State of Madhya Pradesh & Ors Vs.
Galla Tilhan Vyapari Sangh & Ors  INSC 12 (17 January 1977)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
CITATION: 1977 AIR 2208 1977 SCR (2) 619 1977
SCC (1) 657
Madhya Pradesh Krishi Upaj Mandi Adhiniyam,
1972, S. 37(5)(a), constitutional validity of--Whether unreasonable to
The respondents challenged the constitutional
validity of s. 37(5)(a) of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam,
1972, before the High Court on the ground that it places unreasonable
restriction on the commission agent and puts a great burden on him for storing
the goods given to him by his principal, without charging the commission for
its safe custody. The plea was accepted and the High Court struck down the
impugned provision as unconstitutional.
Allowing the appeal by Special Leave, the
HELD: Section 37(5)(a) is constitutionally
valid and there is no hardship or unreasonableness in it. The provision
prevents the commission agent from levying any additional charges from the
farmer or the principal for safe custody of the goods. but s. 37(4) of the Act
compensates him by authorising him to charge not only his commission from the,
principal trader, but also the expenses incurred by him for the purpose of
storing the produce, and the services rendered by him. [620 D, E, G]
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 19121914 of 1976.
(Appeal by special Leave from the Judgment
and order dated 7-2-1975 of the Madhya Pradesh High Court in Misc. Petition No.
231/74 and 685 and 732/73 respectively.) I.N. Shroff and H.S. Parihar, for the
S.K. Gambhir, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by
FAZAL ALI, J. In this appeal by special leave, on an application filed by the
respondents before the High Court of Madhya Pradesh, the High Court struck down
the constitutional validity of sub-s. (5) (a) of s. 37 of the Madhya Pradesh
Krishi Upaj Mandi Adhiniyam, 1972 --hereinafter referred to as 'the Act'--(No.
24 of 1973). The impugned sub-section runs as follows:
"(5) Every commission agent shall be
liable-(a) to keep the goods of his principal in safe custody without any
charge other than the commission payable to him; and" 620 The High Court
thought that this statutory provision places unreasonable restriction on the
commission agent and puts great burden on him for storing the goods given to
him by the principal without charging the commission for its safe custody. The
Act is a social piece of legislation and should have been liberally construed
so as to advance the object of the Act and fulfill the aims to be achieved
thereby. The main purpose of the Act is to secure a scientific method of
storage, sale, distribution and marketing of agricultural produce and cut out
as far as possible middleman's profit. The Act, therefore, contains provisions
of a beneficial nature preventing profiteering tendencies. It is not, however,
the hardship that can be termed unreasonable so as to make a statute
unconstitutional. Moreover, the High Court does not appear to have looked to
the scheme of the Act and has in fact completely overlooked the provisions of
s. 37(4) which runs as follows:
"(4) The commission agent shall recover
his commission only from his principal trader at such rates as may be specified
in the byelaws including all such expenses as may be incurred by him in storage
of the produce and other services rendered by him." This section clearly
empowers the commission agent to charge such rates as may be specified by the
bye-laws even for the storage of the Produce and other services rendered by
This provision also does not prevent the
commission agent from levying reasonable charges for the storage over and above
his commission. All that the Act prevents is that the commission agent is
prohibited from levying any charges for safe custody from the farmer or the
principal. This is done in order to attract and lure the farmers to place their
goods with commission agents without additional payment of charges for safe
custody. Section 37 (4), however, compen sates the commission agent by
authorising him to charge his commission and all expenses which may be incurred
by the commission agent in connection with the storage of the produce and the
services rendered by him. This section, therefore, clearly authorises the
commission agent not only to charge his commission from the principal trader
but also expenses incurred by him for the purpose of the storage.
That a part s. 2(e) of the Act which defines
a "Commission agent" empowers him to charge any commission or percentage
upon the amount involved in such transaction.
For these reasons, therefore, we do not see
any hardship or unreasonableness in the provisions Of s. 37(5)(a) of the Act.
The High Court, therefore, committed an error of law in striking down this
provision as unconstitutional. In our opinion, therefore, s. 37 (5) (a) of the
Act is constitutionally valid. In the view we take, it is not necessary to go
into the question whether the law violates Art. 19 of the Constitution which
stands suspended during the emergency.
The appeal is accordingly allowed. The order
of the High Court is quashed. In the circumstances, there will be no order as
M.R. Appeal allowed.