Holding

A market committee may levy a market fee even if all facilities are not fully in place, provided some services are rendered and the quid pro quo need not be mathematically exact.

Summary

The Agriculture Market Committee of Rajam, created under the Andhra Pradesh Agricultural (Produce & Livestock) Markets Act, 1966, levied a market fee on traders. The Rajam Jute and Oil Millers Association sued, claiming the Committee had not provided any facilities in the notified market area and therefore had no right to collect the fee. The trial court decreed in favour of the Association, but the District Judge and later the Andhra Pradesh High Court dismissed the suit, holding the Committee entitled to levy the fee. On appeal, the Supreme Court held that while a quid pro quo between fee and services is required, exact proportionality is not necessary; the Committee had already provided several services and was in the process of extending others, and the Association offered no evidence to the contrary. Consequently, the Court allowed the appeal, set aside the High Court’s decision, and dismissed the suit.

Issues considered

Whether a market committee can levy a market fee when all facilities and amenities are not yet fully provided in the notified market area.
Whether the requirement of quid pro quo between the fee and services demands exact proportionality.
Whether the plaintiff’s failure to produce evidence on the absence of facilities defeats its claim.
Whether the principle of res judicata applies to the fee levy issue raised in a prior writ petition.

Subjects

market feequid pro quoagricultural market committeefacilities provisionlevy of feeres judicatamarket committee fundAndhra Pradesh Agricultural Markets Act

Judgment

A AGRICULTURE MARKET COMMITTEE. RAJAM AND ANR.
v.
RAJAM JUTE AND OIL MILLERS ASSOCIATION, RAJAM

FEBRUARY 25, 2003

B [M.B. SHAH AND ARUN KUMAR, JJ.]

Andhra Pradesh Agricultural (Produce and Livestock) Markets Act,
1966-Sections 12 and 15-Market fee or cess-Entitlement of Market
C Committee to levy-Market Committee in the process of providing facilities in
the notified market area-Suit for injunction from levy on the ground that all
the facilities were not provided-During pendency of suit facilities completed
and fee paid by Association-Suit decreed-On appeal held that Market
Committee entitled to levy fee-High Court held that committee not entitled
since facilities were not provided-On appeal held: While quid pro quo
D between levy of fee and facilities provided in the notified market area is
necessary, it cannot be in exact proportion to the fee levied-Existence of all
the required services before levy offee is not necessary-However in the facts
of the case challenge to levy of market fee has no fo,ce.

Plaintiff-respondent filed a suit for declaration to the effect that
E defendant-appellant had no right to levy, demand and collect any market
fee from the members of the plaintiff-association because the market
committee had failed to provide any facilities in the market area. The case
of the defendant-market committee was that market committee was in its
nascent stage and it had already started various services in the market
F area and the process for providing further services were already on.
Plaintiff did not lead any evidence regarding availability of facilities and
amenities. Defendant Committee led oral evidence on this point.

Trial Court held that the facilities and amenities available were not
sufficient so as to hold that the facilities and amenities had been made
G available by the Market Committee and hence decreed the suit. District
Judge dismissed the suit holding that the facilities had been made
available; and that the Committee was discharging its functions and hence
it was entitled to levy market fee. On appeal High Court upheld the
decision of Trial Court. Hence the present appeal. Respondent-Association
admitted that during pendency of the suit, it had started paying market
H 320
L
AGRICULTURE MKT. C0~1T\11TTEE, RAJ AM 1·. RAJ AM JUTE AND OJL MILLERS AS SON
321
fee, after all the facilities were provided by the Committee. A
Allowing the appeal, the Court

HELD: I. While quid pro quo between levy of fee and facilities
provided in the notified market area is necessary, exactitude in such
matters is neither required nor possible. The extent of service/amenities B
cannot have correlation with th• fee levied. Secondly, the market
committees can continue their efforts for providing the amenities
depending on availability of funds with them. It is not that all the required
-; services must be in place before a fee can be levied. (333-A-Bl

Sreenivasa General Traders and Ors. v. State of Andhra Praddh and C
Ors., (1983] 4 SCC 353, relied on.

2.1. In the instant case, the levy of market fee by the Market
Committee was challenged only on the ground that no basic amenities or
services were provided in the notified market area and therefore the D
Market Committee had no right to levy, demand and collect the market
fee. From the evidence on record it is evident that the Market Committee
had made provision for certain services and' facilities in the notified market
area and efforts were being made for extending the services. The Market
Committee had recently come into existence and completion of all the
intended services and facilities takes time. Whether particular services and E
\ amenities are available at a given place and the extent thereof are questions
of fact which require to be proved or demolished on the basis of evidence
to be led by the parties concerned. Sine~ the plaintiff has not led any
evidence whether oral or documentary ~n support of its case, the Court is
left with no option but to accept the evidence of defendant which shows
that some services and facilities in the notified market area were already F
available while arrangements were being made for various other facilities
and services. The foundation for the case set up by the plaintiff is not
available on record. The law is well settled that though quid pro quo is
required in relation to a fee which is charged and collected by a market
committee, the quid pro quo cannot be in exact proportion to the fee levied. G
Mathematical proportions are not possible in such matters. Some services
and amenities were already provided for in the notified market area which
fully justified the levy of market fee. (333-F-H; 334-A-C(

2.2. The present is not a case of total absence of facilities and
amenities in the market area. It has come in evidence that steps are being H
\
,)

322 SUPREME COURT REPORTS [2003] 2 S.C.R.

A taken to improve and extend the services and the work was actually in
progress in that behalf. In fact there is an admission on the part of the
plaintiff-association that after all the facilities were provided in the market
they had started paying the market fee as levied by the Market Committee.
This is an admission of the fact that the steps for providing al! the requisite
facilities which were on when the suit was filed, came to be completed
B during the pendency of the suit. Therefore, so far as the present case is
concerned, the challenge to levy and collection of market fee does not
appear to be having any force. [329-G, H; 330-A, B]

Rameshchandra Kachardas Porwal and Ors. v. State of Maharashtra
C and Ors., [1981] 2 SCC 722, distinguished.

Lakhan Lal and Ors. etc. v. State of Bihar and Ors. etc. 11968] 3 SCR
534 and Kewal Krishan Puri and Anl'. v. State of Punjab and Ors., 11980] 1
sec 416, referred to.
D CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1495of1993.

From the Judgment and Order dated 27.8.1993 of the Andhra Pradesh
High Court in W.A. No. 517 of 1993.

Ms. K. Amreswari and R.F. Nariman, T.V. Ratnam, K. Subba Rao, Ms.
E Anjani Aiyagiri, A.V. Rangam, A. Ranganadhan, Buddy A. Ranganadhan, Y.
Prabhakara Rao, N. Sreedhar and K. Ram Kumar for the appearing parties.

The Judgment of the Court was delivered by

ARUN KUMAR, J. This appeal is directed against the judgment dated
F 20th February, 1992 passed by the Andhra Pradesh High Court allowing the
second appeal and decreeing the suit filed by the piain(iff Association,
respondent herein. Briefly, the facts are that respondent filed a suit for
declaration and injunction in the court of Subordinate Judge, Rajam, District
Srjkakulam, An<lhra Pradesh. The plaintiff sought a de<;Jaration to the effect
th.at the defendant - Market Committee had no right .to levy, demand and
G collect any market fee from the me!J!bers of the plaintiff -Association" An
injunction was also sought to restrain the defendant - Committee from
collecting market fee from the members of the plaintiff - Association. The
case set up by the plaintiff as per the ·plaint was that Rajam Sub-Taluk was
under the jurisdiction of the Ponduru Agricultural Market Committee. On
H Rajam Sub-Taluk being upgraded as a Taluk, a separate Agricultural Market
AGRICULTURE MKT. COMMITTEE, RAJAM "· RAJ AM JUTE AND OIL MILLERS ASSON. [ARUN KUMAR, J.J J 23

Committee was constituted for the Rajam Taluk with effect from 24th A
December, 1979. The Market Committee was constituted under the Andhra
Pradesh Agricultural (Produce & Livestock) Markets Act, 1966 (hereinafter
referred to as the 'Act'). The primary object of the Act is to establish a
market .within a notified area. The market committees which are constituted
under the Act have to provide facilities like sheds, storage, accommodation, B
platforms, facilities for weighing and gra<ling of the agricultural produce etc.
The Committee has also to engage staff to supervise operations of the traders
in the market area. The market committee is to ensure that transactions in the
specified commodities are for the benefit of purchasers and seflers of such
commodities. In the process the committees are supposed to regulate the
purchase and sale of agricultural produce by providing a market place and all C
the facilities necessary for proper conduct of the trade in agricultural produce
in the market place so as to eliminate the middleman and to ensure healthy
trade practices. By eliminating the middleman the committee tries to protect
the ·purchasers of such agricultural produce, live stock etc. from exploitation
and to ensure to them a fair price for their produce. D
According to the plaintiff, the Market Committee had failed to provide·
any facilities in the IT'arket area so much so even a market yard had not been
set up, no services or amenities were being provided IQ the traders in the
market area and therefore the Market Committee was not entitled to levy,
demand and collect the market fee or cess from the members of the plaintiffs. E
In the written statement filed on behalf of the market committee, it was
pointed out that the market committee was in its nascent stage, it had come
into existence on the declaration of Rajam as a separate Taluk only on 24th
December, 1979. It had already taken possession of the site comprising 8.50
acres on 28th November, 1981 for establishment of a market yard at Rajam F
by incurring an expenditure of about Rs. 28,000. The process was on for
construction of godowns, weighing sheds, platforms etc. The Market
Committee had appointed corporates to attend to the work of grading of the
market produce. Supervising staff had been appointed to inspect the premises
of the traders to ensure proper weighment. Thirteen persons had been licensed
for the weighment job. Thus, according to the market committee, it had G
already started various services in the market area and the process for providing
further services was already on. The levy, demand and collection of market
fee by the defendant was sought to be justified on this basis. The defendant
also raised a plea that the plaintiff Association had filed a Writ Petition in the
High Court challenging increase in the inarket fee. The Writ Petition had H
been dismissed. In view of the dismissal of the Writ Petition, an argument
324 SUPREME COURT REPORTS (2003] 2 S.C.R.

A was raised by the learned counsel for the Market Committee that the suit was
barred by the principles of resjudicata. Although the issue raised in the Writ
Petition was only with respect to enhancement of the market fee, yet it was
subrn itted that the plaintiff could have agitated the question of levy of market
fee in the said petition and since it failed to do so, the principle of constructive
B res judicata would come into play. It would be deemed that the point which
was available to the plaintiff Association for being raised at that stage, was
given up. The said question therefore, could not be agitated in the present
suit. The learned counsel for the plaintiff did not have any convincing reply
to this argument. However, while going through the record, we find that the
earlier Writ Petition being W.P. No. 1184178 was filed when Rajam was
C under the erstwhile Ponduru Agricultural Market Committee. It is possible
that the argument regarding non-availability of facilities and amenities in the
market area was .wt available then because Ponduru Agricultural Market
Committee which had jurisdiction over Rajam Sub-Taluk, might have been
in existence since long and the requisite facilities in the notified market area
D were possibly available. Since there is no material on record, in this connection,
we are not inclined to non-suit the plaintiff on this ground. The only question
left for decision in the present appeal is as to whether there has to be a quid
pro quo for the levy of fee in the sense that services and facilities ought to
be available in the market area before a fee can be levied and if so the extent
to which such services and amenities be available. Jn other words, it is to be
E decided as to whether the fee levied by a Market Committee in pursuance of
power conferred on it under the relevant statute i.e., A.P. Agricultural (Produce
& Livestock) Markets Act, 1966, is to commensurate with or in proportion
to the services and facilities provided by the Market Committee to the traders
and purchasers in the market area. To facilitate consideration of this question,
F it will be appropriate to notice relevant provisions of the Act.

Section 2(vi) defines market to be a market established under sub-
section (3) of Section 4 and includes market yard and any building therein.

Sub-Section (vii) defines a Market Committee as a Committee constituted
G or reconstituted under the provisions of the Act. Notified market area according
to sub-section (xii) of Section 2 means any area declared to be a market area
by notification under Section 4.

Section 4 of the Act contains provision for constitution of a Market
Committee and for declaration of a notified market area. The Government is
H required to constitute by a notification a Market Committ~e for every notified

I
,; AGRICULTURE MKT. COMMITTEE, RAJAM •·. RAJAMJUTE AND OIL MILLERS ASSON. [ARUN KUMAR, J] 325

area. The Market Committee so constituted shall be a body corporate having A
perpetual succession and a common seal with power to acquire, hold and
dispose of property. It is the duty of the Market Committee to enforce the
provisions of the Act and the rules and the bye-laws thereunder in the notified
area. A Market Committee under sub-section (iii) is required to establish
such number of markets as the Government may from time to time direct for
the purchase and sale of any notified agricultural produce, livestock or products B
of livestock. The Market Committee is required to provide such facilities in
the market as may be specified by the Government from time to time by a
general or special order.

Section 12 contains provision regarding levy of fee by the Market C
Committee. It is reproduced as under :

"12(1) : The market committee shall levy fees on any notified
agricultural produce, livestock or products of livestock purchased or
sold in notified market area [at such rate, not exceeding [two rupees]
as may be specified in the bye-laws] for every hundred rupees of the D
aggregate amount for which the notified agricultural produce, livestock
or products of livestock is purchased or sold, whether for cash or
deferred payment or other valuable consideration. "

Section 14 (1) provides for Market Committee Fund :

.
; "All moneys received by a Market Committee shall be paid into
a fund to be called 'The Market Committee Fund' and the said Fund
E

shall be deposited, in a single banking account. with the nearest
Government treasury, or with the sanction of the Government, in a
Bank. All expenditure incurred by the market committee under or for
the purpose of this Act shall be defrayed out of the said Fund; and F
any surplus remaining after such expenditure shall be invested in

- such manner as may be prescribed."

Section 15 enumerates the purposes for which the Market Committee
funds may be expended which are as under:
G
"Section 15 : Subject to the provisions of Section 14, the Market
Committee Fund shall be expended for all or any of the following
purposes, namely :-(i) the acquisition of site for the market ;
(ii) the establishment, maintenance and improvement of the market;
(iii) the construction and maintenance of buildings necessary for the H
326 SUPREME COURT REPORTS [2003] 2 S.C.R.

A market and for the health, convenience and safety of the persons
using the market and maintenance of buildings under the control
of the market committee;
(iv) the provision and maintenance of standard weights and measures;
(v) the pay, pensions, leave allowances, gratuities compassionate
B allowances and contribution towards leave allowances, pensions
or provident fund of officers and servants employed by the market·
committee;
(vi) the payment of interest on loans that my be raised for purposes
of the market and the provisions of a sinking fund in respect of
c · such loans;
(vii) the collection and dissemination of information regarding all
matters relating to crop statistics and marketing in respect of
notified agricultural produce, livestock and products of livestock;
(viii)schemes for the extension of cultural improvement of notified
D
agricultural produce, livestock and products of livestock within
the notified area, including the grant, subject to the approval of
the Government, of financial aid to the schemes for such extension
or improvement within such area, undertaken by other bodies or
individuals;
E (ix) propaganda for the improvement of agriculture, livestock and ..
products of livestock and thrift;
(x)

(xi) the promotion of grading services;
F (xii) measures for the preservation of foodgrains;
(xii) .......... .
(xiii)such other purposes as may be specified by the Government by
general of special order."
G It is· the case of the plaintiff that the Market CommiUee had failed to
establish a market yard within the notified market area. The Committee had
also to provide facilities like weighing of market produce/commodities, laying
roads, providing storage space, platforms for grading and displaying of the
products. lnspite of passage of considerable time after its constitution, the
H defendant Committee had not made provision for these facilities and amenities
AGRICULTURE MKT. COMMITTEE. RAJ AM"· RAJAM JUTE AND OIL MILLERS AS SON. (ARUN KUMAR, I.] J 27

in the market area. On account of these failures, the Market Committee was A
not entitled to levy any fee or cess on the members of the plaintiff Association.
A fee or cess has an element of quid pro quo which was missing in the
present case. Therefore, the levy of fee was illegal according to the plaintiff.
The immediate provocation for filing of the suit was the two notices dated
25th May, 1982 and 8th December, 1982 issued by the Market Committee to B
the members of the plaintiff-Association demanding market fee from the
members. As already noted, the trial court accepted the case set up by the
plaintiff. However, on appeal the learned District Judge, Srikakulam allowed
the appeal and dismissed the suit filed by the plaintiff Association vide his
judgment dated 9th October, 1990. The plaint:ff preferred a Second Appeal
against the judgment of the District Judge. The High Court vide its impugned C
judgment dated 20th February, 1992 accepted the appeal and decreed the suit
of the plaintiff upholding the allegation of the plaintiff that the Market
Committee had failed to provide necessary services and amenities in the
notified market area and therefore it was not entitled to levy and collect the
market fee.
D
So far as the factual aspect of availability of facilities and amenities in
the market is concerned, the plaintiff did not lead any evidence at all. We are
left with only the averments in the plaint about the absence of facilities and
amenities in the notified market area. There is nothing on record to support
the plaint averments. On the other hand, apart from controverting the plea of E

- the plaintiff regarding absence of facilities and amenities in the market area
in the written statement and stating the necessary facts therein, the defendant
led oral evidence on the point by examining a witness who was an employee
of the Market Committee. The witness stated that after formation of the
Market Committee, Government notified the market area as·per Section 4(4).
of the Act. He produced a copy of the notification as Exh. B.2. According F
to the witness, the members of the plaintiff Association made applications
regarding business in their premises. The Committee issued licenses to all the
traders to carry on business in their respective produce. All the traders were
sending monthly statements of the business carried on by them from their
respective premises. The traders had to pay a market fee at the rate of 1% on G
the basis of their turnover in the market. The market Committee had taken
possession of a site comprising an area of 8.50 acres on 28th November,
1981 for establishment of regulated market yard at Rajam. Tenders had been
called for construction of the market yard. The godowns, grain platforms,
weighing sheds, grading platforms were in operation. Wide publicity was
being given about the benefit of grading. The Market Committee also appointed H
328 SUPREME COURT REPORTS [2003] 2 S.C.R.

A supervisory staff to inspect the premises and to ensure that there was proper
weighment of the commodities being traded in the market. The supervisors
were, besides. ensuring proper weights, verifying the proper payment to the
ryots by the traders in respect of the goods sold by the ryots to the traders.
The· Market Committee was exhibiting price list in respect of notified
B agricultural produce on the notice board. He stated in the cross-examination
that the market yard was already under construction. The witness was cross-
'
examined at length but nothing could emerge to show that his statement
about the services provided in the market was not correct.

Though according to the trial court and the High Court, the above
C facilities or amenities available in the notified market area were not sufficient
so as to hold that facilities and amenities had been made available by the
Market Committee in the notified market area, the learned District Judge,
who ordered dismissal of the suit, accepted that such facilities had been· made
available in the notified market area and this entitled the committee to levy
market fee in terms of Section 12 of the Act. The learned District Judge
D noted from the evidence of DW I that no suggestion had been put to him in
the cross-examination that by 1982 the market yard was not having all the
basic amenities. According to the learned District Judge, it was clear from the
evidence of the said witness that amenities were being provided in the notified
market area and the construction of building was in progress. Another fact
E which emerged from the evidence of DW I was that Market Committee was
giving loans to the growers or ryots by way of cash, loans or by way of
supply of manures o.n credit. Thus the Market Committee was discharging its
functions.·

The question is whether the market Corr..nittee was not entitled to levy,
F demand and collect market fee till all the facilities and amenities are fully
and completely in place. The facilities already provided for in the notified
market area in the present case have been enumerated hereinbefore. What
remains to be considered is the extent to which services, facilities and amenities
ought to be available in the market area before the market fee can be levied.

G The validity of notifications declaring the market area and establishing
the market for notified agricultural produce and the legality of the levy of
market fee came up for consideration before a Constitution Bench of this
Court in Lakhan Lal and Ors. etc. v. State of Bihar and Ors. etc., [1968] 3
SCR 534. This was a case under the Bihar Agricultural Produce Markets Act,
H 1960. On the question of levy and collection of the market fee, this court
l
AGRICULTURE MKT. COM,llTTEE. RAJAM •·. RAJAM JUTE AND OIL MILLERS ASSON. [ARUN KUMAR.JJ)29

observed that the fee collected by the Market Committee was not excessive A
and it formed part of the Market Committee fund which was set apart and
earmarked for the purposes of the Act such as elimination of unhealthy
market practices, ensuring the correct weight and grading, dissemination of
information regarding prices cf agricultural produce etc. It was observed that
there was sufficient quid pro quo for the levy.
B
Another Constitution bench judgment of this court in Kewal Krishan
Puri and Anr. v. State of Punjab and Ors., [1980] I SCC 416 while dealing
with provisions of the Punjab Agricultural Produce Markets Act, 1961, held
that element of quid pro quo must exist for the payer of the fee for the special
services rendered. The bench noted the well recognized distinction between C
tax and fee. A fee is a charge for special service rendered to individuals by
the governmental agency and therefore for levy of fee an element of quid pro
quo for the services rendered was necessary. Service rendered did not mean
any personal or domestic service. It meant service in relation to the transaction,
property or the institution in respect of which the fee is paid. The court noted
the literal meaning of the phrase quid pro quo as "one for the other" meaning D
thereby "you charge fee for the service." A significant observation contained
in the said judgment which is relevant for our purposes is: "the eleme.. t of
quid pro quo may not be possible, or even necessary, to be established with
arithmetical exactitude but even broadly and evenly it must be established,
with some amount of certainty, reasonableness or preponderance of probability E
that quite a substantial portion o.f the amount' of fee realized is spent for the
special benefit of its payers. Each case has to be judged from a reasonable
and practical point of view for finding an element of quid pro quo".

In Rameshchandra Kachardas Porwal and Ors. v. State of Maharashtra
and Ors., [1981] 2 sec 722, this court observed that a place ought not be· p
notified as a market unless it is ready for use as a market with all reasonable
facilities and conveniences. A view was expressed that a notification may be
quashed if nothing had been done beyond publishing a notification. In cases
where some facilities and conveniences have been provided for while some
other remain to be provided, the court may instead of quashing the notification
give appropriate time bound directions for providing necessary facilities and G
conveniences. The present is not a case of total absence of facilities and
amenities in the market area. It has come in evidence that steps are being
taken to improve and extend the services and the work was actually in progress
in that behalf. In fact there is an admission on the part of the plaintiffs-
association that after all the facilities were provided in the market they had H
330 SUPREME COURT REPORTS (2003) 2 S.C.R.

A started paying the market fee as levied by the Market Committee. This is an
admission of the fact that the steps for providing all the requisite facilities
which were on when the suit was filed, came to be completed during the
pendency of the suit. Therefore; so far as the present case is concerned, the
challenge to levy and collection of market fee does not appear to be having
B any force.

In Sreenivasa General Traders and Ors. v. State of Andhra Prasesh
and Ors., (1983) 4 SCC 353, the challenge was to the constitutional validity
of the increase in the rate of market fee levied by the market committees in
the State of Andhra Pradesh under sub-section (I) of Section 12 of the Act.
C There was no challenge to levy of market fee, only the increase in rate of the
fee was under challenge. The challenge was based on the argument that there
was oo quid pro quo for the increase in rate. We must note here that levy of
market fee under Section 12( I) is correlated to the purposes mentioned in
Section 15 for which the proceeds of the Market Committee Fund are to be
expended. All the purposes are beneficial to the growers and the traders.
D There was no material to show that the market committees were rendering no
service or were incurring unauthorized expenditure. The court also referred
to earlier decisions and discussed the same.

Regarding Kewal Krishan Puri's case (Supra), it was observed that the
case did not lay down any legal principle of general applicability. The fact
E was that the Market Committees in Punjab were making money by way of
collection of market fee and had huge surplus funds. The surplus funds were
being diver:ted by the State Government to purposes other than those under
the statute. Though the funds were being utilized for laudable public purposes,
yet the utilization was outside the purpose spelled out in the statute. It was
p ·observed :

"The traditional view that there must be actual quid pro quo for
a fee has undergone a sea change in the subsequent decisions. The
distinction between a tax and a fee lies primarily in the fact that a tax
is levied as part of a common burden, while a fee is of payment of
G a specific benefit or privilege although the special advantage is
secondary to the primary motive of regulation in public ,interest. .If 1
the element of revenue for general purpose of the State pr.edominates,
the levy becomes a tax. In regard to fees there is, and must always
be, correlation between the fee collected and the service intended to
be rendered. In determining whether a levy is a fee, the true test must
H
AGRICULTURE MKT COMMITTEE, RAJ AM"· RAJAM JUTE AND OIL MILLERS ASSON. [ARUN KUMAR, J.] JJ f
be whether its primary and essential purpose is to render specific A
services to a specified area or class; it may be of no consequence that
the State m·ay ultimately and indirectly be benefited by it. The power
of any legislature to levy a fee is conditioned by the fact that it must
be "by and large" a quid pro quo for the services rendered. However,
correlationship between the. levy and the services rendered (sic or) B
expected is of general character and not of mathematical exactitude .
. All that is necessary is that there should be a "reasonable relationship"
between die levy of the fee and the services rendered."

While dealing with the question of difference between a tax and a fee,
the Court observed :
c
"There is no generic difference between a tax and a fee. Both are
compulsory exactions of money by public authorities. Compulsion
lies in the fact that payment is enforceable by law against a person
in spite of his unwillingness or want .of consent. A levy in the nature
of a fee does not cease to be of that character merely because there D
is an element of compulsion or coerciveness present in it, nor is it a
postulate of a fee that it must have direct relation to the actual service
rendered by the authority to each individual who obtains the benefit
of the service. It is now increasingly realized that merely because the
collections for the services rendered or grant of a privilege or licence
are taken to the consolidated fund of the State and not separately E
appropriated towards the expenditure for rendering the service is not
by itself decisive. Presumably, the attention of the Court in the Shirur
Mutt case was not drawn to Article 226 of the Constitution. The
Constitution nowhere contemplates it to be an essential element of
fee that it should be credited to a separate fund and not the consolidated F
fund. It is also increasingly realized that the element of quid pro quo
in the strict sense is not always a sine qua non for a fee."

On the question of increase in market fee, the Court had to say :

"In the present case, there is no allegation anywhere by any of the G
petitioners, nor was any contention advanced that there was any
unauthorized expenditure by any of the market committees for
purposes not authorized by the Act. There is only a bare assertion on
their part that there are surplus funds available with the market
committees and therefore the increase in the rate of market fee from
50 paise per hundred rupees to rupee one was without lawful H
332 SUPREME COURT REPORTS [2003] 2 S.C.R.

A justification. From the material on record it is quite apparent that the
income from the market fee derived by some of the market committees
is not sufficient to meet the expenditure incurred by them. That apart,
when the petitioners concede that they do not challenge the levy of
market fee at 50 paise per hundred rupees in the year 1972, there can
be no basis for challenging the increase in the rate of market fee from
B 50 paise to rupee one in 1978. Surely the cost of rendering services
has correspondingly increased with the fall in the value of rupees. In
the economic sense, 50 paise of I 972 is certainly equivalent to at
least rupee one of today, if not more."

There is no material placed on record by the petitioners to show
c that the fuarket committees are rendering no service. Under the scheme
of the Act, there are certain obligatory duties of a market committee.
Sub-section (3) of Section 4 provides that every market committee
shall establish in the notified area such number of markets as the
Government may, from time to time, direct for the purchase and sale
D of any notified agricultural produce, livestock or products of livestock
and shall provide, such facilities in the market as may be specified by
the Government from time to time by a general or special order.
Chapter V provides for various regulatory measures in Rules 54 to 73
for the control of a market in that correct weighments would be
secured, storage facilities provided and equal powers of bargaining
E assured so that the growers may bring their agricultural produce,
livestock and products of livestock to the market and sell them at a
reasonable price. There was not a whisper during the course of the
arguments that the market committees were not providing the services
as enjoined by Rules 54 to 73."
F
Another important aspect dealt with in this case is about when the
services are to be completed. The following observations are pertinent :

"It will be noticed that these facilities are to be provided by the
market committees in course of time 'as and when funds permit'. It
G is needless to stress that the question of providing these facilities
would depend on the financial capacity of each market committee.
That would depend on whether there are sufficient funds available at
its disposal in the market committee fund."

The observations noted above in Sreenivasa's case have simplified our
H task to a great extent. It follows that while quid pro quo between levy of fee
;
.\.
AGRICULTURE MKT. COMMITTEE, RAJAM '" RAJ.'M JUTE ANO OIL MILLERS ASSON. [ARUN KUMAR. J.] 333

and facilities provided in the notified market area is necessary, exactitude in A
such matters is neither required nor possible. The traditional view about
actual quid pro quo has undergone a sea change. The extent of service/
amenities cannot have correlation with the fee levied. Secondly, the market
committees can continue their efforts for providing the amenities depending
on availability of funds with them. It is not that all the required services must B
be in place before a fee can be levied.

It was in the case of Kewal Krishan Puri (Supra) that this Court said
that for a valid levy of market fee on the agricultural produce bought or sold
by the licensees in a notified market area, the amount of fee realized must be
earmarked for rendering services to the licensees in the notified market area C
and a good and substantial portion of it must be shown to be expended for
this purpose. However, gradually the concept of expending a good and
substantial portion of the market fee collected by the market committee has
been toned down. Most of the relevant statutes have provision for creation of
Market Committee Funds. All market fee which is collected goes into .the D
Fund. The statutes also contain provisions as to how the Fund is to be utilized.
The powers of market committees to utilize the Funds are thus circumscribed
by the statutes. The Funds are utilized only for the facilities in the markets
and for the benefit of the members, producers, growers and traders. When the
Funds are in any case to be utilized for specified purposes, the observation
in Puri' s case to the effect that a good and substantial portion of it must be E
shown to be expended, does not have much significance. In Sreenivasa Traders
and other later cases, it has been accepted that the market committees may
keep on extending the services and facilities in the notified market area as per
availability of funds with them.

In the case in hand, the levy of market fee by the market Committee F
was challenged only on the ground that no basic amenities or services were
provided in the notified market area and therefore the Market Committee had
no right to levy, demand and collect the market fee. We have noted from the
evidence on record that the market Committee had made provision for certain
services and facilities in the notified market area and efforts were being made G
for extending the services. The market committee had recently come into
existence and completion of all the intended services and facilities takes time.
It has clearly emerged from the evidence of DW I that steps were being
taken for extending the services and facilities in the I)larket area. The plaintiff
has led no evidence to contradict the defendant's evidence. Whether particular
services and amenities are available at a given place and the extent thereof H
334 SUPREME COURT REPORTS [2003] 2 S.C.R.

A are questions of fact which require to be proved or demolished on basis of
evidence to be led by the parties concerned. Since the plaintiff has not led
any evidence whether oral or documentary in support of its case, tile Court
is left with no option but t.o accept the evidence of defendant which shows
that some services and facilities in the notified market area were already
B available while arrangements were being made for various other facilities and
services. The foundation for the case set up by the plaintiff is not available
on record. The law is well settled that though quid pro quo is required in
relation to a fee which is charged and collected by a marker committee, the
quid pro quo cannot be in exact proportion to the fee levied. Mathematical
proportions are not possible in such matters. We have accepted that some
C services and amenities were already provided for in the notified market area
which fully justified the levy of market fee. We are thus unable to agree with
the finding of the High Court that the market committee had failed to provide
any services or amenities in the notified market area. The findings of the
High Court are accordingly set aside. The appeal is allowed. As a result of
D this, the suit filed by the plaintiff, respondent herein, shall stand dismissed.
There will be no order as to costs.

Appeal allowed.