1999 Supreme(SC) 825

1999(7) Supreme 1
Supreme Court of India
(From Patna High Court)
Dr. A.S. Anand, CJI., S.B. Majmudar, Mrs. Sujata V. Manohar, K. Venkataswami & V.N. Khare, JJ.
The Belsund Sugar Co. Ltd. etc. —Appellants
versus
The State of Bihar & Ors. etc. —Respondents
Civil Appeal No. 398 of 1977
With
C.A. Nos. 399/1977, 3505/1992, 3506/1992, 1880/1988
W.P. (C) 1250/1986
C.A. Nos. 4500-05/1992, 234/1995, 8163/1994, 7432/1994
C.A. Nos. 4374-75/1999
@ SLP (C) Nos. 3159-60/1994, C.A. Nos. 2632-33/1982
C.A. No. 2532/1980, C.A. Nos. 2951, 2952 and 2953 of 1992, C.A. No. 829/1993, C.A. No. 4376/1999
@ SLP (C) No. 9684/1992, C.A. Nos. 1282/1995, 1427/1979
Decided on 10-8-1999
Counsel for the Parties :
For the Appearing Parties : R.N. Trivedi, Additional Solicitor General, Shanti Bhushan, Y.V. Giri, Dipankar Gupta, G.L. Sanghi (A.K. Goel) Addl. Advocate General, Subodh Markeandeya, Rakesh Dwivedi, H.N. Salve, H.L. Agrawal, Ram Janam Ojha, Sr. Advocates, Shri Narain, Ramesh K. Agrawal, H. Deorajan, Sandeep Narain, Dhruv Agarwal, Praveen Kumar, Ranjit Kumar, Ms. Minu Tamta, Chandra Bhushan, Ms. Parul Gupta, Gopal Jain, R.N. Karanjawala, Ms. Nandini Gore, Sandeep Mittal, Ms. Manik Karanjawala, Ms. Meera Mathur, A.K. Srivastava, R.B. Misra, K. Misra, Sunil Jain, Gauri Rasgotra, S.S. Khanduja, C.N. Sree Kumar, A. Subba Rao, Saket Singh, B.B. Singh, D. Goburdhan, D.N. Goburdhan, Ravinder Narain, Ms. A.K. Verma, Sanjiv Sen, Irshad Ahmad, Sudhir Kumar Gupta, M.P. Jha, Anis Ahmad Khan, S. Ganesh, Ram Ekbal Roy, Ms. Pinki Anand, Advocates.

Important Points
1. Provision of Section 15 of the Bihar Agricultural Markets Act are in direct conflict with Sugarcane Act; entire Machinery of Markets Act cannot apply to transactions of purchase of sugarcane and sale of sugar and molasses by sugar fac­tories functioning in area of Market Committee.
2. Wheat is a produce of agriculture, therefore, any product resulting after processing such basic raw material or which results after process of manufacture is carried on qua such basic raw material would remain agricultural produce within meaning of Section 2(1)(a) of the Bihar Agricultur­al Markets Act and as such levy of market fee on transaction purchase of wheat and sale and purchase of atta, suzi, maida, bran etc. by flour mills is valid.
3. All vegetable oils are treated to be ‘agricultural produce’ as per serial No. 4 of the schedule framed under Section 2(1)(a) of the Bihar Agricultural Market Act; oil manufactured by the oil mills functioning within the areas of the Market Committees concerned by crushing oil-seeds which are undisputedly agricultural produce and subjecting them to manufacturing process cannot be said to be outside the sweep of the regulatory provisions of the Market Act.
4. If rice milling industries located and functioning in the market area purchase within the market area, raw material paddy, whether grown in the market area concerned or outside, then such purchases within the market area will at­tract the regulatory provisions of the Bihar Agricultural Market Act.
5. Rice manufactured out of basic agricultural produce ‘paddy’ would also remain agricultural produce falling within the sweep of the definition of Section 2(1)(a) of the Bihar Agricultural Markets Act;
6. Entire machinery of the Market Act will be applicable to regulate transac­tions of sale and purchase of paddy by the rice mills within the market area as well as sale of rice by them within that area as all these transactions will have to take place in the market yard or sub-market yards as per Section 15 of the Act; rice mills cannot, however, be compelled to shift the loca­tion of the rice mills to any market yard.
7. Tinned baby food containing various ingredients which may include some milk facts or protein though in powder form cannot be said to be milk powder simpliciter or whole milk not in liquid form, and as such infact food cannot be treated as agricultural produce as part and parcell of animal husbandry products within the meaning of Section 2(1)(a) of the Bihar Agricultural Produce Markets Act.
8. Even if an agricultural produce ini­tially is not grown in the market area and it is brought in manufac­tured form within the market area for sale, such sale transaction in connection with such a produce would be covered by the Bihar Agricultural Produce Market Act.
9. Insertion of Tea (leaf and dust) in Schedule to the Bihar Agricultural Markets Act by the State Legislature is valid and blended tea brought in sealed packets for sale in Bihar State is liable to market fee notwithstanding the fact that tea was purchased and proc­essed outside Bihar.

Headnote:(i) Bihar Agricultural Produce Markets Act, 1960—Section 27 read with Section 2(1)(a)—Power to levy fees—Levy on purchase of sugarcane and sale of sugar and molasses—Challenge by sugar factories—Locus standi—Payment of market fee is imposed on sugar factories as buyers of sugarcane within market area—As buyers of sugarcane sugar facto­ries have sufficient locus standi to challenge imposition of market fee on purchase transactions on sale of sugar and molasses by sugar factories to unlicensed buyers obligation of realising market fee and depositing same with market committee is cast upon sugar factories—Hence, in respect of imposition of market fee on sale transaction by sugar factories also, they have locus standi to chal­lenge imposition of market fee.

       Held : It is not in dispute between the parties that sugarcane is an ‘agri­cultural produce’ as it is grown in fields by the cultiva­tors. Both sugarcane and sugar are listed as Item Nos. 1 and 3 in Para XII dealing with miscellaneous items as found in the Sched­ule to the Market Act enacted as per Section 2(1)(a) of the Act. In the light of the aforesaid provisions, it is obvious that the sugar factories operating in the market area within the jurisdic­tion of the market committee concerned can be said to be buyers of sugarcane, an ‘agricultural produce’. Their purchase centres are situated within the market area. As submitted by learned senior counsel for the respondents, all the purchase centres at which the appellant sugar factories purchase sugarcane as raw material are not only situated within the market area but are also de­clared as sub-market yards. In fact the entire Bihar State is comprised of various market areas within the jurisdiction of different market committees. If that is so, it has to be held that when the charge under Section 27 of paying market fee is imposed on the sugar factories as buyers of sugarcane within the market area, they have to be treated to be having sufficient locus standi as buyers of sugarcane to challenge the imposition of market fee on their purchase transactions. On this aspect, learned senior counsel for the respondents did not contest. However, their submission was that when purchased sugarcane is processed at the factories and converted into sugar and molasses and when such sugar and molasses are sold by the sugar factories, the charge of market fee on these sale transactions would settle on the buyers of sugar and molasses who have not made any grievance about payment of market fee. That may be so, however, the fact remains that if the sugar factories sell manufactured sugar and molasses out of the purchased raw material-sugarcane, and if the buyers are not licensed then as per the provisions of Rule 82(iii) of the Bihar Agricultural Produce Markets Rules, 1975 the sugar factories as sellers have to realise the market fee from the buyers and have to deposit the same with the market committees. That obligation by itself would give sufficient locus standi to the sugar factories which sell sugar and molasses within the market area to challenge the aforesaid statutory obligation imposed on them by the Act and the Rules and to submit as to how they are not covered by the provisions of the Act. It may be that when they sell levy sugar to the Food Corporation of India, they may not have to undertake this liability as collect­ing agents of the market committee, so far as the market fee is concerned. Still even if partially in case of sale of free sugar to unlicensed buyers they have to be called upon to discharge their statutory obligation under Rule 82(iii), it cannot be said that they have no locus standi to challenge the imposition of market fee on the transactions of sale effected by them in con­nection with sugar and molasses. (Para 9)

       (ii) Bihar Agricultural Produce Markets Act, 1960—Sections 3, 15, 27 and 42 — Notification dated 22.3.1976—Sugarcane Act, 1981—Section 3—Sugar Control Order, 1966—Applicability of Agricultural Produce Markets Act to transaction of purchase of sugarcane and sale of sugar­cane products by sugar factories—Sugarcane Act provides machinery for regulating purchase and sale of sugarcane—Provisions of Section 15 of Markets Act are in direct conflict with Sugarcane Act —Section 15 of Markets Act and Section 3 of Sugarcane Act cannot co-exist—Notification u/s 42 of Markets Act came to be issued to avoid conflict—Entire Machinery of Markets Act rendered redundant qua agricultural produce (Sugar­cane) to which Section 15 of Markets Act does not apply—No occasion for Market Committee to exercise its regulatory functions for such produce—Entire machinery of Markets Act cannot apply to transaction of purchase of sugarcane by sugarcane factories as they are fully covered by special provisions of Sugarcane Act—Wide sweep of general notification of Section 3 of Markets Act will have to be read down by excluding from its general sweep sugarcane and its products—Sugar manufactured by sugar factories functioning in the market area would be governed by Sugar Control Orders and would pro tanto get excluded from general sweep of the Market Act—Sale of molasses is also regulated by Molasses Act—Market committee cannot levy market fee on purchase of sugarcane and sale of sugar and molasses by sugar factories situated in market committee area—Judgment is prospective.

       Held : The provisions of the Sugarcane Act leave no room for doubt that the Bihar Legislature in its wisdom has enacted a special machinery for regulating the purchase and sale of sugar­cane to be supplied to sugar factories for manufacturing sugar out of the sugarcane produced for them in the reserved area. The relevant provisions of the Act project a well knit and exhaustive machinery for regulating the production, purchase and sale of sugarcane for being supplied as appropriate raw material to the factories manufacturing sugar and molasses out of them. The provision of Sugarcane Rules clearly indicate that the need for regulating the purchase, sale, storage and processing of sugarcane, being an ‘agricul­tural produce’, is completely met by the comprehensive machinery provided by the Sugarcane Act enacted by the very same legislature which enacted the general Act being the Market Act. (Paras 14 & 15)

       Once that conclusion is reached, it becomes obvious that the Market Act which is an enabling Act empowering the State Authori­ties to extend the regulatory net of the said Act to notified agricultural produce as per Section 3(1) will get its general sweep curtailed to the extent the special Act being the Sugarcane Act enacted by the very same legislature carves out a special field and provides special machinery for regulating the purchase and sale of the specified ‘agricultural produce’, namely, sugar­cane. (Para 16)

       Section 15 of Market Act enables the market committee concerned to monitor and regulate the sale and purchase of the agricultural commodity which is covered by the protective umbrella of the Act. Once such an agricultural produce is brought for sale in the market yard or sub-market yard, the sale is to be effected by auction or by inviting tenders. Such a scheme is in direct con­flict with the scheme of the Sugarcane Act wherein there is no question of sugar factory being called upon to enter into a public auction for purchasing sugarcane which is specially earmarked for it out of the reserved area. In fact, provisions of the Sugarcane Act and the provisions of the Market Act, especial­ly Section 15 read with Section 3(1), cannot harmoniously co-exist. It is precisely to avoid such a possible conflict and head on collision between general Act, namely, the Market Act and the special Act, namely, the Sugarcane Act which was later on enacted in 1981 by the very same Bihar Legislature, that the State Government in exercise of its exemption power under Section 42 of the Market Act issued a notification dated 22nd March, 1976. This very notification shows that the State Government had given up its erstwhile intention of regulating the sale and purchase of sugarcane as per Section 3(1) of the Market Act which could not survive any further after the issuance of the aforesaid exemp­tion notification. It is easy to visualise that the market committee can control purchase, sale, storage and processing of agricultural produce in the specified area under the Market Act only when the sale and purchase of agricultural produce can be effected as per Section 15 in the principal market yard or sub-market yard. Once Section 15 is out of picture, the mere declaration of market area as per Section 4 and the general declaration of intention to regulate purchase, sale, storage and processing of agricultural produce like sugarcane as per Section 3 of the Market Act or declaration of market yard or sub-market yards as per Section 5 would remain an empty formality or would represent an empty eggshell with its contents taken out. The entire machinery of the Market Act would be rendered redundant qua agricultural produce to which Section 15 does not apply. Section 15 is the heart and soul of the Act. Due to its inappli­cability to a given agricultural produce there would remain no occasion for the market committee concerned to exercise its regulatory functions for such a produce. This is the precise result which has ensued regarding regulation of purchase and sale of sugarcane by the market committee concerned in view of the combined operation of the relevant provisions of the Sugarcane Act and the exemption notification under Section 42 of the Market Act excluding the application of Section 15 of the Market Act to the sale and purchase transactions of sugarcane in the market area. The contention that notification under Section 42 of the Act in substance excludes only the applicability of Section 15(2) cannot be accepted. On the express wordings of the said notification it is not possible to countenance this contention. Even if declaration under Section 5 treating the premises of the sugar factories and the purchase centres from which they have to purchase sugarcane as per the Sugarcane Act is to be held to be operative, such a declaration would be devoid of any efficacy under the Market Act as the very purpose of the declaration of such market yard would not get fructified once sugarcane will not be required to be brought for purchase and sale in such declared market yard. It has to be kept in view that the relevant provisions of the Market Act laying down the machinery for effecting the regulation of purchase, sale, storage and processing of agricultural produce cannot be of any avail once pur­chase and sale of such an agricultural produce are not required to be effected at the relevant market yard and have not to be subjected to open auction or tender for fixing proper prices for such agricultural produce to be paid to the growers of such produce. (Para 16)

       Entire machinery of the Market Act cannot apply to the transactions of purchase of sugarcane by the appellant sugar factories as they are fully covered by the special provisions of the Sugarcane Act. It is also necessary to note that if both these Acts are treated to be simultaneously applying to cover sale and purchase of sugarcane, the possibility of a clear conflict of decisions of Officers and Authorities acting under the Sugarcane Act on the one hand and the Market Act on the other would arise. These authorities acting under both the State Acts, dealing with the same subject-matter and covering the same transactions may come to inde­pendent diverse conclusions and none of them being subordinate to the other may create a situation wherein there may be head-on collision between the decisions and the orders of these authorities acting on their own in the hierarchy of the respective statutory provisions. (Para 17)

       The Market Act is a general Act covering all types of agricultural produce listed in the Schedule to the Act, but out of the listed items if any of the ‘agri­cultural produce’ like sugarcane is made subject-matter of a special enactment laying down and independent exclusive machinery for regulating sale, purchase and storage of such a commodity under a special Act, then the special Act would prevail over the general Act for that commodity and by necessary implication will take the said commodity out of the sweep of the general Act. Because of the Sugarcane Act the regula­tion of sale and purchase of sugarcane has to be carried out exclu­sively under the Sugarcane Act and the said transactions would be out of the general sweep of the Market Act. None of its machinery would be available to regulate these transactions. (Para 17)

       Further the provisions of the Sugar­cane (Control) Order operate in the same field in which the Bihar Legislative enactment, namely, the Sugarcane Act operates and both of them are complementary to each other. When taken together, they wholly occupy the field of regulation of price of sugarcane and also the mode and manner in which sugarcane has to be supplied and distributed to the earmarked sugar factories and thus lay down a comprehensive scheme of regulating purchase and sale of sugarcane to be supplied by sugar­cane growers to the earmarked sugar factories. It is, however, true that comprehensive procedure or machinery for enforcing these provi­sions is found in greater detail in the Sugarcane Act of the Bihar Legislation. But on a combined operation of both these provisions, it becomes at once clear that the general provisions of the Market Act so far as the regulation of sale and purchase of sugarcane is concerned get obviously excluded and superseded by these special provisions. (Para 20)

       On a conjoint reading of the Sugarcane Order as well as the Sugarcane Act, an inevitable conclusion has to be reached that the regulation of sale and purchase of sugarcane in the entire market area for which the general Act, namely, the Market Act is enacted, is fully governed and highlighted by these two special provi­sions harmoniously operating in the very same field. Therefore, there would remain no occasion for the State Authorities to rationalise and reasonably visualise any need for regulating the purchase, sale as well as storage of sugarcane in the market area concerned. The wide sweep of general notification of Section 3 of the Market Act, there­fore, will have to be read down by excluding from its general sweep sugarcane and its products as the definition of ‘agricultural produce’ as noted earlier would otherwise include not only primary produce of agriculture but also any other commodity processed or manufactured out of such primary agricultural produce. That is precisely the reason why the State of Bihar having realised the futility of the need about controlling and regulating the sale and purchase of sugarcane in the market area by the sugar factories excluded the operation of Section 15 of the Act, which noted earlier is the soul of the Act. It is easy to visualise that if transactions concerning and ‘agricultural pro­duce’ are excluded from the operation of Section 15 of the Act, the entire machinery available to the market committee to regulate such transactions would get out of picture and there would be no room for the market committee to supply any infrastructural facility or other benefits to the seller of such agricultural produce on the one hand and the purchaser thereof on the other. (Para 22)

       It is, of course, true that the Union Parliament has not exercised its concurrent legislative powers under Entry 33 of List III for regulat­ing the sale and purchase of sugarcane. But, as noted earlier, the Sugarcane (Control) Order promulgated under the central legislation of the Essential Commodities Act when read harmoniously and in conjunc­tion with the State Sugarcane Act carves out a special field for their operation and by the sweep of their combined operation the general provisions of the Market Act pro tanto get excluded so far as the transactions of purchase and sale of sugarcane in the market area are concerned. (Para 27)

       Various Orders issued under Section 3 of the Essential Commodities Act clearly indicate that all sale trans­actions of sugar by factories manufacturing sugar out of the sugar­cane, basic ‘agricultural produce’ and raw material, are regulated by these provisions. As noted earlier, Section 15 of the Market Act is out of picture qua even these transactions. The sale of sugar manufactured out of sugarcane and fixation of price thereof would also, therefore, go out of the sweep of Section 15(1) & (2) of the Market Act and would be governed wholly by these special provisions of the Control Orders. On the parity of reasons governing the transactions of sale and purchase of sugarcane, transactions of sale of sugar manufactured out of pur­chased sugarcane by the very same sugar factories functioning in the market area would also be governed by special provisions of the afore­said special Sugar (Control) Orders and would pro tanto get excluded from the general sweep of the Market Act. (Para 29)

       As regard levy of market fee on sale of molasses :

       Sale of molasses is also regulated by the State Government and the cost of such regulation is recovered under the Molasses Act in the form of administrative charges. Provisions of Bihar Molasses (Control) Act leave no room for doubt that the sale and purchase of molasses which would be an agricultural produce as defined by Section 2(1)(a) of the Market Act being a by-product resulting from manufacture of sugar by utilising the basic agricultural produce, namely, sugarcane are wholly controlled by the Molasses Control Act enacted by the very same legislature which has enacted the Market Act. It is easy to visualise that the very same legislature which enacted both these provisions was pressed to be alive to the need of having special provisions for regulating the sale and purchase of molasses and that by itself would exclude the need to get these transactions generally controlled and regulated by the sweep of the Market Act as per Section 3 of the said Act. That is precisely the reason for even its delegate, the State of Bihar in its wisdom to exclude the applica­bility of Section 15 of the Market Act, so far as the sale transactions of molasses by the sugar factories operating in the market area are concerned. It is, therefore, obvious that the Molasses Act laying down a detai­led statutory scheme of control of sale and purchase of molasses produced by the sugar factories in the market area will remain within the statutory framework of the aforesaid special statute. The general provisions of the Market Act has, therefore, to give way to the aforesaid special provisions. Once the State of Bihar itself has exempted these sale transactions from the operation of Section 15 of the Act, they would be out of sweep of the general provisions of the Market Act and would not statutorily enjoin the market committees to provide any infrastructure for regulating sale of molasses to enable them to bring home the charge of market fee on the sale transactions of molasses as per Section 27 of the Act. (Paras 31, 33, 34 & 35)

       Held, resultantly the provisions of the Market Act cannot apply to the transactions of purchase of sugarcane and sale of sugar and molasses by the sugar mills situated and functioning within the market area of the concerned market committee consti­tuted under the Market Act. (Para 36)

       Held further, the present decision will have only prospective effect. Meaning thereby that after the pronouncement of this judgment all future transactions of purchase of sugarcane by the sugar factories concerned in the market areas as well as the sale of manufactured sugar and molasses produced therefrom by utilising this purchased sugarcane by these factories will not be subjected to the levy of market fee under Section 27 of the Market Act by the market committees concerned. All past transactions upto the date of this judgment which have suffered the levy of market fee will not be covered by this judgment and the collected market fees on these past transactions prior to the date of this judgment will not be required to be refunded to any of the sugar mills which might have paid these market fees. In other words, market fees paid in past shall not be refunded. Similarly market fees not collected in past also shall not be collected hereafter. (Paras 44 & 45)

       The present judgment will be applicable in connection with the pur­chase of sugarcane by the sugar factories as well as the sale of manufactured sugar and molasses by these factories functioning in the areas of market committees concerned and whose transactions are gov­erned by the provisions of the Sugarcane (Control) Order, 1966 as well as the Sugarcane Act of 1981 and also by the relevant provisions of the Sugar Orders and the provisions of Molasses Control Act. Any other transactions of purchase and sale, in principal market yard or sub-market yards, of sugarcane, sugar or molasses by any other licensed dealers not governed by the aforesaid provisions will not be covered by the ratio of this judgment. (Para 46)

       (iii) Bihar Agricultural Produce Markets Act, 1960—Sections 15 and 27—Levy of market fee—Condition precedent to—Levy on purchase of sugarcane and sale of sugar and molasses by sugar factories—Legality of—Service rendered by market committee must be in connection with sale and purchase transaction to justify levy of market fee—Agricul­tural produce must be required to be brought sold or purchased at market yard to levy market fee—Sugarcane, sugar and molasses exempt­ed from provisions of Section 15(1)—No statutory obligation on market committee to provide service to sugar factories—Market fee as envis­aged u/s 27 not get attracted.

       Held : Before justifying levy of market fee on any transaction the services to be rendered by the market committee must be in connection with the sale and purchase transactions of agricultural produce falling for regulation under the Market Act, when the purchase and sale of agricultural produce like sugarcane, sugar or molasses are not governed by the Market Act, there would remain no occasion for the market committee to be statutorily under any obligation to provide any services or infrastructural facilities for covering such transactions so as to be entitled to charge market fee on such transactions. (Para 39)

       Only because the sugarcane factories are located in the market area they can be said to be covered by the general sweep of Section 27 of the Market Act as the agricultural produce, namely ‘sugarcane’ as well as ‘sugar and molasses’ can be said to be bought and sold in the market area. But by the fact only of sale and purchase of these commodities in the market area, it cannot be said that such agricultural produce belongs to the category of agricultural produce which is covered by the general sweep of the Act. In order to attract the charge under Section 27, the concerned agri­cultural produce on which the market fee is to be levied must be required to be bought and sold in the market area within the jurisdic­tion of the concerned market committee as per Section 15 of the Market Act which enjoins that no agricultural produce specified in the noti­fication under sub-section (1) of Section 4 shall be bought or sold by any person within the market area other than the relevant principal market yard or sub-market yards. Thus, on a conjoint reading of Sec­tions 27 and 15 of the Market Act, it must be held that before any charge of market fee can settle regarding any purchase and sale trans­actions concerning the agricultural produce, such agricultural produce must have been required to be sold or purchased at the relevant prin­cipal market yard or sub-market yards. It is obvious that principal market yard or sub-market yards would be situated within the market area, but if any agricultural produce is exempted from the provisions of Section 15(1) of the Act as in the case of sugarcane, sugar and molasses there would remain no occasion for transactions of sale and purchase of these commodities to be carried on only in the principal market yard or sub-market yards and not elsewhere in any other part of market area. It is only those agricultural produce which are required to be bought and sold in the relevant principal market yard or sub-market yards situated within the market area that attract charge of Section 27 of the Act. Once this charge is attracted, the further question whether it is backed by any quid pro quo would survive for consideration. (Para 41)

       On the facts of the present case, Section 15 as a whole is out of picture for controlling purchase and sale of sugarcane, sugar and molasses by sugar factories operating in the market area, as we have seen earlier, the charge of market fee as envisaged by Section 27 would not get attracted at all for them. Hence the aforesaid list of the infrastructural facilities made available to sugar factories in gener­al with other dealers in agricultural produce attracting Section 15 of the Act would pale into insignificance. Market Committees would not supply adequate quid pro quo for levying market fee as the charge itself does not settle on these transactions by the sugar factories. It may be, that some sugar factories may have taken benefit of electric lighting and preparation of approach roads by the market committees which might have spent sufficient funds for giving these facilities. Still they would not be a part and parcel of the statutory obligations of the market committees qua such sugar factories and may remain in the domain of Section 72 of the Indian Contract Act and if such benefits are received by the factories they may be liable on the principle of quantum meruit to reimburse or compensate the market committees for the voluntary facilities given by them but they would not support any legal quid pro quo by way of statutory obligation of the market com­mittees for giving facilities to the sugar mills for supporting the levy of market fees on their transactions. (Para 41)

       (iv) Interpretation of statutes—Two legislations operating in same field—Mere possibility of provisions of one of the inconsistent enactment being excluded by resorting to exemption power under another enactment cannot cure basic inconsistency between them.

       Held : Where a question arises whether two legislations operating in the same field can be reconciled or not, a mere possibility of the provisions of one of the inconsist­ent enactments being excluded by resorting to exemption power under another enactment cannot cure the basic inconsistency between them. It is obvious that such exemption power entrusted to its delegate by its Legislature may or may not be utilised. Consequently, a basic incon­sistency between two legislative enactment would remain operative dehors such exemption, if any. Such conflicting statutory schemes in their operation in the same field would directly collide. (Para 25)

       (v) Bihar Agricultural Produce Markets Act, 1960 — Industries (Development and Regulation) Act, 1951—Section 18—Constitution of India—Entry 52, List I and Entry 24 List II of First Schedule—Appli­cability of Market Act to transactions of purchase of wheat by flour mills and manufacture of wheat products like atta, maida, suzi, bran etc.—Challenge to applicability of Market Act on ground that IDRA regulate purchase and sale of above products — Production of wheat as raw material or its sale not covered by IDRA—Wheat as agricultural product is outside sweep of IDRA—No statutory order promulgated u/s 18G of IDRA—Regulation of sale and purchase of products of flour like atta, maida, suzi, bran etc. would not remain outside domain of State legislature.

       Held : So far as the I.D.R. Act is concerned, it is enacted under Entry 52 of the First Schedule which deals with industries in general. Simultaneously in the State List itself there is Entry 24 which deals with industries subject to the provisions of Entries 7 and 52 of List I. Consequently, the products of such controlled industries would necessarily not be governed by the sweep of the general legislation pertaining to such industries as per Entry 52 of the Union List. (Para 52)

       It is true that the Union Parliament in exercise of its legislative power under Entry 52 of List I of the Seventh Schedule has enacted the I.D.R. Act. It is also true that flour industry is listed as one of the scheduled industries as item No. 27(4) under the caption ‘food processing industries’. However, production of wheat as raw material or its sale is not covered by the said Act. Consequently, so far as wheat as ‘agricultural produce’ is concerned, it is outside the sweep of the I.D.R. Act. (Para 49)

       Unless the Central Government in exercise of its statutory power under Section 18G promulgates any statutory order covering this field, it cannot be said that mere existence of a statu­tory provision for entrustment of such power by itself would result into regulation of purchase and sale of flour even if it is a sched­uled industry. In the absence of statutory order promulgated under Section 18G of the I.D.R. Act, it cannot be said that the field for regulation of sale and purchase of products of flour industry like atta, maida, suzi, bran etc. would remain outside the domain of the State Legislature. (Paras 49 & 52)

       (vi) Bihar Agricultural Produce Markets Act, 1960—Sections 2(1) and 27—Levy of market fee on sale and purchase of wheat products like atta, suzi, maida, bran etc.—Challenge on ground that above products cannot be said to be agricultural produce—Not sustainable—Wheat is produce of agriculture, hence, any product resulting after processing such basic raw material or which results after process of manufacture is carried on qua such basic raw material would remain agricultural produce.

       Held : The contention that even though wheat is an agricultural produce, atta, maida, suzi manu­factured out of the same cannot be said to be agricultural produce as it is a produce of the factory and not of an agriculturist cannot be sustained for the simple reason that agricultural produce as defined by Section 2(1), as already noted earlier, would include all agricultural produce whether processed, non-processed or manufactured out of any primary agricul­tural produce. Wheat is a produce of agriculture, therefore, any product resulting after processing such basic raw material or which results after process of manufacture is carried on qua such basic raw material would remain agricultural produce. Moment the artificial definition of agricultural produce as aforesaid holds the field, as a logical corollary these three disputed items would squarely get cov­ered by the sweep of the term ‘agricultural produce’ and hence their inclusion in the schedule enacted under Section 2(1)(a) as types of cereals cannot be found fault with. (Para 54)

       (vii) Bihar Agricultural Produce Markets Act, 1960—Sections 2(1)(a), 15 and 27—Levy of Market fee on purchase sale of oil manufactured by oil mills—All vegetable oils are treated as ‘agricultural produce—Oil manufactured by oil mills functioning within area of Market Committees chrushing oil seeds are agricultural produce—Not outside sweep of provisions of Market Act. (Paras 55 & 56)

       (viii) Bihar Agricultural Produce Markets Act, 1960—Sections 2(1) (a) and 15—Rice Milling Industry (Regulation) Act, 1958—Levy of market fee on purchase of paddy and sale of rice by rice mills—Challenge on ground regulation of purchase and sale of products of rice milling industry—Not tenable—Rice Milling Act has nothing to do with regula­tion of purchase and sale of products of such mills—On paddy already purchased outside market area and imported there­after market fee cannot be levied—Rice manu­factured out of paddy within market area is squarely covered by sweep of definition of Section 2(1)(a) of Market Act—Sale and purchase transaction of paddy and rice required to be carried on in market yard—Rice mills cannot be compelled to shift location of rice mills to market yards.

       Held : Relevant provisions of the Rice Milling Industry Act leaves no room for doubt that the working of the rice milling industries was sought to be regulated by the said Act and it has nothing to do with the regulation of purchase and sale of products of such mills. (Para 59)

       If the rice mills import paddy already purchased from outside the market area then on such transactions of outside purchase and import of paddy in the market area, there would remain no occasion for the market committees concerned to subject such transactions to the regulating machinery of the Market Act or to demand any market fee thereof. If these rice milling industries located and functioning in the market area purchase within the market area, raw material paddy, whether grown in the market area concerned or outside, then such purchases within the market area will at­tract the regulatory provisions of the Market Act. (Para 60)

       So far as the manufactured rice out of such paddy is concerned, once manufacturing takes place within the market area, it would get square­ly covered by the wide sweep of definition of Section 2(1)(a), as we have seen earlier. Even apart from that, rice is mentioned as a sepa­rate item No. 2 in the category of ‘Cereals’ in the Schedule of the Market Act. It cannot be disputed that rice manufactured out of basic agricultural produce ‘paddy’ would also remain agricultural produce falling within the sweep of the Act. So far as the regulation of sale and purchase of rice within the market area is concerned, Section 15 of the Act applies to the transactions of licensed dealers dealing with such agricultural produce in the market area. Hence the entire machinery of the Market Act will be applicable to regulate transac­tions of sale and purchase of paddy by the rice mills within the market area as well as sale of rice by them within that area as all these transactions will have to take place in the market yard or sub-market yards as per Section 15 of the Act. (Para 61)

       The statutory mandate of Section 15 does not go beyond the regulation of transactions regarding purchase and sale of agricultural produce and that can be required to be effected only at the relevant principal market yard or sub-market yard or yards. None of the provisions of the Market Act would entitle the market committee to insist on shifting of the business premises of any milling company or factory processing agricultural produce located within the market area to any particular market yard or sub-market yards. Therefore rice mills will not be required to shift the location of the rice mills to principal market yard or sub-market yards. However, their sale and purchase transactions of paddy and rice will, of course, be required to be carried on only in market yard or sub-market yards concerned as mandated by Section 15 of the Market Act. (Paras 62 & 63)

       (ix) Bihar Agricultural Produce Markets Act, 1960—Section 2(1)(a) and item 20 of Schedule—Agri­cultural produce—Animal Husbandry Products—Tinned baby food containing various ingredients which may include some milk fact or proteins though in powder form cannot be said to be milk powder simpliciter or whole milk not in liquid form—Baby food manufacturer not required to take any licence under the Markets Act, for sale of same in market area.

       Held : The said term ‘agri­cultural produce’ as defined by Section 2(1)(a) clearly indicates that the agricultural produce which is to be covered by the sweep of the Act has to be one which should be specified in the Schedule. When we turn to the Schedule of the Act framed as per Sec­tion 2(1)(a), we find one of the animal husbandry products at item VIII, sub-item 20 as milk except liquid milk. Thus any product con­sisting of solidified milk like milk powder, is contemplated by the said item. The afore­said Schedule at sub-item No. 20 captioned under the title ‘Animal Husbandry Products’ refers to milk except liquid milk. By no stretch of imagination, tinned baby food containing various ingredients which may include some milk fats or proteins though in powder form can be said to be milk powder simpliciter or whole milk not in liquid form. It is also pertinent to note that there is no item of milk products in the Schedule to the Act under the caption ‘Animal Husbandry Products’. In this connection, it is profitable to contradistinguish this entry in the Schedule with items 14, 15 and 16 under the caption ‘Cereals’ in the very same Schedule. In the listed items under the caption ‘Cereals’, we find ‘Wheat’ separately mentioned at item No. 3 as compared to Wheat Atta, Suzi and Maida separately mentioned at items 14, 15 and 16. This shows that basic agricultural produce - ‘wheat’ is treated as a separate agricultural produce as compared to its own products manufactured out of wheat, namely, atta, suzi and maida. Those products of the concerned basic agricultural produce are separately mentioned as ‘agricultural produce’ in the Schedule so far as ‘ce­reals’ are concerned. But similar is not the scheme in connection with milk. Milk products like baby foods are not separately mentioned. Under the very caption ‘Animal Husbandry Pro­ducts’, Butter and Ghee are separately mentioned as items 7 & 8 which are wholly manufactured out of milk. It, therefore, becomes clear that save and except butter and ghee no other milk product is sought to be covered by the sweep of the Act as ‘Animal Husbandry Products’ and the basic Animal Husbandry Produce like ‘milk’ only in solid form is sought to be covered by a separate solitary item No. 20 as one of the ‘Animal Husbandry Products’. Therefore, any other manufactured product like the present ones, utilising same ingredients of milk powder as one of the ingredi­ents but which are possessed by addition of all other extra items with the result that finished pro­ducts like baby foods emerge as manufactured items for serving as substitute for milk to be fed to infants who cannot digest liquid milk or solidified milk as such, cannot be treated to be ‘agricul­tural produce’ as part and parcel of listed ‘Animal Husbandry Products’ mentioned in the Schedule to the Act. Consequently, there was no occasion for the respondent authorities to insist that the appellant for the sale of the aforesaid two products within the market area governed by the Market Act in the State of Bihar was required to take any licence under that Act. (Paras 67, 69 & 70)

       (x) Bihar Agricultural Produce Markets Act, 1960—Sections 2(1) (a), 15 and 27—Applicability of Act to transaction of tea manufactured and blended outside Bihar but sold in packed tins and packets in Bihar—Tea leaves would not cease to be agricultural produce once they got processed—Sale of manufactured tea in packed condition with­in market area would squarely attract Section 27.

       Held : Section 2(1)(a) of the Market Act, includes in the definition of agricultur­al produce not only the primary produce grown in the field but also covers all processed or non-processed, manufactured or non-manufactured agricultural produce as specified in the Schedule. In the light of the aforesaid wide sweep of this definition, it cannot be said that tea leaves which are produced in tea gardens being primary agricultural produce would cease to be agricul­tural produce once they got processed. After plucked tea leaves are processed by roasting them and then by subjecting them to further process of blending and ultimately packing them in suitable packets they still remain all the same agricultural produce so manufactured out of the basic agricultural raw material ‘tea leaves’. It is also not in dispute that Tea (leaf and dust) is a Scheduled item. Once that is so, sale of manufactured tea in packed condition within the market area would squarely attract the charge under Section 27 of the Act which, as noted earlier, is widely worded. The moment the agricultural produce as defined by Section 2(1)(a), is bought or sold in the market area, Section 27 would get attracted to cover such transaction. It is also pertinent to note that Section 15 sub-section (1) of the Act is ap­plicable in the present case to cover such transactions of sale of packed tea within the market areas of the concerned market committees governed by the Act. Save and except such quantity as may be pre­scribed for retail sale or personal consumption to be outside the sweep of Section 15(1) of the Act, rest of these sale transactions regarding manufactured agricultural produce would remain governed by the sweep of the Act. On a conjoint reading of Section 2(1)(a) and Section 15 and the relevant entry in the Schedule, there is no escape from the conclusion that whether the manufactured agricultural produce has undergone manufacturing process within the market area or not or whether such agricultural produce in its raw form is grown in the market area or outside or whether the processed ‘agricultural produce’ is imported only for sale within the market area, the applicability of the Act cannot be said to be ruled out to cover all these types of sale transactions. Even if an agricultural produce ini­tially is not grown in the market area and it is brought in manufac­tured form within the market area for sale, such sale transaction in connection with such a produce would be covered by the sweep of the Market Act. (Paras 80 & 82)

       Therefore, it cannot be held that merely because the tea leaves produced in tea gardens outside the State of Bihar are processed by the appellant in its factories outside Bihar and are converted into blended and branded qualities of packed tea like red label tea or green label tea etc., and even though such packed tea is sold within Bihar Market areas, the Market Act cannot be applied to such sale transactions of manufactured tea after importing it in the State of Bihar. (Para 83)

       (xi) Bihar Agricultural Produce Markets Act, 1960—Sections 2(1) (a), 15 and 27—Tea Act, 1953—Section 30—Levy of market fee on manufactured tea marketed in packed condition—Challenge on ground that transac­tions of purchase and sale regulated by Tea Act—Not tenable—Tea Act does not regulate sale of purchased roasted tea leaves after they are subjected to manufacturing process—No notification issued by Central Government u/s 30 of Tea Act to Control, price and distribution of tea or tea waste—State Legislature competent to cover that field by exercising its legislative power under Entry 33 of concurrent list—Insertion of Tea (leaf and dust) in Schedule to Markets Act valid—Entire infrastructural facilities for sale transactions as made available by Market Com­mittee would ensure for benefit of sellers of packed blended tea—Sufficient quid pro quo exist to justify levy of market fee.

       Held : The basic feature of the Tea Act is to provide for control of extension of tea cultivation in the areas where tea leaves are grown in tea gardens. It does not provide for regulating the sale of purchased roasted tea leaves after they are subjected to manufacturing process of blending and are brought in the market for sale as packed tea. The place where such packed tea is to be sold and the price at which it has to be sold are matters on which the Tea Act, 1953 does not contain any statutory provisions. Section 30 of the Tea Act found in Chapter VI deals with control by the Central Government and lays down the power of the Central Government regarding control, price and distribution of tea or tea waste. Howev­er, it is to be noted that till date no such control order has been issued by the Central Government under the said provision. So long as the Central Government does not issue any order under Section 30 of the Tea Act, the field dealing with fixation of maximum price or minimum price to be charged by a grower of tea, manufacturer or dealer, whole­sale or retail, for Indian market leaving aside the question of ex­port, would not be occupied. In other words, it would remain open for the State Legislature to cover that field by exercising its legisla­tive power under Entry 33 of the Concurrent List. (Para 86)

       Mere possibility of issuance of any future order under Section 30(1) of the Tea Act by the Central Gov­ernment, in the absence of any existing express order to that effect, cannot be said to have occupied the field regarding purchase and sale of manufactured tea and fixation of maximum or minimum price thereof, or the location of such sales. These topics cannot be said to be legitimately covered by the Tea Act. Hence, the field is wide open for the State Legislature to exercise its concurrent legislative power under Entry 33 of List III for effectively dealing with these matters. This is precisely what has been done by the State Legislature by enacting the Market Act. The insertion of item pertaining to Tea (leaf and dust) in the Schedule, therefore, cannot be said to be an unautho­rised exercise on the part of the delegate of the State Legislature, namely, the State Government which has exercised its power under Section 39 of the Market Act. (Para 89)

       Further on a conjoint reading of the statutory Orders issued under the Tea Act and the relevant scheme of the Tea Act, it becomes at once clear that the provisions regarding fixation of appropriate price at which blended and packed tea can be sold to wholesalers in any estab­lished market or particular place at which sale transactions of such manufactured tea between the manufactures on the one hand and the traders or other wholesale producers/dealers on the other are outside the sweep either of the Tea Act or of the relevant statutory Orders framed under Section 30 by the Central Government under the very same Act. The places at which public auctions can be held in connection with sale of roasted tea leaves to be purchased by manufacturers like the appellant are the earmarked six places indicated in 1984 and 1989 Orders. These auctions have nothing to do with the later sales of manufactured blended tea by such auction purchasers of tea leaves, who manufacture packed tea by blending and packing roasted tea leaves in their factories. The public auctions as contemplated by these Orders, therefore, serve out their purpose once the manufacturers of blended tea, like the appellants, purchase roasted tea leaves in public auctions. Once such purchased tea leaves are further processed after blending and packed in suitable receptacles for sale in local markets the stage is reached for regulating such sale trans­actions by manufac­turers of tea when they are subjected to further auctions to be held in the market areas wherein the licensed distribu­tors and manufacturers of tea can be subjected to the procedure of Section 15, sub-section (2) of the Market Act. So far as these later transactions are concerned, neither the Tea Act nor any of the afore­said Orders can hold the field. Such sale transactions of manufac­tured tea in packed condition will, therefore, necessarily have to be governed by the provisions of the Market Act applicable to the area wherein such sale transactions in favour of wholesalers or retailers are effected by the stockists of the appellant operating in the market areas concerned. It is also pertinent to note that Section 15 of the Market Act gets attracted to such transactions of sale. Once it is held that the Market Act covers the transactions of sale of packed blended tea in sealed packets and receptacles by the appel­lant’s stockist in the market areas concerned especially when these transactions take place in the market yard or sub-market yards as laid down by Section 15 of the Act which remains fully operative to cover such transactions, there is no escape from the conclusion that the entire infrastructural facilities for regulation of such sale transac­tions as made available by the market committee concerned would enure for the benefit of sellers of such packed blended tea. This would supply ade­quate quid pro quo for levying market fee on the buyers of commodities sold at its market yard or sub-market yard. It is, therefore, not possible to agree with the learned senior counsel for the appellant that there is no quid pro quo underlying transactions of sale of packed tea by the appellant’s stockist in the market yard or sub-market yards maintained by the market committee concerned. (Paras 101, 104 & 106)