Market Committee is a local authority u/s 3(17) of Madras Genera Clauses Act.

This is a petition under Article 226 of the Constitution for the issue of a writ of mandamus, directing the first respondent to forbear from enforcing its notice S. No. 610, dated 11th July, 1957, calling upon the petitioner to pay cess for the groundnuts purchased from 23rd November, 1955, to 30th June, 1957, under section 11 (1) of the Madras, Commercial Crops Markets Act, 1933, Rule 28 (1) of the Madras Commercial Crops Markets Rules, 1948 and by-law 23 of the Coimbatore Market Committee by-laws.

The petitioner is a merchant carrying on business at Erode in the name of the Shanmugha Oil Mill engaged in the purchase and sale of groundnuts. He has taken a licence for dealing in groundnuts under section 5 (1) and 5 (3) of the Madras Commercial Crops Markets Act (Madras Act XX of 1933) which I shall refer hereafter as the Act. The first respondent is the Coimbatore Market Committee constituted under section 4-A of the Act. Coimbatore District is a notified area under the Act in respect of groundnuts and certain other commercial crops, such as cotton, tobacco and turmeric. As the petitioner’s business place is situated within the notified area, the Market Committee of Coimbatore would be entitled to collect certain fees and cesses for which provision has been made under the Act, the Rules and the by-laws. Under section 11 (1) of the Act the petitioner would be bound to pay a cess, as provided for therein. On 11th July, 1957, the 1st Respondent issued a notice, calling upon the petitioner to render accounts for the purchase of groundnut between 23rd November, 1955 and 30th June, 1957 and to pay cess on the quantity purchased in accordance with the rates fixed by the Rules and Regulations aforesaid. The case for the petitioner is that the demand for the cess could not be held to be under authority of law, and that, therefore, a direction of this Court is necessary to prohibit the 1st Respondent from levying or collecting the cess.

The Act was passed on the 25th July, 1933, with a view to provide satisfactory conditions for the growers of commercial crops to sell their produce to the best advantage. It was intended to regulate buying and selling of commercial crops by providing suitable and regulated markets, eliminating the middlemen and reducing the scope of exploitation of the producers by financiers. The historical background and the purport of the legislation have been considered in Kutti Koya v. State of Madras1, and in Arunachala Nadar v. The State of Madras2. Except in regard to one provision of the Act the legislation has been held to be valid. Under the. Act a machinery is set up for controlling and regulating the sale of commercial crops. The State Government is given power to notify an area in respect of commercial crops and constitute a Market Committee for that area. Provisions are made for the constitution, supersession, etc, of the Market Committee. The State Government is empowered to make rules for working the Act and the Market Committee could make its own by-laws for regulation of trade. Establishment of a market for enabling the meeting of buyers and sellers and provision for its building, amenities are provided for. To facilitate the object of the enactment being fulfilled certain restrictions have been imposed on traders in the notified area. In view of the contentions raised in this petition, it is necessary to consider briefly the provisions of the Act in its original form as enacted in 1933 and the change effected by the Amending Act, XXXIII of 1955.

Section 2 (1) (a) of the Act defines ‘commercial crop‘ to mean

“cotton, groundnut or tobacco and includes any other crop or product notified by the State Government in the Fort St. George Gazette as a commercial crop for the purposes of the Act”.

Section 3 enables the State Government by notification in the Official Gazette to declare their intention of exercising control over the purchase and sale of such commercial crops or crop and in such area as may be