Holding

The term "trader" means a person who in his normal course of business buys or sells any notified agricultural produce and does not include an agriculturist.

Summary

The State of Madhya Pradesh issued directions prohibiting agriculturists from selling their produce through commission agents. The commission agents challenged the directions, arguing that under the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, agriculturists are classified as "traders" and therefore may sell through agents. The Madhya Pradesh High Court held that the definition of "trader" includes any person who buys or sells agricultural produce in the normal course of business, thereby classifying agriculturists as traders and quashing the State's directions. On appeal, the Supreme Court examined the statutory definitions and held that the normal course of business of an agriculturist is cultivation, not buying or selling, and that Section 2(b) expressly excludes traders and commission agents from the definition of "agriculturist". Consequently, the Court concluded that "trader" does not encompass agriculturists, upheld the State's directions, set aside the High Court judgment, and dismissed the writ petition.

Issues considered

Whether the term "trader" under Section 2(p) of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 includes an agriculturist.
Whether the State's directions restraining agriculturists from selling produce through commission agents are valid.

Legislation cited

Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972s. 2(b), s. 2(e), s. 2(p)

Subjects

trader definitionagriculturistcommission agentagricultural produce marketingstatutory interpretationmandi legislationmiddlemen

Judgment

I
A THE STATE OF MADHYA PRADESH
,,
v.
MIS HARDEO SHRINATH AND ORS. ~·

JULY 11, 1994

B (KULDIP SINGH AND YOGESHWAR DAYAL, JJ.)

Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972:

Section 2(b)(e)(p}-Directions restraining 'Agriculturists' from selling
C their produce through 'Commission AgentsL..ffeld valid.
Expression 'Trader'-Does not include 'Agriculturist<-Such inclusion
would defeat the object of the Acl--Object of the Act explained.
f.
The appellant-Stale issued directions restraining the agriculturists
D from selling their produce through the Commission Agents. Respondents·
Commission Agents challenged the validity or Instructions on the ground
that they were contrary to the provisions or the Madhya Pradesh Krlshl
UpaJ Mandi Adhlnlyam, 1972 and In any case the agriculturists being
traders the Commission Agents were entitled to selVpurchase the agricul-
E tural produce on their behalf. The High Court held that (I) In the definition
or 'trader' the words used are 'buys or sells'. Therefore, trader means any
person who In bis normal course or business either buys or sells agricul·
tural produce and Includes a person engaged In processing or agricultural
produce; (II) thus the agriculturist who sells bis produce through a Com·
mission Agent Is a trader according to the definition of 'trader'. Accord·
F lngly, It quashed the Instructions holding that the petitioners cannot be
prohibited from acting as Commission Agents on behalf of the agricul·
turist. State prererred an appeal In this Court.

Allomng the appeal and setting aside the High Court's order, this
G Court

HELD : 1. The expression "trader" under Section 2(p) of the M.P.
Krlsbl Upaj Mandi Adhlnlyam, 1972 means a person who "In his normal
course or busin~ss" "buys or sells" any notified agricultural produce. The
High Court noticed the words "buys" or "sells" but failed to appreciate that
H the said buying and selling bas to be "In his normal course or business".
300

I
STATE OF M.P. v. H. SHRINATH [KULDIP SINGH,J.] 301

The normal course of business of an agriculturist is neither buying nor A
selling. Cultivation of land to gain agricultural produce is the normal
course of business of an agriculturist. It is no doubt correct that a farmer
takes his produce to the market for sale but that by itself would not bring
him within the definition of 'trader' under the Act. [303-H, 304-A]

2. One of the avowed objects of agricultural produce marketing B
legislation is to save the farmers from the middlemen. The farmer can
directly sell bis produce to the consumers/purchasing agencies in the
markets constituted and established under the Act. Accepting the inter-
pretation given by the High Court would defeat the very object of the Act.
Even otherwise the traders and the commission agents have been specili- C
cally excluded from the definition of "agriculturist" under Section 2(b) of
the Act. Therefore, the High Court fell into patent error in holding that
the expression "trader' includes Agriculturists. [304-B, C, 303-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3962 of
1987. ])

From the Judgment and Order dated 8.4.87 of the Madhya Pradesh
1
High Court in M.P. No. 1863 of 1986.

S.V. Deshpande and S.K. Agnihotri for the Appellant. E
D.K. Garg for the Respondents.

The Judgment of the Court was delivered by

KULDIP SINGH, J. This appeal by the State of Madhya Pradesh is F
directed against the order dated April 8, 1987 of Indore. Bench of the
Madhya Pradesh High Court, wherein the expression "Trader" under Sec-
tion 2(p) of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 (the
Act) has been interpreted to include an 'agriculturist'.

Sub-sections .(b), (e) and (p) of Section 2 which are relevant are G
reyroduced hereunder: -

"(b) 'agriculturist' means a person whose main source of livelihood
is wholly dependent on agricultural produce and who cultivates
land on one's own accounts- H
302 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

A (i) by one's own labour; or

(ii) by the labour of either spouse; or

(iii) under the personal supervision of oneself or any member of
one's family referred to in sub-clause (ii) above by hired labour or
B by servants on wages payable in cash or kind but not as crop share,
but does not include a trader, commission agent, processor, broker,
weighmen or hammal of agriculture produce although such trader,
commission agent, processor, broker, weighmen or hammal may
also be engaged in the production of agriculture produce;"

c (e) 'Commission agent' means a person who on behalf -of his
principal trader and in consideration of a commission o; percent-
age upon the amount involved in such transaction buys agricultural
produce and makes payment in cash keeps it in his custody and
delivers it to the principal trader in due course or who receives
D and takes in his custody agricultural produce sent for sale within
the market area or from outside the market area, sell; the same
in the market area and collects payment therefor, from the buyer
a~d remits the sale proceeds to his principal trader.

(By the Amending Act (No. 24 of 1986) in the aforesaid definition,
E after the word 'principal' the word 'trader' has been inserted.)

(p) 'Trader' means a person who in his normal course of business
buys or sells any notified agricultural produce and includes a
person engaged in possession of agricultural produce."

F The appellant issued directions dated December 9, 1986 (Annexure
P-7) restraining the agriculturists from selling their produce through the
Commission Agents (Adatiyas). It was further directed that action would
be taken against the Commission Agents for violating the said instructions.
Respondents 1 and 2 who were Commission Agents challenged the instruc-
G tions (Annexure P-7) on the ground that they were contrary to the
provisions of the Act and in any case the agriculturists being traders under
the Act the Commission Agents are entitled to sell/purchase the agricul-
tural produce on their behalf in consideration of a commission or percent:
age. The High Court posed the following questions for its consideration: -

H "The short question raised in this petition, therefore has been
STATE OF M.P. v. H. SHRINATH [KULDIP SINGH,J.] 303

whether the petitioners can be prohibited from acting as Commis- A
sion Agents on behalf of the seller namely agriculturist and whether
the agriculturist, who thus sells his produce is a 'trader'.

On the interpretation of tt e provisions of the Act reproduced above, the
High Court allowed the writ petition and quashed the Government instruc-
tions impugned before it on the following reasoning: - B
11
The definition of a :'trader' cannot be interpreted to mean, as
urged by the learned counsel for the respondents, that it excludes
agriculturist/cultivator. In the definition of 'trader' the words used
are 'buys or sells'. Therefore, any person who in his normal course
of bi;;iness either buys or sells any notified agricultural produce
c
and includes a person engaged in processing of agricultural
produce is a trader. Therefore, it is difficult to agree with the
submission made by the learned counsel for these respondents
that the business of an agriculturist is only to sell his produce and
that too once in a year. The agriculturist-cultivator is at liberty to D
sell his agricultural produce in one lot or different lots and at
intervals according to the market conditions. Therefore, the normal
course of business of an agriculturist cultivator is to sell the notified
agricultural produce and at times be may he required also to buy
the same in the course of his normal business. Therefore, we are E
of opinion that the petitioners cannot be prohibited from acting as
Commission Agents on behalf of the sellers that is the agriculturist
and consequently Annexure P-7 has to be quashed. It:, therefore,
follows that the agriculturist who sells his produce through a
Commission Agent is a trader according to the present definition
of 'traderrn. F

We are of the view that the High Court fell into patent error in holding
that the expression "Trader" as defined under the Act includes Agricul-
turists. It failed to notice that the legislature has separately defined the
expression "Agriculturist" under section 2(b) of the Act.
G
The expression "Trader" under Section 2(p) of the Act means a
person who 11 in his normal course of business" "buys .or sells11 any notified
agricultural produce .... The High Court noticed the words "buys" or "sells"
but failed to appreciate that the said buying and selling has to be "in his
normal course of business". The normal course of business of an agricul- H
304 SUPREME COURT REPORTS [1994) SUPP. 1 S.C.R.

A turist is neither buying nor selling. Cultivation of land to gain agricultural
produce is the normal course of business of an agriculturist. It is no doubt
correct that a farmer takes his produce to the market for sale but that by
itself would not bring him within the definition of 'trader' under the Act.
One of the avowed object of agricultural produce marketing legislation is
to save the farmers from the middlemen. The farmer can directly sell his
B produce to the consumers/purchasing agencies in the markets/mandis con-
stituted and established under the Act. Accepting the interpretation given
by the High Court would defeat the very object of the Act.

In any case the traders and the commission agents have been specifi-
c cally excluded from the definition of "agriculturist" under Section 2(b) of
the Act. It seems that Section 2(b) was not brought to the notice of the
High Court otherwise, for ought, the result may have been different.

We, therefore, allow the appeal, set aside the impugned judgment of
the High Court and dismiss the writ petition filed by respondents 1 and 2
D before the High Court. The appellant shall be entitled to costs of these
proceedings which we quantify as Rs. 20,000 to be paid by respondents 1
and 2.

T.N.A. Appeal allowed.
,1

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