Mal Girdhari Lal Vs. State of Uttar Pradesh & Ors  INSC 102 (3 April 1992)
S. (J) Mohan, S. (J) Punchhi, M.M. Ray, G.N. (J)
1992 AIR 2084 1992 SCR (2) 446 1993 SCC Supl. (1) 338 JT 1992 (2) 537 1992
Utpadan Mandi Adhiniyam Act, 1964/Rules, 1964: Sections 2,7,10,17/Rules
66,79-Market fees-Levy of- Retrospective effect-Validity of.
this Court upheld the validity of the U.P. Krishi Utpadan Mandi Adhiniyam Act,
1964, (AIR 1980 SC 1124), the authorities called upon the commission agents
carrying on trade in the notified market area to submit their accounts in order
to fix their liability towards market fee. The Traders Association objected
that since no notification was issued under section 10 of the Act, market fee
could not be levied. The authorities replied that the required notification was
already issued on 9.10.67. Certain other objections were also raised and th
authorities informed the Traders Association that such objections were not
tenable and directed production of accounts. Demand Notices were also issued
and the traders were informed that if the market fee was not paid, the same
would be realised as arrears of land revenue. The traders filed Writ Petitions
before the High Court challenging the demand notices.
High Court having dismissed the Writ Petitions, some of the Commission Agents
have preferred the present appeals.
appellants contended that the liability sought to be fixed retrospectively from
1973 to 1978 on the commission agents was unreasonable, as they would not be
able to realise the same from the purchasers scattered all over India,
especially after a long gap and the relief against the purchaser has become
time barred and as such the retospective levy would impose a great burden on
the commission agents; that since the operation of the notification was stayed
by the High Court in 1973, which stay was in force till 1975, no market fee
could be levied for the transactions during that period; and that as no
notification has been issued under section 10 read with proviso to Rule 66
providing for trade charges and market fees in respect of Khandsari sugar, the
demand was invalid.
behalf of the respondents, it was contended that a resolution was passed by the
Mandi Samiti that market fee would be payable with effect from 1.10.73 and that
the same was given wide publicity in the market area and also through
the appeals, this Court,
1. The fee has been validly imposed and no exception could be taken to the
same. It is incorrect to state that notification under section 10 has not been
issued. Merely because there was a stay, it does not mean the liability
disappears. The notification dated 13.9.1973 stood suspended at the instance of
other traders. That cannot enure to the benefit of the appellants herein. They
were neither the petitioners nor the respondents in those proceedings.
Therefore, they cannot take advantage of the stay order and plead inability to
pay. In as much as the Act itself has been retrospectively amended, the
appellants cannot disown their liability. [451C,D] Jang Singh v. Brijlal and Ors.,
 2 SCR 145; Union Carbide Corporation and Ors. v Union of India and Ors.,
 4 SCC 585, distinguished.
Chandra Kailash Kumar & Co. v. State of U.P.,
AIR 1980 SC 1124, referred to.
is one of the settled principles that because of plenary powers, the
Legislature could pass legislation prospectively as well as retrospectively.
This being so, the retorspective liability between 11.10.73 and 12.10.75, the
period in dispute in these appeals, cannot be avoided.
Merely because the commission agents could not realise the amount from the
purchasers at this distance of time or that the purchasers are scattered, the
statutory liability cannot be avoided. [458B]
appellants are liable to pay the demands raised by the respondent Samiti
against them. However, if with regard to any particular transaction it is
proved that by the commission agents the purchasers had paid the market fee, on
such transaction the Samiti will not make them liable once again. [458C]
APPELLATE JURISDICTION : Civil Appeal Nos. 7356- 7360 of 1983 etc. etc.
From the Judgment and Order dated 28.1.83 of the Allahabad High Court in
C.M.W.P. No. 6477, 6606, 6602, 6608, 6517 of 1981.
Jain, B.D. Aggrawal, Ramesh Chandra and P.K. jain for the Appellants.
for the Respondents.
Judgment of the Court was delivered by MOHAN, J. Since common points of law are
involved, all these appeals are dealt with under one judgment.
appellants, commission agents were carrying on trade in the notified market
area. The attack is as to the levy of market fee on them in relation to the
business of Khandsari sugar. To highlight the issue involved we will set out
the legal background first.
U.P. Legislature passed an Act called U.P. Krishi Utpadan Mandi Adhiniyam in
the year 1964 as Act 25 of 1964.
object of the Act was to regulate the sale and purchase of agricultural produce
and for the establishment, superintendence and control of markets in U.P.
Section 5 of the Act confers powers on the State Government in relation to
regulation of sale and purchase of any agricultural produce in any area wherein
such transactions are usually carried on and for that purpose to declare the
area as a market area. This declaration is to be by way of a notification.
Section 7 empowers even a portion of that market area be specified as a
principal market yard, while such other portions could be specified as
effect of such declaration of market area is spoken to under Section 9. In
that, no person shall deal with specified agricultural produced except in
accordance with the conditions of licence granted by the Committee. Sub-
section (9)(ii) is specific, while it says the commission agent, trader or
broker will have to carry on the business in accordance with the conditions of licence.
Section 10 prohibits realisation of trade purchases from the producers form the
sale and purchase of specific agricultural produce except those which are
permitted by the rules or bye-laws.
17, about which we will deal with later talks of the powers of the Mandi Samiti.
Section 40 confers rule-making power.
commission agents, carrying on business by sale and purchase of gur, rab, shakkar
and khandsari questioned the enforcement of the Act in respect of these
merchandise. A Division Bench of the Allahabad High Court held they would not
constitute agricultural produce within the meaning of clause (a) of Section 2
of the Act. The reason was it involves manufacture changing the nature of
order to get over this difficulty, the definition of agricultural produce was
amended by U.P. Act 10 of 1970, and as a result, gur, rab, shakkar and khandsari
and jagger became agricultural produce. The validity of amending Act 10 of 1970
was questioned on various grounds, which, of course, need not concern us. A
Division Bench in Special Appeal No. 175 of 1973 dated 7.9.77 concurring with
the Learned Single Judge repelled the contentions and upheld the validity.
important to note that pending this Special Appeal No. 175 of 1973, the
operation of the notice dated 13.9.73 issued under Section 8 of the Act was
suspended in so far as it related to khandsari. However, on 6.8.75 order of
stay was modified and the Mandi Samiti was directed to keep the amounts realised
by them in a separate account. This order was by agreement between the parties.
It has an important bearing since arguments were raised as to the effect of the
order of stay, and that is why, we are mentioning at this stage itself.
trader carrying on business within the jurisdiction of several Market
Committees challenged the levy of fee before the High Court of Allahabad from
time to time. There were several rounds of litigation in which they failed.
they came up with an appeal. This court ultimately gave a direction that the
market fee should be regularised and charged in the light of the judgment.
the services whenever rendered by the Market Committee, it was observed at page
1141(A.I.R. 1980 SC) as follows :
do hope that services are being rendered and will continue to be rendered by
the various Market Committees in the light of the judgment of this Court in Kewal
Krishan Puri's case. If in regard to any particular Market Committee it is
found that services are not being rendered or in future lapses are made then it
will be open to the payers of fees to reagitate the matter in the High Court in
the light of that judgment." 450 The result of the judgment was the
validity of U.P.
Utpadan Mandi Act was upheld. Thereafter, the Commission Agents were called
upon to submit the account for the period 11.10.73 to 12.8.75 in order to fix
the liability of the market fee. An objection was raised by the Traders
Association that since no notification has been issued under Section 10, market
fee was not leviable. To this, a reply was sent by the Director that as early
as 9.10.67, a notification had been issued. Then again, certain other
objections were raised. The Mandi Samiti informed the Association that the
objections were not tenable and the Samiti need not have recourse to Rule 66 to
support the market fee and directed the production of account. Further to his,
a demand notice was issued and the appellants were also informed should the
market fee be not paid, it would be realised by way off arrear of land revenue.
As a result, Writ Petitions were filed challenging the demands for the period
11.10.73 to 12.8.75. A Division Bench of the Allahabad High Court dismissed
those Writ Petitions. Hence, these civil appeals by a few of the commission
several contentions were raised before the High Court, only the following
points were raised before us by the appellants:- (i) The liability to pay
market fees was on the seller till 1973. Thereafter, till 1978 the purchasers,
were made liable. The commission agents are only the collecting agencies from
the sellers. The liability of the commission agents is sought to be fixed up to
1978 retrospectively from 12.6.73. The fixation of such a libaility is
unreasonable. Firstly, the commission agents were unable to realise the said
amount from the purchasers who were scattered all over India.
1980, when the demand was made the relief against such purchaser has become
The retrospective levy would impose a great burden on the commission agents.
operation of notification of the State Government dated 13.9.73 including
definition of agricultural produce under Section 8 was suspended by the High
Court on 11.10.73. The stay was in force till 1975. Hence, no market fee could
be charged or paid by anyone for the transaction during that period.
(iii) Admittedly, no notification has been issued under Section 10 read with
proviso of Rule 66 providing for trade charges and market fees in respect of khandsari
sugar. Therefore, the demand is invalid.
opposition to this, it is argued on behalf of the Samiti as early as 1975, Mandi
Samiti, Muzaffarnagar passed a resolution that the market fee would be payable
@ 1% with effect from 1.10.73. This resolution was given wide publicity in the
market area as well as through newspapers.
fee has been validly imposed and no exception could be taken to the same. It is
incorrect to submit that notification under Section 10 has not been issued.
Merely because there was a stay, it does not mean the liability disappears. The
notification dated 13.9.1973 stood suspended at the instance of other traders.
That cannot ensure to the benefit of the appellants herein. They were neither
the petitioners north respondents. Therefore, they cannot take advantage of the
stay order and plead inability to pay. In as much as the Act itself has been restrospectivley
amended, the appellants cannot disown the liability.
order to appreciate the respective contentions we will now refer to the
relevant provisions of law in relation to levy of market fess. Originally
(prior to 1978) Section 17 read as follows :- "A committee shall, for the
purpose of this Act, have the power to- (i).........
Levy and collect.
"Such fees as may be prescribed for the issue or renewal of licences, and
(b) Market fees on transactions of sale or purchase of specified agricultural
produce in the principal market yard and sub-market yards from such persons and
at such rates as may be prescribed, but not exceeding one half per centum of
the price of the specified agricultural produce sold or purchased therein:
Provided that no market fee shall be levied or collected on retail sale of any
specified agricultural produce where such sale is made to the consumer.
..........." By President's Act No. 13 of 1973, Section 17(iii)(b) was
substituted by the following sub-section:- "17(iii)(b) market fees, which
shall be payable by purchasers, on transactions of sale of specified
agricultural produce in the principal market yard or a sub-market yard at such
rates, being not less than one per centum and not more than 1-1/4 per centum of
the price of the agricultural produce so sold, as the State Govt. may specify
by notification in the Gazette." The material change effected by this
amendment was to fix the liability on the purchaser instead of the seller.
two limits were also prescribed viz. 1% and 1-1/2% giving the right to the
State Govt. to fix any amount in between these limits relating to any Mandi Samiti.
This power was exercised by the Market Committees through the bye-laws under
by U.P. Act 7 of 1978, a new sub-clause came to be introduced retrospectively
with effect from 12.6.73.
result, the Section reads as under:- "Power of the committee- a committee
shall for the purpose of this Act, have the power to :- (i) ...........
Market fees which shall be payable on transactions of sale of specified
agricultural produce in the market area at such 453 rate, being not less than 1
per centum and not more than 1 -1/2 per centum of the price of the agricultural
produce so sold as the State Government may specify by notification and such
fees shall be realised in the following manner :- (1) If the produce is sold
through a Commission agent, the commission agent may realise the market fees
from the producer and shall be liable to pay the same to the committee.
the produce is purchased directly by a trader from a producer the trader shall
be liable to pay the market fees to the committee.
the produce is purchased by a trader from another trader, the trader selling
the produce may realise it from purchaser and shall be liable to pay the market
fees to the committee, and (4) In any other case of sale of such produce, the
purchaser shall be liable to pay the market fees to the committee.
............" Two things are evident from the above-(1) the Section has
got restrospective effect w.e.f. 12.6.73 and (2) Commission agents are made
66 runs to the following effect :- "Market fee (Section 17 (iii) - (1) The
Market Committee shall have the power to levy and collect fees on the specified
agricultural produce brought and sold in the Market Yards at such rates as may
be specified in the bye-laws but not exceeding one- half of one per centum of
the price of the specified agricultural produce :
that the market fee shall be payable by the seller :
Provided further that no market fee shall be levied and charged prior to the
date on which provisions of Section 10 of the Act are enforced.
- For the purposes of this sub-rule, a sale of specified agricultural produce
shall be deemed to have been effected in Market Yard if it has been weighed or
measured by a licensed weighman or measurer in the Market Yard for the purpose
of sale, notwithstanding the fact that the proprietorship of such agricultural
produce has by reason of such sale passed to a person in a place outside the
market fee shall be levied more than once on any consignment of the specified
agricultural produce brought for sale in the Market Yard if the market fee has
already been paid on it in any Market Yard of the same Market Area and in
respect of which a declaration has been made and a certificate has been given
by the seller in Form No. V.
: Rule 66 cannot be said to be invalid in so far as it sub-delegated the
authority to fix the rate of market fee. Mandi Samiti v. L.P. Singh, 1972 ALJ
643." By notification dated 27.10.65, it was declared in exercise of the
power under Section 6 of the Act that from 31.1.66 the area of the following Gaon
Sabha for purposes of the said Act with regard to (1) Wheat (2) Gram (3) Peas
(4) Paddy (5) Rice (6) Arhar (7) Sarson and Lahi (8) Potatoes (9) Cotton (10)
All kind of Gur, Rab and Deshi Shakkar and their compounds will be the Muzaffarnagar
it would be seen that 10 agricultural produce had come to be included. It also
requires to be noted that khandsari sugar did not form part of the
notification. On 26.9.67, a notification was issued under Section 7 of the Act
that from 30.12.67. the principal Mandi area and sub- Mandi area of Muzaffarnagar
Mandi area came to be specified.
came the notification dated 9.10.67 issued in exercise of the power under
Section 10(1). That notification is reproduced below :- "October 9, 1967 455 No. SAM-1038 (Rec) 3812 In
exercise of the power delegated by the State Government vide Krishi (kha vibhag
dated September 14, 1967, it is hereby notified under sub-section (1) of
section 10 of the U.P. Krishi Utpadan Mandi Adhiniyam 1964 (U.P. Act No. XXV of
1964), that with effect from December 20, 1969, no person shall, in the Muzaffarnagar
Principal Market yard and the Shahpur and Budhana Sub-Market Yards of Muzaffarnagar
market Area levy charge or realise any trade charges other than those
prescribed under rule 79 of the Uttar Pradesh Krishi Utpadan Mandi Niyamavli,
1966, in respect of any transaction of sale or purchase of the agricultural
produce specified vide notification No. H5353A/XII-B- 1047(2) 65, dated October
27, 1965." The last of the notification is one issued under Sub- Section
(1) of Section 8 on 13.9.73, which is reproduced below:- "Government of
Uttar Pradesh Agriculture Section-5 No.A-7756 12B (5) 490/72 Dated : Lucknow
13, September, 1973 Notification Under the proviso of Sub-Section (1) of
Section 8 U.P. Krishi Utpadan Mandi Act, 1964, (U.P. Act No. 25 of 1964) in
Notification No. H-7372/12B- 1200(3)69 dated 16.3.71 issued by the State
Government with regard to the Agriculture Production in the Muzaffarnagar Mandi
area District Muzaffarnagar, under Section 6 of the said Act, in Notification
No. H-5353-A/12B- 1047(2)/65 dated 27.10.65, the Government had made a
declaration of its objects including in the specified agricultural production
in the list. And objections and suggestions if any with regard to the proposed
declaration had to be made to the Director of Agriculture within the period
specified in the said notification. And with regard to the said object,
consideration has been done by the State Government of all objection and
suggestion received by the Director of Agriculture within the prescribed time.
Now therefore in exercise of the powers conferred by part(a) of Sub-Section (1)
of Section 8 of the said Act the Governor declares that from 25.9.73 for the
purposes of the said Act, the following agriculture products i.e. (1) Khatai Amchur
(2) Barseen (seed) (3) Fodder (4) khansari will be included in the list of
agricultural products as indicated in Section 6 of the said Act with regard to
the Muzaffarnagar Mandi area District Muzaffarnagar.
A.P. Singh Deputy Secretary.
effect of the last notification is khandsari gets included to the list of
agricultural produce to the notification issued under Section 6 dated 27.10.65.
matter of fact, Section 8 of the Act clearly postulates such a procedure.
Section 8(1)(a) is reproduced below :- "Alteration of Market Area and
Modification of the List of Agricultural produce-(1) The State Government,
where it considers necessary or expedient in the public interest so to do, may,
by notification in the Gazette, and in such other manner as may be prescribed
and with effect from the date specified in the notification,- (a) include any
agricultural produce in, or exclude any agricultural produce from, the list of
agricultural produce specified in the notification under Section 6;" The
consequence of it will be that w.e.f. December 20, 1969, no person in the Muzaffarnagar
principal Market Yard may levy charge or realise any trade charges other than
those prescribed under rule 79 in respect of sale or purchase of agricultural
produce, specified in the notification dated 27th October, 1965.
is apparent from the notification under Section 10 dated 9.10.67 as seen from
the above extract.
24.9.73, acting under Section 17(iii) as amended, the State 457 Government
issued a notification providing for realisation of market fee @1% on the price
on sale and purchase of specified agricultural produce in the principal Market
Yard of Muzaffarnagar w.e.f. 1.10.73.
to this notification, the U.P. Krishi Utpadan Mandi Samiti Muzaffarnagar
informed as follows:- "...all the traders and commission agents of the Mandi
Area, Muzaffarnagar, Distt. Muzaffarnagar, are informed that they will now realise
Mandi fee on all agricultural produce at its sale value at the rate of 1% of
the total sale or purchase from the purchaser. The amount of Mandi fee realised
in this way shall be deposited as order earlier in the office of the Samiti by
the commission agent traders within the prescribed period and after this notice
no amount will be deducted as Mandi fee from the seller.
Agrawal Pergana Officer, Muzaffarnagar President Krishi Utpadan Mandi Samiti Muzaffarnagar"
From the above narration it will be clear that once the Act itself amended
retrospectively w.e.f. 12.6.73, we do not know how the commission agent can escape
the liability. It is one of the settled principles that because of plenary
powers, the Legislature could pass legislations prospectively as well as
retrospectively. This being so, the liability between 11.10.73 to 12.10.75, the
period in dispute in these appeals, cannot be avoided.
already been seen how khandsari has come to be validly included. Therefore, for
dealing in this commodity the commission agents will be liable to pay at the
to the stay, it has already been noted that though stay was granted on
11.10.73, it was not at the instance of the appellants herein. As a matter of
fact, they never questioned the validity of the amending Act or the
notification. Therefore, they cannot take advantage of the same. The said stay
also came to be modified on 6.8.75 by agreement. Even to that agreement, the
appellants were not the parties. Therefore, neither of the 458 rulings viz.
Jang Singh v. Brijlal and others,  2 SCR 145 and Union Carbide
Corporation and others v. Union of India and others,  4 SCC 585 would
have any application to the facts of the case. Merely because the commission
agents cannot realise the amount from the purchasers at this distance of time
or that they are scattered, the statutory liability cannot be avoided.
result, we hold that they are liable to pay the demands raised by the
respondent Samiti against them.
if with regard to any particular transaction it is proved by the commission
agents the purchasers had paid the market fee on such transaction the Samiti
will not make them liable once again. Subject to the only qualification the
appeals are hereby dismissed. However, there shall be no order as to costs.