British India Corporation Ltd. Vs.
Market Committee, Dhariwal & ANR  INSC 99 (16 December 1982)
VARADARAJAN, A. (J) VARADARAJAN, A. (J)
CITATION: 1983 AIR 162 1983 SCR (2) 159 1983
SCC (1) 196 1982 SCALE (2)1339
Punjab Agricultural Produce Markets Act, 1961
Section 23-Rule 29 (7)-Scope of-Goods purchased by head office but weighed and
delivered within the market committee area-If attract fee.
The appellant, with its head office at Kanpur
in U.P., runs two woollen mills-one of which is in Dhariwal in the State of
Punjab. The raw material purchased by the head office at Kanpur was sent from
various centers to the mills and no raw material used in the mills was
purchased locally or within the area of the Market Committee.
On demand of market fee by the Committee
under section 23 of the Punjab Agricultural Produce Markets Act, 1961 the
appellant stated that no purchase or sale of the raw material received by the
mills took place within the area of the Market Committee and that for this
reason the Committee had no jurisdiction to levy any fee in respect of those
A Writ Petition filed by the appellant in the
High Court was dismissed a in fructuous since the Market Committee agreed to
withdraw the assessment and to make fresh assessment according to the rules.
Sometime later, however, the Market Committee
once again levied market fee and penalty. A single Judge of the High Court
quashed the demand notice of the Market Committee on the ground that the
assessment order was not in accordance with the provisions of the Act and
Rules. But a Division Bench of the High Court allowed the Committee's Letters
On the question whether the Market Committee
was competent to levy fees.
Dismissing the appeal,
HELD: Clauses (b) and (c) of rule 29 (7) of
the Punjab Agricultural Produce Markets (General) Rules, 1962 would be
attracted bringing the transaction within the term 'bought or sold' if in
pursuance of the agreement of sale or purchase, even if entered at the head
office of the mills at Kanpur, the agricultural produce was weighed in the
market area or if in pursuance of the 160 agreement of sale or purchase the
agricultural produce was delivered in the said area to the purchaser or to some
other person on behalf of the purchaser. [163 E-F] In the instant case both
clauses (b) and (c) would be applicable provided the transaction of sale was
completed immediately on the delivery of the goods to the mills on weighment
within the market area, if the delivery and/or weighment are such that without
both or either of them there will no sale at all in law.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 681 of 1978.
Appeal by special leave from the judgment and
order dated the 2nd day of September, 1976 of the Punjab & Haryana High
Court in Letters Patent Appeal No. 208 of 1974.
Y.S. Chitale, Mrs. A.K. Verma and Ashok Gupta
for the Appellant.
Hardev Singh and R.S. Sodhi for the
The Judgment of the Court was delivered by
VARADARAJAN, J. This appeal by special leave is directed against the judgment
of a Division Bench of the Punjab and Haryana High Court at Chandigarh in
Letters Patent Appeal No. 208 of 1974 by the respondent in that appeal. The
appellant who filed the Writ Petition, has its head office at Kanpur and is
running two woollen mills, one at Dhariwal, in the name and style of New
Egerton Woollen Mills' (hereinafter referred to as 'Dhariwal Mills') and
another at Kanpur in the name and style of 'Lal-Imli Cawnpore Woollen Mills' (hereinafter
referred to as 'Kanpur Mills'). The case of the appellant-company was that
after the purchase of raw material made by its head office at Kanpur the raw
material is sent from various centres in India as well as from abroad to both
the mills in accordance with their requirements and no raw material used in the
Dhariwal Mills is purchased locally or within the area of the Market Committee,
Dhariwal excepting that during the years 1969 and 1970 two contracts for the
purchase of raw wool of the value of Rs. 6,000/- and Rs. 5,000/- were entered
into within the area of the said Market Committee.
The appellant's case was that no purchase or
sale of the raw material received by the Dhariwal Mills takes place within the
area of the Market Committee and that, however, the Market Committee made a
demand for payment of market fee on all raw wool purchased by the appellant
from 7.3.1962 to 29.6.1968 by a letter dated 21.6.1968 on pain of 161 recovery
of that amount and penalty as arrears of land revenue, if not paid within the
specified time. After a series of correspondence between the appellant and the
Market Committee-first respondent, the latter made an assessment of market fee
due from the appellant and demanded a sum of Rs. 3,67,200/- made up for Rs. 2,44,800/-
being fee payable for the period from 26.5.1961 to 31.12.1970 and Rs. 1,22,400/-
being penalty. As the amount was not paid the Market Committee took steps under
s. 41 (2) of the Punjab Agricultural Produce Markets Act, 1961 for the recovery
of the amount as arrears of land revenue. It is in these circumstances that the
appellant filed a Writ Petition No. 4247 of 1971 which was dismissed as
infructuous on 15.11.1972 as the Market Committee agreed to withdraw the
assessment and to make a fresh assessment according to the rules.
The appellant contended in the present Writ
Petition out of which this appeal has arisen that although it made all efforts
for associating itself with the fresh assessment proceedings by producing the
necessary records, the Market Committee once again levied market fee of Rs.
4,26,000/- and penalty of a like sum and made a demand for the total sum of Rs.
8,52,000/- by notice dated 16.8.1973. The present Writ Petition was filed under
Articles 226 and 227 of the Constitution for quashing that demand notice and
restraining the Market Committee from recovering the amount. The learned Single
Judge allowed the Writ Petition on a legal point that the assessment order made
is not accordance with the provisions of the aforesaid Act and the Rules,
without expressing any opinion on the merits of the case. The Market Committee,
therefore filed the aforesaid Letters Patent Appeal.
There is no dispute that the raw material
received by the Dhariwal Mills is an agricultural produce as defined is s. 2A
of the Act and that the said commodity after being received by the Dhariwal
Mills is weighed within the notified area of the Market Committee. The contest
between the parties is on the question whether in the circumstances of the case
the provisions of s. 23 of the Act were attracted or not.
Section 23 of the Act reads thus:
"A Committee shall, subject to such
rules as may be made by the State Government in this behalf, levy on ad 162
valorem basis fees on the agricultural produce bought or sold by licensees in
the notified market area at a rate not exceeding two rupees and twenty paise
for every one hundred rupees.
Provided that:- (a) no fee shall be leviable
in respect of any transaction in which delivery of the agricultural produce
bought or sold is not actually made; and (b) a fee shall be leviable only on
the parties to a transaction in which delivery is actually made." A
perusal of the records produced by the appellant reveals the existence of a
number of original contracts entered into by the appellant at Kanpur with
various suppliers of raw wool in India with a provision practically in all the
transactions that 80 per cent of the goods was payable against the documents
and the balance after receipt and examination of the goods which were to be
despatched to Dhariwal Mills directly. There are certain terms and conditions
on the back of the contract forms in regard to the procedure for scouring
yield. It will be necessary to state only a few of those terms and conditions.
Clause A relating to the procedure for scouring yield read thus:- (A) Two bales
at random are taken and issued to Scouring Department. The weight recorded at
the time of receipt of the consignment is taken. After scouring in three bowl
Scouring Machine using warm water, the wool is dried in the dryer and spread in
a covered place for about 12 hours to regain normal moisture. The wool is then
weighed and yield calculated".
Clauses 2 and 3 read thus:
'2. The Mills have every right to reject a
portion or bulk if the quality is not up to the suppliers' samples given at the
time of offers.
3. Weight received in the mills will be taken
as final weight." 163 Rule 29 of the Punjab Agricultural Produce Market
(General) Rules 1962 framed under the Act provides for levy of the fees on agricultural
produce bought or sold by licensees in the notified market area. Rule 29 (7)
"29 (7) For the purposes of this rule
agricultural produce shall be deemed to have been bought or sold in a notified
(a) if the agreement of sale or purchase
thereof is entered into the said area;
(b) if in pursuance of the agreement of sale
or purchase the agricultural produce is weighed in the said area; or (c) if in
pursuance of the agreement of sale or purchase the agricultural produce is delivered
in the said area to the purchaser or to some other person on behalf of the
purchaser." Clauses (b) and (c) would be attracted bringing the
transaction within the term 'bought or sold' if in pursuance of the agreement
of sale or purchase, even if entered into at Kanpur, the agricultural produce
is weighed in the market area or if in pursuance of the agreement of sale or
purchase the agricultural produce is delivered in the said area to the
purchaser or to some other person on behalf of the purchaser.
The Division Bench of the High Court in the
Letters Patent Appeal was of the opinion that both clauses (b) and (c) are
applicable to the facts of the present case even on the admitted facts of this
case as the transaction of sale is completed immediately on the delivery of the
goods to the Dhariwal Mils. In that view the learned Judges allowed the appeal
and set aside the judgment of the learned Single Judge and left it open to the
appellant-company to satisfy the Market Committee in respect of any transaction
which does not fall within the scope of their judgment.
The question is as regards the sites of the
sale. If the sale transaction took place within the Market Committee either by
delivery of the goods or by weighment thereof, the transaction would fall
within the ambit of Rule 29 (7).
After having heard 164 learned counsel for
the parties we are of the opinion that no interference with the judgment under
appeal is called for except that it is necessary to make it clear that the
delivery and weighment to be taken into consideration by the market Committee
in respect of the past transactions regarding which the demand has been made
and also future transactions must be delivery an/or weighment without which
there will be no sale at all in law. Subject to this clarification we dismiss
the appeal and direct the parties to bear their own costs.
P.B.R. Appeal dismissed.