PETITIONER: MOHAMMADBHAI KHUDABUX CHHIPAAND ANOTHER Vs. RESPONDENT: THE STATE OF GUJARAT AND ANOTHER(And connected petitions) DATE OF JUDGMENT: 15/03/1962 BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. SARKAR, A.K. GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA CITATION: 1962 AIR 1517 1962 SCR Supl. (3) 875 CITATOR INFO : R 1966 SC 385 (17) RF 1981 SC1127 (11) R 1982 SC 710 (19) RF 1983 SC1246 (15) ACT: Agricultural Produce Markets-Market committees-Levy of fees- Notification-Validity-A class and B class traders-- Licences-Discrimination-Rules declared invalid-Subsequent amendments to enactment-Validity of rules-Doctrine of eclipse--Saurashtra Agricultural Produce Markets (Gujarat Amendment and Validating Provisions) Ordinance, 1961 (1 of 1961)-Bombay Agricultural Produce Markets Act, 1939 (Bom. 22 of 1939), as amended, ss.5A, 11, 29-B, rr. 53, 64, 65, 66, 67-Constitution of India, Arts.14, (31)(1), 265. HEADNOTE: Consequent on the decision in Gulam Mohammad v. The State of Bombay, [1962] 2 S.C.R. 659, by which rr. 53, 65, 66 876 and 67, framed under the Bombay Agricultural Produce Markets Act, 1939, were held to be ultra vires the provisions of ss. 6A and 11 of the Act, the State of Gujarat amended r.53 by a notification dated June 23, 1961, and also promulgated an Ordinance on June 26, 1961, by which amendments were made in certain sections of the Act and a new s. 29 B was inserted in the Act validating certain acts or things done prior to the promulgation of the Ordinance. The petitioners, some of whom were wholesale dealers and the rest retail dealers, filed petitions under Art. 32 of the Constitution of India for certain reliefs on the grounds (1) that the notification dated June 23, 196 1, was discriminatory and thus offended Art. 14 because under it a market committee could levy fees on agricultural produce by different modes, (2) that s. 29-B was insufficient to validate the defects noticed in the earlier decision of the Supreme Court inasmuch as the relevant provisions of the Act and the Rules were not retrospectively amended, (3) that under the bye-laws A class traders were charged much higher fees than B class traders and, further, B class traders were allowed to sell to consumers anywhere in the market area whereas A class traders were not so allowed, and this amounted to discrimination, (4) that the main provisions of the Act had been amended by the Ordinance and, therefore, the basis on which the Supreme Court upheld the Act no longer existed, (5) that rr. 65, 66 and 67 which had been declared to be ultra vires had neither been reframed no validated by the Ordinance and, therefore, it was not open to the market committee to issue licences under those rules, and (6) that s. 29-B was bad in so far as it prevented refund of licence fees collected before the Ordinance came into force in view of Art.31 (1) of the Constitution. Held that : (1) the notification dated June 23, 1961, by itself could not be said to be discriminatory- because imposition of the fees was made only by the bye-laws framed by the market committee under the power conferred on it by s. 11 subject to the maxima prescribed in the notification; if a bye law prescribed rates of fees in two modes in such a way as to result in discrimination then such a bye-law would have to be struck down. (2)the fact that under r.53 the market committee might levy fees by one method on one agricultural produce and by another method on another agricultural produce, would not be a ground of discrimination, because each commodity must be treated as a class by itself. (3)s. 29-B was sufficient to cure the defects pointed out in the earlier judgment of the Supreme Court and to validate 877 the actions taken and the things done before the promulga- tion of the Ordinance dated June 26, 1961. (4)there was a basis for classification of traders into A class and B class, and the restrictions placed by the Act, Rules and Bye-laws were reasonable restrictions in the interests of the general public. (5)the purpose of the licence granted to B Class traders was to permit them to buy in the market yard and thus control their activity in connection with whole-sale trade, and not to control retail dealers. Consequently, the market committees were acting within their powers under Act. (6)though s.5A had been amended, the said section read with the Rules did not involve any radical departure from the scheme of the Act as it was before the amendment. (7) rr. 65 and 67, which were valid when they were originally framed but became bad on the insertion of 5A in the Act in 1953, became valid again after the amendment of the section by the ordinance, by the application of the doctrine of eclipse. Dhikaji Narain Dhokras v. The State of Madhya Pradesh, (1955) 2 S. C. R. 589 and Deep Chand v. The State of Uttar Pradesh (1959) Supp. 2 S.C.R.8. applied. (8)s. 29-B having validated the levy and collection of licence fees, Art. 31 (1) was riot applicable to the case, since fees were included within the taxing power of the legislature which had also power to legislate retrospectively. M.P. V. Sundararamier & Co. v. The State of Anddhra Pradesh,(1958) S.C.R. 1422, relied on. JUDGMENT:
ORIGINAL JURISDICTION : Petitions Nos. 226 to 229 and 233 of
1961.
Petitions under Art. 32 of the Constitution of’ India for
the enforcement of fundamental rights.
A.S. R. Chari, J. B. Dadachanji, O. C. Mathur and
Ravinder Narain, for the petitioners (in Petns. Nos. 226 to
229 of 61).
I.N. Shroff, for the petitioners (in Petn, No. 233 of
61).
A.V. Viswanatha Sastri, N. S. Bindra and
878
R. H. Dhebar, for respondent No. 1 (in all the petitions.)
1962. March 15. The Judgment of the Court was delivered by
WANCHOO, J.-These five petitions under Art. 32 of the
constitution, which are connected and will be dealt with
together, raise questions as to the constitutionality of the
Bombay Agricultural Produce Markets Act, Bombay Act No.XXII
of 1939, (hereinafter referred to as the Act), as amended by
the Bombay and Saurashtra Agricultural Produce Markets
(Gujarat amendment and validating Provisions) Ordinance, No.
1 of 1961 (hereinafter referred to as the Ordinance), and
the Rules and the bye-laws framed thereunder. They are a
sequal to the judgment of this Court in Gulam Mohammed v.
The State of Bombay (1), which was delivered on May 2, 1961.
‘One of petitioners before us in these petitions was also a
party in that petition, which was with respect to a market
established in Ahmedabad. In that petition the challenge to
the constitutionality of the main provisions of the Act
failed but the provisions of certain Rules, namely rr. 53,
65, 66 and 67 were held to be ultra vires the provisions of
a. 11 and a. 5A of the Act. In consequence, a direction was
issued prohibiting the respondents in that petition from
enforcing the provisions of the Act, Rules and Bye-laws
against the petitioners in that petition till a market was
established in law for that area under s.5A and from levying
any fee under a. 11 till the maximum was prescribed under
the Rules. Consequent on that decision, the State of
Gujarat amended r. 53 by notification dated June 23, 1961.
Further the Ordinance was promulgated on June 26, 1961, by
which certain amendments were made in certain sections of
the act and a new s. 29-B was inserted in the Act validating
certain acts or things done prior to the promulgation of the
(1) [1962] 2 S.C.R. 659,
879
ordinance. The present petitions were filed thereafter.
Four of the petitions (namely, Nos. 226 to 229) are with
respect to Ahmedabad while the fifth petition (No. 233)
is with respect to Nadiad. Two of the petitioners of
Ahmedabad are wholesale dealers while the other two claim to
be retail dealers. The contentions on behalf of the Ahme-
dabad petitioners are that the notification amended r. 53,
offends Art. 14 of the Constitution and is therefore bad.
It is further contended that though S. 5AA has been amended,
the amendment is prospective ; therefore the infirmity
noticed in the earlier judgment of this Court still remains
and s. 29-B which has been inserted in the Act is insuffi-
cient to validate what bad been done before the Ordinance
came into force. It is further contended that the bye-law
under which the market committee issues licences to A Class
and B class dealers is discriminatory and imposes
unreasonable restrictions on the fundamental right to carry
on trade and business and is therefore bad. Lastly it is
contended that the market committee insists on issuing
licences for retail trade and this it cannot do for control
of retail trade is, not within the provisions of the Act as
held by, this Court in the earlier judgment, and further in
consequence the market committee is using r. 64 in a manner
in which it was not intended to be used and therefore that
rule though it was upheld in the earlier judgment should be
declared ultra vires.
The majority of the petitioners in the Nadiad case are
wholesale dealers but a few of them claim to be retail
dealers. These petitioners further challenge the
constitutionality of the Act after its amendment by the
Ordinance, and their contention is that the Ordinance makes
radical changes in the main provisions of the Act and the
basis on which these main provisions were upheld by this
Court
880
earlier, no longer applies, and therefore the Act as it now
stands after the amendment is violative of the fundamental
right to carry on trade and business guaranteed under Art.
19(1)(g) of the constitution as the restrictions placed by
it on the said right are unreasonable. Further it is
contended that rr. 65, 66 and 67 were struck down by this
Court in the earlier judgment as beyond the power conferred
on the State under s. 26 of the Act. These rules therefore
cannot be held to be a part of the Rules in force now and in
consequence it was not open to the market committee to Act
as provided in these Rules. Lastly it is urged on behalf of
one of the petitioners that he. had paid licence fee to the
market committee and was entitled to a refund of that after
the earlier judgment of this Court; but s. 29-B newly
inserted in the Act which in effect deprives this petitioner
of getting refund is invalid and illegal as it is against
the provisions of Art. 31(1). Some other points have also
been raised by the Nadiad petitioners ; but as they are not
pressed, we shall not refer to them.
The petitions have been opposed on behalf of the State and
it has traversed all the points raised on behalf of the
petitioners. It is not necessary to set out the grounds on
which it is urged on behalf of the respondents that the
contentions of the petitioners have no force. These grounds
will appear when we deal with the contentions raised on
behalf of the petitioners one by one. Nor do we think it
necessary to set out the previous history as to the
establishment of the market in Ahmedabad as that will be
found in the earlier judgment ; nor is it necessary to set
out the previous history as to the establishment of the
market in Nadiad, for it is not in dispute that that history
is similar to the, history in the case of the Ahmedabad
market. We shall therefore proceed to indicate the points
which alone have been pressed on behalf of the petitioners
and then consider them one by one.
881
Some of the points are not common; but as they have been
raised in one petition or the other and these petitions have
been dealt with together and. the decision on any point Will
effect even other petitions in which it has not been raised,
we shall proceed on the basis that all the points have been
raised in all the petitions particularly as the learned
counsel appearing in the various petitions adopted the
arguments of one another during the hearing. The points
therefore which call for decision are as below-
(1)Is the notification dated June 23, 1961 fixing the
maximum fee to be charged. hit by Art.14 of the
Constitution?
(2)Does the insertion of s. 29-B in the Act suffice to
validate acts or things done before the promulgation of the
Ordinance?
(3)Are the by-laws by which the market committee issues
licences to A class and B class dealers discriminatory and
thus offend-Art. 14, and do they amount to an unreasonable
restriction on the fundamental right to carry on trade and
business under Art. 19(1)(g)?
(4) Is the market committee acting beyond its powerunder
the Act in requiring retail dealers to take out licences and
is r. 64 bad on account of the manner in which it is being
enforced by the market committee?
(5)Are the main provisions of the Act after its amendment
by the Ordinance liable to be struck down as an unreasonable
restriction on the fundamental right to carry on trade and
business under Art. 19(1)(g)?
(6)Was it necessary to reframe rr. 65,66 and 67 under
power conferred on the State Government under s. 26; if so,
what is the effect of its not having been done?
882
(7)Is a. 29-B bad in view of Art. 31 (1) of the
Constitution insofar as it prevents refund of licence-fee
collected before the Ordinance came into force?
Re (1).
The notification is in these terms:-
“No. APM/060/30797-F-In the exercise of the
powers conferred by section 26 of the Bombay
Agricultural Produce Market Act, 1939 (Bom.
XXII of 1939), the Government of Gujarat
hereby amends the Bombay Agricultural Produce
Market Rules 1941 as follows namely:-
“In the said rules in rule 53, for sub.rule
(1) except in explanation thereto the
following shall be substituted, namely:-
(1)’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 by laws, subject to
the following maximums, namely:-
(1)Rate when levied according to cart load
shall not exceed 40 naya paise per cart load.
(2)Rate when levied ad valorem. shall not
exceed 40 naya paise per Rs. 100.
(3)Rate when levied according to weight shall
not exceed.
(1) per quintal 15 naya paise
(2) per Bengali Maund 5 naya paise
(4)Rate when levied according to the number of
containers containing the agricultural produce
shall not exceed,
(a) per bale of cotton 40 nay& paise
883
(b)per gunny bag or 5 naya paise any other
container,
(5)Rate when levied in respect of cattle,
sheep and goat shall and exceed per animal
Rs.2.’
By order and in the name of Governor of
Gujarat.”
The contention on behalf of the petitioners is that the
notification is discriminatory in two ways: in the first
place, because it allows fees to be collected by different
modes, i.e., by cart load, by value, by weight and by
containers. It is urged that it is open to the market
committee to levy fees on certain agricultural produce by
(say) cart load and on certain other agricultural produce by
(say) weight; and this is very likely to result in
discrimination. in the second place, it is urged that the
notification gives power to the committee to levy fees on
the same commodity by even two of the methods mentioned
therein. For example, it is urged that the same commodity,
say, potatoes may be charged under the notification by the
market committee both by weight and by cart load depending
upon whether they are brought into the market area in a
cart, or for example, in a basket. It is said that there is
nothing in the rule which prevents the market committee from
doing so, and this may result in discrimination.
We may however point out that the notification by itself
does not impose any, fee on any commodity. What it does is
to carry out the terms of a. 11 which require the maxima to
be prescribed subject to which the market committee can levy
fees on Agricultural produce. The imposition of the, fees
still remains to be made by the market committee under the
power conferred on it by s. 11 subject to the maxima
prescribed in the notification therefore the notification by
itself cannot be, said to be discriminatory.
884
Lot us, however, examine the two contentions raised on
behalf of the petitioners on the basis that though the
notification may not actually impose fees on any
commodity, it still allows discrimination to be practised by
the market committee, when it proceeds under s. II to levy
fees within the maxima prescribed by the notification.
Taking the first contention, it may be that by using one
method in the case of one, agricultural produce and another
method in the case of another agricultural produce, there
may be some difference in the incidence of the fees charged,
if one were to judge that incidence on the basis of only one
of the modes prescribed in the notification. But that in
our opinion cannot be said to result in d discrimination for
each produce must for this purpose be treated to be a class
by itself. Therefore, so long as the market committee uses
one method of levying fee with respect to one kind of
agricultural produce, it cannot be said that it is
discriminating if it use,% another method for levying fee on
another kind of Agricultural produce. It is well known even
in systems of taxation that taxes Are levied with different
incidence depending upon the nature of the article taxed,
and a fee levied under s. 11 is only the exercise of the’
power of taxation using that word in its widest sense.
Therefore, the fact that under this rule, the market
committee may levy fees by one method on one agricultural
produce and by another method on another agricultural
produce will not be a ground of discrimination, for each
commodity must be treated as a class by itself,
Turning now to the second contention, it is true that there
is nothing in the rule expressly to prevent the market
committee from using two of the modes prescribed therein for
the purpose of levying fees on the same agricultural
produce. It must be remembered however that the rule is a
general provision for levying fees within the
885
maxima prescribed on the agricultural produce by market
committees in the market areas all over the State. Various
methods of levying fees have been included in the rule, for
we assume that the rule making authority knew that there
were various ways in which things are brought into various
market areas. The. rule is meant to apply to all situations
that may arise in the State and there maybe different ways
in which things may be brought to the market areas in
different parts of the State. That is why the rule has a
wide sweep and allows the market committee to levy fees
either by cart load or by value, or by weight or by
containers. It may be that if for the same agricultural
produce fees are levied subject to the maxima two different
modes, the rates fixed may result in discrimination. It
would however not be impro-in r to assume that in framing
the bye-laws in which pee rates for any particular
agricultural produce shall be fixed the market committee
shall pay due wigard to the prohibition against
discrimination rentained in Art. 14 of the Constitution.
The praccocal consequence of this is likely to be that for
one tigricultural produce the market committee will fix ane
rate only in one of the four modes. If that is oone no
discrimination can be said to arise. It will dot also in
our opinion be unreasonable to think that in issuing the
notification the Government proceeded on the assumption that
for any particular agricultural produce one mode of fixing
fees whether according to cart load or according to value or
according to weight or according to the number of
containers-will be adopted. .,Nor would it be difficult if
the rate is fixed in one of the modes, pay according to cart
load, to calculate the fees to be levied where the produce
is brought in any other manner, say in baskets, for then the
proportional fee can be charged on each basket on the basis
of so many basket-fuls being equal to one cart load.
Similarly where the bye-law fixes
886
the fees according to containers and a dealer brings the
produce in cart load, it will be possible to Calculate the
fee due on the basis of containers, by calculating how many
containers would be equal to one cart load. Where the fee.
is fixed by weight or value there would be no difficulty in
any case. Therefore one may reasonably conclude that the
market committee when acting under s.11 read with the
notification will levy the fees on a single commodity in one
only of the permitted modes. If that happens in actual
practice there will be no question of any discrimination.
But assume that a market committee chooses to adopt two
modes for levying fees on the same agricultural produce, say
one according to cart load and another according to weight.
In such a case a question may arise whether there is
discrimination in the incidence of fees. That question may
have to be considered if and when it arises and whether
discrimination actually arises in such a case will depend
upon the rates fixed by the market committee for levying of
fees on the, same agricultural produce in the two modes
that, it might choose. If the rates are so fixed that the
incidence is substantially the same whether the fees are
levied on the basis of cart load or on the basis of weight,
there will be no discrimination. On the other hand if the
rates are so fixed that the incidence works out
substantially differently there will be a case of dis-
crimination and in such a case: it is the bye-law that will
have to be struck down as being discriminatory for the
actual imposition of fees will be made by the bye-law framed
by the committee and not by the impugned notification. The
chances however of fixing two modes for the levy of fees
even on the same agricultural produce in such a way as to
result in discrimination are in our opinion so remote that
the notification cannot be struck down on that account as
discriminatory. In such
887
a case it is not the notification which will have to be
struck down but the actual bye-law if it prescribes rates of
fees in two modes in such a way as to result in
discrimination.
Turning now to the facts of the ‘present case we find that
the bye-laws framed by the market committees have fixed only
one mode of levying fees in these cases for one kind of
produce. It is not the petitioners’ case that the market
committees with which we are concerned in the present cases
have used more than one mode for levying fees on the same
agricultural produce. There it; therefore no case for
discrimination made out on the basis of the actual bye-laws
which have been framed by the market committees under the
power conferred on them under s.11 read with the
notification. In these circumstances, the attack on the
notification on the ground of, discrimination must fail.
Re. (2).
Sub-section (1) of s.29-B provides that in the case of a,
market area declared before the commencement of, the
Ordinance, a market for such market area shall be deemed
always to have been established for the purposes of the Act
with effect from the date on which a market yard for such
market area was declared for the first time under the
Rules .or the Act and such market shall include and shall be
deemed always to have included the said market yard. By
this provision the defect that was pointed out in the
earlier judgment with respect to the establishment of a
market is intended to be validated. The sub-section further
provides that any action taken or anything done by a market
committee or any other authority after the establishment of
a market therein as aforesaid but before the commencement of
the Ordinance, which but for the provisions of this clause
would have been invalid, shall be and shall be deemed always
to
888
have been valid and shall not be called in question merely
on the ground that no market was established for such market
area when such action was taken or thing done. Sub-section
(2) then provides that any fees levied aid collected on
agricultural produce bought and sold in a market area before
the commencement of the Ordinance by a market committee at
the rates specified in its bye-laws shall be deemed to have
been validly levied and collected and such levy and
collection shall not be called in question merely on the
ground that at the time of such levy and collection no
maxima were prescribed as required by a. 11. The intention
of this provision is to cure the defect which was noticed in
the earlier judgment inasmuch as no maxima had been
prescribed under s.11 by the State Government. Rub-section
(3) finally provides that all licences issued to operate in
a market area or any part thereof and fees charged therefore
before the commencement of the Ordinance by a market
committee under the Rules and bye-laws and any action taken
or thing done relating to licensing of persons, or obtaining
of a licence, to operate in the market area or any part
thereof, taken or done by a market committee or any other
authority or person under the Rules and bye-laws before the
commencement of the Ordinance shall be and shall be deemed
always to have been valid and the validity thereof shall not
be called in question merely on the ground that when such
action was taken or thing done, the power right or.
obligation therefore was not duly conferred or imposed by
the Act on such market committee, authority or person. This
provision is intended to cure the defect arising from rr.65
and 67 being declared ultra vires by this Court in its
earlier judgment.
The contention on behalf of the petitioners is that these
provisions are insufficient to validate
889
the defects which were noticed in the earlier judgment of
this Court inasmuch as the relevant provisions of the Act
and the Rules have not been retrospectively amended. We see
no force in this argument, for the provisions as they stand
certainly validate the defects pointed out in the earlier
judgment of this Court. It is true that the relevant
sections and the Rules have not been retrospectively amended
by the Ordinance, but this in our opinion was unnecessary.
Retrospective amendment may be necessary when it is desired
to change the law; but it seems that so far as s. 11 is
concerned, the legislature did not intend that the control
of the State Government over levy of fees should be done
away with for the future also. Therefore, all that was
necessary in that respect was to validate the past actions
and this is specifically provided for by sub-ss.(2) and (3)
of s.29-B. As for the establishment of market committees, an
amendment has been made in s.5.AA of the Act deleting the
provision. by which a market could be established only if so
required by the State Government. This amendment is
prospective. It could have been made retrospective also and
in that case sub-s. (1) of s.29-B may not have been
necessary. The legislature, however, adopted the method of
amending s.5-AA prospectively and making a separate provi-
sion for validating the establishment of markets in sub-s.
(1) of s.29-B. We see no reason why it should be held that
the validation made by sub-s.(1) is not sufficient because
the legislature has adopted one method rather than the other
for carrying out its purpose. We are therefore of opinion
that s.29-B is sufficient to cure the defects pointed out in
the earlier judgment of the Court and to validate actions
taken and things done before the promulgation of the
Ordinance which would otherwise have been invalid in view of
the earlier judgment of this Court. The contention on this
head must also be rejected.
890
Re. (3).
Under the bye-laws as they now stand two classes of traders
are mentioned, namely A class traders and B class traders.
A class traders are those who hold licences to buy and/or
sell agricultural produce in quantities not below 10 lbs. in
the market yard, and the licence-fee which they have to pay
per year is Rs. 75. B class traders are those who have
licences to buy agricultural produce in quantities not below
10 lbs. in the market yard and to sell in retail to
consumers anywhere in the market area. They have been
divided into three classes, namely, (a) shop-keepers, (b)
lari holders, and (e) Toplawala (hawkers), with a licence-
fee of Rs. 12, Rs. 6 and Rs. 3 respectively. It is urged
that this amounts to discrimination between A class and B
class traders inasmuch as A class traders are charged much
higher fees than the B class traders. It is however clear
that there is a basis for classification between the two
classes of traders. A class traders are those who can both
buy and sell agricultural produce in the market yard while B
class traders can only buy in the, market yard but cannot
sell there. It is submitted on behalf of the State
Government that B class traders are those persons who
generally sell in retail to consumers after buy in a
wholesale in the market yard from A class traders or
producers. The reason why B class traders have been
permitted to buy in the market yard is to allow for
competition, as otherwise there would have been a monopoly
of the few A class traders who operate in a particular
market yard. This classification in our opinion is
reasonable. A class traders are wholesale traders who are
permitted both to buy and sell in the market yard and are
thus charged a higher licence-fee. B class traders are
ordinary retailers who in order to carry on their retail
trade are permitted to buy in the market yard but they are
,not permitted to sell there. They are small trader,
891
and are therefore charged lower licence fees. It appears to
us that in order to avoid the monopoly of A class traders,
who are a few in number, with the result that prices might
be depressed by such traders, B class traders are permitted
only to buy in the market yard on payment of a small licence
fee in order that the producer who brings his produce in the
market yard may have a fair price. We see no reason
therefore to hold that there is any discrimination in
creating the two classes of traders, for there is a fair
basis of classification of traders into A class and B class.
Nor can this restriction be deemed to be an unreasonable
restriction on the right to carry on trade and business, for
such regulation is obviously envisaged by the Act in order
to carry out its purposes and this Court, has already held
in the earlier judgment that the Act is a valid piece of
legislation. It is unnecessary to repeat the reason given
in the earlier judgment,: where it was held that the
restrictions placed by the Act, Rules and Bye-laws framed
thereunder are reasonable restrictions in the interest of
general public.
It is however urged that B class traders are allowed to sell
to consumers anywhere in the market area whereas A class
traders’, are not so allowed. It has already been held in
the earlier judgment that retail trade is not controlled
under the Act. Therefore, the fact that the bye-,law has
added the words ,to sell in retail to consumers anywhere in
the market area” in the case of B class traders is of no
consequence, for B class traders, as they are retailers,
would be entitled in any case, without being controlled
under the Act, to sell to consumers anywhere they like. It
if; not the addition of these words which gives that right
to B class traders, for that right of theirs is not
controlled by the Act and they would be entitled to exercise
it without the addition of these words, which, we consider
as surpluses in the circumstances. As for A class traders
892
they are admittedly wholesalers and there is no question of
their selling in retail. We are therefore of opinion that
the addition of the words mentioned above with respect to B
class traders is a mere sur-plusage and makes no difference
to the basis of classification. There is no force therefore
in the contention under this head and it must be rejected.
Re. (4).
It is next urged that the market committee is attempting to
control retail dealers and requires them also to take out
licences and this it is not authorised to do, as this Court
has already held in the earlier judgment that retail trade
is not. within the ambit of the Act. This argument is based
on the use of the words “to sell in retail to consumers
anywhere in the market area” in connection with B class
traders. It is said that in this way the market committee
is controlling retail trade also under the Act which it
cannot do. We are of opinion that this contention has no
force. B class traders are required to take out licences in
order to buy agricultural produce in quantities not below 10
lbs. in the market yard. The licence in our opinion is not
meant to permit them to carry on retail sale anywhere in the
market area. As we have said already these words are a mere
surplusage and the real purpose of the licence granted to B
class traders is to permit them to buy in the market yard
and thus control their activity in connection with wholesale
trade. It is urged, however, that no provision has been
made under s.2(ix)( a) of the Act to define the limit of
retail sale under any bye-law. It is true that no specific
provision for that purpose has been made but when the limit
of 10 lbs. is fixed below which no transaction can take
place in the market yard it is some indication of what is
the limit of retail sale. In any case the bye-laws which
provide for A and B class traders, indicate the limit below
which they cannot trade in the market yard and this clearly
893
shows that the intention of the market committee was not to
control retail trade by the issue of licence to traders for
the large proportion of retail trade may well be below 10
lbs. for each transaction. We cannot therefore accept the
contention of the petitioners that the bye-laws by providing
for A class and B class traders are really providing for
control of retail trade. It is clear that B class traders
can only buy in the market yard but cannot sell there and as
for sale, they will be entitled to sell in retail wherever
they like, for the Act does not control retail trade.
As for r. 64, it merely provides for incidental powers in
connection with the regulation of market yards and it has
already been held valid in the earlier judgment. We see no
reason to hold that that rule is invalid on the ground that
the market committee is using that rule to control retail
trade. We have already pointed out that the market
committee cannot be said to control retail trade by
providing, for A and B class licences’ and there is no
question therefore of r. 64 being used in a manner not
intended thereunder.
Lastly, it seems that there is some dispute by some
petitioners in Petitions Nos. 228 and 229 as to whether they
hold certain shops in the market yard from the municipal
committee or must be deemed to hold them from the market
committee and what rights the market committee has over
those petitioners in that connection. It appears that there
have been suits in courts with, respect to that dispute.
That is a matter which in our opinion has to be decided by
the courts where the suits are said to be pending and cannot
be the subject of adjudication in a petition under Art. 32.
In any case r. 64 cannot be declared had because of any
dispute between the market committee, the municipal com-
mittee and stall holders as to their respective rights
894
over the stalls in the market yard. There is therefore no
force in this contention either and it must be rejected.
Re. (5).
The main contention under-this head is that the main
provisions of the Act have been so amended by the Ordinance
that the basis on which this Court upheld the provisions as
constitutional no longer exists and therefore the Act as it
now stands after its amendment by the Ordinance is an unrea-
sonable restriction on the right to carry on trade. This
contention requires a consideration of the provisions of the
Act as they stand after the amendment by the Ordinance and
it will have to be seen whether there has been any radical
departure from the scheme of the Act as it was before the
amendment. If there has been no radical departure after,
the amendment and the control envisaged by the Act as
amended is still the same, as it was before the amendment
the basis on which the earlier judgment of this Court upheld
the main provisions ,the Act would still apply, and the Act
as amended would be constitutional. Let us therefore see if
there has been any radical departure from the main
provisions of the Act as they stood before the amendment.
The Act still deals with the regulation of purchase and sale
of agricultural produce and establishment of markets for
ouch produce. Section 3 stands unamended and provides for
the constitution of market areas 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. Section 4(1) is also unamended and gives
power to the Commissioner after holding such inquiry as may
be necessary and considering the objections and suggestions
if any made after the notification under a. 3 to declare
895
a particular area as a market area for the purposes of the
Act. There. has been some amendment in s. 4( 2) but it is
not of a radical character and does not make any difference
to the main provisions of the Act. Section 4-A has also
been amended by providing for declaration of a market proper
and con. sequential changes necessary-due to such provision.
This amendment only brings in to the Act what was formerly
in r. 51. This amendment also therefore makes no radical
change in the Act. Section 5-AA has also been amended and
the provision which made it necessary for the State
Government to require a market committee to establish a
market has boon deleted. Section 5-AA as it now stands
makes it the duty of the market committee to enforce the
provisions of the Act etc. and when a market is established
thereunder to provide for such facilities in the market as
the State Government may from time to time direct in
connection with the purchase and sale of agricultural
produce with which it is concerned. The change in s. 5-AA
therefore is also of an incidental character and does not in
any way affect the scheme of the Act as it was before the
amendment. Section 5A has also been amended and it now
reads as follows:-
“Where a market is established under section
4A, the market committee may issue licences in
accordance with the rules to traders,
commission agents, brokers, weighmen,
measurers, surveyors, warehousemen and other
persons to operate in the market area or any
part thereof”
The main argument of the petitioners is based on this
amendment. It is urged that under the unamended Act after a
market was established the market committee had to issue
licences for operation in the market so that the business of
sale and purchase of agricultural produce was concentrated
in the market which consisted of a principal market yard and
896
one or more sab-market yards with the consequent advantage
to the agricultural producer that they had a place or places
where they could find a large number of buyers for their
produce and could thus secure fair prices under regulated
conditions. Now, however, it ‘is urged that under s. 5A it
is open to the market committee, after the market is
established under s. 4A to give licences to traders and
other to operate in the market area or any part thereof with
the result that it would not be necessary to have a
principal market yard or sub-market yards. There would be
some force in this argument if we were to ignore the rules
framed under the Act. But the rules which were framed by
the State Government are still the same. Rule 51 provides
for the declaration of market yards and market proper by the
State Government. Rule 60 provides that all agricultural
produce brought into the market shall pass through, the
principal market yard or sub-market yards and shall not
subject to the provisions of sub-r.(2), be sold at, anyplace
outside such yards. The only exception to this is sub-
r.(2), which provides that proceed agricultural produce may
be sold either in the principal market yard, or sub-market
yard, or in the market proper, or in the market. area in
accordance with the provisions of the bye-laws. The reason
for this distinction is clear, for where produce is to be
processed, as for example, ginned cotton, it has to be taken
to a ginning factory in which came it would be most
inconvenient to bring the produce to the market yard for
sale and that may also add to the price by further transport
charges. Reading s. 5A therefore along with the Rules, it
is clear that the present provisions are materially the same
as the agricultural produce (except that which is processed)
shall have to pass through the principal market yard or sub-
market yards and be sold there. The only difference that
the amendment has made
897
is that whereas formerly under a. 5A ‘ traders could only
operate in the market by virtue of the provisions of, the
Act, now they will operate in the market by virtue of the
provisions of the Act read with the Rules. The rules,
however, are still the same and therefore in effect the
provisions of the Act and the Rules read together still
provide for the same kind of regulation which was intended
under the unamended Act. It is urged that it will be open
in the future for the market committee to do away with the
necessity of having market yards and sub-market yards and
concentrating, wholesale trade only in market yards and sub-
market yards in view of the provisions in the amended s.5A,
for the market committee would be entitled to issue licences
in accordance with the Rules in case they are changed to
traders etc. to trade in the market area or any part thereof
It will be seen however that the power to change .the Rules
is not in the market committee and until the Rules are
changed the position as it was under the unamended Act would
remain the same. We have no reason to suppose that the
State Government intends to change the Rules as they are now
and to permit the market committee to grant licences under
s. 5A for trade anywhere in the market indiscriminately. It
is true that such a possibility can &rise if the State
Government changes the Rules as they exist at present. But
there is no reason to suppose that such a change is
intended. So long therefore as the Rules stand as they are,
there is no radical departure from the scheme of the Act as
it was before its amendment and the reasons which impelled
this Court to uphold the Act and the Rules framed thereunder
would still hold good. If and when the Rules are so changed
as to make a radical departure from the present position, a
question may well arise whether the scheme of control
envisaged under the
898
Act has failed in its purpose. It may then be necessary to
decide whether the Act and the rules framed thereunder
are unconstitutional; but so long as the rules stand as they
are, we have to read s.5A along with the Rules, for licences
are issued under that section in accordance with the Rules,
and reading s. 5A and the present Rules together it must be
held that there has been no radical departure from the
scheme of the act as it was before the amendment and
therefore the reasons which impelled this court to uphold
the Act, Rules and bye-laws framed under it in the earlier
judgment still stand.
Beside, this main argument certain subsidiary contentions
are also urged on behalf of the petitioners to challenge the
constitutionality of the act, and the Rules framed
thereunder on the ground that it was an unreasonable
restriction on the fundamental right to carry on trade or
business. It is urged that a trader who has business all
over the State may have to take 80 or more licences to trade
in different market areas and that will mean a heavy burden
on him resulting in increase in price of agricultural
produce. This in our opinion is a theoretical consideration
and in any case if a trader is so big as to carry on trade
in all the 80 or more market areas established in the State
we see no reason why he should not take licence in each
market area. He will be in a position to bear the burden
and it need not necessarily affect the price of agricultural
produce seriously. Then it is urged that the Act affects
transactions between traders outside the market area. We
have not been able to understand what exactly is meant by
this. it is only when the sale takes place within the market
area that the produce has to pass through the principal
market yard or sub-market yard, but if a trader gets
something from outside the market area and the sale takes
place outside the market area and the thing is brought in to
the market area by the trader after the purchase, such
transaction will not
899
be subject to any fees, for fees have only to be charged on
agricultural produce bought and sold in the market area
under r. 53 read with s. 11. But where the sale takes place
outside the market area and the commodity is merely brought
into the market area by the wholesale trader, there will be
no question of any fee being charged on that, transaction;
of course, if there is a further sale in the market area or
in the market yards by the wholesale trader to some one
locally that may be liable to fee. We do not we how in the
circumstances it can be said that this is a case of
unreasonable restriction on the right to carry on trade and
business.
Next it is urged that the provisions in the Act also affect
transaction between traders and traders, and also affect
produce not grown within the market area if it is sold in
the market area. That is undoubtedly so. But if control
has to be effective in the interest of the agricultural
producer such incidental control of produce grown outside
the market area and brought into the market yard for sale is
necessary as otherwise the provisions of the Act would be
evaded by alleging that the particular produce sold in the
market yard was not grown in the market area. For the same
reasons transactions between traders and traders have to be
controlled, if the control in the interest of agricultural
producers and the general public has to be effective. We
are therefore of opinion that the Act and the Rule,% and
Bye-laws thereunder cannot be struck down on this ground.
The contention under this head therefore must fail.
Re. (6).
The next contention is that rr. 65, 66 and 67 were struck
down by this Court in the earlier judgment and have neither
been reframed nor validated by the Ordinance. Therefore,
these rules do not exist. Consequence of this, it is
alleged, is that it
900
is not open to the market committee to issue licences which
were provided by these rules. Rules 65 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. Rule 67 provides that no person shall do business as
a trader, commission agent, broker, weighmen, measurer,
surveyor, warehouseman or operate in any other manner in any
market area except under licence granted by the market
committees. It is urged that licences are granted under
these rules read with s.5A, which now provides that whore a
market is established the market committee may issue
licences in accordance with rules to traders, commission
agents, brokers etc. to operate in the market area or any
part thereof. Section 5A, it is urged, is a mere enabling
provision and becomes effective when the rules are framed
and that licences under the enabling provisions of s. 5A are
to issue in accordance with the rules; and if there are no
rules as to issue of licences the enabling provisions of a.
5A cannot be availed of by the market committee to require
the taking out of licences. It is rr. 65 and 67 which
prohibit business in the market area without taking licences
and provide for the manner in which applications for licence
shall be made, the period for which the licence shall remain
valid and other incidental matters. It is urged that as
these rules were struck down by this Court and have neither
been reframed nor validated under the Ordinance there is no
power in the market committee to require traders to take out
licences merely because s. 5A enables it to issue licences.
The argument on behalf of the State is that even though
these rr. 65 and 67 were struck down because they were in-
consistent with s. 5A as it stood before the amendment, now
that s. 5A has been amended these rules must be held to have
revived and reliance in this connection is placed on certain
decisions of
901
this Court where it was held that an Act which was valid
when it was passed before the Constitution came into force
and some provisions of which be. came invalid for certain
purposes in view of the provisions in the Constitution
relating to fundamental rights and Art. 13 thereof, became
wholly effective again when the Constitution was amended and
the inconsistency with the fundamental rights removed. This
principle was laid down by this Court in Bhikaji Narain
Dhakras v. The State of Madhya Pradrsh (1), in these words:
“The true effect of Art. 13(1) is to render an
Act inconsistent with the fundamental right
inoperative to the extent of the inconsis-
tency. It is over-shadowed by the fundamental
right and remains dormant but is not dead.
With the amendment made in clause (6) of Art.
19 by the First Amendment Act, the pro.
visions of the impugned Act were no longer
inconsistent therewith and the result was that
the impugned Act began to operate once again
from the date of such amendment with this
difference that’, unlike amended clause (2) of
Art.19 which was expressly made retrospective,
no rights and obligations could be founded on
the provisions of the impugned Act from the
date of the commencement of the constitution
till the date of the amendment.
This matter was further considered in Deep Chand v. The
State of Uttar Pradesh (2) and it was held by majority
that ,,there was clear distinction between the two clauses
of Art. 13. Under cl. (1), pre-Constitution law subsisted
except to the extent of its inconsistency with the
provisions of Part III whereas under cl. (2) any post
Constitution law contravening those provisions was a nullity
from its inception to the extent of such contravention and
(1) (1955) 2 S.C.R. 589 589 (2) (1955) Supp. 2 S.C.R. B.
902
therefore a law which was bad ab initio under Art. 13 ( 2)
either wholly or to the extent of the con travention could
not be revived by the application of the doctrine of
eclipse and the doctrine could only apply in the case of a
law that was valid when made but was rendered invalid for
certain purposes by a supervening constitutional
inconsistency. The argument on behalf of the State is that
if rr. 65 and 67 were valid when they were first framed and
became invalid on the introduction of s. 5A in the Act, they
became effective again when s. 5A was amended by the
Ordinance.
It has not been disputed in this case that the doctrine of
eclipse applies to cases of rules. The only dispute was
whether rr. 65 and 67 in the present form were in existence
before 1953 when a. 5A was inserted in the Act and if so
whether they were valid in that form before 1953. Time was
taken by the parties to trace the history of the Act and
those two rules and the form in which the Act and these
rules stood before 1953. Investigation in this matter shows
that rules were framed for the first time in 1941 after the
Act came on the statute book. Rule 65 (1) was in the same
form as it existed when it was struck down by the earlier
judgment. Rule 67 (1) was also substantially in the same
form except that it did not originally include a trader or a
commission agent or warehouseman as it did at the time when
it was struck down. The addition or the words “the traders
and commission agents” in r. 67(1) is however not material,
for these classes were already covered by r.65(1). As for
the werehousemen which were added sometime later to r.
67(1), that addition need not detain us because we are not
concerned in these petitions with warehousemen. So it seems
that r. 65 (1) and r. 67 (1) were practically the same when
they were first framed in 1941 as they existed when they
were struck down. The Act as originally passed in 1939 did
not contain a section like s.5A. The scheme of the Act then
was that under a. 4 (2
903
the Government alone could grant licences for setting up any
place for the purchase and sale of agriculture produce
notified under the Act and thereafter under s. 5 it was the
duty of the market committee established under the Act for
every market area to enforce the provisions of the Act and
the conditions of the licence granted by the Government
setting up a place as above and to establish a market
therein, if so, required by the Government. Section 26 gave
power to the Government to frame rules for the purposes of
carrying out the provisions of the Act. Sub-section (2)(e)
and (f) were as below:-
“(2) In particular and without prejudice to
the generality of the foregoing provisions
such rules may provide for or regulate:-
(e)the maximum fees which may be levied by the
market committee in respect of licences
granted to traders and on the agricultural
produce bought and sold in the market area and
the recovery of such fees;
(f)the issue of licences to brokers, weigh-
men measures and surveyors the form in which
and the conditions subject to which such
licences shall be issued or renewed and the
conditions subject to which the licences shall
carry on their business and the fees to be
charged therefore.”
It will be seen that these provisions by which rules could
be framed for grant of licences did not confer power for
issuing licences only for the market established under s.5
is it originally stood. These powers were general in terms
and the Government could frame rules empowering the market
committee to issue licences for carrying on business
through. out the market area. Rules 65 (1) and 67 (1)
therefore would be within the power granted to the State
Government under a. 26 when they were
904
originally framed in 1941 and would thus be valid then.
Then we come to the amendment of the Act in 1948. By this
amendment, clauses (e) and (f) of s. 26(2) were combined
in one and were numbered as sub-s. (2)(f), which runs as
follows:-
(2)In particular and without prejudice to
the generality of the foregoing provision such
rules may provide for or regulate:-
(f)the issue of licences to traders, com-
mission agents, warehousemen and other persons
operating in-the market, brokers, weighmen,
measurers and surveyors, the form in which,
and the conditions subject to which such
licences shall be issued or renewed and the
fees to be charged therefore;”.
It will be seen that though the words ‘market area” do not
appear in this provision, it is still of a general nature
and does not restrict the operation of the licence only to
the market. So rr. 65 an(] 67 would not be inconsistent
with it.
Then we come to the amendment of 1953 which introduced s.54
(as it was before the amendment by the Ordinance) in the Act
and that provided that ,’where a market is established under
s.5, the market committee may issue licences in accordance
with the rules to traders, commission agents, brokers,
weighmen, measurers, surveyors, warehousemen and other
persons to operate in the market.” This section was
considered in the earlier judgment and it was held there on
the basis of this section that rr. 65 and 67 when they gave
power to the committee to issue licences for operation in
the market area as distinguished from the market were bad
after the enactment of S. 5A.
905
It is however clear from the above narration of facts that
r.65(1) and r.67 (I,) were valid when they were originally
framed and remained valid till s. 5A was enacted in 1953 and
became bad on the insertion of s. 5A in the Act. Now that
s. 5A has been amended by the Ordinance, rr. 65 and 67 are
obviously in conformity with it, r. 66 being merely
consequential. Therefore they will revive by the
application of the doctrine of eclipse as they are no longer
overshadowed by s. 5A as it was before the Ordinance. The
contention under this head must therefore fail.
Re. (7).
The argument under this head is that subs.(3) of s. 29-B
which validates the collection of licence-fees by market
committees is bad inasmuch as it makes it impossible for
refund to be made of licence-fees collected at the time when
the market committee had no power to collect it. We have
not been able to understand this contention, for it is not
disputed that the legislature has power to legislate
retrospectively even with respect to taxation (see M. P. V.
Sundararamier & Co. v. The State, of Andhra Pradesh (1),
where Sales Tax Laws Validation Act, 1956, was held
constitutionally, valid. Fees ire also included within the
taxing power of the legislature in the broadest, sense.
Article (1) therefore has no application in the present case
and we have to took to Art. 265 which says that “no tax
shall be levied or collected except by authority of law”.
Sub-section (3) of s. 29-B is the law which retrospectively
authorises the levy of licence-fees collected in this case.
Retrospective power of the legislature to make a law being
there even in the case of taxation, we fail to see how the
provisions of sub-s. (3) of s. 29-B which validate the levy
and collection of licence-fees can be hold to be invalid
(1)[1958] S.C.R. 1422.
906
under Art. 31(1). We may add that the same will apply to
fees collected under s. II and validated by sub-s. of s.
29-B. There is’ therefore no force in this contention. It
is hereby rejected.
In the result, the petitions are dismissed with costs.
One set of hearing fee.
Petitions dismissed,