Back
2007 Supreme(All) 661
[2007(3) ADJ 383 (DB)]
ALLAHABAD HIGH COURT
BEFORE : YATINDRA SINGH AND SANJAY MISRA, JJ.
I.T.C. LTD. —Petitioner
Versus
MANDI PARISHADS, U.P. AND OTHERS —Respondents
(Civil Misc. Writ Petition Nos. 3957 of 2000 and 22696 of 2006,
decided on 16th March, 2007)
Shanti Bhushan, S.P. Gupta, Sr. Advs., Sanjay Pathak, Yashwant Verma, for I.T.C., B.D. Madhyan, Sr. Adv., Satish Madhyan, Sanjay Chaturvedi for Mandi Parishad and Mandi Samiti; S.P. Kesarwani, S.C. for the State.
Headnote:U.P. Krishi Utpadan Mandi Adhiniyam, 1964—Sections 17(iii), Explanation, 2(a), 6, 6-A and 8—U.P. Krishi Utpadan Mandi Niyamavali, 1966—Rule 50-A—Constitution of India—Articles 226, 301 and 304(4)—Legislative cmpetence—To enact Explanation to Section 17(iii) of the Act—Constitutionality, interpretation and applicability of Explanation to Section 17(iii) of Act of 1964—Held, (i) Explanation to Section 17(iii) of Act of 1964, read with Rule 50-A of Rules of 1966, is neither violative of Part XIII of Constitution, nor beyond legislative competence, (ii) presumption under Section 17(iii), can be raised against a licensed, or unlicensed traders, if conditions mentioned therein are satisfied, (iii) cut tobacco is processed form of raw tobacco, and is a specific agricultural produce, (iv) In case of no sale, in contradiction to claim of sale, outside market area of Mandi Samiti, if necessary documents, rebutting the presumption are also filed, alongwith declaration, then gate pass has has to be issued—However, this does not prohibit Mandi Samiti to exercise any power, granted under Act of 1964, or to pass reasoned order, holding otherwise after opportunity to person concerned—In case, it is held otherwise, then market fee and development cess, can be recovered in accordance with law—In that event, order can also be challenged in accordance with law, (v) In instant case, petitioner had filed sufficient documents to rebut presumption of sale, (vi) Impugned order is illegal. [Paras 66 and 67]
Hon’ble Yatindra Singh, J.—These cases revolve around constitutionality, interpretation and applicability of the Explanation to Section 17 (iii) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 (the Act) and Rule 50-A of the Uttar Pradesh Krishi Utpadan Mandi Niyamavali, 1965 (the Rules). These are quoted in Appendix-1 to this judgment.
THE FACTS
2. ITC Limited (ITC) is a company registered under the Companies Act. Its registered office is at 37, JL Nehru Road, Kolkata (West Bengal). It initially started business with making cigarettes but at present has diversified itself into many other businesses. However, here, we are concerned with its business relating to cigarettes only.
3. In order to make cigarettes, raw tobacco is first converted into cut tobacco thereafter cigarettes are made from the cut tobacco. According to ITC.
The raw tobacco is purchased in public auction from auction platform maintained by Tobacco Board of India in the State of Andhra Pradesh and Karnataka.
It has two thrashing units : one at Anaparti (Andhra Pradesh) and the other at Chirala (Andhra Pradesh).
The raw tobacco is brought to the thrashing units and converted into cubical form. This is sent to its other units for converting it into cut tobacco.
It has four manufacturing units of cigarettes : they are situate at Saharanpur (UP), Munger (Bihar), Banglore (Karnataka) and Kidderpore (West Bengal). However, the facility for making cut tobacco is only in the first three.
Thrashed tobacco is first brought into the first three units and converted into cut tobacco. The three units sent part of cut tobacco to the fourth unit at West Bengal.
4. According to the ITC, its Saharanpur unit converts thrashed tobacco into cut tobacco and uses it in three different ways :
(i) A part of it is sent to its unit at West Bengal where there is unit for making cigarettes but has no facility of making cut tobacco.
(ii) A part of it sent to private contractors in Madhya Pradesh for making cigarettes of ITC brand on work contract basis.
(iii) The remaining part is converted into cigarettes at Saharanpur.
5. Initially, the Mandi Samitee Saharanpur was not charging any market fee on transfer of cut tobacco from ITC. Nevertheless, this question arose in 1998. The President of the Mandi Samitee, Saharanpur passed an order on 28.10.1998 holding that the ITC is not liable to pay market fee on the cut tobacco sent to its unit at West Bengal but guidance of the Director, Mandi Parishad was sought in respect of cut tobacco sent to private contractors in Madhya Pradesh.
6. The Director passed an order on 14.1.1999 setting aside the order of the President in respect of cut tobacco sent to its unit at West Bengal and remanded the matter to the Mandi Samitee, Saharanpur to decide afresh after giving opportunity to the petitioner.
7. Against the aforesaid order of the Director, the ITC filed writ petition 9515 of 1999 (the earlier WP) before this Court; it was allowed on 14.1.1999. The High Court held that :
The Director had no power of revision as there was no valid delegation of power;
There is no ground to reopen all cases from 31.3.1987;
The director is under misconception about the presumption under the explanation;
There was sufficient material to rebut the presumption under the explanation; and
The explanation is being misused to extract mandi fee.
On these findings, the order of the Director dated 14.1.1999 was quashed and the same relief was also granted in respect of cut tobacco sent to private contractors at Madhya Pradesh, as was granted in case of transfer of cut tobacco to its own unit by the President of the Mandi Samitee.
WP 3957 of 2000
8. The Mandi Samitee, Saharanpur went up in appeal before the Supreme Court against the aforesaid order. During pendency of the appeal, the Mandi Samitee refused to issue gate passes to ITC unless the market fee was deposited. Aggrieved by this action, the WP 3957 of 2000 has been filed.
9. This Court, while entertaining
