{"id":38391,"date":"1979-05-04T00:00:00","date_gmt":"1979-05-03T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/kewal-krishan-puri-anr-vs-state-of-punjab-others-on-4-may-1979"},"modified":"2018-11-27T20:37:58","modified_gmt":"2018-11-27T15:07:58","slug":"kewal-krishan-puri-anr-vs-state-of-punjab-others-on-4-may-1979","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/kewal-krishan-puri-anr-vs-state-of-punjab-others-on-4-may-1979","title":{"rendered":"Kewal Krishan Puri & Anr vs State Of Punjab & Others on 4 May, 1979"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Kewal Krishan Puri & Anr vs State Of Punjab & Others on 4 May, 1979<\/div>\n
Equivalent citations: 1980 AIR 1008, \t\t 1979 SCR (3)1217<\/div>\n
Author: N Untwalia<\/div>\n
Bench: Chandrachud, Y.V. ((Cj), Bhagwati, P.N., Untwalia, N.L., Fazalali, Syed Murtaza, Pathak, R.S.<\/div>\n
           PETITIONER:\nKEWAL KRISHAN PURI & ANR.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF PUNJAB & OTHERS\n\nDATE OF JUDGMENT04\/05\/1979\n\nBENCH:\nUNTWALIA, N.L.\nBENCH:\nUNTWALIA, N.L.\nCHANDRACHUD, Y.V. ((CJ)\nBHAGWATI, P.N.\nFAZALALI, SYED MURTAZA\nPATHAK, R.S.\n\nCITATION:\n 1980 AIR 1008\t\t  1979 SCR  (3)1217\n 1980 SCC  (1) 416\n CITATOR INFO :\n E\t    1980 SC1037\t (1,6)\n C\t    1980 SC1124\t (3,10,11,24,36)\n RF\t    1981 SC1127\t (7)\n E\t    1981 SC1863\t (25)\n RF\t    1982 SC1012\t (6)\n R\t    1983 SC 634\t (20)\n R\t    1983 SC1246\t (26,27,28,29,32,37)\n R\t    1984 SC1870\t (16)\n F\t    1985 SC 218\t (1,7,8,10,12,13,15)\n R\t    1989 SC 100\t (16)\n RF\t    1992 SC1383\t (12,13)\n RF\t    1992 SC2084\t (8)\n\n\nACT:\n     Punjab Agricultural  Produce Market.  Act, 1961 Ss. 23,\n26 and\t28 &  Punjab Agricultural Produce (General) Rules, R\n29-Marketing Development  Fund & fee-Validity-Principles for\nsatisfying the rest for a valid levy of market fees.\n\n\n\nHEADNOTE:\n     Punjab Agricultural  Produce Markets  Act, 1961 Ss. 23,\n26 and\t28 &  Punjab Agricultural Produce (General) Rules, R\n29-Marketing Development  Fund &  Marketing Committee  Fund-\nUtilisation of\tmarket fees-Validity  of purposes enumerated\nin clauses of Ss. 26 and 28 examined\n     The Punjab Agricultural Produce Markets Act, 1961 which\nwas passed  by the  composite State  of Punjab is an Act for\nthe better  regulation of  the\tpurchase,sale,\tstorage\t and\nprocessing of  agricultural produce and the establishment of\nmarkets for  agricultural produce  in the  State. Section  3\nenvisages  the\t establishment\tof  the\t State\tAgricultural\nMarketing Board\t for the  entire State and it is provided in\nsub-sec (9)  that \"The\tBoard shall exercise superintendence\nand control over. the committees\" Section 6(1 ) provides for\n\"declaration  of   notified  market   area\"  and  the  State\nGovernment is  empowered to  declare the area notified under\ns. S or any portion thereof to be a notified market area for\nthe purpose  of the  Act  in  respect  of  the\tagricultural\nproduce notified  under s. 5 or any part thereof. The market\nareas and market yards were declared. putting restriction on\nthe traders  to carry on their trade under a licence granted\nby  the\t  various   Markets   Committees   established\t and\nconstituted within  the specified boundaries or areas. After\nthe declaration\t of the\t notified market  area no person can\nestablish or  continue any  place for  the  purchase,  sale,\nstorage and  processing of  the agricultural  produce except\nunder a licence granted in accordance with the provisions of\nthe Act, the Rules and the Bye-laws. Section 23 empowers the\ncommittee to  levy the\tfees subject to such rules as may be\nmade  by   the\tState  Government  in  this  behalf  on\t the\nagricultural produce  bought or\t sold by  licensees  in\t the\nnotified market\t area at  a  certain  percentage.  Under  s.\n27(1), all Moneys received by a Committee shall be paid into\na fund\tto be  called the  Market  Committee  Fund  and\t all\nexpenditure incurred  shall be\tdefrayed out  of such  fund,\nwhile under  s. 25  all receipts  of the  Board\t are  to  be\ncredited into  a fund to be called the Marketing Development\nFund and  the purposes\tfor which  it may  be  expended\t are\nenumerated in  s. 26  viz. better  marketing of agricultural\nproduce on  co-operative lines, collection and dissemination\nof market  rates and  news. grading  and standardisation  of\nagricultural produce etc. Section 28 catalogues the purposes\nfor which  the Marketing Committee Fund may be utilised viz.\nacquisition  of\t  sites\t for  the  market.  maintenance\t and\nimprovement  of\t the  market,  construction  and  repair  of\nbuildings which\t are necessary for the purpose of the market\netc.\n     In the  composite State  of Punjab\t and even  after the\nbifurcation of\tthe State  for about a period of three years\nthe maximum rate of market fee which could\n1218\nbe levied  by the various market communities under s. 23 was\n50  paise   for\t every\tone  hundred  rupees.  the  fee\t was\nthereafter raised from time to time.\n     A number of writ petitions were Filed in the High Court\nchallenging the\t power of  the Board  to incease the levy of\nfee. All  the writ  petitions were  heard together  and\t the\nincrease Ind  levy of fee upto Rs. 2\/- by the various Market\nCommittees in  the State  of Haryana was upheld and the writ\npetition of  the Haryana  dealers were dismissed while those\nof the Punjab dealers were allowed and the increase of u-a e\nbrought about  by Act  13 of  1974 to the extent of Rs, 2.25\nWas struck  down. [M\/s.\t Hanuman Dall & General Mills, Hisar\nv. State of Haryana & others AIR<\/a> 1976 P & H 1]\n     In Punjab,\t by amendment  Act 14  of 1975, s. 23 of the\nAct was\t again amended\tauthorising the imposition of market\nfee at a rate not exceeding Rs. 2.20 per hundred rupee only,\nand this  increase in  the rates of fee was again challenged\nin the\tHigh Court  and a  Full Bench  upheld the  increase.\n[Kewai Puri & Anr. v. State of Punjab & Ors., AIR 1977 P & H\n347]. This view was challenged in the appeal to this Court.\n     Both in  the State\t of Punjab  and the State of Haryana\nthe rate  of market  fee was  further raised from Rs. 2\/- to\nRs. 3\/-.  It was unsuccessfully challenged in the High Court\nby the\tdealers\t of  each  of  the  States,  who  thereafter\npreferred appeals  to this Court against the Judgment of the\nHigh Court and also challenged the increases in fee, in writ\npetitions in this Court.\n     In the appeals and writ petitions it was contended that\nthe levy of the market fee realised from the buyers under s.\n23 of  the Act could not be correlated I with the service to\nbe rendered  to the payers of the fees, and therefore cannot\nbe justified  and sustained on the well known concept of fee\nas pointed  out by this Court in several decisions, and that\nthe items of expenditure authorised and enumerated in ss. 26\nand 28 of the Act, go beyond the scope of the purpose of the\nutilisation of the market fees.\n     On the  question of  the validity\tof the\tfixation  of\nmarket fee  under s. 23 of the Act from time to time and the\nscope and the purpose of the utilisation of such fees:\n^\n     HELD: 1.  The impost of fee and the liability to pay it\nis on  a particular  individual or  a class  of individuals.\nThey are under the obligation to submit accounts, returns or\nthe  like  to  The  authorities\t concerned  in\tcases  where\nquantification of the amount of fee depends upon the same. I\nhey have  to  undergo  the  botherations  and  harassmentss,\nsometimes justifiably  and sometimes  even unjustifiably, in\nthe process  of discharging  their liability to pay the fee.\nThe authorities\t levying the  fee deal with them and realise\nthe fee\t from them.  By operation  of the  economic laws  in\ncertain kinds  of imposition of fee the burden may be passed\non to  different other\tpersons one after the other. [1229H-\n1230B]\n     In the  instant case,  the Market\tCommittees  and\t the\nMarket Board  assumed to themselves the liberty of utilising\nand  spending\tthe  realisations  from\t market\t fees  to  a\nconsiderable extent. as if it was a tax, although in reality\nit was not so. [1240D]\n     2. Rendering  some service,  however remote the service\nmay be, cannot strictly speaking satisfy the element of quid\npro required to be established in cases\n1219\nof the\timpost of  fee. Registration  fee, however has to be\ntaken to  stand on  a different\t footing altogether.  In the\ncase of\t such a\t fee the  test of  quid pro quo is not to be\nsatisfied with\tsuch direct  close or proximate relationship\nas in the case of many other fees. By and large registration\nfee is charged as a regulatory measure. [1241B]\n     3. This  Court in\ta large\t number\t of  cases  had\t the\noccasion to  examine the  nature of  fee and  tax and from a\nconspectus  of\t the  various\tauthorities  the  following,\nprinciples for\tsatisfying the\ttest for  a  valid  levy  of\nmarket fees  on the  agricultural produce  bought or sold by\nlicences in a notified market area are deducible :-\n     (i) That  the amount  of fee realised must be earmarked\nfor rendering  services to  the licencees  in  the  notified\nmarket area and a good and substantial portion of it must be\nshown to be expended for this purpose. [1243H]\n     (ii) That\tthe services  rendered to the licensees must\nbe in relation to the transaction of purchase or sale of the\nagricultural produce. [1244B]\n     (iii) That\t while rendering services in the market area\nfor the purpose of facilitating the transactions of purchase\nand sale with a view to achieve the objects of the marketing\nlegislation it\tis not\tnecessary to confer the whole of the\nbenefit on  The licensees  but some special benefits must be\nconferred on them which `have a direct, close and reasonable\ncorrelation between  the  licensees  and  the  transactions.\n[1244C]\n     (iv) That while conferring some special benefits on the\nlicensees it  is permissible  to render\t such service in the\nmarket which may be in the general interest of all concerned\nwith the transaction taking place in the market. [1244D]\n     (v) That  spending the  amount of\tmarket fees  for the\npurpose of augmenting the agricultural produce. its facility\nof transport  in villages.  and to  provide other facilities\nmeant mainly or exclusively for the benefit of agriculturist\nis not\tpermissible on\tthe ground  that such in services in\nthe long  run go  to increase  the volume of transaction, in\nthe market  ultimately benefiting  the traders also. Such an\nindirect and  remote benefit to the traders is in no sense a\nspecial benefit to them. [1244E-F]\n     (vi) That\tthe element  of quid  pro  quo\tmay  not  be\npossible,  or\teven  necessary,   to  be  established\twith\narithmetical exactitude\t but even  broadly and reasonably i;\nmust be\t established by\t the authorities who charge the fees\nthat the  amount is  being spent  for rendering\t services to\nthese on whom falls the burden of the fee. [1244G]\n     (vii) At  least a\tgood and  substantial portion of the\namount\tcollected   on\taccount\t of  fees,  may\t be  in\t the\nneighbourhood of  two-thirds or three-fourths, must be shown\nwith reasonable\t certainty  as\tbeing  spent  for  rendering\nservices of the kind mentioned above. [1244 H]\n     The  Commissioner Hindu Religious Endowments, Madras v.\nSri Lakshmindra\t Thirtha Swamiar  of Sri Shirur Mutt,<\/a> [1954]\nSCR 1005;  Matthews v. Chicorv Marketing Board, 60 CLR. 263;\nAttorney General  for British Columbia & Esquimalt & Nanaimo\nRailway Co. & Ors., (1950) Appeal Cases. 87: H. H.\n1220\nSudhundra  Thirtha   Swamiar  v.   Commissioner\t for   Hindu\nReligious &  Charitable Endowment, Mysore [1963 Suppl. 2 SCR\n302; Mahant Sri Jagannath Ramanuj Das & Anr. v. The State of\nOrissa &  Anr.,<\/a> [1954] SCR 1046; Ratilal Panachand Gandhi v.\nThe State  of Bombay  and ors.<\/a>\t[1954] SCR 1055; The Hingir-\nRampur Coal  Co. Ltd.  & ors. v. The State of Orissa & Ors.,<\/a>\n[1961] 2  SCR 537;  Parton v.  Milk Board  (Victoria) 80 CLR\n229; Corporation  of Calcutta  &  Anr.\tv.  Liberty.  Cinema<\/a>\n[1965] 2  SCR 477;  Har Shankar\t & ors. etc. etc. v. The Dy.\nExcise &  Taxation    Commr.  & ors. [1975] 3 SCR 254; Nagar\nMahapalika Varanasi v. Durga Das Bhattacharya & ors.<\/a>, [1968]\n3 SCR 374; The Delhi Cloth & General Mills Co. Ltd. v. Chief\nCommissioner Delhi  & Ors.,1970<\/a>]  2 SCR\t 348; Indian  Mica &\nMicanite Industries  Ltd. v  State of  Bihar &\tOrs.  [1971]\nSuppl.\tSCR   319;  Secretary\tGovernment  of\tMadras\tHome\nDepartment &  Anr. v. Zenith Lamp & Electrical Ltd.<\/a> [1973] 2\nSCR 973;  State of Maharashtra & Ors. v. The Salvation Army,\nWestern India  Territory,<\/a>[1975] 3  SCR 475;  Govt. of Andhra\nPradesh & Anr. v. Hindustan Machine Tools Ltd.<\/a> [1975] Suppl.\nSCR 394; The Municipal Council Madurai v. R. Narayanan<\/a> etc.,\n[1976] 1  SCR 333;  The Chief Commissioner Delhi and Anr. v.\nThe Delhi Cloth & General Mills Co. Ltd. & Anr. AIR<\/a> 1978, SC\n1181; P\t P. Kutti Keya & Ors. v. The State of Madras & Ors.,\nAIR<\/a> 1954  Madras, 621;\tMCVS Arunachala\t Nadar etc.  v.\t The\nState of  Madras &  Ors., [1959]  Suppl. 1  SCR 92;  Mohmmad\nHussain Gulam & Anr. v. State of Bombay & Ors.,<\/a> [1962] 2 SCR\n659;Lakhan Lal\t& Ors.\tetc. v.\t The State  of Bihar & Ors.,\n[1968] 3 SCR 534; referred to.\n     4. (i)  A dispute\tarose  between\tthe  parties  as  to\nwhether the  licence is granted for the whole of the area or\nfor particular\tplaces therein.\t On examining  Form  in\t the\nRules meant  for grant\tof licence  under s. 10, it is found\nthat the  licence is  granted for  one\tor  more  places  of\nbusiness specified  in\tcol.  6\t situated  in  a  particular\nnotified market\t area named at the top of the licence. There\nwill be\t no sense in specifying the place of business in the\nlicence if  the licensee is to be permitted to establish his\nplace of  business any where in a notified market area which\nis too\tbig and extensive for the control and supervision of\na particular  Market Committee.\t Market yards  are  declared\nunder s.  7. For  each notified market area there can be one\nprincipal market  yard and  one or  more sub-market yards as\nmay be necessary. The marginal note of sec 8 is, \"No private\nmarket to  be opened  in  or  near  places  declared  to  be\nmarkets.\" [1246D-E]\n     (ii) There\t is no special provision in this statute for\nan establishment  of markets  or markets  proper as  per the\ndefinition contained  in cl. (i) and (k) of s. 2 of the Act,\nit is  reasonable  to  assume  that  the  intention  of\t the\nlegislature is\tto constitute the market yards as the market\nproper and  ordinarily and generally the market would be the\nsame but may include some other places where transactions of\npurchase of  agricultural produce  by the  traders from\t the\nproducers has  been allowed  in order  to avoid\t rush in the\nprecincts of  the market  proper. But  one thing  is certain\nthat the whole of the market area in no sense can be equated\nwith market  or market\tproper. Nobody\tcan be'\t allowed  to\nestablish a  purchasing centre\tof his\town at\tany place he\nlikes  in  the\tmarket\tarea  without  there  being  such  a\npermission or authority from The Market Committee. After all\nthe whole  object of  the Act is the supervision and control\ncf the\ttransactions of\t purchase by  the traders  from\t the\nagriculturists in  order  to  prevent  exploitation  of\t the\nlatter by the former. [1240H-1247A]\n1221\n     5. The  whole object  of the Act is the supervision and\ncontrol of the\ttransactions of purchase by the traders from\nthe agriculturists  in order  to prevent exploitation of the\nlatter by  the former.\tThe supervision\t and control  can be\neffective only\tin specified  localities and  places and not\nthroughout the extensive market area. [1247B]\n     6. Rule  24(1) in\tboth the States framed under the Act\nprovides that  \"all agricultural  produce brought  into\t the\nmarket for  sale shall\tbe  sold  by  open  auction  in\t the\nprincipal or  sub-market yard\",\t which indicates that market\nis  generally  the  principal  and  sub-markets\t yards.\t The\nbenefit of  market fee, therefore, has to be correlated with\nthe transactions  taking place at the specified place in the\nmarket area and not in the whole of the area.[1247D]\n     7. The  duties and\t powers of  a market  committee\t are\nenumerated in s. 13 and this indicates that the Committee is\nprimarily concerned with the establishing of a market in the\nnotified area  and with\t providing facilities  in the market\nfor  persons   visiting\t it   and  in  connection  with\t the\ntransactions taking place there. [1247F]\n     8. Reading\t s. 23\talong with r. 29 it would be noticed\nthat the  power of  the Committee to levy fees is subject to\nthe Rules as may be made by the State Government. The fee is\nlevied on ad valorem basis at a rate which cannot exceed the\nmaximum mentioned in s. 23 by the legislature. But the power\nto fix\tthe rate  from time to time within the maximum limit\nhas been  conferred on the Board and the Committee is merely\nbound to follow it. [1248G-H]\n     9. Section 23 in express language controls the power of\nthe Committee  to levy\tfees subject to the rules. The power\ngiven to  the Board to fix the rate of market fees from time\nto time\t under rule  29 is not ultra vires the provisions of\nthe Act,  as sub-sec.(a)  of s. 3 confers power on the Board\nto exercise superintendence and control over the committees,\nwhich power,  in the context and the scheme of the marketing\nlaw, will  take within\tits ambit the power conferred on the\nBoard under rule 29(1). [1249C]\n     State of Punjab & Anr. v. Hari Krishan Sharma,<\/a> [1966] 2\nSCR 982; distinguished\n     10. The  fee levied  is not on the agricultural produce\nin the\tsense of  imposing any\tkind of\t tax or\t duty on the\nagricultural produce.  Nor is it a tax on the transaction of\npurchase or  sale. The levy is an impost on the buyer of the\nagricultural  produce\tin  the\t  market  in   relation\t  to\ntransactions of\t his purchase.\tThe agriculturists  are\t not\nrequired to  share any portion of the burden of this fee. In\ncase the  buyer is not a licensee then the responsibility of\npaying the  fees is  of the  seller who may realise the same\nfrom the  buyer. But  such a  contingency  cannot  arise  in\nrespect of  the transactions  of sale by an agriculturist of\nhis agricultural  produce in the market to a dealer who must\nbe a  licensee. Probably  such an  alternative provision was\nmeant to  be made  for outside\tbuyers who are not licensees\nwhen they  buy the  agricultural produce from or through the\nlicensees.[1249D-E]\n     11. Every\tMarket Committee  is obliged  under sub-sec.\n(2) (a)\t of s.\t27 to  pay out of its funds to the Marketing\nBoard as  contribution such percentage of its income derived\nfrom licence fee, market fee and fines levied by the\n1222\ncourts as  specified in sub-cl. (i) and (ii). The purpose of\nthis contribution  as mentioned\t in sub-sec.(2)\t (a)  is  to\nenable\tthe   Board  to\t  defray  expenses  of\tthe  office,\nestablishment of  the Board and such other expenses incurred\nby it  in the  interest of  the Committees  in general.\t The\nincome of  almost all  the Market  Committees  were  several\nlakhs of rupees per year and, therefore, each is required to\npay 30\tper centum  of its  income to the Board by virtue of\nthe amendment  brought about  by Punjab Act 4 of 1978. Under\ns. 25  all receipts  of the  Board are to be credited into a\nfund to\t be called  the Marketing Development Fund. Purposes\nfor which the Marketing Development Fund may be expended are\nenumerated in  s. 26  and the  purposes for which the Market\nCommittee  Funds  may  be  expended  are  catalogued  in  s.\n28[1250A-C]\n     12. No  serious objection\tto the\titems of expenditure\nmentioned in  clauses (xii),  (xiv), (xv)  and (xvi)  can be\ntaken. Clause  (x) and clause (xi) cannot  form the items of\nexpenditure of\tthe market  fees. The  whole of the State is\ndivided into  market areas.  The  propaganda  in  favour  of\nagricultural improvement  and expenditure for production and\nbetterment of  agricultural produce  will be  in the general\ninterest of  agriculture in  the market area. So long as the\nconcept of  fee remains\t distinct and limited in contrast to\ntax such  expenditure  out  of\tthe  market  fee  cannot  be\ncountenanced in law. [1252F-G]\n     13. The  first part  of cl.  (xiii) may be justified in\nthe sense  of imparting\t education in marketing to the staff\nof  the\t  Market  Committee.   But  imparting  education  in\nagriculture in\tgeneral cannot be correlated with the market\nfee. [1252H]\n     14. How  ill-conceived the second part of clause (xvii)\nis ?  Is it  permissible to  spend the\tmarket fees realised\nfrom the  traders for  any purpose calculated to promote the\nnational or  public interest  ?\t Obviously  not.  No  market\nCommittee can  be permitted  to\t utilise  the  fund  for  an\nulterior  purpose   howsoever\tbenevolent,   laudable\t and\ncharitable the\tobject may be. The whole concept of fee will\ncollapse if  the amount\t realised by  market fees  could  be\npermitted to be spent in this fashion. [1253A-B]\n     Technically and legally, one may not have any objection\nto the\texpenditure of such money for the purposes mentioned\nin clauses (x), (xi), (xiii) and (xvii). [1253D]\n     15. It  is not  necessary to strike down any clauses of\ns. 28  as being\t unconstitutional merely  on the ground that\nthe expenditure\t authorised therein goes beyond the scope of\nthe purpose  of the  utilisation of  the  market  fees.\t The\nauthorities have  to bear  this in  mind  and  on  a  proper\noccasion the  matter will have to be dealt with by courts in\nthe light  of this  Judgment where  a concrete case comes of\nraising of a loan, spending the money so raised which cannot\nbe reasonably  connected with  the purposes  for  which\t the\nmarket fee  can be  spent, as  to whether such a loan can be\nrepaid or interest on it can be paid out of the realisations\nof the market fees. [1253G]\n     16. The  Board in\tthe State is the Central Controlling\nand superintending authority over all the Market Committees,\nthe primary  function of  which is  to render service in the\nmarket. Parting\t with 30%  income by  a Market\tCommittee in\nfavour of  the Board  is not so excessive or unreasonable so\nas to  warrant any  interference with the law in this regard\non the\tground of violation of the principle of quid pro quo\nin the utilisation of the market fee realised\n1223\nfrom the  traders in  the market  area. Emphasised  that the\nMarketing Development  Fund can\t only be  expended  for\t the\npurposes of the Market Committees in a general way, or to be\nmore accurate,\tas far\tas practicable,\t for the purposes of\nthe   particular    Market   Committee\t which\t makes\t the\ncontribution. [1254C-D]\n     17. Section  26 of\t the Act  provides for\tpurposes for\nwhich the  Marketing Development  Fund may  be expended. The\nMarketing Development  Fund constituted primarily and mainly\nout of\tthe contributions  by  the  Market  Committees\tfrom\nrealisation of\tmarket fee  can also  be  expended  for\t the\npurposes of  the market\t in  the  notified  market  area  in\nrelation  to  the  transactions\t of  purchase  and  sale  of\nagricultural produce  and for no other general purpose or in\nthe   general\tinterest   of\tthe   agriculture   or\t the\nagriculturists. The purposes mentioned in clauses (i), (ii),\n(iii), (iv),  first part of clause (v), clauses (vi), (vii),\n(viii), (ix),  (xii), first  part of  clause (xiii), clauses\n(xiv), (xv)  and (xvi) held valid. The Marketing Development\nFund constituted  out of  the Market fees cannot be expended\nfor the\t purposes mentioned  in second\tpart of\t clause (v),\nclauses (x),  (xi), second  part of clause (xiii) and clause\n(xvii). As  the\t purpose  of  the  law\twill  be  served  by\nrestricting the\t operation of  s. 26, it is not necessary to\nstrike\tdown  those  provisions\t as  being  constitutionally\ninvalid. [1254E, 1255F-1256A]\n     18. The  High Court  has extracted s. 28 of the Act but\nhas failed  to scan  the effect\t of the\t various purposes in\nsome of the clauses. [1256H-1257A]\n     19. The  High Court  seems to be of the view that since\ntransportation is  very essential  for the  development of a\nmarket and to enable the growers of the agricultural produce\nto bring  the same  to the  market, the construction of link\nroads becomes an essential purpose of the market committees.\nIt may\tbe so  but the\tpurpose\t cannot\t be  allowed  to  be\nachieved at  the cost  of the  market fee  realised from the\ndealers. [1257G]\n     20. The  impost must  be correlated with the service to\nbe rendered  to the  payers of\tthe fees in the sense and to\nthe extent pointed out. [1260A]\n     21. Everybody  seems to  have  allowed  himself  to  be\ncarried too  far by  the sentiment of the laudable object of\nthe Act of doing whatever is possible to do under it for the\namelioration  of  the  conditions  and\tthe  uplift  of\t the\nvillagers and  the agriculturists.  Undoubtedly the  Act  is\nprimarily meant\t for that  purpose and\tto the\textent it is\npermissible  under   the  law  to  achieve  that  object  of\nutilising the  money collected\tby the market fee, it should\nbe done.  But if  the law  does not  permit carrying  on the\nsentiment too  far for achieving of all the laudable objects\nunder the  Act, then  primarily it  becomes the\t duty of the\nCourt to  allow the  law to  have an  upper  hand  over\t the\nsentiment and not vice versa. [1263G-H]\n     22. If  insecticides and  pesticides are for use at the\nplace where actually the marketing operations are carried on\nit would be a justifiable expenditure. But if they are meant\nto be  supplied to  the\t agriculturists\t for  use  at  their\nvillage homes or in their fields surely they cannot be valid\nexpenditure out\t of  the  collections  of  the\tmarket\tfee.\n[1267G-H]\n     In the  instant cases the authorities took full liberty\nto treat  the realisation  from\t market\t fee  as  a  general\nrealisation of\ttax which  they were  free to  spend in\t any\nmanner\tthey   liked  for  the\tpurposes  of  the  Act,\t the\ndevelopment of the area, for giving a fillip to agricultural\nproduction and so forth and so on. The\n1224\nsooner the  authorities are  made  to  realise\tthe  correct\nposition in  law the  better it\t will be  for all concerned.\n[1269F]\n     23. Taking\t a reasonable  and  practical  view  of\t the\nmatter\tand   on  appreciation\t of  the   true\t picture  of\njustifiable and\t legal expenditure in relation to the market\nfee income,  even though  it had  to be done on the basis of\nsome reason-  able guess work, the court did not disturb the\nraising of  an imposition of the rate of market fee upto Rs.\n2\/- per\t hundred by  the various  Market Committees  and the\nBoards both  in the  State of Punjab and Haryana. After all,\nconsiderable development  work seems  to have  been done  by\nmany Market  Committees in  their  respective  markets.\t The\ncharging of fee @ Rs. 2\/- therefore, is justified and fit to\nbe sustained. [1269G-1270A]\n     24. The  dealers of Haryana did not feel aggrieved when\nthe High  Court maintained  the raising of the market fee to\nthe extent  of Rs. 2\/- per hundred rupees. The court did not\nuphold the  raising of\tthe fee\t from Rs.2\/- to Rs. 3\/-as on\nthe materials  placed before  it, it  is clear that this has\nbeen done  chiefly because  of the  wrong impression  of law\nthat  the  amount  of  market  fee  can\t be  spent  for\t any\ndevelopment work  in the notified market area and especially\nfor the\t development of\t agriculture and  the welfare of the\nagriculturists. The High Court was wrong in maintaining this\nuse on an erroneous view of the matter.[1270B-C]\n     25. In  future if the market fee is sought to be raised\nbeyond\tthe  rate  of  Rs.2\/-  per  hundred  rupees,  proper\nbudgets, estimates,  balance-sheets showing  the balance  of\nthe money  in hand  and in deposit, the estimated income and\nexpenditure, etc.  should carefully  be prepared. On drawing\nthe correct  balance  sheets  and  framing  of\tthe  correct\nestimates and  budgets the  authorities as  also  the  State\nGovernment will\t be able to know the correct position and to\ndecide reasonably  as to  what extent  the  raising  of\t the\nmarket fee  can be  justified taking  an over-all picture of\nthe matter  and\t keeping  in  view  the\t reason\t behind\t the\nrestrictions of\t sales tax  laws concerning the transactions\nof foodgrains  and the other agricultural produce. Then, and\nthen only,  there may  be a  legal justification for raising\nthe  rate   of\tthe  market  fee  further  to  a  reasonable\nextent.[1270E-G]\n\n\n\nJUDGMENT:\n<\/pre>\n
     CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1083 of
\n1977.\n<\/p>\n
     (Appeal by\t Special Leave\tfrom the  Judgment and Order
\ndated 28-1-1977\t of the\t Punjab Haryana\t High Court in Civil
\nWrit No. 5697\/75)
\n\t       CIVIL APPEAL NO: 1616 OF 1978
\n     (Appeal by\t Special Leave\tfrom the  Judgment and Order
\ndated 18-9-1978\t of the\t Punjab &  Haryana High Court in CWP
\nNo. 3849\/78)
\n\t     CIVIL APPEAL NOS;1700-1761 OF 1978
\n     (Appeals by  Special Leave\t from the Judgment and Order
\ndated 30-8-1978\t of the Punjab & Haryana High Court in Civil
\nWrit Petition  Nos. 3351,  2662, 3094,\t 3221,\t3303,  3330,
\n3347, 3348, 3349, 3350,
\n1225<\/span>
\n3384, 3390,  3393, 3459, 3460, 3489, 3517, 3533, 3548, 3551,
\n3563, 3570,  3576, 3598, 3615, 3665, 3673, 3773, 3775, 3776,
\n3826, 3827,  3883, 4024, 4171\/77, 37\/78, 178, 212, 283, 335,
\n381, 423,  483, 577,  666, 751,\t 887, 976, 1021, 1058, 1104,
\n1164, 1280,  1469\/78, 2625\/77, 1556\/78, 1578\/78, 1635, 1859,
\n1980, 1997 and 2095\/78.\n<\/p>\n
\t    CIVIL APPEAL NOS. 1762-1773 OF 1978.\n<\/p>\n
     (Appeals by  Special Leave\t from the Judgment and Order
\ndated 30-8-1978\t of the Punjab & Haryana High Court in Civil
\nWrit Petition  Nos. 45\/78,  888, 1251 1451, 1556 3300, 3330,
\n3293\/77, 3292, 3337, 3385 and 3426\/77)
\n\t    CIVIL APPEAL NOS.1626-1627 OF 1978.\n<\/p>\n
     (Appeals by  Special Leave\t from the Judgment and Order
\ndated 30-8-1978\t of the Punjab & Haryana High Court in Civil
\nWrit Petition Nos. 4171\/77 and 1356\/78)
\n\t\t\t    AND
\nWRIT PETITION  NOS. 4436, 4470, 4472, 4481, 4485,4564, 4420,
\n4450, 4460, and 4484 OF 1978
\n\t   (Under Article 32 of the Constitution)
\n     For the  Appellants in  CA No.  1083\/77:A. K.  Sen\t Mr.
\nRavinder Bana,\tand Bhal  Singh Malik  For the RR. 1-2 in CA
\nNo. 1083\/77:  S. N.  Kackar, Sol. Genl., Hardev Singh and R.
\nS. Sodhi, For the Intervener-State Agricultural Market Board
\nand Market  Committee, Nai  Mandi in  CA No.  1083\/77: V. M.
\nTarkunde, and  S. C. Patel. For the Applicant Intervener: in
\nCA No.\t1083\/77 Mrs. Urmila Kapoor. For the Respondent No. 3
\nin CA No. 1083\/77 H. L. Sibbal, G. G. Garv and Mr. Atma Ram.
\nFor the\t Petitioner in\tthe W.P.  except in  WPs. Nos. 4481,
\n4470, 4564  Bhal Singh\tMalik, B. Datta and K. K. Manchanda.
\nFor the\t Petitioners in\t W.P. Nos.4481,\t 4564, and  for\t the
\nAppellants in  CA No.  1616\/78 S.K. Walia, and Mr. M.P. Jha.
\nFor the\t Petitioner in W.P. No.4470\/78 Sarva Mitter. For the
\nRespondents in\tWP.4430, 4472,\t4481, 4485\/78 and CA 1616\/78
\nW.P.4564\/78: Hardev  Singh, G.\tC. Garg and R. S. Sodhi. For
\nthe Appellants\tin CA  Nos. 1700-1761\/78  Anil Diwan, (1703)
\nAdarsh Kumar  Goel (in\tall  appeals)  Praveen\tKumar,\tAdv.
\n(1703) Miss  Bina Gupta, Adv. (1703) Madan Gopal Gupta (1703
\nto 1752)  Sarva Mitter\t(1751-1761 and\tall other)  For\t the
\nPetitioners in\tW.P. Nos.  4420, 4450,\t4460, 4484\/78: A. K.
\nSen, (4420)  Dr. L.  M. Singhvi,  (4460)  B.  Dutta,  K.  K.
\nManchanda and  Bhal Singh  Malik, For  R. 1  in Appeal\tNos.
\n1700-1761\/78 and WP Nos. 4420, 4450, 4460 and 4484\/78:\n<\/p>\n
1226<\/span><\/p>\n
P. N.  Lekhi, (FP  4420) and  R. N. Sachthey, For RR. 2-3 in
\nAppeal Nos.  1760-1761\/78 and  WP Nos.\t4420, 4450, 4460 and
\n4484\/78:V. M. Tarkunde, (in CA 1700 and WP 4420) Gian Singh,
\n(WPs. 4420,  4450 4460, 4484 and CAs 1760-1761) S. C. Patel.
\nFor the\t Appellants in\tCA Nos.\t 1626-1627\/78:\tMrs.  Urmila
\nKapoor, For  the Appellants  in CA  Nos. 1762-1773\/78: K. K.
\nMohan.\n<\/p>\n
     For the other appearing RR. in CA Nos. 1762-1763: S. C.
\nPatel,
\n     The Judgment of the Court was delivered by
\n     UNTWALIA, J.-In  these groups of Civil Appeals and Writ
\nPetitions, broadly  speaking, the  question which  falls for
\ndetermination is  the validity\tof certain provisions of the
\nPunjab Agricultural  Produce Markets  Act, 1961\t (Punjab Act
\nNo. 23 of 1961). hereinafter referred to as the Act, and the
\nRules framed  by the  State of\tPunjab and Haryana under the
\nsaid Act as also the validity of the fixation of market fees
\nfrom time  to time  by the  various Market Committees in the
\nStates aforesaid  under the  direction of  the Punjab  State
\nAgricultural Produce  Marketing Board  and the Haryana State
\nAgricultural Produce  Marketing Board.\tAll these cases have
\nbeen heard  together and  are being  disposed of by a common
\njudgment.\n<\/p>\n
     In the  erstwhile composite State of Punjab the Act was
\npassed in  the year  1961 to  consolidate and  amend the law
\nrelating to  the better\t regulation of\tthe purchase,  sale,
\nstorage and  processing\t of  agricultural  produce  and\t the
\nestablishment of  markets for  agricultural produce  in\t the
\nState. Under  section 3\t of the\t Act the  State Agricultural
\nMarketing Board\t was constituted  for the entire area of the
\ncomposite State,  which later,\tin the\tyear 1966 came to be
\nbifurcated into\t the States of Punjab and Haryana. Under the
\nvarious provisions of the Act, which will be noticed shortly
\nhereinafter, market  areas and\tmarket yards  were  declared
\nputting restrictions  on the traders to carry on their trade
\nunder a\t licence granted  by the  various Market  Committees
\nestablished and\t constituted in\t accordance with sections 11
\nand 12,\t within\t the  specified\t boundaries  or\t areas.\t The
\ntraders were  required to  take out licences on payment of a
\nlicence fee.  Under section 23 of the Act a Market Committee
\nwas required and authorised to levy on ad-valorem basis fees
\non the\tagricultural produce  bought or sold by licensees in
\nthe notified  market area  at a\t rate not exceeding the rate
\nmentioned in  section 23  from time  to time  for every\t one
\nhundred rupees.\n<\/p>\n
1227<\/span><\/p>\n
     In the  composite State  of Punjab\t and even  after the
\nbifurcation of\tthe States for about a period of three years
\nthe maximum  rate of  market fee which could be levied under
\nsection 23  was 50  paise  for\tevery  one  hundred  rupees.
\nVarious Market\tCommittees levied  a fee  of  50  paise\t per
\nhundred rupees and no dealer made any murmur of grievance of
\nit. In\tthe bifurcated State of Punjab by Act 25 of 1969 the
\nrate of\t 50 paise  was raised  to Re.  1\/-. It\twas  further
\nraised to  Rs.\t1.50  by  Act  28  of  1973.  Thereafter  by
\nOrdinance 4 of 1974 which was replaced by Act 13 of 1974 the
\nrate was  raised to Rs. 2.25. Several dealers filed a number
\nof Writ\t Petitions in  the High\t Court of Punjab and Haryana
\nchallenging the increase in the rate of market fee from time
\nto time,  the last one being by Act 13 of 1974. Similarly in
\nthe State  of Haryana the rate of 50 paise was raised to Re.
\n1\/- by\tHaryana Amendment  Act 28  of 1969.  It was  further
\nraised to Rs. 1.50 by Act 21 of 1973. By Ordinance 2 of 1974
\nwhich was replaced by Act 17 of 1974 in the State of Haryana
\nthe fee\t was raised  to Rs.2\/- for every one hundred rupees,
\nas against  the rise  of Rs.  2.20 in  the State  of Punjab.
\nSeveral dealers\t of the\t State of Haryana also challenged in
\nthe High Court the levy and increase of market fee from time
\nto time.  All the  Writ Petitions  were heard  together. The
\nincrease and  levy of fee upto Rs. 2\/- by the various Market
\nCommittees in  the State  of Haryana was upheld and the Writ
\nPetitions of  the Haryana dealers were dismissed while those
\nof the\tPunjab dealers were allowed and the increase of rate
\nbrought about  by Ordinance  4 and  Act 13  of 1974  to\t the
\nextent of  Rs. 2.25  was struck\t down. This  decision of the
\nHigh Court is reported in M\/s. Hanuman Dall & General Mills,
\nHissar v.  The State  of Haryana and others<\/a>. The date of the
\ndecision is  November 8, 1974. In Punjab by Amendment Act 14
\nof 1975\t section 23 of the Act was again amended authorising
\nthe imposition\tof market  fee at  a rate  not exceeding Rs.
\n2.20  per  hundred  rupees.  Telegraphic  instructions\twere
\nissued by  the Punjab Board to the various Market Committees
\ndirecting them\tto charge  Rs. 2\/-  only  with\teffect\tfrom
\nAugust 23,  1975 after\tthe passing of the Act 14 of 1973 on
\nAugust 8,  1975. The  increase in the rates of fee, the last
\none being in August, 1975, were again challenged in the High
\nCourt. But  the Full  Bench which  finally  heard  the\tWrit
\nPetition upheld\t the increases\tby its judgment delivered on
\nJanuary 28,  1977, which  is reported  in Kewal Krishan Puri
\nand another  v. The State of Punjab and others. Civil Appeal
\n1083 of\t 1977 has been preferred in this Court from the said
\njudgment of the High Court.\n<\/p>\n
1228<\/span><\/p>\n
     Both in  the State\t of Punjab  and the State of Haryana
\nthe rate  of market  fee was  further raised from Rs. 2\/- to
\nRs.3\/-. It  was unsuccessfully challenged in the High Court.
\nThe dealers have preferred appeals from the judgments of the
\nHigh Court  as also  filed Writ\t Petitions in this Court. In
\nthe State  of  Punjab  the  fee\t was  raised  to  Rs.  3\/-by
\nOrdinance 2 of 1978 which must have been replaced by an Act.
\nThe Ordinance  was promulgated\ton April  28, 1978. The Writ
\nPetition  4436\t of  1978  has\tbeen  filed  in\t this  Court
\nchallenging the previous increases in the fee along with the
\nlast increase  of Rs.  3\/-. The\t High Court upheld it by its
\njudgment dated\tMay 18, 1978. Special Leave Petition (Civil)
\n2768 of 1978 was preferred from this judgment. Writ Petition
\nNo. 3849  of 1978  was filed  in the  High Court  by a large
\nnumber of  dealers, which  was dismissed  in limine by order
\ndated September\t 18, 1978.  Civil Appeal 1616 of 1978 arises
\nout of\tthis Writ Petition. Several other dealers have filed
\nseparate Writ  Petitions also  being  Writ  Petitions  4470,
\n4472, 4481,  4485  and\t4564  of  1978\tchallenging  in\t the
\nincrease of market fee in the State of Punjab.\n<\/p>\n
     In the State of Haryana the rate of fee was raised from
\nRs. 2\/-\t to Rs.3\/-  with effect\t from September\t 5, 1977  by
\nOrdinance 12 of 1977 replaced by Act 22 of 1977. The Haryana
\nState Marketing\t Board directed all the Market Committees in
\nthat State  to collect market fee @ Rs. 3\/- with effect from
\n5-9-1977. A  number of Writ Petitions were filed in the High
\nCourt challenging  the said  increase  and  the\t High  Court
\ndismissed all  the Writ\t Petitions  by\tits  judgment  dated
\nAugust 30,  1978. Civil\t Appeals 1700  to 1773\tof 1978\t and
\nCivil Appeals 1626 and 1627 of 1978 are from the judgment of
\nthe High  Court dated August 30, 1978. The said increase has
\nalso been  challenged by filing Writ Petitions in this Court
\nand they  are Writ  Petitions 4420,  4450, 4460\t and 4484 of
\n1978.\n<\/p>\n
     Although by  now there  is a  catena of  cases of\tthis
\nCourt pointing\tout the\t difference between  “tax” and “fee”
\nwith  reference\t  to  the   constitutional  provisions\t and
\notherwise also, the problem before us has presented some new
\nangles and  facets. We,\t therefore, think  it advisable\t and
\nnecessary to  review many  of the  earlier decisions to pin-
\npoint the  precise difference as far as practicable in order
\nto  resolve  the  rival\t contentions  of  the  parties.\t The
\narguments of  the learned  counsel for\tthe parties whenever
\nthought necessary  would be  referred to  at the appropriate
\nplaces hereinafter in this judgment.\n<\/p>\n
     Clause (2) of Article 110 and clause (2) of Article 199
\nof the\tConstitution, the former occurring in the Chapter of
\nParliament and the
\n1229<\/span>
\nlatter\tin   relation  to  the\tState  Legislature,  are  in
\nidentical terms as follows:-\n<\/p>\n
\t  “A Bill  shall not be deemed to be a Money Bill by
\n     reason only  that it  provides………..for the demand
\n     or payment\t of fees  for licences\tor fees for services
\n     rendered…….<\/p><\/blockquote>\n
     The   Constitution,    therefore,\t clearly   draws   a
\ndistinction between  the imposition of a tax by a Money Bill
\nand the impost of fees by any other kind of bill. So also in
\nthe Seventh Schedule both in List I and in a distinction has
\nbeen maintained\t in relation to the entires of tax and fees.
\nIn the\tUnion List  entries 82\tto 92A\trelate to  taxes and
\nduties and  entry 96  carves out  the legislative  field for
\nfees in\t respect of  any of  the matters  in the  said\tlist
\nexcept the  fees taken\tin any Court. Similarly in the State
\nList entries  relating to  taxes are  entries 46  to 63\t and
\nentry 66  provides for fees in respect of any of the matters
\nin List\t II but not including fees taken in any Court. Entry
\nrelating to  fees in List III is entry 47. Our Constitution,
\ntherefore, recognises  a different  and distinct connotation
\nbetween taxes and fees.\n<\/p>\n
     The leading  case of this Court which has been referred
\nand followed in many subsequent decisions is the case of The
\nCommissioner, Hindu  religious\tEndowments,  Madras  v.\t Sri
\nLakshmindra Thirtha  Swamiar of\t Sri Shirur  Mutt. The<\/a> point
\ndecided therein\t was that  the\tprovision  relating  to\t the
\npayment of annual contribution contained in section 76(1) of
\nthe Madras  Hindu Religious  and Charitable  Endowments Act,
\n1951 is\t a tax\tand not\t a fee\tand so\tit  was\t beyond\t the
\nlegislative competence\tof the\tMadras State  Legislature to
\nenact such  a provision. The meaning given to the word “tax”
\nby Latham C.J. of the High Court of Australia in Matthews v.
\nChicory Marketing  Board has  been quoted  with approval  at
\npage  1040  and\t has  been  often  repeated  in\t many  other
\ndecisions. Generally  speaking a  fee is  defined  to  be  a
\ncharge for a special service rendered to individuals by some
\ngovernmental agency.  A\t question  arises-“special  service”
\nrendered  to  whom  which  kind\t of  individuals?  Mr.\tV.M.
\nTarkunde  who  appeared\t for  the  Haryana  Marketing  Board
\nstressed  the\targument  that\t service  rendered  must  be
\ncorrelated to  those on\t whom the ultimate burden of the fee
\nfalls. In  our opinion\tthis argument is neither logical nor
\nsound. The impost of fee and the liability to pay it is on a
\nparticular individual  or a  class of  individuals. They are
\nunder the obliga-\n<\/p>\n
1230<\/span><\/p>\n
tion  to  submit  accounts,  returns  or  the  like  to\t the
\nauthorities concerned  in cases\t where quantification of the
\namount of  fees depends\t upon the same. They have to undergo
\nthe botherations  and harassments, sometimes justifiably and
\nsometimes even\tunjustifiably, in the process of discharging
\ntheir liability\t to pay the fee. The authorities levying the
\nfee deal  with them  and  realize  the\tfee  from  them.  By
\noperation  of\tthe  economic\tlaws  in  certain  kinds  of
\nimpositions of\tfee the burden may be passed on to different
\nother persons  one after the other. A few lines occurring at
\npage 119 in the judgment of the Privy Council in the case of
\nAttorney-General for  British  Columbia\t and  Esquimalt\t and
\nNanaimo Railway\t Company  and  others  may  be\tquoted\twith
\nadvantage. They are as follows:-\n<\/p>\n
\t  “It is  probably true\t of many  forms of tax which
\n     are indisputably  direct that the assessee will desire,
\n     if he  can, to  pass the  burden of  the tax  on to the
\n     shoulders of  another but\tthis  is  only\tan  economic
\n     tendency. The  assessee’s efforts\tmay be\tconscious or
\n     unconscious, successful  or unsuccessful;\tthey may  be
\n     defeated in  whole or in part by other economic forces.
\n     This type\tof tendency appears to their Lordships to be
\n     something fundamentally different from the “passing on”
\n     which is regarded as the hall-mark of an indirect tax.”<\/p><\/blockquote>\n
     The  authorities,\t more\toften\tthan   not,   almost
\ninvariably, will  not be  able to  know\t the  individual  or
\nindividuals on\twhom partly or wholly the ultimate burden of
\nthe fee will fall. They are not concerned to investigate and
\nfind  out  the\tposition  of  the  ultimate  burden.  It  is
\naxiomatic that\tthe special  service rendered must be to the
\npayer of  the fee.  The element\t of quid  pro  quo  must  be
\nestablished between  the payer\tof the fee and the authority
\ncharging it.  It may  not be the exact equivalent of the fee
\nby  a\tmathematical  precision,   yet,\t by  and  large,  or
\npredominantly, the  authority collecting  the fee  must show
\nthat the  service which they are rendering in lieu of fee is
\nfor some  special benefit of the payer of the fee. It may be
\nso intimately  connected  or  interwoven  with\tthe  service
\nrendered to  others that  it may  not be  possible to  do  a
\ncomplete dichotomy and analysis as to what amount of special
\nservice was  rendered to  the payer  of\t the  fee  and\twhat
\nproportion  went   to  others.\tBut  generally\tand  broadly
\nspeaking it  must be  shown with  some amount  of certainty,
\nreasonableness or  preponderance of probability that quite a
\nsubstantial portion  of the  amount of fee realised is spent
\nfor the special benefit of its payers.\n<\/p>\n
1231<\/span><\/p>\n
     We\t may  now  extract  some  very\tuseful\tand  leading
\nprinciples from\t the decision of this Court in Shirur Mutt’s
\n(1954 S.C.R.,  1005,  supra)  pointing\tout  the  difference
\nbetween tax  and fee. At pages 1040-41 says Mukherjea J., as
\nhe then was:\n<\/p>\n
\t  “The second characteristic of tax is that it is an
\n     imposition made for public purpose without reference to
\n     any special benefit to be conferred on the payer of the
\n     tax. This\tis expressed  by saying that the levy of tax
\n     is for  the purposes  of general  revenue,\t which\twhen
\n     collected forms  part of  the public  revenues  of\t the
\n     State. As\tthe object  of a  tax is  not to  confer any
\n     special benefit  upon any\tparticular individual, there
\n     is, as  it is  said, no element of quid pro quo between
\n     the tax-payer and the public authority….”
\n\t  “a ‘fee’ is generally defined to be a charge for a
\n     special  service\trendered  to   individuals  by\tsome
\n     governmental agency.”<\/p><\/blockquote>\n
     At\t page\t1042  the   learned  Judge.  enunciates-“The
\ndistinction between  a tax  and a  fee lies primarily in the
\nfact that  a tax  is levied  as a  part of  a common burden,
\nwhile a\t fee is a payment for a special benefit or privilege
\nPublic interest seems to be at the basis of all impositions,
\nbut in a fee it is some special benefit which the individual
\nreceives.” After  pointing out the  ordinarily there are two
\nclasses\t of   cases  where  Government\timposes\t ‘fee’\tupon
\npersons, the  first being  the type  of cases of the licence
\nfees for  Motor Vehicles  or the like and in the other class
\nof cases  ..the Government  does some  positive work for the
\nbenefit of  persons and the money is taken as the return for
\nthe work  done or services rendered” (vide page 1043), it is
\nsaid further-“If  the money  thus  paid\t is  set  apart\t and
\nappropriated specifically  for the  performance of such work
\nand is\tnot merged in the public revenues for the benefit of
\nthe general  public, it\t could be  counted as fees and not a
\ntax. There  is really  no generic difference between the tax
\nand fees  and as  said by  Seligman, the  taxing power\tof a
\nState may  manifest itself  in three  different forms  known
\nrespectively  as   special  assessments,   fees\t and  taxes.
\n“Finally at page 1044 the striking down by the High Court of
\nthe imposition\tof fee\tunder section 76. Of the  Madras Act
\nwas upheld  on the  ground-“It may be noticed, however, that
\nthe contribution  that has  been levied\t under section 76 of
\nthe Act\t has been  made to  depend upon\t the capacity of the
\npayer and  not upon  the quantum of benefit that is supposed
\nto be  conferred on  any particular  religious institution.”
\nBenefit conferred  or any  particular religious\t institution
\nwould have  been undoubtedly  benefit conferred on the payer
\nof the fee.\n<\/p>\n
1232<\/span><\/p>\n
     After the\tdecision of  this Court in Shirur Mutts case
\n(supra) section 76 of the Madras Act was amended. The effect
\nof the\tamendment came to be considered by this Court in the
\ncase of\t H. H. Sudhundra Thirtha Swamiar v. Commissioner for
\nHindu  Religious  &  Charitable\t   Endowments.\t  Mysore.(1)
\nPointing out the various differences between the earlier law
\nand the\t amended one  at pages\t320-21 the imposition of fee
\nwas upheld.\n<\/p>\n
     In two other cases of this Court following the ratio of
\nShirur Mutt’s  decision the  imposition of  fee was  upheld,
\nvide, Mahant  Sri Jagannath   Ramanuj Das and another v. The
\nState of  Orissa and another and Ratilal Panachand Gandhi v.
\nThe State of Bombay and<\/a> other . (3)
\n     We now proceed to consider. some more decisions of this
\nCourt in  which apparently  some different phrases were used
\nfor explaining\tthe  meaning  of  the  word  ‘fee’  and\t its
\ndistinction from  ‘tax’. Both  sides  placed  reliance\tupon
\nthose decisions.  But if  the phrases  are understood in the
\ncontext they were used and with reference to the facts those
\ncases it would be noticed that the leading principle has not
\nbasically undergone any change.\n<\/p>\n
     In the  case of The Hingir-Rampurr Coal Co. Ltd. & Ors.
\nv. The\tState of  Orissa and  others<\/a>(4) the challenge was to
\nthe cess  levied by the orissa Mining Areas Development Fund
\nAct, 1952.  The petitioners’ stand in the first instance was
\nthat the  cess levied  was not a fee but a duty of excise on
\ncoal  and   hence  beyond   the\t competence   of  the  State
\nLegislature. Alternatively  they contended  that even  if it
\nwas a  fee  it\twas  beyond  the  competence  of  the  State
\nLegislature for\t some If  other reason\t not necessary to be
\nmentioned here.\t The cess  imposed was\tupheld\tas  a  ‘fee’
\nrelatable to  Entry 23\tof List\t II read  with Entry  66. In
\nother  words  it  was  upheld  as  a  ‘fee’  in\t respect  of
\nregulation of mines and\t mineral development. Gajendragadkar
\nJ., as\the then was, delivered the judgment on behalf of the
\nmajority and discussed the point at some length. At page 545
\nare to\tbe found  a few\t words which go directly against the
\ncontention of  Mr. Tarkunde.  Says the\tlearned Judge:-“…a
\nfee is\tlevied essentially for services rendered and as such
\nthere is  an element  of quid pro quo between the person who
\npays the fee and the public authority which imposes it.”\n<\/p>\n
1233<\/span><\/p>\n
(Emphasis supplied).  Mr. Tarkunde,  however, relied  upon a
\npassage at the same page which runs thus:-\n<\/p>\n
\t  “If specific\tservices are  rendered to a specific
\n     area or  to a  specific class  of persons\tor trade  or
\n     business  in   any\t local\tarea,  and  as\ta  condition
\n     precedent for  the said  services or in return for them
\n     cess is  levied against the said area or the said class
\n     of\t persons   or  trade   or  business   the  cess\t  is
\n     distinguishable from a tax and is described as a fee.”<\/p><\/blockquote>\n
     The above\tpassage\t does  not  mean  that\tthe  service
\nrendered is  unconnected with  or not meant for the payer of
\nthe fee.  As pointed  out earlier,  service rendered  to  an
\ninstitution like  a Math  is a service rendered to the payer
\nof the\tfee. Similarly\tservices rendered to a specific area
\nor to  a specific  class of  trade or  business in any local
\narea must  mean, and  cannot but  mean, that  it is  for the
\nspecial benefit\t of the\t person operating  in that area. The
\nservice rendered  was to  the mining area for the benefit of
\nthe mine owners at that area. The area or trade does not pay
\nthe fee\t nor does  it get  the benefit in vacuum. The fee is
\npaid by\t the person  who is  liable to pay it and service to
\nthe payer  does not mean any personal or domestic service to
\nhim but\t it means  service in  relation to  the transaction,
\nproperty or  the institution  in respect of which he is made
\nto pay the fee. Says the learned Judge at page 549:-\n<\/p>\n
\t  “It is true that when the Legislature levies a fee
\n     for rendering  specific services to a specified area or
\n     to a  specified class  of persons or trade or business,
\n     in the  last analysis such services may indirectly form
\n     part of  services to  the public  in  general.  If\t the
\n     special service  rendered is  distinctly and  primarily
\n     meant for\tthe benefit of a specified class or area the
\n     fact that\tin benefitting\tthe specified  class or area
\n     the State\tas a  whole may ultimately and indirectly be
\n     benefitted would  not detract from the character of the
\n     levy as  a fee. Where, however, the specific service is
\n     indistinguishable from  public service,  and in essence
\n     is directly  a part of it, different considerations may
\n     arise. In\tsuch a\tcase it is necessary to enquire what
\n     is the  primary object  of the  levy and  the essential
\n     purpose which  it is  intended to\tachieve. Its primary
\n     object and\t the essential purpose must be distinguished
\n     from  its\t ultimate     or  incidental\t results  or
\n     consequence .  That is the true test in determining the
\n     character of the levy.” (underlining, ours)
\n     At pages  549-50 in  the decision\tof The Hingir-Rampur
\nCoal Co. Ltd. (supra), reference has been made in passing to
\nthe decision of
\n1234<\/span>
\n     the Australian  High Court\t in Patron   v.\t Milk  Board
\n(Victoria).(1) The  majority which, amongst others, included
\nDixon J.,  held the  purported levy to be invalid because it
\nwas the\t imposition of\ta duty\tof excise,  there being\t  no
\nelement of  quid qua to the person on whom the levy had been
\nimposed. Since\ta few  lines from  the judgment of Dixon J.,
\noccurring at  pages 258-259 will be very helpful in tackling
\nwith the problem we are faced with, we may quote them. here.\n<\/p><\/blockquote>\n
They are as follows:-\n<\/p>\n
\t  “It is an exaction for the purposes of expenditure
\n     out of  a\tTreasury  fund.\t The  expenditure  is  by  a
\n     government agency\tand the objects are governmental. It
\n     is\t not   a  charge   for\t service.   No\t doubt\t the
\n     administration of\tthe Board  is regarded as beneficial
\n     to what  may loosely be described as the milk industry.
\n     But the  Board performs  no  particular service for the
\n     dairyman or  the owner  of a  milk\t depot for which his
\n     contribution  may\t be   considered   as\ta   fee\t  or
\n     recompense………………….On the other hand it is
\n     a trading\ttax. “Customs  and excise   duties  are,  in
\n     their essence,  trading taxes,  and may  be said  to be
\n     more concerned  with the  commodity in respect of which
\n     the taxation is imposed than with the particular person
\n     from whom\tthe tax\t is exacted”:  Attorney General\t for
\n     British Columbia v. Kingcome Navigation Co\t [1934] A.C.
\n     45, at p. 59.<\/p><\/blockquote>\n
     At page  554 is  to be  found the\tfinal conclusion  of
\nGajendragadkar J.,  which is  the crux\tof  the\t matter.  It
\nruns:-\n<\/p>\n
\t  Thus the  scheme of the Act shows that the cess is
\n     levied against the class of persons owning mines in the
\n     notified area  and it  is levied  to enable  the  State
\n     Government to  render specific  services  to  the\tsaid
\n     class by developing the notified mineral area. There is
\n     an element\t of quid  pro quo   in\tthe scheme, the cess
\n     collected is  constituted into  a specific\t fund and it
\n     has not  become a\tpart of\t the consolidated  fund, its
\n     application is  regulated by a statute and is con fined
\n     to its  purposes, and  there is  a definite correlation
\n     between the  impost and the purpose of the Act which is
\n     to render service to the notified area.”  (underlining,
\n     ours).\n<\/p><\/blockquote>\n
     In the  case of  Corporation of Calcutta and another v.\n<\/p><\/blockquote>\n
Liberty cinema(2) the respondent was charged by the Calcutta
\nCorporation a
\n1235<\/span>
\nvery   high licence fee assessed according to the sanctioned
\nseating\t   capacity  of the  Cinema house.  The\t High  Court
\nquashed the  imposition. In  appeal to the Supreme Court the
\nstand of  the appellant\t Corporation was that the levy was a
\ntax and section 548(2) of the Calcutta Municipal Act did not
\nsuffer from  the vice  of excessive  delegation:  while\t the
\nrespondent cinema  contended that the levy was a fee and had
\nto be  justified as  being imposed in return for services to
\nbe rendered.  Alternatively the respondent submitted that if
\nit was\ta tax  it was  invalid as  it amounted to an illegal
\ndelegation of  legislative functions.  The majority view was
\nexpressed by  Sarkar J.,  as he then was, and the impost was
\nupheld as  a tax.  In  the  minority  opinion  delivered  by
\nAyyangar J.,  it was held that even in the case of a licence
\nfee a  correlation between  the fee  charged and the service
\nrendered was necessary to be established. It was, therefore,
\nheld to\t be a  tax  but\t invalidly  imposed  under  a  power
\nsuffering from\tthe  vice  of  unconstitutional\t legislative
\ndelegation. In\tthe cases before us the licence fees charged
\nfrom the  various  traders  in\tthe  market  areas  are\t not
\nexcessive  and\t have  not   been  attacked  on\t any  ground
\nwhatsoever. We\tare. therefore,\t not concerned\tto find\t out
\nwhether an  element of quid pro quo is necessary in cases of
\nall kinds  of licence  fees. Some licences are imperative to
\nbe taken  only by way of regulatory measure, some are in the
\nnature of  grant of  exclusive right  or  privilege  of\t the
\nState, such  as, excise\t cases noticed\tby this Court in the
\ncase of\t Har Shankar  & ors.  etc. etc.\t v. The Dy. Excise &
\nTaxation Commr. & Ors  (1) Some may be cases of licence fees
\nwhere  element\t of  qid   pro\tquo    is  necessary  to  be
\nestablished. But  what is  important to\t be pointed out from
\nthe case  of Liberty Cinema (supra) is that in the case of a
\nfee of the kind with which we are concerned in this case the
\nelement of   quid pro quo must be established. Otherwise the
\nimposition of  fee will\t be bad. In the majority opinion, it
\nis stated at page 490:-\n<\/p>\n
\t  “The conclusion  to which  we then  arrive is that
\n     the levy  under s.548  is not a fee as the Act does not
\n     provide for any service to him. No question here arises
\n     of correlating  the to    the  person  on\twhom  it  is
\n     imposed. The work of inspection done by the Corporation
\n     which is  only to see that the terms of the licence are
\n     observed by  the licensee\tis not\ta service to him. No
\n     question here  arises of  correlating the amount of the
\n     levy to the costs of any service. The levy is a tax.”<\/p><\/blockquote>\n
1236<\/span><\/p>\n
     Ayyangar J.,  also said at page 526 that there being no
\ncorrelation    between\tthe  fee  charged  and\tthe  service
\nrendered the impugned levy was not authorised.\n<\/p>\n
     Mr. Tarkunde at one stage of the hearing endeavoured to
\nsubmit, although  the Solicitor-General\t appearing  for\t the
\nState of  Punjab  and  Mr.  H.\tL.  Sibbal  for\t the  Punjab
\nMarketing Board\t had made  no  such  submissions,  that\t the
\nimpugned impost\t could be  justified as\t a tax. There was no
\nlack of legislative competence in imposing a tax of the kind
\nunder issue.  Counsel further  submitted that  in almost all
\nthe cases in absence of quid pro quo the levy was held to be
\nbad and\t unsustainable as  a tax  for  want  of\t legislative
\ncompetence. On\t the  other hand  learned  counsel  for\t the
\nappellants and\tthe petitioners\t M\/s. A. K. Sen, Anil Dewan,
\nB. S. Malik and A. K. Goel pointed out that at no pointed of
\ntime the  respondent sought  to justify\t the impost as a tax
\nobviously because it would have then violated the provisions
\nof the\tSales Tax law which did not authorise the imposition
\nof such a  tax\tbeyond a certain percentage, and as a tax it
\ncould not  be but  a sales tax. Finally this controversy was
\nnot pursued  when we  pointed  out  that  at  no  stage\t the
\nquestion was  raised and  no attempt  any stage\t was made to
\njustify it  as a  tax. Obviously the Market Committees could
\nnot be\tcompetent under\t the Act  to impose  any tax: on the
\nsale and  purchase of the agricultural produce in the market
\nnor did\t it ever  purport to  do so The nature of the impost
\nand the\t power. under  which  it  was  levied  squarely\t and
\nuniformally remained  within the realm of the fee and fee of
\nthe kind  which could not but sustained on the establishment
\nof the\telement\t of  quid  pro\tquo  between  the  authority
\ncharging the fee and its payer.\n<\/p>\n
     The next  case to be considered is the decision of this
\nCourt in Nagar Mahapalika Varanasi v. Durga Das Bhattacharya
\n& ors.<\/a>(l)  in which  it was held that the annual licence fee
\ncharged from  the rickshaw  owners and\tthe drivers  by\t the
\nVaranasi Municipal  Board could\t be justified\t only on the
\nbasis of the element of quid pro quo. The fee was held to be
\nultra vires  and illegal  because  after  excluding  certain
\nitems  of   expenditure\t the   balance\tdid  not  constitute
\nsufficient quid\t pro quo  for the  amount of the licence fee
\ncharged. It  could not\tbe sustained as a tax. Certain major
\nitems of  expenditure incurred\tby the\tMunicipal Board were
\nattributable to\t the discharge\tof its\tstatutory duty\tand,
\ntherefore, at  page 386\t it was\t said by Ramaswami J.,-it is
\nmanifest  that\t the  licence  fee  cannot  be\timposed\t for
\nreimbursing the\t cost of ordinary municipal serves which the
\nMunicipal
\n1237<\/span>
\nBoard  was bound under the statute to provide to the general
\npublic.” The expenditure incurred by the Municipal Board for
\nthe benefit  of the  licensees constituted 44%\tof the total
\nincome of  the Municipal  Board and  hence it  was held that
\nthere was  no sufficient  quid\t pro quo  established in the
\ncircumstances of  the case.  In Delhi  Cloth & General Mills
\nCo. Ltd.  v. Chief  Commissioner Delhi\t& ors.<\/a>(l)  the\tHigh
\nCourt had  found the   60%  of the  amount of  licence\tfees
\ncharged from  the  mills  was  actually\t spent\ton  services
\nrendered to  the factory  owners. On  that basis  sufficient
\nquid pro  was found  to exist  and the\timpost was upheld by
\nthis Court  also. We  may, however, add that the rule of 60%
\ncannot be of universal application. It is not a static rule.
\nThe cases  of licence  fees are, generally speaking, on some
\ndifferent  footing.   There  is\t a  substantial\t element  of
\nregulatory measure  involved in\t them. Over and above that a
\ngood portion  of the fee, may be in the neighbourhood of 60%
\nor more,  must be  correlated to the service rendered to the
\nperson from  whom the fee is charged. But there may be cases
\nwhere, as in the instant one, the licence fee charged by way
\nof regulatory  measure is  not exorbitant  or excessive. But
\nthe other kind of fee charged has got to be justified on the
\nground of existence of sufficient quid pro  quo\t between the
\npayer of  the fee  and the  authority charging it. In such a
\ncase from  a practical\tpoint of view it may be difficult to
\nfind out  with arithmetical  exactitude as to what amount of
\nfee has\t gone in incurring the expenditure for the services.
\nBut, broadly  speaking, a good and substantial portion of it
\nmust be shown as being spent for the services rendered.\n<\/p>\n
     Now we  come to   the  decision of this Court in Indian
\nMica & Micanite Industries Ltd . v. State of Bihar & ors.(2)
\nwherein Hegde J., speaking on behalf of a Constitution Bench
\nof this\t Court, reviewed  all the  earlier cases and pointed
\nout at\tpage 323  that-“While a tax invariably goes into the
\nconsolidated fund,  a fee  is earmarked\t for  the  specified
\nservices in  a fund  created for the purpose.” Concludes the
\nlearned Judge at pages 324-25:-\n<\/p>\n
\t  “From the above discussion it is clear that before
\n     any levy  can be upheld as a fee, it must be shown that
\n     the  levy\t has  reasonable  co-relationship  with\t the
\n     services rendered by the Government. In other words the
\n     levy must\tbe proved  to be  a  qui  pro  quo  for\t the
\n     services rendered.\t But in\t these matters\tit  will  be
\n     impossible to  have an  exact co-relationship.  The co-
\n     relationship expected is one of a general character and
\n     not as of arithmetical exactitude.”\n<\/p><\/blockquote>\n
1238<\/span><\/p>\n
Difference between  a licence  to regulate a trade, business
\nor profess  on in  public interest  and in  a case  where  a
\nGovernment which  is the  owner of a particular property may
\ngrant permit or licence to some one to exploit that property
\nfor his\t benefit for  consideration has\t been pointed out at
\npage 325.  The State  of Bihar had failed to place materials
\nin  the\t  High\tCourt\tto  establish\tthe  reasonable\t co-
\nrelationship between the value of the services rendered with
\nthe fee\t charged. For  some special  reasons  the  case\t was
\nremanded. But  one thing  may be  pin-pointed from a passage
\noccurring at  page 327\tthat the  expenses of maintaining an
\nelaborate staff\t by the\t Excise Department were not only for
\nthe purposes of ensuring that denaturing is done properly by
\nthe manufacturer but also for the purpose of seeing that the
\nsubsequent possession  of  denatured  spirit  in  the  hands
\neither of  a wholesale\tdealer or retail seller or any other
\nlicensee or  permit-holder is  not misused by converting the
\ndenatured spirit  into alcohol fit for human consumption and
\nthereby evade  payment of  heavy  duty.\t But  the  appellant
\nbefore the  Supreme Court  or other  similar  licensees\t had
\nnothing to do with the manufacturing process. They were only
\nthe purchasers\tof manufactured\t denatured spirit.  In\tthat
\ncontext it  was said-“Hence  the  cost\tof  supervising\t the
\nmanufacturing process  or any  assistance  rendered  to\t the
\nmanufacturers cannot  be recovered  from the  consumers like
\nthe appellant.”\t When we  come\tto  discuss  even  from\t the
\nadmitted facts\tin relation  to the  levy of impugned market
\nfees, we  shall point  out that the authorities concerned as
\nalso the  High Court  labour   under the impression that the
\nfee realized  from the\ttraders in the market could be spent
\nfor any\t purpose of  development of agriculture by providing
\nall sorts  of facilities to the agriculturists including the
\nfacilities of  link roads  for the  purpose of trans port of
\ntheir agricultural  produce  to\t the  markets  how  so\tever
\ndistant these  link roads  may be  from the market proper or
\nany other purchasing centre in the market.\n<\/p>\n
     In the  case of  Secretary, Government  of Madras, Home
\nDepartment and\tanother v.  Zenith Lamp & Electrical Ltd.(1)
\nthe character  of Court fees came up for consideration as to
\nwhether they  are taxes\t or fees  or whether  they  are\t sui
\ngeneris. Although  after referring to the various Entries of
\nthe Seventh  Schedule in  the different lists it was noticed
\nthat Court  fees were  not taxes  and they  were covered  by
\nseparate Entries  of fees  exclusively meant for Courts, yet
\nthe broad principles of the requirement of quid pro quo were
\nmade applicable\t in the\t cases of  Court fees also. Even so,
\nSikri C.J.  speaking for  the Court pointed out at page 982-
\n“But even if the meaning is the same,
\n1239<\/span>
\nwhat is\t ‘fees’ in a particular case depends on the subject-
\nmatter ill  relation to which fees are imposed.” The learned
\nChief Justice  further observed\t at the\t same page-“In other
\nwords, it  cannot tax  litigation, and make litigations pay,
\nsay for\t road building\tor  education  or  other  beneficial
\nschemes that  a State  may have.  There must  be a broad co-
\nrelationship  with  the\t fees  collected  and  the  cost  of
\nadministration of  civil justice.”  If the view taken by the
\nHigh Court  in the  market fee cases were to hold good, then
\npushing it  to the  logical conclusion\tone will have to say
\nthat giving  all sorts\tof facilities  to the  litigants for
\ntheir travel from the village homes to the Courts would also
\nbe a  service of them In cases of court fees one has to take
\nbroad view  of the matter to find out whether there exists a
\nbroad co-relationship  with the fees collected and the cause
\nof administration  of justice.\tEven mixing  the  amount  of
\ncourt  fee   collected\twith   the  general   fund  will  be
\npermissible. It\t may not  be kept  in  a  separate  fund  or
\nearmarked separately.  The very\t fact that  in\trelation  to
\ncourt-fees  there   are\t separate  Entries  in\tthe  Seventh
\nSchedule e.g.  Entry 77\t List I\t and Entry  3  of  List\t II,
\nindicates that\teven though the character of the levy is not
\nvery much  different from that of the general types of fees,
\nin the\tmatter of  approach for\t finding out  the element of
\nquid pro quo quite a different test has not to be applied as
\nindeed, to some extent it has to be applied in many kinds of
\nfees  depending\t  upon\tthe   totality\tof   the  facts\t and
\ncircumstances. Each  case has to be judged from a reasonable
\nand practical  point of\t view for finding out the element of
\nquid pro quo.\n<\/p>\n
     In the  case of  State of\tMaharashtra &  ors.  v.\t The
\nSalvation  Army,   Western  India  Territory<\/a>(1)\t Mathew\t J.,
\nspeaking  for\tthe  Court  after  resume  of  some  earlier
\ndecisions of  this Court  upheld to a certain extent the fee
\ncharged under  the Bombay  Public Trust\t Act,  1950  on\t the
\nground that taking precautionary measures to see that Public
\nTrusts are  administered for  the purpose  intended  by\t the
\nauthors of  the Trust and exercising control and supervision
\nwith a\tview to\t preserve the  trust properties\t from  being
\nwasted or misappropriated  by trustees are certainly special
\nservices for the benefit of the trust. Thus special benefits
\nfor the\t payer of  the fee  were established, as benefits to
\nthe trust  were benefits to the trustees who are required to
\npay the\t fees out  of the  trust income.  But  then  it\t was
\nfurther pointed\t out that  in spite  of accumulation  of the
\nsurplus from  1953 onwards  the authorities went on charging
\nthe fee\t of 2%\twhich has  assumed the\tcharacter of  a tax.
\nAfter giving  certain guidelines the levy was declared to be
\nwithout the\tauthority of law after 31st March, 1970.\n<\/p>\n
1240<\/span><\/p>\n
     Observations of  one of  us (Chandrachud J., as he then
\nwas), speaking\tfor the\t Court in  the case of Government of
\nAndhra Pradesh\t& Anr. v. Hindustan Machine Tool  Ltd.<\/a>(1) at
\npage 401  are quite  apposite and  may\tbe  usefully  quoted
\nhere:-\n<\/p>\n
\t  One cannot  take into account the sum total of the
\n     activities of  a public  body like\t a Gram Panchayat to
\n     seek justification\t for the  fees imposed\tby  it.\t The
\n     expenses incurred by a Gram Panchayat or a Municipality
\n     in discharging  its obligatory  functions, are  usually
\n     met by  the imposition  of\t a  variety  of\t taxes.\t For
\n     justifying the  imposition of fees the public authority
\n     has to  show that\tservices are rendered or intended to
\n     be rendered  individually to  the particular  person on
\n     whom the  fee is  imposed. The  Gram Panchayat here has
\n     not even  prepared an  estimate of\t what the – intended
\n     services would cost it.’
\n     The levy  of house-tax  was held  to be  lawful but the
\nlevy of\t Permission Fee\t had to\t be  struck  down  as  being
\nillegal. In  the instant  case also it would be noticed that
\nthe Market  Committees and  the\t Market\t Boards\t assumed  to
\nthemselves  the\t  liberty  of  utilizing  and  spending\t the
\nrealizations from  market fees to a consider able extent, as
\nif it  was a  tax, although in reality it was not so. In The
\nMunicipal Council  Maduri v.  R. Narayanan<\/a> etc.(2) endeavour
\nwas made as in the case of Nagar Mahapalika Varanasi (supra)
\nto justify  the impost\tby the\tMunicipal Council  as a tax.\n<\/p><\/blockquote>\n
Krishna Iyer  J.,  speaking  for  the  Court  repelled\tthat
\nargument and  since the impost could not to justified as fee
\nthe resolution\tof the\tMunicipal Council  was\theld  to  be
\ninvalid. In the Chief Commissioner, Delhi and another v. The
\nDelhi Cloth  and General  Mills Co.  Ltd. and  others(3) the
\nquestion for  consideration was whether the registration fee
\ncharged on  the document satisfied the two conditions of fee
\nwhich were enumerated in the fol- lowing language:-\n<\/p>\n
\t  “(i) there must be an element of quid pro quo that
\n\t       is to  say the authority levying the fee must
\n\t       render  some   service  for  the\t fee  levied
\n\t       however remote the service may be;\n<\/p><\/blockquote>\n
\t  (ii) that the\t fee realised  must be spent for the
\n\t       purposes of  the imposition  and\t should\t not
\n\t       form part  of the  general  revenues  of\t the
\n\t       State.”<\/p><\/blockquote>\n
1241<\/span><\/p>\n
     The second\t condition was found not to be fulfilled and
\nhence the  impost was held to be bad. We would like to point
\nout that  the first condition is rather couched in too broad
\nand general  a language.  Rendering  some  service,  however
\nremote the  service may be, cannot strictly speaking satisfy
\nthe element  of quid  pro quo  required to be established in
\ncases of  the impost  of fee.  But then,  as pointed out, in
\nsome of\t the cases  noticed earlier the registration fee has
\nbeen taken  to stand  on a  different footing altogether. In
\nthe case  of such  a fee the test of quid pro quo is not  be
\nsatisfied  with\t  such\tdirect,\t  close\t or   proximate\t co-
\nrelationship as\t in the case of many other kinds of fees. By
\nand large  registration\t fee  is  charged  as  a  regulatory
\nmeasure.\n<\/p>\n
     The history  of the marketing legislation was traced by
\nVenkatarama Aiyar  J. in  the case  of P.  P. Kutti Keya and
\nothers v.  The State  of Madras\t and others<\/a>.(1)\t A number of
\nWrit Petitions were disposed of by one judgment delivered on
\n10-7-1953. Appeals  in some  of these  Writ  Petitions\twere
\nbrought to  this Court\tin the\tcase of M.C.V. S. Arunachala
\nNadar\tetc. v.\t The State of Madras & others.(2) Al- though
\nthe Courts  were concerned  mainly with\t the question of the
\nconstitutional validity of the marketing law which is beyond
\nany pale  of challenge\tnow, it would be interesting to note
\nthat the Madras High Court had taken the view that the funds
\nraised from  the merchants  for construction  of a market in
\nsubstance amounted to an exaction of a tax. We are not going
\nto approve such a narrow view in relation to the application
\nof the amounts realized by market fees, yet we are not going
\nto make\t it too broad either, so as to take within its sweep
\nany remote  service which may ultimately or tangentically be
\nof some\t benefit to the grain trade in the market. Subba Rao
\nJ., as\the then\t was, speaking\tfor the\t Court in Arunachala
\nNadar’s. case  (supra) traced  the history  of the marketing
\nlegislation at\tpages 95-96 and pointed out at page 98:-“The
\nAct,  therefore,  was  the  result  of\ta  long\t exploratory
\ninvestigation by experts in the field, conceived and enacted
\nto regulate  the buying\t and selling  of commercial crops by
\nproviding suitable  and\t regulated  markets  by\t eliminating
\nmiddlemen and  bringing face to face to the producer and the
\nbuyer  so  that\t they  may  meet  on  equal  terms,  thereby
\neradicating  or\t  at  any   rate  reducing   the  scope\t for
\nexploitation in\t dealings.” At\tpage 102 is to be found some
\ndiscussion with\t regard to  the licence fees which, says the
\nlearned Judge,\t“do not\t appear to  be so high as to cripple
\nthe trader’s business.” The question of charge of the market
\nfee  apart   from  the\t licence  fee\tdid  not   fall\t for
\nconsideration in this case. The Bombay
\n1242<\/span>
\nMarketing Statute  came to  be considered  in  the  case  of
\nMohammad Hussain  Gulam Mohammad and another v. The State of
\nBombay and  another.(1) Wanchoo J., as he then was, speaking
\nfor the\t Court repelled the attack at page 669 on section 11
\nof the\tBombay Act which gives power to the Market Committee
\nsubject to  the provisions  of the rules and subject to such
\nmaxima as may be prescribed to levy fees on the agricultural
\nproduce bought and sold by licensees in the market area. The
\nattack was  that the  impost was in the nature of sales tax.
\nIt was repelled on the ground that:-\n<\/p>\n
\t  “Now there  is no  doubt that the market committee
\n     which is  authorised to  levy this fee renders services
\n     to the  licensees,\t particularly  when  the  market  is
\n     established. Under\t the circumstances it cannot be held
\n     that the  fee charged  for\t services  rendered  by\t the
\n     market committee  in connection with the enforcement of
\n     the various  provisions of\t the Act  and the provisions
\n     for  various   facilities\tin   the   various   markets
\n     established by it, is in the nature of sales tax. It is
\n     true that\tthe fee\t is  calculated\t on  the  amount  of
\n     produce bought and sold but that in our opinion is only
\n     a method  of realising fees for the facilities provided
\n     by the Committee.”\n<\/p><\/blockquote>\n
Since the  market  was\tnot  found  to\thave  been  properly
\nestablished it\twas held that the market committee could not
\nenforce any  of the  pro  visions of the Act or the Rules or
\nthe bye-laws.  Therefore, the question of the rate of market
\nfee did\t not fall  for consideration. The Bihar Statute came
\nup for\tconsideration of  this Court  in the case  of Lakhan
\nLal and\t  others  etc. v.  The State  of Bihar\tand  others.
\nBachawat J.,  upheld the  validity of  the  various  actions
\ntaken by  the State  Government under  the Act and the Rules
\nand finally  said at  page 539:-“But there is no material on
\nthe record to show that the Government acted unreasonably or
\nthat the  market is  so wide  that the\tsale and purchase of
\nagricultural  produce\twithin\tit   cannot  be\t effectively
\ncontrolled by  the market  committee  or  that\tthe  growers
\nwithin the  area cannot\t conveniently bring their produce to
\nthe market yards.” In contrast in the present case the whole
\nof the\tState has  been divided into different market areas,
\nalthough the  principal market\tyard is only one in one area
\nwith some  sub market  yards appertaining  to it.  We do not
\nmean to\t suggest in  pointing out  this difference  that the
\ndeclaration of\tthe whole  market area\tis unreasonable. But
\nthe market  fee has  to be  realized from the traders on the
\npurchase of  the agricultural  produce in  the market  which
\nconsists of the market yards and some purchas-\n<\/p>\n
1243<\/span><\/p>\n
ing centres established at some other places in the area due
\nto the\t    urgency or exigency of the situation. Such a fee
\ncannot be utilised for the purpose of rendering all sorts of
\nfacilities   and   services   for   the\t  benefit   of\t the
\nagriculturists throughout the area. It may be very necessary
\nto render  such services to the agriculturists; rather, they
\nmust be\t rendered. But\tthe laudable  and in  itself  cannot
\njustify the  means to achieve that end if the means have got
\nno sanction  of the  law. In  the Bihar case it was found at
\npage 540:-\n<\/p>\n
\t  “The market  committee  has  appointed  a  dispute
\n     subcommittee   for quick settlement of disputes. It has
\n     set up  a market  intelligence unit  for collecting and
\n     publishing the  daily prices  and information regarding
\n     the  stock,  arrival  and\tdespatches  of\tagricultural
\n     produce. It  has provided\ta  grading  unit  where\t the
\n     techniques of  grading agricultural  produce is taught.
\n     the  contract   form   for\t  purchase   and   sale\t  is
\n     standardised. The\tprovisions of  the Act and the Rules
\n     are  enforced   through  inspectors   and\tother  staff
\n     appointed by  the market committee. The fees charged by
\n     the market\t committee are\tcorrelated to  the  expenses
\n     incurred by it for rendering these services. The market
\n     fee,  of\t25  naya   paise  per\tRs.  100\/  worth  of
\n     agricultural produce and the licence fees prescribed by
\n     Rules 71  and 73  are not excessive. The fees collected
\n     by\t the  market  committee\t form  part  of\t the  market
\n     committee fund which is set apart and earmarked for the
\n     purposes of  the Act.  There is sufficient quid pro quo
\n     for the  levies and  they satisfy\tthe test of “fee” as
\n     laid down\tin Commissioner\t Hindu Religious  Endowments
\n     Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur
\n     Mutt-<\/a>[954] S.C.R., 1005.”\n<\/p><\/blockquote>\n
It would  be noticed  that even\t the rate  of 25  paise\t per
\nhundred rupees\thad to\tsatisfy\t all  these  tests.  In\t the
\ninstant cases  we are concerned with the rates of market fee
\nwhich are  much higher\tthan  the  Bihar  rate.\t Correlative
\nservice also, therefore, must satisfy the tests of rendering
\nmore services  in  the\tmarket\tarea.  The  fund  cannot  be
\npermitted to be utilised for an end, such as, augmenting the
\nagricultural produce etc., if it has no reasonably direct or
\nclose connection with the services rendered to the payers of
\nthe fee.\n<\/p>\n
     From a  conspectus of  the various\t authorities of this
\nCourt we  deduce the following principles for satisfying the
\ntests for  a valid  levy of  market fees on the agricultural
\nproduce bought\tor sold\t by licensees  in a  notified market
\narea:-\n<\/p>\n
\t  (1)  That the\t amount\t of  fee  realised  must  be
\n\t       earmarked  for\trendering  services  to\t the
\n\t       licensees in the notified
\n1244<\/span>
\n\t       market  area   and  a  good  and\t substantial
\n\t       portion of   it\tmust be shown to be expanded
\n\t       for this purpose.\n<\/p><\/blockquote>\n
\t  (2)  That the\t services rendered  to the licensees
\n\t       must be\tin relation  to the  transaction  of
\n\t       purchase or sale of the agricultural produce.
\n\t  (3)  That while  rendering services  in the market
\n\t       area for\t the  purpose  of  facilitating\t the
\n\t       transactions of purchase and sale with a view
\n\t       to  achieve  the\t objects  of  the  marketing
\n\t       legislation it is not necessary to confer the
\n\t       whole of\t the benefit  on the  licensees\t but
\n\t       some special  benefits must  be conferred  on
\n\t       them  which   have  a   direct,\t close\t and
\n\t       reasonable correlation  between the licensees
\n\t       and the transactions.\n<\/p><\/blockquote>\n
\t  (4)  That while  conferring some  special benefits
\n\t       on the  licensees it in permissible to render
\n\t       such service  in the  market which  may be in
\n\t       the general  interest of\t all concerned\twith
\n\t       the transactions taking place in the market.
\n\t  (5)  That spending  the amount  of market fees for
\n\t       the purpose  of augmenting  the\tagricultural
\n\t       produce,\t its   facility\t of   transport\t  in
\n\t       villages\t and  to  provide  other  facilities
\n\t       meant mainly  or exclusively  for the benefit
\n\t       of the  agriculturists is  not permissible on
\n\t       the ground  that such service in the long run
\n\t       go to  increase the volume of transactions in
\n\t       the market ultimately benefitting the traders
\n\t       also. Such  an indirect and remote benefit to
\n\t       the traders  is in no sense a special benefit
\n\t       to them.\n<\/p><\/blockquote>\n
\t  (6)  That the\t element of  quid pro quo may not be
\n\t       possible,   or\t even\tnecessary,   to\t  be
\n\t       established with\t arithmetical exactitude but
\n\t       even  broadly   and  reasonably\tit  must  be
\n\t       established by the authorities who charge the
\n\t       fees that  the  amount  is  being  spent\t for
\n\t       rendering services to those on whom falls the
\n\t       burden of the fee.\n<\/p><\/blockquote>\n
\t  (7)  At least\t a good\t and substantial  portion of
\n\t       the amount  collected on account of fees, may
\n\t       be in  the  neighbourhood  of  two-thirds  or
\n\t       three-fourths, must  be shown with reasonable
\n\t       certainty  as   being  spent   for  rendering
\n\t       services of the kind mentioned above.<\/p><\/blockquote>\n
1245<\/span><\/p>\n
     In\t the   light  of   the\tprinciples  culled  out\t and
\nenunciated above,  we\t now proceed to examine the relevant
\nprovisions of  the Act and the rules framed thereunder as in
\nforce in  the States of Punjab and Haryana. We shall examine
\nthe relevant provisions with reference to the Punjab Act and
\nthe Rules  and will only refer to those of Haryana when some
\ndifference of some significance or consequence has got to be
\npointed out.\n<\/p>\n
     Under clause  (f) of  section 2  of the Act “dealer” is
\ndefined to mean :-\n<\/p>\n
\t  “any person  who within  the notified\t market area
\n     sets up,  establishes or  continues  or  allows  to  be
\n     continued any  place for the purchase, sale, storage or
\n     processing of  agricultural produce notified under sub-
\n     section (l) of section 6 or purchases, sells, stores or
\n     processes such agricultural produce.”\n<\/p><\/blockquote>\n
Clause (hh) inserted by Punjab Act 4O of 1976 says:-\n<\/p>\n
\t  “licensee” means  a person  to whom  a licence  is
\n     granted under  section 10 and the rules made under this
\n     Act  and\tincludes  any\tperson\twho  buys  or  sells
\n     agricultural produce  and to  whom a licence is granted
\n     as Kacha  Arhtia or  commission agent  or otherwise but
\n     does not include a person licensed under section 13.”\n<\/p><\/blockquote>\n
As per clause (i):-\n<\/p>\n
\t  market” means\t a market  established and regulated
\n     under this\t Act  for  the\tnotified  market  area,\t and
\n     includes a\t market proper,\t a principal market yard and
\n     sub-market yard.”\n<\/p><\/blockquote>\n
The definition\tof “market  proper” is to be found in clause\n<\/p>\n
(k) to mean:-\n<\/p>\n
\t  “any area  including all  lands with the buildings
\n     thereon, within  such distance  of the principal market
\n     or sub-market  yard, as may be notified in the official
\n     gazette  by  the  State  Government,  to  be  a  market
\n     proper.”\n<\/p><\/blockquote>\n
“Notified market area” in clause (b) means any area notified
\nunder section 6 and clause (n) provides:-\n<\/p>\n
\t  ” “Principal\tmarket yard”  and “sub-market  yard”
\n     mean an  enclosure, building or locality declared to be
\n     a principal  market  yard\tand  sub-market\t yard  under
\n     section 7.”\n<\/p><\/blockquote>\n
As already  stated the State Agricultural Marketing Board is
\nconstituted under section 3 and while enumerating the powers
\nand duties of the
\n1246<\/span>
\nBoard it  is provided  in sub-section  (9) that\t “The  Board
\nshall  exercise\t  superintendence  and\t control  over\t the
\nCommittees.”  The  provision  of  “Declaration\tof  notified
\nmarket area”  is to  be found in section 6(1) which empowers
\nthe State  Government to  declare the  area  notified  under
\nsection 5  or any  portion thereof  to be  a notified market
\narea  for  the\tpurposes  of  the  Act\tin  respect  of\t the
\nagricultural produce  notified under  section 5\t or any part
\nthereof. As  already pointed  out the whole of the State was
\nintended to  be divided in various market areas and was also
\ndeclared as  such under\t section 6. Under sub-section (3) of
\nsection 6  after the declaration of the notified market area
\nno person  can establish  or  continue\tany  place  for\t the
\npurchase, sale,\t storage and  processing of the agricultural
\nproduce except\tunder a\t licence granted  in accordance with
\nthe provisions\tof the\tAct, the  Rules and  the byelaws.  A
\ndispute arose  between the  parties before  us as to whether
\nthe licence  is granted\t for the  whole of  the area  or for
\nparticular places  therein. On\texamining Form\tin the Rules
\nmeant for grant of licence under section 10 we find that the
\nlicence is  granted for\t one  or  more\tplaces\tof  business
\nspecified in  column 6\tsituated in  a\tparticular  notified
\nmarket area  named at  the top of the licence. There will be
\nno sense  in specifying the place of business in the licence
\nif the licensee is to be permitted to establish his place of
\nbusiness any  where in\ta notified  market area which is too
\nbig and\t extensive for\tthe control  and  supervision  of  a
\nparticular market committee. Market yards are declared under
\nsection 7 and for each notified market area there can be one
\nprincipal market  yard and  one or  more sub-market yards as
\nmay be\tnecessary. The\tmarginal note  of section  8 is\t “No
\nprivate market to be opened in or near places declared to be
\nmarkets.” There\t is some difference in the provisions of the
\nAct as\tintroduced by  the Haryana  Amendment in relation to
\nthe establishment  of notified\tmarket area,  declaration of
\nmarket yards  and the  inhibition on any person to establish
\nor continue  any place\tfor the\t purchase “sale, storage and
\nprocessing of  any agricultural\t produce.” There  was also a
\ncontroversy before  us as to the exact interpretation of the
\nlanguage of the two Statutes in relation to such inhibition.
\nBut for\t the purposes  of the  cases before  us\t it  is\t not
\nnecessary to  further encumber the judgment by attempting to
\nreconcile by  harmonious construction the various provisions
\nof the\ttwo Acts  in relation  to this matter. Suffice it to
\nsay that  there is  no special\tprovision in the Statute for
\nestablishment of  markets  or  markets\tproper\tas  per\t the
\ndefinition contained in clauses (i) and (k) of section\t2 of
\nthe Act,  yet it  is reasonable to assume that the intention
\nof the\tlegislature is to constitute the market yards as the
\nmarket proper  and ordinarily and generally the market would
\nbe the same but may
\n1247<\/span>
\ninclude some  other places where transactions of purchase of
\nagricultural produce  by the  traders from the producers has
\nbeen allowed  in order to avoid rush in the precincts of the
\nmarket proper.\tBut one\t thing is  certain that the whole of
\nthe market  area in  no sense  can be equated with market or
\nmarket proper.\tNo  body  can  be  allowed  to\testablish  a
\npurchasing centre  of his  own at  any place he likes in the
\nmarket\tarea  without  there  being  such  a  permission  or
\nauthority from\tthe Market  Committees. After  all the whole
\nobject of  the Act  is the  supervision and  control of\t the
\ntransactions  of   purchase  by\t  the\ttraders\t  from\t the
\nagriculturists in  order to   prevent  exploitation  of\t the
\nlatter by  the former.\tThe supervision\t and control  can be
\neffective only\tin specified  localities and  places and not
\nthroughout the extensive market area.\n<\/p>\n
     We have  already pointed  out that there is no separate
\nnotification or\t declaration establishing a market or market
\nproper. But  Rule 24(1)\t in both the States framed under the
\nAct provides  that:-“All agricultural  produce brought\tinto
\nthe market  for sale  shall be\tsold by\t open auction in the
\nprincipal or  sub-market yard.”\t This  also  indicates\tthat
\nmarket\tis generally the principal and sub-market yards. The
\nbenefit of  market fee, therefore, has to be correlated with
\nthe transactions  taking place at the specified place in the
\nmarket area and not in the whole of the area.\n<\/p>\n
     Sections 9 to 10A deal with the procedure of taking out
\nlicences, The State Government is empowered under section ll
\nto establish  a market\tcommittee for  every notified market
\narea and  to  specify  its  headquarters.  The\tquestion  of
\nconstitution of\t committees is\tdealt within section 12. The
\nduties and  powers of  a market\t committee are enumerated in
\nsection 13.  It would  be seen from clause (a) of subsection\n<\/p>\n
(l) of\tsection 13  that it  is the duty of the committee to
\nestablish a  market in\tthe notified  market area “providing
\nsuch facilities\t for persons  visiting it in connection with
\nthe purchase,  sale, storage,  weighment and  processing  of
\nagricultural produce concerned as the Board may from time to
\ntime direct.”  This also  indicates that  the  Committee  is
\nprimarily concerned  with providing facilities in the market
\nfor  persons   visiting\t it   and  in  connection  with\t the
\ntransactions taking place there.\n<\/p>\n
     Now we  come to  the most important section viz section\n<\/p>\n
23. It read as follows:-\n<\/p>\n
\t  “A Committee\tshall, subject\tto such rules as may
\n     be made by the State Government in this behalf, levy on
\n     ad-valorem\t basis\tfees  on  the  agricultural  produce
\n     bought or sold by licensees in the notified market area
\n     at a  rate not  exceeding three  rupees for  every\t one
\n     hundred rupees:-\n<\/p><\/blockquote>\n
1248<\/span><\/p>\n
\t  Provided that-\n<\/p><\/blockquote>\n
\t  (a)  no fee  shall be\t leviable in  respect of any
\n\t       transaction  in\t which\t delivery   of\t the
\n\t       agricultural produce  bought  or\t section  in
\n\t       which delivery is actually made.”\n<\/p><\/blockquote>\n
\t  (b)  a fee  shall be\tleviable only on the parties
\n\t       to  a   transaction  in\t which\tdelivery  is
\n\t       actually made.”\n<\/p><\/blockquote>\n
There is  a slight  variation in  section 23  as amended  by
\nHaryana Act  21 of  1973. Therein  some market\tfee  may  be
\ncharged\t on   the  agricultural\t produce  even\tbrought\t for
\nprocessing by licensees in the notified area. But we are not
\nconcerned with\tthe charge  of such  a fee  in any  of these
\ncases.\n<\/p>\n
     Rule 29 of the Punjab Rules says:-\n<\/p>\n
\t  “Levy and  collection of  fees  on  the  sale\t and
\n     purchase of agricultural produce.\n<\/p>\n
\t  (1) Under  section 23\t a Committee shall levy fees
\n     on the agricultural produce bought or sold by licensees
\n     in the  notified market area at the rate to be fixed by
\n     the Board from time to time.\n<\/p>\n
\t  Provided that\t no such fees shall be levied on the
\n     same agricultural\tproduce more  than once\t in the same
\n     notified market  area. A  list of\tsuch fees  shall  be
\n     exhibited in  some conspicuous  place at  the office of
\n     the Committee concerned:\n<\/p>\n
 ………………………………………………..
\n\t  (2)  The   responsibility  of\t  paying  the\tfees
\n     prescribed under sub-rule (l) shall be of the buyer and
\n     if he  is not  a licensee\tthen of\t the seller  who may
\n     realise the  same from  the buyer.\t Such fees  shall be
\n     leviable as  soon as  an agricultural produce is bought
\n     or sold by a licensee.”\n<\/p>\n
The Haryana Rule is substantially the same.\n<\/p>\n
     Reading section  23 along\twith Rule  29  it  would  be
\nnoticed that  the power\t of the\t Committee to  levy fees  is
\nsubject to the Rules as may be made by the State Government.
\nThe fee is levied on ad-valorem basis at a rate which cannot
\nexceed\tthe   maximum,\tmentioned   in\tsection\t 23  by\t the
\nlegislature. But the power to fix the rate from time to time
\nwithin the maximum limit has been conferred on the Board and
\nthe Committee  is merely  bound to  follow it.\tOne  of\t the
\narguments before  us on\t behalf of  the appellants  and\t the
\npetitioners was\t that it  was the Board which fixed the rate
\nof Rs. 2\/- first and thereafter Rs. 3\/-\n<\/p>\n
1249<\/span><\/p>\n
per hundred  rupees. The Committee abdicated its function in
\nthis regard  and, therefore,  the levy of fee is contrary to
\nthe principle  of law laid down by this Court in the case of
\nState of  Punjab and  another v. Hari Krishan Sharma(l). But
\nthe distinction between the said case and the present one is
\nthat under the former there was no provision in section 5(l)
\nof the\tPunjab Cinemas\t(Regulation) Act  of 1952  that\t the
\npower of  the  licensing  authority  to\t grant\tlicence\t was
\nsubject to  any rule, the rule in its turn providing an over
\nriding power  in the State Government in the matter of grant
\nof licence.  The control  of the Government provided in sub-
\nsection (2) was of a limited kind. On the other hand section
\n23 in  express language\t controls the  power of Committee to
\nlevy fees subject to the rules. The power given to the Board
\nto fix\tthe rate of market fees from time to time under rule
\n29 is  not ultra  vires the provisions of the Act, as in our
\nopinion sub-section  (9) of  section 3\tconfers power on the
\nBoard to  exercise  superintendence  and  control  over\t the
\nCommittees, which  power, in  the context  and the scheme of
\nthe marketing  law   will take\twithin its  ambit the  power
\nconferred on the Board under rule 29(1).\n<\/p>\n
     It is  further to be pointed out that the fee levied is
\nnot on the agricultural produce in the sense of imposing any
\nkind of\t tax or duty on the agricultural produce Nor is it a
\ntax on\tthe transaction\t of purchase or sale. The levy is an
\nimpost on  the buyer  of the  agricultural  produce  in\t the
\nmarket in  relation to\ttransactions of\t his  purchase.\t The
\nagriculturists are  not required to share any portion of the
\nburden of this fee. In case the buyer is not a licensee then
\nthe responsibility  of paying  the fees is of the seller who
\nmay realise  the same from the buyer. But such a contingency
\ncannot arise  in respect  of the  transactions of sale by an
\nagriculturist of his agricultural produce in the market to a
\ndealer who  must be a licensee. Nor was any such eventuality
\noccurring in  any of  the cases before us was brought to our
\nnotice. Probably  such an alternative provision was meant to
\nbe made\t for outside  buyers who are not licensees when they
\nbuy the\t agricultural produce from or through the licensees.
\nAny way we are not concerned with that question.\n<\/p>\n
     Under  section 27(1):-\n<\/p>\n
\t  “All moneys  received by a Committee shall be paid
\n     into a  fund to be called the Market Committee Fund and
\n     all expenditure  incurred by the Committee under or for
\n     the purposes  of this Act shall be defrayed out of such
\n     fund, and\tany surplus remaining after such expenditure
\n     has been met shall be invested in such manner as may be
\n     prescribed.”\n<\/p>\n
1250<\/span><\/p>\n
Every Market Committee, is obliged under sub-section section
\n(2) (a)\t of section  27 to  pay\t out  of  its  fund  to\t the
\nMarketing Board\t as  contribution  such\t percentage  of\t its
\nincome derived from licence fee, market fee and fines levied
\nby the\tcourts as  specified in\t sub-clause(i) and (ii). The
\npurpose of  this contribution  as mentioned  in\t sub-section
\n2(a) is to enable the Board to defray expenses of the office
\nestablishment of  the Board and such other expenses incurred
\nby it  in the  interest of Committees in general. The income
\nof almost  all the  Market Committees  were several lakhs of
\nrupees per  year and, therefore, each is required to  pay 30
\nper centum  of its  income to  the Board  by virtue  of\t the
\namendment brought  about by  Punjab  Act  4  of\t 1978  Under
\nsection 25 all receipts of the Board are to be credited into
\na fund to be called the Marketing Development Fund. Purposes
\nfor   which the\t Marketing Development\tFund. Purposes\t for
\nwhich the  Marketing Development  Fund may  be expanded\t are
\nenumerated in  section 26  and the  purposes for  which\t the
\nMarket Committee  Funds may  be expended  are catalogued  in
\nsection 28  We think we shall have to read both the sections
\nin full\t one by one. First we refer to section 28 which runs
\nas follows:-\n<\/p>\n
\t  Subject to the provisions of section 27 the Market
\n     Committee Funds  shall be\texpended for  the  following
\n     purposes:-\n<\/p><\/blockquote>\n
\t  (i)  acquisition of sites for the market;\n<\/p><\/blockquote>\n
\t  (ii) maintenance and improvement of the market;\n<\/p><\/blockquote>\n
\t  (iii)construction and\t repair of  buildings  which
\n\t       are necessary  for the purposes of the market
\n\t       and for\tthe health convenience and safety of
\n\t       the persons using it.\n<\/p><\/blockquote>\n
\t  (iv) provision and maintenance of standard weights
\n\t       and measures;\n<\/p><\/blockquote>\n
\t  (v)  pay.    leave\t allowances,\t gratuities,
\n\t       compassionate  allowances  and  contributions
\n\t       towards leave  allowances,  compensation\t for
\n\t       injuries and  death resulting  form accidents
\n\t       while  on   duty,  medical  aid,\t pension  or
\n\t       provident fund of the persons employed by the
\n\t       Committee.\n<\/p><\/blockquote>\n
\t  (vi) payment of  interest on\tloans  that  may  be
\n\t       raised for  purpose of  the  market  and\t the
\n\t       provisions of  a sinking\t fund  in respect of
\n\t       such loans;\n<\/p><\/blockquote>\n
\t  (vii)collection and  dissemination of\t information
\n\t       regarding  all\tmatters\t relating   to\tcrop
\n\t       statistics and  marketing in  respect of\t the
\n\t       agricultural produce concerned’
\n1251<\/span>\n<\/p><\/blockquote>\n
\t  (viii)providing comforts  and facilities,  such as
\n\t       shelter,\t shade,\t parking  accommodation\t and
\n\t       water  for   the\t persons,   draught  cattle,
\n\t       vehicles and  pack animals  coming  or  being
\n\t       brought to  the market or on construction and
\n\t       repair of  approach roads;  culverts, bridges
\n\t       and other such purposes;\n<\/p><\/blockquote>\n
\t  (ix) expenses incurred  in the  maintenance of the
\n\t       offices and  in auditing\t the accounts of the
\n\t       Committees;\n<\/p><\/blockquote>\n
\t  (x)  propaganda   in\t  favour   of\tagricultural
\n\t       improvements, and thrift;\n<\/p><\/blockquote>\n
\t  (xi) production  and\tbetterment  of\tagricultural
\n\t       produce;\n<\/p><\/blockquote>\n
\t  (xii)meeting any  legal expenses  incurred by\t the
\n\t       Committee;\n<\/p><\/blockquote>\n
\t  (xiii)imparting   education\t in   marketing\t  or
\n\t       agriculture;\n<\/p><\/blockquote>\n
\t  (xiv)payments of  travelling and  other allowances
\n\t       to  the\t members  and\temployees   of\t the
\n\t       Committee, as prescribed:\n<\/p><\/blockquote>\n
\t  (xv) loans and advances to the employees;
\n\t  (xvi)expenses of and incidental to elections; and
\n\t  (xvii)with the previous sanction of the Board, any
\n\t       other purpose  which is calculated to promote
\n\t       the general interests of the Committee or the
\n\t       notified market\tarea or\t with  the  previous
\n\t       sanction of the State Government, any purpose
\n\t       calculated to  promote the national or public
\n\t       interest.”<\/p><\/blockquote>\n
     Let us  first scan\t these clauses\tone by\tone  on\t the
\nfooting that  the Market  Committee Fund will ordinarily and
\ngenerally and  almost wholly  will be  created\tout  of\t the
\nincome of a particular Market Committee on account of market
\nfees realised  by it  from the\ttraders\t in  the  market.  A
\nportion of it may be on account of fines, licence fees, from
\nweighment, arbitration\tfees etc. But those amounts compared
\nto the\thuge realisations on account of market fees would be
\nalmost negligible.  By and  large the purposes enumerated in
\nclauses (i)  to (ix)  are relatable  to the  service  to  be
\nrendered in  the market\t in relation  to the transactions of
\npurchase and sale of the agricultural produce. We shall deal
\nwith the problem of payment of interest on loans that may be
\nraised for  purposes of\t the market  as mentioned  in clause\n<\/p>\n
(vi)  shortly\thereinafter.  Apropos\tclause\t(viii)\t the
\nattention of all concerned must be focussed here because the
\nlast part of this clause had led the autho-\n<\/p>\n
1252<\/span><\/p>\n
rities and also the High Court to think that construction of
\nlink roads,  culverts and  bridges any\twhere in  a notified
\nmarket area  is covered by this clause. In our opinion it is
\nnot so.\t In the\t context of  the language of all the clauses
\npreceding clause (viii) and clause (viii) itself it is plain
\nthat what  is meant  by “construction and repair of approach
\nroads; culverts,  bridges” is  only for\t the purpose  of the
\nfacility of  going into\t the market  from the nearest public
\nroad. Supposing\t a market has been established consisting of
\nprincipal market  yard or  sub-market yards  at a particular
\nplace where there is no facility for the carts or the trucks
\nand other  vehicles to\tgo,  then  approach  roads,  and  if
\nnecessary even\tculverts and  bridges may be constructed, or
\nrepaired  out\tof  the\t  Market  Committee  Fund.  Such  an
\nexpenditure within the limited limit will be with the object
\nof facilitating\t the taking  place of  the  transactions  of
\npurchase and sale in the market and will confer some special
\nbenefits to  the traders  apart from  a share of the benefit
\ngoing to  the agriculturists  who are  not required to share
\nany burden  of the  market fee.\t But as\t we have pointed out
\nabove, if  one were  to give  a very  wide meaning  to\tthis
\nphrase\tof   construction  and\trepair\tof  approach  roads,
\nculverts and  bridges to  say that  such construction can be
\npermitted any  where in\t the market area for the facility of
\nthe agriculturists which ultimately will benefit the traders
\nalso, then  the whole  concept of correlation of fee and its
\ncharacter of  having an element of quid pro quo will dwindle
\ndown and  become an  empty formality. Uplift of villages and
\nhelping the  agriculturists by all means is the duty and the
\nobligation of  the State  no doubt  and it  has to  do it by
\nincurring expenses out of the public exchequer consisting of
\nthe income from various kinds of taxes etc.
\n     One may  not have any serious objection to the items of
\nexpenditure mentioned  in clauses  (xii),  (xiv),  (xv)\t and
\n(xvi).\tBut  the  other\t clauses  do  require  some  careful
\nexamination. Obviously\tclause (x)  and clause\t(xi)  cannot
\nform the  items of  expenditure out  of the  market fees. In
\nface of\t the view  of the  law expressed  by  us  above\t the
\npropaganda in  favour of  the agricultural  improvement\t and
\nexpenditure for\t production and\t betterment of\tagricultural
\nproduce will  be in  the general  interest of agriculture in
\nthe market  area. The  whole of\t the State  is divided\tinto
\nmarket areas.  So long\tas the\tconcept\t of  fee  under\t our
\nConstitution remains distinct and limited in contrast to tax
\nsuch  expenditure   out\t of   the  market   fee\t cannot\t  be
\ncountenanced in\t law. The first part of clause (xiii) may be
\njustified in  the sense\t of imparting education in marketing
\nto  the\t  staff\t of  the  Market  Committee.  But  imparting
\neducation in  agriculture in  general cannot  be  correlated
\nwith the  market fee. The first part of clause (xvii) is too
\nvague to merit any
\n1253<\/span>
\ndiscussion on  the language  of the  clause itself until and
\nunless\twe  are\t   faced  with\tconcrete  examples  of\tsuch
\nexpenditure. But how ill-conceived the second part of clause
\n(xvii) is,  is abundantly  clear from  the decisions  of the
\nPunjab High  Court  mentioned  above  and  to  be  discussed
\nshortly hereinafter.  Is it  permissible to spend the market
\nfees realised from the traders for any purpose calculated to
\npromote the  national or public interest ? Obviously not. No
\nMarket Committee can be permitted to utilise the fund for an
\nulterior  purpose   howsoever\tbenevolent,   laudable\t and
\ncharitable the\tobject may be. The whole concept of fee will
\ncollapse if  the amount\t realised by  market fees  could  be
\npermitted to  be spent\tin this\t fashion. We  may,  however,
\nmention one  matter pointedly  in connection with the Market
\nCommittee Fund.\t Under section\t32 the\tCommittee may borrow
\nmoney  for   carrying  on  the\tpurposes  for  which  it  is
\nestablished on\tthe security  of any  property vested in and
\nbelonging to  the Committee.  It may  obtain a loan from the
\nState Government  or the  Board. In  the various figures and
\ncharts submitted  before us  it was  shown that\t the  Market
\nCommittees had\traised money by loan and other methods. That
\nalso will  form the  market committee  fund. Technically and
\nlegally, therefore,  one may  not have\tany objection to the
\nexpenditure of\tsuch money  for the  purposes  mentioned  in
\nclauses (x),  (xi) (xiii)  and (xvii). As we indicated above
\nclause (vi)  provides for  payment of interest on loans, but
\nthat is confined to loans that may be raised for purposes of
\nthe market and not for any other purpose, whereas, the power
\nof the\tCommittee to  raise loans  under section  32 is very
\nwide. The  Act, however, is silent as to where from interest
\nwill be\t paid or the principal will be returned in regard to
\nthe amount  of loan  raised for\t a purpose  other  than\t the
\npurpose of  the market.\t Since we  find that  the matter has
\nproceeded at  various stages  in the  High Court  as also in
\nthis Court  under a  great confusion of the correct position
\nof law,\t we do\tnot propose  to express\t any opinion in this
\nregard at this stage. Nor do we propose to strike any clause
\nof section 28 as being unconstitutional merely on the ground
\nthat the  expenditure authorised  therein  goes\t beyond\t the
\nscope of  the purpose of the utilisation of the market fees.
\nThe authorities\t have to  bear this  in mind and on a proper
\noccasion the  matter will have to be dealt with by courts in
\nthe light  of this  judgment where  a concrete case comes of
\nraising of a loan, spending the money so raised which cannot
\nbe reasonably  connected with  the purposes  for  which\t the
\nmarket fee  can be  spent, as  to whether such a loan can be
\nrepaid or interest on it can be paid out of the realizations
\nof the market fees.\n<\/p>\n
     One of  the points\t mooted before\tus was as to how far
\nthe market  committees can  be compelled to part with 30% of
\ntheir income  in favour\t of the\t Marketing Board. If so, for
\nwhat purposes the Board
\n1254<\/span>
\nfund,  namely,\t the  Marketing\t  Development  Fund  can  be
\nexpanded. It  is to  be remembered that market fee is levied
\nby each\t and every  Market Committee  separately in  its own
\narea and  if a\tgood and substantial portion of this fee has
\ngot to be expanded for rendering services in the area to the
\npayers of  the fee  in relation\t to the\t transactions taking
\nplace therein, then logically speaking it flows from it that
\nany money  paid to  the Board  out of the collections of the
\nmarket fee has also got to be expended in the very same area
\nof the\tparticular  Market  Committee.\tBut  such  a  strict
\nconstruction from a practical point of view is not possible.
\nThe Board  in the  State  is  the  Central  Controlling\t and
\nsuperintending authority over all the Market Committees, the
\nprimary function  of which  is\tto  render  service  in\t the
\nmarket. Parting\t with 30%  income by  a Market\tCommittee in
\nfavour of  the Board  is not so excessive or unreasonable so
\nas to  warrant any  interference with the law in this regard
\non the\tground of violation of the principle of quid pro quo
\nin the\tutilisation of\tthe market  fee\t realised  from\t the
\ntraders in  the market\tarea. We  would,  however,  like  to
\nemphasise that\tthe Marketing  Development Fund\t can only be
\nexpended for  the purposes  of the  Market Committees  in  a
\ngeneral way,  or to be more accurate, as far as practicable,
\nfor the\t purposes of  the particular  Market Committee which
\nmakes the contribution.\n<\/p>\n
     We shall  now read\t section 26 of the Act providing for
\npurposes for  which the\t Marketing Development\tFund may  be
\nexpended. It reads as follows:-\n<\/p>\n
\t  “The Marketing  Development Fund shall be utilised
\n     for the following purposes:-\n<\/p><\/blockquote>\n
\t  (i)  better marketing of agricultural produce;\n<\/p><\/blockquote>\n
\t  (ii) marketing   of\t agricultural\tproduce\t  on
\n\t       cooperative lines;\n<\/p><\/blockquote>\n
\t  (iii)collection and  dissemination of market rates
\n\t       and news;\n<\/p><\/blockquote>\n
\t  (iv) grading and  standardisation of\tagricultural
\n\t       produce;\n<\/p><\/blockquote>\n
\t  (v)  general improvements  in the markets or their
\n\t       respective notified market areas;\n<\/p><\/blockquote>\n
\t  (vi) maintenance of  the office  of the  Board and
\n\t       construction  and   repair  of\tits   office
\n\t       buildings, rest-house and staff quarters;\n<\/p><\/blockquote>\n
1255<\/span><\/p>\n
\t  (vii)giving aid  to financially weak Committees in
\n\t       the shape of loans and grants;\n<\/p><\/blockquote>\n
\t  (viii)payment\t  of\tsalary,\t  leave\t  allowance,
\n\t       gratuity,      compassionate\t  allowance,
\n\t       compensation for, injuries or death resulting
\n\t       from accidents  while on\t duty, medical\taid,
\n\t       pension or  provident  fund  to\tthe  persons
\n\t       employed by  the Board  and leave and pension
\n\t       contribution  to\t  Government   servants\t  on
\n\t       deputation;\n<\/p><\/blockquote>\n
\t  (ix) travelling  and\t other\tallowances   to\t the
\n\t       employees  of  the  Board,  its\tmembers\t and
\n\t       members of Advisory Committees;\n<\/p><\/blockquote>\n
\t  (x)  propaganda, demonstration  and  publicity  in
\n\t       favour of agricultural improvements;\n<\/p><\/blockquote>\n
\t  (xi) production  and\tbetterment  of\tagricultural
\n\t       produce;\n<\/p><\/blockquote>\n
\t  (xii)meeting any  legal expenses  incurred by\t the
\n\t       Board;\n<\/p><\/blockquote>\n
\t  (xiii)  imparting   education\t in   marketing\t  or
\n\t       agriculture;\n<\/p><\/blockquote>\n
\t  (xiv)construction of godowns;\n<\/p><\/blockquote>\n
\t  (xv) loans and advances to the employees;
\n\t  (xvi)expenses incurred in auditing the accounts of
\n\t       the Board; and
\n\t  (xvii)with the  previous  sanction  of  the  State
\n\t       Government,  any\t  other\t purpose   which  is
\n\t       calculated to  promote the  general interests
\n\t       of  the\tBoard  and  the\t Committee;  or\t the
\n\t       national or public interest.<\/p><\/blockquote>\n
     On a  parity of  the reasoning which we have applied in
\nthe case  of Market Committee Fund we may point out that the
\nMarket Development Fund constituted primarily and mainly out
\nof  the\t  contributions\t by   the  Market   Committees\tfrom
\nrealisations of\t market fees,  can also\t be expended for the
\npurposes of  the market\t in  the  notified  market  area  in
\nrelation to  the transactions  of purchase  and sale  of the
\nagricultural produce  and for no other general purpose or in
\nthe  general   interests   of\tthe   agriculture   or\t the
\nagriculturists. On  that basis we may, as at present advised
\nhold as\t valid the  purposes mentioned in clauses (i), (ii),\n<\/p>\n
(iii), (iv),  first part  of clause (v) clauses (vi), (vii),\n<\/p>\n
(viii), (ix),  (xii), first  part of  clause (xiii), clauses\n<\/p>\n
(xiv), (xv)  and (xvi).\t At the\t same time  we hold that the
\nMarketing Development  Fund constituted\t out of\t the  Market
\nfees cannot be expended for the purposes mentioned in second
\npart of clause (v), clauses (x), (xi), second part of clause\n<\/p>\n
(xiii) and  clause (xvii).  We do not propose to strike down
\nthese provisions  as being  constitutionally invalid  as the
\npurpose of the
\n1256<\/span>
\nlaw will  be served  by restricting the operation of section
\n26 in the manner we have done.\n<\/p>\n
     We now  proceed to\t examine the  decisions of  the High
\nCourt in  the light  of the  principles\t of  law  enunciated
\nabove. The  first decision in the case of M\/s Hanuman Dall &
\nGeneral Mills (supra) is the decision of a Division Bench of
\nthe High  Court. It should be recalled that by this judgment
\ndelivered on 8-11-1974 the High Court maintained the raising
\nof the\tmarket fee  from Rs.  1.50 to Rs. 2\/- in Haryana but
\nstruck down the rise from Rs. 1.50 to Rs. 2.25 in Punjab. In
\nthe cases  before us a lot of new materials contained in new
\nstatements and\tcharts were  filed before us on either side.
\nWe shall  examine only a few of those materials and that too
\nvery cursorily\tas in  our view\t no useful  purpose will  be
\nserved, nor  is it  possible to\t do so for the first time in
\nthis Court, by their thorough examination. The very basis of
\nthe materials  submitted on either side seems to be not well
\ngrounded on a correct appreciation of law. Too many disputes
\nof facts  have been  raised before us. It is not possible to
\nresolve all of them nor do we find that it will be useful to
\ndo that\t exercise. We  shall presently show that even on the
\nmaterials placed  before the  High Court and on the findings
\nrecorded by  it, many of which do not seem to be in dispute,
\nthe requirement\t of law is not satisfied to the extent it is
\nessential in a case of this nature.\n<\/p>\n
     In the  case of  Hanuman Dall and General Mills (supra)
\nthe High  Court examined  many of  the leading and important
\njudgments of  this Court which we have reviewed, earlier and
\nalso placed reliance upon an earlier Division Bench decision
\nof the\tsame High Court in Ram Sarup v. The Punjab State. In
\npara 31\t of the\t judgment at  page 12  the view\t of the High
\nCourt-“that the\t amount of  fees so  collected are not to be
\nspent exclusively  for rendering  services to  the payers of
\nthe fees  but can  also be  utilised for  carrying  out\t the
\npurposes or objects of the Act under which they are levied,”
\nis not\tquite correct.\tIn the same paragraph the High Court
\nfelt constrained  to add that the amount cannot, however, be
\nutilised for purposes which have no connection with the main
\npurposes of  the Act  for which fee is levied, nor can it be
\nspent for  carrying out\t the governmental  functions of\t the
\nState. If  many of  the purposes mentioned in the Act, as we
\nhave shown  above, are\toutside the  ambit  of\tthe  service
\nelement and  fall  within  the\trealm  of  the\tgovernmental
\nfunctions, then\t it is\tplain that  to say by generalisation
\nthat the  fee money can be spent for the purposes or objects
\nof the\tAct  is\t not  quite  correct.  The  High  Court\t has
\nextracted section
\n1257<\/span>
\n28 of  the Act\tbut has\t failed to  scan the  effect of\t the
\nvarious purposes in some of the clauses.\n<\/p>\n
     After  referring\tto  the\t  income   and\t expenditure
\nstatements of Market Committee, Hissar from 1969-70 to 1973-
\n74 the\tconclusion of  fact drawn  at page  15 is  that\t the
\nmarket fee  constitutes more  than 80%\tof the income of the
\nMarket Committee  and the  amount spent on “works” is nearly
\none-half of  the total\texpenditure. The  further finding is
\n“the major item on which the amount has been spent under the
\nhead ‘works’  consists of  the\tamount\tdeposited  with\t the
\npublic\tworks\tdepartment,  Hissar,   as  contribution\t for
\nconstruction of\t village link roads.” On that finding itself
\nit is manifest that Public Works Department was carrying out
\nthe  governmental   functions  of   construction  of   roads
\nincluding village  link roads spread throughout the whole of
\nthe notified  market area  of Hissar.  The said\t link  roads
\ncould not  be taken  to be approach roads within the meaning
\nof clause (viii) of section 28 of the Act as seems to be the
\nview of\t the High Court. The error of law becomes writ large
\nin the\tlast sentence  occurring  in  paragraph\t 34  of\t the
\njudgment at page 15 which says:-\n<\/p>\n
\t  “In any case, the construction of roads within the
\n     notified market area is a work of Public importance and
\n     promotes the  general interest of the committee and the
\n     notified market  area which  is  one  of  the  purposes
\n     enumerated in Cl. (xvii) of Section 26 of the Act.”
\n     The High Court further proceeds to say:-
\n\t  “After giving\t my careful  consideration, I  am of
\n     the opinion that the expenditure on the construction of
\n     link roads\t for which  amounts were  deposited with the
\n     Public Works Department is fully justified as it is for
\n     the benefit  of the  growers, the\tlicensed dealers and
\n     the general  public and  promotes the  interests of the
\n     notified market area.”<\/p><\/blockquote>\n
     The High  Court seems  to be  of the  view\t that  since
\ntransportation is  very essential  for the  development of a
\nmarket and to enable the growers of the agricultural produce
\nto bring  the same  to the  market, the construction of link
\nroads  becomes\t an  essential\t purposes  of\tthe   market
\ncommittees. It\tmay be\tso but the purpose cannot be allowed
\nto be  achieved at  the cost  of the  market fee we realised
\nfrom the  dealers. The\tHigh Court  point out that the money
\ncannot be spent in construction of the government activities
\nfor providing main roads in the State. How, then, the Market
\nCommittees can\tbe made\t to contribute\ta very\tbig chunk of
\ntheir market  fee income  in construction  of the link roads
\nthroughout all villages ? To push the matter logically,
\n1258<\/span>
\nif a  link road\t is to\tbe constructed from a village to the
\nmain road  for enabling\t an agriculturist  to transport\t his
\nproduce upto  the main road then the Market Committee should
\nbe under  an obligation to construct or at least to maintain
\nthe main  road also in order to enable that agriculturist to
\nreact the  market which\t may be\t at distance of say 20 miles
\nfrom the  link road.  It is  plain that construction of such
\nlink road  is as much a part of the governmental activity as
\nthat of the main roads.\n<\/p>\n
     It is  interesting to find out from paragraph 36 of the
\njudgment  that\tthe  Market  Committees\t were  made  to\t pay
\ndonations  to  educational  institutions  imparting  general
\neducation.  The\t  Market  Committee,   Hissar,\t spent\t Rs.
\n1,07,794\/- on  the water  supply scheme\t for a village. Even
\nthe High  Court was  constrained to  disapprove of  this. It
\nalso spent a sum of Rs. 6,00,000\/- for the construction of a
\nPanchayat Bhawan.  Many other  instances  are  mentioned  in
\nparagraph 37  of the  judgment which  show that\t the  Market
\nCommittees were getting enormous income from market fees and
\nthey were made to squander away a good portion of that money
\nunauthorisedly, although  none of the purposes in itself was
\nobjectionable or  bad. Rather,\tthey were very laudable. But
\ntaking an  overall view\t of the\t matter the  High Court felt
\npersuaded in the case of Haryana to uphold the maximum limit
\nof Rs. 2\/- by adding “no interference seems to be called for
\nat  this   time.”  In  the  case  of  Punjab,  however,\t the
\nallegation of the petitioners before the High Court was that
\nthe market  committees were collecting lakhs of rupees every
\nmonth and  the Marketing  Board\t was  collecting  crores  of
\nrupees. The  Marketing Board  was asked\t to  contribute\t one
\ncrore of  rupees to  the Guru  Gobind Singh  Medical College
\nwhich had  been recently  established at  Faridkot.  A\tgood
\nportion of the money was already paid and the High Court was
\nconstrained to\tobserve that  “the State Government shall be
\nwell advised  to compensate the Agricultural Marketing Board
\nand the\t Market Committees  for the  misutilisation of their
\nfunds for  this unauthorised  purposes”. The High Court held
\nat page 19, column 2:-\n<\/p>\n
\t  “In the historical background, set out above, I am
\n     convinced that  the enhancement  in the  amount of\t fee
\n     from one  rupee and  fifty\t paise\tto  two\t rupees\t and
\n     twenty-five  paise\t per  one  hundred  rupees  was\t not
\n     genuine and  it was  made with  a view  to\t enable\t the
\n     market committees\tand the Agricultural Marketing Board
\n     to reimburse themselves for the amounts which they were
\n     directed to  contribute to\t Guru Govind  Singh  Medical
\n     College at\t Faridkot. The Market Committees were having
\n     enough  income   and  could   meet\t  their\t  legitimate
\n     requirements from\tthe amounts of fees which were being
\n     realised prior to the enhancement.”\n<\/p><\/blockquote>\n
1259<\/span><\/p>\n
The enhancement\t of fee\t from Re. 1\/- to Rs. 1.50 was upheld
\nbut the further increase to Rs. 2.25 was knocked down.\n<\/p>\n
     We may  note here that in the batch of appeals we heard
\nthere was  no appeal  from the judgment of the High Court in
\nthe case  of Hanuman Dall & General Mills. We may reasonably
\nassume,\t therefore,   that  the\t  dealers  of  Haryana\twere
\nreconciled for\tpayment of  the market fees upto the maximum
\nlimit of  two rupees  per hundred  rupees. In  the  case  of
\nPunjab, as  we traced  the history  at the  very outset, the
\nmaximum fixed  later was  Rs. 2.20 by Act 14 of 1975. But by
\ntelegraphic instructions  issued by  the  Board\t the  Market
\nCommittees were\t asked to  charge Rs.  2\/- only\t with effect
\nfrom 23-8-1975.\t This was  challenged before  the High Court
\nbut unsuccessfully  in the  case of  Kewal Krishan  Puri and
\nanother v.  The State  of Punjab  and others  (supra). Civil
\nAppeal 1083 of 1977 is from this judgment of the High Court.
\nThe Full  Bench judgment  in this  case also suffers more or
\nless from  the same  kind of  error in\tthe approach  of the
\nlegal problem  as is  to be  found in  the earlier  Division
\nBench decision.\t In paragraph 13 of the judgment at page 352
\nthe High  Court repelled the attack on clauses (x), (xi) and\n<\/p>\n
(xiv) of section 26 of the Act on the ground:-\n<\/p>\n
\t  “The broad  object of\t the  legislation  like\t the
\n     present  one  is  only  to\t protect  the  producers  of
\n     agricultural produce  from being exploited by middlemen
\n     and profiteers  and to  enable them  to secure  a\tfair
\n     return of\ttheir  produce.\t The  Legislation  like\t the
\n     present one  has its root in the attempt on the part of
\n     the nation\t to provide  a fair  deal to  the growers of
\n     crops and\talso to find a market for its sale at proper
\n     rates without  reasonable chances\tof exploitation.  If
\n     this object  is kept in view, then the clauses of which
\n     the  constitutionality   has  been\t  challenged,  would
\n     certainly fall  within the\t ambit of  Entry 28. Clauses\n<\/p><\/blockquote>\n
     (x), (xiii)  and (xiv)  would help\t the growers to make
\n     improvements in  the production of agricultural produce
\n     with the  result that  their agricultural produce would
\n     find a  better market  resulting in  getting them\thigh
\n     price for their agricultural produce.”<\/p><\/blockquote>\n
     It is  to be emphasised at this stage that the question
\nis not of the legislative competence to enact those clauses,
\nnor is there a question of the fee assuming the character of
\na  tax\tand  therefore,\t its  imposition  being\t beyond\t the
\nlegislative competence of the State Legislature. The precise
\nand the\t short question is whether the Market Committees and
\nthe Board  can be authorised to spend the amount realised by
\nmarket fees,  as fee  and fee  alone for  achieving all\t the
\nobjects of the Act when such expenditure cannot be justified
\nand sustained on the well-known
\n1260<\/span>
\nconcept of  fee as  pointed out\t by this  Court\t in  several
\ndecisions. The impost must be correlated with the service to
\nbe rendered  to the  payers of\tthe fees in the sense and to
\nthe extent  we have  pointed out above. Again the High Court
\nfell into  an error  in paragraph  15 of  the judgment when,
\nwhile upholding\t the construction  and\trepair\tof  approach
\nroads, culverts\t and bridges in the larger sense of the term
\nit said:-\n<\/p>\n
\t  “If the approach roads, culverts or bridges are in
\n     such a  bad shape\tthat they  would become hindrance in
\n     the mobility  of the  produce  from  one  part  of\t the
\n     notified market area to the principal market yard, then
\n     the worst\tsufferer  would\t be  the  grower  for  whose
\n     benefit the Act has been enacted.”\n<\/p><\/blockquote>\n
The Full  Bench approved  the view  of the Division Bench in
\nthe earlier  case as is apparent from paras 17 and 18 of the
\njudgment at pages 352 and 353.\n<\/p>\n
     We have  said a  bit earlier  that the Market Committee
\nand the\t Board laboured\t under a  mistaken notion  that they
\ncould spend  the income\t from the  market fee  for all\tgood
\npurposes and  objects of  the Act in the general interest of
\nagriculture and\t agriculturists in the village. We are going
\nto extract  some of  the averments  made in the affidavit of
\nthe Secretary  of the  Market Committee\t of  Moga  from\t the
\njudgment of the High Court at pages 354 and 355:-\n<\/p>\n
\t  “Besides the\tabove, the  answering-respondent has
\n     undertaken the  cleaning of  mandis, lining  of village
\n     khals (water  courses), link  roads;  constructions  of
\n     culverts and  bridges; supply  of pesticides  and spray
\n     pumps on  subsidized basis\t as also the electrification
\n     of villages. All these activities are going to cost the
\n     answering-respondent an  amount  of  several  lakhs  of
\n     rupees.”\n<\/p><\/blockquote>\n
\t  “Para 8  of the  writ petition  is denied.  It  is
\n     wrong to  suggest that  the Board\tand  the  answering-
\n     respondent have  already given  Rs.  5  crores  to\t the
\n     Markfed without  charging any interest. The fact of the
\n     matter is\tthat on\t account of  the withdrawal  of\t the
\n     Cotton Corporation\t of India  from the various markets,
\n     the price\tof cotton  came down  suddenly. In  order to
\n     provide and  ensure a  reasonable price  to the farmer,
\n     the Government  asked the\tMarkfed to enter the market.
\n     For this  purpose, the Board contributed some amount of
\n     money. So far as the answering-respondent is concerned,
\n     it has not contributed any money at all. The answering-
\n     respondent believes that the Board has contributed only
\n     an amount of Rs. 1.43 crores and not 5 crores.”\n<\/p><\/blockquote>\n
1261<\/span><\/p>\n
\t  “It may,  however, be\t submitted that\t the  entire
\n     money collected  by the Market Committees is being used
\n     for the purposes envisaged under the Act.”
\n\t  “The Market  Committees have to provide facilities
\n     as envisaged  under the  Act. The petitioners had asked
\n     for the  copies of\t balance sheets.  The balance sheets
\n     were originally  prepared\twhen  the  accounts  of\t the
\n     Committees\t were\tbeing  audited\t by  “the  Chartered
\n     Accountants.” Now,\t the accounts  are being  audited by
\n     the Examiner, Local Fund Accounts which is a Government
\n     Agency. The  preparation  of  balance  sheets  involved
\n     unnecessary expenditure and wastage of time and energy.
\n     Consequently, the\tpractice of preparing balance sheets
\n     was given up a few years back.”\n<\/p><\/blockquote>\n
These paragraphs were placed before us also from the records
\nof Civil  Appeal 1083  of 1977.\t After quoting\tthe  various
\nparagraphs from\t counter-affidavit the\tHigh Court  says  in
\nparagraph 20 of the judgment at page 355:-\n<\/p>\n
\t  “From the aforesaid specific averments made in the
\n     written statement,\t referred to above, it is clear that
\n     to carry  out the\tpurposes of  the Act  it had  become
\n     necessary to  enhance the\trate of\t the market  fee and
\n     such an enhancement stands fully justified.”\n<\/p><\/blockquote>\n
When certain  documents were placed before the High Court to
\nshow that the Board was indulging in activities which had no
\ncorrelation to\tthe object  to be achieved under the Act and
\nthat  the  enhancement\tof  the\t market\t fee  could  not  be
\njustified the  High Court,  in the  first instance,  did not
\nfeel inclined  to put absolute reliance upon those documents
\nas they\t were filed with the replication of the petitioners.
\nBut it did not stop there. It proceeded further at page 356,
\npara 22\t to say,  on an\t impression of law which we have not
\ncountenanced, that:-\n<\/p>\n
\t  “So far  as Annexures W-11 and W-12 are concerned,
\n     any expenditure  incurred by the Marketing Board on the
\n     setting up of the rice shellers or ginning factories or
\n     by the  Market Committees\ton the\tconstruction of\t the
\n     link  roads   would  not\tbe  inconsistent   with\t the
\n     provisions of  the Act  and the  object to\t be achieved
\n     under the\tAct. The  setting up  of the  rice  shellers
\n     would be  for the\tbenefit of  the\t producers  and,  as
\n     earlier observed,\tconstruction of\t the link roads also
\n     would be for their advantage. So far as Annexure W-10
\n1262<\/span>
\n     is concerned, there can be no gainsaying that giving of
\n     donation for  the Chief Minister’s Flood Relief Fund by
\n     the  Board\t  or  the  Market  Committee  would  not  be
\n     justified as  the same  has  no  correlation  with\t the
\n     object to\tbe achieved  under the\tAct and\t in case any
\n     respect,  it   would  certainly   be  unauthorised\t and
\n     illegal. But, in the instant case, the petitioners have
\n     failed to\tshow that any amount was contributed towards
\n     the Chief\tMinister’s Flood  Relief Fund  and that\t the
\n     enhancement in  the fee had any correlation with such a
\n     contribution. In  this view of the matter, on the basis
\n     of Annexures  W-10, W-11  and W-12,  the enhancement in
\n     the fee to be levied by the Committees cannot be struck
\n     down.”<\/p><\/blockquote>\n
     In several Civil Writ Petitions filed in the High Court
\nby the\tdealers of  the various Market Committees of Haryana
\nthe challenge,\twas to the raising of the rate of market fee
\nfrom Rs.  2\/- to  Rs.3\/-. The  High Court rejected all those
\npetitions by  the judgment  dated  30-8-1978  which  is\t the
\nsubject matter\tof appeal  in Civil  Appeal No. 1708 of 1978
\nand the\t analogous ones.  After\t referring  to\tthe  earlier
\njudgments of  the Court\t this judgment of the Division Bench
\nalso proceeds  on the  same lines  at it  was bound to. To a
\nlarge extent  we are  saved from the unnecessary botheration
\nof examining the voluminously new materials placed before us
\nin view\t of the\t counter filed\ton  behalf  of\tthe  Haryana
\nMarketing Board\t in the\t High Court  portions of  which\t are
\nextracted in  the judgment.  It will  be useful\t to give the
\nwhole of the extract from the judgment of the High Court. It
\nruns as follows:-\n<\/p>\n
\t  “It is  well known  to every\tone that  the recent
\n     floods in\tHaryana were unprecedented and created havoc
\n     in the  State Almost one-third of Haryana was submerged
\n     under water  damaging the\tstanding crops and uprooting
\n     the inhabitants  making them homeless. The State has to
\n     resort to\tquick measures, for removing the miseries of
\n     the     people\tand\tto     rehabilitate\tthem
\n     ……………………………………………….
\n     ……………………………………………….
\n     The projected  income from market-fee in the year 1977-
\n     78 was  Rs. 9  crores. But due to the floods at the old
\n     rate of  2% it  is expected  to be Rs. 7.77 crores. The
\n     Committees will  only be  able to achieve the projected
\n     income of\t1977-78 as  anticipated in  the beginning of
\n     the year only if the fee is charged at enhanced rate of
\n     3%. Only  with the\t projected income  the Board will be
\n     able to  provide the  services envisaged  by it  to the
\n     farmers of the area. The Board allot-\n<\/p><\/blockquote>\n
1263<\/span><\/p>\n
     ted works\tamounting to  Rs. 8.53\tcrores in  the\tyear
\n     1976-77, out  of  which  the  Board  will\tbe  able  to
\n     complete the  development works  worth Rs.\t 5.62 crores
\n     upto 31st March, 1978, leaving a spill over of Rs. 2.91
\n     crores for the year 1978-79. In addition to this spill-
\n     over, Board  also anticipated  to take  new development
\n     works amounting  to Rs.  3 crores\tduring 1978-79.\t The
\n     projected income  during the  year 1978-79\t taking into
\n     account the  enhanced rate\t of market-fee\twill be\t Rs.
\n     6.20 crores whereas the expenditure will be to the tune
\n     of Rs.  8.97 crores  including the\t development  works,
\n     miscellaneous  other   services   and   the   cost\t  of
\n     establishment. The deficit of Rs. 2.77 crores had to be
\n     met by  the Board\tby raising  loan from other sources.
\n     Thus even\tthis enhanced  fee will not be sufficient to
\n     meet the  expenditure which the Board proposes to incur
\n     for the purposes under the Act. Thus the enhancement of
\n     market-fee from  2% to  3%\t is  wholly  reasonable\t and
\n     justified and  has a  reasonable correlation  with\t the
\n     services rendered or to be rendered.”\n<\/p><\/blockquote>\n
Quoting passages  from the  earlier judgments  of  the\tHigh
\nCourt, it  upheld the  levy of the fee @ Rs. 3\/- per hundred
\nrupees and dismissed all the writ petitions.\n<\/p>\n
     The  challenge  by\t the  dealers  of  the\tMoga  Market
\nCommittee by  Civil Writ  Petition No. 2015 of 1978 filed in
\nthe High  Court failed as per the judgment of the High Court
\ndelivered on  18-5-1978 wherein\t the Full Bench decision was
\nfollowed. Special  Leave Petition  No. 2768 of 1978 has been
\nfiled from the said judgment. The purposes enumerated in the
\nFull Bench  decision and  repeated in this judgment also for
\nthe purpose  of justifying  the increase  in the rate of fee
\nfrom Rs.  2\/- to  Rs. 3\/- per hundred rupees are the stereo-
\ntype ones  including Rural  Integrated\tDevelopment  Scheme,
\nnight-shelter, link  roads and\tbridges. Every body seems to
\nhave allowed  himself to be carried too far by the sentiment
\nof the\tlaudable object\t of the\t Act of\t doing\twhatever  is
\npossible  to  do  under\t it  for  the  amelioration  of\t the
\nconditions  and\t  the  uplift\tof  the\t villagers  and\t the
\nagriculturists. Undoubtedly  the Act  is primarily meant for
\nthat purpose  and to  the extent it is permissible under the
\nlaw to\tachieve that object of utilising the money collected
\nby the\tmarket fee,  it should\tbe done. But if the law does
\nnot  permit  carrying  on  of  the  sentiment  too  far\t for
\nachieving of  all the  laudable objects\t under the Act, then
\nprimarily it  becomes the duty of the Court to allow the law
\nto have an upper hand over the sentiment and not vice versa.
\nWe must\t not be misunderstood to say that we are against the
\nsentiment expressed in the interests of the
\n1264<\/span>
\nagriculturists. Nor  are we  opposed in\t the  least  to\t the
\nachievement of\tall the laudable objects envisaged under the
\nAct. Let  them all  be achieved by all means known to law by
\nmeeting the  expenses after augmenting the public revenue or
\nby diverting  the expenditure  from wasteful  or unimportant
\nchannel to  the more important one under the Act. But surely
\nwe cannot  countenance the  achievement of all those objects
\nby utilising  a good  and substantial  portion of the market
\nfee  collections  when\tthe  utilisation  goes\tagainst\t the
\nconcept of  quid pro  quo which is very essential in case of
\nfees. As  we have  already stated  Civil Appeal 1616 of 1978
\narised from  the order\tof the\tHigh Court  dated  18-9-1978
\ndismissing the\tconnected  Writ\t Petition  filed  by  a\t few
\nhundred dealers of various Market Committees in the State of
\nPunjab challenging  the increase  of the market fee from Rs.
\n2\/- to Rs. 3\/-. Before us in the Writ Petitions not only the
\nincrease of  the rate  from Rs.\t 2\/- to\t Rs.  3\/-  has\tbeen
\nchallenged  but\t  the  previous\t increases  have  also\tbeen
\nchallenged. For the reasons to be briefly stated hereinafter
\nwe do  not feel\t persuaded to interfere with the charging of
\nthe market  fee Rs.  2\/- per  hundred rupees  by the various
\nMarket Committees  in the  States of Punjab and Haryana. But
\nsurely on  the facts  as they  are, the increase of the rate
\nfrom Rs.  2\/- to  Rs. 3\/-  is not justified in law by any of
\nthe Market Committees in either of the two States.\n<\/p>\n
     Mr. Tarkunde  drew our  attention to  the report of the
\nRoyal Commission  submitted in 1928 and the recent Report of
\nthe  National\tCommission  on\t Agriculture.  It  has\tbeen
\nemphasised in  those reports  that  in\torder  to  make\t the
\nmarketing system efficient and useful link and village roads
\nshould be constructed providing transport facilities for the
\ntransport of  the  agricultural\t produce  to  the  marketing
\ncentres. There\tcannot be  any doubt  that in  any scheme of
\ndevelopment of\tAgriculture and marketing in a wide sense, a
\nchain of  connections may  be found  between one activity or
\nthe other. It is not only in regard to agriculture but it is
\nso  in\tany  other  kind  of  production,  distribution\t and
\nmarketing. Our\tattention was  drawn also  to the use of the
\nword “secondary”  or “indirect”\t in some of the decisions in
\nrelation to  the element of quid pro quo. But in our opinion
\nthere is  a misconception in understanding the true scope of
\nthe  matter  and  not  drawing\tthe  dividing  line  at\t the
\nappropriate place  for\tdetermining  the  real\tcontroversy.
\nExamples of trust cases were given before us that control of
\nthe trustees is not for the personal benefit of the trustees
\nbut for the beneficiaries, although the liability to pay the
\nfee is\tof the\ttrustees. The misconception lies in the fact
\nthat the  impost of  fee is  not a  personal impost  on\t any
\nperson in the sense that unconnected with any undertaking or
\nproperty or the like, it is just an impost on his person. It
\nis not\tso. When  the trustee is charged fee for the benefit
\nof the
\n1265<\/span>
\nreligious institutions and the beneficiaries it is a benefit
\nto the\ttrustee. Similarly, as pointed out in the Mining Act
\nand the\t factory cases charge of fee from the mine owners in
\nthe area  or the  factory owners  in  the  factory  for\t the
\npurpose of  developing and  protecting\tthe  mines  and\t the
\nfactories is  a service\t to the\t owners. If one were to push
\nthe example  of a factory beyond the limit of the conception
\nof fee,\t one could say that the fee charged from the factory
\nowners can be utilised for pushing end augmenting the output
\nof the\traw-materials required\tin the manufacturing process
\nin the\tfactory, it  is also a benefit to the factory owner.
\nIs it reasonably possible to travel as wide as that? Neither
\nthe Royal  Commission nor  the National Commission suggested
\nas to  how the\tintegrated development\tof marketing and the
\nagricultural produce  is  to  be  financed.  They  were\t not
\nconcerned with\tthat aspect of the matter. None can have any
\nobjection to  the carrying out of the integrated development
\nbut it\tmust be\t carried out  by  legal\t means\traising\t the
\nfinance in a way known to law.\n<\/p>\n
     The improvements, checks, controls and regulations must
\nbe carried out in the market or in its vicinity. Much of the
\nfacilities provided  in the  market yards  or around it will
\nalso be\t for the  direct benefit of the producers. But then,
\nbeing intimately  connected with  marketing  operations\t the
\nbenefit to  the producers  must be  deemed to  be special or
\ndirect benefit\tto the\ttraders also.  Under  the  Marketing
\nRules the  auction cannot  be conducted\t by any person other
\nthan the  person engaged by the Committee. [Rule 24(5)], and
\nweighments and measurements of agricultural produce intended
\nfor sale  are to  be made  through  licensed  weighments  or
\nmeasures in  the principal  or a  sub-market yard [vide Rule
\n28(2)].\t Reading  these\t Rules\tin  the\t background  of\t the
\nrecommendations of  the Commissions,  and even otherwise, it
\nis  plain   they  are\tmeant  for  the\t protection  of\t the
\nagriculturists. But since they are intimately connected with
\nthe marketing  operations, just like factory cases, they are
\nalso meant  for the  special benefit  of  the  traders.\t The
\nliteral meaning of the phrase “quid pro quo” is “one for the
\nother” meaning thereby-“you charge the fee for the service.”
\nService to  the mining\tarea, factory,\tmarket or  marketing
\noperations are services to the payer of the fee.\n<\/p>\n
     Mr. P.N.  Lekhi,  learned\tcounsel\t for  the  State  of
\nHaryana placed some new materials before us to show that big
\nprojects of  development of marketing had been undertaken in
\nIndia with  the help of the World Bank loans. All very good,
\nwe wish\t God speed  to all  these projects.  The only  check
\nwhich the  law has  to put  is-“please don’t spread your net
\ntoo wide  only on the traders. Keep it within bounds so long
\nyour levy  has got the character of fee. You may raise funds
\nby any other means known to law or to the economic world.”\n<\/p>\n
1266<\/span><\/p>\n
     Now we refer to some additional documents placed before
\nus. But\t before we  do so  we repeat what we have said above
\nthat the  materials placed  on either  side before  us is so
\nvoluminous and\tcumbersome that no definite finding with any
\naccuracy could be arrived at on that basis as there seems to
\nbe disputes  in regard to the nature and accuracy of many of
\nthe figures either on the receipt side or on the expenditure
\nside. We  have, however,  referred to  some of\tthe admitted
\nfacts even  from the  judgments of  the High  Court. We\t may
\nrefer to a few more.\n<\/p>\n
     In the  affidavit of  Shri R.  K.\tSingh,\tDirector  of
\nMarketing, Punjab and Secretary of Punjab State Agricultural
\nBoard filed  in the  High Court\t giving rise to Civil Appeal
\nNo. 1083\/77,  which is\tnot a new material in that sense. It
\nwas stated in paragraph 6:-\n<\/p>\n
\t  “It is  submitted that  respondent No.  3 is\tduty
\n     bound to  bring about general improvement of a notified
\n     market area,  production and  betterment of agriculture
\n     etc. Under the Act and the answering-respondent is duty
\n     bound to  approve such expenditure under the Act. It is
\n     also submitted  that electricity  plays a major role in
\n     the production  and betterment  of agriculture  and for
\n     the  general  improvement\tof  area.  In  view  of\t its
\n     importance respondent  No. 3 sought and respondent No.2
\n     approved the  expenditure on the electrification of the
\n     villages situate  within the jurisdiction of respondent
\n     No. 3.”<\/p><\/blockquote>\n
     In\t the   Writ  Petition,\trespondent  No.\t 2  was\t the
\nMarketing Board\t and respondent\t No.  3\t was  the  concerned
\nMarketing Committee.  In the  same case\t in the\t High  Court
\nadditional  affidavit\twas  filed  by\tShri  Tirath  Singh,
\nChairman of  the Punjab\t Board. It  is stated in paragraph 7
\nthat apart from development works in the budget estimates in
\nthe year  1975-76, there  were other development projects to
\nbe taken  in hand  some of  which were\tenumerated  in\tthat
\nparagraph. We may take up only two or three items out of the
\nsame to\t show in  contrast how one will be within the limits
\nof law\tand the others will widely beyond it. Item No. (iii)
\nreads as follows:-\n<\/p>\n
\t  “To provide Rest Houses, Cattle Sheds, Cart Sheds,
\n     Light and Water arrangements in all the market yards.”<\/p><\/blockquote>\n
     A good  portion of these facilities will be utilised by
\nthe agriculturists  who would  be coming to the market yards
\nfor sale of their produce. Yet in the view we have expressed
\nabove it  will be a service to the trader directly connected
\nwith the  marketing operations.\t In contrast  we quote items\n<\/p>\n
(x) and (xii):-\n<\/p>\n
1267<\/span><\/p>\n
     (x) Continuation of programme of link-roads.\n<\/p><\/blockquote>\n
     (xii)  Improvement\t  of  agricultural   production\t  by
\n     providing improved\t seeds, green  manuring seeds, plant
\n     protection equipment insecticides and pesticides.”\n<\/p><\/blockquote>\n
One has\t to stretch  one’s imagination\talmost to a breaking
\npoint  to   say\t that\tthe  programme\tof  link  roads\t and
\nimprovement of\tagricultural say  production  by  the  means
\nmentioned in item (xii) can all be carried out by the impost
\nof fee in the market.\n<\/p>\n
     In a  new affidavit  of Shri N. S. Bakshi filed in this
\nCourt in Civil Appeal 1083 of 1977 it is stated in paragraph
\n6 that\tin the\tentire Khanna  market notified area there is
\none principal  yard; two  sub-yards and\t only  two  purchase
\ncentres and  no weighing  bridge or  any weighing facilities
\nhas  been  provided  by\t the  Committee.  It  is  stated  in
\nparagraph 7  that “amount  of Rs.  3\/- lacs  lying with\t the
\nKhanna Market  Committee during March, 1978 in Banks was got
\ndeposited in  the Government  Treasury under  the orders and
\ndirections of  the Board.”  These facts are disputed. But we
\nare merely  stating them  for the  future  guidance  of\t the
\nauthorities  that   they  should   proceed  in\t the  matter
\ncautiously keeping  in view  the law laid down by this Court
\nin earlier  cases, such\t as, Salvation Army case, and in the
\nlight of  this judgment. In the additional affidavit of Shri
\nK. K.  Puri it\tis stated that from the information gathered
\nit was\tlearnt that the Punjab Board had spent about a crore
\nof rupees  by way of subsidy @ 75% for the metallic bins for
\nthe use of the villagers for their domestic use; a crore for
\nair spray;  five crores\t to  the  Punjab  State\t Electricity
\nBoard, one  crore given\t to MARKFED, one and a half crore to
\nSoil Conservation  Department and yet nine crores were lying
\nsurplus with  the various  Market Committees. The figure may
\nbe exaggerated\tbut are\t not quite groundless. We are merely
\nquoting them  for the  future  caution\tof  the\t authorities
\nconcerned. Puri\t has further  pointed out in paragraph 17 of
\nhis affidavit  that in\tthe  Estimated\tExpenditure  in\t the
\nproposed Budget\t of the Moga Committee for the years 1976-77
\nand  1977-78   several\tlakhs\tof  rupees  were  shown\t for
\ninsecticides and  pesticides apart  from other\tinadmissible
\nexpenses.  We\tmay  again   pin-point\tthe  difference.  If
\ninsecticides and  pesticides are  for use at the place where
\nactually the marketing operations are carried on it would be
\na justifiable  expenditure. But\t if they  are  meant  to  be
\nsupplied to  the agriculturists\t for use  at  their  village
\nhomes or  in  their  fields  surely  they  cannot  be  valid
\nexpenditure out of the collections of the market fee.\n<\/p>\n
     Mr. Tarkunde  filed an  abstract of  the  statement  of
\nincome from  market fee\t and  licence  fee  and\t expenditure
\nincurred therefrom by
\n1268<\/span>
\nthe Market Committee, Hissar as worked out from Annexure R-I
\nto R-V\tfiled in  the High Court. It would be seen from this
\nabstract that in the year 1974-75 the income from market fee
\nwas Rs.\t 24,08,141\/- and  from licence fee about Rs. 6,000\/-
\nonly. A\t sum of Rs. 7,89,670\/- was contributed under section
\n27 of  the Act to the Board and a sum of Rs. 14,73,732\/- was
\nspent  on  Works  including  link  roads.  Similar  was\t the
\nposition in the year 1975-76. In 1976-77 income from licence
\nfee was\t only Rs.  16,000\/- and\t odd and incomes from market
\nfee was\t Rs. 38,27,233\t\/-. A  big chunk  to the tune of Rs.
\n12,19,383\/- went  as  contribution  to\tthe  Board  and\t Rs.
\n24,47,408\/-  were  spent  on  works  including\tlink  roads.
\nSimilar abstracts  were given  in respect  of  other  Market
\nCommittees showing exactly the same position. Abstracts were
\nalso given  to us  by Mr. Tarkunde showing the income of the
\nHaryana Board  by contribution\tmade by\t the various  Market
\nCommittees and\tthe expenditure\t incurred therefrom.  In the
\nabstract statement figures of expenditure both of admissible
\nand inadmissible  items had  been clubbed  together. It\t is,
\ntherefore, not\tpossible to  get any  correct  picture\tfrom
\nthese abstracts.\n<\/p>\n
     How admittedly the authorities concerned have travelled
\nwide beyond  limit for the application of the fee money will
\nbe apparent  from the counter affidavit of the Haryana Board
\nfiled in  the High Court giving rise to Civil Appeal 1700 of
\n1978. In paragraph 10(i) it is stated:-\n<\/p>\n
\t  “The\tconstruction   of  link\t  roads\t within\t the
\n     notified market area is a work of public importance and
\n     promotes the  general interest  of the farmers, traders
\n     and the  notified market  area  which  is\tone  of\t the
\n     purposes enumerated in clause XVII of section 28 of the
\n     Act.”\n<\/p><\/blockquote>\n
In para 10(ii) it is admitted:-\n<\/p>\n
\t  “Thus the  enhancement of market fee from 2% to 3%
\n     is wholly\treasonable  and\t has  co-relation  with\t the
\n     services rendered\tor to be rendered. 65% of its income
\n     had to  be rightly\t deposited with\t the P.W.D.  and the
\n     Government, as  the Committee  had got  its link  roads
\n     constructed through  Government  Agency  and  is  still
\n     getting so constructed.”\n<\/p><\/blockquote>\n
It is thus a clear admission that 65% of the income has gone
\nby way\tof contribution\t to the P.W.D. fund for construction
\nof the\tlink roads. It is in substance a contribution to the
\nPublic\tExchequer  for\thelping\t the  Government  Agency  in
\nperforming its\tgovernmental functions and duties. In no way
\nsuch a contribution can be justified out of the mar-\n<\/p>\n
1269<\/span><\/p>\n
ket fee income. From Annexure R-II appended to the aforesaid
\naffidavit of  the Board\t it would  be seen  that in the year
\n1974-75 a  sum of  Rs. 1,07,338\/- was given as aid to animal
\nhusbandry for  the uplift  of cattle wealth and its product.
\nThis illustrates  to what  extent the concept of fee in lieu
\nof service  has been  stretched. A sum of Rs. 6,00,000\/- and
\nodd was\t spent for improving the quality of cotton seeds for
\nseeds purposes.\t In a  Gober Gas  Plant Rs. 15,55,000\/- were
\ninvested. This\titem was sought to be explained before us by
\nMr. Tarkunde  that this\t expenditure was  incurred with\t the
\nhelp of\t the subsidy received from the State and the Central
\nGovernments. The  scheme of the Gober Gas Plant was launched
\nfor the\t promotion of  interest of  market area.  It is\t not
\nexplained as  to how  it was  connected with  the  marketing
\noperations in the area and how much was the subsidy and what
\nportion of  the amount\twas spent  out\tof  the\t market\t fee
\nIncome. Similarly  in Annexure\tR-III from  the statement of
\nincome and  expenditure of  the Haryana\t Board for  the year
\n1975-76 it  would appear that a sum of Rs. 1,28,70,662\/- was
\nspent “on  general improvement\tin M.C.\t and other  notified
\narea and construction of F.A.C.C.” Apart from that the other
\nitems of  expenditure  are  a  sum  of\tRs.  20,00,000\/-  in
\npurchase and  acquisition of  land for\tnew mandies  and Rs.
\n10,00,000\/- and\t odd for  purchase of  land, construction of
\nbuilding for  Board’s  office  and  staff  quarters  in\t the
\nmandies. Again in this year a sum of Rs. 95,00,000\/- and odd
\nis shown  to have  been spent  on Gober Gas plant. It may be
\ninclusive of  the figure  of the  earlier  year.  Then\tfrom
\nAnnexure R-IV,\tthe statement  for the year 1976-77, it will
\nbe found that a sum of rupees one crore was given as loan to
\nHaryana Electricity Board. We have taken some of these items
\njust by\t way of\t example to  illustrate that the authorities
\ntook full  liberty to  treat the realisation from market fee
\nas a  general realisation  of tax  which they  were free  to
\nspent in  any manner they liked for the purposes of the Act,
\nthe development\t of  the  area,\t for  giving  a\t filling  to
\nagricultural production\t and so\t forth and so on. The sooner
\nthe authorities\t are made to realise the correct position in
\nlaw the better it will be for all concerned.\n<\/p>\n
     But taking\t a reasonable  and  practical  view  of\t the
\nmatter\tand   on  appreciation\t of  the   true\t picture  of
\njustifiable and\t legal expenditure in relation to the market
\nfee income,  even though  it had  to be done on the basis of
\nsome reasonable\t guess work,  we are not inclined to disturb
\nthe raising  of an imposition of the rate of market fee upto
\nRs. 2\/-\t per hundred rupees by the various Market Committees
\nand the\t Boards both  in the  State of\tPunjab and  Haryana.
\nAfter all,  considerable development work seems to have been
\ndone by many Market
\n1270<\/span>
\nCommittees in  their respective markets. The charging of fee
\n@ Rs.  2\/-, therefore, is justified and fit to be sustained.
\nWe accordingly\tdo it. As pointed out earlier the dealers of
\nHaryana\t did   not  feel   aggrieved  when  the\t High  Court
\nmaintained the\traising of  market fee\tto the extent of Rs.
\n2\/- per\t hundred rupees.  We are,  however, not\t inclined to
\nuphold the raising of the fee from Rs. 2\/- to Rs. 3\/-, as on
\nthe materials  placed before  us it  is clear  that this has
\nbeen done  chiefly because  of the  wrong impression  of law
\nthat  the  amount  of  market  fee  can\t be  spent  for\t any
\ndevelopment work  in the  notified market area and specially
\nfor the\t development of\t agriculture and  the welfare of the
\nagriculturists. On the basis of the facts and figures placed
\nbefore us  from the  High Court\t records and  also some\t new
\nmaterials filed\t here we  have come  to the  conclusion that
\nthere was  no justification  in raising the fee from Rs. 2\/-
\nto Rs.\t3\/-. The  High Court  was wrong\t in maintaining this
\nrise on\t an erroneous  view of\tthe matter.  We,  therefore,
\nallow the  appeals and\tthe writ Petitions to the extent and
\nin  the\t  manner  indicated  above  and\t direct\t the  Market
\nCommittees and\tthe State  Marketing Boards  not to  realize
\nmarket fee  at the rate of Rs. 3\/- per hundred rupees on the
\nbasis of  their impugned  decisions and\t actions which\thave
\nbeen found to be invalid by us. We leave the parties to bear
\ntheir own costs throughout
\n     Before we\tpart with  these  cases\t we  would  like  to
\nobserve that  in future\t if the\t market fee  is sought to be
\nraised beyond  the rate of Rs. 2\/-per hundred rupees, proper
\nbudgets, estimates,  balance-sheets showing  the balance  of
\nthe money  in hand  and in deposit, the estimated income and
\nexpenditure, etc.  should carefully be prepared in the light
\nof this\t judgment. It  may be,\tas was\tsubmitted before us,
\nthat it\t is not\t imperative either for the Market Committees
\nor  the\t  Board\t to  prepare  balance-sheets  because  their
\naccounts are  audited by  government auditors  but  for\t the
\npurposes of raising the market fee any further, the balance-
\nsheets will  give a  true picture  of the position also with
\nthe budgets  and estimates. Then, and then only there may be
\na legal justification for raising the rate of the market fee
\nfurther to  a reasonable  extent. On  drawing of the correct
\nbalance-sheets and  framing of\tthe  correct  estimates\t and
\nbudgets the authorities as also the State Government will be
\nable to\t know the  correct position and to decide reasonably
\nas to  what extent  the raising\t of the\t market fee  can  be
\njustified taking  on  overall  picture\tof  the\t matter\t and
\nkeeping in  view the reason behind the restrictions of sales
\ntax law\t concerning the\t transactions of food-grains and the
\nother agricultural produce.\n<\/p>\n
N.V.K.\t\t\t      Appeals and petitions allowed.\n1271<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Kewal Krishan Puri & Anr vs State Of Punjab & Others on 4 May, 1979 Equivalent citations: 1980 AIR 1008, 1979 SCR (3)1217 Author: N Untwalia Bench: Chandrachud, Y.V. ((Cj), Bhagwati, P.N., Untwalia, N.L., Fazalali, Syed Murtaza, Pathak, R.S. PETITIONER: KEWAL KRISHAN PURI & ANR. Vs. RESPONDENT: STATE OF PUNJAB & […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-38391","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nKewal Krishan Puri & Anr vs State Of Punjab & Others on 4 May, 1979 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/kewal-krishan-puri-anr-vs-state-of-punjab-others-on-4-may-1979\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kewal Krishan Puri & Anr vs State Of Punjab & Others on 4 May, 1979 - 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