JUDGMENT
1. In all these writ petitions, the power of the Agricultural Market Committee, Hyderabad to levy and collect market fees from the petitioner herein, the commission agents who carry on business of selling betel leaves as commission agents of the growers in “Gyan Bagh”, Hyderabad, a private market owned by them is questioned.
2. The members of the “Pan Merchants Wholesale Commission Agents Association, “Hyderabad are licenced commission agents carrying on the trade of selling betel leaves on behalf of the growers in the private market “Gyan Bagh” situated in Sitarampet, Hyderabad. They plead that the private market “Gyan Bagh” is owned by them, that they have been carrying on the trade in betel leaves as commission agents in that market from time immemorial and that no facilities whatsoever have been provided so far in that market by the Agricultural Market Committee, Hyderabad. It is further stated that “Gyan Bagh” has not been so far established as a market proper under Sub-section (3) of Section 4 of the Andhra Pradesh Agricultural (Produce & Livestock) Markets Act, 1966 (for short the Act).
3. 1n exercise of the powers conferred by Clause (i) of Section 2 of the Act, the State Government declared betel leaves to be agricultural produce for the purpose of the Act in G.O.Ms.No. 323 Food & Agriculture (Agri-IV) Department, dated February 15, 1968. “Agricultural Produce” is defined in Section 2 (i). It “means anything produced from land in the course of agriculture or horticulture and includes forest produce or any produce of like nature either processed or un-processed and declared by the Government by notification to be agricultural produce for the purposes of this Act.” The validity of the notification declaring betel leaves to be agricultural produce was upheld by this Court by the judgment dated October 20,1975 in W.P.No. 5221 of 1973, which was filed by the petitioner herein.
4. 1n exercise of the powers conferred by Sub-section (3) of Section 3 of the Act, the State Government declared in G.O.Ms.No. 2095 Food & Agriculture (Agri-IV) Department, dated October 29,1968 the notified area consisting of all villages and area under Hyderabad Urban and Hyderabad East Taluks in respect of agricultural produce, livestock and products of livestock mentioned in Schedule II to the G.O., including the betel leaves. Thereafter, Agricultural Market Committee, Hyderabad has been constituted by the State Government for the said notified area.
5. 1n exercise of the powers conferred by Sub-section (4) of Section 4 of the Act, the State Government declared by notification in G.O.Ms.No. 867 Food & Agriculture (Agri-IV) Department, dated June 30,1971 the market area and the notified market area with reference to the market “Hyderabad”. This notification was amended by a subsequent notification issued by the State Government in G.O.Ms.No. 123 Food & Agriculture (Agri-IV) Department, dated February 12,1976, the relevant portion of which reads as follows:
——————————————————————————–
Name of the Market Area Notified Notified Market
market agricultural Area
established produce,
under Section 4(3) livestock and
(a)and(b) products of
livestock
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Hyderabad Area comprised All Agricultural 15 kms. radius
within the limits of produce and Ghee around the office
Municipal as notified in of the Agricul-
Corporation of G.O.Ms.No. 223 tural Market
Hyderabad F and Adt.l5-2-1968 Committee,
excluding the and G.O.Ms. Hyderabad ex-
areas comprising No. 1894 F and A cluding the market
of Chandraingutta dt.10-9-1979. area of Chand-
and Shamsheer- raingutta Market,
gunj of Ward within the notified
No. 18 of Muni- area of the Market
cipal Corporation committee.
of Hyderabad.
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6. The main contention advanced by Sri. E. Ayyapu Reddy, the learned counsel for the petitioners is that in the notified area declared under Sub-section (3) of Section 3, by the notification in G.O.Ms.No. 2095 Food & Agriculture (Agri-IV) Department, dated October 29,1968 comprising Hyderabad Urban and Hyderabad East Taluks, the Hyderabad Agricultural Market Committee has not so far established a market under Sub-section (3) of Section 4 of the Act for the purchase and sale of betel leaves, nor has “Gyan Bagh” been notified as a market under the said provision, and therefore, no market fees can be levied on the sale or purchase of betel leaves in “Gyan Bagh”. In order to appreciate the main contention of the learned counsel for the petitioners, it will be necessary to refer to the relevant provisions of the Act. “Market” means a market established under Sub-section (3) of Section 4 and includes market yard and any building therein Section 2 (vi). “Market Committee” means a committee constituted or reconstituted under the provisions of the Act Section 2 (vii)). “Notified Area” means any area notified under Section 3 Section 2(xi). “Notified Market Area” means any area declared to be a market area by notification under Section 4 Section 2(xii). “Products of livestock” means such products of livestock as may be declared by the Government by notification, to be products of livestock for the purposes of this Act Section 2(xv)). “Trader” means the person licensed under Sub-section (1) of Section 7 and includes the person in whose management the collection of fees is placed whether he is called a commission agent, ginner, presser, warehouseman, importer, exporter, stockist or by whatever local name he is called, Section 2 (xvi) Power is conferred upon the State Government under Sub-section (3) of Section 3 of declare the area to be a notified area in respect of any agricultural produce, livestock and products of livestock. The Government shall constitute by notification a Market Committee for every notified area as provided in Sub-section (1) of Section 4. The Market Committee so constituted shall be a body corporate and it shall be the duty of such Committee to enforce the provisions of the Act and the rules and bye-laws made thereunder in the notified area. The Market Committee shall establish in the notified area such number of markets as the Government may direct for the purchase and sale of any notified agricultural produce, livestock or products of livestock and shall provide such facilities in the market as may be specified by the Government Section 4 (3) (a). The Market Committee shall declare the limits of every market established by it called ‘market area’. After the establishment of a market by the Market Committee and declaration of market area, the State Government shall declare by notification what is known as notified market area’ consisting of the market area and such other area adjoining thereto as may be specified by the State Government in respect of any notified agricultural produce, livestock or products of livestock. Section 7 prohibits any person from setting-up, establishing or using or continuing or allowing to be continued any place for the purchase, sale, storage, weighment, curing, dressing or processing of any notified agricultural produce or products of livestock or for the purchase or sale of livestock except under and in accordance with the conditions of a licence granted to him by the market committee. Power in conferred upon the Market Committee to levy fees on any notified agricultural produce, livestock or products of livestock, purchased or sold in the notified market area.
7. In view of the provisions referred to above, it is submitted by Sri E. Ayyapu Reddy, the learned counsel for the petitioner that unless a market is established under Sub-section (3) of Section 4 for the purchase or sale of betel leaves and facilities are provided in that market by the Market Committee, on market fees can be levied by the Market Committee under Section 12. In this context, it is urged that no market proper has been established in the notified area of Hyderabad Urban and Hyderabad East Taluks and what has been mentioned in the notifications in G.O.Ms.No. 867 dated June 30,1971 and G.O.Ms.No. 123 dated February 12,1976 issued by the State Government under Section 4 (4) saying that Hyderabad market has been established under Section 4 (3) (A) and (b) is not correct. Hyderabad comprises of a vast area and it cannot be described as a market proper or a market yard. Therefore, it is submitted that when the Market Committee had. not established a market as contemplated under Section 4(3) for the sale and purchase of betel leaves, question of fixing its limits, known as market area and declaring the notified market area, does not arise. In the absence of an established market proper, it is contended that no market fees can be levied.
8. 1n support of this contention, the learned counsel has cited a decision of the Full Bench of this Court in M. S. Murthy v. State of Andhra Pradesh, . The learned Judges pointed out:
“…. the notified area is the largest geographical and physical unit. There may be a single market or more than one market for each notified area….. Thus, the largest physical unit is the notified area and within that notified area is the notified market area pertaining to each market established by the market committee. Within the notified area is the market area which defines the limits of every market and within the market area are the actual markets where the notified agricultural produce is bought or sold and where facilities have to be provided by the market committee for buying and selling these notified commodities. It is obvious that all these different five steps have to be completed before the machinery set up under the Act starts functioning.”
So, also, reliance is placed on the following observation of the Supreme Court in Mohammad Hussain Gulam Mohammad and Anr. v. The State of Bombay and Anr., (1969) 2 SCR 659, a case arising under the Bombay Agricultural Produce Markets Act, 1939:
“The power of the market committee to grant licences under Section 5-A arises only after a market is established and is confined to operation in the market.”
9. There is no dispute that “Gyan Bhag”, a private market owned by the petitioners, where they have been carrying on the business of selling betel leaves as commission agents of the growers has not been notified as a market under Section 4 (3) of the Act. However, it is submitted by the learned Advocate General, appearing for the respondents, that admittedly “Gyan Bhag” is within the notified area declared by the State Government under Section 3(3) of the Act. The State Government had also issued a notification under Section 4(4) declaring the notified market area in respect of the market “Hyderabad” established under Section 4(3) for the sale or purchase of betel leaves. Therefore, it is contended that persons carrying on business outside the market, but within the notified market area, are liable to pay the market fees under Section 12 as laid down by the Supreme Court in Sreenivasa General Traders and Ors. v. State of Andhra Pradesh, . Referring to the various provisions of the Andhra Pradesh Agricultural Produce and Livestock Markets Act, 1966 and the rules made thereunder in particular Section 7 and 12, the Supreme Court has pointed out that Section 12 casts a liability on the persons selling or purchasing agricultural produce, livestock or products of livestock out of the market but within the notified market area to the pay the market fees. The respondents have not produced any material to show that a market has been established under Section 4 (3) in the notified area of Hyderabad urban and east taluks.
10. When no market has been established under Section 4(3)of the Act with in the notified area and when no facilities whatsoever have been provided by the Market Committee in “Gyan Bagh” the question is whether any market fee can be levied on the petitioners. in Mohammad Hussain Gulam Mohammad and Anr. v. The State of Bombay and Anr. (2 supra), a case arising under the Bombay Marketing Statute, the Supreme Court repelled the attack that the impost was in the nature of sales tax, holding that it was fee, in the following terms:
“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.”
Since the market was not found to have been properly established in that case, the Supreme Court held that the market committee could not enforce any of the provisions of the Act or the rules and the bye-laws.
11. In Kewal Krishnan v. State of Punjab, a case arising under the Punjab agricultural Produce Markets Act, 1961, the Supreme Court deduced the following principles for satisfying the tests for valid levy of market fees on the agricultural produce:
“(1) That the amount of fee realised must be earmarked for rendering service to the licensees in the notified market area and a good and substantial portion of it must be shown to be expended for this purpose.
(2) That the services rendered to the licensees must be in relation to the transaction of purchase or sale of the agricultural produce.
(3) That while rendering services in the market area for the purpose of facilitating the transactions of purchase and sale with a view to achieve the objects of the marketing legislation it is not necessary to confer the whole of the benefit on the licensees but some special benefits must be conferred on them which have a direct, close and reasonable correlation between the licensees and the transactions.
(4) That while conferring some special benefits on the licensee; it is permissible to render such service in the market which may be in the general interest of all concerned with transactions taking place in the market.
(5) That spending the amount of market fees for the purpose of augmenting the agricultural produce, its facility of transport in villages and to provide other facilities meant mainly or exclusively for the benefit of the agriculturists is not permissible on the ground that such services in the long run go to increase the volume of transactions in the market ultimately benefiting the traders also. Such an indirect and remote benefit to the traders is in no sense a special benefit to them.
(6) That the element of quid pro quo may not be possible, or even necessary, to be established with arithmetical exactitude but even broadly and reasonably it must be established by the authorities who charge the fees that the amount is being spent for rendering services to those on whom falls the burden of the fee.
(7) At least a good and substantial portion of the amount collected on account of fees, may be in the neighbourhood of two-thirds or three-fourths must be shown with reasonable certainty as being spent for rendering services of the kind mentioned above.”
In Agricultural Market Committee, Anantapur v. Kulluru Subbi Reddy, , a Division Bench of this Court considered the question whether a Market Committee can compel the traders carrying on business in their own premises to shift their business to the market yard where even the minimum facilities have not been provided. The question was answered in the negative, holding that the market committee was under an obligation to provide the minimum facilities in the market before requiring the traders to shift to the new market yard. So also, a learned Judge of this Court, in Rajam Jute and Oil Millers Association v. Agricultural Market Committee, 1992 (1) APLJ 35 (S.N.) has taken the view that a market committee is not entitled to collect market fees till basic facilities are provided in the market yard. In the instant case, the report submitted by the Commissioner appointed by this court reveals that Gyan Bagh market is not provided with even the basic minimum amenities and facilities in accordance with G.O.Ms.No. 719, dated December 27,1979.
12. Thus, even where a market has been established under Section 4 (3) by an Agricultural Market Committee for the sale or purchase of any agriculture produce, no market fee can be levied by it unless the basic minimum amenities and facilities are provided therein. In the present case, no market whatsoever was at all established by the market committee under Section 4 (3) within the notified area of Hyderabad Urban and Hyderabad East Taluks. When no market has been established question of providing facilities in the market and making a declaration of limits of market and notified market area does not arise.
13. lt is, however, submitted by the learned Advocate General that whatever might have been the position relating to the establishment of a market under Section 4 (3) within the notified area of Hyderabad Urban and Hyderabad East Taluks prior to 1986, but after the setting up of a wholesale fruit market in an area of 22 acres, under the notification published in the Andhra Pradesh Gazette dated 3rd September, 1986, in Gaddi Annaram village, Hyderabad in September 1986, and a vegetable market at Jamsingh, Sri Balaji Venkateswara Swamy Temple, Gudimalkapur, Golkonda Mandal, for the purpose of purchase and sale of agricultural produce, livestock and products of livestock including betel leaves, as per the directions issued by the State Government in G.O.Ms.No. 444 Food & Agriculture (Marketing I) Department, dated June 16, 1989, it cannot now be pleaded by the petitioner that no market proper has been established under Section 4(3) of the Act by the Market Committee for the sale and purchase of betel leaves within the notified area of Hyderabad Urban and Hyderabad East Taluks. It is stated that in respect of those two markets, the notified market area comprises of the entire notified area of the Hyderabad Market Committee adjoining those respective markets including the area within the Hyderabad Municipal Corporation. It is also the case of the respondents that in these two markets, the necessary amenities and facilities are provided for the sale and purchase of the notified agricultural produce, livestock and products of livestock. Therefore, it is contended by the learned Advocate General that the petitioners who have been carrying on business in the sale of betel leaves in Gyan Bagh, which is situated outside the fruit and vegetable markets, but within the notified market area declared under the relevant notifications, are liable to pay the market fees. This argument of the learned Advocate General is countered by Sri. E. Ayyapu Reddy, the learned counsel for the petitioners stating that the wholesale fruit market established in an extent of 22 acres in Survey Nos. 124 to 128 in Gaddi Annaram village, Hyderabad District, is a market for the sale and purchase of only fruits and not any other notified agricultural produce, livestock and products of livestock. The vegetable market is stated to have been established by the Hyderabad Agricultural Market Committee in an extent of 21,22 acres in survey Nos. 295/1 to 4 and 126 to 131. Gudimalkapur village, Golkonda Mandal, Hyderabad District in accordance with G.O.Ms.No. 444 Food & Agriculture (Marketing I) Department, dated June, 16,1989 issued by the State Government, for the purchase and sale of agricultural produce, livestock and products of livestock including betel leaves, specified in Schedule II to the notification issued in G.O.Ms.No. 2095, dated October 29,1968. In respect of the wholesale fruit market, the notification issued by the State Government under Section 4 (4) of the Act in G.O.Ms.No. 189 Food & Agriculture (Marketing I) Department, dated April 3,1987, contains the particulars relating to the name of the market, the market area, notified agricultural produce, livestock and products of livestock sold or purchased in the market and notified market area. This market as we have already mentioned is intended for the sale and purchase of only the fruits and it cannot be said to be a market established for the sale and purchase of betel leaves. So far as the vegetable market is concerned, the State Government directed the Agricultural Market Committee, Hyderabad, in G.O.Ms.No. 444 Food & Agriculture (Marketing I) Department, dated June, 16,1989 to establish a vegetable market at Jamsingh, Sri Balaji Venkateswara Swamy Temple, Gudimalkapur, Golkonda Mandal, Hyderabad District in survey Nos. 295/1 to 4 and 126 to 131 for the purpose of purchase and sale of agricultural produce livestock and products of livestock including betel leaves specified in Schedule II to the notification issued in G.O.Ms.No. 12095, dated 29th October 1968. The relevant file produced by the respondents discloses that the Agricultural Market Committee, Hyderabad resolved at its meeting held on August 28, 1990 to establish a vegetable market at the place as directed by the State Government and declare the market area. But, it has been vehemently asserted on behalf of the petitioners that till this date, the State Government has not declared the notified market area of the vegetable market by way of a notification and therefore, the provisions of the Act and the rules and bye-laws made thereunder cannot be enforced in respect of levy of market fee on the sale or purchase of betel leaves. The learned counsel for the respondents have not produced a copy of the notification issued by the State Government declaring the notified market area in respect of the vegetable market at Gudimalkapur, Golkonda mandal, Hyderabad District and it is admitted that no such notification has been issued by the State Government so far. Therefore, we have to proceed on the basis that the State Government has yet to declare the notified market area in respect of the vegetable market established at Gudimalkapur, Golkonda Mandal, Hyderabad District.
14. lt is no doubt true that as pointed out by the Full Bench of the Punjab & Haryana High Court in Subbhash Chander Kamlesh Kumar v. The State of Punjab and Ors., , it is not necessary to establish a separate market yard for a particular agricultural produce for the levy of market fees. It is also true that the setting up of one market in a vast notified market area cannot be held to be illegal or improper because of the vastness of the notified market area, (vide R.K. Porwal v. State of Maharashtra, ).
15. But the question in the instant case is whether any market has been established by the Hyderabad Agricultural Market Committee under Section 4(3) within the notified area of Hyderabad Urban and Hyderabad East Taluks for the sale or purchase of betel leaves. In view of the material referred to above, we have to hold that till the establishment of a vegetable market at Gudimalkapur, Golkonda mandal, Hyderabad district in August 1990 pursuant to the directions of the State Government in G.O.Ms.No. 444, dated June 16,1989 no market has been established under Section 4 (3) in the notified area of Hyderabad Urban and Hyderabad East Taluks for the sale and purchase of betel leaves. Even after the establishment of a vegetable market at Gudimalkapur by the Agricultural Market Committee, Hyderabad, the State Government has not so far declared by notification the notified market area under Section 4 (4) and till such a notification is issued, the petitioners cannot be said to be carrying on business in the sale of betel leaves within a particular notified market area, but outside the market established for the sale and purchase of betel leaves. So far as the wholesale fruit market is concerned, its establishment and the declaration of its notified market area will not be relevant for the purpose of this case as that market is intended only for the sale and purchase of fruits and not for any other notified agricultural produce, livestock and products of livestock.
16. Yet another point urged by the learned counsel for the respondents is that the Hyderabad Agricultural Market Committee has almost completed the construction of the shops-cum-godowns for the purpose of establishing a centralised market for agricultural produce at Mahaboob Mansion, Malakpet, Hyderabad and that the Agricultural Market Committee has been permitted by the State Government in the memo dated May 23,1980 to allow transactions in the notified and non-notified commodities including betel leaves in the market complex at Mahaboob Mansion. But, G.O.Ms.No. 649 Food & Agriculture (Marketing I) Department, dated October 9,1990 discloses that the construction of market complex has not yet been completed and that the limits of the market and the notified market area have not yet been declared under Section 4 (3) and 4 (4) of the Act.
17. Therefore, from the aforesaid discussion, it emerges that no market has been established by the Hyderabad Agricultural Market Committee within the notified area of Hyderabad Urban and Hyderabad East Taluks for the sale or purchase of betel leaves and when no market has been established, question of providing facilities in the market does not arise. When no service whatsoever is rendered by the Agricultural Market Committee by providing facilities in any one of the markets established by it for the sale or purchase of betel leaves it cannot levy market fees. Therefore, having regard to the various decisions referred to above and the provisions of the Act, the rules and bye-laws made thereunder, it is held that the market fees cannot be levied on the betel leaves being sold in “Gyan Bagh” by the petitioners as commission agents of the growers till the statutory requirements under Section 4 (3) of the Act relating to the establishment of a market in the notified area of Hyderabad Urban and Hyderabad East taluks for sale or purchase of betel leaves and declaration of the notified market area under Section 4 (4) of the Act are fulfilled.
18. We do not find force in the contention of Sri.E. Ayyapu Reddy, the learned counsel for the petitioners that in any event, the petitioners who are commission agents of growers of betel leaves, are not liable to pay the market fees in view of the decision of Division Bench of this Court in P. Srinivasulu & Co., v. The Secretary, Agricultural Market Committee, Guntakal, 1987 (2) APLJ 345, wherein it has been categorically held as follows:
“….The liability of the commission agent is traceable to:
(a) the application filed by the commission agent seeking a licence under Section 7 wherein the commission agent had agreed to abide by the all provisions of the Act, Rules and Bye-laws;
(b) the authorisation given by the market committee to the commission agent in the licence issued under Section 7 of the Act in Form No. 8;
(c) the provisions contained in Rule 74 (4) and (5), and finally;
(d) bye-law No. 25 oblige the commission agent to collect the market fee from the purchaser and to pay the same over to the market committee.
It is cumulative operation of all the aforesaid provisions that render the commission agent liable to pay to the market committee the fee payable by the purchasers, for collecting which the market committee gave the commission agent a clear authorisation and the Rules and Bye-laws clearly provide.”
19. For the reasons stated above, it is declared that the petitioner are not liable to pay the market fees for the sale of betel leaves in “Gyan Bagh” private market till a market for the sale or purchase of betel leaves is established by the Agricultural Market Committee, Hyderabad in the notified area of Hyderabad Urban and Hyderabad East Taluks under Section 4 (3)of the Act and the notified market area is declared by a notification as contemplated under Section 4 (4) of the Act.
20. The writ petitions are allowed only to the extent indicated above. There shall be no order as to costs. Advocate’s fee Rs. 500/-