Case: G.Giridhar Prabhu  Vs. Agricultural Produce Market Comtt

The appellants purchase raw cashew nut and after subjecting the same to process of manufacture extract cashew kernel. The cashew kernel is then sold by them all over India as well as in International markets. Both cashew nut and cashew kernel are National Agricultural Produce under the Schedule to the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (hereinafter called the said Act). The appellants have licences under the said Act as Importers, Trades, Exporters and Producers from the Market Committee. The appellants are paying market fee as per the provisions of Section 65(2A) when they purchase cashew nut.The Market Committee issued notices to the appellants directing them to collect market fee from their buyers and pay the same to the Committee in respect of transactions of sales of cashew kernel. These notices were issued under the provisions of Section 65(2A)(iii) of the said Act.The appellants filed a writ petition in the High Court of Kerala praying for declaration that they were "producers" of cashew kernel and, therefore, were not liable to collect the market fee fro their purchasers and pay the same to the Committee. They also sought a declaration that as produces of cashew kernel they did not even require a license. The appellants sought directions fro the Court to quash the Notices issued by the Market Committee and to restrain the Market Committee from recovering market fee from them. This writ petition came to be dismissed by a single Judge of the High Court on 21st August, 1996. The appellants then filed a writ appeal which also came to be dismissed by the impugned judgment dated 2nd April, 1998.

Court's reasoning:
17. We are unable to agree with the submissions of Mr. Sarangan. As can be seen from the Preamble the Act is to provide for better regulation of marketing of agricultural produce. In the Act certain exemptions have been given to producer which exemptions have not been either to importer or an Exporter or a Trader. These exemptions, therefore, have been given a producer because the Producer is the person who produces the main agricultural produce. The main agricultural produce, which may be a Notified Agricultural Produce, could then be converted into various other Notified Agricultural Produce/s by subjecting the same to a process or manufacture. The person who processes or manufactures a different Notified Agricultural Produce would not be a producer. To be noted that an importer imports or cause goods to be imported into the market area for the purpose of selling, processing, manufacturing or for any other purpose, except for ones own domestic consumption. Thus, it is clear that a person, who imports would not be a producer. The import would be for purpose of selling or processing or manufacturing or for any other purpose except for ones own domestic consumption. Similarly, the term "Exporter" makes it clear that an exporter is not a Producer. A trader is also is a person who buys Notified Agricultural Produce for the purpose of selling or processing or manufacturing or for any other purpose except for the purpose of domestic consumption. The definition of the term "Trader" is not a restrictive definition. It is not restricted to a person who only buys. If a person buys for domestic or personal consumption, then he would not be a trader. it is only when a person buys for the purpose of selling or processing or manufacturing that he would become a trader. Thus a person may buy, process or manufacture and then sell. When he processes or manufactures Notified Agricultural Produce which he had bought, it may change its character and become another Notified Agricultural Produce. Thus, by way of examples, a person may buy milk and through processes makes it into butter and/or cheese or a person may buy hides and skins and by a process make it into leather. However, merely because a distinct and separate Notified Agricultural Produce comes into existence does not mean that the person who bought, processed and sold ceases to be a Trader. The term "Trader" encumbrances not just the purchase transaction but the entire transaction of purchase, processing, manufacturing and selling.We also see no substance in the submission that if Section 65(2-A)(ii) did not apply, then Section 65(2-A)(iv) would apply. Section 65(2-A)(iv) is residuary clause. It would only that the appellants are Traders they squarely fall within Section 65(2-A)(iii). IN fact, they may also fall within Section 65(2-A(ia). As they fall within these two clauses there is no question of the residuary clause applying.