M/S. MAHALUXMI RICE MILLS AND ORS.versusSTATE OF U.P. AND ORS.

A                M/S. MAHALUXMI RICE MILLS AND ORS.
                                  v.
                        STATE OF U.P. AND ORS.

                                AUGUST 19, 1998
B
                   [J.S. VERMA, en, K.T. THOMAS AND
                  SYED SHAH MOHAMMED QUADRI, JJ.]

          U.P. Krishi Utpadan Mandi Adhiniyam, 1964-Section
    17(iii)(b)(3)-Market fee payable to Market Committee--W11etl1er it shall be
C   paid by seller or purchaser when agiicultura/ produce is sold by a trader to
    the Govemment-Held, Market Committee is entitled to collect the fee from
    selle1~Seller can recover the same from purchaser-Govemment.


          Appellants, traders carrying on business in rice milling within cer-
D lain areas notified as market areas u/S 6 of the U.P. Krishi Utpadan Mandi
    Adhiniyam, 1964, were under a duty to sell rice to the State Government
    as levy by virtue of Clause (3) of the U.P. Rice and Paddy (Levy and
    Regulation of Trade) Order, 1985, which was issued under the Essential
    Commodities Act. The Market Committee concerned made demands on
    the appellants to remit the· market fee u/S 17(iii)(b)(3) of the Act. Appd-
E   lants challenged the demand alleging that when a rice miller gives rice to
    the Government as levy under the Levy Order it does not amount to a
    'transaction or sale' and hence no market fee can be collected thereon; that
    the State Government is not a 'trader' as contemplated in the sub-clause
    and hence there is no liability to pay market fee and that even if it was a
F   sale to a trader the liability to pay market fee is on the purchaser i.e.
    Government and not the miller who sells it to the Government. High Cou!'t
    not accepting any of these contentions dismissed the writ petitions. Hence
    these appeals. The limited 11uestion raised in these appeals was whether
    the market fee payable to the Market Committee constituted under the Act
G   shall be paid by the seller or purch~ser when agricultural produce is sold
    by a trader to the Government.

          It was submitted on behalf of the Market Committee that the
    provisions of the Act are intended to make it feasible and practical for the
    Market Committee to realise market fee and if the primary liability to pay
H   market fee is that of purchaser and not a seller, the market committee
                                         8
                      MAHALUXMI RICE MILLS v. STATE                              9

    would find it very difficult to collect the fee from the purchaser who might      A
    leave the market area after purchasing the agricultural produce.

          The appellants argued that since clause (3) of Section 17(iii)(b) of
    the Act allows the seller to collect fee from the purchaser, trader's liability
    must be fastened with the purchaser and when the purchaser is Govern-
    ment, the market fee is very often not paid by the Government to the seller       B
    and in such a contingency it would be unjust for the Market Committee to
    realise the fee from the seller.

          Dismissing the appeals, this Court

           HELD : 1.1. In sub-clause (3) Section 17(iii)(b) of the U.P. Krishi        c
    Utpadan Mandi Adhiniyam, 1964, the word used for the seller to realise
    market fee from his purchaser is "may" while the word used as for the seller
    to pay the market fee t'l the Committee is "shall". Employment of the said two
    monosyllables of great jurisprudential import in the same clause dealing
    with two rights regarding the same burden must have two different imports.        D
    The legislative intendment can easily be discerned from the frame of the
    sub-clause that what i~ conferred on the seller is only an option to collect
    market fee from his purchaser, but the seller has no such option and it is
    imperative for him to remit the fee to the Committee. The Market Committee
    is entitled to collect market fee from the seller irrespective of whether the
    seller has realised it from the purchaser or not. [13-G-H; 14-A-B]                E
           1.2. The Market Committee is fully entitled to collect the market fee
    from the seller and it is for the seller to pass the burden on the purchaser
    if he chooses. It is not the lookout of the Market Committee to see that
    seller gets the amount of fee paid by the purchaser. Thus the appellants
    cannot shirk the responsibility to pay the market fee to the Market               F
    Committee when the transaction falls within the purview of snb-clause (3)
    of Section 17(iii)(b) of the Act and then it would be open to them to recover
    the same from the purchaser • Government. [15-C-D]

         /Vishi Utpada11 Mandi Samiti, Haldwani & Ors. v. Indian Wood                 G
    Products Ltd. & Anr., [1996] 3 SCC 321, overruled.

          /Vishi Upaj Mandi Samity & Ors. v. 01ie11t Paper & Industries Ltd.,
    [1995] 1 sec 655, distinguished.

         Ramesh Cha11dra Etc. v. State of U.P. Etc., [1980] 3 SCR 104, fol-           H



.
    10                    SUPREME COURT REPORTS (1998) SUPP.1 S.C.R.

A lowed.
                 'I
          Food Corporation of India v. State of Kera/a, [1997) 3 SCC 410,
    referred to. .
                  '
          CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 555-557
B   of 1997 Etc.,Etc.

         From the Judgment and Order dated 25.3.87 of the Allahabad High
    Court in C.M.W.P. Nos. 10355, 7178 and 7179 of 1986.

          B.D. Agarwal, O.P. Rana, Joseph Pocckkatt, Prashant Kumar, Anis
C Dayal, Sunil Ambwani, R.C. Verma, Dr. LP. Singh, (A.K. Srivastava, for
    R.B. Misra, T. Mahipal, Pradeep Misra, Y.P. Rao and Irshad Ahmad, for
    the appearing parties.

         The Judgment of the Court was delivered by

D         THOMAS, J The area of dispute, in this appeal, has now been
    considerably narrowed down with the decision of a three Judge Bench of
    this Court in Food C01poratio11 of India v. State of Kera/a, [1997] 3 SCC
    410. The short question now remains is whether the market fee payable to
    the Market Committee constituted under the U.P. Krishi Utpadan Mandi
E   Adhiniyam, 1964 (for short "the Act") shall be paid by the seller or
    purchaser when agricultural produce is sold by a trader to the Government.
    The aforesaid question arose under the following facts :

           Appellants are traders carrying on business in rice milling within
    certain areas constituted in the State of U.P. Such areas have been notified
F   as market areas under Section 6 of the Act. Among the business activities
    carried on by the appellants they purchased paddy from cultivators or
    sellers outside the market area and the paddy so purchased is hulled to
    make it rice for sale. They are under a duty to sell rice to the State
    Government as levy by virtue of Clause (3) of the U.P. Rice and Paddy
G   (Levy and Regulation of Trade) Order, 1985, which was issued under the
    Essential Commodities Act. It will hereinafter be referred to as the "Levy
    Order".

          Provisions of the Act envisage the formation of a Market Committee
    for each market area and the said Committee is empowered to levy and collect
H   fee called "market fee" on transactions of sale of agricultural produce which
              MAHALUXMI RICE MILLS v. STATE [THOMAS, J.]                    11

    take place within the market area, at such rates as the State Government     A
    may specify by notification. Section 17(iii) of the Act reads thus :

            "17. Powers of the Committee. - A Committee shall, for the purpose
            of this Act, have the power to -

            xxx xxx xxx xxx xxx                                                  B

            (iii) levy and collect :

            xxx xxx xxx xxx xxx

            (b) market fee, which shall be payable on transactions of sale of C
            specified agricultural produce in the market area at such rates,
            being not less than one per centum and not more than two per
            centum of the price of the agricultural produce so sold, as the State
            Government may specify by notification, and such fee shall be
            realised in the follow;ng manner -                                    D
               (1) if the produce is sold through a commission agent, the
            commission agent may realise the market fee from the purchaser
            and shall be liable to pay the same to the Committee;

               (2) if the produce is purchased directly by a trader from a       E
            producer the trader shall be liable to pay the market fee to the
            Committee;

                (3) if the produce is purchased by the trader from another
            trader, the trader selling the produce may realise it from the
            purchaser and shall be liable to pay the market fee to the Com-      F


-
            mittee; and

               (4) in any other case of sale of such produce, the purchaser
            shall be liable to pay the market fee to the Committee."

          The Market Committee concerned made demands on the appellants G
    to remit the market fee as indicated in Section 17(iii)(b)(3) of the Act.
    Appellants challenged the said demand before the Allahabad High Court
    on different grounds. First ground is that when a rice miller gives rice to
    the Government as levy under the Levy Order it does not amount to a
    "transaction of sale" and hence no market fee can be collected thereon. H
    12                    SUPREME COURT REPORTS (1998) SUPP. 1 S.C.R.

A Second ground is that the State Government is not a "trader" as con-
    templated in the sub-clause and hence there is no liability to pay market
    fee. Third ground is that, even if it was a sale to a trader the liability to
    pay market fee is on the purchaser i.e. Government and not the miller who
    sells it to the Government.

B          High Court did not accept any of the aforesaid contentions and
    hence the reliefs prayed for by the appellants in the writ petitions were
    disallowed. Against the judgment repelling those contentions Special Leave
    Petitions have been filed by the appellants and hence these appeals.

C        In the present appeals, appellants did not contend that Government
  is not a trader as envisaged in sub-clause (3) of Section 17(iii)(b) of the
  Act . However, appellants persisted with the third contention that the Act
  of selling rice to the Government under the Levy Order is not a transaction
  of sale. That contention was heard by a three Judge Bench of this Court
  along with some other appeals wherein similar question was involved. It
D was held by the Bench that the disputed transactions are sales and thus the
  said contention is put to rest. (vide paragraph 35 of Food Corporation of
  India v. State of Kera/a (supra).

          However, these appeals were not disposed of by the said Bench since
E the first ground mentioned above has not been heard. Hence these appeals
    were delinked from the rest of appeals and they were posted before a
    Bench of two Judges of this court. When the appeals were heard on
    22.4.1998, the Bench deemed it necessary to have these appeals heard by
    a larger Bench due to the following reasons : Before the said Bench
    counsel for the appellants relied on the decision of another two Judge
F   Bench of this Court in Krishi Utpadan Mandi Samiti, Haldwani & Ors. v.
    Indian Wood Products Ltd. & Anr., [1996) 3 SCC 321 in which this Court
    held thus:

             "In a case where the trader selling the produce has realised the
             market fee from the trader, the seller shall be bound to pay the
G            market fee to the Committee. However, where the selling trader
             does not realise it from the purchaser he is under no obligation to
             pay the market fee to the Committee."

    On behalf of the Market Committee it was submitted then that an earlier
H decision of a Constitution Bench of this Court was not taken note of by the



                                                                                    ..., I'
           MAHALUXMI RICE MILLS v. STATE [THOMAS, J.]                      13

learned Judges in Krishi Utpada11 Mandi Samiti Ltd. v. I11dia11 Wood             A
Products Ltd. & A11r. (supra). In view of the aforesaid contentions learned
Judges felt the need that these appeals should be heard by a larger Bench
regarding the remaining question. Thus the limited question mentioned in
the first paragraph alone needs answer for the final disposal of these
appeals.
                                                                                 B
        Shri O.P. Rana, learned senior·counsel who argued for the Market
Committee contended that the provisions of the Act are intended to make
it feasible and practical for the Market Committee to realise market fee;
the Committee looks to the licenced traders doing business within the limits
of the market area for realisation of the market fee; if the primary liability   C
to pay market fee is that of purchaser and not a seller the market commit-
tee would find it very difficult to collect the fee from the purchaser who
might leave the market area after purchasing the agricultural produce. Mr.
B.D. Agarwal, learned senior counsel for the appellants argued that since
sub-clause (3) allows the seller to collect fee from the purchaser, trader's
liability must be fastened with the purchaser and when the purchaser is          D
Government the market fee is very often not paid by the Government to
the seller and in such a contingency it would be unjust for the Market
Committee to realise the fee from the seller.

      Sub-clause (3) of Section 17(iii)(b) of the Act which has been ex-         E
tracted above contains the following limbs :

      (1) The right of the Market Committee to collect market fee would
arise under the sub-clause only "if the produce is purchased by a trader
from another trader".
                                                                                 F
      (2) In such a case it is open to the seller to realise the market   fee
from the purchaser.

      (3) But it is the duty of the seller to pay the fee to the Committee.

      It is significant to note that the word used for the seller to realise
                                                                                 G
market fee from his purchaser is "may" while the word used as for the seller
to pay the market fee to the Committee is "shall". Employment of the said
two monosyllables of great jurisprudential import in the same clause deal-.
ing with two rights regarding the same burden must have two different
imports. The legislative intendment can easily be discerned from the frame H
    14                    SUPREME COURT REPORTS [1998) SUPP. 1 S.C.R.

A of the sub-clause that what is conferred on the seller is only an option to
    collect market fee from his purchaser, but the seller has no such option
    and it is imperative for him to remit the fee to the Committee. In other
    words, the Market Committee is entitled to collect market fee from the
    seller irr~spective of whether the seller has realised it from the purchaser
    or not.
B
         In Krishi Utpadan Mandi Samiti v. Indian Wood Products Ltd. (supra)
  the learned Judges were persuaded by the ratio laid down by this Court in
  J(Jishi Upaj Mandi Samity & Ors. v. Oliellf Paper & lndusllies Ltd., [1995]
  1 SCC 655 wherein provisions of a similar Act which is in force in the Sta~e
C of Madhya Pradesh were considered and held that the primary liability to
  pay the fee is placed upon the buyer. But the corresponding provision in
  the Madhya Pradesh Act is differently worded and hence the question of
  the liability to pay market fee as per sub-clause (3) of Section l 7(iii) of the
  Act could not have been solely based on the ratio in the said decision. It
  is difficult for us to agree with the reasoning that "the use of the word 'shall'
D in the said clause means that where the selling trader collects fees from a
  purchasing trader he is under an obligation to make over the fee to the
  Market Committee and where the selling trader does not collect the fee
  from the purchasing trader the liability to pay the market fee remains to
  be that of the purchasers."

E         The Constitution Bench in Ramesh Chandra Etc. v. State of U.P. Etc.,
    [1980) 3 SCR 104, considered the provisions of the Act though in a
    different context. Their Lordships, while dealing with Section 17(iii)(b) of
    the Act looked at the distinction between sub-clause (2) and sub-clause (3)
    and observed that if paddy is purchased in a particular market area by a          .....
    rice miller .and the same paddy is converted into rice and then sold, the
F   rice miller will be liable to pay market fee on his purchase of paddy from
    the agriculturist-producer, but he cannot be asked to pay market fee over
    again under sub-clause (3) in relation to the transaction of rice. The Bench
    then added:

             "If, however, paddy is brought by the rice-miller from another
G             market area, then the Market Committee of the area where paddy
              is converted into rice and sold will be entitled to charge market
              fee on the transaction of sale in accordance with sub-clause (3) ."

     The Constitution Bench then referred to a transaction of sale of Ghee and
H    pointed out:two types of dealers in such transaction - (1) a dealer who
            MAHALUXMI RICE MILLS v. STATE (IBOMAS, J.)                    15

purchases milk or cream from the villagers & others and manufactures            A
G~ee in his plant, and (2) a dealer who purchases such Ghee from the
manufacturer of Ghee and sells it to another trader in the same market
area. It is held that when the first dealer sells Ghee to another dealer then
under sub-clause (3) the manufacturing dealer will be liable to pay market
fee to the Market Committee on the transaction of Ghee, but he will be
entitled to pass on the burden to his purchaser.' In that context learned
                                                                                B
Judges stated thus :

         "Apropos the Market Committee, however, the liability will be of
         the. manufacturing dealer."

      The aforesaid observation of the Constitution Bench makes the             c
position clear that the Market Committee is fully entitled to collect the
market fee from the seller and it is for the seller to pass the burden on the
purchaser if he so chooses. It is not the look out of the Market Committee
to see that seller gets the amount of fee paid by the purchaser. Thus the
appellants cannot shirk the responsibility to pay the market fee to the D
Market Committee when the transaction falls within the purview of sub-
clause (3) of Section 17(iii)(b) of the Act and then it would be open to
them to recover the same from the purchaser - Government.

       For the above reasons we dismiss these appeals.
                                                                                E
R.A.                                                     Appeals dismissed.