ORDER
Somasundaram, J.
1. In all these writ petitions the petitioners are dealers engaged in purchase and sale of various agricultural produces and they challenge the various provisions of the Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987, and certain rules in the Tamil Nadu Agricultural Produce Marketing (Regulation) Rules, 1991 which have been brought into force with effect from 1st February, 1991. Inasmuch as the points raised and claims made in all the above writ petitions are similar, all the writ petitions were heard together and they are disposed of by this common order.
2. Marketing legislation in the State of Tamil Nadu was the subject matter of several reports of Expert Committee appointed by the Government and the Expert Committee after careful examination found that the agricultural producers were largely illiterate and economically weak and were not having the facilities to dispose of their produce to their best advantage without being exploited by middlemen and profiteers. In order to protect the interest of agricultural producers and on the recommendation of the Expert Committee, the Madras Commercial Crops Act, 1933 was enacted. In the year 1959, the said Act was repealed and the Tamil Nadu Agricultural Produce Markets Act, 1959 (Tamil Nadu Act 23 of 1959) was enacted, which included various other agricultural produces as per the requirements of the purchasers and traders. The constitutional validity of the Madras Commercial Crops Act, 1933 was upheld by the Supreme Court in Arunachala Nadar v. State of Madras, . Similarly the validity of the Tamil Nadu Agricultural Produce Markets Act, 1959 (Act 23 of 1959) was upheld by a Division Bench of this Court in Kannappa Mudaliar v. State of Madras, (1969) ] Mad
LJ 212. In the year 1989, the Tamil Nadu Act 23 of 1959 was repealed and it was replaced by the Tamil Nadu Agricultural Produce Marketing (Regulation) Act, 1987 (hereinafter referred to as the Act) and the same was brought into force with the issuance of the Tamil Nadu Agricultural Produce Marketing (Regulation) Rules 1991 (hereinafter referred to as the Rules), with effect from 1-12-1991.
3. The Act is aimed at better regulation of buying and selling of agricultural produces to secure a fair and reasonable, price to the producers of the notified agricultural produce and this object is sought to be achieved by regulating the trade by providing a special market yard and other facilities, like storage, proper weighment, transaction shed, grading of produce, etc. for better marketing and for benefit of farmers and traders. The Act has a definition section and among others the term agricultural produce is defined in S. 2(1) of the Act as follows:
“(E) “agricultural produce” means any produce of agriculture, whether processed or unprocessed, specified in the schedule;”
According to S. 2(10) “market” means any market established under sub-sec. (1) of S. 6 and shall, except in sub-sees. (1) and (2) of that section, include a subsidiary market. Section 2(1 i) defines a “market committee” as any market committee established under sub-sec. (1) of S. 5. Notified agricultural produce has defined in Sec. 2(12) as any agricultural produce specified in the notification under S. 3. According to S. 2(13), “notified area” means any area notified under S. 4 as altered by any notification under sub-sec. (1) of S. 9. According to S. 2(14) “notified market area” means any area notified under sub-sec. (2) of S. 6 as altered by any notification under sub-sec. (1) of S. 9. The term “processing” is defined in S. 2(17) of the Act. The intention of the Government to exercise control over the purchase and sale of any specified agricultural produce has to be declared by a notification which shall also call for objections to be received within a stated period. After the expiry of the period and after considering such objections and suggestions as may be received, the Government
by notification may declare the area specified therein or any portion thereof to be a notified area for the purposes of the Act in respect of any agricultural produce specified in the notification. Once a notified area comes into existence in that manner and in accordance with Ss. 3 and 4, the Government is required under S. 5 to establish a market committee for every notified area. It is the duty of the market committee to enforce the provisions of the Act as well as the rules and by-laws made thereunder in such notified area. Section 6 provides that every market committee shall establish in the notified area such number of markets providing such facilities, as the Government may, from time to time, direct for the purchase and sale of the notified agricultural produce. After the establishment of the market under sub-sec. (1) of S. 6, the Government shall by notification, declare the area of the market and such area around the market as may be specified in the notification to be a notified market area for the purpose of the Act in respect of any notified agricultural produce. Section 8(1) states that no person shall within a notified area set up, establish or use, or continue or allow to be continued, any place for the purchase or sale, storage, weighmenl measurement or processing of any notified agricultural produce or operate as a broker, weighman, measurer, trader, warehousemen or in any other capacity in relation to the buying and selling of any notified agricultural produce, except under, and in accordance with the conditions of, a licence granted to him by the market committee. Section 8(2) deals with certain exemptions. Sub-section (4) of S. 8 enumerates the circumstances under which a licence under sub-sec. (1) may be refused to a person. Similarly, sub-sec. (5) of S. 8 enumerates the circumstances under which a licence already granted under sub-sec. (1) of Sec. 8 may be cancelled or suspended. Section 8(6) provides for an appeal against the order refusing to grant licence or cancelling or suspending a licence. Sub-section (7) of S. 8 deals with the period during which a licence granted under sub-sec. (1) of S. 8 shall be valid. According to sub-sec. (9) of S. 8, every person licensed or liable to pay fee or any other amount under
this Act shall keep and maintain a true and correct account and such other records showing such particulars as may be specified in the by-laws of the market committee and shall submit such periodical returns relating to his business transaction including processing as may be prescribed, to the market committee in such manner and within such period as may be prescribed, together with the fee or other amount due on the basis of the return. Section 10 deals with the constitution of a market committee and according to sub-sec. (1) of S. 10 every market committee shall consist of sixteen members and shall be constituted in the manner specified in sub-sec. (2) of S. 10. Section 12 deals with election of Chairman and Vice-Chairman of Market Committee. Section 24 deals with levy of fee by market committee. Sub-section (1) of S. 24 reads thus:
“(1)The market committee shall levy a fee on any notified agricultural product bought or sold in the notified market area at a rate not less than one rupee but not exceeding two rupees for every hundred rupees of the aggregate amount, for which the notified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable consideration:
Provided that, when any agricultural produce brought into any notified market area for the purpose of processing only, or for export is not processed or exported there from within thirty days from the date of its arrival therein, it shall until the contrary is proved, be presumed to have been brought into such notified market area for buying and selling and shall be subject to the levy of fee under this section on the value of the agricultural produce, as if it had been bought and sold therein.
Explanation 1 — For the purpose of this sub-section, all notified agricultural produces taken out or proposed to be taken out of a notified market area shall, unless the contrary is proved, be presumed to be bought or sold within such area.
Explanation 11 — In the determination of the amount of the fee payable under this Act,
anytfraction often paise less than five paise shall be disregarded and any fraction of ten paise equal to or exceeding five paise shall be regarded as ten paise.”
Section 25 enables the establishment of check-post of barrier by the market committee in order to prevent or check the evasion of payment of fee or other amount due to the ma.rk.et committee under the provisions of the Act. Section 29 provides for market committee fund and according to that section, all moneys received by the market committee shall be paid into the market committee fund and all the expenditure incurred by the market committee under, or for the purposes of the Act shall be defrayed out of the said fund. Section 30 enumerates the various purposes for which the market committee fund may be expended. The Act also provides for the establishment of State Agricultural Marketing Board, creation of Market Board Fund, and Market Development Fund and for such other matters relating to the day-today regulation and administration of the market. Section 52 empowers the Government to make rules either generally or specially for any notified area or areas, rules for carrying out all or any of the purposes of the Act. It is only in exercise of the power under S. 52 of the Act, the Government has made rules called the Tamil Nadu Agricultural Produce Marketing (Regulation) Rules, 1991,
4. From the reliefs claimed in these writ petitions, it is seen that the validity of Ss. 2, 3, 8, 10, 12, 13, 15, 24, 25, 27, 29, 30, 35, 36, 49, 57 and 59 of the Act and Rules 27, 30, 32, 33 and 41 of the Rules are challenged. However, during the course of arguments, the attack was confined only to the following sections of the Act and the Rules, namely, Ss. 8, 10, 12(a), 24 and 25 of the Act and Rules 27, 32, 33 and 41 of the Rules.
5. Let us consider the principal contentions of Mr. G. Subramaniam, learned senior counsel adopted by the counsel appearing for the other petitioners in this batch of writ petitions, challenging the constitutional validity of the sections and the Rules referred above one by one.
6. The first contention of Mr. G. Subramaniam, learned senior counsel is that sub-secs. (4), (5), (7) and (9) of S. 8 of the Act and Rules 27,32 and 33 of the Rules are ultra vires (sic) constitute infringement of fundamental rights guaranteed under Art, 19(1)(g) of the Constitution of India, invalid and are liable to be struck down on the following grounds:
(i) The increase in licence fee from Rs. 25/-per year to Rs. 300/- for three years is very high and unjustified.
(ii) There is no provision under the Act for refund of licence fee for the unexpired period of the licence.
(iii)The criteria laid down for refusal, cancellation and suspension as per Ss. 8{4) and 8(5) are unjustified and the respondents have no ‘locus standi’ to question or test with regard to the trading activities of the traders.
(iv) Though there is a provision for appeal against the orders of refusal, suspension and cancellation of the licence, the conditions provided under S. 8(4) and 8(5) of the said Act thereof are ‘ultra vires’ and constitutes infringement of fundamental rights guaranteed under Art. 19(1)(g) of the Constitution.
(v)The provisions relating to the registering and collection of licence fee for the whole 3 years without there being any provision for refund in respect of the unexpired period of the licence has no reasonable nexus to the object sought to be achieved under the Act.
(vi) The provisions of Rr. 32 and 33(4) are mutually contradictory in the sense that R. 32 mandates the traders to submit their returns every succeeding month while R. 33(4) mandates that fee should be paid within a week immediately after the purchase and the rule making authorities have not applied their mind to the very scope of S. 8(9) of the said Act.’
7. We are unable to accept the above contentions of the learned senior counsel for the petitioners. Section 8(1) of the Act imposes an obligation on a trader to obtain a licence from the market committee for carrying on any business in agricultural produce in
the notified areas. Sub-section (4) of S. 8 deals with the refusal of licence under certain circumstances, Sub-section (5) of S. 8 read with Rule 30 deals with the cancellation or suspension of the licence under certain circumstances. Sub-section (7) of S. 8 read with Rule 27 deals with validity period of the licence, i.e., three years for wholesalers whose annual turnover is about five lakhs and above and one year in respect of other, small and petty traders and also provides for renewal. Section 8(9) of the said Act read with Rule 32(2) obligate the licencee to keep and maintain accounts and other records as may be specified by market committee, and submission of returns every month and accounts every 6 months. This section also provides for collection of licence fee at Rs. 300/- valid for 3 years from wholesalers and Rs. 75/- per year for other traders and Rs. 25/- per year from small and petty traders.
8. With regard to sub-sec. (7) of S. 8 and
R. 27 which prescribes the licence fees, the learned Advocate General submitted that the matter of issuance of regional or zonal licences by the market committees is being considered by the State Government and that necessary amendments to the Act will be made, so that regional or zonal licences can be issued to the traders. In para 2 of the additional counter affidavit fiicd on behalf of the first respondent, it is specifically averred as follows:
“2. I submit that the matter of issuance of regional or zonal licences by the market committees is being considered by the State Government. Necessary amendments to the Act will be made so that regional or zonal licences can be issued to the traders”.
Further, in the letter dated 11-5-1993 addressed to the President, Pollachi Chambers of Commerce, the Special Secretary to the Government, Agricultural Department has stated as follows:
“With reference to your letter dated, I am directed to state that while moving Agriculture Demand on 22-4-1993 the Honourable Minister for Agriculture has made the following announcement:–
1. Provision of drinking water supply, rest houses, toilets, etc. in Regulated Markets and supply of transport and refreshment subsidy and certain other concessions to the traders and agriculturists.
2. To make necessary amendments to the
Tamil Nadu Agricultural Produce Marketing
(Regulation) Act and Rules made thereunder
regarding:
1. issue of advance permit;
2. issue of State/ Regional Licence;
3. fixing of exemption limit for transport of agricultural produce without permit;
4. enhancing the period of processing from 30 days to 60 days (by amending Section 24(1) of this Act).
3. I am also to request you to take necessary action for withdrawal of court cases immediately as agreed to at the meeting held on 3-2-93″.
In view of the above stand taken by the first respondent in the additional counter affidavit referred above, and the representation of the learned Advocate General that the first respondent is examining the question of issuing regional or zonal and make necessary amendments to the Act to that effect, it is not necessary for us to examine the validity of sub-sec. (7) of S. 8 and R. 27 of the Rules and we are not expressing any opinion on the validity of the said provisions.
9. As already stated, sub-sec. (4) of S, 8 deals with the circumstances under which a licence may be refused to a person and the said sub-sec. (5) reads as follows:
“(4) A licence under sub-sec. (1) may be refused to a person –
(a) whose licence was cancelled, and a period of three years has not elapsed since the date of the cancellation; or
(b) who has been convicted of an offence where such offence relates to his business or his integrity as a man of business; or
(c) in regard to whom the market committee is satisfied, after such enquiry as it
considers adequate, that he is a benamidar for, or a partner with, any other person to, whom a licencee may be refused under cl. (a) or cl. (b).
Similarly sub-sec. (5) of S. 8 enumerates the circumstances under which a licence granted under sub-sec. (1) of S. 8 can be cancelled or suspended. The said sub-sec. (5) reads thus:
“(5)If a market committee is satisfied, either on a reference made to it in this behalf, or otherwise, that –
(a) a licence granted under sub-sec. (1) has been obtained by misrepresentation or fraud, or ,
(b)the holder of a licence has contravened, or failed to comply with, any of the provisions of this Act or any of the conditions of the licence, then without prejudice to any other penalty to which the holder of the licence may be liable under this Act, the market committee may, subject to such rules as may be made in this behalf, cancel or suspend the licence, after giving the holder of the licence a reasonable opportunity of showing cause against such cancellation or suspension”.
Sub-sections(1) and (4) of S. 8 of the Act corresponds to sub-sees. (1) and (3) of S. 6 of Act 23 of 1959. The constitutional validity of sub-sees. (1) and (3) of S. 6 of Act 23 of 1959 was challenged in Kannappa Mudaliar v. State of Madras, (1969) 1 Mad LJ 2)2. Division Bench of this Court while upholding the constitutional validity of sub-sees. (1) and (3) of S. 6 of Act 23 of 1959 observes thus:
“But it is said that S.6(1) provides for an unguided discretion in the matter of grant or refusal of licence and that the discretion might be used in such a manner as to impede or restrain trade. We do not think that that is a proper construction to be placed on S. 6(1). The object of the Act is to be found in the Preamble, namely, better regulation of buying and selling of agricultural produce and the establishment and proper administration of markets for agricultural produce. This and the provisions of the Act as a whole will be a guide in the matter of granting licence. Further where a discretionary power is vested
in a public authority, it is invariably meant for exercise in favour of individuals who seek licence and the licence can be denied only for proper reasons. This question was touched upon from the stand point of Art. 19(1)(g) and (6) in Kutti Keya v. State of Madras, and the Court observed :
“Section 5(4}(a) (Act XX of 1933) does confer on the Collector an unlimited and uncontrolled discretion to grant or refuse licences as he might choose and a provision which makes the exercise of a fundamental right dependent on the absolute discretion of administrative authorities must be held to be unconstitutional. The learned Advocate-General did not dispute the correctness of this position; he merely stated that as a fact there had not even been a single instance of refusal to grant a licence. It may be conceded that the intention of the Legislature was that all persons who apply for licence should get them and that none should be refused though being a pre-constitution enactment, the language is undoubtedly wide. As it stands, the section must be held to be void in so far as it confers on the Collector an authority to refuse a licence at his will. This conclusion however does not entail the consequence of the entire licensing regulation becoming void, because its only result is that all applicants are entitled to obtain licences provided they pay the prescribed fee and comply with the other conditions. Section 5(4) of the Act 1933 Act is in pari materia with S. 6(1) of the 1959 Act and those observations, with equal force, will apply to the latter provisions of sub-sec. (3) of S. 6, every person who applies for a licence under S. 6(1) will be entitled to it. Subsection (3) specified certain cases of persons to whom licence should be declined or the circumstances in which a licence granted may be cancelled. In our opinion, it cannot be said that because of the provisions in sub-sec. (3) of S. 6, the licensing system provided by S.6(1) is invalid as placing a restraint on freedom of trade”.
Sub-sections (1) and (3) of S.6 of Act 23 of 1959 are in pari materia with sub-sees. (1) and (4) of S. 8 of the Act. In view of the decision
in Kannappa Mudaliar v. State of Madras, (1969) 1 Mad LJ 212, we have no hesitation in holding that sub-sees. (4) and (5) of S. 8 of the Act are valid and they are not liable to be struck down.
10. In Vishnu Dayalv. State of U.P., , the Apex Court while upholding the validity of S. 17 of Uttar Pradesh Krishi Utpadan Mandi Adhiniyam (Act 25 of 1965), which empowers the market committee to issue or renew licence or suspend or cancel licence under the said Act, observes thus:
8. “We may now lake up consideration of the second and the third submissions which may be dealt with together. It is submitted that the licensing of the traders should not be left in the hands of the market committee. We find it difficult to appreciate how the performance of this duty by the committee will at all prejudice the traders. To say the least it is a hypothetical objection in this case, as we understand, none of the petitioners have been refused a licence. It is true that usually some governmental authority is charged with the duty of granting of licences under various local Acts. That, however, does not prove that the duty cannot be properly and impartially exercised by the committee representing various interests which are vitally interested in the trade of agricultural produce. Whether in a particular case the action of the committee is mala fide or otherwise objectionable, may be a different matter and such a grievance can be properly dealt with. That would, however, not make the provision invalid nor can it be said to place an unreasonable restriction on the right of the petitioners to trade”.
11. On a careful examination of sub-sees. (4) and (5) of S. 8 of the Act, we are of the view that the conditions laid down in those sub-sections for the refusal, cancellation and suspension of the licences cannot be considered as unreasonable and unjustified when we take note of the object and purpose of the Act which is regulatory in nature. If the contention of the learned counsel for the petitioners is countenanced, it amounts to permitting any trader who commits breach of conditions of fhe licence to continue to commit breaches or offences under the Act.
Further, it must be remembered that the licence is only a privilege and such licence can be cancelled under the circumstances mentioned in the relevant provisions and that the petitioners cannot claim exclusive right over a licence once granted under all circumstances where the licensee see acts in accordance with the conditions of the licence or even when he commits breach of the conditions imposed by the licence. As a matter of fact, several safeguards have been provided under the Act to protect the interest of the bona fide traders. Sub-section (6) of S. 8 provides for an appeal against an order of the market committee refusing to grant a licence or cancelling or suspending a licence. Therefore, the contention of the learned counsel for the petitioners, that the provisions of sub-sees. (4) and (5) of Sec. 8 of the Act are ultra vires and infringes the fundamental rights guaranteed under Art. 19(1)(g) of the Constitution cannot be countenanced. We are clearly of the view that the restrictions or eligibility criteria laid down in sub-sec. (4) of S.8 are only reasonable restrictions and therefore, it cannot be said that sub-sec. (4) of S. 8 infringes the fundamental rights guaranteed under Art. 19(1)(g) of the Constitution.
12. Sub-section (9) of Section 8 runs as follows:
“(9) Every person licensed or liable to pay fee or any other amount under this Act shall keep and maintain a true and correct account and such other records showing such particulars as may be specified in the by-laws of the market committee and shall submit such periodical returns relating to his business transaction including processing as may be prescribed, to the market committee in such manner and within such period as may be prescribed, together with fee or other amount due on the basis of the return.”
Rule 32 deals with submissions of periodical returns. According to sub-rule (1) of Rule 32 every licensee shall send a monthly return under sub-sec. (9) of S. 8 of the Act relating to the purchase or sale of every notified agricultural produce so as to reach the head of market on or before the 10th day of the succeeding month in Form 9. Sub-rule (2) of
Rule 32 says every licensee under sub-sec. (1) of S. 8 of the Act shall produce the accounts to the market committee for verification once in six months. Rule 33 deals with levy of fee, on notified agricultural produce. The fee on notified agricultural produce leviable under sub-sec. (1) of S. 24 of the Act shall be Re. 1 /-(rupee one only) for every hundred rupees of the aggregate amount of the notified agricultural produce which is bought or sold in the notified area. Sub-rule (3) of Rule 33 deals with the mode of calculating the quantum of fee leviable. Sub-rule (4) of Rule 33 says that the fee shall be paid by the trader immediately after the purchase in respect of purchases within the market and within a week in respect of other first purchases or sales effected in any other place in the notified market area except the market aforesaid. There is absolutely, no contradiction between Rule 32 and sub-rule (4) of Rule 33 as contended by the learned counsel for the petitioners. It must be pointed out that Rule 32 and sub-rule (4) of Rule 33 deals with two different matters. Rule 32 deals with submission of periodical returns whereas sub-rule (4) of Rule 33 deals with payment of market fee. As per sub-rule (4) of Rule 33, a trader has to pay the market fee immediately for the purchases made within the regulated market and for the purchases made out side the regulated market he should pay within a week. On the other hand sub-rule(1) of Rule 32 imposes an obligation on the trader to submit the monthly return in respect of transactions not later than the 10th of the succeeding month to the Head of the Market. It is seen from the counter affidavit filed on behalf of the respondents, under the provisions of the Tamil Nadu Act 23 of 1959 and the rules framed thereunder, the traders were submitting their accounts once in three months for verification. In view of the representations made by the traders and in order to obviate some of the difficulties, sub-rule (2) of Rule 32 of the rules requiring them to submit their accounts once in in six months was made. On a examination of Rules 32 and 33, we are satisfied that they are regulatory in nature and they do not impose any unreasonable restrictions on the traders in carrying on
their business as contended by the learned
counsel for the petitioners. In these circurmstances, we have no hesitation in holding that
sub-sections (4), (5) and (9) of Section 8 and
Rules 32 and 33 are perfectly valid and-they
are not liable to be struck down.
13. The next contention of the learned counsel for the petitioners is that Section 10 of the Act providing for the constitution of market committee is undemocratic, invalid and therefore, it is liable to be struct down. The contention of the learned counsel for the petitioners is that under the old Act 23 of 1959 the market committee shall consist of 18 members of whom 9 were elected from licencees and 4 were nominated by Government of whom one should be the producer residing in the notified area. The Tamil Nadu Act 27 of 1989 provides for nomination of non-official and official members numbering 16 only by the Government of whom 8 shall be from the producers. The learned counsel for the petitioners would submit that the provisions of Section 10 is not in consonance with democratic set up and leave it open to the arbitrary way of nominating the representatives by the Government who would be only henchmen and thereby the market committee is made a tool to its own political influence or gain whoever may be the ruling party. It is, further contended that the constitution of the market committee as per Section 10 of the said Act is undemocratic as the purchasers and sellers have no proper and adequate representation.
14. Per contra, the learned Advocate General submitted that the practice of election for the constitution of market committee has been done away with and the procedure of nomination by the Government as is the practice in other Boards, Corporations, Local bodies etc. in Tamil Nadu and as prevalent in other States is provided for, taking into account the huge expenses involved in the conduct of elections in the constitution of market committee which is functioning only with limited resources. The learned Advocate General further submitted that the primary object of the Act is to help and benefit the producers and traders who are given adequate
representation in the constitution of market committees and therefore the contention of the petitioners that the nominated members are going to be only henchmen of the party in power has no merit.
15. In para 4.4.1 of the report of the Working Group on drawing up model agricultural produce market Act, it is pointed out that the direct election of the non-official members of the market committees by the formers may be a very cumbersome and costly process. The learned Advocate General also relied on para 4.4.2 of the said report which reads thus:
“4.4.2 It is almost like a general election in which electoral rolls will have to be prepared, published and finalised after hearing objections. Elaborate arrangements will also have to be made for setting up a large number of polling booths, providing security during the election process and for counting of votes, etc. The number of voters being very large, a lot of man-power and financial resources will be required to conduct these elections.”
16. In N. Sreerama Murthy v. State, , a Division Bench of the Andhra Pradesh High Court while upholding the validity of a similar provision in Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966 empowering the Government to nominate members of market committee held as follows:
“6. Sri Venugopala Reddy, learned Counsel for the petitioners, contends that the Division Bench, striking down S. 5(1) and (2) of the principal Act, declared that it was the elected members that on best subserve the interests of the different interests represented on the market committee. The amended Act gives a go by to the system of election and is contrary to the intendment of the judgment of this court. He argues that if the provisions were held to be violative of Art. 14 because the principle of election was not observed with respect to the representatives of the growers of the agricultural produce and owners of livestock and products of livestock as well as in the case of traders the amended provision must also be held to be violative of
Art. 14 of the Constitution. We must point out thai this is not the correct interpretation of the earlier judgment of this Court. The Court, in declaring the said provision to be violative of Art. 14 pointed out that growers of agricultural produce and owners of livestock and products of livestock on the one hand and the traders in agricultural produce, owners of livestock and products of livestock on the other, represent two vital interests in the market committee and if one interest was represented by those elected from among themselves, and according to ihc Bench elected representatives are better suited to safeguard the interests of the particular section the other section also ought to have been given an opportunity to be represented by members elected from among themselves. Such a discrimination was held to be striking at the root of the validity of that provision. What would have been the provision if the legislature had made provision for nomination of both the interests, that is, growers of agricultural produce and owners of livestock and products of livestock on the one hand and the traders on the other, did not come up for consideration in that case. Whatever may be said about the system of nomination as compared to the system of election to particular body, when all the interests are to be informally represented either by elected representatives or by nominated members, none of such groups can complain of hostile discrimination. That is what the legislalure in its wisdom, has now done. Now, both the traders and the growers of agricultural produce and owners of livestock and products of livestock, are to be nominated by the Government by a notification. May be, if provision was made for election of the representatives of the growers and owners of livestock and products of livestock, would have been better, but the legislature in its wisdom must have thought nomination of persons representing the two groups was in the best interests of the market committees. Whatever criticism on such a provision may be open to, cannot certainly be questioned on the ground that it is violative of Art. 14 of the Constitution. May be, the Legislature, after considering the several aspects, was of the
view that the interests of the traders as well as the growers of agricultural produce and owners of livestock and products of livestock are better served by nomination of the members of those categories. May be, the administrative difficulties and financial burden of conducting elections to several market committees especially when growers of agricultural produce and owners of livestock run into several lakhs weighed with the legislature in abandoning the election process. Or may be, it thought that on committees like this, persons with special knowledge or experience may not come forward to seek election and the Government preferred to secure their services by nominating them to these committees in the hope that the committee would function better. Those are matters entirely for the legislature to consider and decide. It is not the province of this Court to say that the method of election alone is to be preferred as against the method of nomination in constituting the market committees. It is a matter of opinion. So long as such nomination does not violate any provision of the Constitution, the Court cannot substitute its own view in matters such as these and strike down the legislation. It may be pointed out that the passage from the judgment of this Court relied upon by the learned counsel to the effect that interests are best protected by permitting the affected owners of those interests to elect their representatives to the market committee were made only to emphasise that the others interest was not similarly represented by the elected members but was represented only by nominated members. It was never meant that the persons to man the market committees must be chosen only by the process of election from among the members of that category. In our view, inasmuch as all the interests envisaged by the Act are represented by persons nominated by the Government, no question of hostile discrimination arises so as to hold the said amended provisions of the enactment to be violative of Art. 14 of the Constitution.”
The Division Bench of the Andhra Pradesh High Court in para 8 of the decision referred above, further observes thus:
“8. It would thus be seen that this Act as a fairly comprehensive Act covering the purchase and sale of notified agricultural produce, livestock and products of livestock and intended to provide facilities for marketing of these products’ and to put a check on unauthorised collections to which (he growers of agricultural produce and owneis oflivestock and products of livestock are exposed in the process of sale of their stock. Having regard to the fact that the growers run into lakhs only an agency like the Government may be able to identify the person suitable and sufficiently qualified for being nominated to the committees to represent the various interests. It is not any subordinate authority, but the Government which is the highest administrative authority, that is vested with the power to nominate persons of each category on the committee. It is well settled that if such a power is vested in the highest authority, it is assumed that it would act fairly having regard to the provisions of the Act and its intend-ment and to advance the purposes of the Act. The provisions made in the amended subsections (1) and (2) of S. 5 of the Act, read with the other provisions of the Act referred to above, provide sufficient guidelines to this highest authority of the State in the matter of nominating the members to the committee; be it from the category of growers or of traders. In Jyoti Pershad v. Union Territory of Delhi, , a similar contention that the Act itself did not provide any guidelines was repelled and it was observed that ”it is not essential for the legislation to comply with the rule as to equal protection, that the rules for the guidance of the designated authority, which is to exercise the power or which is vested with the discretion, should be laid down in express terms in the statutory provision itself.” The Supreme Court then referred with approval to the following observations made in Kedarnath v. State of West Bengal, :–
“The Saurashtra case would seem to lay down the principle thaf if the impugned legislation indicates the policy which it is to seek to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things
to which it is to be applied, but leaves the selective application of the law to be made by the standard indicated in the underlying policy and object disclosed is not a sufficient ground for condemning it as arbitrary and therefore, obnoxious to Art. 14”. The Supreme Court further laid down that “such guidelines may thus be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well-known facts of which the Court might take judicial notice or of which it is appraised by evidence before it in the form of affidavits, being an instance where the guidance was gathered in the manner above indicated (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment.”
We are in entire agreement with the view expressed by the Division Bench of the Andhra Pradesh High Court in N. Sree Rama Murthy v. State, . 1 herefore, it has to be held that the attack on the validity of Section 10 of the Act is unsustainable.
17. The third contention of the learned counsel for the petitioners is with regard to the validity of Sec. 12(a) of the Act. The learned counsel for the petitioners challenged the Constitutional validity of Section 12(a) on the ground that it is discriminatory and violative of Art. 14 of the Constitution. The contention of the learned counsel for the petitioners is that Sec. 12(a) provides that every market committee shall elect one of its members who is nominated under clause (a), clause (c) of sub-section (1) of Section 10 to be its Chairman; that by reason of Sec. 12(a) the licensees or traders have not given any chance to become chairman of market committee by virtue of the specific exclusion provided under Section 12(a) of the Act, and therefore, the said section is discriminatory and it is liable to be struck down. There is no merit in this contention of the learned counsel for the petitioners. Section 12(a) is not a new pro-
vision, but only a replica of the provision of the Tamil Nadu Act 23 of 1959, wherein also the producers alone can become Chairman of the market committee. The relevant provision under the old Act had never been challenged by any trader or licencee. Further, the Act is intended to help and prqtect the interests of the producers who were subjected to exploitation and that is the reason for the majority representation being given to the producers. Section 10 of the Act says that every market committee shall consist of 16 members and it shall be constituted in such a manner that 9 out of the 16 members shall consist of growers, 3 out of 16 shall consist of traders and 4 members shall be officials. If, the legislature in its wisdom having regard to the object sought to be achieved by the Act and also having regard to the large number of growers of agricultural produce, has given a larger representation to them on the market committee than the traders who are infinitesimally few as compared to growers and given a chance to the growers alone to become Chairman of the market committee, that legislation cannot be struck down as discriminatory. Therefore, the challenge of the petitioners on Sec. 12(a) of the Act also fails.
18. Fourthly, the learned Counsel for the petitioners challenge the legality and validity of the levy and collection of market fee as provided in Section 24 of the Act which empowers the market committee to collect a minimum of Re. 1 and the maximum of Rs. 2 per every transaction to the value of Rs. 100/-in lieu of 45 paise authorised under the old Act. The validity of Section 24 of the Act is challenged on the following grounds:
1. Without even doing any services the increase of the fee from 45 paise to Re. 1/- has no nexus to the object of the Act, and that there is no necessity for enhancing the rate. Such increase directly or indirectly benefits the State.
2. The principles of ‘quid-pro-quo’ is an essential pre-requisite for the levy of fee and that such levy must conform to the provisions of Article 286(3) of the Constitution of India.
3. The levy and Collection without render-
ing any services constitutes an infringement into the fundamental rights of the traders to carry on the trade and affect their livelihood guaranteed under Article 21 of the Constitution.
4. There exist no correlation between the amount spent and fee collected.
5. Even though the turnover is the basis for paying the licence fee etc., the said term has not been defined under the said Act. If the person allows other persons paddy and cotton etc., to be processed, there is no provision under the said Act to guide as to how to calculate the turnover. As such, unguided powers have been given to the authorities for calculating the fee. The commodities brought for processing cannot be presumed to have been brought into such notified areas for buying and selling and therefore the provisions making them liable for levy beyond one month will be beyond the scope of the object of the said Act. On the other hand, the learned Advocate General submitted that, that the contention put forward on behalf of the petitioners that no service is rendered by the respondents, in the notified area and therefore, the levy of market fee of Re. 1/- per Rs. 100/- is unjust and unreasonable is not correct. The learned Advocate General also submitted that the fact that as on day many of the market committee are running at loss and do not have any surplus funds will only go to show that the present increase cannot at any stretch of imagination be construed as either arbitrary or unreasonable. According to the learned Advocate General, the present increase is justified keeping in view the increased facilities that are made available to the growers and the traders by each market committee in the State.
19. The backdrop of law on the question of quid-pro-quo may be briefly examined before coming into the factual details of the present case. The apex Court in various decisions has considered the question what is fee and to what extent there must be correlation between fees collected and services rendered. The Supreme Court in Delhi Municipality v. Mohd. Yasin, considered the distinction between tax and fee held as follows:–
“9. What do we learned, from these precedents? We learn that there is no generic difference between a tax and a fee, though broadly a tax is a compulsory exaction as part of a common burden, without promise of any special advantages to classes of taxpayers whereas a fee is a payment for services rendered, benefit provided or privilege conferred. Compulsion is not the hall-mark of the distinction between a tax and a fee. That the money collected does not go into a separate fund but goes into the consolidated fund does not also necessarily make a levy a tax. Though a fee must, have relation to the services rendered, or the advantages conferred, such relation need not be direct, a mere casual relation may be enough. Further, neither the incidence of the fee nor the service rendered need be uniform. That other besides those paying the fees are also benefited does not detract from the character of the fee. In fact the special benefit or advantage to the payers .of the fees may even be secondary as compared with the primary motive of regulation in the public interest. Nor is the Court to assume the role of a cost accountant. It is neither necessary nor expedient to weigh too meticulously the cost of the services rendered etc. against the amount of fees collected so as to evenly balance the two.
A broad correlationship is all that is necessary. Quid pro quo in the strict sense is not the one and only true index of a fee; nor is it necessarily absent in a tax.”
20. The Apex Court in Sreenivasa General Traders v.-State of Andhra Pradesh, , while upholding the Constitutional validity of Sec. 12(1) of the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966, which enhanced the market fee from 50 paise charged in 1972 to Re. 1/- per Rs. 100/- price of notified agricultural produce in 1978, held as follows:–
“30. The traditional view that there must be actual quid pro quo for a fee has undergone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for
payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public interest. If the element of revenue for general purpose of the state predominates, the levy becomes a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly benefited by it. The power of any legislature to levy a fee is conditioned by the fact that it must be ‘by and large’ a quid pro quo for the services rendered. However, correlation between the levy and the services rendered expected is one of general character and not of mathematical exactitude. All that is necessary is that there should be a ‘reasonable relationship’ between the levy of the fee and the services rendered. If authority is needed for the proposition, it is to be found in the several decisions of this Court having a distinction between a ‘tax’ and a ‘fee’. See, Commr., Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Mutt, supra; H. H. Sudhindra Thirtha Swamiar v. Commr. for Hindu Religious and Charitable Endowments, Mysore, ; Hingir-Rampur Coal Co. Ltd. v. State of Orissa, ; H. H. Shri Swamiji of Shri Admar Mutt v. Commr. Hindu Religious and Charitable Endowments Dept, , Southern Pharmaceuticals and Chemicals, Trichur v. State of Kerala and Municipal Corporation of Delhi v. Mohd. Yasin, .
‘Viewed from this perspective, the conclusion is inevitable that the observation made in Kewal Krishnan Puri’s case, that ‘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-fourth must be shown with reasonable certainly as being spent for rendering services in the market to
the payer of fee’ was not intended to lay down a rule of universal application but it was a decision which must be confined to the. . . special facts of that case. Otherwise it may affect the validity of many similar marketing legislations undertaken during the past 50 years relating to the regulation of purchase and sale of agricultural produce, livestock and products of livestock and the establishment of markets in connection therewith and the levying of a market fee in lieu thereof towards the cost of rendering such service by different States on the recommendations made in the Report of the Royal Commission on Agriculture in India, 1928 and of those of many high-powered bodies of experts constituted from time to time by the Centre and different States.”
In para 34 of the judgment referred to above, the Supreme Court further observes thus:–
34. In the present case, there is no allegation anywhere by any of the petitioners nor was any contention advanced that there was any unauthorised expenditure by any of the market committees for purposes not authorised by the Act. There is only a bare assertion on their part that there are surplus funds available with the market committees and therefore, the increase in the rate of market fee from 50 paise per hundred rupees of the price to rupee one was without lawful justification. From the material on record it is quite apparent that the income from the market fee derived by some of the market committees is not sufficient to meet the expenditure incurred by them. That apart, when the petitioners concede that they do not challenge the levy of market fee @ 50 paise per hundred rupees in the year 1972, there can be no basis for challenging the increase in the rate of market fee from 50 paise to rupee one in 1978. Surely the cost of rendering services has correspondingly increased with the fall in the value of rupee. In the economic sense, 50 paise of 1972 is certainly equivalent to at least rupee one of today, if not more.”
21. In City Corporation of Calicut v. Thachambalath Sadasivam, , the Supreme Court held that it is not necessary to establish that
those who pay a fee must receive direct benefit for the services rendered for which the fee is being paid. If one who is liable to pay receives generally benefit from the authority levying a fee, the element of service rendered for collecting the fee is satisfied. It is not necessary for the person liable to pay must receive some special benefit or advantage for payment of the fee.
22. The Supreme Court in Ashwathanarayana Setty v. State of Karnataka, has held that the test of co-relation is not in the context of individual contributors. The test is on the comprehensive level of the value of totality of the service set off against the totality of the receipts. If the character of the fee is thus established, the vagaries in its distribution among the classes do not detract from the concept of a fee as such though a wholly arbitrary distribution of the burden might violate other constitutional limitation.
23. Following is the sum and substance of the principles to be gleaned from the pronouncement of the highest Court of the land, correlation between the levy of fees and services rendered is one of general character and not of mathematical exactitude. All that is necessary is that there should be a reasonable relationship between the levy of fee and services rendered. Again, such relationship need not be direct but a mere casual relation may be enough. Further, neither the incidence of the fee nor the services rendered need be uniform. The fact that others besides those paying the fees are also benefited does not detract from the character of fee.
24. Bearing the aforesaid principles in mind, we shall proceed to consider the contentions of the learned counsel for the petitioners that there is no correlation between the increase in the levy of market fee and the services rendered and therefore, Sec. 24(1) is invalid. In para 20 of the counter-affidavit filed on behalf of the first respondent, the market committees’ activities and services rendered by them both internal and external services, are stated in the following terms:
“(a) Establishment and setting up market
committee, Regulated Markets with the required facilities to transact business.
(b) Providing the required weighing machines in the markets;
(c) Doing Propaganda and Publicity work through the Committee’s personnel in Cooperation with the State Agricultural Marketing Board and with the help of the State and Centra! Government field publicity wings and about the production and marketing of agricultural produces;
(d) Licencing the dealers, weighmen, brokers and other market functionaries;
(e) Taking preventive measure to eradicate the malpractices in the trade premises in notified areas such as underweighments, unauthorised deductions, abnormal commission, brokerage, weighman charges, etc. by framing suitable bylaws under the Act and Rules;
(f) Disseminating of market trend and prices through ratio, news papers, bulletins, etc. for the benefit of both the producers and traders.
(g) Making provisions for settlement of disputes in the transaction;
(h) Providing grading facilities in almost all markets i.e. at Rajapalayam and Theni Regulated Markets etc. Kapas Grading centres equipped wiih the latest machineries to
find out stable length, strength of the fibre, ginning and moisture percentage are functioning with trained personnel. These facilities are available both to agriculturists and traders free of cost.
(i) Prescribing forms for sale and purchase, contract and settlement for transactions in the notified area.
(j) Educating the farmers as well as Traders regarding the post harvest technology, for marketing of quality products.
(k) Framing a scheme for providing load from committee funds and also from nationalised or co-operative banks on pledging of agricultural produce. The small and marginal farmers are more benefited and this scheme helps to avoid distress sales.”
25. Further, in paragraphs 3 to 5 and 7 and 8 of the additional counter-affidavit filed by the first respondent, the details of infrastructure built up by the Market Committees in various regulated markets, the proposal to acquire lands for locating regulated markets and the various other proposals pending with the Government are given in the following terms:
3. Along with this counter-affidavit, I crave leave to annex charts I and V which show the details of infrastructure build up by the Market Committees in various Regulated Markets.
Chart No.
No. /Details of works
Value of works (in lakhs Rs.)
1.
2.
3.
Chart I
Abstract of Annexure filed with main adoption counter i.e. infrastructure build up. Total 645 works.
1157.85
Chart II
Works completed between 1-4-91 to 31-3-93. Total 158 works.
244.16
Chart III
Works taken up during 1993-94. Total 46 works.
190.12
Chart IV
Details of rate of market fee collected in other States of India.
____
Chart V
Details of market arrivals of agricultural produce and receipt of market committee fees and expenditure.
____
4. I submit that the Directorate of Agricultural Marketing, Madras has sent proposal for laying and improving 96 kms. of approach roads in a 8 Market Committees at a cost of about Rs. 2.57 crores to be incurred from Market Committee funds. The matter is under consideration with the Government.
5. I submit that as on date there are 128 rural godowns in all the 14 market Committee areas A Scheme, similar to the one in force in a number of States, has been introduced here in this State also which is known as pledge loan scheme for small and marginal farmers. According to this, the agriculturalists who bring the produce to the market can deposit the produce in the rural godowns and obtain loans up to the value of 10,000/- rupees. Interest is not charged for the first 30 days and thereafter for the next 5 months 12% interest is charged. This will attract the farmers to come to the market and thereby the purchasers, will have a wide choice of selecting the commodities and getting good quality products instead of purchase going round the door steps of agriculturalists in various villages, spending time, money and energy. The purchasers will have the benefit of buying the stock which they want in the market itself.
6. It is proposed to acquire lands for locating Regulated Markets in the Market Committee areas of Erode, Coimbatore, Salem, south Arcot and North Arcot market committee at a cost of Rs. 200/- lakhs for each Market Committee. Refrigeration facilities are proposed at a cost of Rs. 100/ – lakhs each in Oddanchathiram and Hosur areas of Madurai and Dharmapuri Market Committees respectively at a cost of Rs. 200 lakhs. These services can be availed by the traders who may want to export fruits and vegetables and turmeric, chillies, ladies fingers, etc. from Tamil Nadu.
7. Establishment of Regulated Markets in Market Committee owned lands or improvement of existing markets, establishing special markets for valuable commodities like cotton, jaggery, oilseeds is being considered by the Government. In order to achieve this, proposals are pending with the Government
for the following:–
1. Purchase of lands for establishment of Regulated Markets.
2. Purchase of machinery for drying, cleaning and grading of agricultural produce.
3. Purchase of electronic weighing machines.
4. Purchase of electronic spectro meter for assessing instantly the oil content of oilseeds.
5. Provision of electronic display boards for informing the agriculturists and the traders quantity and prices of various commodities received in selected markets so that farmers would expect slightly higher prices and the traders would cover more commodities if the arrivals are diminishing.
6. Installation of STD/TSD facilities for use by traders at selected Regulated Markets.
7. Tie up with Banks for extension of short term loan accommodation to the traders and
opening up of extension counters of Nationalised banks.
8. Programme of publicity through com
mercial grading at villages itself.
9. Provision of water coolers and running water in regulated markets.
For achieving all the above objectives, a sum of Rs. 17 to 18 crores is proposed to be spent. All these outlays are proposed to be made in a way to help the traders and the farmers and to help promote growth of exports of agricultural products from Tamil Nadu also”.
26. It is relevant to point out that the provisions of the Tamil Nadu Act 23 of 1959 originally provided for levy of 45 paise at the maximum per every hundred rupees transaction and this rate had been in existence till 1974. It is only in 1991 after the introduction of the present act and Rules the levy has been. increased to one rupee. Thus from 1962 to 1991 for nearly three decades there has been no increase in the mater of levy and collection of market fee, in spite of the fact that the
market committees were rendering various services to the purchasers and traders. When the petitioners did not challenge the levy of market fee at 45 paise per every hundred rupees transaction from 1962 to 1991, there is absolutely no basis for challenging the increase In the rate of market fee from 45 paise to one rupee in 1991 when the value of 45 paise in 1962 is certainly more than one rupee as on today.
27. It must be pointed out that the levy of market fee under sub-section (1) of Section 24 of the Act is correlated to the purposes mentioned in Section 30 of the Act. All the monies received by the market committee from the traders as market fee had to be paid into a fund called market committee fund under Section 29 of the Act. All the expenditure incurred by the market committee under and for the purposes of the Act have to be defrayed out of the said fund and any surplus remaining after such expenditure has to be invested in the manner prescribed. Under sub-section (2) of Section 29 every market committee has to pay to the State Government out of its fund the cost of any special or additional staff employed by the Government with their consultation. The purposes for which the proceeds of the market committee fund can be expended are set….. out in Section 30 of the Act. The purposes mentioned in Section 30, namely acquisition of site for the market, establishment, maintenance and improvement of the market, construction of buildings, maintenance of standard weights and measures which are extremely beneficial to the growers and the traders. There is no material placed on record by the petitioners to show that the market committee are rendering no service. For all the reasons stated above, and in view of the factual materials available on record, we are of the view, that the contention that the increase in the market fee levied by the market committee under sub-section (1) of Section 24 from 45 paise to one rupee is illegal and invalid on the ground that there is no quid pro quo, i.e. there is no correlation between the increase in the rate of market fee and the services rendered cannot be countenanced and it must fail.
28. The learned counsel for the petitioners next challenged the validity of proviso to Section 24(1) contending that the said proviso is beyond the scope of the Act. The contention of the learned counsel for the petitioners is that what is not sale cannot be made sale by a legal fiction and the commodities brought for processing cannot be presumed to have been brought into the notified area for buying and selling and made them liable for levy of fees on the value of the sale. It is further contended that inasmuch as the proviso to Section 24(1) is beyond the scope of the Act, the said proviso is invalid and liable to be struck down. In support of the above contention Mr. G. Subramaniam, learned Senior Counsel relied on the following decisions in
(1) State of Travancore Cochin v. Shanmugha Vilas Cashewnut Factory, ; (2) Madras State v. G. Dunkefley and Co., and (3) Deputy Commercial Tax Officer v. Enfield India Ltd., .
We are unable to accept the above contention of the learned Senior Counsel for the petitioners. Sub-section (1) of Section 24 gives an authority to the market committee to levy fee on any notified agricultural produce bought or sold in the notified market area, at the rates specified in that sanction. Proviso to Section 24(1) says that when any agricultural produce brought into any notified market area, for the purpose of processing only or for export is not processed or exported therefrom within 30 days from the date of its arrival therein, it shall until the contrary is proved be presumed to have been brought into such notified market area for buying and selling and shall be subject to levy of fee under Section 24(1) on the value of the agricultural produce as if it had been bought and sold therein. The contention of the learned counsel for the petitioner is that as a result of the proviso to Section 24(1) of the Act what are not sales are deemed to be sales and fee is sought to be levied on them and the power of legislature being only to levy fees on actual sale or purchase, and not on deemed sales, the proviso to Section 24(1) is invalid. It must be remembered that the said proviso contains only
a rule of evidence and its effect is not impose a fee on deemed purchase or sale of notified agricultural produce. It is intended to avoid possibility of evasion of payment of market fee and to make Section 24(1) as effective as possible. Further as pointed out in para 30 of the counter affidavit, the proviso to S. 24(1) is intended to serve as a safeguard against hoarding, black marketing and speculative transactions under the guise of processing. It must be also pointed out that the presumption raised in the proviso to Section 24(1) is only a rebuttal presumption and the concerned trader can always prove by the positive evidence that the commodity in question was brought into the notified market only for the purpose of processing or for export. Explanation I to Section 18 of the Tamil Nadu Act 23 of 1959 says that for the purposes of Section 18(1) all agricultural produces taken out or proposed to be taken out of a notified market area shall unless the contrary is proved, be presumed to be bought or sold within such area. The said explanation 1 to Section 18 of Act 23 of 1999 was challenged on identical grounds in Kannappa Mudaliar v. State of Madras, (1969) 1 Mad LJ 212. A Division Bench of this Court, in the above decision, while upholding the validity of explanation I to Section 18 of Act 23 of 1959 held as follows:
“One other contention for the petitioner is that Explanation (2) to Section 18(1) is unconstitutional. We have already noticed that sub-section (1) provides for authority to the market committee to levy a cess by way of sales tax on the purchase or sale of any notified agricultural produce in the notified market. Explanation (1) says that for the purposes of sub-section (1) all notified agricultural produce taken out or proposed to be taken out of a notified market area shall, unless the contrary is proved, be presumed to be bought or sold within such area. The contention is that as a result of the Explanation what are not sales are deemed to be sales and an impost is levied on them and the power of the Legislature being only to impose a tax on actual purchases or sales and not deemed sales which are not sales of goods in the strict sense of the law, the Explanation should be
struck down. The Explanation is only a rule of evidence. We do not think that there is any substance in this contention. Its effect is not to impose or authorise imposition of a fee in the nature of sales tax on deemed purchase or sale of notified agricultural produce. The presumption is intended to make sub-section (1) as effective as possible and to avoid possibility of evasion. The presumption is rebuttable and the person concerned can always show that the notified agricultural produce taken out or proposed to be taken out of a notified market area is not the subject-matter of any purchase or sale within the notified area”.
The ratio of the above decision directly applies to the facts of the present case, so far as the proviso to Section 24(1) of the Act is concerned. We must also point out that Explanation (1) to old Section 18(1) is in pari materia with explanation (1) of Section 24( 1) of the present Act. The petitioners have not challenged Explanation (1) to Section 24( I) of the Act evidently, because the constitutional validity of the similar provision under the old Act has been upheld by a Division Bench of this Court in Kannappa Mudaliar v. State of Madras (1969) 1 Mad LJ 212.
29. The Apex Court in M/s. J. K. Cotton Spinning and Weaving Mills Ltd.v. Union of India, has held that it is well settled that the Legislature is quite competent to enact a deeming provision for the purpose of assuming the existence of a fact which does not really exist.
30. The principles laid down in the decisions (1) State of Travancore-Cochin v. Shanmugha Vilas Cashewnut Factory, Quilon, ; (2) Madras State v. G. Dunkerley and Co., and (3) Deputy Commercial Tax Officer v. Enfield India Ltd., relied on by the learned Senior Counsel for the petitioners will have no relevance for deciding the validity of proviso to Section 24(1), which in our view contains only a rule of evidence and as pointed by a Division Bench of this Court in Kannappa Mudaliar v. State of Madras (1969) 1 Mad LJ 212, its effect is not to impose or authorise imposition of a fee on deemed purchase or sale of notified agricultural produce.
The purpose which proviso (I) to section 24 (1) is intended to serve is stated in para 30 of the counter affidavit filed on behalf of the first respondent as follows:–
“30. In respect of goods brought from outside the district or outside the state for the purpose of only processing, they are not liable to the payment of market fee provided a period of one month is not lapsed from the date of such bringing in. The one month period has been stipulated only to ensure proper regulation in the notified area. Merely because a person brings certain produce for processing, he cannot be allowed to store them in the market for indefinite period causing prejudice to the very implementation of the other provisions of the Act and Rules. Further the time limit of one month is within the scope of the Aci as contemplated under Section 2 of definition 17 and therefore, the prescription of the period of one month is based on rational and realistic principles. This provisions is mainly to safeguard against hoarding, black-marketing, speculation, artificial scarcity etc. under the guise of processing.”
In these circumstances, the attack on the proviso to Section 24 (1) of the Act cannot be sustained and we have no hesitation in holding that proviso to Section 24(1) of the Act is perfectly valid and it is not liable to be struck down.
31. The next provision challenged in these batches of writ petitions is sub-section (5) of Section 24 providing for transport of notified agricultural produce from the notified market area with permits. Sub-section (5) of Section 24 provides that a notified agricultural produce taken or proposed to be taken out of a notified market area exceeding the prescribed quantity shall be accompanied by a permit issued by the secretary of the market committee subject to the by-laws made by the market committee in this regard. The contenlion of the learned counsel for the petitioners is that if the agricultural produce passes through the different notified areas, the insistence that permit should be laken for each and every entry within the notified market area affects the very business of the
petitioners due to practical difficulties and such a condition prescribed in sub-section (5) of Section 24 amounts to interference with the freedom of trade and offends Article 19(1)(g) of the constitution of India. There is no substance in this contention of the learned counsel for the petitioners. The learned counsel for the petitioners were not able to point out the actual difficulties faced by the traders in taking the permit for entering into the market area. As pointed out by the first respondent in its counter-affidavit, subsection (5) of Section 24 is made in order to safeguard the honest and bona fide traders who have already paid market fee on the agricultural produce and in order to check evasion of the market fee. The advantages of the permit system under sub-section 5 of Section 24 are stated in paragraph 32 of the counter affidavit in the following terms:
“As per rules in force an intimation slip is sent to the Check Post through which the produce passes. A duplicate copy of the permit is sent to the head of market in whose jurisdiction the said produce is taken in and triplicate copy to the Secretary of the Market Committee concerned in terms of Rule 33(5). By this, not only the evasion of duty but also the acceleration of corrupt practices is eliminated. As a matter of fact, this procedure facilitates smooth passage of goods through the various check-posts till the goods are received at the destination point. If the system is abolished there will be confusion and irregularities at the check-posts regarding the bona fides of the goods and also irregular trade practices at the receiving end. The object of the Act being regulatory in nature, if the permit system is not implemented and enforced, then it would defeat the very object of the Act, and the restriction by way of permit is saved by Article 19(6) of the Constitution of India and will not be violative of Article 19(1)(g) as contended by the petitioners.”
Further it is also on record that during the pendency of these writ petitions, at the request of Traders, Govt. in G. O. Ms. 117 dated 22-2-1993, revived the Advance Permit system so as to enable them to transport their
produce freely and without any difficulty in getting permit under the Act every time. In view of the above position, we are unable to hold that sub-section (5) of Section 24 imposes any unreasonable restriction upon the traders in carrying on their business offending Article 19(1)(g) of the Constitution. However considering the object of (he Act and the other provisions of the Act, we are of the view that the permit contemplated under sub-section (5) of Section 24 is necessary only where the notified agricultural produce is taken or proposed to be taken out of the notified market area by a trader, and not when it is taken or proposed to be taken by a producer of agricultural produce. As already pointed out the object of the Act is to protect the interests of agricultural producers. According to sub-section (2) of Section 24 the market fee is ordinarily payable by the purchaser of notified agricultural produce. Again sub-section (5) of Section 24 is newly added in the Act, in order to check evasion of payment of market fee. No doubt, sub-section (5) of Section 24 does not expressly say that permit is required only when notified agricultural produce is taken or proposed to be taken out of notified area by a trader and it is not necessary when it is so done by a producer. However, considering the object of the Act and on a harmonious construction of the various provisions of the Act, coupled with the principle of interpretation by reading down the above provisions in the statute, subsection (5) of Section 24 must be interpreted as a provision having limited application in the sense that the permit contemplated under the said provision is necessary only when the notified agricultural produce is taken or proposed to be taken out of a notified market area by a trader and such a permit is not necessary when agricultural produce is taken or proposed to be taken out of a market area by a producer of agricultural produce. Therefore, the attack on sub-section (5) of Section 24 fails, subject to our observation referred above that the permit contemplated under Section 24(5) is not necessary where the agricultural produce is taken or proposed to be taken out of a market area by the producer of notified agricultural produce.
32. The learned counsel for the petitioners, next challenged the validity of Section 25 of the Act which provides for the establishment of check-post or barrier. Section 25(1) enables the Government to issue notification directing the setting up of check-post or the erection of barrier or both by the market committee at such place or places as may be specified in the’ notification, if the Government consider it necessary to do so in order to prevent or check the evasion of payment of fee or other amount due to the market committee under the provisions of the Act. The contention of the learned counsel for the petitioners is that Section 25 which enables the Government to establish check-post or barrier, imposes an unreasonable restriction upon the freedom of the traders in carrying on their business and therefore, it is violative of Article 19(1)(g) of the constitution, This contention of the learned counsel for the petitioner, cannot be countenanced, because the check-post have been established only for the purpose of checking the Evasion of payment of market fee or other amounts due to the market committee under the provisions of the Act, A careful examination of sub-Sections (1) to (4) of Section 25 clearly shows that the said provisions are regulatory in nature, intended to prevent the evasion of payment of market fee payable under Section 24(1) of the Act. We have no hesitation in holding that the said provisions do not impose any unreasonable restriction on the freedom of the traders in carrying on their trade. Therefore, we reject the contention of the learned counsel for the petitioners that Section 25 of the Act is invalid on the ground that it is violative of Article 19(1)(g) of the Constitution.
33. The learned counsel for the petitioners, then challenged the validity of sub-rule 2 of Rule 41 of the rules on the ground that the Act does not empower the Government to frame the said rule making it obligatory on the part of the traders to have the services of a licensed weighrnan. Rule 41 deals with weighing of agricultural produce intended for purchase or sale in the notified area. Sub-rule (1) of Rule 41 says that the market committee shall install weighing
machines in the market or in the notified area with suitable arrangements for their use in proper working order. According to the said sub-rule (1) any producer may have his agricultural produce weighed in the market and he shall be given free certificate of weighment duly signed by the Head of the Market. Sub-rule.(2) of Rule 41 says that all weighments of agricultural produce intended for purchase or sale in the notified area shall be made by the person who is licensed to act as a weighman, and that he should wear the badge containing the serial number allotted to him by the market committee. Section 52 of the Act deals with the power of the Government to make rules and the said section empowers the Government to make either generally or specially for any notified area or areas, rules for carrying out all or any of the purposes of the Act. As already pointed out, the object of the Act is to provide for better regulation of buying and selling of agricultural produce and the establishment; and proper administration of markets for agricultural produce in this State and the said object is sought to be achieved by regulating the trade by providing facilities like storage, proper weighments, transaction shed, grading of produce etc. for better marketing and benefit of the farmers and traders. Sub-rule (2) of Rule 41 only aims at proper weighment of agricultural produce transacted in the notified market area and only with a view to ensure proper weighment the Said rule prescribes weighment of agricultural produce by licensed weighmen. As the said rule is intended to carry out the purposes of the Act, and as it is made by the Government in exercise of power under Sec. 52, the petitioners cannot challenge the said rule on the ground that the Government has no power to make such a rule. Therefore, the challenge of sub-rule (2) of Rule 42 also cannot be sustained. Cotton Waste 34. (sic) Writ Petitions Nos. 3275, 4198, 5193, 5194, 6756 to 6758, 6793 and 12142 of 1991;
In these writ petitions, the petitioners challenge the levy of market fee under Section 24(1) of the Act on cotton waste bought or sold in the notified market area and they pray for the issue of a writ of declaration declaring that item 1V(1) in the schedule to the Act
which enables the respondents to enforce the provisions of the Act in respect of cotton waste as ultra vires, unconstitutional and invalid. Mr. K. Govindarajan learned counsel for the petitioner in W.P. 3275/91 and Mr. Vijayanarayan, learned counsel for the petitioners in Writ Petition No. 4198/91 etc. submitted that under Tamil Nadu Act 27/89, the State has authorised all market committees to levy a fee on notified agricultural produce bought or sold in the notified market area at the rate of not less than Re. 1 and not exceeding Rs. 2/- for every Rs. 100/- of the aggregate amount for which the notified agricultural produce are bought or sold, that cotton waste which is an industrial by-product arising out of the processing of cotton, is not an agricultural produce and hence the respondents, are not competent to levy a fee on the sale of cotton waste under the provisions of the Act. It is not at all possible to accept the contention of the learned counsel for the petitioners that cotton waste is not agricultural produce within the meaning of Section 2(1) of the Act. The term agricultural produce according to the definition contained in Section 2(1) of the Act means any produce of agricultural whether processed or unprocessed, specified in the Schedule. On its plain meaning of Section 2(1) of the Act, any produce as specified in the Schedule shall fall within the term “agricultural produce”. Admittedly cotton in all forms, namely, kapas, lint, waste is included in the Schedule to the Act. Cotton Waste, is consequently an agricultural produce within the meaning of the Act so that the various provisions of the Act with regard to agricultural produce are applicable to cotton waste also. In M/s. Madanlal Manoharlal v. State of Haryana, , the Supreme Court while interpreting Sec. 2(a) of the Punjab Agricultural Produce Markets Act (23 of 1961) held as follows:–
“The term “agricultural produce” according to its definition contained under S. 2(a) of the Act means all produce, whether processed or not of agricultural, horticulture, animal husbandry or forest as specified in the Schedule to the Act. On its plain meaning, therefore, only such produce as is specified in the
Schedule to the Act shall fall within the term “agricultural produce.”
34-35. As rightly contended by the learned Advocate General, cotton in all forms is included as item IV(1) in the Schedule to the Act in order to avoid evasion of payment of market fees on cotton. In this context, it is also relevant to note the stand taken by the first respondent, in the counter-affidavit filed in this batch of writ petitions stating that the intention behind the inclusion of cotton waste which is one of the forms of cotton is that the trader should be subjected to the levy of fee either at the stage of kapas, or at the stage cotton waste and on production of sufficient evidence of payment of fee at kapas stage, the question of payment of fee again at the stage of cotton waste does not arise.
36. The second contention of Mr. Vijaya-naran, the learned counsel for the petitioners is that under Section 24(1) of the Act, the market committee is authorised to levy fee on any notilied agricultural produce bought or sold in the notified area, that according to Section 2(12) of the Act, notified agricultural produce is any agricultural produce specified in the notification under Sec. 3 that under the new Act (Act 27 of 1989) no notification has been issued under Section 3 of the Act in respect of cotton or cotton waste, that the notification issued under the old Act includes only cotton and does not include cotton waste, that cotton and cotton waste are two distinct commercial product and that in as much as the notification issued under Sec. 3 of the old Act does not include cotton waste, the said item is not a notified agricultural produce and consequently the market fee under Sec. 24(1) of the Act cannot be levied on cotton waste. In support of his contention, that cotton and cotton waste are two distinct commercial products, the learned counsel relied on a decision in Sapt Textile Products (India) Ltd. v. State of Madras, (1965) 16 STC 267. We are unable to agree with the above contention of ihe learned counsel for the petitioners. It is not in dispute that notifications were issued under Sec. 3 of the old Act (1959 Act) directing the market committees to establish markets at various
places for the purchase and sale of groundnut, gingelly, cotton, paddy etc. Section 67 of the Act deals with the repeal and savings. Subsection (3) of Section 67, says that anything done or any action taken, including any appointment or delegation made notification, order instruction or direction issued, or any rule regulation or form framed, certificate granted or registration effected, under Tamil Nadu Act 23 of 1959 shall be deemed to have done or taken under the present Act and shall continue to have effect unless and until superseded by anythings done or any action taken under the present Act. Therefore, by virtue of sub-section (3) of Section 67 of the Act, the notifications issued under Sec. 3 of the old Aci, directing the establishment or markets in various places for the purchase of cotton etc. would continue to be in force, notwithstanding the repeal of the old Act 23 of 1959. Therefore, the issue of a separate notification under Sec. 3 of the present Act is not necessary. The question whether the item “cotton” mentioned in the notification under Section 3 of the old Act would comprehend cotton waste also need not detain us long in view of the decision of the Supreme Court in K.U.M. Samiti Kanpur v. M/s. Ganga Dal Mill and Co., , where in, the Supreme Court has taken a view that cotton waste is comprehended in the item “cotton”. The Apex Court in para 18 of judgment referred above after referring to the decision of the Allahabad High Court in Modi Spinning and Weaving Mills Co. Ltd. Modinagar v. State of Uttar Pradesh 1980 All U 1137 and while disagreeing with the view expressed by the Allahabad High Court, that the expression ‘cotton’ would not take in cotton waste, held as follows:–
“After referring to these definitions, the Court held that cotton waste is not included in ‘cotton ginned or unginned’. In our opinion, the Court has strained the language to reach an unsustainable conclusion, holding that cotton waste is not the processed form of cotton but it is a by-product quite different form of cotton cannot be used as ordinary cotton. As its name indicates, cotton waste appears to be droppings, stripping and other waste product while ginning cotton. It cannot be said to be a by-product of cotton but it is cotton nonetheless minus the removed seed. In other words it is residue of ginned cotton. We therefore, find it difficult to agree with the view of the High Court that cotton waste is not comprehended in the item ‘cotton ginned and unginned.”
The decision in Sapt Textile Products (India) Ltd. v. State of Madras, (1965) 16 STC 267 is not helpful to the petitioners because, in that case a Division Bench of this Court considered the question whether cotton and cotton waste are distinct commercial products for the purpose of levy of sales-tax under the Madras General Sales Act, 1939. Again, we are not inclined to follow the above decision in Sapt Textile Products (India) Ltd. v. State of Madras, (1965) 16 STC 267 as we are bound to follow the direct decision of the Supreme Court in K.U.M. Samiti, Kanpur v. M/s. Ganga Dal Mill and Co., , wherein the Apex Court considered the question whether the item “cotton” ginned or unginned would comprehend “cotton waste” for the purpose of levy of market fee on the transaction of sale of cotton waste and answered the question in the affirmative. In these circumstances, we are of the view that the item “cotton” mentioned in the notification issued under Section 3 of the old Act would take in cotton waste also and that what was implicit in the notification issued under the old Act has been made explicit in Item IV(1) of the Schedule to the Act by mentioning “cotton” (kapas, lint, waste). Therefore, the contention of Mr. Vijanarayan, learned counsel for the petitioners that cotton waste has not been declared to be an agricultural produce in the notification issued under the old Act and consequently Section 67(3) of the Act cannot be invoked and fresh notification under the present Act is necessary cannot be countenanced. Once when cotton is notified, under Sec. 3 old Act, it would automatically include kapas, lint and cotton waste. In view of the above discussion, it has to be held that cotton waste is an notified agricultural produce within the meaning of Section 2(12) of the Act and that item IV(1) of Schedule to the Act is perfectly valid and it is not liable to be declared as ultra vires, unconstitutional and invalid. Consequently, the writ petitions challenging the item IV(1) of the Schedule to the Act are liable to be dismissed.
JAGGERY
37. Writ Petitions Nos. 3734, 6868, 4707, 7138 of 1991 :
In these writ petitions, the petitioners, apart from challenging the various provisions of the Act and Rules, also challenge Entry XV(1) in the Schedule to the Act, notifying sugarcane jaggery in all forms (Jaggery powder, brown sugar etc.) as an agricultural produce, as ultra vires and invalid…..
The contention of the learned counsel for the petitioners is that sugarcane Jaggery in all forms cannot be termed as agricultural produce and therefore Item XV in the Schedule to the Act notifying Sugarcane Jaggery as an agricultural produce is ultra vires, arbitrary unconstitutional and invalid and therefore, the said entry XV is liable to be struck down. There is no merit in this contention of the learned counsel for the petitioners. As already pointed out the term agricultural produce according to the definition contained in Sec. 2(1) of the Act means any produce of agriculture, whether processed or unprocessed specified in the Schedule. Therefore, any produce specified in the Schedule shall fall within the term agricultural produce. Admittedly, Sugarcane Jaggery in all forms (Jaggery Powder, brown sugar etc.) is included as Entry XV(1) in the Schedule to the Act. From this, it follows that Sugarcane Jaggery in all forms is an agricultural produce within the meaning of Sec. 2(1) of the Act. So that the various provision of the act with regard to agricultural produce are applicable to Sugarcane Jaggery in all forms also.
38. In Kishan Lal v. State of Rajasthan, the Supreme Court had occasion to consider the validity of inclusion of manufactured articles such as Khandsari Shakkar, Gur and Sugar as agricultural produce in the Schedule to Rajasthan Agricultural produce Marketing Act, 1961. In that decision, the Apex Court repelling the contention that inclusion of sugar as an item 2 in the Schedule to the Rajasthan Agricultural produce Marketing Act, 1961 is arbitrary, held that sugar is an agricultural produce
within the meaning of Sec. 2(1)(i) of the Rajasthan Agricultural produce Marketing Act. The Apex Court in the above decision held as follows:–
“5. Inclusion of Sugar in the Schedule was urged to be arbitrary as it was not produced out of soil the basic ingredient of agricultural produce. Fallacy of the submission is apparent as it was in complete disregard of definition of the word “agricultural” produce in the Act which includes all produce whether agricultural, horticultural, animal husbandry or otherwise as specified int he Schedule. The legislative power to add or include and define a word even artificially, apart, the definition which is not exhaustive but inclusive neither excludes any item produced in mill or factories not in confines its width to produce from soil. If that be construction then all items of animal husbandry shall stand excluded. It further overlooks expanse of the expression “nor otherwise as specified in the Schedule”. Nor switch over from indigenous method of producing anything to scientific or mechanical method changes its character. Khandasan Sugar, which is produced by open pan process and is not different from sugar produced by vacuum pan process except in composition, filterability and conductivity as held in Rathi Khandasari Udyog, (supra) was held to be agricultural produce in some decisions. No distinction was made on method of production, namely, by modern plant and machinery. To say, therefore, that sugar being produced in mill or factories could not be deemed to be agricultural produce is both against the statutory language and juricial interpretation of similar provisions of the Act in statutes of other states. Rice or dal produced in mills have been held to be agricultural produce in Ramchandrav. U. P. State, and State of U. P, v. Ganga Das Mill, 1985 SCR 87-88 (or Krishiutpadan Mandi Samiti Kanpur v. Ganga Dal Mill and Co., Ed). Even in Halsbury Laws of England, Vol. I the word agricultural produce for purposes of agricultural marketing schemes is understood as, ‘including any product of agriculture or horticulture and any article of food or drink wholly or partly manufactured or derived from any such product and fleeces (including all kinds of wook) and the skins of animals’. In the same volume products covered by the provisions of EEC Treaty as to agriculture (classified according to the Brussls Nomenclature of 1965) are mentioned in paragraph 1845. Sugar is one of them.”
In view of the above decision of the highest Court of the land, we have no hesitation in holding that sugarcane jaggery in all forms (Jaggery Powder, brown sugar, etc.) in Entry XV(I) of Schedule to the Act is an agricultural produce and that the said Entry XV(1) is perfectly valid and it is not liable to be struct down.
RUBBER
39. Writ petitions Nos. 5411, 5916 and 13020 of 1991. The petitioners in these writ petitions would contend that the state is not competent to legislate on rubber, inasmuch as the subject rubber falls, within the exclusive purview of the parliament. They further contended that the Parliament have enacted Rubber Act, 1947 (Central Act XXIV of 1947) and have also constituted the Rubber Board, All the dealings and transactions on rubber is controlled by the Rubber Act, 1947 which also authorises the collection of 50 paise per kg. as cess. It has also been contended that this cess amount is utilised for lending assistance to small growers. Therefore, according to the petitioners, the State cannot collect another amount as market fee and the notification including the rubber as notified agricultural produce is null and void. Identical contentions were raised by the petitioners in W.P. 5411 and 5916 of 1991 in the earlier round of litigation in writ appeal No. 3 of 1981 (Kanyakumari District Rubber Dealers Association, Kulasekaram. Rep. by its Secretary v. State of Tamil Nadu). By a judgment dated 25-6-1987 in W, A. 3 of 1981, a Division Bench of this Court while repelling the contentions urged on behalf of the appellant similar to those raised in these writ petitions, held as follows:–
“5. It is then contended by the learned
counsel that the Parliament has enacted the Rubber Act, 24 of 1947, as amended by Central Act, 54 of 1954, and that trade and commerce in production, supply and distribution of produces of rubber industry shall be deemed to.have been declared by Parliament by law to be expedient in the public interest within the meaning of Entry 33 of List 3 of Schedule VII of the Constitution of India and therefore, the Legislature has no jurisdiction to make enactment without the concurrence of the president. Learned counsel further contended that the Tamil Nadu Act. as applicable to Rubber and its processed forms offends Art. 19(1)(g) and Art. 301 of the Constitution. We are unable to agree with these contentions of. the learned counsel also. So far as the scope relating to Art. 19(1)(g) and Art. 301 is concerned, it is directly covered by an earlier decision of this Court written in Kannappa v. State of Madras, ILR (1968) 2 Mad 449. In that case also constitutional validity of the Madras Agricultural produce Markets Act was questioned on the ground that the previous sanction of the President was not obtained as required under Art. 304(b) and that therefore, the Act is violative of Arts. 19(1)(g) and 301 of the Constitution, This Court held that the Tamil Nadu Act XXIII of 1959 is regulatory in substance and character and does not violate Arts. 19(1)(g) and 301 of the Constitution. It was also held that there was no need to refer to Art. 304(b) to save the Act from the constitutional prohibition.
6. Learned counsel is also not well founded in his contention that both the Rubber Act as also the Tamil Nadu Act 23 of 1959, cover the same field. The Rubber Act is an Act to provide for the development under the Control of the Union of the rubber industry. It provides for the constitution of a Rubber Board entrusting certain functions to it. The Rubber Act, of course, provides for fixation of price of rubber at which it could be sold. But, as held in the earlier Bench Judgment, the scope of the Tamil Nadu Act is entirely different. It creates a market and declares that any agricultural produce brought and sold in this market wilt have to be regulated in accordance with the provisions contained therein. One of the provisions related to the taking of the licence by the dealer and the other provision related to the payment of flies to the market committee when there is a purchase or sale. Having regard to the purpose of the enactments and the nature of the enactments, we are unable to agree that there is any conflict between the provisions of the two enactments.”
As these petitions 5411, 5916 and 13020 of 1991 are covered by the judgment in W. A. 3 of 1981 dated 25-6-1987 referred to above, they are liable to be dismissed.
CASHEW KERNELS
40. Mr. Muthuramalingam, learned counsel for the petitioner in W. P. 4372 of 1991 submitted that cashew kernels are not covered by the notification which declared cashewnuts alone as agricultural produce and that inasmuch as cashewnuts and cashew kernels are commercially different commodities the respondents are not entitled to collect market fee on cashew kernels, on the basis of the notification issued under Sec. 3 of the old Act declaring cashewnuts alone as agricultural produce. In support of his contention that cashewnuts and cashew kernels are commercially different commodities, the learned counsel for the petitioner, relied on the following three decisions (I) Dinod Cashew Corporation v. Dy. Commercial Tax Officer, 61 STC 1 : (1986 Tax LR 2236); (2) Peirceleslie India Ltd. v. State of Karnataka, (1985) 59 STC 302 : (1986 Tax LR 2305) and (3) State of Kerala v. Sankaran Nair, (1986) 63 STC 225. We are unable to accept the above contention of the learned counsel for the petitioner. The market fee is leviable under Sec. 24(1) of the Act on agricultural produce bought or sold in the notified market area. According to Sec. 2(1) agricultural produce means any produce of agriculture whether processed or unprocessed, specified in the Schedule to the Act. Entry X(8) of the Schedule to the Act covers cashewnuts in all forms. Inasmuch as cashew kernels is derived from cashewnuts, there is no difficulty in holding that the expression “cashewnuts in all forms” found in Entry X(8) of the Schedule to the Act would take in cashew kernels also.
Further, the notification issued under S. 3 of the old Act in respect of cashewnuts would equally apply to cashew kernels also, because, it is welt known in common parlance as well as in the commercial parlance that cashew is available both in shell and as kernel. Again, as pointed out in the counter affidavit filed on behalf of the first respondent, once cashew-nuts are subjected to market levy, the question of cashew kernels derived from such cashewnuts being subjected to market levy does not arise, if the trader is able to prove, by producing sufficient evidence that he has already paid market tee on cashewnuts. The decision in (1) Dinon Cashew Corporation v. Dv. Commercial Tax Officer, 61 STC 1 : (1986 Tax LR 2236) (Mad); (2) Peirceleslie India Ltd. v. State of Karnataka, 59 STC 302 : (1986 Tax LR 2305); and (3) State of Kerala v. Sankaran Nair, (1986) 63 STC 225, relied on by the learned counsel for the petitioner, rendered in the context of levy of sales tax, holding that cashewnuts and cashew kernels are commercially different commodities, have no relevance for deciding the question involved in this case, namely, whether cashew kernel is liable for levy of market fee under S. 24(1) of the Act. in view of the stand taken by the first respondent. in the counter affidavit that once, cashewnuts are subjected to market levy, the question of cashew kernels derived from such cashewnuts being subjected to market levy does not arise if the trader is able to prove that he has paid the market fee on cashewnuts. Therefore, we have no hesitation in rejecting the contention of the learned counsel for the petitioner that cashew kernel is not an notified agricultural produce and not liable to for levy of market fee under S. 24(1) of the Act.
41. For all the reasons stated above, we see no merit in this hatch of writ petit ions and therefore, all the writ petitions are liable to be dismissed. Accordingly, all the writ petitions are dismissed subject to our observation with regard to applicability of S. 24(5) of the Act only to traders and not to producers of agricultural commodities. However, there will be no order as to costs.
42. Order accordingly.