PETITIONER: MOHAMMAD HUSSAIN GULAM MOHAMMADAND ANOTHER Vs. RESPONDENT: THE STATE OF BOMBAY AND ANOTHER DATE OF JUDGMENT: 02/05/1961 BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. SARKAR, A.K. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA CITATION: 1962 AIR 97 1962 SCR (2) 659 CITATOR INFO : R 1962 SC1517 (1) R 1966 SC 385 (2,3,8,11) RF 1971 SC1017 (8) D 1974 SC1489 (6) R 1980 SC 350 (10) E 1980 SC1008 (22) RF 1983 SC1246 (15) R 1990 SC 560 (13) ACT: Agricultural Produce Markets-Enactment for regulation of purchase and sale of such produce Constitutional validity- Validity of rules framed under the Act-Bombay Agricultural Produce Markets Act, 1939 (Bom. 22 of 1939), ss. 4, 4A, 5, 5A, 5AA, 11, 29, rr. 53, 64, 65, 66, 67-Constitution of India, Arts. 19(1)(g), 19(6). HEADNOTE: The Bombay Agricultural Produce Markets Act, 1939, was enacted by the Bombay Legislature to provide for the better regulation of buying and selling of agricultural produce in the State of Bombay and the establishment of markets for such produce. Under the provisions of the Act power was given to the commissioner by notification to declare certain areas as market areas as a result of which such areas could not thereafter be used for the purchase or sale of any agricultural produce specified in the notification, except under a licence. Markets were to be established and market committees constituted with power to grant licences for operation in the market. By s. 11 a market committee may, subject to the provisions of the Rules and subject to such maxima as may be prescribed, levy fees on the agricultural produce bought and sold by licencees in the market area. Section 29 enabled the State Government by notification in tile official Gazette to add to, amend or cancel any of the items of agricultural produce specified in the Schedule to the Act. The petitioners challenged the validity of the Act and the rules framed thereunder, and in particular ss. 4, 4A, 5, 5A, and 5AA which provided for the declaration of a market area and the establishment of a market, as unconstitutional on the ground that they placed unreasonable restrictions on their right to carry oil trade in agricultural produce and thus infringed their fundamental right guaranteed under Art. 19(1)(g) of the Constitution of India. They also attacked the validity of ss. 11 and 29 and rr. 53, 64, 65, 66 and 67. Held: (1) that ss. 4, 4A, 5, 5A and 5AA of the Act are constitutional and intra vires and do not impose unreasonable restrictions on the right to carry on trade in the agricultural produce regulated under the Act. M. C. V. S. Arunachala Nadar v. The State of Madras, [1959] Supp. 1 S.C.R. 92, followed. 660 (2) that the fee provided by s. 11 though calculated on the amount of produce bought and sold, is not in the nature of sales tax as it is only a levy charged for services rendered by the market committee in connection with the enforcement of the various provisions of the Act. Accordingly, s. 11 is valid. (3) that r. 53 in so far as it enables the market committee to fix any rates as it liked of the fees to be collected on agricultural produce bought and sold in the market area, is not valid, because under s. 11 unless the State Government fixes the maxima by rule it is not open to the committee to fix any fees at all. (4) that under S. 29, the power given to the State Govern- ment to add to, or amend, or cancel any of the items of the agricultural produce specified in the Schedule in accordance with the local conditions prevailing in different parts of the State is only in pursuance of the legislative policy which is apparent on the face of the Act, and, therefore, the section is intra vires. The Edwards Mills Co. Ltd., Beaway v. State of Ajmer and Another, [1955] 1 S.C.R. 735, applied. (5) that r. 64 is merely a method of enforcing the regu- latory provisions with respect to market yards and sub- market yards and is valid. (6) that rr. 65, 66 and 67, in so far as they authorise the market committee to grant a licence for doing business in any market area, go beyond the power conferred on the market committee by S. 5A, and are ultra vires. JUDGMENT:
ORIGINAL JURISDICTION: Petition No. 129 of 1959.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
R. Ganapathy Iyer, J. B. Dadachanji, S. N. Andley,
Rameshwar Nath and P. L. Vohra, for the petitioners.
N. S. Bindra and R. H. Dhebar, for the respondents.
S. T. Desai, Trikamlal Patel and I. N. Shroff, for the
Interveners.
1961. May 2. The Judgment of the Court was delivered by
WANCHOO, J.-This petition raises a question as to the
constitutionality of the Bombay Agricultural Produce Markets
Act, No. XXII of 1939 (hereinafter referred to as the Act)
and the Rules framed thereunder. The petitioners are
businessmen of Ahmedabad. Their case is that by a
notification under the
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Act the whole area within a radius of 12 miles of Ahmedabad
city was declared to be a market area under s. 4 of the Act
for the purposes of the Act in respect of certain
agricultural produce from June 1, 1948. At the same time a
market yard and a market proper were established for dealing
in the commodities mentioned above; and simultaneously a
market committee was established under s. 5 of the Act for
the Ahmedabad market area by the name of “The Agricultural
Produce Market Committee, Ahmedabad.” By later notifications
certain other agricultural produce was declared to be
regulated under the provisions of the Act in this market
area. ID 1959 a locality known as the “Kalupur market” in
the Telia Mill compound near the railway station Ahmedabad
was declared to be a sub-market yard for the purposes of the
Act. The petitioners apparently were carrying on business
in the Kalupur market and therefore after the declaration of
that area as sub-market yard, the market committee required
the petitioners to take out licences under the Act without
which they were not to be allowed to carry on business. The
petitioners contend that the various provisions of the Act
and the Rules and bye-laws framed thereunder place un-
reasonable restrictions on their right to carry on trade in
agricultural produce and thus infringe their fundamental
right guaranteed under Art. 19 (1)(g) of the Constitution.
In particular, the heavy fees payable to the market
committee for taking out licences in order to trade in
various markets impose a heavy burden on trade in the
regulated commodities resulting in an unreasonable
restriction on the right of the petitioners to carry on
their trade. Further the declaration of the market area and
the establishment of market yard and sub-market yards has
resulted in compelling producers of agricultural commodities
to carry their produce for long distances, thus imposing an
unreasonable restriction on their right to carry on trade.
The petitioners thus assail the main provisions of the Act
and some of the provisions of the Rules and the bye-laws
framed by the market committee,
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which we shall specify at their proper place later. The
petitioners also contend that the State of Bombay has never
required the market committee to establish a market as
required by s. 5AA of the Act and no market has in law been
established by the market committee and therefore the market
committee has no power to issue licences and to exercise
other powers conferred under the Act on market committees.
They therefore pray that the Act and the Rules and the bye-
laws framed thereunder may be declared unconstitutional,
ultra vires and void. In the alternative a direction should
be issued to the respondents, in particular the market
committee, not to enforce the provisions of the Act, the
Rules and the bye-laws against the petitioners so long as a
market has not been established as required under the law.
The petition has been opposed on behalf of the respondents,
and their contention is that the Act, the Rules and the bye-
laws provide reasonable restrictions on the fundamental
right to carry on trade under Art. 19(1)(g). It is further
contended that a market has been established as required by
law, and therefore the market committee in particular has
the right to enforce all the provisions of the Act, the
Rules and the bye-laws and to insist upon the petitioners
taking out licences as provided therein.
Before we consider the attack made on the constitutionality
of the Act, the Rules arid the bye-laws framed thereunder,
we should like to refer to the main provisions of the Act
and the scheme of regulation provided in it. The Act deals
with the regulation of purchase and sale of agricultural
produce in the State of Bombay and establishment of markets
for such produce. Section 2 of the Act is the definition
section. Section 3 provides for the constitution of markets
and market committees and gives power to the Commissioner by
notification to declare his intention of regulating the
purchase and sale of such agricultural produce and in such
area as may be specified in the notification; and objections
and suggestions are invited within a month of the
publication of the notification. Thereafter the
Commissioner after considering the objections and
suggestions, if any, and
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after holding such inquiry as may be necessary, declares the
area under s. 4(1) to be a market area for the, purposes of
the Act. The consequence of the establishment of the market
area is given in s. 4(2) which lays down that after the
market area is declared, no place in the said area shall,
subject to the provisions of s. 5A, be used for the,
purchase or sale of any agricultural produce specified in
the notification. After the declaration of the market area,
the State Government is given the power under s. 5 to
establish a market committee for every market area.
Thereafter under s. 5AA it becomes the duty of the market
committee to enforce the provisions of the Act, and also to
establish a market therein, on being required to do so by
the State Government, providing for such facilities as the
State Government may from time to time direct, in connection
with the purchase and sale of the agricultural produce with
which the market committee is concerned. The Act however
envisages that there may be a time lag between the
declaration of a market area and the establishment of a
market; therefore the proviso to s. 4(2) lays down that
pending the establishment of a market in a market area the
Commissioner may grant a licence to any person to use any
place in the said area for the purpose of purchase and sale
of any such agricultural produce, and it is the duty of the
market committee under s. 5AA also to enforce the conditions
of a licence granted under s. 4(2). Further under s. 5A,
where a market has been established, the market committee is
given the power to issue licences in accordance with the
Rules to traders, commission agents, brokers, weighmen,
measurers, surveyors, ware housemen and other persons to
operate in the market; provided that no such licence shall
be necessary in the case of a person to whom a licence has
been granted under the proviso to s. 4(2). The effect
therefore of these provisions of the Act read with the
definition section is this. A market area is first declared
under s. 4(1). In the market area, a market may be
established. The Rules make it clear that the market may
consist of what are called market proper and principal
market yard and
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sub-market yards, if any. Under s. 4A for each market area
there shall be one principal market yard and one or more
sub-market yards as may be necessary and the Commissioner is
given the power by notification to declare any enclosure,
building or locality in any market area to be the principal
market yard for that area and other enclosures, buildings or
localities to be one or more sub-market yards for the area.
As we have already said, the Act envisages that there may be
a time lag between the declaration of a market area and the
establishment of a market, and that is why there is a
provision for licences under the proviso to s. 4(2) pending
the establishment of a market in a market area. The
establishment of a market, however, takes place only when
the State Government requires the market committee under s.
5AA to establish a market in the market area. There does
not seem to be any provision in the Act or the Rules as to
how the market committee shall proceed, on being required to
do so by the State Government, to establish a market; but
reading the provisions of s. 4A and s. 5AA together it
appears that after the State Government has required the
market committee to establish a market, it has to approach
the Commissioner with its recommendation to declare
localities as the principal market yard and the sub-market
yards, if any, and the Commissioner makes a notification in
regard thereto, and thereafter the market is established.
Till however such action is taken by the committee and the
Commissioner notifies a principal market yard and sub-market
yards, if any, no market can in law be established; and
other provisions of the Act which come into force after the
establishment of a market cannot be enforced and the trade
is till then regulated in the manner provided in the proviso
to s. 4(2).
After the market is established, the market committee gets
the power to issue licences under s. 5A. Other provisions
of the Act provide for the constitution of market committees
and the establishment of a market committee fund and the
ancillary powers of market committees with which however we
are not directly concerned in the present case. It is
665
enough to refer to s. 11 only in this connection, which
provides that the market committee may subject to( the
provisions of Rules and subject to such maxima as may be
prescribed levy fees on the agricultural produce bought and
sold by licencees in the market area. This section, it will
be noticed, applies to the purchase and sale of agricultural
produce in the market area and the power under it can be
exercised by the committee as soon as the market area is
declared, though no market might have been established under
s. 5AA. Till such time as the market is established the
fees prescribed under s. 11 would be levied on the licencees
under the proviso to s. 4(2). Then come sections creating
offences for contravention of the various provisions of the
Act, which it is unnecessary to consider. Section 26 gives
power to the State Government to frame rules for the
purposes of carrying out the provisions of the Act. Section
27 gives power to the market committee to frame bylaws with
the previous sanction of the Director or any other officer
specially empowered in this behalf by the State Government
and subject to any rules framed by the State Government
under s. 26. Finally, s. 29 provides that the State
Government may by notification in the official gazette add
to, amend or cancel any of the items of agricultural produce
specified in the Schedule to the Act.
These are the main provisions of the Act and the scheme
which results in the declaration of a market area and the
establishment of a market therein. The first contention on
behalf of the petitioners is that ss. 4, 4A, 5, 5A and 5AA
which provide for the declaration of a market area and the
establishment of a market are unconstitutional as they are
unreasonable restrictions on the right to carry on trade in
agricultural produce. We are of opinion that there is no
force in this contention. This Court had occasion to
consider a similar Act, namely, the Madras Commercial Crops
Markets Act, No. XX of 1933, in M. C. V. S. Arunachala Nadar
etc. v. The State of Madras and others (1) and the
regulation with respect to marketing
(1) [1959] Supp 1 S.C.R. 92.
666
of commercial crops provided in that Act was upheld. The
main provisions of the Madras Act with respect to the
declaration of a market area (called notified area in that
Act) and the establishment of markets are practically the
same as under the Act. It is therefore idle for the
petitioners to contend that the main provisions contained in
ss. 4, 4A, 5, 5A and 5AA of the Act are unconstitutional.
Learned counsel for the petitioners, however, urges that
there is a difference between the Madras Act and; the Act
inasmuch as the Madras Act dealt with commercial crops
whereas the Act makes it possible to bring every crop under
its sweep. It is conceded that though it may be con-
stitutional to regulate the sale and purchase of commercial
crops, regulation of all crops made possible under the Act
would mean an unreasonable restriction on the fundamental
right enshrined in Art. 19(1)(g). We are of opinion that
there is no force in this contention. The Madras Act which
dealt with commercial crops specified certain crops as
commercial crops in the definition section and added that
the words “commercial crop” used in that Act would include
any other crop or product, notified by the State Government
in the Fort St. George Gazette as a commercial crop for the
purposes of that Act. In view of this inclusive definition
of “commercial crop” in the Madras Act, it was open to the
State Government under that Act to include any crop within
the meaning of the words “commercial crop” which was
regulated by that Act. The Act had a schedule when it
originally passed in which certain crops were included. The
State Government was however given the power to add to, or
amend or cancel any of the items mentioned in the Schedule
by s. 29. It is true therefore that under the Act it is
open to the State Government to bring any crop other than
those specified originally in the Schedule within its
regulatory provisions; but the fact that it is possible to
bring any crop within the regulatory provisions of the Act
by amendment of the Schedule would not necessarily make the
Act an unreasonable restriction on the exercise of the
fundamental right guaranteed under Art.
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19(1)(g). As we have already pointed out, the definition of
the words “commercial crop” in the Madras Act was also wide
enough to bring any crop which the State Government
considered fit to be included as a commercial crop for the
purposes of that Act. There is thus in our opinion no
difference in the ambit of the Madras Act and of the Act.
Besides we see no reason why a crop which can be dealt with
on a commercial scale should not be brought under the
regulatory provisions of the Act. Section 4(2A) makes it
clear that the Act does not apply to the purchase or sale of
specified agricultural produce, if the producer of such
produce is himself its seller and the purchaser is a person
who purchases such produce for his own private use or if
such agricultural produce is sold to such person by way of a
retail sale. Thus it is clear from this exception that the
provisions of the Act do not apply to retail sale and are
confined to what may be called wholesale trade in the crops
regulated thereunder. This would suggest that the Act also
deals with commercial crops in the same way as the Madras
Act, for the notion of wholesale trade implies that the crop
dealt with therein is a commercial crop. There is thus no
distinction so far as the main provisions are concerned
between the Act and the Madras Act, and for the reasons that
have been elaborately considered in Arunachala Nadar’s case
(1) we are of opinion that ss. 4, 4A, 5,5A and 5AA of the
Act are constitutional and intra vires and do not impose un-
reasonable restrictions on the right to carry on trade in
the agricultural produce regulated under the Act.
The next attack is on s. 29 of the Act, which provides that
the State Government may by notification in the official
gazette, add to, amend or cancel any of the items of
agricultural produce specified in the Schedule. It is
submitted that this gives a completely unregulated power to
the State Government to include any crop within the Schedule
without any guidance or control whatsoever. We are of
opinion that this contention must also fail. It is true
that s. 29 itself does not provide for any criterion for
determining which crop shall be put into the Schedule or
which shall
(1) [1959] Supp. 1 S.C.R. 92.
668
be taken out therefrom but the guidance is in our opinion
writ large in the various provisions of the Act itself. As
we have already pointed out, the scheme of the Act is to
leave out of account retail sale altogether; it deals with
what may be called wholesale trade and this in our opinion
provides ample guidance to the State Government when it
comes to decide whether a particular agricultural produce
should be added to, or taken out of, the Schedule. The
State Government will have to consider in each case whether
the volume of trade in the-produce is of such a nature as to
give rise to wholesale trade. If it comes to this
conclusion it may add that produce to the Schedule. On the
other hand if it comes to the conclusion that the production
of a particular produce included in the Schedule has fallen
and can be no longer a subject-matter of wholesale trade, it
may take out that produce from the Schedule. We may in this
connection refer to The Edward Mills Co. Ltd., Beawar v. The
State of Ajmer and another (1). In that case, s. 27 of the
Minimum Wages Act, 1948, which gave power to the appropriate
Government to add to either part of the schedule any
employment in respect of which it is of opinion that minimum
wages shall be fixed by giving notification in a particular
manner was held to be constitutional. It was observed in
that case that the legislative policy was apparent on the
face of the enactment (impugned there); it was to carry out
effectively the purposes of the enactment that power had
been given to the appropriate Government to decide with
reference to local conditions whether it was desirable that
minimum wages should be fixed in regard to a particular
trade or industry which was not included in the list. The
same considerations in our opinion apply to s. 29 of the Act
and the power is given to the State Government to add to, or
amend, or cancel any of the items of the agricultural
produce specified in the Schedule in accordance with the
local conditions prevailing in different parts of the State
in pursuance of the legislative policy which is apparent on
the face of the Act. Therefore, in enacting s. 29,
(1) [1955] 1 S.C.R. 735.
669
the legislature had, not stripped itself of its essential
powers or assigned to the administrative authority, anything
but an accessory or subordinate power which was deemed
necessary to carry out the purpose and policy of the Act.
We therefore reject the contention that s. 29 of the Act
gives uncontrolled power to the State Government and is
therefore unconstitutional.
The next attack is on s. 11 of the Act and the rules framed
in that connection. Section II gives power to the market
committee subject to the provisions of the rules and subject
to such maxima as may be prescribed to levy fees on the
agricultural produce bought and sold by licencees in the
market area. It is said that the fee provided by s. 11 is
in the nature of sales tax. Now there is no doubt that the
market committee which is authorised to levy this fee
renders services to the licencees, particularly when the
market is established. Under the circumstances it cannot be
held that the fee charged for services rendered by the
market committee in connection with the enforcement of the
various provisions of the Act and the provisions for various
facilities in the various markets established by it, is in
the nature of sales tax. It is true that the fee is
calculated on the amount of produce bought and sold but that
in our opinion is only a method of realising fees for the
facilities provided by the committee. The attack on s. 11
must therefore fail. Besides this however, it is also
contended that rr. 53 and 54 which provide for levying of
fees under s. II are ultra vires, as they do not conform to
s. 11 of the Act. It will be noticed that s. 11 provides
for levy of fees to be fixed by the market committee,
subject to such maxima as may be prescribed by the Rules and
this fee is to be charged on the agricultural produce bought
and sold. There are thus two restrictions on the power of
the market committee under s. 11; the first is that the fee
fixed must be within the maxima prescribed by the Rules and
naturally till such maxima are fixed it would not be
possible for the market committee to levy fees, and the
second restriction is that fees have to be charged not on
the produce brought into but only on such produce as is
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670
actually sold. Rule 53 provides that the market committee
shall levy and collect fees on agricultural produce bought
and sold in the market area at such rates as may be
specified in the bye-laws. The Rules nowhere prescribe the
maxima within which the bylaws will prescribe fees. The
first attack therefore on the Rules is that it will not be
open to the market committee to prescribe any fee under s.
11 till the State Government prescribes the maxima by the
Rules, which it has not done so far. Further there is an
attack on r. 54 which lays down that the fees on
agricultural produce shall be payable as soon as it is
brought into the principal market yard or sub-market yard or
market proper or market area as may be specified in the bye-
laws. The argument is that this rule allows fees to be
charged on the produce brought into the market irrespective
of whether it is actually bought and sold, and this is
against s. 11. As we read s. 11, there is no doubt that the
State Government is expected to specify the maxima within
which the market committee shall fix fees and until such
maximum is specified by the State Government in the Rules it
would not be possible for the market committee to fix any
fees under s. 11. Further, there is no doubt that s. 11
provides that fees shall be charged only on the amount of
produce bought and sold and not on all the produce that may
have been brought into the market but may have to be taken
back as it is not sold. The reply of the respondents so far
as r. 54 is concerned is that the rule only prescribes a
convenient method of levying fees and that various bye-laws
provide for refund in case there is no sale of the produce
brought into the market. The petitioners in their
application have not specifically said that there is no
provision for refund and in the circumstances all that we
need say is that r. 54 will be valid if proper provision for
refund is made in the bye-laws with respect to the produce
brought into the market on which fees have been charged but
which has been taken back because it is not sold, for then
it would only be a method of levying the fee permitted under
s. 11. In the connected petition Yograj
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Shankersingh Parihar and another v. The State of Bombay and
another (57 of 1957) which was heard along with this
petition there was an attack on r. 53; but the attack was
confined to the fee being analogous to a sales tax and there
was no ground taken that the fee could not be levied under
r. 53 because the maxima had not been specified in the
Rules. However, it is not in dispute in this case that
maximum has not been specified in any rule and r. 53 itself
leaves it open to the market committee to prescribe such
rates as may be specified in the bye-laws. We have already
said that it would not be possible for the market committee
to prescribe any fees under s. 11 through byelaws till the
State Government prescribes the maximum under s. 11. As no
such maximum has been prescribed in the Rules, the
contention that fees which are being charged under the bye-
laws for the purposes of s. 11 are ultra vires of that
section, must prevail.
It has been urged on behalf of the respondents that the true
construction of s. 11 is that if maxima are prescribed by
the Rules, fees will be fixed by the market committee within
the maxima; but if no maxima are fixed under the Rules, it
will still be open to the market committee to prescribe any
fees it thinks proper under its power under s. 11. We are
not prepared to accept this interpretation of s. 11, for it
amounts to adding the words “if any” after the word “maxima”
therein. Besides, the legislature was conferring power of
taxation (using the word in its widest sense) by s. 11 on
the market committee. While doing so, the legislature
apparently intended that the committee shall not have
unlimited power to fix any fees it liked. It restricted
that power within the maxima to be prescribed by the State
Government in the Rules. Thus the power given to the
committee was meant to be subject to the control of the
State Government which would be in a position to view the
situation as a whole and decide the maxima. At the same
time, some flexibility was provided by leaving it to the
committee to fix fees within the maxima. We may in this
connection refer to various municipal Acts for example where
also the power of taxation is subject to the control of the
672
different form. Section 11 also prescribes similar control
by the State Government over this taxing power of the
committee and this is obviously in the interest of the
community as a whole. The State Government cannot
practically abdicate that power as it seems to have done
under r. 53 by leaving it to the committee to fix any rates
it likes. We are therefore of opinion that unless the State
Government fixes the maxima by rule it is not open to the
committee to fix any fees at all and the construction urged
on behalf of the respondents is not correct.
The next attack is on r. 64 which provides that no person
shall (a) enter a principal market yard or sub-market yard
in contravention of a direction given by a servant or a
member of the market committee, or (b) disobey any of the
directions of the market committee in regard to the places
where carts laden with agricultural produce may stand or
loads of agricultural produce may be exposed or in regard to
the road by which or in regard to the times at which they
may proceed. Any person contravening or disobeying any of
the directions referred to in sub-r. (1) shall, on
conviction be punishable with fine. It is urged that this
rule is ultra vires as it imposes an unreasonable
restriction on the right to carry on trade. We are of
opinion that there is no force in this contention because
this rule is merely a method of enforcing the regulatory
provisions with respect to market yards and sub-market
yards.
The next attack is on r. 65 which provides that “no person
shall do business as a trader or a general commission agent
in agricultural produce in any market area except under a
licence granted by the market committee under this rule.”
The contention is that this rule goes beyond the provisions
of s. 5A which lays down that “where a market is established
under s. 5AA, the market committee may issue licences in
accordance with the Rules to traders, commission
agents…….. So far as the grant of licence to traders
before the establishment of a market is concerned, the
provision is to be found in the proviso to
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s.4(2) and the power to grant licences before the
establishment of a market for trading in any market, area,
is given to the Commissioner and not to the market
committee. The power of the market committee to grant
licences under s. 5A arises only after a market is
established and is confined to operation in the market.
Rule 65 therefore in our opinion when it authorises the
market committee to grant a licence for doing business in
any market area goes beyond the power conferred on the
market committee by s. 5A and entrenches on the power of the
Commissioner under the proviso to s. 4(2). It must
therefore be struck down as ultra vires of the provisions in
s. 5A read with the proviso to s. 4(2). Rule 66 which
is incidental would fall along with r. 65.
The next attack is on r. 67. It gives power to the market
committee to grant licences for doing business in the market
area and prohibits doing of business without such licences.
This rule is open to the same objection as r. 65, for the
power of the market committee to grant licences is with
respect to operation in the market and not in the market
area, the latter power being in the Commissioner under the
proviso to s. 4(2) till the market is established. It seems
to us that rr. 65 and 67 as they are framed show a confusion
in the mind of the rule making authority. It would have
been enough if the Rules had been confined to grant of
licences for operation in the market, for under the law as
soon as the market area is declared and a market is
established, s. 4(2) comes into force and no place in the
said area can be used for the purchase and sale of any
agricultural produce except as provided by s. 5A. It seems
to us therefore that the intention probably was to confine
the issue of licences under rr. 65 and 67 to markets which
the market committee has the power to do where a market is
established under s. 5A; but the two rule.-, as drafted
refer to the market area and not to the market and must
therefore be held to be beyond the power granted to the
market committee under s. 5A.
The last point that is urged is that no market has been
established in law as required under s. 5AA of the
674
Act. We have already said while dealing with the scheme of
the Act that the scheme envisages that there may be a time
lag between the declaration of a market area under s. 4 and
the establishment of a market. under s. 5AA. We have also
pointed out that a market can only be established by a
market committee constituted under s. 5, if it is required
so to do by the State Government under s. 5AA. Therefore,
the requirement by the State Government is a condition
precedent to the establishment of a market under s. 5AA. No
procedure has however been prescribed either under the Act
or under the Rules as to what the market committee has to do
after it has been required to establish a market. We
presume, in view of the provisions of s. 4A which gives
power to the Commissioner to establish a market yard or sub-
market yards, that the market committee after it receives a
direction from the State Government to establish a market
will have to approach the Commissioner with its
recommendation and ask him to notify the establishment of a
principal market yard and sub-market yards, if any. The
contention of the petitioners is that no direction was
issued by the State Government under s. 5AA to the market
committee for the establishment of a market and that in any
case the committee took no steps after the receipt of any
such direction for the establishment of a principal market
yard and sub-market yards, if any. It appears that the
market area was declared for the first time in Ahmedabad
from June 1, 1948, by notification dated April 15, 1948.
This was followed by another notification by which the State
Government established a market and a market proper under
the Act as it stood before the amendment of 1954 by which
the power to establish a principal market yard and sub-
market yards has now been given to the Commissioner. It
seems however that no direction was issued as required by s.
5 of the Act as it stood before the amendment (now s. 5AA)
requiring the market committee to establish a market. This
matter had come to the notice of the Bombay High Court in
Bapubhai
675
Ratanchand Shah v. The State of Bombay (1). Chagla, C. J.,
then pointed out as follows at p. 887:-
“Now, a very curious situation was disclosed
to us by Mr. Joshi. No market has been
established under s. 5 of the Act and
therefore s. 5A has not come into operation.
The result is this that the Market Committee
cannot issue licences under s. 5A to traders,
commission agents, etc., to operate in the
market. In the absence of a market being
established under s. 5 and the absence of
licences being issued under s. 5A, licences
can only be issued by the State Government
under the proviso to s. 4A(2). But the rules
show that licences have been issued by the
Market Committee and not by the State Govern-
ment. It is difficult to understand how
either the Government or the Market Committee
came to the conclusion that the Market
Committee was authorised to issue licences
without s. 5 and s. 5A being brought into
force. Mr. Joshi suggests that the Market
Committee acts as a delegate of the State
Government and the authority to issue licences
has been delegated by the State Government.
It is rather difficult to accept this
contention.”
Having said this, the learned Chief Justice went on to
observe that as there was no such challenge in the petition
itself, therefore whether the challenge could be sustained
or not, it was not open to the petitioners before him to
make that challenge. That observation was made with respect
to another market area but the same, we understand, applies
to the present case. It appears that after that observation
of the Bombay High Court, the State Government on August 11,
1955, issued a notification (No. PMA 7055) dated August 1,
1955, directing the Agricultural Produce Market Committee
Ahmedabad to establish a market in the market area for which
the said committee had been established. But there is
nothing in the affidavit of the respondents to show that
after this direction was issued on August 11, 1955, the
market committee took any steps to establish a market by
making recommendations to the Commissioner to establish a
principal
(1) I.L.R. [1955] Bom, 870.
676
market yard or sub-market yards under s. 4A of the Act. As
a matter of fact, the principal market yard was already
there from before this direction given in 1955 and has
continued. Even in the case of the sub-market yard
established at Kalupur in 1959 there is nothing in the
notification issued by the Commissioner on January 16, 1959,
to show that he was doing so in pursuance of the desire of
the market committee and on its recommendation. We should
have thought that if the market committee had requested the
Commissioner to establish a sub-market yard and recommended
Kalupur as the place for it, the notification should have
shown that the Commissioner was acting at the desire of the
market committee and on its recommendation. In any case,
even if the notification did not show this, it was the duty
of the respondents, when this question was specifically
raised in para. 25 of the petition, to state when the State
Government directed the market committee to establish the
market and what steps the market committee took in that
behalf after such direction. But in para. 24 of the
counter-affidavit filed on behalf of the respondents all
that is stated is that “with reference to paragraph 25 of
the petition, I crave leave to refer to s. 5-A of the Act
for ascertaining its contents, true meaning and legal
effect. I deny all the allegations, contentions and
submissions contained in paragraph 25 of the petition as are
contrary to or inconsistent with what is stated herein as if
they were specifically set out herein and traversed.” We
must say that this is a most curious way of meeting the
allegations made on behalf of the petitioners that no
direction as required by s. 5AA of the Act has been ever
given to the market committee to establish a market and no
steps were ever taken by the market committee in pursuance
of such a direction to establish a market. The notification
No. PMA 7055 which was produced before us during the course
of arguments seems in the circumstances to have been an
empty formality which was observed in view of the
observations of the Bombay High Court in Bapubhai Ratanchand
Shah’s case (1). It seems to us that the curious situation
which
(1) I.L.R. [1955] Bom. 870.
677
the Bombay High Court noticed as far back as March, 1955
still continues with respect to the market in this( case and
no proper steps have been taken in law even after the formal
direction made by notification No. PMA 7055 in August, 1955
to establish a market. It is true that in fact the State
Government before the amendment of 1954 and the Commissioner
after that amendment have established a principal market and
a sub-market yard for this market area; but there is nothing
to show in the case of the principal market yard that it was
established at the instance of the market committee on a
direction given by the State Government as required by s. 5
of the Act as it was before the amendment of 1954 or that
the sub-market yard at Kalupur which was established in 1959
was so established at the instance of the market committee.
In the circumstances the curious situation that was noticed
with respect to another market area by Chagla, C. J., is
there with respect to the Ahmedabad market area and the
Ahmedabad market, with the result that the market committee
cannot issue licences under s. 5A of the Act and exercise
such other powers as may be exercisable on the establishment
of a market under the law. In the result therefore the
petition must be allowed and the market committee forbidden
to enforce any of the provisions of the Act, the rules and
the bye-laws with respect to the market until a market is
properly established under s. 5AA. No other point has been
urged before us.
In conclusion we hold that the challenge made by the
petitioners to the constitutionality of the main provisions
of the Act and of the provisions in r. 64 fails; but the
challenge in respect of (i) the provisions in r. 53 on the
ground that they are ultra vires s. 11, there being no
maximum fee prescribed by the State Government, and (ii) the
provisions in rr. 65, 66 and 67 on the ground that they are
ultra vires the provisions in s. 5(a) read with the proviso
in s. 4(2) succeeds. As however we have held that the
market in this case has not been properly established, the
market
86
678
committee cannot enforce any of the provisions of the Act or
the rules or the bye-laws framed by it and cannot issue
licences till the market is properly established in law.
We therefore allow the petition partly and direct the
respondents not to enforce any of the provisions of the Act,
the rules and the bye-laws against the petitioners with
respect to the market till a market is properly established
in law for this area under s. 5AA and not to levy any fees
under s. 11 till the maximum is prescribed under the Rules.
In the circumstances we order parties to bear their own
costs.
Petition allowed in part.