1. Challenge to the constitutionality of the Bombay Agricultural Produce Markets Act, 1939, regarding market area declarations, licensing requirements, and the legal establishment of markets. (Para 1 )
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1961 Supreme(SC) 231
SUPREME COURT OF INDIA
A.K.Sarkar : K.C.Das Gupta : K.N.Wanchoo : N.Rajagopala Ayyangar : P.B.Gajendragadkar
Mohammad Hussain Gulam Mohammad, Ishwarbhai Becharbhai
Versus
State Of Bombay
Case No. : 129 of 1959
Date of Decision : 5/2/61
Advocates Appeared: Andley S.N. : Bindra N.S. : Dadachanji J.B. : Desai S.T. : Dhebar R.H. : Iyer R.Ganapathy : Narain Rajindar : Nath Rameshwar : Patel Trikamlal J. : Shroff I.M. : Vohra P.L.
Advocates:
I.M.SHROFF, J.B.DADACHAN, N.S.BINDRA, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY, S.T.DESAI, TRIKAMLAL J.PATEL
I.M.SHROFF, J.B.DADACHAN, N.S.BINDRA, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY, S.T.DESAI, TRIKAMLAL J.PATEL
Regulation of wholesale agricultural trade is a reasonable restriction under Article 19(1)(g). However, market committees cannot levy fees without government-prescribed maxima, nor grant licenses for a "market area" (as opposed to a "market"), and must strictly follow statutory procedures for market establishment.
Headnote:(A) Constitution of India - Article 19(1)(g) - Agricultural Produce Markets Act - Sections 4, 4A, 5, 5A, 5AA, 11, 29 - Regulation of trade in agricultural produce - Constitutionality of market area declaration and establishment of markets - Held: Provisions allowing the declaration of market areas and establishment of markets are reasonable restrictions on the right to carry on trade, as they target wholesale trade and not retail sales. (Para 5)
(B) Delegated Legislation - Power to amend schedule of produce - Section 29 - Held: Power to add, amend, or cancel items of agricultural produce in the schedule is not unregulated; the legislative policy to regulate wholesale trade provides sufficient guidance. (Para 6)
(C) Fees vs. Tax - Section 11 - Held: Fees levied for services rendered by a market committee are not in the nature of sales tax. However, the power to fix fees is subject to the maximum prescribed by the State government in the Rules. In the absence of such prescribed maxima, the market committee cannot fix any fees. (Paras 7, 8)
(D) Ultra Vires Rules - Rules 65, 66, and 67 - Licensing - Held: Rules authorizing a market committee to grant licenses for doing business in a "market area" are ultra vires Section 5A, as the committee's power is limited to operation within the "market," while the power for the "market area" (pending establishment) rests with the Commissioner. (Paras 10, 11)
Facts of the case:
Businessmen challenged the constitutionality of an Act regulating agricultural produce markets. They contested the requirement for licenses, the levy of fees, and the validity of specific rules. They further contended that no market had been legally established according to the statutory requirements, rendering the market committee's actions unauthorized.
Findings of Court:
The main provisions of the Act and the power to amend the schedule of produce are constitutional. Fees under Section 11 are valid in principle but cannot be levied without the State government prescribing a maximum limit. Rules granting licensing power for the entire market area to the committee are ultra vires. Crucially, the court found that the mandatory procedure for establishing a market under Section 5AA had not been properly followed.
Issues: Whether the Act's provisions unreasonably restrict the right to trade; whether the power to amend the produce schedule is uncontrolled; whether the fees are sales taxes; whether specific rules exceed the statutory authority; and whether a market was legally established.
Ratio Decidendi: Regulation of wholesale trade in agricultural produce is a reasonable restriction under Article 19(1)(g). Statutory power to levy fees must be exercised within limits prescribed by the government; without such limits, the power cannot be exercised. Licensing authority for a "market area" differs from that of a "market," and rules cannot expand the committee's jurisdiction. A market is only established when the State government's direction is followed by specific administrative actions.
Result: Petition partly allowed; respondents directed not to enforce provisions of the Act, rules, or bye-laws until a market is properly established and not to levy fees until the maximum is prescribed.
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Table of Contents
2. Petitioners allege unreasonable restrictions on trade under Article 19(1)(g) and lack of legal market establishment; respondents maintain restrictions are reasonable and market is established. (Para 1 , 2 )
3. The Act regulates wholesale trade; however, licensing powers of the committee are limited to the market, not the market area, and fees require prescribed maxima. (Para 5 , 6 , 7 , 8 , 10 , 11 , 12 )
4. Market committees cannot exercise powers under Section 5A unless a market is properly established under Section 5AA, and fees under Section 11 require prescribed maxima. (Para 8 , 12 , 13 )
5. Petition partly allowed; enforcement of Act and Rules stayed until market is properly established and fee maxima are prescribed. (Para 14 )
6. Is the regulation of wholesale trade in agricultural produce through market areas and committees a reasonable restriction under Article 19(1)(g)?
Yes, the court held that regulating wholesale trade in agricultural produce is constitutional and does not impose unreasonable restrictions on the fundamental right to carry on trade. (Para 5 )
7. Does the power to add or amend agricultural produce in the Act's schedule without specific criteria constitute an uncontrolled administrative power?
No, the power is guided by the legislative policy of regulating wholesale trade, allowing the government to adapt to local conditions and trade volumes. (Para 6 )
8. Can a market committee levy fees under Section 11 if the State government has not prescribed the maximum limits in the Rules?
No, the power to fix fees is subject to the maxima prescribed by the State government; without such maxima, the committee cannot legally fix or levy fees. (Para 7 , 8 )
9. Can a market committee issue licenses for doing business throughout a market area?
No, the committee's power to issue licenses under Section 5A is limited to operation within the market; licensing for the market area remains with the Commissioner. (Para 10 , 11 )
10. What is the condition precedent for a market committee to exercise powers under Section 5A?
A market must be properly established under Section 5AA, which requires a direction from the State government and subsequent action by the committee and Commissioner. (Para 12 , 13 )
K.N.WANCHOO, J.
(1) THIS petition raises a question as to the constitutionality of the BOMBAY AGRICULTURAL PRODUCE MARKETS ACT , No. XXII of 1939 (hereinafter referred to as the Act) and the Rules framed thereunder. The petitioners are businessmen of Ahmedabad. Their case is that by a notification under the Act the whole area within a radius of 12 miles of Ahmedabad city was declared to be a market area under s. 4 of the Act for the purposes of the Act in respect of certain agricultural produce from 1/06/1948. At the same time a market yard and a market proper were established for dealing in the commodities mentioned above; and simultaneously a market committee was established under s. 5 of the Act for the Ahmedabad market area by the name of `The Agricultural Produce Market Committee, Ahmedabad.` By later notifications certain other agricultural produce was declared to be regulated under the provisions of the Act in this market area. ID 1959 a locality known as the `Kalupur market` in the Telia Mill compound near the railway station Ahmedabad was declared to be a sub-market yard for the purposes of the Act. The petitioners apparently were carrying on business in the Kalupur market and therefore after the declaration of that area as sub-market yard, the market committee required the petitioners to take out licences under the Act without which they were not to be allowed to carry on business. The petitioners contend that the various provisions of the Act and the Rules and bye-laws framed thereunder place unreasonable restrictions on their right to carry on trade in agricultural produce and thus infringe their fundamental right guaranteed under Art. 19 (1)(g) of the Constitution. In particular, the heavy fees payable to the market committee for taking out licences in order to trade in various markets impose a heavy burden on trade in the regulated commodities resulting in an unreasonable restriction on the right of the petitioners to carry on their trade. Further the declaration of the market area and the establishment of market yard and sub-market yards has resulted in compelling producers of agricultural commodities to carry their produce for long distances, thus imposing an unreasonable restriction on their right to carry on trade. The petitioners thus assail the main provisions of the Act and some of the provisions of the Rules and the bye-laws framed by the market committee, which we shall specify at their proper place later. The petitioners also contend that the State of Bombay has never required the market committee to establish a market as required by s. 5AA of the Act and no market has in law been established by the market committee and therefore the market committee has no power to issue licences and to exercise other powers conferred under the Act on market committees. They therefore pray that the Act and the Rules and the bye laws framed thereunder may be declared unconstitutional, ultra vires and void. In the alternative a direction should be issued to the respondents, in particular the market committee, not to enforce the provisions of the Act, the Rules and the bye-laws against the petitioners so long as a market has not been established as required under the law.
(2) THE petition has been opposed on behalf of the respondents, and their contention is that the Act, the Rules and the bye laws provide reasonable restrictions on the fundamental right to carry on trade under Art. 19(1)(g). It is further contended that a market has been established as required by law, and therefore the market committee in particular has the right to enforce all the provisions of the Act, the Rules and the bye-laws and to insist upon the petitioners taking out licences as provided therein.
(3) BEFORE we consider the attack made on the constitutionality of the Act, the Rules arid the bye-laws framed thereunder, we should like to refer to the main provisions of the Act and the scheme of regulation provided in it. The Act deal
