Holding

Under Rule 29(7) clauses (b) and (c), weighing or delivery of agricultural produce within the notified market area deems the transaction to be ‘bought or sold’ there, rendering the Market Committee competent to levy fees.

Summary

British India Corporation Ltd., whose head office in Kanpur purchased raw wool and sent it to its Dhariwal mill, was assessed market fees by the Dhariwal Market Committee under the Punjab Agricultural Produce Markets Act, 1961. The company argued that no purchase or sale occurred within the Committee’s notified area, contending the Committee lacked jurisdiction to levy fees. The High Court’s single judge quashed the demand, but the Division Bench reversed, holding that the transaction fell within the Act because the wool was weighed and delivered in the market area, invoking Rule 29(7) clauses (b) and (c). On appeal, the Supreme Court affirmed the Division Bench, clarifying that delivery and/or weighment within the market area are essential for a sale to be deemed to have occurred there, thereby making the Committee competent to levy fees. The appeal was dismissed.

Issues considered

Whether the Market Committee is competent to levy market fees on raw wool purchased by the appellant’s head office but weighed and delivered within the notified market area under Section 23 of the Punjab Agricultural Produce Markets Act, 1961.
Whether Rule 29(7) of the Punjab Agricultural Produce Markets (General) Rules, 1962, brings such transactions within the definition of ‘bought or sold’ in the notified market area.

Legislation cited

Punjab Agricultural Produce Markets Act, 1961s. 21, s. 23, s. 41(2)
Punjab Agricultural Produce Markets (General) Rules, 1962s. 29(7)

Subjects

market feeagricultural produce markets actjurisdictionweighmentdeliveryRule 29(7)Section 23Punjabraw woolMarket Committeelevy of fees

Judgment

159
A
BRITISH INDIA CORPORATION LTD.

v.
MARKET COMMITTBB, DHAR!WA.L & ANOTHBR
B
December 16, 1982

[V.D. TULZAPURUR AND A. VARADARAJAN, JJ.]

Punjab Agdcultural Produce Mark1ts Act, 1961 Section 23-Ru/e 19 (7)-
Scope of-Goods purcha1ed by head office but weighed and delivered wilhin 1he c
market comn,it11e aria-If attract fee.

The appelJant, with its head office at K1npur in U.P .. runs two woollen
mills-one of which is in Dha'riwal in the State of Pu 1jab. The raw material
purchased by the head office at K<1.npur wa~ sent from variou:i centres J to the
. mills and no raw material used in the mills was purchased locally :,or within the
area of the Market Committee.
D
On demand of market fee bf the Committee under sectjoo 21 of the
Punjab Agricultural Produce Markets Act, 1961 the appellant stated t~at no
purchase or sale of the raw material received by the mills took place within the
area of the Market Committee and that for this reas:Jn the C::>mnittee had jjno
jurisdiction to levy any fee in respect of those materials.

A Writ Petition filed by the appellant in the High Court was dismissed E
as infructuous since the M:irket Committee agreed to withdraw the a~sessment
and to make fresh assessment according to the rules.

Sorn_e time !ater. however, the M lrket Co1n11ittee once again levied
market fee and penalty. A single Judge of the High Court quashed the demand
notice of the Market Committee on the ground that the assessment order was
not in accordance with the provisions of the Act and Rules. But a Division
Bench of the H1g'l. Cot1rta1low~d the C()-nmittee's L~tters Pateat Appeal.

On the question whether the Market Com nittee was CO!D,1-'teat to
levy fees.
G
Dismissing the appeal,

HELD: Clause~ (bl and (c) oF rule 29 (7) of the Punjab Agricultural
Produce Markets(Geoeril) Rules, 196Z would be attracted bringing the transac.'
tion within the term 'bought or sold' if in pursuance of the agreement of sale H
or pllrchase, even if entered ·at the head office of the mills at Kanpur. the
agricultural· produce was weighed in the market area or if in l)µrsua.oce of the
160 SUPREJ.I~ COURT REPORTS [1983] 2 s.c.R.

A agreement of sale or purchase the agricultural produce was delivered in tho
said .area to the purchaser or to some other [iperson on behalf of the
purchaser. [163 E·F]
I .

Jn the instant case both clauses \b) and (c) would be applicable provided
the transaction of sale was completed immediately on the delivery of the goods to
the mills on weighment within the market area, if the delivery and/or weighment
B are such that without both or either of them there will no sale at all in law.
[164 A-BJ

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 681 of 1978.

Appeal by special leave from the judgment and order dated
the 2nd day of Seplembcr, 1976 of the Punjab & Haryana High
c Court in Letters Pate.nt Appeal No. 208 of 1974.

Y.S. Chita/e, Mrs. A.K Verma and Ashok Gupta for the
Appellant.

Hardev Singh and R.S. Sodhi for the Respondents.

D The Judgment of the Court was delivered by

VARADARAJAN, J. This appeai by special leave is directed
against the judgment of a Division Bench of the Punjab and Haryana
High Court at Chandigarh in L'tters Patent Appeal No. 208 of 1974
by the respondent in that appeal. The appellant who filed the Writ
E Petition, has its bead office at Kanpur and is running two woollen
mills, one at Dhariwal, in the name and style of New Egerton
Woollen Mills (hereinafter referred to· a1 'Ohariwal Mills') and •
another at Kanpur in the name and style ot 'Lal-Im!i Cawnpore
Woollen Mills' (hereinafter referred to as 'Kanpur Mills'). The
case of the appellant-company ";as that after the purchase of raw
F
material made by its head office at Kanpur the raw material is sent
from various centres in India as well as from abroad to both the
mills in accordance with their requirements and no raw material
used in th~ Dhariwal Mills is purchased locally or within the area
of the Market Committee, Dhariwal excepting that during the years
1969 and 1970 two contracts for the purchase of raw wool of the
G
value of Rs. 6,000/- and Rs. 5,000/- were entered into within
the area of the said Market Committee. The appellant's case was
that no purchase or sale of the raw materi!ll received by the
Dhariwal Mills takes place within the area of the Market Committee
H and that, however, the Market Committee made a demand for
payment of market fee on all raw wool purchased by the appeflant
from 7.3.1967 to 29.6.1968 by a letter dated 21.61968 on pain of
BRITISH INDIA COQPN. v. MARKBT COM. (Varadarajan; J.) 161

recovery of that amount and penalty as arrears of land revenue,
if not paid within the specified time. After a series of correspon·
dence between the appellant and the Market Committee - first
respondent, the latter made an assessment of market fee due from
the appellant and demanded a sum of Rs. 3,67,200/· made up for
Rs. 2,44,800/- being fee payable for the period from 26.5.1961 to
31.12.1970 and Rs. 1,22,400/· being penalty. As the amount waa I
not paid the Market Committee took steps under s. 41 (2) of the
Punjab Agricultural Produce Markets Act, 1961 for the recovery or
the amount as arrears of land revenue. It is in these circumstances
that the appeallent filed a Writ Petition No. 4247 or 1971 which was
dismissed as infructuous on 15.11.1972 as the Market Committee
agreed to withdraw .the assessment and to make a fresh assessment c
according to the rules.

The appellant contended in the present Writ Petition out of
which this appeal bas arisen that although it made all efforts
for associating itself with the fresh assessment proceedings by
D
producing the necessary records, the Market Committee once again
levied market fee of Rs. 4,26,000/- and penalty of a like sum and
made a demand for the total sum of Rs. 8,52,000/· by notice dated
16.8.1973. The pre~nt Writ Petition was filed under Articles 226
and 227 of the Constitution for quashing that demand notice and
restraining the Market Committee from recovering the amount.
The learned Single Judge allowed the Writ Petition on a legal point
that the assessment order made is not accordance with the provisions
of the aforesaid Act and the Rules, without expressing any opinion
on the merits of the case. The Market Committee, therefore filed the
aforesaid Letters Patent Appeal.

. There is ·no dispute that the raw material received by the
Dhariwal Mills is an agricultural produce as defined is s. 2A of the
'
Act and that the said commodity after being received by the
Dhariwal Mills is weighed within the notified area of the Market
Committee. The contest between the parties is on the question G
whether in the circumstances of the case the provisions of s. 23 of
the Act were attracted or not.

Section 23 of the Act reads thus :
B
"A Committee shall, subject to such rules as may be
made by the State Government in this behalf, levy on ad
162 SUPREME COURT REPORTS [1983] 2 S.C.R

A valorem basis fees on the agricultural produce bought or
sold by licensees in the notified market area at a rate
not exceeding two rupees and twenty paise for every one
hundred rupees.

Provided that :-
B
(a) no fee shall be Ieviable in respect of any
transaction in which delivery of the agricultural
produce bought or sold is not actually made ;
and

c (b) a fee shall be leviable only on the parties to a
transaction in which delivery is actually made."

A persual of the records produced by the appellant reveals the
existence of a number of original contracts entered into by the
appellant at Kanpur with various suppliers of raw wool in India
D with a provision practically in all the transactions 'that 80 per cent
of the goods was payable against the documents and the balance
after receipt and examination of the goods which were to be des-
patched to Dhariwal Mills directly. There are certain terms and
conditions on the back of the contract forms in regard to the
procedure for scouring yield. It will be necessary to state only a
few of those terms and conditions. Clause A relating to the procedure
for scouring yield read thus :-

(A) Two bales at random are taken and issued lo Scouring
Department. The weight recorded at the time of
receipt of the consignment is taken. After scouring in
J! three bowl Scouring Machine using warm water, the
wool is dried in the dryer and spread in a covered place
for about 12 hours to regain normal moisture. The
wool is then weighed and yield calculated".

Clauses 2 and 3 read thus :
G
'2. The Mills have every right to reject a portion or bulk
if the quality is not up to the suppliers' samples given
at the time of offers.
H 3. Weight received in the mills will be taken as final
weight."
BRITISH INDIA CORPN. v. MARKBT COM. (Varadarajan, J.) 163

Rule 29 of the Punjab Agricultural Produce Market (General) A
. Rules 1962 framed under the Act provides for levy of the fees on
agricultural produce bought or sold by licensees in the notified
market area. Rule 29 (7) read thus :

"29 (7) For the purposes of this rule agricultural
produce shall be deemed to have been bought or sold in a B
notified market area:

(a) if the agreement of sale or purchase thereof is
entered into the said area;

(b) if in pursuance of the agreement of sale or c
purchase the agricultural produce is weighed in the
said area; or

(c) if in pursuance of the agreement of sale or
purchase the agricultural produce is delivered in the
said area to the purchaser or to some other person D
on behalf of the purchaser."

Clauses (b) and (c) would be attracted bringing the transaction
within the term 'bought or sold' if in pursuance of the agreement
of sale or purchase, even if entered into at Kanpur, the agricultural
produce is weighed in .the market area or if in pursuance of the E
agreement of sale or purchase the agricultural produce is delivered
in the said area to the purchaser or to some other person on behalf
of the purchaser.

The Division Bench of the High Court in the Letters Patent
Appeal was of the opinion that both clauses (b) and (c) arc appli-
F
cable to the facts of the present case even on the admitted facts
of this case as the transaction of sale is completed immediately on
the delivery of the goods to the Dhariwal Mills. In that view the
learned Judges allowed the appeal and set aside the judgment of the
learned Single Judge and left it open to the appellant-company to G
satisfy the Market Committee in respect of any transaction which
does not fall within the scope of their judgment.

The question is as regards the situs of the sale. If the sale
transaction took place within the Market Committee either by H
delivery of the goods or by weigbment thereof, the transaction
would fall within the ambit of Rule 29 (7). After having heard
164 SUPRBllB COURT REPORTS [1983] 2 s.c.R.

A learned cousel for the parties we are of the opinion that no inter-
ference with the judgment under appeal is called for except that
it is necessary to make it clear that the delivery and weighment
to be taken into consideration by the market Committee in respect
.
of the past transactions regarding which the demand has been made
and also future transactions must be delivery an/or weighment
B without which there will be no sale at all in law. Subject to this
clarification we djsmiss the appeal and direct the parties to bear
their own costs.

P. B. R. Appeal dismissed.
•
,.