Important Point
The action for levy of fee can arise only on a concluded sale in a market area and where the sale had not taken place within the market area, no mandi fee could be levied.

Judgment

Dr. Arijit Pasayat, J. —

1.Challenge in this appeal is to the Judgment of a Division Bench of the Allahabad High Court holding that the appellant was not entitled to levy market fee under Section 17(iii) (b) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964 (in short the ‘Adhiniyam’) if the agricultural produce is neither brought nor taken out of the market place, and deciding in favour of respondent no.1.

2.Background facts in a nutshell are as follows :

Respondent is a registered partnership firm having its business premises and office at 14, Navyug Market, Ghaziabad, and it carried on the business of sale and purchase of iron and steel and also export of rice. It wanted to purchase broken rice from the rice millers of U.P. for the purpose of export to foreign countries and accordingly, made an application on July 31, 1997, to Krishi Utpadan Mandi Samiti, Ghaziabad, for grant of a licence. It was also stated in the application that the respondent had exported rice in November, 1996 by purchasing it from places outside U.P. Appellant No.1 asked the respondent no.1 to deposit the licence fees for the years 1995-96, 1996-97 and 1997-98, which was done as per the demand. Thereafter, the appellant no.1 sent a demand notice to the respondent no.1 on October 12, 1997, demanding market fee at the rate of 2 percent amounting to Rs.12,94,860.00. The respondent no.1 sent a reply on October 18, 1997, stating that it had never purchased any rice from inside the State of U.P. nor any transaction of sale or purchase of rice was carried out within the State, It was accordingly requested that the demand notice/Order dated October 12, 1997, be rescinded. The appellant no.1, however, initiated proceeding for recovery of the amount in question and issued a citation dated December 6, 1997. The respondent no.1 thereafter, filed C.M. Writ Petition No, 43329 of 1997 in the High Court which was disposed of on December 17, 1997, with a direction to appellant no.1 to decide the respondent no.1’s representation within a month and the recovery proceeding were suspended for six months. The respondent no.1 appeared before appellant no.1 on the date fixed, namely January 14, 1998, along with the relevant records and submitted that the rice had been purchased from places outside the State of U.P. and had been sent directly to the ports for being exported to South Africa and as such, it was not liable to pay any market fee. The appellant passed an Order on January 25, 1998, holding that the transaction of sale of the rice exported by the respondent no.1 firm took place within the market area of Ghaziabad, and, accordingly, the market fee imposed by the Order dated October 12, 1997 was valid and proper. Feeling aggrieved, the respondent no.1 preferred a revision under Section 32 of the Act before the Rajya Krishi Utpadan Mandi Parishad, Lucknow (appellant no.2) which was dismissed by Order dated March 9, 1998. The writ petition under Article 226 of the Constitution of India, 1950 (in short the ‘Constitution’) was filed for quashing the Orders dated October 12, 1997 passed by appellant no.1 and the Order dated March 9, 1998 passed by appellant no.2. The learned Single Judge, who heard the petition, was of the opinion that the controversy raised involved a substantial question of law of general importance and made a reference to larger Bench. That is how the matter came before the Division Bench.

The case of the respondent no.1 was that the rice was exported by it because certain dealers in South Africa wanted to buy rice from India. The respondent no.1 quoted the rates and entered into negotiations. After the deal was settled, the rice was purchased from rice millers in Haryana, Punjab, Madhya Pradesh from where it was directly dispatched to the ports of Mumbai and Kandla and clearing and forwarding agents of the respondent no.1 loaded the same on the ship. After the goods had been loaded a Bill of Lading was prepared and signed by the Master of the ship i