Judgment

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 Rupees 5,000/- were entered into within the area of the said Market Committee. The appellants 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 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 Section 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.

2. 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 was not in accordance with the provisions of the aforesaid Act and the Rulers without expressing any opinion on the merits of the case: The Market Committee, therefore, filed the aforesaid Letters Patent Appeal.

3. There is no dispute that the raw material received by the Dhariwal Mills is, an agricultural produce as defined in S. 2-A 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 Section 23 of the Act were attracted or not.

4. 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 valorem basis fees on the agricultural produce bought or sold by licences in the notified market area at a rate not exceeding two rupees and twenty paise for every one hundred rupees.

Provided