Heinz India Pvt. Ltd.
& ANR. Vs. State of U.P. & Ors.
[Civil Appeal No.1476
[With Civil Appeal
[Civil Appeal No.1477/2006]
[W.P. (C) No.144/2005]
J U D G M E N T
T.S. THAKUR, J.
appeals by special leave arise out of an order dated 20th August, 2004, passed
by the High Court of Judicature at Allahabad whereby a batch of writ petitions
challenging an order passed by the Director, Rajya Krishi Utpadan Mandi
Parishad, Lucknow, dated 3rd July, 1997, under Section 32 of the Uttar Pradesh
Krishi Utpadan Mandi Adhiniyam, 1964 (hereinafter called 'the Act'), have been
The order passed by the
Director, Rajya Krishi Utpadan Mandi Parishad pertained to 19 revision petitions
of which 8 petitions were filed by Glaxo India Ltd. relevant to the period 1st November,
1990 to 30th September, 1994 while the remaining 11 petitions pertained to
Heinz India Pvt. Ltd. relevant to the period between 1st October, 1994 and 31st
During the pendency
of the Special Leave Petitions, Writ Petition (C) No.144/2005 was filed under
Article 32 of the Constitution of India, inter alia, praying for a writ of certiorari,
quashing order dated 25th September, 2004 passed by the Deputy Director (Administration)
Krishi Utpadan Mandi Parishad, Gomti Nagar, Lucknow in another batch of
revision petitions (pertaining to the period between 3rd June, 1996 and 30th
April, 2004) and an assessment order dated 7th July, 1998 passed by the Krishi
Utpadan Mandi Samiti, Aligarh.
A declaration to the
effect that the goods removed from the petitioner's unit at Aligarh to places
outside the State of Uttar Pradesh were by way of stock transfer and no Mandi
Fee was payable on such transfers has also been prayed for. The facts giving
rise to the appeals and the writ petition may be summarised as under:
India Ltd., set up an industrial unit at Aligarh for the manufacture of what is
sold in the market under the brand names Glacto, Complan, Farex, Glucon D and other
products generically called milk foods/weaning foods and energy beverages. It
is not in dispute that the manufacturing process undertaken in the said unit
produced ghee as a by- product of the said items. It is also not in dispute
that with effect from 1st October, 1994, the Family Products Division of Glaxo India
Ltd. was taken over by Heinz India Pvt. Ltd. who continued manufacturing the products
mentioned above including ghee as a by-product of its manufacturing activity.
terms of Section 17(iii) of the Act, sale of specified agricultural produce
within the Mandi limits attracts levy of what is described as Mandi Fee from
the person effecting the sale. The Mandi Samiti accordingly started demanding
the said fee from Glaxo India Ltd., upto the year 1994 and from Heinz India
Ltd., from 1994 onwards qua sales effected by the said two companies of its products
These demands were
resisted by both the companies primarily on the ground that bulk of the ghee
produced in their unit at Aligarh, if not the entire quantity, was sent out of
the Mandi limits on stock transfer basis and that there was no sale involved in
such transfers so as to attract the levy of the Mandi Fee on the same. Even so,
the companies appear to have continued removing their goods from the Mandi
limits in accordance with the procedure in vogue at the relevant time. In
Krishi Utpadan Mandi Samiti & Ors. v. Shree Mahalaxmi Sugar Works &
Ors. (1995) Supp (3) SCC 433, decided on 2nd February, 1995, this Court noticed
the Explanation to Section 17(iii) of the Act and observed that there was a
presumption against the dealers.
This Court held that
in view of the said presumption it is open to the Mandi Samiti to raise demands
against the dealers before the issue of passes. If there is a valid rebuttal to
the presumption and it is shown that no sale took place within the notified
market area the dealers will be entitled to the passes, otherwise not. This Court
further held that even if the dealers are compelled to pay the market fee as
demanded it shall be open to them to challenge the same in the manner provided
under the Act. This implied that if the claim of the dealers that the goods
were not being removed pursuant to any sale transaction was rejected and a
demand for payment of Mandi Fee raised, the aggrieved dealer could question that
demand in appropriate proceedings.
is evident from a reading of the order passed by the Mandi Parishad that the
earlier procedure of issuing free gate passes remained in vogue upto February,
1995, whereafter the Mandi Samiti started issuing gate passes only on payment
of the Mandi Fee demanded by it. This change came about as a result of the
aforementioned decision of this Court in Shree Mahalaxmi Sugar Works (supra).
Subsequently, in Krishi Utpadan Mandi Samiti v. M/s Saraswati Cane Crusher &
Ors. (Civil Appeal Nos. 1769-1773 of 1998), decided on 25th March, 1998 this Court
prescribed the procedure to be followed in the matter of issue of gate passes, making
of provisional assessment and the time frame for making a final assessment.
"We are satisfied
that the orders of this Court afore-referred to would need some repair work. We
treat the said order to be conceiving of a provisional assessment where after
doors are opened for a final assessment. We conceive that when demands are raised
by the Krishi Utpadan Mandi Samiti against a trader before he could ask for
transit of goods outside the market area, the trader would be entitled to
tender a valid rebuttal to say that no sale had taken place within the notified
area and that if the explanation is accepted there and then by the Mandi
Samiti, no question of payment would arise as also of withholding the gate
passes. If prima facie evidence led by the trader is not accepted by the Mandi
Samiti, the trader or the dealer can be compelled to pay the market fee as demanded
before issuance of gate pass.
If the trader makes the
payment without demur, the matter ends and the assessment finalized. But in
case he does so and raises protest, then the assessment shall be taken to be
provisional in nature making it obligatory on the trader to pay the fee before obtaining
the requisite gate pass. After protest has been lodged and the provisional
assessment has been made, a time frame would be needed to devise making the
We, therefore, conceive
that it innately be read in the order of this Court that a final assessment has
to be made within a period of two months after provisional assessment so that the
entire transaction in that respect is over enabling the aggrieved party, if
any, to challenge the final assessment in the manner provided under the afore
Act or under the general law of the land in appropriate for a.
Having added this
concept in this manner in the two Judge Bench decision of this Court, we
declare that what repair has been done instantly would add to the order of the
High Court and the instant corrective decision shall be the governing rule. The
Civil Appeals would thus stand disposed of. Since the assessment thus far made
against the traders, who are involved in the instant appeals, would have to be treated
as provisional awaiting final assessment, we permit the concerned traders to
move the respective Mandi Samiti within two months from today to hear their
objections and proceedings onwards be regulated in accordance with procedure
devised hereinbefore. Nonetheless we add that should the basis of provisional
assessment be knocked off, the Samiti would refund the market fee to the traders/dealers
within two months thereafter."
it to say that according to the above decision the dealers could make a claim
for the refund of the amount paid by them on furnishing of proof of the fact
that the goods had moved out of the mandi area without being subjected to a
transaction of sale.
is important for the present is that Heinz made claims for the refund of the
amount paid by it towards market fee and furnished to the Mandi Samiti material
to support that claim. The material so produced was then evaluated by the Mandi
Samiti who came to the conclusion that the same was not sufficient to rebut the
statutory presumption that the removal of goods from the Mandi limits was
pursuant to a sale effected within such limits. The claim for refund of the
amount paid by the appellant-Heinz was accordingly rejected by the Mandi Samiti
in terms of the orders referred to earlier.
by the order passed by the Mandi Samiti both Glaxo India Ltd. and Heinz India Pvt.
Ltd. filed revision petitions before the Director, Mandi Parishad, invoking his
jurisdiction under Section 32 read with Section 33 of the Act as a delegate of the
Mandi Parishad. By his order dated 24th October, 1996, the Director dismissed the
revision petitions, aggrieved whereof the companies filed Writ Petitions before
the High Court of Allahabad. These Writ Petitions were eventually allowed by the
High Court in terms of an order dated 3rd April, 1997, and the matter remitted
back to the Director for a fresh consideration and disposal in accordance with
Director accordingly heard the revision petition afresh, re- appraised the
material relied upon by the companies in support of their claim for refund and
came to the conclusion that the claim of the companies for refund remained
unsubstantiated and the presumption arising under the Explanation to Section
observed: "17..... (3) Neither the evidences produced by Revisionist company
with the details of information of sale has been given to C & F Agent with dates
on the basis of which C & F Agent would deliver the goods to the buyer
after receipt of payment nor any instance has been produced for giving required
instructions to C & F Agent regarding the sale of goods and nor even any
evidence has been produced. In this way, the evidence produced regarding the
actual mode of sale at the place of destination as to how and by whom it is
being done, are contradictory or are missing. Mandi Samiti gave time to revisionist
for clarifying and proving this sale process but, the revisionist has not been
able to produce clear case and desired evidence on this subject till date.
(4) When the chain
related to the sale at the place of destination in accordance with aforesaid
through stock transfer breaks then while keeping in view the declaration given
under Excise Rule 52(A)/173C, two possibilities appear. First is that the sale agreement
for deal at the place of destination and according to marketing system given in
letter dated 4.1.95 it may be, that the Revisionist company by itself or
through its marketing staff who might be visiting the place of destination give
the delivery of goods to C & F Agent by fixing before the arrival of goods at
the place of destination after receiving amount of money in the form of bank draft
and pay order which resulted in the sale having taken place from the factory at
Aligarh office because the direct contact of buyer with revisionist took place at
Aligarh or it took place through the employees/officers of revisionist's marketing
department at Aligarh and they were given the delivery on that basis only. xxx
xxx xxx xxx xxx xxx 19.
In this way by the
analysis and close consideration of said paras 16, 17 and 18 it is concluded
that under the arrangement given by Hon'ble Supreme Court in 1995 (Supp.3)
S.C.C. 433 the sale taking place in the matter of M/s Mahalaxmi Sugar Works, Revisionist's
disputed transmitted and its sale taking place at the place of destination by
taking stock outside the mandi area in the form of stock transfer and the concept
of taking out the sale under explanation of 17(3)(B), it has failed to prove by
producing counter valid rebuttal of concept because according to the case went
for revision on stock transfer and place of destination it has failed to tell
the presence by producing the best chain of evidence for proving...."
Petition Nos. 2320(M/S), 2516(M/S), 2517(M/S), 2518(M/S), 2519(M/S), 250(M/S),
226(M/S) and 2527(M/S) of 1997 filed by Glaxo India Ltd., before the High Court
of Allahabad challenged the correctness of the above order. Heinz India Pvt.
Ltd. also filed Writ Petition Nos. 2323(M/S), 2321(M/S), 2322(M/S), 2324(M/S), 2325(M/S),
2326(M/S), 2474(M/S), 2475(M/S), 2476(M/S), 2477(M/S) and 2478(M/S) of 1997
before the High Court challenging the same order. The High Court, however, concurred
with the view taken by the Mandi Samiti and the Director of the Parishad and dismissed
the writ petitions by its order dated 20th August, 2004. The High Court held
that the material produced by the companies did not make out a case for refund
for it did not rebut the presumption that ghee produced in the company's unit
at Aligarh was not sold from Aligarh or that the stocks of ghee had been
transferred outside the Mandi limit on consignment basis.
The High Court gave
several reasons for holding that the material produced by the companies in
support of their claim that the so called sales were in fact stock transfer was
either not reliable or was deficient. High Court also held that the companies
had withheld the best evidence available to them without offering any
explanation for doing so. The High Court said: "The long and short of the discussions
made above is that the petitioners have miserably failed to rebut the
presumption of sale in the market area at Aligarh and therefore, the Director and
the assessing authorities rightly levied the Mandi fee on the consignments of
Ghee transported by Glaxo and its successor Heinz India Private Limited to
other States. The judgments passed by the Revisional Authority are not perverse
so as to be interfered with by this Court; rather all the questioned judgments are
well discussed and reasoned. In the result, the petitioners are not entitled to
claim any relief."
present appeals assail the above order as already mentioned.
have heard the learned counsels of the parties at considerable length. Three
questions fall for our determination. These are: 1. Whether the Krishi Utpadan Mandi
Adhiniyam does not contain the necessary machinery provisions for assessment of
the fees and for adjudication of disputes in relation thereto? If so to what
effect? 2. What precisely is the correct legal standard/test for determining whether
or not the presumption arising under the Explanation to Section 17(iii) of the
Act has been rebutted? And 3. Whether the orders passed by the Mandi Utpadan
Samiti and that passed by the Director, as delegate of the Mandi Parishad, suffer
from any legal infirmity to call for interference? Re: Question No.1
Court has in a long line of decisions rendered from time to time, emphasised
the importance of machinery provisions for assessment of taxes and fees
recoverable under a taxing statute. In one of the earlier decisions on the
subject a Constitution Bench of this Court in Kunnathat Thathunni Moopil Nair
etc., v. State of Kerala and Anr. (AIR 1961 SC 552) examined the constitutional
validity of the Travancore-Cochin Land Tax Act (15 of 1955).
what is now well-settled principle of law that taxing statute is not wholly
immune from attack on the ground that it infringes the equality clause in
Article 14, this Court found that the enactment in question was violative of
Article 14 of the Constitution for inequality was writ large on the Act and
inherent in the very provisions under the taxing section thereof. Having said
so, this Court also noticed that the Act was silent as to the machinery and the
procedure to be followed in making the assessment.
It was left to the Executive
to evolve the requisite machinery and procedure thereby making the whole thing from
beginning to end purely administrative in character completely ignoring the legal
position that the assessment of a tax on person or property is a quasi-judicial
exercise. Speaking for the majority Sinha, C.J. said: "Ordinarily, a
taxing statute lays down a regular machinery for making assessment of the tax
proposed to be imposed by the statute. It lays down detailed procedure as to notice
to the proposed assessee to make a return in respect of property proposed to be
taxed, prescribes the authority and the procedure for hearing any objections to
the liability for taxation or as to the extent of the tax proposed to be levied,
and finally, as to the right to challenge the regularity of assessment made, by
recourse to proceedings in a higher Civil Court.
The Act merely declares
the competence of the Government to make a provisional assessment, and by
virtue of s. 3 of the Madras Revenue Recovery Act, 1864, the land-holders may
be liable to pay the tax. The Act being silent as to the machinery and procedure
to be followed in making the assessment leaves it to the Executive to evolve the
requisite machinery and procedure. The whole thing, from beginning to end, is treated
as of a purely administrative character, completely ignoring the legal position
that the assessment of a tax on person or property is at least of a
quasi-judicial character." (emphasis supplied)
Rai Ramkrishna and Ors. etc. v. State of Bihar (AIR 1963 SC 1667) this Court
was examining the constitutional validity of the Bihar Taxation on Passengers
and Goods (Carried by Public Service Motor Vehicles) Act, 1961. Reiterating the
view taken in Kunnathat Thathunni Moopil Nair (supra) this Court held that a statute
is not beyond the pale of limitations prescribed by Articles 14 and 19 of the
Constitution and that the test of reasonableness prescribed by Article 304(b) is
However, in cases
where the statute was completely discriminatory or provides no procedural
machinery for assessment and levy of tax or where it was confiscatory, the Court
would be justified in striking it down as unconstitutional. In such cases the
character of the material provisions of the impugned statute may be such as may
justify the Court taking the view that in substance the taxing statue is a
cloak adopted by the legislature for achieving its confiscatory purpose.
Raja Jagannath Baksh Singh v. State of Uttar Pradesh and Anr. (AIR 1962 SC
1563) this Court was examining the constitutional validity of U.P. Large Land
Holdings Tax Act (31 of 1957). Dealing with the argument that the Act did not make
a specific provision about the machinery for assessment or recovery of tax,
this Court held: "....if a taxing statute makes no specific provision about
the machinery to recover tax and the procedure to make the assessment of the
tax and leaves it entirely to the executive to devise such machinery as it
thinks fit and to prescribe such procedure as appears to it to be fair, an
occasion may arise for the Courts to consider whether the failure to provide for
a machinery and to prescribe a procedure does not tend to make the imposition of
the tax an unreasonable restriction within the meaning of Article 19(5).
An imposition of tax
which in the absence of a prescribed machinery and the prescribed procedure would
partake of the character of a purely administrative affair can, in a proper
sense, be challenge as contravening Article 19(1)(f)." (emphasis supplied)
The State of Andhra Pradesh and Anr. v. Nalla Raja Reddy and Ors. (AIR 1967 SC
1458), this Court was examining the constitutional validity of Andhra Pradesh
Land Revenue (Additional Assessment) and Cess Revision Act (22 of 1962) as
amended by Amendment Act (23 of 1962). Noticing the absence of machinery
provisions in the impugned enactments this Court observed: "...if S.6 is
put aside, there is absolutely no provision in the Act prescribing the mode of assessment.
Section 3 and 4 are charging sections and they say in effect that a person will
have to pay an additional assessment per acre in respect of both dry and wet
lands. They do not lay down how the assessment should be levied.
No notice has been
prescribed; no opportunity is given to the person to question the assessment on
his land. There is no procedure for him to agitate the correctness of the classification
made by placing his land in a particular class with reference to ayacut, acreage
or even taram. The Act does not even nominate the appropriate officer to make
the assessment to deal with questions arising in respect of assessments and does
not prescribe the procedure for assessment. The whole thing is left in a nebulous
form. Briefly stated, under the Act there is no procedure for assessment and
however grievous the blunder made there is no way for the aggrieved party to
get it corrected. This is a typical case where a taxing statute does not provide
any machinery of assessment." (emphasis supplied)
appeals filed by the State against the judgment of the High Court striking down
the enactment were on the above basis dismissed.
may also be made to M/s Vishnu Dayal Mahendra Pal and Ors. v. State of Uttar
Pradesh and Ors. (1974) 2 SCC 306, and D.G. Gose and Co. (Agents) Pvt. Ltd. v.
State of Kerala and Anr. (1980) 2 SCC 410, where this Court held that
sufficient guidance were available from the preamble and other provisions of
the Act. The members of the committee owe a duty to be conversant with the same
and discharge their functions in accordance with the provisions of the Act and the
Rules and that in cases where the machinery for determining annual value has
been provided in the Act and the Rules of the local authority, there is no
reason or necessity of providing same or similar provisions in the other Act or
is no gainsaying that a total absence of machinery provisions for
assessment/recovery of the tax levied under an enactment, which has the effect of
making the entire process of assessment and recovery of tax and adjudication of
disputes relating thereto administrative in character, is open to challenge
before a Writ Court in appropriate proceedings. Whether or not the enactment
levying the tax makes a machinery provision either by itself or in terms of the
Rules that may be framed under it is, however, a matter that would have to be
examined in each case.
In our opinion, it is
not necessary to dilate any further on this aspect in the context of the provisions
of Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 having regard to the fact
that the question whether the said Act provides a suitable machinery for
assessment and recovery of the fee has been examined by this Court in Ram
Chandra Kailash Kumar & Co. & Ors. v. State of U.P. & Anr. 1980
(Supp) SCC 27. That decision arose out of a writ petition filed before the High
Court of Allahabad challenging the constitutional validity of the Adhiniyam. The
High Court had dismissed the challenge to the constitutional validity of the enactment
which order was then assailed before this Court in an appeal by special leave.
This Court formulated as many as 24 distinct points for determination based on
the grounds that were urged in support of the challenge.
One of the points that
fell for consideration was whether the rules framed under the Act provide for any
machinery for adjudication of disputes in addition to the factum and quantum of
liability arising as under the Act. The contention precisely was that neither
the Act nor the rules made any provision for adjudication of disputes that
would arise on both these aspects. While rejecting the submission on behalf of the
Marketing Committee that no such disputes actually exist or are likely to exist
which would require any machinery of the Market Committee for adjudication,
this Court observed: "xxxxxxx
A machinery for
adjudication of dispute is necessary to be provided under the rules for proper functioning
of the market committees. We have already observed and expressed our hope for bringing
into existence such machinery in one form or the other. But it is not correct
to say that in absence of such a machinery no market fee can be levied or
collected. If a dispute arises then in the first instance the market committee
itself or any sub-committee appointed by it can give its finding which will be subjected
to challenge in any Court of law when steps are taken for enforcement of the
provisions for realisation of the market fee."
is evident from the above that this Court had specifically rejected the
contention that in the absence of any machinery under the Act and the Rules no
market fee could be levied or collected. That being so, it not necessary for us
to either re-examine that aspect or to take a contrary view contrary at this
Sudhir Chandra, learned senior counsel appearing for the appellant-company,
however, contended that the hope expressed by this Court that a comprehensive
machinery provision shall be made for adjudication of disputes has been belied
by the inaction of the respondents for over 30 years which calls for suitable
directions and/or guidelines to the State as also to the authorities under the Act
to make necessary machinery provisions especially when serious disputes
involving substantial sums of money towards market fee are arising for
adjudication without there being a semblance of an adjudicatory mechanism or
judicial approach in the matter of adjudication of such disputes.
Elaborating his submissions
Mr. Chandra contended that while the Market Committee examines the question of refund
of the fee paid by the seller of any produce, any dispute touching the correctness
of any such adjudication or assessment by the committee is examinable by the
Board in terms of Section 32 of the Act. Since the Board is a multi-member body
any exercise in the nature of review or revision of the order passed by the Committee
on the claim for refund cannot be undertaken by the Board itself, the practice
that is followed is that such revisions are heard and decided by the Director to
whom the revisional powers of the Board are delegated in terms of Section 33 of
the Act. What according to Mr. Chandra is surprising is that even the Director does
not hear the matters himself.
The actual disposal
of the revision is left to a junior officer to whom the Director may assign the
case for disposal. Hearing by any such junior officer who is neither by training
nor by qualification suited for such determination of complicated issues regarding
the liability of the purchaser or seller of goods within a market area makes the
entire process of determination farcical. A machinery for adjudication of
disputes can be said to have been provided for only if the same ensures a fair
and objective adjudication of the matters in disputes at the hands of the
authority who is either by reasons of his training, experience or qualification
fit to determine the controversy. So long as such a provision is absent in the
scheme of the Act, the requirement of machinery for adjudication of disputes
must be deemed to be absent, argued Mr. Chandra.
32 of the Act empowers the Board to call for and examine the proceedings of the
Committee for the purpose of satisfying itself as to the legality or propriety
of any decision or order passed by a Committee and to pass such orders thereon
as it may deem fit including an order modifying, annulling or reversing any
such decision or order of the Committee. Dealers aggrieved of an order of
assessment or an order declining refund of the fee paid by them are entitled to
question the correctness of any such demand in terms of the said provision
which is in the nature of a revisional power vested in the Board.
It is common ground
that the dealers in the present case had invoked the said power of the Board
under Section 32. It is also common ground that the revisions so filed have
been entertained and dealt with on merits. What is unsatisfactory according to
the dealers is the fact that the revisions have been dealt with by an officer authorised
by the Director. Mr. Chandra did not dispute the proposition that the power vested
in the Board including that under Section 32 of the Act could be exercised by
the Director as a delegate of the Board keeping in view the provisions of
Section 33 of the Act which permits such delegation. Sections 32 and 33 read as
"32. Powers of
the [Board] to call for the proceedings of a Committee and pass orders thereon.
- The [Board] may, for the purpose of satisfying itself as to the legality or
propriety of any decision of, or order passed by, a Committee, at any time call
and examine the proceedings of the Committee, and, where it is of the opinion
that the decision or order of the Committee should be modified, annulled or
reversed, pass such orders thereon as it may deem fit. 33. Delegation of
powers. - The Board may, by regulations, delegate subject to such conditions
and restrictions and in such manner, as may be specified therein, any of its powers
to the Director."
according to the learned counsel for the appellants, was unacceptable is the
fact that the revisions could be heard and disposed of even by an officer
authorised by the Director. This, argued Mr. Chandra, resulted in dilution of the
sanctity and efficacy of the revisional exercise not because it was dehors the
statute but because the exercise of quasi-judicial powers were entrusted to an
officer at the lower rung of the hierarchy.
2(h) defines the term 'Director' as under: "'Director' means an officer
appointed by the State Government as Director of Mandis and includes any other
officer authorised by the Director to perform all or any of his functions under
is manifest from a plain reading of the above that the expression 'Director'
wherever used in the Act including Section 33 thereof includes an officer
authorised by the Director to perform all or any of his functions under the
Act. Significantly enough neither before the High Court nor before us was it contended
that the officer who had handled and disposed of the revision petitions filed by
the dealers, was not duly authorised in terms of Section 2(h) or that the power
of the Board under Section 32 of the Act was not duly delegated to the Director.
It is not, therefore, a case of inherent lack of jurisdiction.
All that the appellants
propose is that the revisions could either be heard by the Board itself or made
over for disposal to a Committee of officers senior enough to decide issues of
fact and law involving substantial financial stakes of the parties. Now it is
true that the stakes involved in the present batch of cases are substantial and
those called upon to satisfy the demands raised against them would like their
cases to be heard by a senior officer or a Committee of officers to be
nominated by the Board. But in the absence of any data as to the number of
cases that arise for consideration involving a challenge to the demands raised
by the Market Committee and the nature of the disputes that generally fall for
determination in such cases, it will not be possible for this Court to step in
and direct an alteration in the mechanism that is currently in place.
The power to decide the
revisions vests with the Board who also enjoys the power to delegate that
function to the Director. So long as there is statutory sanction for the Director
to exercise the revisional power vested in the Board, any argument that such a delegation
is either impermissible or does not serve the purpose of providing a suitable
machinery for adjudication of the disputes shall have to be rejected. It is
noteworthy that Rule 133-A of the Rules framed under the Act regulates the
filing and disposal of the revision petitions under Section 32 thereof.
This provision was
inserted with effect from 11th May, 2008 and empowers the Board either to
decide the revision petition itself or to nominate an officer for doing so. It
also provides for grant of an opportunity of being heard to the person concerned
and a time bound disposal of the revision. Rule 133-A is, therefore, a step in
the direction of providing a machinery under the Act for adjudication of disputes
that may arise between dealers on the one hand and the market committee on the other.
That being so, the
Act is not completely bereft of a machinery nor can it be said that the
observations made by this Court in Ram Chandra Kailash Kumar's case (supra)
have gone unheeded. All that we need to add is that in order to make the
Board's revisional power more effective and its exercise more transparent and
credible, the Board would do well to delegate the power of hearing and disposal
of the revision petitions to a senior and experienced officer who is well-versed
in dealing with legal issues concerning assessment and/or determination of the
liability under the Act. Beyond that it is neither necessary nor proper for us to
say anything. Question No.1 is answered accordingly. Re: Question No.2
to Section 17(iii) of the Act raises a presumption to the effect that any
specified agricultural produce taken out of or proposed to be taken out of a
market area by or on behalf of a licensed trader has been sold within such
area; the price of the produce so presumed to be sold is then determinable in
the manner prescribed. The Explanation reads: Explanation.- For the purpose of
clause (iii), unless the contrary is proved, any specified agricultural produce
taken out or proposed to be taken out of a market area by or on behalf of a licensed
trader shall be presumed to have been sold within such area and in such case,
the price of such produce presumed to be sold shall be deemed to be such
reasonable price as may be ascertained in the manner prescribed."
is fairly evident that the presumption is rebuttable in nature; for it holds
good only till the contrary is not proved by the dealer. The question is what
is the standard of proof required to rebut the statutory presumption; and
whether the Market Committee, the Director or the High Court applied the
correct legal standard for holding that the presumption was not effectively
upon the decision of this Court in Sodhi Transport Co. & Ors. v. State of
U.P. & Ors. (1986) 2 SCC 486, Mr. Sudhir Chandra contended that the
standard of proof applicable was that applied in civil actions which are
decided on the preponderance of probability and not the higher standard of "proof
beyond reasonable doubt" applied in criminal cases. The appellants had
according to the learned counsel discharged the burden of rebutting the
presumption by adducing evidence which tended to show that the ghee
manufactured by them had not been sold within the market area to attract the
levy of market fee on the price thereof.
He urged that the produce
had been removed out of the market area on transfer of stock basis without any
element of sale in such transfers. Reliance was in support placed by Mr.
Chandra upon an agreement which Heinz had executed with its Clearing and
Forwarding (C&F) Agent in the State of Rajasthan apart from other material
adduced before the Market Committee, in a bid to prove that the stocks in
question had not been sold within the market area.
for the Market Committee Mr. Rakesh Dwivedi argued that the mere production of
some evidence howsoever feeble was not enough to rebut the presumption which
would continue to hold the field till such time the trader adduced evidence to
prove the contrary. It was only "proof to the contrary" that could
rebut the presumption and for doing so just any material or evidence was not enough.
It must, argued Mr. Dwivedi, be evidence that would clearly establish that there
was indeed no sale effected within the market area as presumed in terms of the Explanation.
The appellant-companies had failed to do so as before the Market Committee and
the Director and even before the High Court.
Law Dictionary 5th Edition, 1979, defines 'Presumption' as under: "A
presumption is a rule of law, statutory or judicial, by which finding of a
basic fact gives rise to existence of presumed fact, until presumption is
same dictionary defines 'Rebut' as under: "In pleading and evidence, to
defeat, refute, or take away the effect of something. When a plaintiff in an action
produces evidence which raises a presumption of the defendant's liability, and
the defendant adduces evidence which shows that the presumption is ill-founded,
he is said to "rebut it."
in England and America, law permits raising of presumptions both conclusive and
rebuttable. There is considerable judicial authority in both jurisprudential
systems, dealing with the question of the standard of proof required to rebut a
presumption whether statutory or at common law. In England, the civil standard
of proof is defined by Lord Denning in Miller v. Minister of Pensions  2
All ER 372, thus:
need not reach certainty, but it must carry a high degree of probability. Proof
beyond reasonable doubt does not mean proof beyond the shadow of doubt. The law
would fail to protect the community if it admitted fanciful possibilities to deflect
the course of justice. If the evidence is so strong against a man as to leave
only a remote possibility in his favour which can be dismissed with the
sentence "of course it is possible, but not in the least probable"
the case is proved beyond reasonable doubt, but nothing short of that will
years later came Bater v. Bater  2 All ER 458, in which the civil
standard of proof to an extent modified, was seen by some jurists as somewhat
confusing the concept so clearly stated in Miller's case (supra). In Bater (supra)
the Court declared that neither civil nor criminal standard of proof was an
absolute standard. A 'civil case' may be proved by a preponderance of
probability, explained, Denning J., "......but there may be degrees of probability
within that standard. The degree depends on the subject-matter. A civil court, when
considering a charge of fraud, will naturally require a higher degree of probability
than that which it would require if considering whether negligence were
It does not adopt so
high a degree as a criminal court, even when it is considering a charge of a
criminal nature, but still it does require a the degree of probability required
should be commensurate with the occasion."
came Hornal v. Neuberger Products Ltd.  1 Q.B. 247, where the Court held
that in a civil action where fraud or other matter which is or may be a crime
is alleged against a party or against persons not parties to the action, the
standard of proof to be applied is that applicable in civil actions generally,
namely, proof on the balance of probability, and not the higher standard of
proof beyond all reasonable doubt required in criminal matters; but there is no
absolute standard of proof, and no great gulf between proof in criminal and
civil matters; for in all cases the degree of probability must be commensurate with
the occasion and proportionate to the subject-matter.
The elements of gravity
of an issue are part of the range of circumstances which have to be weighed when
deciding as to the balance of probabilities. The law in England, therefore, is
that degree of probability must be commensurate with the subject-matter. This
implies that graver the charge in a civil action, higher the degree of proof
required. A civil case may be proved by preponderance of probability, but the
degree of probability would depend upon the nature of the subject- matter.
the American system of justice, the Courts have adopted a somewhat different
approach, though the essence, may appear to be the same as is accepted by the
Courts in England. In America, standard of proof depends upon the degree of
confidence which the American society thinks the fact finder should have in the
correctness of factual conclusions for a particular type of adjudication. [See
Addington v. Texas, 441 U.S. 418, 423 (1979)].
Proof may be required
by a preponderance of the evidence, by clear and convincing evidence or by
proof that is beyond reasonable doubt. Proof by 'clear and convincing evidence'
lies between standard of 'preponderance of the evidence' at one end and 'beyond
a reasonable doubt' at the other. Clear and convincing evidence has been
described as evidence that produces in the mind of the trier of the fact an
abiding conviction that the truth of the factual contentions is highly probable.
[See 32A Corpus Juris Secundum Evidence ' 1624].
may at this stage refer to a few decisions of this Court on the subject. In
Izhar Ahmad Khan v. Union of India and Ors. (AIR 1962 SC 1052), this Court was
examining the provisions of Schedule III Rule 3 of the Citizenship Rules, 1956
which made it obligatory on the enquiring authority to infer the acquisition of
citizenship of a foreign country from the fact that the passport of foreign country
has been obtained by an Indian citizen. The question was whether a rule about
irrebuttable presumption is a rule of evidence or not.
The question had
arisen in the context of rule- making power of the Central Government under Section
9(2) of the Citizenship Act, 1955 according to which the Central Government could
prescribe rules of evidence subject to which the competent authority could hold
an inquiry. The contention urged was that instead of prescribing a rule of
evidence the Central Government had by enacting Rule 3 and raising a conclusive
presumption regarding the acquisition of citizenship of another country, framed
a rule of substantive law and not a rule of evidence.
Court held that while answering any such question it is not correct to assume
that all rules prescribing irrebuttable presumption are rules of substantive
law. Any such question, declared this Court, has to be answered after examining
the rule and its impact on the proof of the fact in issue. Explaining the
juristic basis of a rebuttable presumption and the approach to be adopted in
applying such presumptions to different situations this Court observed: "25.
It is conceded, and we think, rightly, that a rule prescribing a rebuttable
presumption is a rule of evidence. It is necessary to analyse what the rule about
the rebuttable presumption really means.
A fact A which has
relevance in the proof of fact B and inherently has some degree of probative or
persuasive value in that behalf may be weighed by a judicial mind after it is proved
and before a conclusion is reached as to whether fact B is proved or not. When
the law of evidence makes a rule providing for a rebuttable presumption that on
proof of fact A, fact B shall be deemed to be proved unless the contrary is established,
what the rule purports to do is to regulate the judicial process of appreciating
evidence and to provide that the said appreciation will draw the inference from
the proof of fact A that fact B has also been proved unless the contrary is established.
In other words, the
rule takes away judicial discretion either to attach the due probative value to
fact A or not and requires prima facie the due probative value to be attached
in the matter of the inference as to the existence of fact B, subject, of course,
to the said presumption being rebutted by proof to the contrary. xxx xxx xxx xxx
xxx xxx Thus, the rule of rebuttable presumption adds statutory force to the
natural and inherent probative value of fact A in relation to the proof of the
existence of fact B and in adding his statutory value to the probative force of
fact A, the rule, it is conceded, makes a provision within the scope and function
of the law of evidence.
If that is so, how
does it make a difference in principle if the rule adds conclusive strength to
the probative value of the said fact A in relation to the proof of the
existence of fact B? In regard to the category of facts in respect of which an
irrebuttable presumption is prescribed by a rule of evidence, the position is that
the inherent probative value of fact A in that behalf is very great and it is
very likely that when it is proved in a judicial proceeding, the judicial mind would
normally attach great importance to it in relation to the proof of fact B.
The rule steps in
with regard to such facts and provides that the judicial mind should attach to
the said fact conclusiveness in the matter of its probative value. It would be
noticed that as in the case of a rebuttable presumption, so in the case of an irrebuttable
presumption, the rule purports to assist the judicial mind in appreciating the
existence of facts. In one case the probative value is statutorily strengthened
but yet left open to rebuttal, in the other case, it is statutorily
strengthened and placed beyond the pale of rebuttal. Considered from this point
of view, it seems rather difficult to accept the theory that whereas a rebuttable
presumption is within the domain of the law of evidence, irrebuttable
presumption is outside the domain of that law and forms part of the substantive
Harbhajan Singh v. State of Punjab & Anr. (AIR 1966 SC 97), this Court was
examining the nature and scope of onus of proof which an accused person had to
discharge in seeking protection of the Exception 9 to Section 499 IPC. This Court
held that onus to prove its case lies on the prosecution no matter what the
charge or where the trial is held. The principle that prosecution must prove
the guilt of the prisoner is part of the common law of England and also part of
the criminal law of this country. Having said so, the Court further declared
that if an exception is taken by an accused person he is not required to
justify his plea beyond a reasonable doubt and that the degree and character of
proof which he is expected to furnish in support of his plea cannot be equated with
the degree and character of proof that is expected of the prosecution.
This Court with
approval quoted the English decision in R. v. Clark (1921 61 SCR 608), which
was approved by Lord Hailsham in Sodeman v. R  2 All ER 1138 to the
following effect: ".............the necessity for excluding doubt contained
in the rule as to the onus upon the prosecution in criminal cases might be regarded
as an exception founded upon considerations of public policy. There can be no
consideration of public policy calling for similar stringency in the case of an
accused person endeavouring to displace a rebuttable presumption."
may also refer to the decision of this Court in Sodhi Transport Co. (supra)
upon which heavy reliance was placed by learned counsel for the appellant in
support of the plea that the standard of proof required of the person against whom
statutory presumption is raised is a simple preponderance of probability and no
In Sodhi Transport Co.
(supra) this Court was examining the provisions of Section 28-B of Uttar Pradesh
Sales Tax Act, 1948 which was alleged to be ultra vires of the Constitution inasmuch
as it permitted the authorities to raise a rebuttable presumption regarding the
sale of goods having taken place inside the State of U.P. if the transit pass
is not handed over to an officer at the check-post or the barrier near the
place of exit from the State. Such a presumption with an object of preventing
evasion of tax, it was contended, as regards the proof of a set of
circumstances which would make a transaction liable to tax was tantamount to
conferring on the authority concerned the power to levy a tax which the
legislature could not otherwise levy.
Repelling the contention
this Court held that a rebuttable presumption has the effect of shifting the
burden of proof, for the authority concerned, before levying sales tax arrives
at the conclusion about the exigibility of the tax by a judicial process and
only upon his satisfaction that the goods have been sold inside the State. In
doing so, the authority no doubt relies upon the statutory rules and presumption
contained in Section 28-B of the Act. But such presumption can be rebutted by
the person against whom action is taken under Section 28-B when the person concerned
has the opportunity to displace the presumption by leading evidence. That being
so, provision of Section 28-B inasmuch as the same raises a rebuttable presumption
did not suffer from any vice of unconstitutionality.
This Court observed: "14.
A presumption is not in itself evidence but only makes a prima facie case for
party in whose favour it exists. It is a rule concerning evidence. It indicates
the person on whom the burden of proof lies. When presumption is conclusive, it
obviates the production of any other evidence to dislodge the conclusion to be drawn
on proof of certain facts. But when it is rebuttable it only points out the
party on whom lies the duty of going forward with evidence on the fact
presumed, and when that party has produced evidence fairly and reasonably
tending to show that the real fact is not as presumed the purpose of
presumption is over. Then the evidence will determine the true nature of the fact
to be established. The rules of presumption are deduced from enlightened human
knowledge and experience and are drawn from the connection, relation and
coincidence of facts, and circumstances."
Chandra, however, laid considerable emphasis on the words "tending to show
that the real fact is not as presumed", to argue that the test applied by
this Court in rebuttable presumptions had been the test of 'preponderance of probability'.
We do not think so. It is well-settled that a decision is an authority for the
point it decides. It is equally well-settled that the text of the decision
cannot be read as if it were a statute.
That apart the
expression used by this Court is "evidence fairly and reasonably tending
to show", which signifies that it is not just any evidence, howsoever
shaky and nebulous that would satisfy the test of preponderance of probability to
rebut the statutory presumption but evidence that can by proper and judicial
application of mind be said to be fairly and reasonably showing that the real
fact is not as presumed.
In other words the
evidence required to rebut a statutory presumption ought to be clear and
convincing, no matter the degree of proof may not be as high as proving the fact
to the contrary beyond a reasonable doubt. The heightened standard of proof
required to rebut a presumption raised under the statute at hand is in our view
applicable for two distinct reasons. The first and foremost is that the
presumption is raised in relation to a fiscal statute.
While the amount
payable is not a tax it is nevertheless a statutory levy which is attracted the
moment the transaction of sale takes place within the market area. Goods,
admittedly produced within the market area and not consumed within such area
are presumed to be leaving pursuant to a transaction of sale unless the
contrary is proved. That the goods are produced within the market area is not
in dispute in the instant case. That they left the market area is also admitted.
In the ordinary course, therefore, the presumption would be that the goods left
pursuant to a sale unless the appellants are in a position to prove the
second reason for applying a higher standard of proof than mere preponderance
of probability is that the nature of transaction pursuant to which the goods
are removed from the market area is within the exclusive knowledge of the
appellants or the persons to whom such goods are being dispatched. In other
words, the circumstances in which the transactions, which the statute presumes
to be sales, but which the appellants claim are simple transfer of stocks are within
the exclusive knowledge of the appellants.
The entire evidence relevant
to the transactions, being available only with the appellants and the true
nature of the transactions being within their special knowledge, there is no
reason why the rebuttal evidence should not satisfy the higher standard of proof
and clearly and convincingly establish that the fact presumed is not the actual
fact. Our answer to Question No.2 accordingly is that the evidence intended to rebut
the statutory presumption under Section 17 of the Adhiniyam ought to be clear
and convincing evidence showing that what is presumed under the provision is
not the real fact. Re: Question No.3
Market Committee and the Director have recorded concurrent findings of fact to
the effect that the petitioners had failed to establish that no sale of the
stocks of Ghee had taken place within the Mandi limits at Aligarh. The
statutory presumption that any transfer of stocks from within the Mandi area,
was pursuant to a sale was thus held to have remained unrebutted. A challenge
to the above finding would necessarily raise the question as to the scope of
judicial review of such findings. We need to sail smooth over that aspect
before examining the validity of the orders within the permissible parameters
of judicial review.
power of judicial review is neither unqualified nor unlimited. It has its own
limitations. The scope and extent of the power that is so very often invoked has
been the subject-matter of several judicial pronouncements within and outside
the country. When one talks of 'judicial review' one is instantly reminded of
the classic and oft quoted passage from Council of Civil Service Unions (CCSU) v.
Minister for the Civil Service  3 All ER 935, where Lord Diplock summed up
the permissible grounds of judicial review thus:
has I think developed to a stage today when, without reiterating any analysis of
the steps by which the development has come about, one can conveniently classify
under three heads the grounds on which administrative action is subject to
control by judicial review. The first ground I would call 'illegality', the
second 'irrationality' and the third 'procedural impropriety'. By 'illegality'
as a ground for judicial review I mean that the decision-maker must understand
correctly the law that regulates his decision-making power and must give effect
to it. Whether he has or not is par excellence a justiciable question to be
decided, in the event of dispute, by those persons, the judges, by whom the judicial
power of the State is exercisable.
By 'irrationality' I
mean what can by now be succinctly referred to as 'Wednesbury
unreasonableness'. It applies to a decision which is so outrageous in its defiance
of logic or of accepted moral standards that no sensible person who had applied
his mind to the question to be decided could have arrived at it. Whether a decision
falls within this category is a question that judges by their training and
experience should be well equipped to answer or else there would be something
badly wrong with our judicial system... ... I have described the third head as
'procedural impropriety' rather than failure to observe basic rules of natural
justice or failure to act with procedural fairness towards the person who will be
affected by the decision.
This is because susceptibility
to judicial review under this head covers also failure by an administrative tribunal
to observe procedural rules that are expressly laid down in the legislative instrument
by which its jurisdiction is conferred, even where such failure does not
involve any denial of natural justice."
above principles have been accepted even by this Court in a long line of
decisions handed down from time to time. We may, however, refer only to some of
those decisions where the development of law on the subject has been extensively
examined and the principles applicable clearly enunciated. In Tata Cellular v.
Union of India (1994) 6 SCC 651, this Court identified the grounds of judicial
review of administrative action in the following words : "The duty of the
court is to confine itself to the question of legality. Its concern should be :
a decision-making authority exceeded its powers?
an error of law,
a breach of the rules of natural justice,
a decision which no reasonable tribunal would have reached or,
Therefore, it is not
for the court to determine whether a particular policy or particular decision
taken in the fulfillment of that policy is fair. It is only concerned with the
manner in which those decisions have been taken. The extent of the duty to act fairly
will vary from case to case. Shortly put, the grounds upon which an
administrative action is subject to control by judicial review can be
classified as under :
a. Illegality : This means
the decision-maker must understand correctly the law that regulates his decision-
making power and must give effect to it.
namely, Wednesbury unreasonableness.
may also be made to the decision of this Court in State of Punjab v. Gurdial
Singh (1980) 2 SCC 471 where Krishna Iyer, J. noticed the limitations of
judicial review and declared that the power vested in the Superior Courts ought
to be exercised with great circumspection and that interference may be
permissible only where the exercise of the power seems to have been vitiated or
is otherwise void on well established grounds. The Court observed: "The
court is handcuffed in this jurisdiction and cannot raise its hand against what
it thinks is a foolish choice. Wisdom in administrative action is the property
of the executive and judicial circumspection keeps the court lock-jawed save
where the power has been polluted by oblique ends or is otherwise void on well-
established grounds. The constitutional balance cannot be upset."
is almost complete unanimity on the principle that judicial review is not so
much concerned with the decision itself as much with the decision-making
process. (See Chief Constable of North Wales Police v. Evans  3 All ER
141). As a matter of fact, the juristic basis for such limitation on the
exercise of the power of judicial review is that unless the restrictions on the
power of the Court are observed, the Courts may themselves under the guise of
preventing abuse of power, be guilty of usurping that power. Justice Frankfurter's
note of caution in Trop v. Dulles 356 U.S. 86 (1958) is in this regard apposite
when he said: "All power is, in Madison's phrase, 'of an encroaching nature'.
Judicial power is not immune against this human weakness. It also must be on
guard against encroaching beyond its proper bounds, and not the less so since the
only restraint upon it is self- restraint."
the Court dealing with the exercise of power of judicial review does not
substitute its judgment for that of the legislature or executive or their
agents as to matters within the province of either, and that the Court does not
supplant 'the feel of the expert' by its own review, is also fairly
well-settled by the decisions of this Court. In all such cases judicial
examination is confined to finding out whether the findings of fact have a
reasonable basis on evidence and whether such findings are consistent with the laws
of the land. [See Union of India v. S.B. Vohra, (2004) 2 SCC 150, Shri Sitaram
Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223, and Thansingh Nathmal and Ors.
v. Supdt. of Taxes and Ors., Dhubri, AIR 1964 SC 1419].
Dharangadhra Chemical Works Ltd. v. State of Saurashtra and Ors., AIR 1957 SC
264, this Court held that decision of a Tribunal on a question of fact which it
has jurisdiction to determine is not liable to be questioned in proceedings
under Article 226 of the Constitution unless it is shown to be totally
unsupported by any evidence.
the same effect is the view taken by this Court in Thansingh Nathmal's case
(supra) where this Court held that the High Court does not generally determine
questions which require an elaborate examination of evidence to establish the
right to enforce which the writ is claimed.
may while parting with the discussion on the legal dimensions of judicial
review refer to the following passage from Reid v. Secretary of State for
Scotland  1 All ER 481, which succinctly sums up the legal proposition
that judicial review does not allow the Court of review to examine the evidence
with a view to forming its own opinion about the substantial merits of the
case. "Judicial review involves a challenge to the legal validity of the
decision. It does not allow the court of review to examine the evidence with a
view to forming its own view about the substantial merits of the case. It may
be that the tribunal whose decision is being challenged has done something which
it had no lawful authority to do.
It may have abused or
misused the authority which it had. It may have departed from the procedures which
either by statute or at common law as a matter of fairness it ought to have observed.
As regards the decisions itself it may be found to be perverse or irrational or
grossly disproportionate to what was required. Or the decision may be found to
be erroneous in respect of a legal deficiency, as for example, through the absence
of evidence, or of sufficient evidence, to support it, or through account being
taken of irrelevant matter, or through a failure for any reason to take account
of a relevant matter, or through some misconstruction of the terms of the
statutory provision which the decision maker is required to apply.
But while the evidence
may have to be explored in order to see if the decision is vitiated by such
legal deficiencies it is perfectly clear that in case of review, as distinct
from an ordinary appeal, the court may not set about forming its own preferred
view of evidence."
its order dated 13th September, 1995 the Mandi Samiti, Aligarh, has upon
examination of the evidence adduced before it recorded a finding that the same
did not inspire confidence for a variety of reasons. The Samiti has found that
the appellants had failed to produce any evidence as to when and where any transaction
regarding sale and purchase of ghee manufactured within Mandi area was
finalised. No evidence was adduced by the appellants to show as to who had been
instrumental in finalising such sale transactions out of its officers and employees.
If the product was being sold under the directions of the officers of the Company
it should have been possible for the company to firmly establish the identity
of such officers and furnish details as to when and where the sale transaction of
different stocks of ghee sent out from the market area was finalised.
The Samiti was of the
view that although the appellant had claimed that there were separate C&F
agreements with various agents appointed by it at several destinations outside
the mandi area the appellant had produced only two of such agreements in
support of its case that such C&F agents existed at all such destinations. The
Mandi Samiti noticed that 25 consignments relevant to the order passed by the
Samiti on 13th September, 1995 were sent out of the Mandi area but the appellant-company
had not adduced evidence pertaining to all such consignments. Even in regard to
consignments where such evidence had been adduced the Samiti noticed shortcomings
that adversely affected the credibility of the evidence. For instance, there were
no Book Numbers on the sales invoice-cum-challans relied upon by the company.
The evidence was in the form of loose papers, hence not reliable.
It was noticed that although
payments were mentioned on the documents submitted, no particulars as to who
made the payment and to whom, were available. The Samiti also noticed that
signatures of the vendor of the goods on the sale invoice-cum-challan were
absent. It was, therefore, not clear whether the person making the sale was an
individual from the company or one representing the C&F agent. The Samiti
found information furnished by the appellant incomplete and discrepant in
regard to the sales made in Jodhpur, Jaipur and Indore. The Samiti on the basis
of the above observations took the view that the so called C&F agents were the
actual purchasers of the ghee from the company and the C&F agreements, two of
which were placed on record, were only meant to avoid payment of market fee.
its order dated 3rd July, 1997 the Mandi Parishad which heard the revision
against the above order of the Mandi Samiti did not find any error in the
appreciation of the evidence per se to warrant a different view. It took the
view that no evidence was produced to show as to why a particular quantity of
ghee was to be delivered to a particular place. The transport biltis did not mention
as to who shall pay the freight for the transportation of the ghee. This is because
if the transport of ghee outside Aligarh, was a stock transfer and not pursuant
to a sale made within the market area, the payment of freight would have been the
responsibility of the company for there is no transfer of the ownership in that
case to any third party.
The company should
have in that case firmly established that the transport charges payable in
regard to the transport of the stocks of ghee out of the mandi area were paid
by it and by no one else. Keeping in view the fact that the company is doing business
worth crores of rupees and maintains regular accounts book, both in the ordinary
course of its business as also for tax purposes, there was no reason why the
company should have failed to establish that the transport charges were paid by
it. The Director exercising powers of the Mandi Parishad also held that there
was a break in the chain of reasons in as much as the appellants did not bring forth
the link evidence giving details of the sale transactions pursuant to which
C&F agents had made the delivery of the goods.
orders passed by the Mandi Samiti and the Director exercising powers of the
Mandi Parishad thus clearly show that there was no clear and convincing
evidence to establish that the presumption arising under Section 17(iii) of the
Act stood rebutted and that the actual was not, what was presumed under the
the same effect are the findings recorded by the Mandi Samiti in its order
dated 7th July, 1998 with minor variations here and there. The Mandi Samiti, inter
alia, noticed that while some of the transport consignment note showed that the
same would be billed at Bombay, some others showed that they would be billed at
Aligarh. The amount of freight was also not mentioned nor details regarding the
payment of these consignments notes produced. It was not established whether
the payment was to be made by the appellants or the recipients of the goods. Hence,
the same were insufficient to prove that no sale had taken place inside the mandi
was also no evidence to prove that the rent of godown was being paid by the
appellant-company nor was there any evidence to show the procedure followed for
the sale of the products at Indore and Jaipur. Twenty one of the invoices made for
Jaipur had no signature of the recipient of the goods nor it was clear as to
who received the payment and what was the mode of making of such payments. The
Samiti noted that these invoices were not in book form but were in the form of
loose papers and did not bear any book number. No evidence was, according to the
Mandi Samiti, produced by the appellant regarding the decision of the company's
marketing department in connection with the stock transfer and in connection
with the directions given to the Aligarh office for transfer of a particular consignment
sent to a particular destination and in a particular quantity.
Samiti also noted that the appellants had not produced any evidence to show
that the C&F agents were not authorized to settle the bargain for sale of
goods and were supposed to simply follow the directions of the company as
regards the delivery of specified quantity to a specified party upon receipt of
payment. No evidence regarding instructions to the C&F agents was adduced
before the Mandi Samiti to prove that the company continued to exercise
complete dominion over its stocks and also the power to sell the goods and to
receive payments kept in the custody of the C&F agent.
it to say that the Mandi Samiti appreciated each piece of evidence and found
the same to be insufficient to hold that the sale transactions had, in fact,
taken place outside the mandi area so that the presumption arising under
Section 17(iii) of the Act stood rebutted. The Director exercising powers of
the Mandi Parishad has in its order dated 25th September, 2004 once again
evaluated the evidence and concurred with the view taken by the Mandi Samiti.
the light of the legal position stated in the earlier part of this order, it is
neither feasible for us to embark upon an exercise of re- appreciating the
entire material or to substitute our own findings for those recorded by the
Mandi Samiti and the Director/Mandi Parishad. So long as the finding recorded
by the Mandi Samiti and the Mandi Parishad are not irrational or perverse, and
so long as the view taken by them is a reasonably possible view, this Court
would not interfere.
course of arguments at the Bar, we repeatedly asked Mr. Chandra as to why the
appellants had failed to adduce the material which would throw a flood of light
as to the true nature of the transaction within or outside the mandi area. Mr.
Chandra's reply was that the material was available and could be produced if so
required. Some of this material which was with the appellant but was not
produced was sought to be introduced even at the stage of hearing before us,
while the rest could, argued Mr. Chandra be laid before the Samiti, if an
opportunity to do so could be granted to the appellant.
regret our inability to accede to any such request. We do not think that a
party who has had ample opportunity before the authorities below, to
substantiate its claim can have the luxury of either producing material for the
first time in the Supreme Court or ask for a remand to enable it to do what it
ought to have done at the appropriate stage. It was not the contention of the appellants
that they were not given a fair opportunity to prove their case before the
authorities below. As a matter of fact, orders passed by the Mandi Samiti and
the Mandi Parishad show that sufficient opportunity was indeed afforded to the
appellants and the matter had remained pending for a number of years before
60. Mr. Chandra contended
that the appellants had been requesting the authorities to indicate as to what
kind of material would satisfy them but since the authorities had failed to
respond to that query the appellant had not produced the bulk of the material
which was relevant and available with them. We do not think that such a
procedure was legally permissible or even called for in the facts and
circumstances of the case. As to what material would be sufficient to prove the
case of the party who goes to the Court for relief is a matter for the party or
those in charge of its legal affairs to determine. No litigant can ask for
guidelines from the Court or statutory body as to the evidence which the party should
adduce to substantiate its claim.
The query made by the
appellants as to what material if adduced would satisfy the authorities was,
therefore, misplaced and a red herring to say the least. This is particularly so
when the appellants were in no way handicapped on account of lack of resources or
capacity to get the best of legal advice. Companies with such tremendous resources
as the appellants before us cannot find a shortcut to the discharge of their
obligations under the law by asking the Court or the authority concerned to
indicate as to what kind of evidence would be sufficient in its opinion to
entitle them to the refund of the amount paid or payable towards market fee.
also, no remand ought to be made only to enable a party to produce additional
material. A remand is neither mechanical nor a routine affair. If there is
nothing wrong in the orders under challenge, there is no question of
interference with the same. There is no reason for this Court to set the clock
back and start a process which would take the parties another decade or so to
come to terms with the problem.
the result these appeals as also W.P. (C) No.144/2005 fail and are hereby
dismissed with cost assessed at Rs.15,000/- in each case.