Karnataka High Court
Kittur Chennamma Poultry Farm vs State Of Karnataka on 6 November, 2024
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IN THE HIGH COURT OF KARNATAKA,
R
DHARWAD BENCH
DATED THIS THE 6TH DAY OF NOVERMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO.60294 OF 2010 (APMC)
C/W
WRIT PETITION NO.106635 OF 2017 (APMC)
IN W.P.No. 60294/2010
BETWEEN:
SRI. LAKSHMI POULTRY COMPLEX
HOSPET - HARIHAR ROAD
MARABBIHALU - 583 212.
HAGARIBOMMANAHALLI TALUK
BELLARY DISTRICT
BY ITS MANAGING PARTNER
M.S.R PRASAD.
...PETITIONER
(BY SRI HARSH DESAI, ADVOCATE)
AND:
1. THE DIRECTOR OF
AGRICULTURAL MARKETING
RAJBHAVAN ROAD
NEXT TO INCOME TAX OFFICE
BANGALORE-560 001.
2. AGRICULTURAL PRODUCE MARKET COMMITTEE
HAGARIBOMMANAHALLI-583 212.
2
BELLARY DISTRICT
BY ITS SECRETARY
...RESPONDENTS
(BY SRI SHIVAPRABHU HIREMATH, AGA FOR R1;
SRI MALLIKARJUN C. BASAREDDY, ADVOCATE FOR R2)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER
DATED 07/11/2009 PASSED BY RESPONDENT NO.2 AS PER
ANNEXURE-E AND ETC.
IN W.P.No. 106635/2017
BETWEEN:
KITTUR CHENNAMMA POULTRY FARM
HONNAPUR VILLAGE, KULAVALLI ROAD
HONNAPUR CROSS, KITTUR-591 115.
BAILHONGAL TALUK, BELAGAVI DISTRICT
BY ITS EXECUTIVE PARTNER
...PETITIONER
(BY SRI HARSHA DESAI, ADVOCATE)
AND:
1. STATE OF KARNATAKA
BY ITS SECRETARY TO
DEPARTMENT OF AGRICULTURAL MARKETING
VIKASA SOUDHA, DR. AMBEDKAR VEEDHI
BENGALURU-560 001.
2. THE DIRECTOR OF AGRICULTURAL MARKETING
DEPARTMENT OF AGRICULTURE
SESHADRI ROAD, KR CIRCLE
BENGALURU-560 001.
3. AGRICULTURAL PRODUCE MARKET COMMITTEE
BAILHONGAL-591 102
3
BELAGAVI DISTRICT
BY ITS SECRETARY.
...RESPONDENTS
(BY SRI SHIVAPRABHU HIREMATH, AGA FOR R1 AND R2;
SRI MALLIKARJUN C. BASAREDDY, ADVOCATE FOR R3).
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF
THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE NOTICE
DATED 08/06/2017 (ANNEXURE-N), NOTICE DATED 08/06/2017
(ANNEXURE-Q) AND NOTICE DATED 27.06.2017 (ANNEXURE-S)
ISSUED BY RESPONDENT NO.3.
THESE WRIT PETITIONS HAVING BEEN HEARD AND
RESERVED FOR ORDERS ON 25.10.2024, THIS DAY ORDER WAS
PRONOUNCED THEREIN, AS UNDER:
CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
C.A.V. ORDER
PER: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
The captioned writ petitions have been filed
challenging the endorsement and notices issued by the
Agricultural Produce Market Committee (APMC), wherein
petitioners have been directed to obtain license from the
APMC under the Karnataka Agricultural Produce Marketing
(Regulation) Act, 1966, for the purchase of food grains used
for feeding poultry. The petitioners contend that the food
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grains are being purchased solely for personal consumption
and not for trading purposes, and hence, the endorsement
and notices issued are illegal and unsustainable.
2. The brief facts of the case are as under:
The petitioners have been engaged in the business of
poultry farming. The petitioners are engaged in large-scale
poultry farming, rearing around five lakh birds, and
purchases food grains to feed the birds.
3. In response to the petitioners operations, the
respondent/APMC issued an endorsement requiring the
petitioner to obtain a license under the APMC Act,
contending that the procurement of food grains for poultry
feed falls under the regulation of the APMC. The petitioners
challenges this endorsement, arguing that the food grains
are purchased exclusively for personal use in the poultry
farm, not for trade, and hence no license is required.
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4. The petitioners assert that its poultry farming
operation, which involves the feeding of a large number of
birds, is classified as an agricultural activity under Section
2(1)(d) of the Karnataka Land Reforms Act. The purchase
of food grains for feeding birds in a poultry farm is
inherently linked to agricultural use, and thus the petitioner
argues that it does not fall under the commercial trading
activities regulated by the APMC Act.
5. Furthermore, the petitioners contend that the
APMC Act is meant to regulate the buying and selling of
agricultural produce in a market context. Since the
petitioners are purchasing food grains strictly for its own
consumption, there is no element of trade or commercial
transaction involved. The petitioners emphasize that the
endorsement issued by the APMC is therefore without legal
basis and should be quashed.
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6. On the other hand, the respondents argue that
the scale of the petitioners operations, which involves
rearing five lakh birds, qualifies as large-scale consumption
of food grains. The respondents claim that any entity
involved in purchasing agricultural produce in large
quantities must obtain a license under the APMC Act,
regardless of whether the produce is used for commercial
trading or personal purposes. The respondents assert that
the regulatory framework of the APMC Act is designed to
ensure transparency and protect farmers in the sale of
agricultural produce. Therefore, even though the petitioners
are using the food grains for feeding poultry, the magnitude
of the procurement requires regulatory oversight and
licensing.
7. Upon reviewing the relevant legal provisions, it is
clear that under Section 2(1)(d) of the Karnataka Land
Reforms Act, poultry farming is explicitly defined as
an agricultural activity. This classification has significant
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implications for the present case. Agricultural activities are
generally exempt from the commercial regulations
applicable to the buying and selling of agricultural produce.
The Court finds that the petitioners procurement of food
grains for the sole purpose of feeding birds in a poultry
farm constitutes an extension of this agricultural activity.
8. Section 8 of the APMC Act regulates
the marketing of notified agricultural produce in a market
area. It provides that no person can use any place in the
market area for the marketing of such produce or operate
as a trader, commission agent, or other market functionary
without a license granted by the market committee.
9. The critical aspect of this provision is that it
applies to marketing activities within a market area. The
term "marketing" refers to buying and selling activities that
involve the commercial transaction of agricultural produce.
Section 8(b)(ii) clearly outlines that a license is required for
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those who operate as traders, brokers, processors, and
similar market functionaries in relation to the marketing of
the notified agricultural produce.
10. Section 8 of the APMC Act reads as under:
"8. Control of marketing of agricultural
produce.-(1) After the market is established.-
(a) no local authority shall, notwithstanding
anything contained in any law for the time being in
force establish, authorise or continue or allow to be
established, authorized or continued any place in the
market area for the marketing of any notified
agricultural produce:
Provided that a local authority may establish or
continue any place for retail sale of any notified
agricultural produce other than cattle, sheep and
goats subject to the condition that no market
functionary shall operate in such place except in
accordance with the provisions of this Act, and the
rules and the bye-laws and standing orders of the
market committee;
(b) no person shall, without, or otherwise than
in conformity with the terms and conditions of a
license granted by the market committee in this
behalf.-
(i) use in any place in the market area
for the marketing of the notified agricultural
produce; or
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(ii) operate in the market area or in any
market therein as a trader, commission agent,
broker, processor, weighman, warehouseman,
or in any other capacity in relation to the
marketing of the notified agricultural produce:
Provided that nothing contained in clause (b) shall
apply.-
(i) to the sale of such agricultural
produce if the producer of such produce is
himself its seller; or
(ii) to the purchase of such produce if the
purchaser is a person who purchases such
produce for his domestic consumption.
(2) The Market Committee shall regulate the
marketing of notified agricultural produce in the
market yards, market sub-yards and sub-market
yards."
11. In the present case, the petitioners are not
engaged in any marketing or trading activity. In both
petitions, petitioners are purchasing food grains exclusively
for feeding its poultry, which is a part of its agricultural
operations. The grain is not being sold or traded but is used
solely for consumption within the poultry farm. Therefore,
Section 8 does not apply, as the petitioners are not involved
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in the commercial marketing of agricultural produce. The
purchase of food grains for personal agricultural use does
not fall within the ambit of the APMC Act.
12. Additionally, the proviso to Section 8(b)(ii)
makes it clear that the section does not apply to the
purchase of agricultural produce if it is for domestic
consumption. In this case, although the food grains are
used for feeding poultry rather than for human
consumption, the principle remains the same. The grains
are being used for the petitioners own agricultural
operations, which is akin to domestic consumption and thus
exempt from licensing requirements.
13. Rule 76 of the APMC Rules governs the licensing
of traders, commission agents, brokers, processors, and
others involved in the trade of notified agricultural produce.
It stipulates that no person shall operate as a trader,
commission agent, broker, or other market functionary in
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the market area without obtaining a license from the APMC.
Rule 76 of the APMC Rules reads as under:
"76. Licensed commission agents, etc.-(1) No
person shall operate in the market area as a
commission agent, broker, processor, exporter,
importer, ginner, presser, crusher, stockist,
warehousemen or retail trader in notified agricultural
produce except under and in accordance with a
licence granted by the committee under this Rule.
(1-A) No person who is in the service of
another person of a firm whether holding any licence
granted by the committee or not shall be eligible to
hold a licence as a broker. If any licensed broker
enters service or does business other than that for
which he holds a licence, he shall be deemed to have
committed a breach of the conditions of the licence.
(2) Every application for grant or renewal of a
licence to operate in the market area.-
(i) as a commission agent, broker, exporter,
importer, stockist, warehouseman, ginner, presser,
crusher or processor shall be in Form 41;
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(ii) as a retail trader shall be in Form 42;
(iii) xxxxxxxx.
(3) The maximum licence fees payable for a
licence to operate as a commission agent, broker,
processor, exporter, importer, ginner, presser,
crusher, stockist, warehouseman or retail trader
specified in column (2) of the Table below shall be as
specified in the corresponding entries in column (3)
thereof.
TABLE
Sl. Category Maximum fees leviable per annum
No.
(1) (2) (3)
Rs.
1 Trader 200
2 Commission agent 200
3 Broker 100
4 Processor 100
5 Exporter 100
6 Importer 100
7 Ginner 100
8 Presser 100
9 Crusher 100
10 Stockist 100
11 Retail trader 25
12 Warehouseman 100
Explanation.- A person who has applied for grant of a
licence in respect of two or more categories specified
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in column (2) of the Table above, may be granted a
composite licence in respect of all such categories on
payment of a separate fee for each such categories.
(4) On receipt of such application the committee
after making such enquiries, as may be considered
necessary may if it finds no ground to refuse the
licence asked for grant him the licence applied for in
Form 36. On the grant of such licence, the applicant
shall execute an agreement in such form as the
committee may determine, agreeing to conform with
these rules and the bye-laws.
(5) The committee may, after giving the applicant an
opportunity of being heard for reasons to be
recorded in writing refuse to grant a licence to any
person who is either not solvent or otherwise
disqualified under the Act, rules or bye-laws, or
whose operations in the market area are not likely to
further the efficient working of the market under the
control of the committee.
(6) A licence granted under sub-rule (4) shall, unless
renewed remain in force till the ends of tenth market
year including the year in which it has been granted.
(7) Every application for renewal of a licence shall be
made one month before the expiry of its period.
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(8) If the application for renewal is made in
accordance with sub-rule (7), the applicant shall be
deemed to be duly licensed until orders are passed
on the application.
(9) The names of all licensed commission agents,
brokers, processors, exporters, importers, ginners,
pressers, crushers, stockists and retail traders shall
be entered separately in a register to be maintained
for the purpose."
14. This rule, like Section 8, applies to individuals
and entities engaged in the commercial trade or
marketing of agricultural produce. The petitioners, however,
are not traders or a market functionary; it is purchasing
food grains solely for feeding its poultry. Since these food
grains are not being bought for sale or commercial
transaction but for personal agricultural use, Rule 76 is
inapplicable to the petitioners operations.
15. The petitioners are not operating as a trader,
processor, or warehouseman, nor is it involved in any
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commercial marketing activity in a regulated market.
Therefore, the authorities cannot insist that the petitioners
apply for a license under Rule 76, as its activities fall
outside the scope of the APMC Act's regulatory framework.
16. The APMC Act, as outlined, is primarily
concerned with the regulation of trade and marketing of
agricultural produce in the context of commercial
transactions. It applies to entities that engage in the buying
and selling of agricultural products within the regulated
markets, such as traders, commission agents, and others
involved in commercial activities. In this case, the
petitioners are purchasing food grains solely for its own
use, not for any trading or resale purposes. The activity of
purchasing food grains to feed livestock (in this case,
poultry) is distinct from commercial transactions and does
not fall under the regulatory ambit of the APMC Act.
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17. The Court finds that the licensing requirement
under the APMC Act is aimed at regulating the trade of
agricultural produce. It is not intended to cover purchases
made for personal agricultural use, such as feeding birds in
a poultry farm. The petitioners operations do not involve
the resale or commercial distribution of food grains, and
therefore, the insistence on obtaining a license is
misplaced. The impugned endorsement and the notices
requiring the petitioners to apply for a license under the
APMC Act and to furnish accounts are found to
be erroneous and without legal justification.
Conclusions:
18. The actions of the APMC officials, insisting that
the petitioners apply for a license under the Karnataka
APMC Act and furnish accounts, are clearly illegal and
without legal foundation, as they exceed the authority
granted under the Act. The APMC Act and the corresponding
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Rules regulate the commercial marketing of agricultural
produce in designated market areas. Section 8(b)(ii) of the
APMC Act specifically governs the operations of traders,
commission agents, and other market functionaries
involved in the marketing of notified agricultural produce.
In the present case, the petitioners are engaged in poultry
farming, an activity classified as agriculture under Section
2(1)(d) of the Karnataka Land Reforms Act. The purchase
of food grains for feeding its own poultry does not
constitute marketing or commercial trading; rather, it is for
personal agricultural use. The proviso to Section 8(b)(ii) of
the APMC Act explicitly exempts purchasers who buy
agricultural produce for domestic consumption, which in this
case extends to agricultural use like feeding poultry. In the
case of State of Karnataka vs. E. Bhaskar Rao1, this
Court reaffirmed that poultry farming is an agricultural
activity, irrespective of the scale of operations, and falls
under the definition of agriculture, exempting it from the
1
(2003) SCC Online Kar 146
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commercial licensing requirements of the APMC. Similarly,
in Canara Bank vs. M.D. Chikkaswamy2, the Court ruled
that loans given for poultry farming were considered for
agricultural purposes, recognizing poultry farming as part of
agricultural activity. Therefore, insisting on a license for the
petitioner, who is purchasing food grains for personal
agricultural use, is an unlawful overreach by APMC officials.
They must refrain from exceeding their statutory authority
and applying the law in situations where it is not applicable,
as doing so amounts to an abuse of power, unsupported by
the APMC Act and the relevant case law.
19. In light of the above findings, the Court
concludes that the endorsement and the notices, requiring
the petitioners to obtain a license under the APMC Act and
to furnish accounts, are unsustainable in law. The
petitioners activity of purchasing food grains for feeding
poultry is classified as an agricultural activity, which does
2
(2001) SCC Online Kar 562
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not require licensing under the APMC Act. Therefore, the
endorsement and the notices issued by the
respondent/APMC are thus quashed.
20. For the foregoing reasons, this Court proceeds to
pass the following:
ORDER
(i) The writ petitions are allowed;
(ii) The impugned endorsement and the notices issued by the respondent/APMC respectively are hereby quashed;
(iii) The petitioners are not required to furnish accounts and obtain a license under the APMC Act for the purchase of food grains used in its poultry farming activities;
(iv) No orders as to costs.
(v) Pending I.As., if any, stand disposed of.
(SACHIN SHANKAR MAGADUM) JUDGE CA