Supreme Court of India
SASA MUSA SUGAR WORKS ETC. ETC.versusSTATE OF BIHAR AND ORS. ETC. ETC.
- Citation
- 1996 INSC 699
- Decided
- 8 July 1996
- Disposal
- Disposed off
- Bench
- G N RAY
Holding
Sections 4A, 4B and 33M are intra‑vires, Section 39 can add or delete items without the aid of Sections 3 and 4, and the market fee on sugar is valid.
Summary
The case concerned the validity of Sections 4A, 4B and 33M inserted by the Bihar Agricultural Produce Markets (Amendment) Acts of 1992‑1993 and the power of the State Government to add or delete items from the Schedule of the Bihar Agricultural Produce Markets Act, 1960 using Section 39. The sugar mills argued that inclusion of sugar in the Schedule without complying with the procedures of Sections 3 and 4 was unconstitutional and that the validation provisions violated Articles 14 and 19(1)(g). The State contended that Section 39 is an independent power and that the amendment merely clarified the procedure, making the validation provisions intra‑vires. The Supreme Court held that Section 39 can operate independently of Sections 3 and 4, that Sections 4A and 4B are valid legislative measures and do not offend the Constitution, and that Section 33M is also intra‑vires. Consequently, the levy of market fee on sugar was upheld. The appeals and the special leave petition were disposed of without any order as to costs.
Issues considered
- Whether Section 4A of the Bihar Agricultural Produce Markets Act, inserted by the 1993 amendment, is constitutionally valid prospectively and retrospectively.
- Whether Section 4B, which validates market fee levied earlier, is constitutionally valid.
- Whether Section 33M, introduced by the 1992 amendment, is within the legislative competence of the State.
- Whether a notification under Section 39 can add an item to the Schedule without complying with the procedures of Sections 3 and 4 of the Act.
- Whether the levy of market fee on sugar, after its inclusion in the Schedule, is lawful.
- Whether the amendment encroaches upon the judicial power of the State.
- Whether the provisions violate Articles 14 and 19(1)(g) of the Constitution.
Legislation cited
- Bihar Agricultural Produce Markets Act, 1960s. 15, s. 27, s. 3, s. 33M, s. 39, s. 4, s. 4A, s. 4B
- Bihar Agricultural Produce Markets (Amendment) Act, 1992s. 33M
- Bihar Agricultural Produce Markets (Amendment) Act, 1993s. 4A, s. 4B
- Bihar General Clauses Acts. 24
- Constitution of Indias. Article 14, s. Article 19(1)(g)
- Essential Commodities Act, 1955
Subjects
agricultural produce markets actschedule amendmentSection 39Section 4ASection 4Bmarket feeconstitutional validityArticle 14Article 19(1)(g)legislative competencevalidation amendmentjudicial power
Judgment
SASA MUSA SUGAR WORKS ETC. ETC. A
v.
STATE OF BIHAR AND ORS. ETC. ETC.
JULY 8, 1996
B
[G. N. RAY AND B.L. HANSARIA, .JJ.]
Bihar Afjlitllltural Produce Markets Act, 1960-Sections 4A and 48
inse11ed by (Amendment) Act, 1993, Sec. 33M as inserted by (Amendment)
Act, 1992-Legality of-Notification dated 31-8-1992 issued u/s 4 of the
Act-Power of inclusion or deletion of an afjlicultural produce-Requirement
c
of followi11g the procedure under Sections 3 & 4 of the Act-Section 4A does
not suffer from encroachmellt of judicial power of the State-Sections 3 & 4
stand modified on account of Section 39 r/w S 4A of the Act-Deletion of an
itent and subsequent inclusion of the sanie u/s 39 to be 111ade in accordance
with Section 39 r/w S 4A-Vires of Ss. 4A & 4B, 33M upheld. D
On 6-8-1960 when the Bihar Agricultural Produce Markets Act, 1960
came into force, sugar was one of the scheduled items in respect of which
the provisions of the Act were made applicable. On 22-3-1976, all sugar
mills were exempted from the provisions of Section 15 of the Act. By
notification dated 2-5- 1977, sugar and some other items were deleted from E
the schedule in exercise of the power u/s 39 of the Act. On 21-5-1977, by
another Notification, issued in exercise of power u/s 39 of the Act, the
previous Notification dated 2-5-1977 was cancelled. Several sugar mills
challenged this Notification dated 21-5-1977 by filing Writ Petitions alleg-
ing as to whether or not the cancellation of the earlier Notification by the F
subsequent notification dated 21-5-1977 had the effect of restoring the
situations prevailing prior to 2-5-1977. The High Court held that Notifica-
tion dated 21-5-1977, even though cancelled the earlier Notification dated
2-5-1977, did not tantamount to an automatic revival of sugar being an
item in the Schedule; that for including sugar as an item in the Schedule G
'Jf the Markets Act, positive action of issuing separate notification adding
sugar in the Schedule ~'as necessary and even if it was assumed that the
effect of notification dated 21.5.1977 was to add sugar in the Schedule of
the Act, such inclusion did not authorise imposition of market fee u/s 27
of the Act because it was necessary to comply with the requiren1ents u/Ss
3 and 4 of the Act before including any item in the Schedule of the Act. H
149
•
150 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A TI1e Bihar State Agricultural Marke1ting Board filed Special Leave Petition
against the Judgment of the High Court. On 23-5-1992, Memo No. 3027
Dated 12-'-1992 issued u/S 39 of the Markets Act adding sugar to the
Schedule under the Markets Act, was published in the Bihar Extraordi-
nary Gazette. By the Bihar Agricul(ural Produce Markets (Amendment)
B Act, 1993, Sections 4A and 4B were inserted in the Markets Act. The
market committees issued notices to the Sugar Mills in view of the amend-
ment of the Act incorporating Sections 4A and 4B. Writ Petitions were filed
by several sugar mills challenging the valiclity of Sections 4A and 4B of the
Act. The High Court, partly allowing the petition, held that the Validat-
e ing/Amending Act of 1993, introduding Sections 4A and 48 into the
Markets Act after Section 4, could not have the effect of making the Act
applicable to sugar under Notification dated 21-5-1977 in view of the fact
that Sections 3 and 4 remained integral and vital parts of the Markets Act
and compliance of Sections 3 and 4 was essential; that the Validat-
ing/Amending Act had merely the effect of making Sections 3 and 4 of the
D Act not applicable to action taken under Section 39 of the Act, but having
regard to the continuance of Sections 3 and 4 of the Act, other provisions
of the Act cannot be made applicable merely because of the re-introduction
of sugar into the Schedule as to make !he Act applicable to the items added
by Notification dated May 21, 1977, there must have been a fresh notifica-
E lion u/Ss. 3 and 4 of the Act; a notification u/S 3 (1) is not a mere
notification introducing agricultural Produce under the Schedule of the
Act but the said notification is also concerned with prescribing the area
within which the agricultural produce will have to be sold and purchased
and notification u/s 4 can be brought into existence only after considering
F the objections presented under Sections 3 and 4 of the Act, pursuant to
the notification issued under Section 3 (1) of the Act. The introduction of
a commodity into the Schedule of the Markets Act must be combined with
notification u/s 4(1) of the said Act and that the requirements under
Sections 3 and 4 of the Act must be complied with together and they cannot
be severed and it is only after issuanct! of notification u/S 4 (1) of the Act
G that the fee leviable under the Act became payr.ble; that Section 27 of the
Act is wholly dependent upon a notification under Section 4(1) of the Act
because levy of market fee can be made only on agricultural produce
bought or sold in the market at the sp,,cified rates and as Section 4(1) of
the Markets Act still remains operative and has not been excluded, mere
H inclusion of a commodity under Section 39 of the Markets Act will not ipso
SASAMUSASUGAR WORKSv. STAIB 151
facto attract other provisions or the Act; that Sections 4A and 4B are A
invalid as they constitute two different procedures, namely, the procedure
for items which are added subsequent to the commencement or the act and
the procedure which has to be followed in the case or the items already
included in the Schedule as there cannot be two separate procedures for
the items existing prior to August 6, 1960 and those which are added
B
subsequently, therefore, the provisions for non-application or Sections 3
and 4 or the Markets Act by Section 4A(l) or the Act, is arbitrary, without
intelligible basis and has the effect of destroying the Scheme of the
Markets Act, therefore, Section 4A(l) of the Act has to be struck down to
keep the other provisions of the Act alive; that Sections 4A and 4B
introduced by the Amending Act violate Articles 14 and 19(l)(g) of the c
Constitution, and the said Sections 4A and 4B create two separate classes
for the application or the Act, one for those who would be traders in the
area concerned and the other for the market con1mittee; that Section 48
is partly valid and partly invalid, the said Section having four parts out
of which first part is invalid and cannot be given effect to while the Second D
part is valid and can be given effect to, the other two parts of Section 4B
are merely ancillary and consequential to the first and second part. These
appeals had been filed against the Judgment of the High Court.
The sugar mills submitted that any inclusion or an item in the
Schedule to the Markets Act u/s 39 does not bring about any control or E
regulation of sale, purchase, storage or processing of such produce as in
order to regulate and bring the produce under control, it is necessary that
intention to regulate a produce is to be notified and procedure to be
followed; that the Markets Act presents an integrated scheme and Section
39 of the Act cannot be read in isolation or·other provisions or the Act; F
that the Amending/Validation Act introducing Sections 4A and 4B failed
to revive control of any agricultural produce, even if it is included i.n the
Schedule u/S 39 of the Act, until and unless the provision of Sections 3 and
4 or the Act r/wS 15 are complied with; that Sections 4A and 4B are invalid
as sub-sections (1) or Section 4A, in so far as it dispenses with the G
requirement or complying with the provisions or Sections 3 and 4 before
market ree can be validly levied on an agricultural produce, is bad and
void for being repugnant to the scheme of the Act and for truncating
valuable rights given u/Ss 3 and 4 & that sub-Section (1) of Section 4A
also obliterates the concept of market area which is the sole basis of
operating the Act aud for imposing the levy and as a result of sub-Sec. (1) H
152 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.
A of Section 4A, the basis of the Act gets transmitted from an Act levying a
fee to an Act imposing tax; that sub-Section (2) of Section 4A is also bad
because it renders invalid the notifications for deletion of items issued by
the Stale Government, which have been acted upon by the citizens and all
concerned and the introduction of sub-Section (2) of Section 4A retrospec-
B tively w.e.f. 6-8-1960 would lead to invalidation of notifications by which
items have been deleted and enable the market committee to impose a fee
and to collect the fee in respect of items which have been deleted, the same
is bad inasmuch as it undoes the certainty with which citizens had acted
upon issuance of notification u/S 39 of the Act deleting items from the
Schedule; Section 4A (2) is also bad inasmuch as the legislature has
C provided an opportunity for hearing at the stage of deletion of the items
from the Schedule and not at the stage of addition of the items and since
the process of addition and deletion are both legislative acts, unless a
rational basis exists to ditl'erentiat~ the circumstance, not atl'ording of
opportunity to the members of genen1I public when an item is being added
D to the Schedule, is per se discriminatory and as such void; that sub-Sec-
tions (1) and (2) of Section 4A cannot coexist with Sections 3 and 4 of the
statute and, therefore, the continuaince of Sections 3 and 4 after the
Amending Act is entirely futile and these Sections have been reduced to a
dead letter and such cannot be the scheme of the Act; that Sections 3 and
4 do not influence the exercise of power u/s 39 of the Markets Act and are
E not therefore, condition precedent, yet once an item is added to the
Schedule it would be operative in a market area through the process of
Sections 3 and 4; that the Notifications of 2-5-1977 and 21-5-1977 are
referable to Section 39 and the Notification dated 21·5-1977 expressly
rescinds notification issued u/s 39 on 2-5-1977, hence this notification is
F referable to Section 39 and not to Section 4(3) and for exercise of power
u/s 4(3), the procedure u/s 3 is to be followed and therefore, sugar having
been deleted from the Schedule by the Notification of2-5-1977, its inclusion
could have been made only by taking integrated actions as contemplated
u/Ss 3 &4 of the Markets Act and any attempt to include sugar in the
Schedule for imposition of levy either by amending/validating Act or by
G purporting to rescind the Notification elated 2-5-1977 by Notification dated
21-5-1977 is illegal, arbitrary, unreasonable and repugnant to the Scheme
of the Act.
The respondent State submitted that Section 39 is an independent
H provision and that this power to amend or cancel is not controlled by Ss. 3
SASAMUSASUGAR WORKSv. STATE 153
& 4 of the Markets act and even if it was assumed that Sec. 39 cannot add A
to the Schedule without the aid of Ss. 3 & 4, the infirmity is cured by the
amending/validation Act by introducing Sections 4A & 4B; that Sec. 4B of
the Amending Act protects the levy and collection of fee in the past and that
Notification dated 2-5-1977 shall be deemed never to have been issued,
therefore, no question ofr~·introducing ne\f goods into the Schedule arises
in this case because sugar had always been in the Schedule; that Section 24 B
of the Bihar General Clauses Act \\ill apply, as the intention of the Legis-
lature in enacting Ss. 4A & 4B of the Act is clearly to include the items
deleted on 2-5-1977 by giving effect to the notification of 21-5-1977, not-
mthstanding the non-compliance of the conditions in Ss.3 & 4 of the Act as
it was not a deletion u/s 4(1) of the Act and, therefore, it was sought to be c
done mthout following the procedure prescribed in Ss. 3 & 4 of the Act.
Disposing of the appeals and SLPs this Court
HELD 1.1. Unless an agricultural produce is included in the D
Schedule to the Bihar Agricultural Produce Markets Act, the provisions
of the Act have no application to such produce. An agricultural produce
may find its place in the Schedule to the Markets Act as originally included
by the Legislature, or it may subsequently be added to the Schedule under
Section 39 of the Act. Section 39 is the only provision in the Act which
authorises the State Government to add any item to the Schedule of the E
Act or delete any item therefrom. Section 39 being an independent
provision, it does not require sustenance from other sections. It operates
on its own strength. [185-C-D]
1.2. The power of altering the Schedule by addition or deletion so as F
to determine the area of control and the goods to be controlled other than
those specified in the Schedule has been delegated by the Legislature to
the State Government. For dramng up the field of control by specifying
agricultural produce in the Schedule so that control in respect of the same
under other provisions of the Act is made, no hearing has been prescribed G
by the statute. Such hearing is not contemplated because it may not always
be feasible or even desirable to give hearing for determining which produce
is to be included in the Schedule. The wisdom in selecting the field of
control by including the produce in the schedule was exercised initially by
the Legislature and thereafter such msdom has been left to the discretion
of the delegated authority namely the State Government. [185-E-G] H
154 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A 1.3. When the field of control is circumscribed by the items in the
Schedule, the actual control part of it including the goods to be controlled,
the market area where the control will operate and where the controlled
products will have to be sold are left to the judgment of the State Govern-
ment subject to the statutory conditions imposed by Section 3(1) and
B Section 4(1) of the Markets Act. Once the Notification under Sections 3
and 4 are issued specif)fog the goods to be controlled and the areas where
the control will operate, the other provisions of control contained in
Section 5 onwards including the levy of fee under Section 27 of the Markets
Act spring into action. Ever since control on sugar was imposed by fixing
the market areas, the Markets Act had been operating for controlling sale
C of sugar and purchase has been levied with fee. [185-H, 186-A-B, DJ
1.4. In exercise of power under Section 39 of the Markets Act, a
notification was issued on May 2, 1\177 deleting sugar from the Schedule.
Admittedly, the said notification under Section 39 was issued without fol-
D lowing the procedure of Sections 3 and 4 of the Markets Act. As a result of
the said notification sugar was deleted from the Schedule and such deletion
had the effect of shrinking the field of control of the original Schedule.
Inclusion or deletion of an item in selecting the field of control is to be made
in exercise of power under Section 39 of the Markets Act and State Govern-
ment is clothed with such power which can be exercised without any aid of
E the provisions of Sections 3 and 4 of the Act. Since deletion of sugar from
the Schedule was made in exercise cif power under Section 39, and such
deletion wae not a deletion under S"ction 4(1) of the Act, the procedure
prescribed in Sections 3 and 4 of the Act, was not required to be followed.
Section 4(3) does not contemplate inclusion or exclusion of produce under
F Section 39 of the Act but is applicable only to the inclusion or exclusion of
any area from the area of market or ainy produce specified therein as have
been notified for control in a specified market already by notification issued
under Sections 3 and 4 of the Act. [186-E-H, 187-A-B]
1.5. The Legislature is quite competent to make provision for hearing
G only in case of deletion of a scheduled item without making such provision
for inclusion of an item in the Schedule. Whether an item deserves to be
included in the Schedule so that cont1rol under the Act may be brought in
respect of such item, is a matter of decision of the State Government
according to its perception to the felt need for such inclusion. But when
H the State Government has felt the need of inclusion in the Schedule but
SASAMUSASUGAR WORKSv. STATE 155
later on intends to change its mind by deleting the item from the Schedule, A
the Legislature in its wisdom has thought it fit that before deletion, a
second thought is desirable by noting the objections that might be given
by a party aggrieved. Both the sub-sections of Section 4A are within the
legislative competence and are also informed by reasons. Therefore, there
is no occasion to hold that Section 4A is ultra vires. [188-B-E)
B
1.6. The amending/validation Act does not intend to overrule or
annul any decision of the Court 1 but the amending Act has brought in a
change in the requirement of fol1011ing the procedure under Sections 3 and
4 of the Act while amending the Schedule under Section 39 of the Act.
Hence, the basis of the decision in DCM's case has undergone a legislative c
change. Therefore, Section 4A does not suffer from encroachment of
judicial power of the State, Section 4A does not offend Article 14 of the
Constitution. In view of Section 4A of the Act, any exercise of po\\'er under
Section 39 of the Act is to be uniformaly exercised in accordance with
Section 4A of the Markets Act. No objection as to the validity of Section D
4A can be raised on the ground that dilferent procedures for inclusion and
deletion of an item for the purpose of exercising power under section 39
and powers under Sections 3 and 4 of the Act have been provided for in
the Act. Exercise of power UP_der section 39 is altogether a different exercise
from the exercise of po"·er under Sections 3 and 4. Even if it is assumed
that the exercise of power under Section 39 in the matter of inclusion and E
deletion of an agricultural produce overlaps or comes in conflict with the
exercise of power under Sections 3 and 4, lhe Legislature by incorporating
Section 4A has given overriding power to Section 39, subject to the limita-
tion under Section 4A(2). Sections 3 and 4 stand modified on account of
Section 39 read with Section 4A of the Markets Act. First part of Section F
4B contemplates validation of Market fee levied and collected by treating
such levy and collection under the Act as amended. Second part of Section
4B legislatively annuls the notification dated 2-5-1977. The other parts
relate to consequential actions flowing from the first two parts. Levy of
market fee was held invalid for item like sugar which was excluded from
the Schedule by notification dated2-S-1977 on the ground that once deleted G
from the Schedule, its reintroduction can take effect only after complying
with Sections 3 and 4 of the Act. In view of Section 4A, which has been
inserted in the market Act by specifically indicating in Section 2 of Amend-
ing Act that the said Section "shall always be deemed to have been in-
serted", deletion of an item and subsequent inclusion of the same under H
156 SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.
A Section 39 is to be made in accordance with Section 39 read with Section
4A. Sub-section (2) of Section 4A makes it imperative that deletion can be
made after hearing objection. Hence,. even if notification dated 21-5-1977
purporting to rescind the notification dated 2-5-1977, by which sugar was
deleted from the Schedule, is held invalid for the reasons indicated by the
B High Court, such deletion stands invalidated under Sub-section (2) of
Section 4A. Hence, declaration of annulment of notification dated 2-5-1977
flows from Section 4A (2). The result is that sugar must be deemed to be
always in the Schedule in respect of which controls have been operative.
Both the parts of Section 48 therefore, do not suffer from any infirmity,
even otherwise. If deletion is non-est annulment of notification dated
C 2-5-1977 is a matter of course. Similarly, levy and realisation of market fee
on the items which were included in the Schedule, but eXclusion of which
was of no consequence cannot be helll invalid. In a sense, first two parts
of Section 48 are declaration of the consequence of invalidation of deletion
notification, therefore, there is no difficulty in upholding the vires of both
D Sections 4A and 48 of the Markets Aet. [188-G-H, 189-A-H, 190-A-B]
1.7. Section 33M cannot also be held ultra vires inspite of the fact that
the object for inclusion of Section 33M in the Act is not happily worded.
It has been categorically stated by the State Government that the collection
to be made by the State Government under Section 33M of the Markets
E Act are not to be utilised for general purposes but entire collection are to
be ploughed back for achieving the purposes under the Act. It cannot be
held that imposition has lost the character of fee and it partakes the
character of tax. [190-C]
F Delhi Cloth and Ge11era/ Mills Company and Others v. Agricultural
Produce Mm*et Committee and Others, AIR (1993) Patna 43, distinguished.
Ram Krishan Dalmia v. Shri Justice S.R Tendu/kar, [1959] SCR 279;
Prag Jee and Oil Mills v. U11io11 of India, [1978] 3 SCR 293; Commissioner
Commercial Taxes v. R.S. !haver, [1968] 1 SCR 148; MSVS Arunachal
G Naddar v. State of Madras and Others, [1959] Suppl. SCR 92; Lakhan Pal
v. State of Bihar, [1968] 3 SCR 534; Prithvi Cotton Mills v. Broach Borough
Municipality & Ors., [1969] 2 SCC 283; Municipal Corporation of the City of
Ahmedabad v. New Shrock Spinni11g and Weaving Co. Ltd., [1970] 2 SCC
280; Madan Mohmi Pathak v. Union of India and Ors., [1978] 2 SCC 50;
H State of Gujarat v. Raman/a/ Keshav Lal, [1980] Vol. IV SCC 65; Jagannath
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 157
Ramamirig Dass v. State of Orissa, [1954] SCR 1046; Chief Commissiollei; A
Delhi a!ldAllother v.DeUti Cloth a!ld Gmeral Mills Co. Ltd. and Ors., [1978]
3 SCR 657 and Municipal Corporation of Delhi and Ors. v. Mohd. Yasin Etc.,
[1983] 2 SCR 999, referred to.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7431 of
1994 Etc. Etc. B
From the Judgment and Order dated 20.1.94 of the Patna High Court
in C.W.J.C. No. 12937 of 1992.
Gopal Subramanium, K.K. Venugopal, Y.V. Giri, H.N. Salve, H.L.
Agarwal, AK. Sen, Udai Sinha, Raja Ram Agarwal, N.P. Agarwala, P.P. c
Tripathi, Anil Agarwala, Jyoti Sharan, P.C. Sharma, A. Sharan, C.N. Sree
Kumar, B.B. Singh, K.L. Vajala, Irshad Ahamd, Anil Kumar Jha, Ramesh
Agarwal, Praveen Kumar and B.B. Singh for the appearing parties.
The Judgment of the Court was delivered by
D
G.N. RAY, J. These appeals and the special leave petition involve
common question of law and they arise out of the common judgment dated
January 20, 1994, passed by the Division Bench of Patna High Court. By
the impugned judgment, the Division Bench of the Patna High Court
allowed in part the Writ Petitions filed by several sugar mills of Bihar E
challenging the validity of Section 4A and 4B inserted by the Bihar Agricul-
tural Produce Markets (Amendment) Act, 1993. Section 33M as inserted
by the Bihar Agricultural Produce Markets (Amendment) Act, 1992;
notification dated August 31, 1992 issued under Section 4 of the Bihar
Agricultural Produce Markets Act, 1960 (hereinafter referred to as the
Markets Act), and also challenging the validity of imposition of market fee F
under the Markets Act in view of exemption of all the sugar mills in Bihar
from the provision of Section 15 of the Markets act under notification
dated March 22, 1976. The High Court on the basis of respective conten-
tion of the parties in the said Writ Petitions formulated the following points
for the decision of the Court : G
(a) Whether sub-section (1) and (2) of Section 4A is valid or
constitution ·so far as prospective part of the same is concerned.?
(b) If answer to (a) is in the affirmative, whether the said provisions
are valid and constitutional so far as the retrospective part of the same is H
158 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A concerned?
(c) Whether Section 4B is valid and constitutional?
(d) Whether Section 33M of the Markets Act as introduced by
amendment of 1992 is valid and constitutional?
B
(e) Whether Rule 68 (iii) of the Bihar Agricultural Produce Markets
Rules (hereinafter referred to as the Rules) as inserted by Notification No.
4 dated November 30, 1992 is valid.?
(f) What is the effect of grant of exemption made under Section 15
C of the Markets Act?
(g) What is the effect of Bihar Ordinance No. 8 of 1988 having lapsed
so far as levy of market fee is concerned?
D (h) Whether a limited and restricted meaning can be given to the
expression agricultural produce by excluding the industrial products
produced by industry from the scope and ambit of the Markets Act?
(i) Is the Notification dated June 31, 1992 a valid Notification under
Section 4 of the Markets Act?
E
The High Court by the impugned judgment answered the said points
formulated by it in the following manner :
(i) Neither sub-section (1) nor sub-section (2) of Section 4A is valid
or constitutional prospectively. Both the sub-sections are ultra vires of
F Articles 14 and 19(1)(g) of the Constitution and not protected by Article
19(6) of the Constitution.
(ii) Even if it is assumed that prospective part of Section 4A is valid,
the retrospective part is ultra vires of Articles 14 and 19 (1) (g) of the
G Constitution.
(iii) Section 4B is partly valid and partly invalid. Section 4B can be
divided into four parts. The first pa:rt of Section 4B is invalid and cannot
be given effect to. The second part is valid and can be given effect to. The
third and fourth part of Section 4B are merely ancillary and consequential
H to first ~nd second part.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY..l.J 159
(iv) Section 33M of the Markets Act as sought to be introduced by A
the Amending Act of 1912 by replacing tile amending Ordinances is invalid
and ultra vires the Constitution. The said legislation lacks legislative com-
petence.
(v) Rule 68(iii) of the Rules is invalid in view of the invalidity of
section 33M. B
(vi) The grant of exemption made under Section 15 of the Markets
Act so far as sugar is concerned, does not affect the applicability of the
other provisions of the Act, rules and by laws, if they are otherwise valid
and applicable. C
(vii) Bihar Ordinance No. 8 of 1988 having lapsed, the rate of market
fee provided under Section 27 of the Act before the Ordinance No. 8 of
1988 was promulgated, revived. The rate will be Re. 1 and it will continue
• .to be so until and unless it is modified according to law.
D
(viii) No limited or restricted meaning can be given to the expression
'agricultural produce' by excluding industrial products from the ambit of
the Markets Act.
(ix) In view of the decisions on various points formulated, no opinion
need b.e expressed on the validity of Notification dated June 31, 1992 issued E
under Section 4 of the Markets Act.
For the purpose of appreciating the rival contentions of the parties,
the following facts need be noted:
(i) On August 6, 1960, the Markets Act, 1960 (Act No. 16 of 1960) F
came into force and at the time of enforcement of the said Act, sugar was
one of scheduled items in respect of which the provisions of the Markets
Act were made applicable. On March 22, 1976, all sugar mills were
exempted from the provisions of Section 15 of the Markets Act.
G
(ii) By Notification dated May 2, 1977 bearing No. SO 75, sugar and
some other items were deleted from the Schedule under the Markets Act
in exercise of the power under Section 39 of the Act.
(iii) On May 21, 1977, by another Notification bearing No. 857, issued
in exercise of power under Section 39 the previous Notification dated May H
160 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A 2, 1977 was cancelled.
(iv) Till July 23, 1976, four notifications were issued under Section
39 of the Markets Act by which various items like rice bran, milk (only
liquid milk) etc. were deleted from the Schedule under the Act.
B (v) Section 27 of the Markets Act was amended by Bihar Ordinance
No. 8 of 1988 by substituting the word "at the rate of rupee one". This
Ordinance elapsed subsequently.
(vi) The Notification dated May 21, 1977 issued under Section 39 of
the Markets Act cancelling the earlier notification dated may 2, 1977 (by
C which sugar was deleted from the Schedule under the Markets Act) was
challenged in a series of Writ petitions filed before the Patna High Court.
Such Writ Petitions were disposed of by a common judgment dated March
30, 1992. Such decision has been reported in Delhi Cloth Gild Gelleral Mills
Compally Gild Others v.Agricultural Produce Market Committee alld Others,
D AIR (1993) Patna 43. The question raised before the Patna High Court in
the said Writ Petitions was as to whether or not the cancellation of the
earlier notification by the subsequent notification dated May 21, 1977 had
the effect of restoring the situations prevailing prior to May 2, 1977.
The High Court considered the following questions raised before it,
E namely:
(a) Whether or not the Notification dated May 21, 1977 cancelling
the earlier Notification dated May 2, 1977 automatically restored the state
of affairs which had existed prior to May 2, 1977; and, if it did so, then did
it mean that sugar was automatically included in the Schedule under the
F Markets Act and became subjected to levy of market fee as "agricultural
produce" in "the specified are.a 11 under and Act?
(b) Even if it is assumed that Notification dated May 21, 1977 validly
cancelled the earlier Notification dated May 2, 1977 which resulted in the
G inclusion of sugar in the schedule, was it necessary that procedure etc.
contemplated by Sections 3 and 4 of the Act had to be applied afresh
before levying market fee?
The High Court, imer alia, held that Notification dated May 21, 1977,
even though cancelled the earlier Notification dated May 2, 1977 did not
H tantamount to an automatic revival of sugar being an item in the Schedule.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 161
For including sugar as an item in the Schedule of the Markets Act, positive A
action of issuing separate notification adding ougar in the Schedule was
necessary. The High Court also held that even if it was assumed that the
effect of notification dated May 21, 1977 was to add sugar in the Schedule
of the Markets Act, such inclusion did not authorise imposition of market
fee under Section 27 of the said Act because it was necessary to comply B
with the requirements under Sections 3 and 4 of the Markets Act before
including any item in the schednle of the Markets Act.
(vii) The Bihar Stale Agricultural Marketing Board filed Special
Leave Petition No. 9529/92 before this Court impugning the said judgment
passed by the High Court. Such special leave petition was admitted but no C
stay order was granted by this Court.
(viii) On May 23, 1992, Memo No. 3027 dated May 12, 1992 issued
under Section 39 of the Markets Act adding sugar to the schedule under
the Markets Act, was published in the Bihar Extraordinary Gazette.
D
(ix) By Notification No. GSR 40 dated November 30, 1992 sub-rule
(iii) of Rule 68 of the Rules framed under the Markets Act was inserted
by which every market committee was required to transfer 20% of the total
receipt to the State Fund.
(x) On October 13, 1992, an Ordinance, known as Bihar Agricultural E
Produce Markets (Second Amendment) Ordinance, 1992, was promul-
gated. The said Ordinance being Ordinance No. 25/92 was repealed on
February 3, 1993 and in its place the Bihar Agricultural Produce Markets
(Amendment) Act, 1993 was enacted. By the said Amending Act, Sections
4A and 4B were inserted in the Markets Act.
F
(xi) The Market Committees issued notices to the Sugar Mills in view
of the amendment of the Act incorporating Sections 4A and 4B.
It will be appropriate at this stage lo refer to Sections 3, 4, 4A 4B,
15, 33M and 39 of the Markets Act : G
3. Notification of intention of exercising control over purchase,
sale, storage and processing of agricultural produce in specified
area - (1) Notwithstanding anything lo the contrary contained in
any other Act for the time being in force, the State Government
may, by notification, declare its intention of regulating the pur- H
162 SUPREMECOURTREPORTS [1996)SUPP.3S.C.R.
A chase, sale, storage and processing of such agricultural produce
and in such area, as may be specified in the notification.
(2) A notification under sub-section (1) shall state that any objec-
tion or suggestion which may be received by the State Government
within a period of not less than two months to be specified in the
B notification, shall be considered by the State Government.
4. Declaration of market area. - (1) After the expiry of the period
specified in the notification issued under Section 3 and after
considering such objection and suggestions as may be received
c before such expiry and after holding such enquiry as it may con-
sider necessary, the State Government may by notification, declare
the area specified in the notification under Section 3 or any portion
thereof to be a market area for the purposes of this Act, in respect
of all or any of the kinds of agricultural produce specified in the
notification under Section 3.
D
(2) On and after the date of publication of the notification under
sub-section (1), or such later date as may be specified therein, no
municipality or other local authority, or other person, not-
withstanding anything contained in any law for the time being in
E force, shall, within the market area,or within a distance thereof to
be notified in the official Gazette in this behalf set up, establish,
or continue, or allow to be set up, established or continued, any
place for the purchase sale, store or processing of any agricultural
produce so notified, except in accordance with the provisions of
F this Act, the rules and by laws.
Explanation - A municipality or other local authority or any person
shall not be deemed to set up, establish or continue or allow to be
set up, establish or continue a place as a place for the purchase,
sale, storage or proce:;sing of agricultural produce within the
G meaning of this section, if the quantity is as may be prescribed and
the seller is himself the producer of the agricultural produce
offered for sale at such place or any person employed by such
producer to transport the same and the buyer is a person who
purchases such produce for his own use or if the agricultural
H produce is sold by retail sale to a person who purchases such ~
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 163
produce for his own use. A
(3) Subject to the provisions of Section 3, the state Government
may at any time by notification exclude from a market area, any
area or any agricultural produce specified therein or include in
any market area or agricultural produce included in a notification
issued under sub-section (1). B
(4) Nothing in this Act shall apply to a trader whose daily, or
annual turnover does not exceed such amount as may be
prescribed.
4A. Sections 3 and 4 not to apply to section 39 - (1) The provisions c
of sections 3 and 4 shall not apply to the exercise of powers by the
State Government under Section 39 to amend the schedule by
addition of any item of agricultural produce not specified therein.
(2) The State shall not order the deletion of any item in exercise D
of its power under Section 39 without giving an opportunity for
hearing to the affected parties.
4B. Validating of market fee levied and collected - Notwithstanding
any judgment, decree or order of any Court to the contrary, any
market fee levied and collected shall be deemed to be valid as if E
such levy and collection was made under the provisions of this Act
as amended by this Act and notification No. 730 dated 2nd May,
1977 shall be deemed never to have been issued and no suit or
other legal proceedings shall be maintained or contained in any
Court for the refund of the fee collected under the provisions of
this Act and no Court shall entertain any proceedings challenging F
the fee merely on the ground that liability had ceased on the issuing
of the notification no. 730, dated May 2, 1977."
15. Sale of agricultural produce - (i) No agricultural produce,
specified in notification under sub-section (1) of Section 4 shall be G
bought or sold by any person at any place in the market area other
than the relevant principal market yard or sub-market Yard or
yards established therein except such quantity as may on this behalf
be prescribed for retail sale or personal consumption.
(2) The Sale and purchase of such agricultural produce in such H
164 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A area notwithstanding anything contained in any law be made by
means of open auction or tender system except in cases of such
class or description of produce as may be exempted by the Board.
33-M. Every Market Committee shall out of its fund contribute to
the State Government Fund such percentage of its income derived
B from licence fees and market fees as may be prescribed by Rules
from time to time by the State Government.
39. Power to amend the Schedule - The State Government may,
by notification, add, amend or cancel any of the items of agricul-
tural produce specified in the Schedule."
c
The reasonings indicated by the High Court in deciding the vires of
Section 4A and 4B of the Markets Act as contained in the impugned
judgment may be broadly indicated as hereunder :
D (a) Notification dated May 21, 1977 cannot be treated as re- intro-
duction of sugar in the Schedule without the requirement of Sections 3 and
4 of the Markets Act which are valid and operative having been complied
with. Even if Section 24 of the Bihar General Clauses Act is treated as
applicable, it will have the effect o:f adding sugar in the Schedule; but
without a proper notification under Sections 3 and 4 of the Markets Act,
E the regulatory provisions for fee were not applicable merely because sugar
was added in the Schedule.
(b) Validating/Amending Act of 1993 introducing Sections 4A and
4B into the Markets Act after Section 4, could not have the effect of making
the Act applicable to sugar under Notification dated May 21, 1977 in view
F of the fact that Sections 3 and 4 still remained integral and vital parts of
the Markets Act and compliance of Sections 3 and 4 was essential.
(c) The scheme of the Markets Act is an integrated one and mere
introduction of a commodity into the Schedule will not proprio vigore
G attract the provisions of the Act without following the provisions of Sec-
tions 3 and 4 of the Act.
(d) The Validating/Amending Act had merely the effect of making
Sections 3 and 4 of the Act not applicable to action taken under Section
39 of the Act, but having regard to the continuance of Sections 3 and 4 of
H the Act, other provisions of the Act cannot be made applicable merely
SASAMUSASUGARWORKSv.STATE[GN.RAY,J.] 165
because of the re-introduction of sugar into the Schedule. To make the Act A
applicable to the items added by Notification dated May 21, 1977, there
must have been a fresh notification under Sections 3 and 4 of the Act.
(e) Sections 3 and 4 of the Act constitute the core of the Act for the
application of the provisions of the Act, which mandates fresh notification
before the Act is made applicable to items included in the Schedule. After
B
the commencement of the Act, introduction under Section 39 cannot
achieve that purpose. (t) A notification under Section 3 (1) is not a mere
notification introducing agricultural produce under the Schedule of the Act
but the said notification is also concerned with prescribing the area within
which the agricultural produce will have to be sold and purchased. c
Notification under Section 4 can be brought into existence only after
considering the objections presented under Sections 3 and 4 of the Act,
pursuant to the notification issued under Section 3(1) of the Act. The
introduction of a commodity into the Schedule of the Markets Act must
be combined with notification under Section 4(1) of the said Act. The D
requirements under Sections 3 and 4 of the Act must be complied with
together and they cannot be severed. It is only after issuance of notification
under Section 4(1) of the Act that the fee leviable under the Act becomes
payable.
(t) Section 27 of the Act is wholly dependent upon a notification E
under Section 4(1) of the Act because levy of market fee can be made only
on agricultural P,roduce bought or sold in the market at the specified rates.
As Section 4(1) of the Markets Act still remains operative and has not been
excluded, mere inclusion of a commodity under Section 39 of the Markets
Act will not ipso facto attract other provisions of the Act. F
(g) Section 4A and 4B are invalid as they constitute two different
procedures, namely, the procedure for items which are added subsequent
to the commencement of the Act and the procedure which has to be
followed in the case of the items already included in the Schedule. There G
cannot be two separate procedures for the items existing prior to August
6, 1960 and those which are added subsequently Accordingly, the
provisions for non-application of Sections 3 and 4 of the Markets Act by
Section 4A (1) of the Act, is arbitrary, without intelligible basis and has the
effect of destroying the Scheme of the Markets Act. Any contention that
Sections 3 and 4 of the Markets will not apply to an item which is added H
166 SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.
A in the Schedule will make mockery of the entire Act. Section 4A purports
to destroy the entire fabric of the Act. Therefore, Section 4A (1) of the
Act has to be struck down to keep the other provisions of the Act alive.
(h) Sections 4A and 4B introduced by the Amending Act violate
Articles 14 and 19(1)(g) of the Constitution. The said sections 4A and 4B
B create two separate classes for the application of the Act, one for those
who would be traders in the area concerned and the other for the market
committee.
(i) Section 4B is partly valid and partly invalid. The said Section has
C four parts out of which first part is invalid and cannot be given effect to.
The Second part is valid and can be given effect to. The other two parts
of section 4B are merely ancillary and consequential to the first and second
part.
The High Court has also held that Notification dated August 31,
D 1992, issued under Section 4 of the Markets Act in continuation of the
Memo No. 3028 issued by the State Government of Bihar under Section 3
of the Markets Act declaring its intention of regulating the purchase and
processing of items mentioned in the Schedule was bad and inoperative.
Against the impugned decision of. Patna High Court, Bihar State
E Agricultural Marketing Board, State of Bihar and several Sugar mills have
preferred appeals before this Court. It appears that each of the appellants
is aggrieved by one part or the other of the impugned decision of the High
Court. Mr. Venugopal, Senior Advocate, Mr. Gopal Subramaniam, Sr.
Advocate, Mr. A.K. Ganguly, Sr. Advocate and Mr. Raja Ram Agarwala,
Sr. Advocate, have made submissions for the Sugar Mills. Mr. A.K. Sen, Sr.
F Advocate has argued for the Bihar Si:ate Agricultural Marketing Board and
Mr. S.B. Sanyal, Sr. Advocate has made submissions for the State of Bihar
at the hearing of these appeals. As the arguments advanced by the learned
counsel for the sugar mills 3re more or less on the same strain, instead of
noting the arguments of each of the learned counsel appearing for the
G respective sugar mill separately, it is proposed to deal with the submissions
made on behalf of the sugar mills jointly in order to avoid repetitions.
Mr. A.K. Sen, learned Senior Advocate, appearing for the Bihar
State Agricultural Marketing Board, has submitted that the disputes in-
volved in the Writ Petitions and determined by the High Court had their
H genesis in Notification dated May 2, 1977 issued under the Markets Act.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 167
That Notification deleted sugar, inter alia, as an item in the Schedule of A
the Act being item No. XII thereof and also other items in the Schedule
which were already in the Schedule at the commencement of the Act. The
power to delete is conferred by Section 39 of the Act whereby the State
Government has been given the power to amend or cancel any of the items
specified in the Schedule to the Act. Mr. Sen has submitted that this power B
to amend or cancel is not controlled by Sections 3 or 4 of the Markets Act
as the Act from the very beginning. Notification dated May 2, 1977 was,
however, cancelled or rescinded by a fresh notification dated May 21, 1977.
There was no notification under Section 39 of the Act including sugar in
the schedule nor was any notification issued under Section 3 and 4 of the
Markets Act in relation to sugar. Mr. Sen had further submitted that the C
Patna High Court in Writ Petition in the case of D. C.M. v. Agricultural
Produce Marketing committee, AIR (1993) Patna 43 accepted the conten-
tion that Section 24 of the Bihar and Orissa General Clauses Act did not
have the effect of having the original position, before deletion of sugar from
the Schedule, restored. The High Court held that sugar having been D
deleted by Notification dated May 2, 1977 from the Schedule, subsequent
notification of May 21, 1977 did not have the effect of re-introducing sugar
as one of the items of the agricultural produce. Even if notification dated
May 21, 1977 is treated as re-introducing sugar as an agricultural produce
within the meaning of the Act, that by itself, would not make the Act
applicable to sugar unless there was a fresh notification under Sections 3 E
and 4 of the Markets Act. Therefore, the fees levied and claimed by the
concerned Marketing Committee could not be sustained.
Mr. Sen has submitted that if the judgment of the High Court was
correct, then this defect could only be cured by fresh legislation and not F
by a fresh notification under Section 39 of the Markets Act. Though the
State Government of Bihar and the Marketing Committee had appealed
against the judgment of the High Court by filing a Special Leave Petition
against the same before this Court, the appeal has not been heard yet.
Hence, the position flowing from the judgment of the High Court had to G
be rectified. The State Government, therefore, exercised its power of
promulgating ordinance under Article 213 of the Constitution by introduc-
ing Sections 4A and 4B in the Markets Act. Such Ordinance was later on
replaced by an Amending Act. Mr. Sen has also submitted that the con-
tentions which were accepted by the High Court in D. C.M.'s case and also
in the present case are based on the hypothesis that Section 39 of the Act H
168 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A can have no effect without the aid of notifications under Sections 3 and 4.
Such a premise, according to Mr. Sen, i' incorrect. Mr. Sen submitted that
Section 4(2) read with Section 15 of the Markets Act only prevents any
municipality or local authority or any private person from establishing or
continuing or allowing to set up or cuntinuing a place for the purchase
B sale, store or processing of any such agricultural produce notified under
Section 4(2), except in accordance with the provisions of this Act. Mr. Sen
has submitted that Section 39 is the instrumentality by which a produce is
brought into the Schedule, where such produce was not in the Schedule.
It is only when a produce finds its place in the schedule, that its control
under the Market Act by notifications under Sections 3 and 4 of the Act
C becomes relevant and possible. Before Sections 3 and 4 of the Act can be
applied, the concerned produce must be in the Schedule, as defined in
Section 2(1) (a) of the Markets Act. The first step is to look to the Schedule
to find out what produces can be controlled. Control under the Act is not
in vaccum but is in respect of the scheduled produces, through the
D mechanism of Sections 3 and 4 for controlling them.
Mr. Sen has submitted that Section 15 of the Act provides one of the
teeth for Section 4 read with Section 3 of the Act. It prescribes that all
goods specified in the Notification under Section 4(1) of the Act shall pass
through the principal market yard or yards, as the case may be, and shall
E not be sold or purchased at any other place within the market proper and
sales and purchases of such agricultural produce in such yards, shall be
made by means of open auction.
Mr. Sen has contended that the effect of the amendment of Section
F 15(2) of the Act is that if a scheduled agricultural produce is subjected to
control by notification under Section 4(1), the subsequent steps under
Sections 5, 6, 16 etc. come into force. But before steps under Sections 3
and 4 are taken, the produce concerned must be in the schedule. It may
be in the Schedule originally or it may be included by a subsequent
notification under Section 39, which alone provides the machinery for such
G subsequent inclusion. According to Mr. Sen, it is an error to argue that
Sections 3 and 4 of the Markets Act must be used for such introduction,
and not Section 39. Mr. Sen has submitted that Section 15 is confined only
to such produce which is included in the notification under Section 4(1) of
the Act; and this is not applicable to produce which was originally in the
H Schedule or is brought in the Schedule by a notification under Section 39
--
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 169
of the Act. Mr. Sen has also submitted that without such notification under A
Section 4(1) of the Markets Act, the sellers and buyers of a produce in the
Schedule originally or subsequently introduced by notification under Sec-
tion 39 of the Act, would not suffer from the disability under Section 15(1)
of the Markets Act and such produce would also not be bound by the
fetters of Sections 4 and J.5 of the Act and the same can be sold in any
B
place in the market area or outside and such sale and purchase would not
be subject to the other prO\isions of the Act providing for control or levy
of fees and matters connected therewith as provided under Section 27A
and 27B of the Act. It is only after the notification under Section 4, that
the control of the Act visits the scheduled produce (s). The control does
not come by the inclusion of a produs:e prop1io vigore. In other words, c
Section 39 of the Act, without the aid of a notification under Section 4(1)
of the Act, would not attract the restrictions and control of the Act
imposed by Sections 4, 5 and 15 and the traders will be allowed to buy and
sell goods anywhere in the market area or outside.
D
It has also been contended by Mr. Sen that Section 39 is an inde-
pendent provision and is not subject to the provisions of Sections 3 and 4
of the Markets Act. The Original Act did not contain Section 4(2) of the
Act. It only came in 1974 by Amending Act 60 of 1980. It only provides for
declaration of a Market area for goods notified under Section 4(1) of the
Markets Act and the restrictions under Section 15 of the Act are applicable E
only to such goods; for any other goods, including the goods originally in ·
the Schedule, the Act provides no-such restrictions. According to Mr. Sen,
Sections 5 and 18 and the Rules imposing various restrictions and also levy
of fee under Section 27 of the Markets Act apply to all goods including
goods notified under Section 4(1) of the Markets Act. F
It is further contended by Mr. Sen that even if it is assumed that
Section 39 alone cannot add to the Schedule without the aid of Sections 3
and 4, the infirmity is cured by the amending/validation Act by introducing
Sections 4A and 4B. Mr. Sen has submitted that Section 4A frees Section
39 from the fetters of Section 4 and Section 15 of the Act. Hence, even if G
there are fetters, exercise of the power under Section 39 will be protected
by Section 4A of the Amending Act because the fetters imposed by Section
4(2) of the Act would be inapplicable in the matter of exercise of power
by the State Government under Section 39 of the Markets Act. The
exercise of the power under Section 39 is only for inclusion or alteration H
170 SUPREME COURT REPORTS (1996) SUPP. 3 S.C.R.
A ohhe Schedule. Mr. Sen has also submilled that Sections 4(1) and (2) of
the Markets Act are to be read together and they are not severable . Section
4B of the amending Act protects the levy and collection of fee in the past
by enacting that such levy and collection are to be deemed valid and that
Notification dated May 2, 1977 shall be deemed never to have been issued.
B According to Mr. Sen, the effect of Section 48 is that Notification dated
May 2, 1977 will be non-est from the beginning. Therefore, no question of
re-introducing new goods into the Schedule arises in this case because
sugar had always been in the Schedule.
Mr. Sen has further submitted that the amending/validation Act gives
C protection (a) to levies and collections of fee made already and (b) to keep
the items existing in the Schedule prior to May 2, 1977 in the Schedule
without any necessity of following the provisions of Sections 3 and 4 of the
Markets Act, Mr. Sen has further submitted that it is a fallacy to contend
that Sections 3 and 4 were not amended. It should be noted that Section
D 4A of the Act gives effect to amendments under Section 39 to the Schedule
without complying with the provisions of Sections 3 and 4 of the Act, so
that as from the commencement of the Act, the items added under Section
39 of the Act form part of the Schedule as originally enacted or modified.
Mr. Sen has further contended that the intention of the State Legislature
is clear. It wanted to include the goods brought into Schedule under
E Section 39 of the Act without the conditions of Sections 3 and 4 of the Act
being notified. The exercise of the power under Section 39 is freed from
the conditions imposed by Sections 3 and 4 of the Markets Act, Therefore,
Section 24 of the Bihar General Clauses Act will apply, as the intention of
the Legislature in enacting Sections 4A and 48 of the Act is clearly to
F include the items deleted on May 2, 1977 by giving effect to the notification
of May 21, 1977, notwithstanding the non-compliance of the conditions in
Sections 3 and 4 of the Act. Mr. Sen has also submitted that the legislature
itself has made the classification of agricultural produces and has specified
them in the Schedule, thereafter, it bas lt:ft to the State to alter the schedule
under Section 39 of the Act. The classification for the purpose of selecting
G schedule produces and control are left entirely to the State Government
under Sections 3 and 4 of the Markets Act, so that the classification for
the purpose of control is made by the State Government according to the
procedure laid down under Sections 3 and 4 of the Act. The only condition
is that the State Government has to intend to declare its intention to
H control such agricultural produce for such area as may be specified in the
SASAMUSASUGAR WORKSv. STATE(G.N.RAY,J.) 171
relevant notifications. Exercise of the power under Section 4 is conditioned A
by Section 3 (2) of the Act read with Section 4(1) of the Act. This
dichotomy follows the pattern_.)lf many economic. enactments like the
Essential Commodities Act, 1955, where certain essential commodities are
specified by Section 3 (a) and then the addition of other essential com-
modities is left to the Central Government by a notified order. The power
B
under Section 2(a)(xi) is not conditioned by any prior right of hearing or
objections but is left to the judgment of the Central Government only. The
power of control under the Essential Commodities Act, is also given to the
Central Government under Section 3 of the Act and leaves it to be
performed on the opinion of the Central Government that such control was
needed for maintaining or increasing supplies of the concerned com- C
modities or for securing their equitable distribution.
Mr. Sen has also submitted that the law is now well settled that a
classification under any law may be made by the law itself or the law may
leave it to some other authority to devise the classification for the p1Jrpose D
of achieving the objects of the Act. When such a classification is left to an
authority other than the Legislature, the Jaw may provide conditions for
the exercise of such classification or leave it again to the judgment of the
authority concerned. In support of this contention, Mr. Sen has referred to
the decision of this Court in Ram Krishan Dalmia v. Shri Justice S.R.
Tendukar, [1959] SCR 279. Mr. Sen has submitted that various actions of E
the authorities, other than the Legislature, exercised under such delegated
power like fixing of price of mustard oil or other essential commodities
have been upheld on the ground that the delegates knew the need and the
reasons for the exercise of such powers. In this connection, Mr. Sen has
referred to the decision of this Court in Prag Ice and Oil Mills v. Union of F
India, [1978] 3 SCR 293.
Mr. Sen has submitted that the Markets Act adopts different proce-
dures for control and regulation and the setting up and running of regu-
lated markets which have been found to be the principle objects of the Act.
But machinery of control imposed under the Act rests on several G
provisions. The first step is to select the item of control by specifying the
goods in the Schedule. The power of altering the Schedule is given to the
state Government under Section 39 of the Markets Act, like the power of
the Central Government to specify essential commodities under Section 2
(a) of the Essential Commodities Act other than those specified by the H
172 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A Legislature. It has been contended by Mr. Sen that this is a case where the
first step of classification is performed by the Legislature itself leaving it
to the state to add or alter the field of control by deleting or adding to or
amending the Schedule under Section 39 of the Markets Act. There is no
condition for hearing etc. for the purpose of such a function in paii mate1ia
B with the Essential Commodities Act. Then, when the area of control is
circumscribed by the items in the Schedule, the actual control part of it
including selection of scheduled goods to be controlled, the market area
where the control will operate and where the controlled produce will have
to be sold, are left to the judgment of the State Government, subject to the
statutory conditions imposed by Sections 3 (1) and 4 (1) of the Markets
C Act. Mr. Sen has submitted that once the notifications under Sections 3
and 4 of the Act have been made specifying the goods to be controlled and
the area where the control will operate, other provisions of control con-
tained in Section 5 onwards including the levy of fee under Section 27 of
the Act and the provisions under Sections 39, 42, 48, 52, 53 and the Rules
D framed under the Act, spring into operation. The selection of the goods
for control i.e. the broad field of the Act is done by the Legislature itself
with a further power given to the State Government to alter the boundaries
and the contents of the fielcl. For defining the field of control, no procedure
for hearing the objections has been prescribed by the statute nor it is
feasible to do so. It must be left to the judgment of the legislature and the
E State Government concerned. But for the purpose of bringing the control
into operation and for opening the gate for the stream of control to flow,
d procedure is prescribed in Sections 3 and 4 of the Markets Act.
Mr. Sen has contended that it has not been alleged in the Writ
F Petitions nor has it been found in the judgment under appeal that by
following the procedure of Sections 3 and 4 of the Markets Act agricultural
produce has been inc]uded in the schedule. In fact, eVcr since control of
sugar was imposed by fixing the market areas concerned, the Act has been
operating for controlling sales of suger and the purchases have been levied
with fee and regulated by other provisions of control. Mr. Sen has further
G submitted that it is not argued nor is it possible to argue that that notifica-
tion under Section 39 had to take the aid of Sections 3 and 4 of the Markets
Act. The deletion of sugar by the first Notification had the effect of
shrinking the field of control of the original Schedule. It should better be
appreciated that it was nol a deletion under Section 4 (1) of the Act and
H therefore, it was sought to be done without following the procedure
SASAMUSASUGAR WORKSv, STATE[G.N.RAY,J.] 173
prescribed in Sections 3 and 4 of the Act. A
Mr. Sen has contended that there was no challenge from the Writ
Petitioners against the exclusion of sugar from the Schedule by the
Notification of May 2, 1977 made under Section 39 of the Markets Act on
the ground that· such exclusion was made without taking recourse to the
B
procedure prescribed in Sections 3 and 4 of the Markets Act. The reason
is obvious. Section 3 would apply in case of inclusion or exclusion of the
produce or markets which have been brought under control already under
Section 4(1) of the Act. Section 4 (3) does not contemplate inclusion or
exclusion of the Schedule under Section 39 of the Act, but makes Section
3 applicable only to inclusion and exclusion of the produces or the areas c
of the market concerned which have been notified for control in a specified
market by State Government. Mr. Sen has submitted that on a parity of
. reasoning there cannot be any complaint against the notification of May
21, 1977 under Section 39 of the Act or under Section 24 of the Bihar
General Clauses Act rescinding the earlier notification. The step for con- D
trot having been taken by the delegated authority and control having been
imposed already on sugar, any exclusion of the control of sugar would have
to follow the procedure of Section 3 of the Act. That not having been done,
the State Government was entitled to cancel the notification of May 2,
1977.
E
Mr. Sen has contended that the High Court was wrong in holding
that such notification could nullify the control imposed earlier on sugar as
a scheduled commodity and it needed re-introduction of control of sugar
by following the procedure of Sections 3 and 4 of the Markets Act. Mr.
Sen has submitted that inclusion and deletion from the Schedule of com- F
modity under Section 39 of the Markets Act are functionally different from
imposing control of produces already in the Schedule under Sections 3 and
4 of the Markets Act. The Schedule fixes the contents of the field from
which the items covered therein are intended to be selected for control.
But a notification under Section 4(1) of the Act fixes the area of the control
and the commodity to be controlled within that area. The latter can only G
be altered by following the procedure under Sections 3 and 4 of the Act.
With regard to challenge under Article 14 of the Constitution, Mr.
Sen has submitted that the High Court has held that the amending Act has
created two different procedures - one for the items which were introduced H
174 SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.
A or re-introduced by Section 39 of the Markets Act without the fetters of
Sections 3 and 4 of the Markets Act read with Section 15 of the Markets
Act and the other for the articles which are introduced or re-introduced
under Sections 3 and 4 of the Markets Act which gives a right of hearing
and making objections against inclusion of an item not in the Schedule. Mr.
B Sen has submitted that this reasoning with respect is not correct. According
to Mr. Sen, the amendment only cancels or rescinds the Notification of
May 2, 1977 and preserves the status quo as on that date including sugar
in the Schedule as it was before. If the deleting notification is made
non-est, then there is no question of any introduction by following the
procedure of Sections 3 and 4 of the Markets Act. Mr. Sen has also
C submitted that it should be borne in mind that Section 39 of the Markets
Act is not subordinate to Sections 3 and 4 of the Act and it can exist
independently. Only for the purpose of bringing in the restriction under
Section 15 of the Act, aid from Sections 3 and 4 of the Markets Act is
necessary. Once an item is included in the Schedule under Section 39 of
D the Markets Act, it will be subjected to all the provisions of the Act,
excepting Section 15, which is confined to items dealt with under Section
3 and 4 of the Markets Act. As from the date of the amending Act, there
will be no difference of procedure for the exercise of power under Section
3 and 4 and for the exercise of power under Section 39 of the Act, following
E of the provisions of Sections 3 and 4 of the Markets Act is not necessary.
Mr. Sen has submitted that the Legislature is competent to say that some
of the provisions would not he subject to some other provisions. New
Sections 4A and 4B are now parts of the Act and these new provisions are
to be construed harmoniously with Sections 3 and 4 read with Section 15
F of the Act. Mr. Sen has submitted that it must be presumed that the
exercise of the powers under Section 39, as under Sections 3 and 4, \vill be
made reasonably and not arbitrarily and indiscriminately. In exercising the
powers under Section 3 of the Markets Act, all that is necessary is a
declaration of intention to include a particular article in a particular market
and then followed by hearing. In the case of Section 39, the power is only
G freed from the duty to hear objections. Mr. Sen has submitted that in
almost all fiscal legislations like the Sales Tax Act, the Excise Act, the
Customs Act, the right of hearing is not a necessary condition for the
regulation and levy under the said enactments. A simple notification is
enough to include an item even by a delegated power which has been
H considered to be legislative in character. So long as the main provision
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 175
delegating the power does not suffer from any bias, the delegated authority A
can validly exercise the power. Mr. Sen has submitted that the Legislature
may very well be of the view that for including certain items in Sections 3
and 4 of the Act benefit of hearing is necessary.
Mr. Sen has also submitted that the challenge under Article 19 of the
Constitution is very weak as it is founded on the ground that Sections 3 B
and 4 still continue to operate and that Sections 4A and 4B were not
proper validating provisions as the Legislature had no power to enact the
same with retrospective effect. Mr. Sen has submitted that it is only where
the previous law is subjected to certain infirmities, that a validation enact-
ment comes to protect it. It is true that the Legislature would not be c
competent to validate the provisions which are not within its legislative
competence; but this question cannot arise here as the Legislature was fully
competent to legislate on the subject. The Act is for the public benefit and
for the protection of agricultural producers from middlemen and brokers,
so also for _the regulation of quality and weight and for providing facilities D
in the markets and the market areas concerned with the aid of the fees
collected. Mr. Sen has; therefore, submitted that challenge under Article
19(l)(g) of the Constitution is without any basis and must fail.
Mr. Sen has therefore submitted that the impugned decision of the
High Court should be set aside and the appeals preferred by the Bihar E
Agricultural State Marketing Board· should be allowed and the appeals
preferred by the Sugar Mills should be dismissed by upholding the validity
of the Notification dated may 21, 1977, so too vires of Sections 4A, 4B and
Section 33M.
The arguments advanced by the respective counsel appearing for F
various sugar mills may be summarised as follows :
(I) The title to the Markets Act itself delineates its scope, which
is to provide for better regulation of buying and selling of agricul-
tural produce and the establishment of markets for agricultural G
produce in the State and for matters connected therewith. In the
Statement of Objects and Reasons of the Markets Act, it has been
indicated that the Act is aimed to constitute regulated markets so
as to secure to the cultivator better prices, fair \vcighmcnt and
freedom from illegal deductions, a fair deal for the agriculturists
provide good incentive for the agriculturists to adopt improved H
176 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A agricultural programme etc. The main objects of the Markets Act
are to create market area and markets with a view l<' ensuring
constitution of market committees fully representatives of growers,
traders, local authorities and Government for supervising the
working of regulated markets and regulation of market charges
and prohibition of realisation charges etc.
B
(II) (a) When the State Government decides to exercise its con-
trol over the purchase, sale, storage or processing of any
agricultural produce in a specified area, it can do so only by
issuing a notification declaring its intention to that effect and
c by inviting objections or suggestions within a period of not
less than two months. The State Government is required to
consider such objections or suggestions.
D (b) Any inclusion of an item in the Schedule to the Markets
Act under Section 39 docs not bring about any control or
regulation of sale, purchase, storage or processing of such
produce. In order to regulate and bring the produce under
control, it is necessary that intention to regulate a produce is
to be notified. When it is finally dec.ided after hearing objec-
E tions to the Notification under Section 4(1) is to be issued
declaring the area specified in the notification issued under
Section 3 or any portion thereof to be market area for the
purpose of the Markets Act in respect of any of the agricul-
tural produce. Sub-Section (2) of Section 4 provides that after
F the date of publication of notification under sub-section (1)
of Section 4 or such later date as may be specified therein,
no municipality, local authority or other person shall within
the area notified in the official gazette set up, establish or
continue any place for the purpose of sale, purchase, storage
or processing of any agricultural produce so notified, except
G in accordance with the provisions of Markets Act, the Rules
and by laws. Sub-section (3) of Section 4 provides that subject
to the provisions of Section 3, the State Government may at
any time, by notification, exclude from a market area or any
area or any agricultural produce specified therein or include
H in any market area or any area or agricultural produce.
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 177
(c) It is thus clear that the scheme of the Act is that after it A
is determined legislatively as to what are the agricultural
produces within the meaning of the Act and which are
provided in the Schedule to the Act, the second stage of
contemplated exercise of control of regulation can be under-
taken by following the procedure laid down under Sections 3
B
and 4 read together. It is quite apparent that until declaration
under Section 4 is notified by the State Government the
question of any regulation and control of sale, purchase,
storage or processing of any agricultural produce mentioned
in the Schedule to the Act does not arise at all.
c
(III) The Markets Act presents an integrated scheme and Section
39 of the Act cannot be read in isolation of other provisions of the
Act. It is a settled rule of construction that the provisions of the
Act should be read as a whole so as to determine the scope and
effect of each of them. The provisions of the Act should be D
harmoniously construed so as to allow each of the provisions to
have full effect. No particular provision should be so construed as
would render other provisions ineffective or redundant. Moreover,
the provisions are to be so construed as would subserve the basic
scheme and object of the legislation.
E
(IV) The Amending/Validation Act introducing Section 4A and
Section 4B fails to revive control of any agricultural produce, even
if it is included in the Schedule under Section 39 of the Act, until
and unless the provision of Sections 3 and 4 of the Act read with
section 15 are complied with. Section 4A and Section 4B are F
invalid. Section 4A contains two sub-sections. Sub-section (1) of
Section 4A, in so far as it dispenses with the requirement of
complying with the provisions of Sections 3 and 4 before market
fee can be validly levied on an agricultural produce, is bad and
void for being repugnant to the scheme of the Act. It is also bad
and void for truncating valuable rights given to citizens and others G
under Section 3 and 4. Sub-section (1) of Section 4A also
obliterates the concept of market area which is the sole basis of
operating the Act and for imposing the levy. As a result of sub-
section (1) of Section 4A, the basis of the Act gets transmuted
from an Act levying a fee to an Act imposing tax. Sub-section (2) H
178 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.
A of Section 4A is also bad because it renders invalid the notifications
for deletion of items issued by the State Government, which have
been acted upon by the citizens and all concerned. The introduc-
tion of Sub-section (2) of Section 4A retrospectively with effect
from 6.8.1960 would lead to invalidation of notifications by which
items have been deleted and enable the market committee to
B
impose a fee and lo collect the fee in respect of items which have
been deleted, the same is bad inasmuch as it undoes the certainty
with which citizens had acted upon issuance of notification under
Section 39 of lhe Act deleting items from the Schedule.
c Section 4A(2) is also bad inasmuch as the Legislature has
provided an opportunity for hearing at the stage of deletion of the
items from the Schedule and not at the stage of addition of the
items. Since the process of addition and deletion are both legisla-
tive acts, unless a rational basis exists to differentiate the cir-
cumstance when an item is being deleted from the Schedule,
D non-affording of opportunity to lhe members of general public
when an item is being added to the Schedule, is per se dis-
criminatory and as such void.
Sub-section (1) and (2) of Section 4A cannot co- exist with 3
E and 4 of the statute. The continuance of Sections 3 and 4 after the
Amending Act is entirely futile and thtse sections have been
reduced to a dead letter. Such cannot be the scheme of the Act.
Particularly, when Sections 3 and 4 have always been adverted to
by this Hon'ble Court while analysing the scheme of the provisions
of the Acl both in relation to the declaration of a market area and
F also the declaration of a priacipal market/sub market yard and
while adjudging the validity of imposition of fee.
Section 4A by obliterating the right to object conferred under
Section 3 introduces an unnecessary hardship and exposes the
entire scheme of the Act to a charge of unreasonableness. The
G
substantial nature of the objections of the appellant as depicted in
the objections filed would indicate that they had a right at least to
set forth the grievances for consideration by the State Government.
Section 4B of the Act is a consequential provision. Section 4B is a
H validating provision proceeding on the basis of Curing the defects pointed
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 179
out but by the Division Bench of the High Court in the D. C.M. case through A
the medium of 4A and consequently validating all collections as if the same
was authorised by the Amending Act and also removing the impediments
of any judgment by a court to t.he contrary. It is, therefore, submitted that
Section 4B containing the words: "as if such levy and collection was ·made
under the provisions of this Act as amended by this Act..... "
B
(emphasis supplied).
Indicate that 4B cannot have any existence independent of its own.
The effect of the judgment of the Division Bench in striking down
Section 4A entirely and upholding the fiction contained in Section C
4B would lead to an anomalous result that without curing the
defects, a judgment can be overruled by the legislature by a simple
process of amendment. It is well settled that a mere attempt to
overrule the decision of the courts by amending the Jaw is not
sufficient and would itself be an encroachment on the judicial
power of the State. It is only upon the defects pointed out by the D
Judgment being cured in a proper manner that validation enact-
ments can be upheld.
The legal fiction m Section 4B must stand the test of
reasonableness. The fiction occuring in 4B is consequential to the E
. removal of defects pointed out by the Division Bench in the
Judgment dated 30.3.92 and cannot be divorced from the same.
Section 4B is inseverable for the purpose of either interpreting the
provisions or for the purpose of considering its validity.
The Notification of 3L8.92 is bad and illegal because the F
objections raised by the appellants have not been considered. On
the basis of the pleadings submitted by the parties, the High Court
ought to have answered the questions relating to the validity of the
notification dated 31.8.92 in the affirmative. It is also contended
that no satisfactory material has been placed by the Marketing G
Board before the Court to suggest that the objections were con-
sidered in serious manner as is expected of statutory authority
under Section 3 of the Act. .
(V) It is well settled that the provisions of an Act have to be read
as a whole in order to give effect to a purposive interpretation of H
180 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A the Act. Viewed from this cardinal principle of construction, it is
evident that the purpose of the Act to regulate activities in relation
to specified agricultural produce in a market area is being defeated
by the Amending Act. Viewed from this principle of statutory
interpretation, Sections 4A and 4B of the Amending Act are bad,
as being contrary to the scheme of the Act. In this connection,
B reference has been made to the decision of this Court in Commis-
sioner Commercial Taxes v. R.S. !haver, [1968] 1 SCR 148.
(VI) Legislation relating to imposition of a restriction under the
provisions of the various Marketing Regulation Acts have always
c been viewed in an integrated manner by this Court. In support of
such contention, reference has been made to the decision in MSVS
A1unachal Naddar v. State of Madras and Others, [1959] Suppl.
SCR 92. Considering the scheme of the Madras Commercial Crops
Act, 1953, which is in pmi materia with the provisions of the
Markets Act, it was observed by this Court in Naddars case that
D
"under Section 3, the State Government issues a Notification
declaring their intention to exercise control over the purchase and
sale of such commercial crop in a particular area and calls for
objections and suggestions to be made within a prescribed time.
After the objections are received, the State Government considers
E them and declares the areas to be specified in the Notification or
any portion thereof to be a notified area for the purpose of the
Act in respect of commercial crop or crops specified in the
notification. 11
F (VII) In this connection reference has also been made to the
decision of this Court in Lakhun Pal v. State of Bihar, (1968] 3 SCR
534. In Lakhanpal's case, this Court had noted that power under
Section 4(1) should be exercised reasonably. It is contended that
the intention of the judgment is that the reasonableness of the
exercise of the power under Section 4 (1) is amenable to judicial
G review. By dispensing with Sections 3 and 4, the Markets Act has
become plainly vulnerable.
(VIII) Referring to Kewal Klishan Puri's case (1980] 1 SCC 416, it
is contended that for a fee to be valid, levy must be imposed on
H the agricultural produce bought or sold by licencees in a notified
SASAMUSASUGAR WORKS v. STATE [G.N. RAY, J.] 181
market area and must also be earmarked for rendering services to A
the licencees in the notified market area and a good and substantial
portion of it must be shown to be expanded for that purpose. If
the ~equirement of regulatory control as envisaged in Sections 3
and 4 are sought to be dispensed with by the aid of Sections 4A
and 4B, the imposition of levy of market fee loses its character as
B
fee and it essentially partakes the character of tax. Such imposition
of tax suffers from legislative incompetence.
(IX) A valid Jaw must cure the defects pointed out in the judgment
of a court and unless it does so effectively, the validation statute
would be liable to be struck down. Mere amendment to overrule C
or annul a decision of courts is not permissible inasmuch as the
same amounts to encroachment on the judicial power of the State.
In this connection, reliance has been made on the decision of this
Court in Prithvi Cotton Mills v. Broach Borough Municipality & Ors.
[1969] 2 SCC 283 at 286-287 para 4, Municipal C01poration of the
City of Ahmedabad v. New Shrock Spinning and Weaving Co. Ltd., D
[1970] 2 SCC 280 at page 285-287 Paras 6, 7 & 8), Madan Mohan
Pathak v. Union of India and Ors., [1978] 2 SCC 50 at pages 65,67,
Cauveri Water Disputes Tribunal's case (Special Reference No.
1/1991) [1992] Suppl. SCC 6 paragraph 142.
(X) A validating law must also be reasonable. The validating law E
must satisfy the requirement of the Constitution after taking into
account the accrued and acquired rights of the parties today. In
this connection, reference has been ma:de to the decision in State
of Gujarat v. Raman/al Keshav Lal, [1980] Vol. 4 SCC 65.
(XI) Whilst it is true that sections 3 and 4 do not influence the
F
exercise of power under Section 39 of the Markets Act and are
not therefore, condition precedent, yet once an item is added to
the Schedule, it would be operative in a market area through the
process of Sections 3 and 4. Section 39 contemplates a positive act
of addition or alteration. While amendment to the Schedule may G
be effected by deletion of an item in the Schedule, yet addition
can be effected only by positive Act of insertion. Rescission of a
notification deleting the items will not lead to or tantamount to
addition of the item in the schedule.
The Notifications of 2.5.1977 and 21.5.1977 are referable to H
182 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.
A Section 39. The Notification Jated 215.1977 expressly rescinds
notification issued under Section 39 on 2.5.1977. Hence, this
notification is referable to Section 39 and not Section 4(3).For
exercise of power under Section 4(3), the procedure under Section
3 is to be followed.
B On the basis of aforesaid submissions, it has been contended by the
learned counsel appearing for various sugar mills that 'sugar' having been
deleted from the Schedule by the ''lotification of 2.5.1977, its inclusion
could have been made only by taking integrated actions as contemplated
under Sections 3 and 4 of Markets Act; and any attempt to include sugar
C in the schedule for imposition of levy either by amending/validating Act or
by purporting to rescind the Notification dated 2.5.1977 by Notification
dated 21.5.1977 is illegal, arbitrary, unreasonable and repugnant to the
scheme of the Act. The impugned decision of the High Court, therefore,
should be modified by allowing the writ petitions by declaring Sections 4A
D , 4B and 33M of the Markets Act as 11/tra vircs and void and also declaring
that al the present no imposition of levy on sugar under the Markets Act
is permissible.
Mr. S.R Sanyal, the learned Senior Advocate appearing for the State
of Bihar, has adopted the arguments advanced by Mr. A.K. Sen in so far
E as the validity of Sections 4A and 413 of the Markets Act and validity of
imposition of levy on sugar are concerned. Mr. Sanyal has submitted that
by the impugned judgment the High Court has struck down Section 33M
requiring contribution to the State fund certain percentage of income
derived from licence fees as may be prescribed. Mr. Sanyal has submitted
F that Rule 68 of the Bihar Agricultural Produce Market Rules, 1975 was
consequently amended and sub-rule (iii) of Rule 6B provides that the
Market Committee will pay, as contribution to the State Government, 10
to 20% of its total income out of the market fee on a graded basis. The
principal attack on the validity of Section 33M before the High Court was
on the ground that no fee can be rai,;ed for general purposes of the State
G because in that case such realisation will amount to tax and in that event
it \vill alter the entire scheme of the Act. Mr. Sanyal has submitted that
Section 33M was introduced in the Markets Act with the object to defray
the cost, grant, loan etc. which the Stale Government had provided and is
providing to the Marketing Board and different Markel Committees from
H time to time. ,_
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 183
Mr. Sanyal has submitted that substantial finance may be necessary A
in future for further expanding the activities of Marketing Board and for
advancing the object of the Markets Act. He has submitted that at the
hearing of the Writ Petitions before the Patna High Court, the State of
Bihar specifically submitted that the amount which would be collected
under Section 33M would be spent exclusively for rendering services to the
B
. agricultural markets constituted under the Act and for the purposes of the
Markets Act.
Mr. Sanyal has further submitted that in view of the financial crunch
which the State Government was facing, it was not possible for the Stale
to perform and discharge the responsibilities and duties cast on the State c
Government under the various provisions of the Markets Act, so also to
translate into action the improvement scheme which the Government
proposes to introduce for advancing the object of the Act. In order to
protect the interests of the agriculturists which is the prominent object of
the Markets Act, the State Government proposes to introduce measures D
for raising the agricultural produce of the growers and to secure them fair
return of their produce in order to increase their holding capacity so that
they are not required to sale their entire stock in the harvest season when
the price is very low. The produce of the agriculturists brought in the
market areas or yards is to be stored in the Government godowns and
pledged to Government so that on such pledging the agriculturists will get E
certain amount of money against the goods pledged to meet the immediate
need and to enable them to sell their produce at a later point of time when
the standard price will prevail in the market. The State Government has
already taken the steps for the implementation of such scheme and the
government order has been issued to that effect. Mr. Sanyal has submitted
that although it is for the Market Committee to establish market in the F
market area and to maintain market yard and sub market yard as per the
directions of the State Government but for implementing such objects, the
Market Committee is authorised to obtain loan from the State Government
as envisaged under section 28 of the Markets Act. The Marketing Board
which exerci,es the power of superintendence over the Market Committees G
can also obtain loan from the State Government for Marketing Develop-
ment Fund as envisaged under Section 33C (3) of the Markets Act. Mr.
Sanyal has submitted that the State Government from time to time has paid
substantial amount to the Marketing Board from 1972 to 1991 running into
several crores of rupees. The State Government is also t,ruarantor to repay
the loan in case of default by the Board in making payment to the financial H
184 SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R. -
A institutions. As a matter of fact, the State Government stands as a guaran-
tor for the grant of loan for 14 million dollars by the World Bank to carry
out the objects of the Markets Act. Mr. Sanyal has also submitted that
crores of rupees have been funded by the State Government for acquisition
of lands for different market areas. Such fact is revealed in the letter no.
1066 dated February 26, 1993 written by the Secretary, Bihar State Market-
B ing Board to Under Secretary, Department of Agriculture, Government of
Bihar. As on account of financial crunch, the State Government felt
difficulty in releasing more funds for carrying out the object of the Act, it
felt the necessity that out of the realisation made under the Act, a certain
percentage should be handed over to the state Government so that such
C an amount is ploughed back as and when necessary. Mr. Sanyal has
submitted that the State Government fully undertakes that the money
which will be made available to it under Section 33M will not be spent for
the general expenditure of the State Government and such amount will be
exclusively spent for the purposes as envisaged in the Act. In such view of
the matter, it cannot be reasonably contended that the realisation to be
D made under Section 33M loses the essential characteristic of fee, namely,
quid pro quo consistent with the scheme of the Markets Act.
Mr. Sanyal has submitted that it has been decided by this Court in
Jagannath Ramamirig Dass v. State of Orissa, [1954] SCR 1046 that annual
contribution taken from the religious institutions for meeting the expenses
E of the Commissioner of Hindu Religious Endowments for due administra-
tion of the affairs of religious institutions, do not lose the character of fees
so long it is not merged in general revenue of the State for general public
purpose. Mr. Sanyal has submitted that similar view has also been ex-
pressed in the later decision of this Court in Chief Commissioner, Delhi
F and Another v. Delhi Cloth and General Mills Co. Ltd. and Ors., (1978] 3
SCR 657 and in Municipal Corporation of Delhi and Ors. v. Mohd. Yasin
Etc., [1983] 2 SCR 999. Mr. Sanyal has submitted that the High Court has
wrongly understood the import of Section 33M and aims and objects for
introducing the same. These have only indicated that in view of the finan-
cial situation of the State, it needed fund by way of contribution of certain
G percentage out of market fees and licence fees, but it was nowhere stated
in the aims and objects that such fund was needed by way of general
revenue of the State for general public purpose. Mr. Sanyal has submitted
that even if the objects for introducing Section 33M may not be happily
worded, the State Government has made its position very clear that entire
H amount to be made available under Section 33M to the State Government
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 185
of Bihar will be ploughed back for advancing the objecl' un<lcr the Markets A
Act and no part of such collection will be utilised for general public
purpose. Mr. Sanyal has, therefore, submitted that in the aforesaid facts,
there is no need to strike down the Section 33M and the decision of the
High Court in that regard must be set aside.
After giving our careful consideration to the facts and circumstances B
of the case and the submissions made by the learned counsel for the
parties, it appears to use that unless agricultural produce is included in the
Schedule to the Markets Act, the provisions of the Act have no application
to such produce. An agricultural produce may find its place in the Schedule
to the Markets Act as originally included by the Legislature, or it may C
subsequently be added to the Schedule under Section 39 of the Act. Section
39 is the only provision in the Act which authorises the State Government
to add any item to the Schedule of the Act or delete any item therefrom.
Section 39 being an independent provision, it does not require sustenance
from other sections. It operates on its own strength.
D
The powor of alterh1g the Schedule by addition or deletion so as to
determine the area of control and the goods lo be controlled other than
those specified in the Schedule has been delegated by the Legislature to ·
the State Government in the same manner as the power has been delegated
to the Central Government under Section 2(a) of the Essential Com- E
modities Act to specify essential commodities other than those specified
by the Legislature itself.
For drawing up the field of control by specifying agricultural produce
m the Schedule so that control in respect of the same under other
provisions of the Act is made, no hearing has been prescribed by the F
statute. In our view, such hearing is not contemplated because it may not
always be feasible or even desirable to give hearing for determining which
produce is to be included in the Schedule. The wisdom in selecting the
field of control by including the produce in the Schedule was exercised
initially by the Legislature and thereafter such wisdom has been left to the G
discretion of the delegated authority namely the State Government. It may
be noted here that such hearing in the matter of selecting the field of
control by adding items is also not contemplated in the Essential Com-
modities Act.
Mr. Sen, in our view, has ·rightly contended that when the field of H
186 SUPREME COURT REl'ORTS [1996] SUPP. 3 S.C.R.
A control is circumscribed by the items in the Schedule, the actual control
part of it including the goods lo be controlled, the market area where the
control will operate and where the controlled products will have to be sold
are left lo the judgment of the State Government subjecl. to the statutory
conditions imposed by Section 3(1) and section 4(1) of the Markets Act.
B Once the notification under Sections 3 and 4 are issued specifying the
goods to be controlled and the areas where the control will operate, the
other provisions of control contained in Section 5 onwards including the
levy of fee under section 27 of the Markets Act spring into action.
It is nobody's case nor it has been found as a fact in the impugned
C judgment that sugar was not in the Schedule and the same was not bro,1ght
under control by following the procedure of Sections 3 and 4 of the Act.
As a matter of fact, ever since control on sugar was imposed by fixing th.e
Market areas, the Markets Act had been operating for controlling sale of
sugar and purchase has been levied with fee.
D
In exercise of power under Section 39 of the Markets Act, a notifica-
tion was issued on May 2, 1977 deleting sugar from the Schedule. Admit-
tedly, the said notification under Section 39 was issued without following
the procedure of Sections 3 and 4 of the Markets Act. As a result of the
said notification, sugar was deleted from the schedule and such deletion
E had the effect of shrinking the field of control of the original Schedule.
It may be noted here that the invalidity of the deletion of sugar on
the basis of the said notification dated 25.1977 is not alleged by the sugar
mills. As a matter of fact, they accept that by the said notification sugar
F stood deleted from the Schedule. But when such deletion is sought to be
negatived by issuing notification dated May 21, 1977 rescinding the earlier
notification dated May 2, 1977, challenge as to the validity of the later
notification was made by filing writ petitions before the High Court. In the
judgment in D.C.M. 's case (supra) such notification dated May 21, 1977
rescinding earlier notification has been held invalid by the High Court on
G the ground that once control has been effected in respect of a scheduled
goods by following provision under Sections 3 and 4, reintroduction of an
item in the Schedule is not permissible without following the provisions of
Sections 3 and 4. In our view, such decision can not be sustained for the
reasons indicated hereafter. Inclusion or deletion of an item in selecting
H the field of control is to be made in exercise of power under Section 39 of
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 187
the Markets Act and State Government is clothed with such power which A
can be exercised without any aid of the provisions of Sections 3 and 4 of
the Act. It should also be noted that since deletion of sugar from the
Schedule was made in exercise of power under Section 39, and such
deletion was not a deletion under Section 4(1) of the Act, the procedure
prescribed in Sections 3 and 4 of the Act, was not required to be followed.
B
Section 4(3) does not contemplate inclusion or exclusion of produce under
section 39 of the Act but is applicable only to the inclusion or exclusion of
any area from the area of market or any produce specified therein as have
been notified for control in a specified market already by notification
issued under Sections 3 and 4 of the Act.
c
Since the decision in DCM's case that by the notification of May 21,
1977 rescinding the earlier notification of May 2, 1977 was invalid and the
said subsequent notification had not the effect of introducing sugar in the
schedule for want of compliance of Sections 3 and 4 was binding on the
State Government, although appeal before this Court against the judgment D
was pending, the State Government intended to remove the hurdles or
fetters in deleting or including items under Section 39 without following
the provisions of Sections 3 and 4 by introducing Section 4A and 4B by the
validating/amending act of 1993.
Sub-section (1) of Section 4A makes Sections 3 and 4 of the. Act E
non-applicable in the matter of exercise of the powers by the State Govern-
ment under Section 39 of the Act to amend the Schedule by addition of
any item of agricultural produce not specified therein. Sub-section (2) of
Section 4A provides that the State shall not order the deletion of any of
the item without giving an opportunity for hearing to the affected parties. F
It is apparent that the legislature has given a chance of hearing to the
parties to be effected if deletion of an item already included in the
Schedule is lo be effected. But for addition of an item of agricultural
produce in the Schedule in the exercise of power under Section 39, no
hearing has been contemplated.
G
In our view, sub section (2) of Section 4A has for the first time
circumscribed the power of deletion of a scheduled item in exercise of
power under Section 39 of the Act without affording any hearing to the
party aggrieved. It has already been indicated that Section 39 is the only
provision in the Markets Act which has delegated the authority to the State H
188 SUPREME COURT REPORTS [1996) SUPP. 3 S.C.R.
A Government to modify the Schedule either by adding or by deleting any
agricultural produce. Before the introduction of Section 4A by the amend-
ing Act, even for deletion in exercise of power under Section 39, no hearing
was necessary.
The Legislature is quite competent to make provision for hearing
B only in case of deletion of a schedukd item witho.ut making such provision
for inclusion of an item in the Schedule. Whether an item deserves to be
included in the Schedule so that control under the Act may be brought in
respect of such item, is a matter of decision of the State Government
according to its perception to the felt need for such inclusion. But when
C the State Government has felt that need of inclusion in the Schedule but
later on intends to change its mind by deleting the item from the Schedule,
the Legislature in its wisdom has thought it fit that before deletion, a
second thought is desirable by noting the objections that might _be given by
a party aggrieved. In our view, both the sub sections of Section 4A are
D within the legislative competence and are also informed by reasons. In the
aforesaid facts, there is 110 occasion to hold that Section 4A is ultra vires.
In our view, the High Court has laboured under an erroneous view that
power under Section 39 can not be exercised without the aid of Sections 3
and 4 of the Act and in view of such misconception about the power and
E authority under Section 39, the impugned decision has been made by
holding Section 4A as ultra vires.
Even if it is held that the decision in DCMs' case, though erroneous,
was binding inter-pwte, the requirement of following the procedures under
Sections 3 and 4 of the Act in the matter of inclusion or deletion of an
F agricultural produce as held in DCJ\f's case by the High Court, has been
expressly removed by introducing Section 4A. In our view, the amend-
ing/validation Act docs not intend to overrule or annul any decision of the
Court, but the amending Act has brought in a change in the requirement
of following the procedure under Sections 3 ·and 4 of the Act while
G amending the Schedule under Section 39 of the Act. Hence, the basis of
the decision in DCM's case has undergone a legislative change. Therefore,
section 4A does not suffer from encroachment of judicial power of the
State.
H Section 4A does not offend Airticle 14 of the Constitution. In view of
SASAMUSASUGAR WORKSv. STATE[G.N.RAY,J.] 189
Section 4A of the Act, any exercise of power under Section 39 of the Act A
is to be uniformaly exercised in accordance with Section 4A of the Markets
Act. In our view, no objection as to the validity of Section 4A can be raised
on the ground that different procedures for inclusion and deletion of an
item for the purpose of exercising power under Section 39 and powers
under Sections 3 and 4 of the Act have been provided for in the Act.
B
Exercise of power under Section 39 is altogether a different exercise from
the exercise of power under Sections 3 and 4. Even if it is assumed that
the exercise of power under Section 39 in the matter of inclusion and
deletion of an agricultural produce overlaps or comes in conllict with the
exercise of power under Section 3 and 4, the Legislature by incorporating
Section 4A has given overriding power to Section 39, subject to the c
limitation under Section 4A(2). Viewed from this perspective, Sections 3
and 4 stand modified on account of Section 39 read with Section 4A of the
Markets Act.
First part of Section 4B contemplates validation of market fee levied D
and collected by treating such levy and collection under the Act as
amended. Second part of Section 4B legislatively annuls the notification
dated May, 1977. The other parts relate to consequential actions flowing
from the first two parts. Levy of market fee was held invalid for item like
sugar which was excluded from the Schedule by notification dated May 2,
1977on the ground that once deleted from the Schedule, its reintroduction E
can take effect only after complying with Sections 3 and 4 of the Act. It
should noted that 'in view of Sec.lion 4A, which has been inserted in the
Market act by specifically indicating in Section 2 of Amending Act that the
said Section "shall always be deemed to have been inserted", deletion of an
item and subsequent inclusion of the same under Section 39 is to be made F
in accordance with Section 39 read with Section 4A. Sub- section (2) of
Section 4A makes. it i!'lperative that deletion can be made after hearing
objection. Hence, even if notification dated May 21, 1977 purporting to
rescind the notification dated May 2, 1977, by which sugar was deleted
from the Schedule, is held invalid for the reason indicated by the High G
Court, such deletion stands invalidated under Sub-section (2) of Section
4A. Hence, declaration of annulment of notification dated May 2, 1977
flows fn;im Section 4A(2). The result is that sugar must be deemed to be
always in the Schedule in respect of which controls have been operative.
Both the parts of Section 4B therefore, do not suffer from any infirmity,
even otherwise. If deletion Ls non-est, annulment of notification dated May H
190 SUPREME COURT REPORTS (1996] SUPP. 3 S.C.R.
A 2, 1977 is a matter of course. Similarly, levy and realisation of market fee
on the items which were included in the Schedule, but exclusion of which
was of no consequence, cannot be held invalid. In a sense, first two parts
of Section 4B arc declaration of the consequence of invalidation of deletion
notification. We, therefore, find no difficulty in upholding the vires of both
B Sections 4A and 4B of the Markets Act.
Section 33M cannot also be held ultra vil~s inspite of the fact that
the object for inclusion of Section 33M in the Act is not happily worded.
It has been categorically stated by the State Go•.•ernment that the collection
lo be made by the State Government under Section 33M of the Markets
C Act are not to be utilised for general purposes but entire collection are to
be ploughed back for achieving the purposes under the Act. In that view
of the matter, it cannot be reasonably contended that the imposition has
lost the character of fee and it partakes the character of tax.
In the result, (a) Sections 4A and 4B are held valid by declaring that
D Sections 4A and 4B are intra vires and (b) Section33M is also valid. Further,
the impusilion of market fee anU collection of such levy in respect of sugar
are legal and valid.
The appeals and SLP are accordingly disposed of without any order
as to costs.
E
R.A. Appeals and petition disposed of.
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