S.C : The petitioners are the producers of khandsari sugar and are the owners of khandsari sugar units which they operate with the aid of power crushers for the production of khandsari sugar.

Counsel Appeared

Soli J. Sorabji with Pramod Swarup, for the Petitioners : Dr. Y. S. Chitale with Mrs. S. Dixit & Pradeep Mishra, for the Respondents

DUTT, J.:

In this writ petition under Art. 32 of the Constitution of India, the petitioners have prayed for issuance of the writ in the nature of mandamus directing the respondents not to compel the petitioners to take out licences and to pay market fee under the U. P. Utpadan Mandi Adhiniyam, 1964, hereinafter referred to as “the Act”.

The petitioners are the producers of khandsari sugar and are the owners of khandsari sugar units which they operate with the aid of power crushers for the production of khandsari sugar. The petitioners claim that as they are only producers of khandsari sugar, they are not liable to take out any licence or to pay the market fee under the Act as illegally demanded by the respondents mandi samitis.

It appears from the preamble that the Act provides for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of markets therefor in Uttar Pradesh. Sec. 5 of the Act provides for the declaration of the intention of the State Government to regulate and control the sale and purchase of agricultural produce in any area to be declared as a market area. Under s. 6, the market area will be declared by the State Government by a notification in the Gazette after considering the objections received within the period referred to in s. 5 of the Act. Sec. 9(1) of the, Act provides as follows : “Sec. 9. (1) As from the date of declaration of an area as market area no local body or other person shall, within the market area, set up, establish or continue, or allow to be set up, established or continued, any place for the sale, purchase, storage, weighment or processing of the specified agricultural produce, except under and in accordance with the condition of a licence granted by the committee concerned, anything to the contrary contained in any other law, custom, usage or agreement notwithstanding: Provided that the provisions of this sub-section shall not apply to a producer in respect of agricultural produce produced, reared, caught or processed by him or to any person who purchases or stores any agriculturale produce for his domestic consumption. Sec. 17 lays down the powers of the committee constituted under s. 13 of the Act. Clause (iii)(1)) ( 1) of s. 17 provides as follows : “Sec. 17. A committee shall, for the purpose of this Act, have the power to-… (iii) levy and collect : ….(b) market fee, which shall be payable on transactions of sale of specified agricultural produce in the market area at such rates, being not less than one percentum and not more than one and half percentum of the price of the agricultural produce so sold, as the State Government may specify by notification, and such fee shall be realised in the following manner- (1) if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the committee ;…”

It is urged by Mr. Sorabji, learned counsel appearing on behalf of the petitioners, that as the petitioners are only producers in respect of agricultural produce, they are not required to take out any licence in view of the proviso to s. 9(1) of the Act. Counsel submits that under the proviso, sub-s. (1) of s. 9 will not apply to two categories of persons, namely, (1) the producer in respect of agricultural produce, and (2) any person who purchases or stores any agricultural produce for his domestic consumption. In other words, according to learned counsel, a producer who produces the agricultural produce in the market area and sells them will not have to take out a licence under sub-s. (1) of s. 9. We are unable to accept the contention. In our view, it is not the intention of the legislature that a producer of an agricultural produce within the market area would be exempt from taking out any licence, even though he sells his produce in the market area. We have already noticed that the preamble of the Act shows that it is for the regulation of sale and purchase of agricultural produce and for the establishment, superintendence and control of market therefor. The very object of the Act, as indicated in the preamble, will be defeated, if a producer of agricultural produce within the market area is exempted from taking out a licence merely because he is a producer of agricultural produce. It is true that the proviso to sub-s. (1) of s. 9 ill not be applicable to a producer of agricultural produce. But such a producer must be a producer of agricultural produce processed, reared, caught or processed by him for his domestic consumption. If, however, the producer produces, rears, catches or processes the agricultural produce not for his domestic consumption, but for the sale thereof in the market area, such a producer will not come within the purview of the proviso and he will have to take out a licence under sub-s. (1) of s. 9 of the Act. We are unable to accept the contention of learned counsel or the petitioners that the expression “for his domestic consumption” in the proviso does not refer to a producer of agricultural produce, but to a person who purchases or stores any agricultural produce. As has been stated already, if the proviso is interpreted to mean that a producer of agricultural produce is exempt from taking out a licence under sub-s. (1) of s. 9 of the Act, even though he produces, rears, catches or processes not for his domestic consumption but for selling them in the market area, it would defeat the very object of the Act. The proviso, in our opinion, should be interpreted in a manner which would be in conformity with the intention of the legislature and also the object of the Act. Therefore, in our view, there can be no doubt that a producer who produces, rears, catches or processes agricultural produce for his domestic consumption and also any person who purchases or stores any agricultural produce for his domestic consumption are exempt under the proviso from taking out any licence. In other words, sub-s. (1) of s. 9 will not apply to these two categories of persons as mentioned in the proviso. It is, however, urged on behalf of the petitioners that sub-s. (1) of s. 9 would apply only to a producer who is (also) a trader. Our attention has been drawn to the definition of the word “trader” under s. 2(y) of the Act as meaning a person who in the ordinary course of business is engaged in buying or selling agricultural produce as a principal or as a duly authorised agent of one or more principals and includes a person engaged in processing of agricultural produce. It is submitted that the petitioners are not “traders” within the meaning of the said definition and also as contemplated by sub-s. (1) of s. 9 of the Act. In support of this contention, learned counsel for the petitioners has placed much reliance upon a decision of this Court in Ramesh Chandra vs. State of U. P. (1980) 3 SCR 104 ; AIR 1980 SC 1124, which also relates to the Act with which we are concerned. In that case, it has been observed that a producer-trader will be required to take out a licence and the expression “producer-trader” has been explained to be a person who is both a producer of agricultural produce and also trades in it. We do not think that the decision at all supports the contention of the petitioners. The petiioners, in our opinion, by producing khandsari sugar and selling it within the market area are also “traders” within the meaning of s. 2(y) and also as contemplated by sub-s. (1) of s. 9. The petitioners are, therefore, “producer-traders” as explained in the above decision of this Court.

The next question that falls for consideration is whether the petitioners are liable to pay the market fee. We have already extracted above the provision of s. 17(iii)(b)(1) which has been relied upon by learned counsel for the petitioners in support of his contention that the petitioners are not liable to pay the market fee. Sec. 17(iii)(b)(1), inter alia, provides that if the produce is sold through a commission agent, the commission agent may realise the market fee from the purchaser and shall be liable to pay the same to the committee. It is argued on behalf of the petitioners that as they sell their produce through a commission agent, it is only the commission agent who is liable to pay the market fee and not the petitioners. It has, however, been frankly conceded by Mr. Sorabji on behalf of the petitioners that there is no averment in the petition that the petitioners sell their produce through a commission agent. In the absence of any such averment, we are afraid, such contention is not available to the petitioners. There is, therefore, no substance in the contention that the petitioners are not liable to pay the market fee.

No other point has been urged on behalf of the petitioners.

For the reasons aforesaid, the writ petition is dismissed. There will, however, be no order as to costs.

[Citation : 171 ITR 443]