Jharkhand High Court
Plywood Association(Dhanbad) vs State Of Jharkhand & Ors on 10 March, 2011
Author: D.N. Patel
Bench: D.N. Patel
1
Letters Patent Appeal No. 77 of 2002
with
Letters Patent Appeal No. 18 of 2002
Against the judgment dated 7th December, 2001, passed by the learned Single
Judge in C.W.J.C. No. 4230 of 2000.
...
Plywood Association & others ... Appellants (in L.P.A. No. 77 of 2002)
M/s Plywood & others .... Appellants (in L.P.A. No. 18 of 2002)
V e r s u s
The State of Jharkhand & Others ... Respondents.
...
For the Appellants : M/s. R.K. Agrawal, R.K. Bhargava, S.L. Agrawal, Advocates
For the State : Mr. Rakesh Kr. Shahi, J.C. to G.A.
For the Marketing Board: M/s. V. P. Singh, Sr. Advocate
Mrinal Kanti Roy, Ashok Kr. Sinha, Advocates
P R E S E N T
HON'BLE THE CHIEF JUSTICE.
HON'BLE MR. JUSTICE D.N. PATEL.
...
Oral Order: Dated: 10
th
March, 2011
:
Per D.N. Patel, J.:
L.P.A. No. 77 of 2002
1. Present Letters Patent Appeal has been preferred against the judgment
delivered by the learned Single Judge in Civil Writ Jurisdiction Case No. 4230
of 2000 dated 7th December, 2001 whereby, writ petition preferred by the
present appellants has been dismissed and therefore, the present Letters Patent
Appeal has been preferred.
2. Important issue raised in this Letters Patent Appeals:
Whether market fee can be levied and collected under Section 27
of Bihar Agricultural Produce Markets Act, 1960 (hereinafter referred to
for the sake of brevity as 'the Act, 1960'), by the respondentsDhanbad
Market Committee on plywood, ply board and ply without any
notification issued by the State Government under Sections 3 and 4 of
the Act, 1960 in relation to plywood, ply board and ply.
3. Factual Matrix
(i) Bihar Agricultural Produce Market Act brought into force with
effect from the year, 1960 with a view to have organized markets of
agricultural and allied commodities.
(ii) The Act was enacted on 6th August, 1960 to provide for the better
regulation of buying and selling of agricultural produce and the
establishment of markets for agricultural produce in the State of Bihar
(old Bihar) and for the matter connected therewith.
2
(iii) Appellant no. 1 is an Association of dealers situated in district of
Dhanbad and Bokaro of the State of Jharkhand. Appellant Nos. 2 to 15
are dealers of Dhanbad, who are dealing in finished manufactured
products namely plywood, ply board and ply.
(iv) The State vide S.O. No. 2561 dated 31st August, 2000 added
plywood, ply board, ply patti, core and veneer in the schedule appended
to the Bihar Agricultural Produce Markets Act, 1960 under Section 39 of
the said Act. By virtue of this notification, the Market Committee started
realising market fee from appellants and others in respect of
sale/purchase of plywood, ply board, ply patti, core, fali and veneer.
'Wood' was already notified as Item No. XII Miscellaneous at Serial No.
15, 'Bamboo' at at Item No. 14 and 'Wood Dhoop' at Item no. 16. These
entries were already in existence before 31st August, 2000. As the Market
Committee has issued notices in December, 2000 demanding market fees
from the appellants, a writ petition was preferred which was dismissed
and therefore, the present appeal has been preferred mainly on the
ground that without issuing notifications under Sections 3 and 4 of the
Act, 1960, market fees cannot be imposed and levied from the appellants.
4. Arguments of the Appellants.
(i) It is submitted by the counsel for the appellants, Mr. R.K. Agrawal,
that Sections 3 and 4 prescribes issuance of notification and declaration
of the market area for exercising control over purchase, sale, storage and
processing of agricultural produce in any market area. Unless and until
notifications have been issued under Sections 3 and 4 of the Act, 1960,
market fee cannot be imposed and levied by the Market Committee.
(ii) It is further submitted by the counsel for the appellants that
previously also, the Schedule to the Act, 1960 has been amended by the
State Government and thereafter, notifications have been issued under
Sections 3 and 4 and thereafter only, the market fees has been levied.
Unless the regulatory provisions have been invoked, no market fee can be
levied from the appellants.
(iii) Counsel for the appellants has relied upon several decisions
including (2003) 4 JCR 197
(1999) 9 SCC 620
3
(2000) 6 SCC 264
AIR 1976 SC 263
(1996) 9 SCC 681
(iv) It is also submitted by the counsel that under Sections 3 and 4,
opportunity of hearing is enshrined. Traders must be given opportunity
to raise objections before imposing and levying market fees upon
sale/purchase of added commodity in the Schedule, to the Act, 1960.
5. Arguments of the Agricultural Produce Market Committee:
(i) It is submitted by the counsel for the Agriculture Produce Market
Committee that originally, commodity 'Wood' has already been specified
in the Schedule to the Act, 1960 and now vide S.O. No. 2561 dated 31st
August, 2000 plywood, ply board, ply patti, core and veneer have been
added in the Schedule in exercise of powers under Section 39 of the Act.
Appellants are dealing in plywood, ply board and ply within the market
area. It is submitted by the counsel for the Market Committee that for
every additional item in the Schedule there is no legal requirement of
publication of the notification under Sections 3 and 4 of the Act. Once
the market area is fixed, there is no need of the publication of the
notifications again and again. Section 4A and 4B have been inserted in
the Act, 1960 by Bihar Act 4 of 1993. This amendment has been
brought into effect from 6th August, 1960. Counsel for the Market
Committee has also relied upon several decisions including reported in
1999 (3) PLJR (SC) 93
(2001) 3 SCC 135 and
(1996) 9 SCC 681
(ii) It is also submitted by the counsel for the Market Committee that
in fact, 'Wood' includes plywood, ply board and ply. Entry of 'Wood' was
already in existence prior to the year 2000 for which there was already a
notification under Sections 3 and 4 and therefore, in view of the
decisions as stated hereinabove, the appellants are liable to make the
payment of market fees. Now Section 4A and 4B have been inserted
and therefore, after insertion of these sections for every addition of item
in Schedule to the Act, 1960 there is no need for issuance of notification
under Sections 3 and 4 and hence also, the appellants are liable to make
4
the payment of market fees.
(iii) Counsel for the Market Committee has also taken this Court to
various provisions of the Act, 1960 and pointed out that 'Market Area'
defined under Section 2(i) is a bigger area wherein, 'Principal Market
Yard' is situated as defined under Section 2(0) and 'submarket yard' is a
much smaller area as defined under Section 2((t). Notifications under
Sections 3 and 4 are necessarily to be issued when for the first time the
Government intends a regulation in purchase, sale, storage and
processing of agricultural produce in such area as may be specified in
the notification. Once the market area is fixed by the notification for
every addition of the entries in the Schedule under Section 39,
notification under Sections 3 and 4 is not required.
6. Arguments of the State Counsel:
(i) It is submitted by the counsel for the State that looking to the
provisions of the Act, 1960 especially Section 2 (1) (a) and looking to
the decisions rendered by the Hon'ble Supreme Court reported
in 1999 (3) PLJR (SC) 93 and
2001 3 SCC 135,
'Wood' includes plywood, ply board and ply. Agricultural produce
means, all produce of agriculture, whether processed or nonprocessed,
manufactured or not. Plywood, ply board and ply is a processed wood or
manufactured out of wood and hence, the appellants are liable to make
the payment of market fees because entries 'Wood' was already in
existence prior to 2000.
(ii) It is further submitted by the counsel for the State that Schedule
has been amended in the year, 2000 by S.O. No. 2561 dated 31 st August,
2000 in plywood, ply board, ply patti, core and veneer added in the
Schedule in exercise of powers under Section 39 of the Act. For every
addition of the entries there is no need of any notification under
Sections 3 and 4 to be issued by the State looking to the provisions of
Sections 4A and 4B inserted in the Act. Previously, several notifications
have been issued under Sections 3 and 4 because of the law declared by
the Court was otherwise. Now, a judgment has been delivered by
Hon'ble Supreme Court in the case of Sasa Musa Sugar Works and
5
others Vs. State of Bihar and others reported in (1996) 9 SCC 681
and looking to paragraph nos. 30, 31 and 32, there is no need of
issuance of notification under Sections 3 and 4 for every addition of
entries in the Schedule. Opportunity of being heard as envisaged under
Sections 3 and 4 has not been contemplated for addition of entries in the
Schedule in exercise of powers under Section 39 of the Act and hence,
the appellants are liable for payment of the market fees under the
provision of the Act, 1960.
Reasons:
7. The Objects and Reasons of the Act, 1960 are as under:
"The importance of properly organised markets of agricultural and
allied commodities, though long recognised, has once again been
emphasised by the Planning Commission. They have recommended that
all the States which have not done so should review the present position
and draw up suitable programmes for regulating all important wholesale
markets during the Second Plan. The need for legislation for regulating
markets is all the greater in Bihar where the agriculturists have to depend
in a large measure on the mercy of middlemen to whom they are obliged
to sell their produce as soon as the harvesting season is over. The
Arhatiyas and wholesale buyers enter into a secret understanding to
exploit the unwary agriculturists and they prevent him from having
correct information as to the current sale prices of agricultural produce
with the result that the agriculturist seldom gets a fair share of the price
paid by the consumer for his produce. The main object of having regulated
markets is to secure to the cultivator better prices, fair weighment and
freedom from illegal deductions. A fair deal for his produce is a good
incentive for an agriculturist to adopt improved agricultural programme."
The Act, 1960 was enacted for the purposes of regulation of sale,
purchase, storage and processing of particular agricultural produce
mentioned in the Schedule appended to the Act. The act also establishes
the markets for agricultural produce and for matters connected
therewith.
8. Sections 3 and 4 and the Notification issued thereunder:
(i) It is contended vehemently by the counsel for the appellants that
unless notifications have been issued under Sections 3 and 4, no market
fees can be levied for the items in the Schedule appended to the Act,
1960. Sections 3 and 4 of the Act read as under:
"3. Notification of intention of exercising control over
purchase, sale, storage and processing of agricultural produce in
specified area(1) Notwithstanding anything to the contrary contained
in any other Act for the time being in force, the State Government may, by
6
notification, declare its intention of regulating the purchase, sale, storage
and processing of such agricultural produce and in such area, as may be
specified in the notification.
(2) A notification under subsection (1) shall state that any
objection or suggestion which may be received by the State Government
within a period of not less than two months to be specified in the
notification, shall be considered by the State Government.
4. Declaration of market area (1) After the expiry of the period
specified in the notification issued under Section 3 and after considering
such objection and suggestions as may be received before such expiry and
after holding such enquiry as it may consider necessary, the State
Government may by notifications, declare the area specified in the
notification under Section 3 or any portion thereof to be a market area for
the purposes of this Act, in respect of all or any of the kinds of agricultural
produce specified in the notification under Section 3.
(2) On and after the date of publication of the notification under
subsection (1), or such later date as may be specified therein, no
municipality or other local authority, or other person, notwithstanding
anything contained in any law for the time being in force, shall, within the
market area, or within a distance thereof to be notified in the official
Gazette in this behalf set up, establish, or continue, or allow to be set up,
established or continued, any place for the purchase, sale, storage or
processing of any agricultural produce so notified, except in accordance
with the provisions of this act, the rules and bye laws.
Explanation xxxxxxxx
(3) Subject to the provisions of section 3, the State Government may
at any time by notification exclude from a market area any area or any
agricultural produce specified therein or include in any market area of
agricultural produce included in a notification issued under subsection (1).
(4) Nothing in this Act shall apply to a trader whose daily or
annual turnover does not exceed such amount as may be prescribed."
(ii) It is also contended by the counsel for the appellants that
opportunity of being heard ought to be given before imposing and
levying market fees or addition of the entries in the Schedule. This
contention is not accepted by this Court mainly for the reason that
notification under Sections 3 and 4 will be required not for every
additional entries in the Schedule, but, it requires when, for the first
time the State declares its intention of regulating the purchase, sale,
storage and processing of agricultural produce and for that
objections/suggestions will be invited and after the expiry of the period
specified in the notification issued under Sections 3, the objections and
suggestions will be considered and after holding such inquiry, the State
Government may by notification declared the area specified in the
notification under Sections 3 or any portion thereof to be a market area
under Section 4. Thus, once the market area is fixed under Section 4,
7
there is no need of notification under Sections 3 and 4 for each and
every item now to be added in the Schedule, after insertion of Section
4A to the Act, 1960. Counsel for the appellants have pointed several
notifications issued under Sections 3 and 4 issued from 1966 to 1992.
All these notifications issued under Sections 3 and 4, which are referred
to by the counsel for the appellants, are as under:
List of Notifications issued by the State Government from time to
time under Section 3 as well as under Section 4 of the Markets Act
in respect of Dhanbad market Committee, prior to insertion of
Section 4A to the Act, 1960.
Sl. Notifications issued Notifications issued For regulation of sale, purchase,
No. under Section 3 Under Section 4(1) & storage and processing of the
4(3) agricultural produce mentioned
below.
(1) (2) (3) (4)
1. No. 6011 Agri. II dated S.O. 159 dated Paddy, Rice, Wheat, Maize, Gram
14.4.66/18.5.66 5.2.70/22.4.70 (whole and dal), Barley, Khesari (whole and dal), Masoor (whole and (Annexure9 at page (Annexure10 at page dal), Arhar (whole and dal) Urad
96) 103) (whole and dal), Arhar (whole and dal), Peas (whole and dal), Moong (whole and dal), Gur, Rape and Mustered Seed, Mustard oil, Cauliflowers, Onions, Cabbages, Table Potatoes, Beans and Tomatoes.
2. S.O. 949 dated 29.6.74 S.O. 1385 dated 9.9.74 All the agricultural produce included in the Schedule under section 2(1) (Annexure9/A at page (Annexure5 at page 42) (Ka) of the Act.
99)
3. S.O. 997 dated 5.6.76 S.O. 2045 dt. 24.12.76 Jai, Jau Ka Atta (Barley Flour), Ghoti (Annexure9/B at page (Annexure10/A at page Jau, Makai ka Atta (maize flour),
102) 105) Saboodana, Mudi, Bale, Mausami, Singhara (chhilka sahit evan bina chhilka ka hara evam sukha), Satalu, Khira, Kakri, Sahjan, Oal, Kanda, Kundari, Aruhi, Khowa, Dahi, Chuni, Chokar evam Tea (leaf evam dust).
Aforesaid items were added in the Schedule by Notification dt.
21.1.1976 4(i) S.O. 1471 dated S.O. 149 dated 22.1.82 All the agricultural produce included 14.10.81 in the present Schedule under section (Annexure4 at page (Annexure5/A & 5/B at 2(1)(ka) of the Act.
34) page 46 & 48)
(ii) S.O. 458 dated 20.3.82 S.O. 1187 dt. 29.10.84 Do
(Annexure5/D at page
50)
5. No. 3028 dated S.O. 229 dt. 31.8.92 Do
12.5.92
(Annexure4/B at page (Annexure5/E at page
37) 52)
8
(iii) Bihar Agricultural Produce Markets Act, 1960 has been amended by Bihar Act 4 of 1993 and new Sections 4A and 4B have been inserted with retrospective effect i.e. with effect from 6th August, 1960. By virtue of this amendment after 1996, there is no need of issuance of notification under Sections 3 and 4 for every addition of entry in the Schedule appended to the Act. If the State intends to change 'Market Area' [as defined in Section 2(i)], for any new entry in the Schedule, then only notifications under Sections 3 and 4 are required to be issued.
9. Amendment in the Act, 1960 by Bihar Act 4 of 1993 and Insertion of Sections 4A and 4B:
(i) Provision after 1993 of the Act, 1960 are now different by the virtue of insertions of Sections 4A and 4B by amending Act of Bihar Act 4 of 1993. This amendment has been made effective from 6th August, 1960. Sections 4A and 4B are as under: "4A. Sections 3 and 4 not to apply to Section 39. (1) The provisions of Sections 3 and 4 shall not apply to the exercise of powers by the State Government under Section 39 to amend the schedule by addition of any item of agricultural produce not specified therein.
(2) The State shall not order the deletion of any item in exercise of its power under Section 39 without giving an opportunity for hearing to the affected parties."
4B. Validating of Market fee levied and collected. Notwithstanding any judgment, decree or order of any Court to the contrary: any market fee levied and collected shall be deemed to be valid as if such levy and collection was made under the provisions of this Act as amended by this Act and notification no. 730, dated 2nd May, 1977 shall be deemed never to have been issued and no suit or other legal proceedings shall be maintained or continued in any court for the refund of the fee collected under the provisions of this Act and no Court shall entertain any proceedings challenging the fee recovered or the continued levy and recovery of the fee merely on the ground that liability has ceased on the issuing of the notification no. 730 dated 2nd May, 1977."
(Emphasis supplied) In view of the aforesaid Sections inserted by Bihar Act 4 of 1993, now for addition of any item of agricultural produce, in the Schedule, provision of Sections 3 and 4 are not applicable. It may happen that entries in the Schedule require to be modified looking to the static need of the society. Modification may be brought by an addition or deletion of the entries in the Schedule in exercise of powers under Section 39. Looking to the provisions of Section 4A wherever any item is added in 9 the Schedule in that situation Sections 3 and 4 are not applicable, but, so far as the deletion of entries is concerned, while exercising powers under Section 39, it cannot be done without giving an opportunity of hearing to the affected parties.
(ii) It has been held by the Hon'ble Supreme Court in Sasa Musa Sugar Works and others Vs. State of Bihar and others reported in (1996) 9 SCC 681 in paragraph nos. 30 and 32 as under: "30. After giving our careful consideration to the facts and circumstances of the case and the submissions made by the learned counsel for the parties, it appears to us that unless agricultural produce is included in the Schedule to the Markets Act, the provisions of the Act have no application to such produce. An agricultural produce may find its place in the Schedule to the Markets Act as originally included by the legislature, or it may subsequently be added to the Schedule under Section 39 of the Act. Section 39 is the only provision in the Act which authorises the State Government to add any item to the Schedule of the Act or delete any item therefrom. Section 39 being an independent provision, it does not require sustenance from other sections. It operates on its own strength.
32. For drawing up the field of control by specifying agricultural produce in the Schedule so that control in respect of the same under other provisions of the Act is made, no hearing has been prescribed by the statute. In our view, such hearing is not contemplated because it may not always be feasible or even desirable to give hearing for determining which produce is to be included in the Schedule. The wisdom in selecting the field of control by including the produce in the Schedule was exercised initially by the legislature and thereafter such wisdom has been left to the discretion of the delegated authority namely the State Government. It may be noted here that such hearing in the matter of selecting the field of control by adding items is also not contemplated in the Essential Commodities Act.
(Emphasis Supplied) In view of the aforesaid decision, no hearing has been prescribed by the statute for drawing upon the field of control by specifying an agricultural produce in the Schedule.
(iii) The argument which is canvassed today, was already canvassed in the aforesaid decision, which is referred to in paragraph no. 24 (iv) of the judgment. It was also argued in the aforesaid judgment that unless and until the provisions of Sections 3 and 4 and 15 are complied with, no market fees can be levied and as Section 4A dispenses with the requirement of complying with the provisions of Sections 3 and 4 before market fee can be validly levied on an agricultural produce, it is bad and void of being repugnant to the scheme of the Act and valuable rights of 10 citizens under Sections 3 and 4 have been taken away. This contention has not been accepted by the Hon'ble Supreme Court and it has been held in paragraph 30 and 32, which are reproduced hereinabove, that hearing is not contemplated.
(iv) Section 39 of the Act reads as under: "39. Power to amend the schedule The State Government may, by notification, add, to amend or cancel any of the items of agricultural produce specified in the Schedule."
In the facts of the present case, powers have been exercised for adding the agricultural produce viz. plywood, ply board, ply etc. in the schedule while exercising powers under Section 39 and looking to the provisions of Section 4A, the provisions of Sections 3 and 4 shall not apply while exercising powers of the State under Section 39. The market area is not altered which is already notified by the State Authorities. Appellants are dealing in the agricultural produce within the market area and therefore, there is no need for issuance of fresh notifications every time under Sections 3 and 4 for every addition of entry of agricultural produce in the Schedule. All the notifications pointed out by the counsel for the appellants, which have been issued under Sections 3 and 4 are prior to the amending Act of 1993 and prior to the decision of Sasa Musa Sugar Works (Supra), there is not a single notification under Sections 3 and 4 issued by the State after the amendment in the Act, 1960 i.e. there is not a single notification issued by the State under Sections 3 and 4 for addition of the entries in the Schedule after Section 4A is inserted in the Act i.e. after 1993.
10. Addition of Entry under Section 39:
(i) Entry 'Wood' was added in the Schedule by Memo No. 2028 dated 12th February, 1972. For this item under Sections 3 and 4 the notifications have been issued as admitted by the counsels for both the sides. Section 2(1)(a) defines agricultural produce. This definition reads as under: "2(1)(a) "Agricultural produce" means all produce whether processed or nonprocessed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture, Pisciculture, and includes livestock or poultry as specified in the Schedule."
(Emphasis Suppled) 11
(ii) Thereafter, in the year 2000 by S.O. No. 228 dated 23rd October, 2000, plywood, ply board, ply etc. have been inserted in the Schedule while exercising powers under Section 39 of the Act. Thus, despite the entry of the word 'Wood' plywood, ply board etc. have been added in the year 2000, in fact, looking to the definition of 'agricultural produce' 'Wood' includes plywood/ply board/ply, because 'agricultural produce' means all the produce whether processed or non processed, whether manufactured or not of agriculture, horticulture, plantation, animal husbandry, forest, sericulture, pisciculture as specified in the Schedule. Annexure7 to the petition gives manufacturing process upon wood. Grounds canvassed in the writ petition are to the effect that wood and plywood/ply board/ply are different. Therefore, plywood/ply board/ply are not covered in the entry of Schedule viz. 'Wood'. This contention is diagonally opposed to the definition of 'Agricultural Produce' given in Section 2(1)(a), therefore is not accepted. The new item might have been manufactured from agriculture or forest. Sometimes it may be 'commercially' another item, as per concept of Excise Act. There may be change in physical appearance or chemical combination. But looking to wider definition of 'Agricultural Produce' all the produce, irrespective of fact that it (new product) is processed or manufactured of (out of) Agriculture or Horticulture or plantation, animal husbandry, forest, sericulture, pisciculture, it (new product), will be 'Agricultural produce', for all the purposes of the Act, 1960.
(iii) It has been held by the Hon'ble Supreme Court in the case of Belsund Sugar Co. Ltd. Vs. State of Bihar and others reported in (1999) 9 SCC 620 paragraph nos. 131 and 150 are as under: "131. So far as the manufactured rice out of such paddy is concerned, once manufacturing takes place within the market area, it would get squarely covered by the wide sweep of the definition of Section 2(1)(a), as we have seen earlier. Even apart from that, rice is mentioned as a separate Item 2 in the category of "Cereals" in the Schedule of the Market Act. It cannot be disputed that rice manufactured out of basic agricultural produce "paddy" would also remain agricultural produce falling within the sweep of the Act. So far as the regulation of sale and purchase of rice within the market area is concerned, Section 15 of the Act applies to the transactions of licensed dealers dealing with such agricultural produce in the market area. Hence the entire machinery of 12 the Market Act will be applicable to regulate transactions of sale and purchase of paddy by the rice mills within the market area as well as sale of rice by them within that area as all these transactions will have to take place in the market yard or submarket yards as per Section 15 of the Act. However, one grievance voiced by learned Senior Counsel for the appellants deserves to be noted before parting with the discussion in these appeals. He submitted that there is no power and authority in the Market Committee to insist that the location of the ricemilling industries also should be changed and must be shifted to the market yard. In this connection, our attention was invited to the notice (p.156 of the paper book) as a specimen notice. In the said notice addressed to Janta Rice & Flour Mills issued by the advocate acting on behalf of the Secretary, Agricultural Produce Market Committee, Chakulia, in the last but one paragraph, the addressee was requested to shift the establishment of business in the main market yard at Dighi of the Agricultural Produce Market Committee, Chakulia within 7 days."
150. At first blush, learned Senior Counsel for the appellant, Shri Shanti Bhushan appeared to be on a firm footing when he submitted that the legislative intention underlying the enactment of the Market Act was to protect the illiterate and unwary agriculturist from middlemen so that he may not be exploited by them and may get appropriate price for his basic agricultural produce. But on a closer scrutiny, the said contention does not appear to be well sustained. Section 2(1)(a) of the Market Act, as seen earlier, includes in the definition of agricultural produce not only the primary produce grown in the field but also covers all processed or non processed, manufactured or nonmanufactured agricultural produce as specified in the Schedule. In the light of the aforesaid wide sweep of this definition, it cannot be said that tea leaves which are produced in tea gardens being primary agricultural produce would cease to be agricultural produce once they got processed. After plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets they still remain all the same agricultural produce so manufactured out of the basic agricultural raw material "tea leaves". It is also not in dispute that tea (leaf and dust) is a scheduled item. Once that is so, sale of manufactured tea in a packed condition within the market area would squarely attract the charge under Section 27 of the Act which, as noted earlier, is widely worded. The moment the agricultural produce as defined by Section 2(1)(a), is bought or sold in the market area, Section 27 would get attracted to cover such transaction. It is also pertinent to note that Section 15 subsection (1) of the Act is applicable in the present case to cover such transactions of sale of packed tea within the market areas of the Market Committees concerned governed by the Act. Save and except such quantity as may be prescribed for retail sale or personal consumption to be outside the sweep of Section 15(1) of the Act, the rest of these sale transactions regarding manufactured agricultural produce would remain governed by the sweep of the Act. On a conjoint reading of Section 2(1)(a) and Section 15 and the relevant entry in the Schedule, there is no escape from the conclusion that whether the manufactured agricultural produce has undergone manufacturing process within the market area or not or whether such agricultural produce in its raw form is grown in the market area or outside or whether the processed "agricultural produce" is imported only for sale within the market area, the applicability of the Act cannot be said to be ruled out to cover all these types of sale transactions. The question posed by Shri Shanti Bhushan, learned Senior Counsel appearing for the 13 appellant for our consideration is no longer res integra. A Constitution Bench of this Court in the case of Ram Chandra Kailash Kumar and Co. v. State of U.P. speaking through Untwalia, J., had to consider the question of imposition of market fee under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 on transactions of purchase and sale of agricultural produce in the market area. While considering this question, various contentions raised by traders operating in the agricultural market in U.P. were listed in para 9 of the Report. Contentions 9 and 23 listed in para 9 of the Report are relevant for our purpose. Contention 9 reads as under: (SCC p.38, para 9) "9. (9) No market fee could be levied on goods not produced within the limits of a particular market area and if produced outside and brought in such area."
Contention 23 reads as under: (SCC p.39, para 9) "9. (23) Fee can be charged only on those transactions in which the seller is producer and not on any other transaction." Repelling these contentions, the Constitution Bench held that market fee could be levied on transactions of sale of goods even though such goods are produced outside the State of Uttar Pradesh or outside the market area of that particular Market Committee, provided the transactions of sale take place within the limits of that market area. It was also held that, on the other hand, there was no provision in the Act or the rules to limit the operation of the law in a particular market area only in respect of the agricultural produce produced in that area.
(Emphasis Supplied) Thus, the 'tea' manufactured out of 'tea leaves' has been held to be an agricultural produce, even though 'manufactured tea' is obtained by several processes, performed upon the 'tea leaves'.
In view of the aforesaid decision 'Wood' includes plywood, ply board, ply because it is a produce by processing the wood. It is manufactured out of wood.
(iv) Similarly, it has been held by the Hon'ble Supreme Court in the case of Park Leather Industry (P) Ltd. Vs. State of U.P. and others reported in (2001) 3 SCC 135 in paragraph nos. 5, 19, 20 and 21 as under: "5. The question which had been raised in the writ petitions and which is raised here is whether the term "hides and skins" includes "tanned leather". Mr Sudhir Chandra has submitted that admittedly the term "tanned leather" has not been used either in the Act or in the Schedule. He admits that under Section 2(a), not just the items which have been specified in the Schedule but also an admixture of two or more such items or any of those items in a processed form, would also be included. He, however, submits that tanned leather is not "hide or skin"
and is not derived by processing "hide" or "skin". He submits that "tanned leather" is a manufactured commodity. He submits that "tanned leather"
is an entirely different commodity from "hide" or "skin".
1419. We have considered the arguments of both the parties. In our view it is clear that the interpretation has to be on the basis of the expression "agricultural produce" as set out in Section 2(a) of the said Act. In so determining decisions based on different statutes, statutes such as sales tax laws can be of no assistance. All the cases relied upon by Mr Sudhir Chandra are cases under the taxing statutes where the interpretation has been given on the basis of the terms as defined in those statutes.
20. A perusal of Section 2(a) of the said Act makes it clear that an agricultural product would be a product which is specified in the Schedule or one which is admixture of two or more items and would also include any such item in a processed form. In our view it makes no difference, for the purposes of the said Act, that the item concerned is a different commodity from the one which is included in the Schedule. It is possible that by virtue of an admixture of two or more items or by virtue of processing a different commodity or item may come into existence. Even though a different commodity may come into existence, it would still be an "agricultural produce". This is best illustrated by sugarcane which is in Schedule A Item VIII at Serial No. 14. From sugarcane, "rab" and "gur" are manufactured. They are already different commodities or items. Yet they are all included. The specific inclusion of items like "gur, rab, shakkar, khandsari and jaggery" is to make it clear that merely because it becomes a different item or commodity it is not excluded.
21. We see no reason to go into the difference between "manufacturing" and "processing". In the strict sense of the terms there may be a difference. However, we are not required to go into these differences as, in our view, it is very clear, from what has been set out by the appellants themselves in their affidavit that for hide and skin to be converted into leather or tanned leather all that is required is a process. It is a process of cleaning, curing and adding preservatives. That it is a process has been held by this Court in the case of State of T.N. v. Mahi Traders. We are also of the view that the finished product i.e. "tanned leather" even though it may have changed in physical appearance or chemical combination and even though it may commercially be a different item still remains a "hide" or a "skin".
(Emphasis Supplied) Thus, a 'hide' or a 'skin', even though has undergone several processes and 'tanned leather' is manufactured and, thus, even though there is change in physical appearance, still 'tanned leather' remains a 'hide' or a 'skin'.
In view of this decision also plywood, ply board, ply retains characteristics of 'Wood' and as per definition of 'Agricultural Produce' under Section 2(1)(a), ply wood, ply board, ply are covered by entry 'Wood' which was already inserted earlier in the year, 1972.
(v) Likewise in Belsund Sugar Co. Ltd (supra) in para 121 it has been held that "Atta", "Maida" and "Suji" though are commercially different items, but looking to definition under Sections 2(1)(a), they 15 are "agriculture produce". Para 121 reads as under:
"121. So far as the alternative contention is concerned, he submitted that even though wheat is an agricultural produce, atta, maida, suji manufactured out of the same cannot be said to be agricultural produce as they are produce of the factory and not of an agriculturist. This contention of Shri Ranjit Kumar also cannot be sustained for the simple reason that agricultural produce as defined by Section 2(1), as already noted earlier, would include all agricultural produce whether processed, nonprocessed or manufactured out of any primary agricultural produce. Wheat is a produce of agriculture, therefore, any product resulting after processing such basic raw material or which results after process of manufacture is carried on qua such basic raw material would remain agricultural produce. Shri Ranjit Kumar fairly stated that he has not challenged the vires of Section 2(1)(a) but in his submission Items 14 to 16 as found in the Schedule to the Act under the caption "Cereals" are wrongly included as agricultural produce as they are not produce of agriculture. The moment the artificial definition of agricultural produce as aforesaid holds the field, as a logical corollary these three disputed items would squarely get covered by the sweep of the term "agricultural produce" and hence their inclusion in the Schedule enacted under Section 2(1)(a) as types of cereals cannot be found fault with. These were the only contentions canvassed by Shri Ranjit Kumar in support of his appeals. As they fail the inevitable result is that all the civil appeals would be liable to be dismissed."
(Emphasis Supplied) Thus, 'atta', 'maida' or 'suji', even though manufactured out of the primary agricultural produce, it remains agricultural produce as per Section 2(1)(a) and is covered by Entry 'Cereals'. Sometimes it may be 'commercially', another item, but, looking to the definition of 'agricultural produce', it (new item) remains agricultural produce, even though it is manufactured or processed out of the Agriculture, Horticulture, Plantation, Animal Husbandry, Forest, Sericulture or Pisciculture.
(vi) Section 2(i) defines Market Area, Section 2(o) defines Market Yard and Section 2(t) defines Sub Market Yard.
In view of these three terminology used in the Act, 1960 market area is a bigger area. It includes market yard and sub yards. Once a market area is already notified and declared under Section 4 of the Act, every time for every addition of the agricultural produce in the Schedule of the Act, 1960, there is no need of issuance of notification under Sections 3 and 4. If State, intends to change 'marketarea' for any item to be added in the schedule, then only, notifications under Sections 3 and 4 16 are required, otherwise not. Appellants are admittedly dealing in plywood/ply board/ ply etc. within the market area and as per Section 15 of the Act there are restrictions for dealing in agricultural produce. Much has been argued out on the basis of Section 15 that every additional entries, there must be a notification under Section 4(1), but, this contention is not accepted by this Court looking to the provisions of Section 4A coupled with the fact that there is no alteration or addition in the market areas already declared under Section 4.
11. As a cumulative effect of the aforesaid facts, reasons and judicial pronouncements, the appellants are liable to make the payments of market fees as contemplated by the Agricultural Produce Market Committee. No error has been committed by the learned Single Judge while appreciating the aforesaid legal position and we find no error in the judgment rendered by the learned Single Judge in C.W.J.C. No. 4230 of 2000 dated 7th December, 2001.
12. There is no substance in this Letters Patent Appeal, hence, the same is hereby, dismissed.
13. L.P.A. No. 18 of 2002 is also disposed of for the aforesaid reasons.
(Bhagwati Prasad, C.J.) (D.N. Patel, J.) Jharkhand High Court, Ranchi.
Dated - The 10th March, 2011 VK/N.A.F.R. 17