Ram and Sons & Ors, M/S Uggar Sain Hari Kishan Vs. State of Punjab and
Other  INSC 266 (30 April 1998)
Punchhi, K.T. Thomas, D.P. Wadhwa Thomas J.
APPEAL Nos. 2506-07 of 1998 [Arising out of SLP (Civil) Nos. 17058-59 of 1997]
are dealers in food-grains having their business places at two certain
localities in Ferozepur District (Punjab). Appellants in one appeal are dealers at Guru Har Sahai and appellants
in the other appeals are dealers at Talwandi. According to them, they have been
doing business at the old market areas in those localities for over fifty years
and the State Government have declared such places as " market area"
as per the provisions of Punjab Agricultural Produce Markets Act 1961 ( For
short 'the Market Act"). Those areas attained much development with many
facilities due to increased governmental activities.
the enactment of Punjab New Mandi Township (Development and Regulation) Act 1960 (for short ' Mandi Township
Act') powers have been conferred on the State Government to create and declare
new Market (Mandi) Townships. As per Section 3 of that Act, the State
Government have power to sell, lease or otherwise transfer either by allotment
or auction or otherwise, any land or building in ht new Mandi Township on such
terms and conditions as the Government may deem fit to impose.
year 1997 Government decided to create a new Mandi Complex at Guru Har Sahai
another at Talwandi. Lands were acquired by Government for that purpose and
buildings were constructed for providing the infrastructure to the new market
areas. The immediate impact of creation of such new market townships on the
appellants was that they had to move their business from the existing market areas
to the new township in order to prevent closure of their business.
all of them became anxious to get accommodation in the respective new market
areas but they are told to stand in the queue along with all the new comers and
compete with them in the open auction.
earlier occasions when such new Mandi townships were created the Government had
provided some ameliorative reliefs to the existing traders by fixing concessional
rates as for them in respect o the plots or buildings in the new Market areas.
In 1985 Government issued a circular stating that "grain shops, subzi
shops and food stall/booths will be allotted to Arhtis (traders) in all the new
Mandi area established and developed by the colonization department on 25%
above the reserved price", of course subject to certain other terms and
conditions. But Government did not continue with such reliefs being afforded to
the existing traders for long. This is reflected in alter circular issued by
the Government that stall/plots would be auctioned in open and any one could
compete and the highest bidder would be preferred for allotment.
in the present situation also entrusted the work of allotment of stall/plots to
the Colonization Department which in turn took a decision to auction such
plots/stall in the new Mandi complex without providing any concession for the
existing traders despite they being badly affected by the establishment of new
complex. Appellants, therefore, filed writ petitions in the High Court of
Punjab and Haryana for issuing necessary directions to the respondents. But
these writ petitions, were dismissed.
RK Jain, learned Senior Counsel argued for the appellants that if the existing
traders and the new-comers are placed on equal position between them for
securing allotment of stalls/plots in the new Market Area that will in effect
amount to treating claimants unequally which would offend Article 14 of the
Constitution. He also contended that the consequences which had befallen the
appellants on account of creation of the new Mandi included their virtual
displacement from the place where they established themselves over the years
and they are compelled to abandon their existing trading places. According to
the counsel, if they have to contest along with the new-comers for getting
accommodation in the new Mandi, it would only be at the risk of substantial
impairment of their right to trade under Article 19(1)(g) of the Constitution.
Learned counsel relied on the decision of a three judge bench of this Court in
M/s Prem Chand Trilok Chand vs. State of Haryana dated 7.8.1991 (CA No.
3122/91) in which claims of similar traders situated in similar circumstances
were upheld by this Court.
Lordships held thus:
are of the view that normally once the Government starts regulating the place
of sale of agricultural produce/covered by the Act and does not permit any
other place to be used for the purpose, there is an inherent obligation for the
Government to provide at the new site for all the licensed dealers sufficient
accommodation for carrying on their trade and until that is done it would not
be possible for the Government to direct closure of the old site."
However, learned counsel for the respondents invited our attention to another decision
of a two judge bench in which a different view has been adopted (Chand Ram Ram Chand
vs. State of Punjab - 1996 (9) SCC 338) learned counsel or the appellants on
the other hand informed us that subsequently another two judge bench of this
Court (Majmudar and Kurdukar) has decided on 13.2.1998 exactly in accordance
with the three judge bench decision in M/s Puran Mal Ram Chander vs. State of Haryana
(CA 827/98). But learned Judges Made it clear that the said decision is
"based on the peculiar facts of the case and it shall not be treated as a
precedent". Hence, it is not proper to treat that decision as laying down
any proposition of law.
Ram (supra) the two judge bench has considered the earlier decision of the
three judge bench in Prem Chand Trilok Chand and made the following
new sites to auction and allowing everyone to compete would tantamount to the
Government providing an opportunity to enable the existing licensees to shift
their place of business to the new Mandi, if they so desire.
the observations in Prem Chand's case to the effect that there was an
obligation to provide new sites for all licensed dealers would only mean that
an opportunity should be granted to the licensed dealers to acquire sites in
the new Mandi." It is noted that learned judges did not doubt the
correctness of the principle that Government has an inherent obligation to
provide all the licensed dealers sufficient accommodation for carrying on their
trade. But can it be said that such obligation stands discharged merely by
allowing them to compete with outsiders in the open auction.
must be remembered that even without any special provision the existing traders
can have such a right to compete with rest of others. We find much force in the
contention of the learned counsel for the appellant that merely providing an
opportunity to compete with the rest of the public for getting accommodation in
the new Market, is not sufficient to discharge the inherent obligation of the
Government to provide the existing traders at the new market area. hence, it is
difficult to concur with the view adopted in Chand Ram Ram Chand vs. State of Punjab (Supra).
3(1) of the Township Act confers power on the Government to carve out an area
and to create a new Mandi with such area to be known by such name as may be
specified in the notification. Sub-section (2) reads thus:
State Government may sell, lease or otherwise transfer, by auction, allotment
or otherwise, any land or building belonging to or vested in the State
Government in any new Mandi Township on such terms and conditions as it may,
subject to any rules that may made under this Act, deem fit to imposes."
It is by virtue of the said power that the Government authorised Colonization
Department to deal with the matter.
words "or otherwise transferred by auction, allotment or otherwise"
in Section 3(2) of the Township Act are quite wide enough to enable the
Government to take into consideration various factors including equitable
considerations for deciding in what manner and on what conditions the lands and
plots in the new Mandi should be allotted. But such wide powers are not
intended to be used to the detriment of the victims of the newly created Mandis.
not that the State government must sell the land or the building by auction
without any other option. Rule 3 which has been framed under Section 3(2) and
Section 25(a) of this Act states that the lands and buildings shall be sold by
the State Government by public auction or allotment.
case of sale by public auction the sale price shall be the reserve price or the
price offered by the highest bidder whichever is higher. In the case of sale by
allotment the sale price can be determined by the State Government from time to
time keeping in view the market price thereof. While allotment of buildings and
plots is made, the State Government has a duty to take into on account the
handicaps to which existing dealers are subjected on account of creation of the
new Mandi. Section 4 of the Mandi Township Act imposes a bar that no one shall
erect or occupy any building or use or develop any site without the previous
permission in writing of the "administrator". In such a situation the
only avenue open to the traders is through the allotments sanctioned by the
counsel for the respondent had fairly conceded that there is no difficulty to
find space to accommodate the erstwhile dealer sin the new market area. But the
contention advanced is that the purpose of public auction was to earn revenue
and there was no bar on the existing traders to compete with the new comers and
that sufficient number of plots/shops were available to satisfy all such
traders if they choose to bid in the open auction. It was also submitted that
there was no bar on those traders to continue their business at old places,
although for sale and purchase of agricultural produce they may have to move
their business at the market yards of the new Mandis.
above line of argument of the State seems to us rather specious. Land is
acquired under the provisions of the Land Acquired under the provisions of the
land Acquisition laws for establishing new Mandi township. Land so acquired is
developed, plots are carved out and shops and flats are built thereon. Plots as
such may be disposed of or shops and other construction thereon can be made for
use of the trading. hence the land for establishment of new Mandi is not to
generate revenue for the State. It may be a laudable object for the State to
earn revenues in the process but that could not be the sole or even the main
purpose of acquiring land. New Mandis are established because of increase in
business transactions and congestion in the old Mandis and for other such
easy to contend that the existing traders can still operate from their old
places but then for the conduct of their business for sale of agricultural
produce they have to come to new Mandi. It would mean that they have to come to
the new Mandis for conduct of their routine business but for rudimentary
business they could continue to do the same at old places. The fact remains
that any trader would like to conduct his business of sale and purchase of
agricultural produce at the platform close to his shop.
not suggest that government should give preference to the erstwhile dealers by
providing free allotment of buildings or plots not to fix a rate which is below
the reserved price. It is open to the Government to fix up any rate above the
reserved price for such licensed dealers, of course such fixation should not be
at unreasonable rates.
are, therefore, of the view that the decision of the three judge bench in Prem Chand
Trilok Chand requires no re- thinking. Hence, we direct the respondents to
provide preference to the appellants in the matter of allotment of building or
plot in the light of the observations made above.
are thus allowed and the impugned judgments are set aside.