject to that, the impugned Act and the Rules were upheld under Art. 19 (6) of the Constitution as a valid piece of marketing legislation. In the result, the applications were dismissed. The aforesaid three appellants have filed these appeals against the order of the High Court in so far as it dismissed their applications.

Court's reasoning:
3. While the object of the Act is to protect the growers, the argument proceeds, the small traders are compelled to resort to distant markets, with the result that some of them would be forced to give up their business and others would have to incur unnecessary expenditure which they could not afford. The Act is an integrated one, and it regulates the buying and selling of commercial crops. If the small traders are exempted, it creates loopholes in the scheme through which the big trader may operate, and thereby the object itself would be defeated. That apart, the second proviso enables the Committee to exempt small traders in appropriate cases. The constitution of the Committee, in which there will be representatives of the traders and the buyers, is a sufficient guarantee against the implementation of the provisions of the Act to the detriment of all concerned. If a packed Committee abuses its powers, there is a further provision to enable the Government to supersede it.We therefore hold that, having regard to the entire scheme of the Act, the impugned provisions of the Act constitute reasonable restrictions on a citizens right to do business, and therefore, they are validWe cannot share the opinion of the learned judges that the question does not arise for decision at this stage. The appellants prayed for issue of a writ of mandamus directing the respondents to forbear from enforcing any or all the provisions of the Act as amended and the Rules and by-laws framed thereunder by the Ramanathapuram Committee; and, the provisions of the Act read with the bye-laws prohibited the collection of mahimai by the appellants. The question whether the bye law prohibiting the collection of mahimai allowance is valid or not does arise directly for consideration in this case. There is also some ambiguity in the conclusion arrived at by the learned Judges of the High CourtThere is considerable force in this argument, but we think that the learned Judges meant only that the said allowance is not an admissible or a permissible trade allowance prescribed by the bye-lawTrade allowance cannot be received in any notified area by any person in any transaction in respect of commercial crop or crops. Every deduction in any transaction in respect of the said crop other than those specified in the explanation is trade allowance for the purpose of the Act. A market committee generally may make bylaws for the regulation of the business and conditions of trading therein and particularly it can make by-laws prescribing what are permissible trade allowances under the section. Such allowances as are prescribed by a by-law can be deducted in any transaction notwithstanding the fact that they are trade allowances. The argument of the learned counsel is that that by-law is bad, because the market committee did not name the allowance or allowances taking them out of the prohibition under S. 14 which they are entitled to do under that section, but made the by-law mentioning the  mahimai allowance as one not deductible in any transaction. The validity of that part of the by-law prohibiting the deduction of mahimai as trade allowance depends upon the nature of that deduction. If mahimai is not a trade allowance, the said part of the by-law would obviously be invalid as inconsistent with the provisions of S. 14. If, on the other hand,  mahimai is a trade allowance, the said part of the by-law will be superfluous, as the allowance falls within the terms of the section itself. This leads us to the question whether mahimai  is a trade allowance within the meaning of S. 14 of the Act16. What is a trade allowance? Trade involves exchange of commodities for money, the business of buying and selling and the transaction involves the seller, the buyer, the commodity sold and the price paid for the sale. Allowance means something given as compensation, rebate or deduction. Under the section, the said deduction should be in any transaction in respect of commercial crops. The deduction may be out of the commodity or out of the price. The recipient may be the seller, the buyer or a third party. When A sells a quantity of cotton to B for a hundred rupees, B, the purchaser, may deduct one rupee from the sale price and pay ninety nine rupees to A; he may keep that amount for himself or pay the same to C. So too, A the seller, may purport to sell one maund of cotton but in fact deduct a small part of it, retain that part for himself or give it to C; or both A and B may fix the price of the commodity purchased at Rs. 102 but the purchaser pays one rupee to C and the seller retains or pays one rupee to C; or it may be that payments have nothing to do with the price or the transaction, but both the parties pay C a specified amount as consideration for the user of the premises or for the services rendered by him. The question whether a particular payment is a trade allowance or not, depends upon the facts of each case. Firstly, it must be a deduction in any transaction in respect of commercial crops. Ii it is a deduction out of the price or commodity agreed to be paid or transferred, it would be a trade allowance. On the other hand, it the payment is de hors the terms of the transaction but made towards consideration for the use of the premises or services rendered, it would not be a deduction from the price or in any transaction.