Summarize the following court judgment. Criminal Appeal No. 264 of 1971 (Appeal by Special Leave from the Judgment and Order dated 19/20th August	 1971 of the Bombay High Court in Cr.A. No. 650 of 1970 with Crl. Rev. No. 886/70). B.R. Agarwala and P.B. Agarwal	 for the appellant. H.R. Khanna and M.N. Shroff	 for the respondent. The Judgment of the Court was delivered by BHAGWATI	 J. The appellant was tried before the Presi dency Magistrate	 25th Court	 Mazgaon	 Bombay for offence under clauses (a) and (b) of section 135 read with section 135(ii) of the and Rule 126H(2)(d) read with Rule 126P(2)(iv) of the Gold Control Rules 1963. The prosecution case against the appellant was that on 7th September	 1965 about 3.45 p.m. Inspector Tilwe	 who was at the material time Senior Grade Inspector of Customs attached to Gold Circle	 Central Excise	 Bombay	 received information that two persons would be coming down from a building known as Hira Mahal	 situated at Kalbadevi Road	 and they will be carrying gold in the handle	 of a cane basket and also in their shoes 17 1104SC1176 520 Inspector Tilwe	 on receipt of this information	 sent for Inspector Nichani and both of them kept guard outside Hira Mahal building from about 8.00 p.m. Around 8.45 p.m.	 the appellant accompanied by his material uncle 's son Dwarkapra sad	 his son Dalip aged 9 years and his servant by the name of Mahadev	 came out of Hira Mahal building. The appellant was carrying a basket in his hand and after coming out of the building	 the appellant and his companions got into a Victoria and proceeded towards Victoria Terminus Station. Inspector Tilwe and Inspector Nichani followed these persons and when the appellant and his companions got down from the Victoria and entered the platform	 Inspector Tilwe accosted them and took them to the office of the Assistant Station Master and searched them there in the presence of three panchas. Two of the panchas were selected by Inspector Tilwe while the third volunteered to act as Pancha. On taking search	 it was found that the shoes worn by the appellant and Dwarkaprasad had specially made cavities and four gold biscuits with foreign markings were found in the shoes of each of these two persons. The basket carried by the appellant also contained 27 gold biscuits with foreign markings concealed in the handle which was made of brass and which had a specially made cavity in it for concealing gold biscuits. While the search was going on	 one Ticket Collec tor called Tharandas Bhatia arrived on the scene and he also witnessed the search. Inspector Tilwe seized the gold biscuits which were recovered from the appeIIant and Dwar kaprasad	 in the reasonable belief that they were smuggled and hence liable to confiscation under section 111 of the . This search and seizure was recorded in a Panchanama exhibit X	 which was witnessed by the three pan chas. Inspector Tilwe also seized from the appellant two first class Railway Tickets for the journey from Bombay to Kanpur	 one Reservation Card and two Platform Tickets and so also were the basket and the shoes seized under the same Panchanama exhibit X. Inspector Tilwe then took the appellant and Dwarkaprasad to the Central Excise Office and recorded their statements in the presence of Inspector Nichani under section 107 of the . The statement of the appellant which is marked exhibit W was written by Dwarkaprasad in Hindi and was signed by the appellant. The appellant admitted in his statement that he was carrying smuggled gold concealed in the handle of the basket and shoes for being handed over to a firm called M/s Pannalal Durgaprasad at Kanpur and that he had been doing this work for the last six months ever since his business as a goldsmith was closed down. Another statement of the appellant was also subsequently recorded by Inspector Tilwe on 22nd November	 1966 at the shop of the appellant and this statement was written by one MaganIal	 an employee of the appellant	 in Gujarati and was signed by the appellant. Both the appel lant and Dwarkaprasad were thereafter prosecuted for of fences under clauses (1) and (b) of section 135 read with section 135(ii) of the 	 and Rule 126H(2)(d) read with Rule 126P(2)(iv) of the Gold Control Rules	 1963. Dwarkaprasad pleaded guilty to the charge and was convicted and we are not concerned in this appeal with the conviction and sentence recorded against him. The appel 521 lant denied the charge and hence he was tried before the leraned Presidency Magistrate. The only evidence led on behalf of the prosecution against the appellant was that of Inspector Tilwe and Tharandas Bhatia. None of the panchas was examined as a witness to prove the search and seizure. The learned Presidency Magistrate observed that in view of the fact that Tharandas Bhatia had not signed the Panchanama exhibit X nor his statement had been recorded by the Customs Authorities or the Railway Police	 and his name had also not been shown as a witness in the complaint	 it would not be desirable to rely on his evidence against the appellant. But the learned Presidency Magistrate found the evidence of Inspector Tilwe satisfactory and convincing and on the strength of this evidence	 he held the charge proved against the appellant and convicted. the appellant of the offence under clause (b) of section 135 read with section 135(ii) of the and Rule 126H(2)(d) read with Rule 126P(2) (iv) of the Gold Control Rules	 1963 and sentenced him to suffer rigorous imprisonment for two months and to pay a fine of Rs. 500/ or in default to suffer rigorous imprisonment for two months for each of these two offences. Since there was no evidence to show that the appellant himself had smuggled the seized gold into India	 he was acquitted of the charge under clause (a) of section 135 read with section 135(ii) of the . The appellant preferred an appeal against his convic tion and sentence but the High Court agreed with the view taken by the learned Presidency Magistrate and dismissed the appeal of the appellant. Hence the present appeal with special leave obtained from this Court. It is true that the conviction of the appellant rests solely on the evidence of Inspector Tilwe. There were three pan chas who witnessed the Panchanama exhibit X regarding search and seizure of gold from the appellant but unfortunately none of the three panchas could be examined	 as they were not trace able in spite of efforts made by the prosecution. Two of the panchas undoubtedly remained present in the course of the adjudication proceedings but that was in December 1967. The trial before the learned Presidency Magistrate commenced in April 1969 and evidence was given by Inspector Tilwe in December 1969 and at that time none of the three panchas could be traced and brought for the purpose of giving evi dence. The statement of Inspector Tilwe that "all the three panchas are now not traceable in spite of great efforts" was not challenged in cross examination and we must	 there fore	 proceed on the basis that none of the three panchas was available and if that be so	 no adverse inference can be drawn against the prosecution for not examining any of the three panchas. Tharandas Bhatia was no doubt examined but the learned Presidency Magistrate preferred not to rely on his evidence and we think	 he was right in doing so. In spector Nichani could	 of course	 have been examined as a witness	 since he was present at the time of search and seizure	 but his non examination cannot help the appellant	 since he was also an Inspector in. the Customs Department like Inspector Tilwe and once Inspector Tilwe gave evidence	 it would not have added to the weight of prosecution evi dence by also examin 522 ing him. The prosecution case against the appellant must	 therefore	 in the ultimate analysis stand or fall by the evidence of Inspector Tilwe. The learned Presidency Magistrate as well as the High Court accepted the evidence of Inspector Tilwe and we do not see any reason to interfere with the concurrent view taken by both these courts as regards the appreciation of his evidence. It was not the case of the appellant that he and Dwarkaprasad along with Dalip and Mahadev did not proceed from Hira Mahal building to Victoria Terminus or that they were not taken by Inspec tor Tilwe to the office of the Assistant Station Master for purpose of search or that gold was not found as a result of the search	 but his defence was that the seized gold was found from Dwarkaprasad and not from him and that both the basket and the shoes belonged to Dwarkaprasad and he had nothing to do with the same. Now	 it is difficult to see why Inspector Tilwe should have falsely implicated the appellant if	 in fact	 the seized gold was found only from the person of Dwarkaprasad and the appellant was completely innocent. It may also be noticed that the case of the appellant was that Mahadev was the servant of Dwarkaprasad and it was Dwarkaprasad who was going from Bombay to Kanpur along with his servant Mahadev and the two Railway Tickets from Bombay to Kanpur were meant for Dwarkaprasad. But it is difficult to understand why in that event there should have been two first class Railway Tickets. Mahadev could not possibly be travelling by first class along with his master. The fact that there were two first class Railway Tickets shows that the appellant and Dwarkaprasad were going to travel from Bombay to Kanpur. This is also. borne out from the statement exhibit H given by the appellant to Inspector Tilwe. The appellant tried to wriggle out of the statement exhibit H by showing that it was taken from him under threat and was not a voluntary statement containing the true facts. But it is evident from the contents of the statement exhibit H that it is a genuine document. There are several details in the statement exhibit H which could never have been dictated by Inspector Tilwe. There is inherent evidence in the contents of the statement exhibit H showing that the statement is true. It was admitted in the statement exhibit H	 that the appellant was carrying gold from Bombay to M/s Pannalal Durgaprasad at Kanpur and this statement is clearly support ed by the seizure of two First Class Railway Tickets from Bombay to Kanpur. It is true that the reservation card seized at the time of search did not show in whose name the reservations were made and it would have been better	 if the prosecution had summoned the railway authorities to produce the Reservation Chart of the train for the purpose of show ing in whose name the reservations were made. But even so	 the fact that the reservation card was seized from the appellant shows that the appellant was travelling from Bombay to Kanpur. We do not see any cogent reasons for taking a different view from that taken concurrently by the learned Presidency Magistrate and the High Court in regard to the evidence of Inspector Tilwe and we think this evi dence is sufficient to found the conviction of the appel lant. The appellant	 however	 contended that even if it be held that gold was found from the person of the appellant	 as alleged by the 523 prosecution	 it was smuggled gold and hence not covered by the Gold Control Rules	 1963 and	 in the circumstances	 no offence under Rule 126H(2)(d) read with Rule 126P(2)(iv) could be said to have been committed by the appellant in acquiring such gold. The argument of the appellant was that the Gold Control Rules	 1963 apply only in relation to what may be called legal gold or non smuggled gold and smuggled gold is outside their scope and ambit and hence acquisition of smuggled gold would not constitute an offence under the Gold Control Rules	 1963. This is an argument of despair and cannot be sustained even for a moment. Rule 126H(2)(d) provides	 inter alia	 that no person other than a licensed dealer shall buy or otherwise acquire or agree to buy or acquire gold	 not being ornaments	 except in accordance with a permit granted by the Administrator or in accordance with such authoriation as the Administrator may make in this behalf. The word 'gold ' is defined in clause (c) of the Explanation to Rule 126A to mean gold	 including its alloy	 whether virgin	 melted	 remelted	 wrought or unwrought	 in any shape or form	 of a purity of not less than nine carats and include any gold coin (whether legal tender or not)	 any ornament and any other article of gold". This definition does not restrict the meaning of the word 'gold ' to legal or non smuggled gold. It is wide enough to include any kind of gold	 whether smuggled or non smuggled. The restrictions imposed by the Gold Control Rules	 1963 could not have been intended merely to apply to legal gold. The object and purpose of the restrictions. would be frustrated by exclud ing from their ambit and coverage smuggled gold. The Gold Control Rules	 1963 seek to control and regulate dealings in gold and 'gold ' within the meaning of these rules must include not only non smuggled gold but also smuggled gold	 We fail to see on what principle of construction can smug gled gold. which is 'gold ' within the meaning of the defini tion	 be excluded from the operation of these Rules. There is no scope for inferring any such exclusion nor is there anything in the Rules which supports such exclusion. Take	 for example	 Rule 126 B which says that a dealer shall not make or manufacture any article of gold other than ornament. Can it be suggested for a moment that this Rule does not prohibit a dealer from making or manufacturing articles out of smuggled gold? Then again	 look at Rule 126 C. It provides	 inter alia	 that no dealer shall make	 manufacture or prepare any ornament having gold of a purity exceeding fourteen carats. Can a dealer make an ornament of smuggled gold having purity exceeding fourteen carats without commit ting a breach of this Rule? Rule 126 1 provides that every person shall make a declaration to the Administrator as to the quantity	 description and other prescribed particulars of gold owned by him. How can a person	 who has smuggled gold	 say that he is not bound to make a declaration under this Rule? The object of requiring a declaration is that the Government should know what is the gold possessed by each person	 so that dealings in gold can be controlled and regulated and this object would be thwarted if smuggled were not subject to the requirement of declaration. Then consid er Rule 126 D which says that no person shall make advance or grant any loan to any other person on the hypothecation	 pledge	 mortgage or charge of any gold other than ornament	 unless such gold 524 has been included in a declaration. If smuggled gold were outside the scope of this rule	 it would be open to a person to advance moneys on the security of smuggled gold without involving any violation of this rule. That surely could not have been the intention of the Government in making the Gold Control Rules	 1963. We are aware that there is a decision of the Calcutta High Court in Aravinda Mohan Sinha vs Proh lad Chand Samenta(1) where a Division Bench has taken the view that "declaration under Rule 126. P is in respect of legal gold as opposed to smuggled gold and no question of declaration in respect of smuggled gold can arise under Gold Control Rules	 1963	 but we do not think this decision represents the correct law on the point. We are of the view that the Gold Control Rules 1963 are applicable alike to smuggled gold as to non smuggled gold, and the inhibition of Rule 126H(2) (d) that no person other than a licensed dealer shall acquire gold except in accordance with a permit or authorisation granted by the Administrator is not con fined in its operation to non smuggled gold but applies equally in relation to smuggled gold. The learned Presiden cy Magistrate and the High Court were, therefore, right in convicting the appellant under Rule 126 H(2)(d) read with Rule 126 P(2) (iv) of the Gold Control Rules, 1963. Since the appellant is convicted of the offence under Rule 126P (2) (iv) of the Gold Control Rules, 1963, the sentence of imprisonment to be imposed on him cannot be less than .six months and the High Court was right in enhancing the sentence to six months imprisonment. But so far as the sentence of fine is concerned, we do not think that the facts and circumstances of the case justify a heavy fine of Rs. 3,000/ for each of the two offences for which the appellant is convicted. It appears from the statement of the appellant exhibit H that he was a carrier of gold for M/s Pannalal Durgaprasad of Kanpur and the purchase price of Gold was provided substantially by this Kanpur firm and the appellant was merely to receive some commission. The appel lant was a goldsmith who had lost his business for the last six months and perhaps economic necessity drove him to carry on this nefarious activity. The sentence of imprisonment which has been imposed on the appellant would be sufficient deterrent to him and many others who indulge in this anti social activity which is calculated to disrupt the economy of the country. We feel that in the circumstances, the ends of justice would be met if the sentence of fine is reduced from Rs. 3,000/ to Rs. 500/ for each of the two offences. We accordingly confirm the conviction of the appellant as also the sentence of imprisonment imposed on him but reduce the sentence of fine from Rs. 3,000/ to Rs. 500/ for each of the two offences for which the appellant is convicted with a direction that in default of payment of fine, the appellant will suffer rigorous imprisonment for a period of two months. The appeal is allowed to this limited extent. M.R. Appeal partly allowed. 
4207	Civil Appeal Nos. 1841 1846 of 1978. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. Nos. 4846, 4436, 3815, 5040, 475 and 4587/78. AND CIVIL APPEAL No. 871 of 1978. From the Judgment and Order dated 29 4 1977 of the Allahabad High Court in W.P. No. 1749 of 1974. AND CIVIL APPEAL No. 1921 OF 1978. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. No. 4566 of 1978. AND CIVIL APPEAL No. 1960 OF 1978. From the Judgment and Order dated 21 9 1979 of the Allahabad High Court in W.P. No.4568/78. AND CIVIL APPEAL Nos. 2169 2173 OF 1978. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. Nos. 4542, 5589, 5592 to 5594/78. AND CIVIL APPEAL Nos. 2178 2187 of 1978. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. Nos. 4921, 4625, 4449, 5002, 5003, 5007, 5068, 5069, 5284 and 4568 of 1978. 113 AND CIVIL APPEAL Nos. 2219 2226 OF 1978. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. Nos. 5185 and 5059 of 1978. AND CIVIL APPEAL Nos. 2269, 2302, 2373 2375 OF 1978. From the Judgment and Order dated 21 9 1979 of the Allahabad High Court in W.P. Nos. 5193/78, 5192, 5010, 4584 and 4583 of 1978. AND CIVIL APPEAL Nos. 2321,2322,2356,2359,2386,2406 2408,2426 2428,2430 & 2431, 2457,2504,2507/1978 and 142,144,174,230,385,388,429,438,599,635,745,821,929 & 1007,1009/79,1149,1149A,1346,1630,1636,1638,1863,1865,1866,1 867 & 1869/79 and 2270,2272/78. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. Nos.5521, 4982, 5001,4447/78, 4454, 2311, 5134, 3826, 4409, 4020, 5144, 5728, 5002, 4455/78, 6948, 4665, 4560, 4666, 4985, 4449, 5540, 4823, 4619, 5150, 4588, 4593, 4926, 4947, 4948, 5012, 5062, 5088, 5089, 5191, 5539, 5106, 5097, 4833, 4911, 1398, 2114, 2515, 898/78, 5071, 5454, 5592, 5072, 5034, 4149, 5153, 5169, 5734/78, 4947/76, 5533/78, 3299/77, 4943, 4629/78 & 5194, 5195, 5196/79. AND CIVIL APPEAL No. 487 of 1979. From the Judgment and Order dated 21 9 1978 of the Allahabad High Court in W.P. No. 4445 of 1978. AND WRIT PETITION Nos. 257 & 600 of 1979. (Under Article 32 of the Constitution). F.S. Nariman, R. F. Nariman and P. C. Bhartari for the Appellants in CA Nos. 2260 & 2261. section P. Gupta, H. K.Puri, V. K Bahl and Miss Madhu Moolchandani for the Appellants in CAs 1841 to 1846, 2426 to 2428, 929, 1007 to 1009, 1630, 2169 to 2172 and 1635. V.M. Tarkunde, G. B. Pai, Mrs. Saran Mahajan, Mr. Arvind Kumar, Mrs. Lakshmi Arvind and R. K. Sinha for the Appellants in CA Nos. 2507, 2322, 2457 and 871. 114 Shanti Bhushan, section P. Gupta, H. K Puri and Miss Madhu Moolchandani for the Appellants in CA 174. L. N. Sinha, section section Ray, Ghayyas Alam and R. K Jain for the Appellants in CA 2269, 2270 to 2272. Shanti Bhushan, Subhash Chandra Birla and Shreepal Singh for the Appellants in 2373, 2302, 2374 and 2375. Yogeshwar Prasad and Mrs. Rani Chabra for the Appellants in CA 599, 142 to 144, 385, 1638, 2219 to 2226, 1921, 1960, 2173, 2178, 2180 to 2187, 2179, 386 to 388, 429 to 438 and W.P. 257. Pramod Swarup for the Appellants in CAs Nos. 230, 2359, and 2386. P. R. Mridul and Ashok Grover for the Appellants in CAs 2406 to 2408. Veda Vyasa, N. C. Sikri, A. K Sikri and Vijay Jaiswal for the Appellants in CA 821 & 487 and W.P. 600. O.P.Verma for the appellants in CAs 1867 and 1869. Y.S.Chitale, Mrs. Shandhana Ramachandran and P. K Pillai for Appellant No. 1 in CA 1846, 745 and Appellant No. 2 in CA 1633 and 1634. S.K.Jain for the Appellants in CA 187/79. T.S.Arora for the Appellants in CA 2356/78 & 1346/79. Y.S.Chitale, O. P. Rana and Mrs. section Ramachandran for the Appellants in CA 1866 and Appellants in CA 1865 and R.1 in CAs 142 & 143 and 144 and for the Appellants in CAs. 1631, 1632 and for appellant No. 1 in CA 1633, 1634 and Appellants in CA 1863. S.K Dhingra for the Appellants in CA 2321/78. J M.Khanna for the Appellants in CA 2430 & 2431. K B.Rohtagi and Praveen Jain for the Appellants in CA 2504/78. M.M.L.Srivastava for the Appellants in CA 1149 & 1149A. K C.Dua for the Appellants in CA 1635 & 1636. L M.Singhvi, B.D. Madhyan, R.N. Dikshit and L.K.Pandey for the Respondents (Mandi Samiti) CA 1841 to 1846,1921,2169 to 2173,2178 to 2187,2219 to 2226, 2260,2261,2269,2302,2373 to 2375,2322,2356,2406 to 2408,2420 to 2423,2431, 2426 to 2428,2507,142 to 144,174,385 to 388,429 to 439,599,230,635,1007 & 1008, 1149, 1149A, 1630 & 1631, 1638, 5135, 1346 and 2212. 115 E.C.Aggarwala and R. Satish for RR 2 in CA 2179,2180,2222 2271,2431,2433, 2504/78 and 1869 and 143/79 and in other matters for Mandi Samiti for Muzaffarnagar and Meerut. Ravinder Bana for RR 2 in 2457,2270 and 2272 and RR 2 and RR 3 in CA 2269 and WP No. 257/79. M.V.Goswami for RR 1 in CA 2356. The Judgment of the Court was delivered by UNTWALIA J. , The Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 being U.P. Act XXV of 1964, hereinafter called the Act, was passed in that year. It led to the establishment of Market Areas, Principal Market Yards and Sub Market Yards etc. and the levying of the fee in relation to transactions of certain commodities in the State of Uttar Pradesh. Various Market Committees were formed known as Mandi Samitis. In order to give effect to the working of the Act The Uttar Pradesh Krishi Utpadan Mandi Niyamavali, 1965, hereinafter called the Rules, were made by the Governor of Uttar Pradesh. The Act has been amended several times. But we were distressed to find that the Rules were not accordingly amended as and when required to make them uptodate in accordance with the amended Act. Various traders carrying on business in the State of Uttar Pradesh within the jurisdiction of several Market Committees challenged the levy of fee in the High Court of Allahabad from time to time. There were several rounds of litigation in which they by and large, failed. Finally many Writ Petitions were dismissed by the High Court by its judgment dated September 21, 1978 on which date many writ petitions were also dismissed in limine. Civil Appeal 1841 of 1978 and about 103 more appeals are from the said judgment and order of the High Court. Immediately preceding the said judgment a longer and more elaborate judgment had been delivered by the High Court on April 29, 1977. Civil Appeal 871 of 1978 and Civil Appeal 1636 of 1979 are from the said judgment. Along with these 106 appeals, two Writ Petitions were also heard being Writ Petition No. 257 of 1979 and Writ Petition No. 600 of 1979. Thus in all 108 matters have been heard together and are being disposed of by this judgment. At the outset it may be mentioned that because of the litigations cropping up from time to time between the traders and the Market Committees the working of the Committees had not successfully proceeded so far, as, fees levied from time to time could not be realised in. Sometimes illegal or unauthorised collections seem to have been 116 made. Money justifiably realised also does not seem to have been fully utilised as it ought to have been done. In order to enable the Market Committees in their attempt to implement the law as far as possible and to save their attempt from being thwarted by any unnecessary litigation we allowed the parties to advance a full throated argument in this Court including some of the points which were not argued in the High Court or in support of which foundations of fact were lacking. In this judgment our endeavour will be to formulate the points of law and decide them as far as practicable so that in future the business of the Market Committees may be conducted in the light of this judgment leaving no scope for unnecessary litigation. Of course even in our judgment at places it would be indicated, and even apart from that, some genuine and factual disputes may crop up which in the first instance may be decided by the Market Committees, preferably a Board constituted by a particular Committee for deciding such disputes and then, if necessary, by the High Court. We do hope that no further time will be lost by the State Government in amending the Rules and making them up to date to fit in with the latest amendments in the Act. The long title of the Act indicates that it is an Act to provide for the regulation of sale and purchase of agricultural produce and for the establishment	 superintendence	 and control of markets therefor in Uttar Pradesh." From the Objects and Reasons of the enactment it would appear that this Act was passed for the development of new market areas and for efficient data	 collection and processing of arrivals in the Mandis to enable the World Bank to give a substantial help for the establishment of various markets in the States of Uttar Pradesh. In other States the Act is mainly meant to protect an agriculturist producer from being exploited when he comes to the Mandis for selling his agricultural produce. As pointed out by the High Court certain other transactions also have been roped in the levy of the fee	 in which both sides are traders and neither side is an agriculturist. This has been done for the effective implementation of the scheme of establishment of markets mainly for the benefit of the producers. But as pointed out recently by a Constitution Bench of this Court in the case of Kewal Krishan Puri vs State of Punjab the fee realised from the payer of the fee has	 by and large	 to be spent for his special benefit and for the benefit of other persons connected with the transactions of purchase and sale in the various Mandis. The earlier cases on the point of fee have been elaborately reviewed in that judgment and certain principles have been called out which will be adverted to hereinafter. While deciding the question of quid pro quo in 117 relation to the impugned fees the High Court had not the advantage of the judgment of this Court. In that regard this judgment is a settler on the point and we hope that the authorities and all other concerned in the matter will be guided by and follow the said decision in the matter of levy and utilisation of the market fee collected. We shall now at the outset refer to the relevant provisions of the Act as they stood in the year 1978 and some of the rules framed thereunder. Wherever necessary reference will be made to the unamended provisions of the Act. In clause (s) of s.2 of the Act "Agricultural produce" has been defined to mean: "Such items of produce of agriculture	 horticulture	 viticulture	 apiculture	 sericulture	 pisci culture	 animal husbandry or forest as are specified in the Schedule	 and includes admixture of two or more of such items	 and also includes any such item in processed form	 and further includes gur	 rab	 shakkar	 khandsari and jaggery. " The 'Board ' means the State Agricultural Produce Markets Board constituted under Section 26 A. Clause (e) defines "commission agent" or "Arhatiya" to mean: "person who	 in the ordinary course of business	 makes or offers to make	 a purchase or sale of agricultural produce	 on behalf of the owner or seller or purchaser of agricultural produce	 for Arhat or commission. " Under clause (k) "Market Area" means an area notified as such under Section 6	 or as modified under Section 9. Clause (o) defines "Principal Market Yard" to mean the portion of a Market Area	 declared as such under Section 7. Clause (p) must be read in full: "Producer ' means a person who	 whether by himself or through hired labour	 produces	 rears or catches	 any agricultural produce	 not being a producer who also works as a trader	 broker or Dalal	 commission agent or Arhatiya or who is otherwise ordinarily engaged in the business of storage of agricultural produce. Provided that if a question arises as to whether any person is a producer or not for the purposes of this Act	 the decision of the Director	 made after an enquiry	 conducted in such manner as may be prescribed	 shall be final. " 118 Under clause (w) "Sub Market Yard" means a portion of a Market Area	 declared as such under Section 7. Clause (y) defines a "trader" to mean: "a person who in the ordinary course of business is engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more principals and includes a person	 engaged in processing of agricultural produce. " Action under s.5 was taken by the State Government declaring its intention to regulate and control sale and purchase of agricultural produce in any area and thereafter declaration of Market Area was made under s.6. Under the present impugned notification	 which was issued on April 11	 1978 making it effective from May 1	 1978	 almost the whole of Uttar Pradesh has been declared to be Market Area dividing it into 250 areas and indicating in Schedule B of the notification 115 commodities in respect of which the fee could be levied by the Market Committees. Under s.7 declarations of Principal Market Yards and Sub Market Yards have been made. Most of such areas declared so far are the markets or the Mandis where the traders are carrying on their businesses. It is proposed to establish Principal Market Yard and Sub Market Yards separately in every market area and a question of asking the traders to carry on their business only in such Market Yards is under consideration of the Government. The State Government under s.8 has got the power to alter any market area and modify the list of agricultural produce. Section 9 provides for the effects of declaration of Market Area. Chapter III of the Act deals with the establishment	 incorporation and constitution of the Market Committees. The most important section is section 17 which provides for the powers of the Committee. Clause (i) authorises a Committee to issue or renew licences under the Act on such terms and conditions and subject to such restrictions as may be prescribed. Clause (iii) authorises a Committee to levy and collect (a) such fees as may be prescribed for the issue or renewal of licences	 and (b) market fee at the rate and in the manner provided therein. Clause (b) of section 17(iii) has undergone drastic changes from time to time and that enabled the appellants to advance certain serious arguments to challenge the levy of the fees especially when the Rules were not correspondingly amended. We shall advert to this aspect of the matter later in this judgment at the appropriate place. Section 19 provides for the Market Committee Fund and its utilisation. Section 19 B was introduced in the Act by U.P. Act 7 of 1978 w.e.f. 29 12 1977 providing for the establishment of 'Market Development 119 Fund ' for each committee. The rule making power of the State Government is to be found in Section 40. From the Rules no provision is necessary to be specifically referred here except to point out that the State Government will be well advised to provide a machinery in the Rules for the adjudication of disputes which may be raised by the persons liable to pay the market fee in relation to their factum or quantum of liability. We are not impressed with the argument advanced on behalf of the Market Committees that no such disputes actually exist or are likely to exist which require any machinery of the Market Committee for its adjudication. At places hereinafter in this judgment we shall point out the nature of disputes which are likely to arise and which have got to be decided in the first instance by a machinery of the Market Committee such as a Board or the like. It would be just and proper and also convenient for all concerned if the disputes are thereafter taken to any court of law. Chapter VI of the Rules deals with levy and collection of fees. Rule 66 dealing with the levy of market fee and Rule 68 providing for its recovery on reference to the provisions of s.17(iii) will be alluded to hereinafter to point out the chaotic conditions in which the Rules have been left inspite of the amendment in s.17(iii)(b) of the Act. Rule 67 provides for licence fee and in none of these appeals we are concerned with the question of levy or quantum of the licence fee. Chapter VII deals with the transaction of business in market Yards. Several sets of arguments were advanced on behalf of the trader appellants in the various appeals by their respective learned counsel. Three sets of arguments were advanced on behalf of the various Market Committees and a separate argument was addressed to us on behalf of the State. In some of the appeals the State and/or the Market Committees are the appellants. The points urged on behalf of the trader appellants	 although too numerous	 broadly speaking are the following: (1) Big areas consisting of towns and villages have been notified as Market Areas without rendering any service. This is contrary to the whole object of the Act and the concept of fee. (2) No market area or market yard has been validly created. (3) No Mandi Samiti (Market Committee) has been validly appointed. 120 (4) No machinery has been provided in the Rules for adjudication of disputes. (5) Fixation of minimum of 1% to be charged as market fee by all the Market Committees under s.17(iii)(b) of the Act was illegal as the requirement of and the services to be rendered by the various Market Committees could not be on the same footing. (6) There was no application of mind in issuing the notification dated 11 4 1978 whereby 250 market areas were notified and 115 items of agricultural produce were specified. (7) There could not be any multi point levy of any market fee either in the same market area or in different market areas. (8) The retrospective operation of the law brought about in s.17(iii)(b) by U.P. Act 7 of 1978 w.e.f. 12.6.1973 is bad. (9) No market fee could be levied on goods not produced within the limits of a particular market area and if produced outside and brought in such area. (10) No market fee could be levied both on paddy and rice. The rice millers have been illegally asked to pay market fee on their sale of rice. Similarly no market fee was payable on Ghee either by the producer trader of Ghee or by its purchaser. (11) Fee could be charged on sale of animals but could not be charged on hides and skins as was being illegally done. (12) Fee could be charged on wood or timber but could not be charged either on furniture manufactured from such wood or timber or on Catechu (Katha). (13) Wood cut and brought from the jungle by a manufacturer of paper such as Star Paper Mills	 Saharanpur could not be subjected to levy of fee. (14) Some of the items mentioned in the notification are Kirana goods brought from outside the market area or even from other States for sale in different Mandi. They cannot be subjected to the levy of market fee. (15) No market fee could be charged on tobacco or Tendu leaves nor on bidis. 121 (16) No fee could be charged in a municipal area as no market committee can be constituted there nor in a Nyaya Panchayat. (17) No market fee could be charged on rab salawat and rab galawat. (18) No market fee can be charged if only goods are brought in a market area and despatched outside it without there taking place any transactions of purchase and sale in respect of these goods. (19) Any goods sold under any controlled legislation such as rice etc. cannot attract the levy of fee as there is no freedom to make any sale in respect of such commodity. (20) If no licence is issued or taken under s.9(1) of the Act then there is no liability to pay a market fee. (21) No market fee can be levied on transactions of matchboxes	 soyabin products	 articles sold by Kisan Products Ltd. and Pan (betel leaves). (22) No market fee can be charged from vendors of fruits and vegetables through their Commission Agents. (23) Fee can be charged only on those transactions in which the seller is producer and not on any other transaction. (24) Market fee can be charged only on those transactions in which the seller is the purchaser of agricultural produce and not on any other transaction. Points 1 to 4 These four points are taken up together as there is no substance in any of them. Declaration of big areas as Market Areas does not offend any provision of law. Any area big or small including towns and villages can be declared as Market Area under s.6 of the Act. As explained in the case of Kewal Krishan Puri (supra) the whole of the market area is not meant where the traders or the licensees can be allowed to set up and carry on their business. The traders are required to take out licences under s.9(2) read with s.11 of the Act	 for such place which is either a Principal Market Yard or a Sub Market Yard or at any specified place in the Market Area. No body can be permitted to carry on his business anywhere in the Market Area as the Market Committee will not be able to control and levy fee throughout the Market Area. The question of rendering service and its co 122 relation to the charging of fee has been elaborately discussed in the said decision and the following principles have been culled out: "(1) That the amount of fee realised must be earmarked for rendering services to the licensees in the notified market area and a good and substantial portion of it must be shown to be expended for this purpose. (2) That the services rendered to the licensees must be in relation to the transaction of purchase or sale of the agricultural produce. (3) That while rendering services in the market area for the purpose of facilitating the transactions of purchase and sale with a view to achieve the objects of the marketing legislation it is not necessary to confer the whole of the benefit on the licensees but some special benefit must be conferred on them which have a direct	 close and reasonable co relation between the licensees and the transactions. (4) That while conferring some special benefits on the licensee it is permissible to render such service in the market which may be in the general interest of all concerned with the transactions taking place in the market. (5) That spending the amount of market fees for the purpose of augmenting the agricultural produce	 its facility of transport in villages and to provide other facilities meant mainly or exclusively for the benefit of the agriculturists is not permissible on the ground that such services in the long run go to increase the volume of transactions in the market ultimately benefitting the traders also. Such an indirect and remote benefit to the traders is in no sense a special benefit to them. (6) That the element of quid pro quo may not be possible or even necessary	 to be established with arithmetical exactitude but even broadly and reasonably it must be established by the authorities who charge the fees that the amount is being spent for rendering services to those on whom falls the burden of the fee. (7) At least a good and substantial portion of the amount collected on account of fees	 may be in the neighbourhood of two thirds or three fourths	 must be shown 123 with reasonable certainty as being spent for rendering services of the kind mentioned above. " As already stated	 Market Yards also have been established while issuing notifications under s.7. By and large	 the Mandis where the traders are carrying on their business for the time being have been declared as Market Yards. When the Market Committees are able to construct their own Market Yards	 as in some places they have been able to do	 then a question will arise whether a trader can be forced to go to that place only for carrying on his business in agricultural produce or he can be permitted to carry on his business in his old place. For the time being this question is left open. Market Committees have not been constituted yet in accordance with the provisions contained in s.13 of the Act. They have been constituted temporarily under Uttar Pradesh Krishi Utpadan Mandi Samitis (Alpakalik Vyawastha) Adhiniyam	 1972 which Act was a temporary Act and has been extended from year to year. But it is high time that Market Committees should be constituted in a regular manner on a permanent basis in accordance with the provisions contained in Chapter III of the Act. But the levy and collection of fee by the temporary Market Committees is not illegal as argued on behalf of the appellants. A machinery for adjudication of disputes is necessary to be provided under the Rules for the proper functioning of the Market Committees. We have already observed and expressed our hope for bringing into existence such machinery in one form or the other. But it is not correct to say that in absence of such a machinery no market fee can be levied or collected. If a dispute arises then in the first instance the Market Committee itself or any Sub Committee appointed by it can give its finding which will be subject to challenge in any court of law when steps are taken for enforcement of the provisions for realisation of the market fee. Point No. 5 Under clause (b) of s.17(iii) of the Act a minimum and maximum limit of market fee chargeable has been fixed by the legislature. The minimum is 1% and the maximum is 1 1/2 of the price of the agricultural produce sold. The fixing of the minimum of 1% fee by itself is not illegal but it would be subject to the rendering of adequate services as explained by this Court in Kewal Krishan Puri 's case. The facts placed before the High Court as also before us were too meagre to indicate that services to the extent of the fee levied at 1% are not being rendered. In Puri 's case we upheld the levy of market fee at 2% on the value of the goods sold. But there we found that the 124 Market Committees were rendering greater services than are being rendered by the Market Committees of Uttar Pradesh. Yet charging of 1% fee as is being charged throughout the State of Uttar Pradesh by all the Market Committees is not illegal and does not go beyond the quid pro quo theory discussed in Puri 's case. Point No. 6 It is difficult to understand the significance of this point. The notification dated 11 4 1978 indicates that in the various Districts	 the number of which is about 55	 250 Market Committees have been constituted and about 115 items have been selected in respect of which market fee has been directed to be levied. None of the items so specified is such that it cannot be covered by the Schedule which is a part of the Act. The definition of agricultural produce is very wide. It is not confined to items of agricultural produce only but includes items of produce of horticulture	 viticulture	 apiculture	 sericulture	 pisci culture	 animal husbandry or forest. Such items are specified in the Act which is undoubtedly a part of the Act. That being so challenge to the notification dated 11 4 1978 on the ground that it was issued without any application of mind is devoid of any substance and must be rejected. Point No. 7 It is clear and it was expressly conceded to on behalf of the Market Committees and the State that there cannot be any multi point levy of market fee in the same market area. The reason is obvious. Section 17(iii)(b)	 as amended by U.P. Act 7 of 1978 reads as follows: "market fee	 which shall be payable on transactions of sale specified agricultural produce in the market area at such rates	 being not less than one percentum and not more than one and half percentum of the price of the agricultural produce so sold	 as the State Government may specify by notification	 and such fee shall be realised in the following manner (1) if the produce is sold through a commission agent	 the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the Committee; (2) if the produce is purchased directly by a trader from a producer the trader shall be liable to pay the market fee to the Committee; 125 (3) if the produce is purchased by a trader from another trader	 the trader selling the produce may realise it from the purchaser and shall be liable to pay the market fee to the Committee; and (4) in any other case of sale of such produce	 the purchaser shall be liable to pay the market fee to the Committee. " All the four clauses of clause (b) are mutually exclusive. If the produce is purchased from a producer directly the trader shall be liable to pay the market fee to the Committee in accordance with sub clause (2). But if the trader sells the same produce or any product of the same produce to another trader neither the seller trader nor the purchaser trader can be made to pay the market fee under sub clause (3). So far the position was not disputed by the Market Committees	 rather it was conceded	 and in our opinion	 rightly. But some difficulty arises in regard to the products of the agricultural produce which has been subjected to the levy of market fee. This will be relevant when we come to consider the various agricultural produce in respect of which challenge was made on the ground that it amounts to multi point levy. At this stage we may explain our view point by taking a few examples from the Schedule appended to the Act. Wheat	 an agricultural produce	 is mentioned under the heading 'Cereals '. Suppose the transaction of wheat	 namely	 wheat purchased from a producer by a trader has been subjected to levy of market fee under s.17(iii) (b)(2) no further levy of market fee in the same market area could be made	 not even on wheat flour if flour were to be included in the Schedule. The better example can be found in the items under the heading 'Animal Husbandry Products ' wherein in the Schedule milk and Ghee both are mentioned. Milk	 of course	 is not mentioned in the notification dated 11 4 1978. But if it would have been mentioned then only the transaction of milk in a particular market area could be subjected to levy of fee and Ghee manufactured from milk could not be so subjected. But since milk is not mentioned in the notification the transaction of Ghee can be subjected to the levy of fee in accordance with the principle to be discussed hereinafter. The greater difficulty arises with respect to paddy and rice as both of them are mentioned in the Schedule as well as in the notification. We shall show hereinafter that in a particular market area market fee can not be levied both in relation to the transaction of purchase and sale of paddy and the rice produced from the same paddy. Fee can be charged only on one transaction. This finds support from the unamended Rules as they are	 wherein is to be found sub r.(2) of Rule 66. But we find nothing in the provisions of the Act or the Rules to 126 warrant the taking of the view that in another market area the Market Committee of that area cannot levy fee on a fresh transaction of sale and purchase taking place in that area. Supposing the Wheat is purchased in market area X by a trader from a producer	 fee will be chargeable under s.17(iii)(b)(2). If the same Wheat is taken to another market area say Y and another transaction of sale and purchase takes place there between a trader and a trader the market fee will be leviable under sub clause (3). It is also not correct to say that the agricultural produce must have been produced in the market area in which the first levy is made. It might have been produced in another market area or even outside the State of Uttar Pradesh but if a transaction of sale and purchase takes place of an agricultural produce as defined in the Act and covered by the notification within a particular market area then fee can be charged in relation to the said transaction. Point No. 8 In order to appreciate the implication of this point we have first to read and compare the provisions of s.17(iii)(b) of the Act as they stood before 1973	 between 1973 and 1978 and after the amendment by Act 7 of 1978. The provision as enacted in U.P. Act XXV of 1964 read as follows: "17. A Committee shall	 for the purposes of this Act	 have the power to: (iii) levy and collect: (b) market fees on transactions of sale or purchase of specified agricultural produce in the Principal Market Yard and Sub Market Yards from such persons and at such rates as may be prescribed	 but not exceeding one half percentum of the price of the specified agricultural produce sold or purchased therein;" The Rules which were framed in 1965 prescribed the rates of and the liability of the persons to pay the market fee. The relevant provision of Rules 66 and 68 are quoted below: "66. Market fee Section 17(iii) (1) The Market Committee shall have the power to levy and collect fees on the specified agricultural produce brought and sold in the Market Yards at such rates as may be specified in the byelaws but not exceeding one half of one percentum of the price of the specified agricultural produce: Provided that the market fee shall be payable by the seller. 127 68. "Recovery of fees Section 17(iii) (1) The market fee on specified agricultural produce shall be payable as soon as such produce is sold in the Principal Market Yard or Sub Market Yards in accordance with the terms of and conditions specified in the bye laws. (2) The market fee shall be realized from the seller in the following manner: (i) If the specified agricultural produce is sold through the Commission agent or directly to the trader	 the Commission agent or the trader	 as the case may be	 shall charge market fee from the seller in sale voucher in Form No. VI and deposit the amount of market fee so realised with the Market Committee in accordance with the directions of the Committee issued in this behalf. (ii) If the specified agricultural produce is sold directly by the seller to the consumer	 the market fee shall be realised by the servant of the Market Committee authorized by it in this behalf. (3) The licence fee shall be paid along with the application for licence: Provided that in case the Market Committee refuses to issue a licence	 the fee deposited by the applicant shall be refunded to him. (4) The payment of market fee and licence fee shall be made to the Committee in cash. " It would thus be seen that before 1973	 reading the provisions of the Act and the Rules	 market fee was to be charged at such rates as specified in the bye laws of a particular Market Committee. But it could not exceed 1/2 percentum of the price of the agricultural produce. We were informed at the Bar that almost every Market Committee had levied fees @ 1/2%. The liability to pay the fee was of the seller of the agricultural produce. Market fee was liable to be paid under Rule 68(2)(ii) even if the specified agricultural produce was sold directly by the seller to the consumer. This provision has been superseded now by an amendment in the Act brought about by U.P. Act 19 of 1979	 whereby a proviso to the following effect has been added to section 17(iii)(b): "Provided that no market fee shall be levied or collected on the retail sale of any specified agricultural produce where such sale is made to the consumer. " 128 Clause (b) of section 17(iii) was amended by U.P. Act 13 of 1973 as re enacted by U.P. Act 20 of 1974. The said clause stood as follows after the said amendment: "(b) market fees	 which shall be payable by purchasers	 on transactions of sale of specified agricultural produce in the Principal Market Yard or a Sub Market Yard at such rates	 being not less than one percentum and not more than one and a half percentum of the price of the agricultural produce so sold	 as the State Government may specify by notification in the Gazette;" It would be noticed that by the said amendment in clause (b) the minimum rate fixed was 1 percentum and the maximum 1 1/2 percentum and the liability to pay the fee became that of the purchaser instead of the seller as prescribed earlier by the Rules. Yet the Rules continued as they were. Nonetheless it is plain that after the amendment in the Statute	 Rules could apply only mutatis mutandis and wherever there was a conflict between the Rules and the Statute the latter had to prevail. In passing	 reference may be made to the substitution of the words market area in place of the words "Principal Market Yard or the Sub Market Yards" occurring in clause (b) by U.P. Act 6 of 1977 w.e.f. 20 12 1976. We have already adverted to this aspect of the matter and pointed out that transactions cannot take place in whole of the market area and although theortically fee is chargeable in the whole of the area now but actually the Rules and especially the Explanation to Rule 66 indicate that the transactions do take place in the Principal Market Yard or Market Yards or some specified place or places in a particular market area. Then came the amended section 17(iii)(b) of U.P. Act 7 of 1978	 which had already been extracted above and it was made retrospective w.e.f. 12 6 1973. Under the present provision a liability to pay the fee is under four mutually exclusive clauses. The Rules which were framed in 1965 namely Rules 66 and 68 are so very different from the present provision of law that we had to express our distress in the beginning of this judgment for the failure of the Government to amend the Rules and bring it in conformity with the amended provisions of the Statute from time to time. Any way	 the Rules will apply as far as possible so long they do not come in conflict with the Statute and even without the aid of the Rules the provision in section 17(iii)(b) as it stands after the amendment brought about by U.P. Act 7 of 1978 is workable and can be given effect to. The 129 State legislature was competent to make retrospective amendment vide B. Banerjee vs Anita Pan and M/s. section K.G. Sugar Ltd. vs State of Bihar and Ors. It has also been pointed out in H. H. Sudhundra Thirtha Swamiar vs Commissioner for Hindu Religious & Charitable Endowments	 Mysore at pages 324 25 that retrospective imposition of a fee is valid. Of course	 this cannot be a rule of universal application. In a given case and in a given situation the retrospective operation may be hit by Article 19. But in the present case we are inclined to take the view that the retrospectivity of the law as such is not bad and the only safeguard which we want to point out is this. If market fee has been realised by any Market Committee in respect of transactions of sale of agricultural produce taking place between 12 6 1973 and coming into force of U.P. Act 7 of 1978	 in accordance with the law as it prevailed then	 no market fee under the amended law can be realised again. But if in respect of any transactions aforesaid market fee has not yet been realised then it can be realised in accordance with the amended provision of the law. The only hardship will be to persons covered by sub clauses (1) and (3) wherein a provision has been made to pass on the burden of fee to others. In the case of sub clause (1) the commission agent can realise the market fee from the purchaser and the seller trader under sub clause (3) can realise it from the purchaser. If market fees are realised from such persons in accordance with the amended provision of the law then in turn they may be able to realise it from persons on whom they could pass on the burden. We are not disposed to hold the law bad only on that account. Point No. 9 We have already alluded to this aspect of the matter earlier in our judgment and taken the view that market fee could be levied on transactions of goods not produced within the limits of a particular market area by the Market Committee of that area even though the goods are produced outside the State of Uttar Pradesh or outside the market area of that particular Market Committee provided the transactions take place within the limits of that Market area. On the other hand we find no provision in the Act or the Rules to limit the operation of the law in a particular market area only in respect of the agricultural produce produced in that area. Point No. 10 Apropos this point attention is first to be focussed on the definition of the word 'producer ' in clause (p) and 'trader ' in clause (y) of 130 section 2 of the Act which have already been quoted. A producer who produces agricultural produce generally does not indulge in trading activities so as to become a trader within the meaning of clause (y). He is covered by clause (p) only. If a person is simply a trader indulging in trading activities he is covered by the definition in clause (y). We have coined the expression producer trader for a person who is both a producer of agricultural produce and himself trades in it. For the purposes of the Act he ceases to be a producer and becomes a trader only as the definition indicates. While discussing the question of levy of market fee on paddy and rice this aspect of the matter is important and therefore we thought it appropriate to highlight it at this stage. By and large in the notification dated April 11	1978 there is hardly any duplication of any item of agricultural produce. As for example	 under Group D Animal Husbandry Products	 milk has been omitted although it is to be found in the Schedule appended to the Act. From milk can be prepared Ghee or Khoya and items 1 and 2 in Group D are the said articles. Hides and Skins can be had from the animals	 so wool is obtained from the sheep. But in case of paddy and rice mentioned as items 3 and 4 in Group A I "Cereals"	 there is a duplication as rice is obtained from paddy. We would	 therefore	 like to clarify the position of law in this regard. If paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist producer under subclause (2) of section 17(iii)(b). He cannot be asked to pay market fee over again under sub clause (3) in relation to the transaction of rice. Nor will it be open to the Market Committee to choose between either of the two in the example just given. Market fee has to be levied and collected in relation to the transaction of paddy alone. Otherwise	 there will be a risk of violation of Article 14 if it is left to the sweet will of the Market Committee in the case of some rice millers to charge market fee on the transaction of paddy and in case of others to charge it when the sale of rice takes place. If	 however	 paddy is brought by the rice miller from another market area	 then the Market Committee of the area where paddy is converted into rice and sold will be entitled to charge market fee on the transaction of sale in accordance with sub clause (3). We now take the example of a producer trader who is an agriculturist and produces paddy in his own field but owns a rice mill also in the same market area. He mills the paddy grown by him into rice and sells it as such. It is plain that in his case no market fee can be charged on paddy because there is no transaction of sale and purchase of paddy and market fee can be charged only on the sale of rice by him in accordance with sub clause (3) and he will be entitled to 131 pass on the burden to his purchaser. Disputes of facts were raised before us as to whether paddy had been subjected to the charge of market fee or not and whether the same paddy has been milled into rice. We did not enter into this disputed question of fact	 and as observed above	 after clarifying the law we direct the Market Committees to levy market fee in the light of this Judgment. It will be open to any trader to go to the High Court again	 if necessary	 for the redress of his grievance in connection with a disputed question which may arise even after our Judgment. In relation to the transactions of Ghee we had two types of dealers before us (1) a dealer who purchases milk or cream from the villagers and others and manufactures Ghee in his plant and (2) a dealer who purchases such Ghee from the manufacturer of Ghee and sells it to another trader in the same market area. The first dealer will be liable to pay market fee because he is the producer of Ghee within the meaning of the Act and at the same time a trader in Ghee also. When he sells Ghee to another dealer in Ghee who is simply a dealer then under sub clause (3) of section 17(iii)(b) the manufacturing dealer will be liable to pay market fee to the Market Committee on the transaction of Ghee. But he will be entitled to pass on the burden to his purchaser. Apropos the Market Committee	 however	 the liability will be of the manufacturing dealer. If milk	 butter or cream would have been included in the notification then the charging of fee in relation to the first transaction of sale and purchase of such commodities would have been attracted in the light of the principle of law we have enunciated above with reference to paddy and rice. But in the case of Group D such commodities are not mentioned in the notification. Point No. 11 An attempt was made on behalf of the Hides and Skins dealers to show that hides and skins cannot be an agricultural produce within the meaning of the Act. They are obtained from the carcass of an animal and not from a living animal. Argument stressed was that under group G in the Schedule appended to the Act Animal Husbandry Products only can come. Item 11 Hides and Skins	 item 12 bones	 item 13 meat etc. are not products of Animal Husbandry. Some authoritative books were cited before us on "Words and Phrases" to show the meaning of 'Animal '	 'Husbandry ' and 'Animal Husbandry '. Animal Husbandry means that branch of agriculture which is concerned with farm animals especially as regards breeding	 care and production. We are not impressed by this argument. The definition clause (a) of section 2 uses the expression 'animal husbandry ' by way of a descriptive one without strictly confining to the products of animal husbandry 132 as the addition of the words "specified in the schedule" indicates. In the schedule under the group 'husbandry products ' are mentioned all these items. We may also add that one may breed and rear animals in a farm for the purpose of obtaining hides and skins after they are butchered. Market fee is	 therefore	 leviable on the transactions of hides and skins as no market fee can be charged on transactions of sale and purchase of animals in a market area in the State of Uttar Pradesh	 the same having not been included in the notification. Had it been included in the notification	 then no market fee could be charged in the same market area on hides and skins. It could only be charged in relation to the transaction of purchase and sale of animals. Point No. 12 For discussing this point we have to refer to group E of the notification dated 11 4 1978 which deals with forest products. The items mentioned in the said group are (1) Gum	 (2) Wood	 (3) Tendu leaves	 (4) Catechu and (5) Lac. Market fee can be charged on purchase of wood by a trader from a producer. No fee can be charged on the sale of furniture manufactured by the purchaser of wood. It was also conceded on behalf of the Market Committees that market fee was not being charged on the sale of furniture. If it has been so charged it will be refunded. Furniture is not an item mentioned in the group of forest products. Therefore	 this question does not present any difficulty at all. Difficulty cropped up in relation to the charging of market fee apropos the transaction of Catechu. According to the Market Committees Catechu is a product from timber or trees like Gum or Lac. It trickles down from the trees. On the other hand	 according to the Catechu dealers by processing of Khar trees Catechu is produced. We leave this question of fact to be decided by the Market Committees concerned in the first instance and then by a court of law. If Catechu is a product of Khar trees by some processing as prima facie it appears to us to be so	 then it is plain that market fee can be charged only on the purchase of Khar wood and not on the sale of Catechu. Point No. 13 This item presented some difficulty in solution. A licence is granted to a Paper Mill and to other kinds of dealers for cutting wood from the jungle and bringing it to their factories for manufacture of various articles such as paper etc. It was argued that there was no transaction of sale and purchase involved in the above operation. Moreover the wood is cut from the jungle area which although has been roped in the market area but no service is rendered in that jungle area by any Market 133 Committee. In our opinion in the licence is involved sale of wood and a right to go to that land to cut that wood. The wood may be used by the manufacturer for manufacturing furniture or may be used in the manufacture of paper or any other commodity. That is immaterial. The owner of the jungle wherefrom the wood is cut and brought will be a producer within the meaning of the Act and the licensee producer of that wood would be a purchaser of an agricultural produce within the meaning of sub clause (2) of section 17(iii)(b) of the Act liable to pay market fee. It matters little what use is made of the wood by him. The question of quid pro quo and service cannot be decided by a dichotomy of service to every payer of fee as held by this Court in Kewal Krishan Puri 's case. The matter has to be judged in a broad sense and not in the sense of rendering service to every individual payer of the fee. Point No. 14 This point also presented some difficulty. But on a parity of reasoning mentioned so far in connection with the other items	 we have got to hold that such Kirana goods as are included in the notification brought from outside a particular market area or even from outside the State of Uttar Pradesh are chargeable to market fee when their sale takes place in a particular market area. In group A VI Spices are mentioned including certain Kirana items such as Ripe Chillies	 Sonf	 turmeric etc. They are sold by the Kirana dealers. Sometimes they purchase them from the agriculturists in the same market area. In relation to those transactions they will be liable to pay market fee under sub clause (2) of section 17(iii)(b). More often than not such articles are brought from outside and sold by the Kirana merchants. If they are sold to consumers	 no market fee can be levied in view of the proviso added in the year 1979. If they are sold in wholesale	 then the transaction can be subjected to the levy of market fee because in a particular market area they enter into the first transaction of sale in respect of the specified agricultural produce. Point No. 15 Market fee can be charged on transaction of tobacco as it is included in group A V of the notification. As in the case of other items so in this case also the fee will be leviable if tobacco is purchased in the same market area from an agriculturist in accordance with sub clause (2). Otherwise it would be leviable under sub clause (3). Similar is the position in regard to tendu leaves which is mentioned in group E. Bidi cannot be treated as an agricultural produce as it is not an admixture of tobacco and tendu leaves within the meaning of section 2(a) of the Act. It was conceded on behalf of the Market Committees that no market fee was being charged on the transactions of Bidi. But 134 if a Bidi manufacturer purchases tobacco and tendu leaves in the market area and uses them in the manufacture of Bidi	 he will be liable to pay market fee in relation to the transaction of tobacco and tendu leaves. Point No. 16 This point has been stated merely to be rejected. There is no substance in this point. Our attention was drawn to some provisions in the municipal Acts and the Zila Parishad Acts to show that no market committee could be constituted in a municipal area or a Nyaya Panchayat. We do not consider it necessary to deal with this point in any detail. We merely reject it as being devoid of any substance. Point No. 17 Gur	 rab	 shakkar	 khandsari and jaggery are expressly included in the definition of agricultural produce given in clause (a) of section 2 of the Act. We are here concerned with the question as to whether rab galawat and rab salawat are rab within the meaning of section 2(a) or are bye products of molasses received at the time of manufacture of khandsari. According to the case of some of the appellants who deal in these commodities they are the bye products and market fee has already been charged on rab and therefore the fee cannot be charged again on rab galawat and rab salawat. Disputes of facts were raised in this connection before us on behalf of the Market Committees. On the materials placed before us it was clear to us that rab galawat and rab salawat cannot be subjected to a separate charge of market fee apart from the transaction of rab. Market fee can be levied on the first transaction of rab taking place in any market area in accordance with any of the sub clauses of section 17 (iii) (b)	 as it may be applicable. It cannot be again charged on the second transaction of rab galawat or rab salawat even assuming that it is rab. But on the materials placed before us it appeared to us that rab galawat and rab salawat are not rab in the original form but they are obtained at one stage or the other in the process of manufacture of khandsari. Any way the question of fact may be decided as we have indicated in respect of the other items in the first instance by the Market Committee and thereafter by the High Court	 if necessary	 in a fresh writ petition. It will bear repetition to say that the only transaction which can be subjected to levy of market fee in a particular market area is the first transaction of rab and no other transaction of rab galawat and rab salawat. Point No. 18 This point urged on behalf of the appellants is well founded and must be accepted as correct. On the very wordings of clause (b) of 135 section 17(iii) market fee is payable on transactions of sale of specified agricultural produce in the market area and if no transaction of sale takes place in a particular market area no fee can be charged by the Market Committee of that area. If goods are merely brought in any market area and are despatched outside it without any transaction of sale taking place therein	 then no market fee can be charged. If the bringing of the goods in a particular market area and their despatch therefrom are as a result of transactions of purchase and sale taking place outside the market area	 it is plain that no fee can be levied. Point No. 19 This point has no substance and has got to be rejected. As held in Vishnu Agencies (Pvt.) Ltd. etc. vs Commercial Tax Officer & Ors. etc. on a review of earlier decisions even if a commodity is sold pursuant to the controlled regulations still some small area is left to make it a transaction of sale. It may well be that no freedom is left to the parties in a large area of the transaction yet it is a transaction of sale. Point No.20 This point also must be rejected. A pure and simple producer as defined in clause (p) of section 2 is not required to take any licence for selling his agricultural produce nor is he required to pay market fee under any of the sub clauses of section 17(iii)(b). But if he is a producer trader in the sense we have explained above	 then he will be required to take out a licence in accordance with section 9(2) of the Act and no body can be permitted to carry on any trade in agricultural produce in the market area without a valid licence. Merely for his lapse of not taking out a licence he cannot escape the liability to pay the market fee. Market fee will still be chargeable from the trader	 as	 in section 17(iii)(b) it is not stated that market fee can be charged only from the licensees. The proviso to clause (p) of section 2 will be attracted only if a question arises as to whether any person is a producer or not for the purposes of the Act and in that event the decision of the Director made after an inquiry conducted in the manner prescribed by the rules shall be final. The proviso has nothing to do with a case of a producer trader. If a question arises whether a person is merely a producer or producer trader the Director will have no power to decide this question. Such a question will have to be decided by the Market Committee itself which will be subject to the final decision of a court of law. 136 In support of the argument reliance was placed upon the decision of this Court in Raunaq Ram Tara Chand & Ors. etc. vs The State of Punjab & Ors. But that case is distinguishable because of the language of rules 29 and 31 of the Punjab Agricultural Produce Market Rules framed in accordance with the Punjab Agricultural Produce Markets Act	 1961. Both the rules aforesaid clearly stated that the fee could be charged from the licensees only. Not only that even the charging section 23 of the Act itself stated: "a Committee may	 subject to such rules as may be made by the State Government in this behalf	 levy on ad valorem basis fees on the agricultural produce brought or sold by licensees in the notified market area at a rate not exceeding rupee one fifty paise for every one hundred rupees	 provided. "On the other hand in section 17 (iii) (b) of the U.P. Act and Rules 66 and 68 of the Rules charging of market fee in terms is not found to be chargeable from the licensees only. The traders cannot escape their liability to pay the fee on account of their default of taking out licences. Point No. 21 This point is also well founded and must be accepted as correct. Market fee can be charged only on the transactions of purchase of wood and if a manufacturer of match sticks purchases wood from the producer for the purposes of manufacturing the sticks he will be required to pay market fee on such purchase of wood only and not on the sale of match sticks or match boxes. Similarly market fee will be leviable on the transaction of purchase of soyabin and not on transaction of sale of soyabin products. Exactly the same will be the position with regard to the articles sold by Kisan Products Ltd. and the sale of Pan. Agricultural produce purchased by the dealers will be chargeable to market fee and not the sale of the products after one kind of processing or the other. Point No. 22 Under this head the submission on behalf of the fruit and vegetable merchants was that they bring their products to the market and sell them in wholesale through their commission agents. No market fee	 therefore	 should be charged from them. In our opinion the argument so placed on behalf of the merchants is misconceived. Under sub clause (1) of section 17(iii)(b) of the Act when fruits and vegetables are sold through a commission agent by the producer then the Commission agent is liable to pay the market fee and he can realise it from the purchaser of fruits and vegetables. The burden does not fall on the producer. The liability in the first instance is of the commission	 agent and finally of the purchaser of the articles. 137 Point No. 23 Point No. 24 Reliance was placed upon a decision of the Mysore High Court (now Karnataka) in the case of K. N. Marudaradhya vs The Mysore State but the view taken by the Mysore High Court was dissented from by the Patna High Court in the case of Mangalchand Ramchandra and others etc. vs State of Bihar. One of us (Untwalia J	) delivering the judgment of the Patna High Court stated at page 1053 thus: "At this stage I would discuss a Bench decision of the Mysore High Court on which great reliance was placed on behalf of the petitioners in support of their contention that no fee can be levied on transaction of buying and selling between a dealer and a dealer even though such transactions take place within the market area or the market proper. The decision of the Mysore High Court is in the case of K. N. Marudaradhya vs The Mysore State A.I.R. At page 126 (column 2) from paragraph 33 starts the discussion on the point at issue. To the extent the decision goes to hold that the purchase in respect of which the fee could be levied or collected is the earliest purchase	 that is to say	 the fee can be levied only on one purchase and not on subsequent purchases	 with respect I am inclined to agree with that view expressed in paragraphs 33 to 38. But while discussing the point	 Iyer J.	 has confined this earliest purchase of the agricultural produce belonging to the producer only. There does not seem to be a pointed discussion of the question whether the first purchase from a dealer could be subjected to levy or not. But by necessary implication	 as I read the judgment	 it seems	 their Lordships of the Mysore High Court took the view that such a deal cannot be subjected to the levy of fee. With great respect	 in that regard	 I strike my note of dissent from the view expressed by the Mysore High Court. Firstly	 merely because the object of the legislation is the protection of the agriculturist	 the plain meaning of the section cannot be cut down. Secondly	 they have relied upon the practice prevailing around the area under different State statutes as mentioned in paragraph 36. If I may say with respect	 law could not be so 138 decided on the basis of any practice. Of course	 the interpretation given to the Statute can be supported by reference to practice. Thirdly	 I am inclined to think that the Supreme Court decision in the case of Krishna Coconut Company does not lend support to the limited view expressed by the Mysore High Court. We approve of the Patna view and in the set up of the U.P. Act after an elaborate discussion we have pointed out as to in what kind of transaction who is liable to pay the market fee. In the U.P. Act even traders under certain circumstances have been made liable to pay such fees. Similarly the argument that market fee can be charged only on those transactions in which the seller is the producer of agricultural produce and not on any other transaction is also devoid of any substance. Conclusions For the reasons stated above	 we hold that market fee should be regularised and be charged in the light of this Judgment. If anything has been realised from the traders or any other person which goes contrary to this Judgment the same should be refunded by the Market Committee concerned within six months from today. This may not be treated as a precedent for all cases of this type. The form of the order in relation to the refund of the market fee may vary from case to case depending upon the facts and circumstances of each case. Market fee due from the traders in the light of this judgement should also be charged and paid within a period of six months from today. If there is any disputed question of fact to be decided by the Market Committee then it should be decided as quickly as possible leaving the person concerned to agitate the matter in a court of law	 preferably in the High Court	 within a short time thereafter. The High Court will proceed to decide the matter in the light of our Judgment. We do hope that services are being rendered and will continue to be rendered by the various Market Committees in the light of the Judgment of this Court in Kewal Krishan Puri 's case. If in regard to any particular Market Committee it is found that services are not being rendered or in future lapses are made then it will be open to the payers of fees to re agitate the matter in the High Court in the light of that judgment. For the reasons stated above the appeals and writ petitions are partly allowed and partly dismissed in the manner indicated above. There will be no order as to costs in any of them. N.V.K. Appeals and petitions partly allowed.

The appellant was found carrying smuggled gold with foreign markings	 concealed on his person. He was convicted by the Presidency Magistrate under Section 135(b) read with Section 135(ii) of the 	 and Rule 126H (2)(d) read with Rule. 126 P(2)(iv) of the. Gold Control Rules	 1965. The High Court upheld the convictions. The appellant con tended that the gold	 allegedly recovered from him was smug gled gold	 and hence not covered by the Gold Control Rules	 1963. Dismissing the appeal the Court. HELD: The Gold Control Rules	 1963	 seek to control and regulate dealings in gold	 and are applicable alike to smuggled gold as to non smuggled gold	 and the inhibition of Rule 126 H(2)(d) that no person other than a licensed dealer shall acquire gold except in accordancee with a permit or authorisation granted by the Administrator	 is not confined in its operation to nonsmuggled gold but applies equally in relation to smuggled gold. The object and pur pose of the restrictions imposed by the Gold Control Rules	 1963	 would be frustrated by excluding from their abmit and coverage	 smuggled gold. [523 A D; 524 B C] Aravinda Mohan Sinha vs Prohlad Chand Samenta AIR 1970 Cal 437 over ruled.