Patna High Court
Agriculture Produce Market Committee vs State Of Bihar And Anr. on 17 February, 1995
Equivalent citations: 1995(2)BLJR1158
Author: K. Venkataswami
Bench: K. Venkataswami
JUDGMENT Gurusharan Sharma, J.
1. These two Letters Patent Appeals arise out of the judgment dated 30.1.1989 passed respectively in C.W.J.C. Nos. 30 of 1982 (R) and 547 of 1983 (R). M/s Chotanagpur Ropeworks moved this Court and challenged the notices dated 21.1.1982 and 15.3.1983 issued by the Secretary, Agriculture Produce Market Committee, Pandra, Ranchi, whereby it was called upon to apply for licence and after obtaining the same, pay surcharge under the provisions of the Bihar Agriculture Produce Markets Act, 1960 (hereinafter referred to as the Act). But the impugned judgment, the learned Single Judge quashed the aforesaid notices and held that Jute-rope was not within the purview of the Act and directed the Market Committee to refund the amount realised from the firm.
2. In the aforesaid writ applications, it was contended that M/s Chotanagpur Ropeworks, a partnership firm, registered under the Indian Partnership Act, having its office and factory at village-Arra, District Ranchi, purchases jute yarn from outside the State of Bihar and makes the same as jute core rope, which is being supplied to different parts of the country.
3. The Bihar Agriculture Produce Markets Act, 1960, has been enacted in terms of Entry 28, List II of the Seventh Schedule of the Constitution of India. Its object is to establish markets and regulate buying and selling of agricultural produce in the markets established under the Act for the purpose of protecting the interest of the agriculturists of the State. The transactions relating to purchase or sale in the agricultural produce as specified in the schedule to the Act are regulated by the Act. For that purpose the dealers who run their shops in the market-area become a very important part of the market. For providing service in such markets, the market fee is realised to be spent over the facilities to be provided in such markets.
4. It is not in dispute that the factory of M/s Chotanagpur Ropeworks (respondent No. 2 herein) is situated within the market area declared under Section 4 of the Act, Under Section 6 of the Act, for every market area the State Government by notification has established a Market Committee, which is a body corporate. It issues licences to the traders, commission agents, brokers, etc. operating in the market area. Section 2(w) of the Act defines 'trader' as a person ordinarily engaged in the business of buying or selling agricultural produce as principal or as duly authorised agents of one or more principals and includes a commission agent or a person ordinarily engaged in the business of processing agricultural produce.
5. The Secretary of the Bihar Agriculture Produce Market Committee, Ranchi, issued, a notice dated 21.1.1982 to the respondent No. 2 to deposit the licence fee and to apply for grant of a licence under the Act in the prescribed form as also to pay surcharge. The respondent No. 2 challenged the said notice in this Court vide CWJC No. 230 of 1982 (R) which was admitted on 18.2.1982. By order dated 23.9.1982 the operation of the notice was stayed subject to the following conditions:
(i) the firm will apply for grant of licence under the Act for the current year as well as future and the Market Committee will grant such licence;
(ii) the Market Committee will not insist upon payment of market fees for the period prior to the grant of licence;
(iii) the grant of licence will be without prejudice to the rights of the parties;
(iv) the realisation of sums due under the Act which the firm is liable to pay according to the stand of the Market Committee will remain stayed;
(v) the firm will be granted licence for future years and it shall deposit licence fee as well as market fees in future years until the disposal of the main writ application and
(vi) the firm shall file an application after complying with all the formalities for grant of licence within two, weeks from today.
6. During the pendency of the said writ application, a fresh notice dated 15.3.1983 was issued by the Secretary, Agriculture Produce Market Committee, Pandra, Ranchi, to respondent No. 2 determining the liability to pay the market fee on the Jute core-rope exported outside the State as well as the market area and to produce the books of accounts and other relevant papers from 30.4.1982 to up-to-date in order to determine the amount of the market fee. Respondent No. 2, therefore, filed an other writ application being C.W.J.C. No. 547 of 1983 of 1983 (R) and challenged the said notice dated 15.3.1983. In C.W.J.C. No. 230 of 1982 (R) a petition for amendment of the writ application was filed which was allowed by order dated 21.12.1983 and the said amendment petition was directed to be treated as a part of the main writ application.
7. According to respondent No. 2, who was petitioner in the aforesaid two writ applications, the Jute yarn was not an agricultural produce as defined under Section 2(1)(a) of the Act read with Clause VII (2) of the Schedule attached to the Act and accordingly, the manufacture of Jute Core rope from Jute yarn was also not an agricultural produce. Since the firm was purchasing Jute yarn from outside the specified market area, it could not have been deemed to be a 'trader' within the meaning of Section 2(1)(v) of the Act. Such purchase of Jute yarn and making Jute core rope therefrom could not have been deemed to be a 'trade' within the meaning of Section 2(1)(v) of the Act. Jute yarn is subject to a process. The fibres of Jute are dissected and segregated and carried to a washing machine. The washed fibre of Jute then are combed for removing grease and to form a continuous silver, which is wound on a machine and converted into a ball. This ball has to undergo further several processes to make a Jute yarn. From this yarn, the firm is making Jute-core-rope. The manufacture of Jute-core-rope from Jute yarn is an industrial product having a different and distinct feature. In absence of entry of Jute yarn and Jute core rope as agricultural produce in the Schedule to the Act, the firm could not have been called upon to obtain a licence and to pay surcharge.
8. The further case of respondent No. 2 was that no market fee was payable on the raw materials which were purchased from outside the State of Bihar and were exported outside the State and/or outside the market area. The notice dated 15.3.1983 determining the liability of the firm to pay market fee and to produce the books of accounts and other papers for assessment was illegal and without jurisdiction. The Act as well as its Amending Act 60 of 1982 were challenged to be ultra vires to the Constitution of India.
9. In the counter-affidavit filed by the Secretary, Agriculture Produce Market Committee, Ranchi, who was respondent No. 2 in both the writ applications, it was, inter-alia, stated that the firm was engaged in sale and purchase of notified agricultural produce i.e. Jute fibres, that the Jute yarn or Jute-core-rope was nothing, but a Jute fibre or twisted form of fibre of Jute, which is a notified agricultural produce, that the firm was doing trade in agricultural produce as defined under the Act within the notified market area and as such it. was a dealer within the meaning of the Act; that the firm is no doubt making Jute-core-rope from Jute yam and was selling them within or outside the market area; that under the Act the liability to pay market fee is on the purchaser and as such, the firm has accordingly to realise the same from them and to deposit it with the committee. It was further stated in the counter-affidavit mat the definition of the agricultural produce was amended on 30.4.1982 by the Bihar Act 60 of 1982, according to which the agricultural produce means all produce of agriculture, horticulture, animal husbandry, tusar and fishery, whether processed or unprocessed, manufactured or not and also dairy and poultry products specified in the Schedule.
10. Both the writ applications were heard together and disposed of by separate judgments dated 30.1.1989 by the learned Single Judge of this Court. The matter was discussed in detail in the judgment passed in C.W.J.C. No. 230 of 1982 (R). The notice dated 21.1.1982 was quashed. C.W.J.C. No. 547 of 1993 (R) was also allowed and the notice dated 15.3.1983 was quashed. The Market Committee was directed to refund the amount realised from the firm.
11. The learned Single Judge observed:
In M/s Raptakos case, one of the disputes was whether Chocolate Bar which is sold in the market was an agricultural produce. It was held that chocolate not having been mentioned in the Schedule to the Act, the manufacturer of chocolate bar (who was one of the petitioner in those cases) was to liable to pay market fee on the sale of chocolate bar (Amul Chocolate). In M/s. Raptakos case, the Bench, therefore, was of the opinion that inspite of the fact that that item may be an agricultural produce, but if it is not included in the Schedule, the provisions of the Act were not attracted. Further, it appears from the Schedule that not only Jute has been included but Sutli has also been included as one of the items in Category-VII-Fibres. It is surely processed jute. Sutli in commercial world is a different article from rope and it is processed jute. If the State Government was of the opinion that Jute-rope should also be brought within the purview of the Act, it would have not mentioned Sutli specifically.
12. The Agriculture Produce Market Committee, Ranchi, has preferred these two Letters Patent Appeals separately against the judgment of the learned Single Judge in C.W.J.C. No. 230 of 1982 (R) and C.W.J.C. No. 547 of 1983 (R) respectively. For the sake of convenience and with the consent of the parties, these two appeals have been heard together and are being disposed of by common judgment.
13. Mr. V.P. Singh, learned Counsel, for the appellant submitted that 'Agricultural Produce' means not only the product of agriculture, horticulture, animal husbandry, forest, etc. in its original form, but also the products that have been processed and manufactured from such original products. Further, according to the amended definition of 'Agricultural Produce' under Section 2(1)(a) of the Act whether a produce or product of a notified agricultural produce has been specified in the Schedule or not is not of much consequence for being held as an agricultural produce. In this context, Mr. Singh placed reliance upon a decision of this Court in Tata Oil Mills Limited v. Director (Marketing), Bihar Agriculture Marketing Board, Patna and Anr. (1986 PLJR 172) wherein it was held that 'coconut' was a fruit and it could have been included in the definition of the 'vegetable' in its generic sense. Once it was held to be a 'vegetable' men 'coconut oil' should be deemed to be 'vegetable' as specified in the Schedule and further 'coconut' stood mentioned against Item 21 of Clause IX to me Schedule to the Act. Once coconut becomes an 'agricultural produce' then any derivative through processing shall also be an 'agricultural produce'. Even under the old definition, 'agricultural produce' includes a produce-whether processed or non-processed of agriculture, horticulture, etc. 'Coconut oil' is admittedly the processed product of coconut In such situation, there is no escape from the conclusion that 'coconut oil' was an 'agricultural produce' under the old definition. Now there should not be any controversy in respect thereof after introduction of new definition of agricultural produce in the Act.
14. According to Mr. Singh, likewise, jute has been mentioned against item No. 2 of Clause VIII of the Schedule to the Act as an 'agricultural produce'. Jute-core-rope is nothing but a jute fibre or twisted form thereof and it is a processed product of Jute and, therefore, jute-core-rope is also an agriculural produce within the meaning of Section 2(1)(a) of the Act. The appellant, therefore, is entitled to ask me firm which is admittedly engaged in buying and selling of the said 'agricultural produce' within the market area to get licence and to pay market fee/surcharge.
15. Mr. Singh also relied upon a decision of the Hon'ble Supreme Court in the case of MA Madanlal Manohar lal and Ors. v. State of Haryana and Anr. wherein it had been held that the term 'agricultural produce' according to its definition contained in Section 2(a) of the Punjab Agricultural Produce Market Act, 1961 means all produce, whether processed of not, or agriculture, horticulture, animal husbandry or forest as specified in the Schedule to the Act and although 'sheep hair' was not mentioned specifically in the Schedule, but it would fall under item No. 41 of the Schedule namely 'wool' (Oon) and consequently, it is an agricultural produce within the meaning of the Act, so that the various provisions therein with regard to the agricultural produce are applicable to 'sheep hair' also.
16. On the other hand, Mr. Gadodia, senior counsel, appearing on behalf of respondent No. 2 relying upon the decision of this Court in the case of M/s Raptakos, Brett and Co. Ltd. v. The Bihar State Agriculture Marketing Board and Ors. and analogous cases (1988 PLJR 830) submitted that likewise Nestrum Baby Cereal commonly known as NBC, a baby food in flake form which is prepared from rice flour, sucrose and iron-salt with added vitamins and Cerelac, another Baby food prepared from grains, milk, oil etc. which have already been held to be not 'agricultural produce' within the meaning of the Section 2(1)(a) of the Act, the Jute core rope is also not an 'agricultural produce' within the meaning of the Act and the learned Single Judge has rightly held so and quashed the notices issued by the Market Committee. Respondent No. 2 is, therefore, not liable to obtain licence and pay surcharge under the provisions of the Act.
17. The definition of 'agricultural produce' has been substituted by amending Act 60 of 1982, which came into force on 30.4.1982, which is as follows:-
2 (1)(a)-"KRISHI UPAJ" SE ABHIPRET HAI KRISHI UDYAN-KRISHI (BAGWANI), BAGANON, PASHU PALAN, VAN, RESHAM-UTPADAN, MATSYA PALAN KI SAB HI UPAJ, CHAHE WOH WIDHAYIT HO YA AWIDHAYIT; WINIRMIT HO YA NAHIN, AURISKE ANTARGAT ANUSUCHI MEN YATHAWINIRDIST PASHUDHAN YA KUKKUT AADI BHIHAIN The English rendering of the aforesaid amended definition is as under:
Agricultural produce means all produce, whether processed or non-processed, manufactured or not, of agriculture, horticulture, plantation, animal husbandry, forest, sericulture, Pisciculture and includes livestock or poultry as specified in the Schedule.
18. Under the original definition, only such produce or product could have been held to be 'agricultural produce' which have been specified in the Schedule. The present definition has no such-restriction. Now the agricultural produce shall mean all produce of Agricultural, horticulture, plantation, animal husbandry, forest, sericulture, live-stock or poultry including the processed and manufactured products of such produce in view of the new definition of agricultural produce. In my opinion, it is very difficult on the part of the respondent No. 2 to urge that Jute-core-rope shall not be an agricultural produce because, admittedly, Jute-core-rope is a processed and manufactured product of a notified 'agricultural produce' namely 'Jute'. In my view, under the new definition, the only thing which has to be established is as to whether item in question is a processed or non-processed or manufactured product of agriculture, etc. and it is now not of such consequence as to whether such produce or product has been specified in the Schedule or not. As such after coming into force of Act 60 of 1982, there is no scope for arguments that jute-core-rope shall not be deemed to be an 'agricultural produce.'
19. In Raptakos (supra), this Court held that if a notified agricultural produce is not the essential nature or base of a product and such product is not mentioned in the Schedule specifically, only then the market fee is not liable to be paid for the same. In the said decision with regard to Nestrum Baby Cereal and Cerelac Baby food. It was held that although they were made out of agricultural items, but after being processed, they became entirely different items and as such they could not be branded as an agricultural produce. So far as jute rope is concerned, in my opinion, jute is certainly the base of this produce. Simply because by processing the jute has been shaped as rope, its basic identity does not change. In fact, jute-core-rope is processed in a factory, but such processing cannot change the character of the produce. In the circumstances, jute-core-rope being a manufactured product of jute, it falls under item 2 of Clause VII of Schedule to the Act. Consequently it is an 'agricultural produce' within the meaning of the Act and as such various provisions therein with regard to the 'agricultural produce' are applicable to jute-core-rope also.
20. In my opinion, learned Single Judge committed an error of record in observing that in the decision of this Court in M/s Raptakos (supra) the said Bench was of the opinion that inspite of the fact that the item may be an 'agricultural produce', if it is not included in the Schedule, the provisions of the Act were to attracted. The concluded view in the said Bench decision as set out in paragraph 31 thereof is as follows:
(i) mat the items mentioned as agricultural produce or produce of Animal Husbandry in the Schedule Part-VII are not invalid on account of Industrial Development and Regulation Act. The field of legislation was/is not occupied as a fact. The case of I.T.C. Ltd v. State of Karnataka (supra) can be of no assistance to the petitioner.
(ii) The Schedule in so far as applied to so called Baby Food does not overreach the object of the Act. That being so, there is no question of any unreasonable restrictions being imposed upon the petitioners within the meaning of Articles 19(1)(g), 19(6) and 304 of the Constitution. Some of the items produced and dealt in by the petitioners are agricultural produce.
(iii) Some of the Baby foods are agricultural produce, some are not. The items which do not fall within the field of operation of the Schedule are Nestrum, Cerelac, Amulspray, Chocolate, Ketchup, Milkafe, and cheese.
(iv) Such of the Baby foods where Milk in powder form are notified agricultural produce, Notification of 1974 is valid and, therefore, the Market Committees are entitled to levy market fee.
(v) The Market Committee does render some services to the producers. It may be mat no service is being rendered to the petitioner, but that is because they are not prepared to come within the umbrella of the Market Committee. If they had spelt out what facilities or services they require, we would have endeavoured to find out their feasibility and how far services could be rendered to them, but the petitioners did not consider it appropriate, may be for a legal stategy to spell them out.
(vi) the vires of the Act has been tested and sustained in several cases in this Court. In my view, the petitioners have failed once again to assail its validity successfully.
21. The learned Single Judge in the impugned judgment has further observed that in the Schedule not only Jute has been included, but Sutli has also been included as one of the items in Category VII-Eibre, which is surely processed Jute and a different article from rope and if the State Government was of the opinion that Jute rope should also be brought within the purview of the Act, it would have not mentioned Sutli specifically. It appears that sometime in the year 1974, 'Sutli' was added as item 7 of Clause VII-Fibre in the Schedule to the Act. At the relevant time, the old definition of 'agricultural produce' under Section 2(1)(a) of the Act was in force in my opinion pursuant to the amendment of Section 2(1)(a) of the Act in the year 1982, the Jute rope came within its sweep and consequently can be called 'agricultural produce' and thereafter, it was no longer necessary for the State Government to exercise power under Section 34 of the Act and add Jute rope as one of the item like 'Sutli' in Clause VII-Fibre in the Schedule to the Act.
22. It is therefore held that Jute rope or Jute-Core-Rope is an 'agricultural produce' within the meaning of Section 2(1)(a) of the Act and the respondent No. 2 is liable to obtain a licence and pay. market fee/sur-charge to the Agricultural Produce Market Committee, Ranchi.
23. In the result, the impugned judgments are set aside and the two appeals are allowed. However, there shall be no order as to costs.
K. Venkataswami, C.J.
24. I agree.