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1996 Supreme(SC) 1746
1997(5) Supreme 554
SUPREME COURT OF INDIA
G.N. Ray and G.B. Pattanaik, JJ.
Bhagwan Dass Sood -Appellant
versus
State of Himachal Pradesh & Ors.-Respondents
Civil Appeal No. 7371 of 1995
Decided on 25-10-1996
Counsel for the Parties :
For the Appellant : P.P. Rao, Sr. Advocate, R. Venkataramani, S.M. Garg and Mrs. Sheela Goel, Advocates.
For the Respondent No. 2 & 3 : E.C. Aggarwala, Advocate.
For the State of Himachal Pradesh : Rajiv Nanda, T. Khan and T. Sridharan, Advocates.
IMPORTANT POINT
Requirement for obtaining a licence is mandatory u/s 4(3) of the Himachal Pradesh Agricultural Produce Market Act, 1949, and such obligation to obtain licence is not confined to wholesalers of agricultural Produce or intermediate dealers but also to retail traders.
Headnote:(i) Himachal Pradesh Agricultural Produce Market Act, 1949-Section 4(3)-Any trader or dealer dealing in scheduled agricultural produce within a notified market area is under an obligation to obtain a licence u/s 4(3)-Such obligation not confined to wholesalers of agricultural Produce on intermediate dealers-Licence is required to be taken even by a small retailer operating within a notified market area-Requirement for obtaining a licence is mandatory u/s 4(3)-Question of liability to pay levy of market fee is to be decided on basis of actual business activities-Exemption from liability in respect of trading activities does not entitle a dealer of agricultural produce to refuse to take licence u/s 4(3).
Held that under the Markets Act any trader or dealer dealing in scheduled agricultural produce within a notified market area is under an obligation to obtain a licence under Section 4(3) of the Markets Act. Such obligation is not confined to wholesalers of agricultural produce or intermediate dealers indulging wholesale and retailed business but also to retail traders like the appellant. (Para 9)
Requirement for obtaining a licence is mandatory under Section 4(3) of the Markets Act. Validity of imposition of levy on certain items of agricultural produce on the score of exemption on account of single point levy, is entirely a different exercise and exemption from liability on such score in respect of trading activities in question does not entitle a dealer of agricultural produce within a specified market area to refuse to take licence under Section 4(3) of the Markets Act. (Para 11)
Further held, the appellant being admittedly a dealer under Section 2(i) of the Act was required to take a licence. The question of liability to pay levy of market fee is to be decided on the basis of actual business activities of the appellant with reference to agricultural produce involved in such business activities. If in respect of some agricultural produce the appellant has no liability of market levy in view of single point levy, it is for the appellant to establish such claim with reference to records. It is unfortunate that the appellant has not obtained licence despite reminder. The appellant has successfully prevented the action on the complaints made against him for not taking the licence under Section 4(3) of the Markets Act by moving the writ petition before the High Court and raising untenable contentions in such writ petition. We, therefore, find no reason to interfere with the impugned judgment. (Para 15)
(ii) Constitution of India-Article 19(1)(g)-Himachal Pradesh Agricultural Produce Market Act, 1949 -Constitutional validity of levy of market fee-Legal position regarding.
Held : The legal position regarding constitutional validity of levy of market fee may be summarised as follows:-
(i) Existence of quid pro quo is essential for retaining the character of fee in the matter of levy of market fees.
(ii) Such quid pro quo is not to be reckoned with any mathematical precision with reference to quantum of fees realised by imposition of levy and the percentage of such fees spent for establishing market yards, construction of various infra structures etc. and providing various amenities as envisaged under the Marketing Act and the Rules framed thereunder for effective implementation of aims and objectives under the Act.
(iii) The service to be rendered to the payers of market fee must be real and not illusory.
(iv) Such service must have an objective basis and have a direct link and not to be remote in its effect.
(v) It is not necessary that imposition of levy is to be effected only on establishment of principal and sub market yards by completing the infrastructures required for such establishment of market and sub-market yards. Such construction being time consuming and expenditure oriented, it will be sufficient to justify valid imposition of levy if it is demonstrable that after notifying market area, effective steps not in contemplation but in reality have been taken to identify market and sub-market yards and schemes for establishment of such market or sub-market yards have in fact been put to action and the market fees levied and realised are being ploughed back for the advancement of the purpose for which market fees have been levied and realised.
(vi) In deciding the question of rendering of a real and not illusory service in discharging the obligation emanating from quid pro quo, to levy of market fee, no straight jacket formulae can be evolved. Fact situation in the matter of establishment of principal and sub-market yards and the practical feasibility of construction of infrastructures, roads, pathways etc. for establishment of such market yards within a time frame and in the light of financial constraints is bound to very depending on various factors including imponderables. It is, therefore, essentially necessary to take a pragmatic approach to the problems associated with establishing market and sub-market yards with necessary infrastructures etc. and accompanying facilities and amenities to be made available to traders and producers coming to such yards, in order to decide whether concrete steps have been translated into action with reasonably sincerity in implementing the schemes envisaged under the Marketing Act and the Rules frames thereunder. (Para 13)
JUDGMENT
G.N. Ray, J.-This appeal is directed against judgment dated November 30, 1994 passed by the Division Bench of Himachal Pradesh High Court in Civil Writ Petition No. 39 of 1989. The said Writ Petition was heard along with other writ petitions including Civil Writ Petition No. 568 of 1988 (M/s. Sardar Singh & Sons v. State of Himachal Pradesh) involving common question of law and all the said writ petitions were disposed of by the judgment rendered in C.W.P. No. 568 of 1988.
2. The main contention raised before the Himachal Pradesh High Court in the said petitions was that the Writ Petitioners were not required to take licences under Section 4(3) of the Himachal Pradesh Agricultural Produce Market Act, 1949 (hereinafter referred to as Markets Act) and are also not required to pay market levy. The petitioners contended that the market committee had established principal/sub market yards within the territorial jurisdiction of the market committee. But the petitioners did not carry on their business within the principal market or market yards/sub market yards. On the contrary, they had been dealing with agricultural produce outside the principal market/yard or sub yards. They had been carrying on their business in their own premises which were though within the notified market area, but were outside the principal market/market yard or sub-market yards. Even then, the market committees were insisting the petitioners to obtain licence and pay market fee in accordance with the provisions of the Markets Act and the Rules framed thereunder. Such action on the part of the market committee was wholly illegal and unconstitutional. It appears from the impugned decision of the High Court that the petitioners contention was that the provisions relating to taking of licences for carrying on business and payment of market fee under the Markets Act have placed unreasonable restrictions on their right to carry on their trade and hence Section 4(3) and 21 of the Markets Act are violative of Article 19(1)(g) of the Constitution of India. It was contended that market fee had a direct relationship with the services rendered and since the market committee rendered no service in respect of the area in which the petitioners had carried on their trading activities but the services rendered by the market committee remained confined only to principal market/market or sub market yard established by the market committee, realisation of market fee was illegal and unconstitutional.
3. Such contentions were disputed by respondents by contending that principal market yards and sub market yards had been identified and constructions had been undertaken. According to respondents, such market and market and sub market yards would consist of shops, auction platforms and various public utility service like provision for drinking water, latrines, sanitation, farmers rest houses etc. would be provided. Such scheme would cost expenditure of several crores of rupees by each of the market committee. Though the works were in process, works of such magnitude involving very heavy expenditure could not be immediately implemented in full and the works in progress would require some more time to be completed. The respondents contended that even in respect of areas outside principal market and market or sub market yards inspecting staff had been appointed to ensure proper weighment and payment of price to the producers of scheduled agricultural produce. It was also contended that income to be derived from market fee would be spent for providing the aforesaid facilities and amenities. Hence, there was sufficient nexus justifying imposition of levy and collection of the same.
4. By the impugned judgment, the High Court has held that levy of market fee was quite justified. The requirement of obtaining licence fee and payment of levy of market fee constituted reasonable restriction under Article 19(1)(g) of the Constitution. Hence, the provisions of Section 4(3) and 21 of
