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Lipton India Ltd. v. State Of Bihar And Others
Judgment Summary — Mukhopadhaya, J. (with concurring and supplemental observations)
Factual and Procedural Background
The Bihar State Agricultural Marketing Board (the Marketing Board) held that Anik Spray (Skimmed Milk Powder) is an "agricultural produce" and directed recovery of market fee from Hindustan Lever Limited (now merged with the petitioner M/s. Lipton India Limited). The Director of the Marketing Board issued Letter No. 1424/Patna dated 2 March 1983 instructing the Secretary of the Agricultural Produce Market Committee, Jamshedpur (Market Committee) to recover the fee. The Market Committee communicated with the petitioner by Letter No. 1595/Jam dated 31 July 1986 and Letter No. 1913/Jam dated 8 September 1986, requiring payment of market fee under the Bihar Agricultural Produce (Amendment) Act, 1982, and warning of action under Sections 31-B and 32-B of the Bihar Agricultural Produce Market Act, 1960 if fee was not paid.
The petitioner challenged these directions in a writ petition. At admission, counsel for the State cited a Division Bench decision of the Patna High Court in Tata Oil Mills v. Director, Marketing, Bihar State Agricultural Marketing Board and Anr. (1986 PLJR 172). That Division Bench decision was doubted by a Division Bench in the present case and the matter was referred to a larger Bench.
While the writ petition was pending, the Supreme Court decided two cases addressing the definition of "agricultural produce" under the amended Section 2(1)(a) of the Bihar Agricultural Produce Market Act, 1960: Belsund Sugar Company Ltd. v. State of Bihar (AIR 1999 SC 3125) and Edward Keventer Pvt. Ltd. v. Bihar State Agricultural Marketing Board (AIR 2000 SC 1976). These decisions interpreted the amended definition and its requirement that covered items be specified in the Act's Schedule.
Legal Issues Presented
- Whether Skimmed Milk Powder (Anik Spray) can be said to be "Milk" as enumerated at sub-item No. 9 of Item No. VIII under the heading "Animal Husbandry Product" of the Schedule to the Bihar Agricultural Produce Market Act, 1960, so as to bring it within the purview of the Act for purposes of realization of market fee.
- Whether the authorities had jurisdiction to impose and recover market fee on the sale of Skimmed Milk Powder in light of (a) the deletion of "Milk" from the Schedule by S.O. No. 1002 dated 21 August 1984 and (b) subsequent judicial interpretations of Section 2(1)(a) by higher courts.
Arguments of the Parties
Petitioner's Arguments
- The petitioner asserted that "Milk" had been deleted from the Schedule to the Act by S.O. No. 1002 dated 21 August 1984; Skimmed Milk Powder (SMP) was not included in the Schedule, and therefore the authorities lacked jurisdiction to levy market fee on SMP.
- Counsel for the petitioner contended that Skimmed Milk Powder is not even a solidified form of milk but is a distinct "milk product" (like butter, ghee, cream, chhena, khowa) and is different from milk.
- It was submitted that the manufacturing of Skimmed Milk Powder involves a complicated industrial process requiring, apart from milk, various other ingredients — implying it is a manufactured item rather than simply a solidified milk product. (However, the petitioner did not detail the ingredients or constituents in the writ petition.)
Counsel for the State / Respondents
- At admission, State counsel brought to the court's attention the Division Bench judgment in Tata Oil Mills v. Director, Marketing, Bihar State Agricultural Marketing Board and Anr. (1986 PLJR 172), which had taken a broadly inclusive view of the amended definition of "agricultural produce".
- Respondents relied on subsequent Supreme Court decisions interpreting Section 2(1)(a), which the court discussed in its analysis.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Tata Oil Mills v. Director, Marketing, Bihar State Agricultural Marketing Board and Anr., 1986 PLJR 172 (Division Bench) | The Division Bench had held that under the new definition it was not decisive whether a product was specified in the Schedule; rather the question was whether the item is a processed or manufactured product of agriculture, animal husbandry, etc. | The High Court said this earlier Division Bench finding was doubted in the present case and, in view of later Supreme Court authorities, declared that the Tata Oil Mills judgment is no longer good insofar as it relates to the interpretation of amended section 2(1)(a). |
| Belsund Sugar Company Ltd. v. State of Bihar, AIR 1999 SC 3125 | The Supreme Court held that the term "agricultural produce" under section 2(1)(a) indicates the agricultural produce covered by the Act must be one which is specified in the Schedule; further, items consisting of solidified milk (like milk powder) are contemplated by the Schedule item except liquid milk. | The High Court relied on Belsund to conclude that solidified milk such as milk powder is contemplated by the Schedule and to support the view that Skimmed Milk Powder can be treated as a solidified form of milk for the purposes of the Act. |
| Edward Keventer Pvt. Ltd. v. Bihar State Agricultural Marketing Board, AIR 2000 SC 1976 | The Supreme Court reiterated that agricultural produce to be covered by the Act must be specified in the Schedule and that items not so specified fall outside the Act's ambit. | The High Court treated this decision as an authoritative pronouncement consistent with Belsund and applied the principle that Schedule specification is necessary when determining whether a product falls within the Act's coverage. |
Court's Reasoning and Analysis
The Court's reasoning proceeded in a series of steps grounded in statutory interpretation, authoritative precedent, factual observations about the product, and the lacunae in the petitioner's pleadings:
- Preliminary legal framework: The Court focused on the amended definition of "agricultural produce" in Section 2(1)(a) of the Bihar Agricultural Produce Market Act, 1960 and the Schedule framed under that provision. It noted the controlling effect of Supreme Court decisions interpreting that definition.
- Effect of Supreme Court authority: The Court observed two Supreme Court decisions (Belsund Sugar Company Ltd. and Edward Keventer Pvt. Ltd.) which held that the agricultural produce covered by the Act must be specified in the Schedule; those decisions were treated as authoritative and decisive on the legal question. Because of those authoritative pronouncements, the Court held that the earlier Division Bench view in Tata Oil Mills was no longer good in so far as it related to interpreting the amended section 2(1)(a).
- Narrowing the factual issue: The Court formulated the core question as whether Skimmed Milk Powder (SMP) can be said to be "Milk" as enumerated at sub-item No. 9 of Item No. VIII (Animal Husbandry Product) of the Schedule, thereby bringing it within the Act for market fee purposes.
- Pleading deficiencies: The Court noted that the petitioner did not plead that SMP is not milk; instead the petition proceeded on the presumption that milk had been deleted from the Schedule and that SMP was not listed. The Court also observed the petitioner had not detailed the ingredients or constituents of Anik Spray in the writ petition despite asserting a manufacturing process involving various ingredients.
- Use of authorities and definitions: The Court considered dictionary and prior judicial statements on the meaning of "milk" and "skimmed milk". It quoted Webster's and secondary authorities (Law Lexicon) explaining that "Skimmed Milk" means milk from which cream has been skimmed, and referred to Mathew, J.'s remark in Lane v. Collins that "Milk, commercially speaking, means, Skimmed Milk."
- Reliance on Supreme Court's view about solidified milk: The Court relied on Belsund Sugar Company's observation that Item VIII, sub-item (20) contemplates products consisting of solidified milk (i.e., milk powder) and that such products fall within the Schedule's scope (except liquid milk).
- Factual conclusion about the nature of Anik Spray: The Court found that conversion of liquid milk to Skimmed Milk Powder involves removal of water and does not require addition or removal of other ingredients such that the basic ingredients of milk are altered. Consequently, the product is a solidified form of milk as contemplated under Item 9 of Schedule VIII.
- Supplementary observations (Justice Vikramaditya Prasad): He took judicial notice of the product container labeling showing "Anik Spray [Spray dried] Skimmed Milk Powder" and relied on Black's Medical Dictionary's description of spray drying (evaporation/ spray drying of milk into powder) to support the view that spray-dried skimmed milk is a dehydrated form of milk that dissolves back into a milk-like fluid. He characterized spray drying as a physical/mechanical process rather than a chemical transformation.
- Conclusion on jurisdiction to levy fee: Based on the statutory interpretation informed by Supreme Court authority and the factual finding that Anik Spray is a solidified form of milk, the Court concluded the respondents were within their jurisdiction to require payment of market fee on the sale of Anik Spray (Skimmed Milk Powder).
Holding and Implications
Holding: The writ petition was dismissed. The Court held that Skimmed Milk Powder (Anik Spray) can be regarded as a solidified form of milk falling within the Schedule item for animal husbandry products and that the respondents were within their jurisdiction to impose market fee on its sale. There shall be no order as to costs.
Implications:
- The direct consequence for the parties is that the petitioner’s challenge to the recovery of market fee on Anik Spray was rejected and the authorities may recover market fee on the sale of the product.
- The Court explicitly stated that the earlier Division Bench decision in Tata Oil Mills (1986 PLJR 172) is "no more good" insofar as it relates to interpretation of the amended section 2(1)(a), in light of subsequent Supreme Court authorities. Thus the opinion records a rejection of that prior High Court precedent on the specific interpretive point.
- The Court relied on and followed Supreme Court pronouncements (Belsund and Edward Keventer) regarding the necessity of Schedule specification and on the concept that solidified forms of milk (milk powder) are contemplated by the Schedule item. The opinion does not purport to create a novel legal principle beyond applying Supreme Court authority to the facts before it.
Mukhopadhaya, J.
1. The Bihar State Agricultural Marketing Board (Marketing Board for short) held that Anik Spray (Skimmed Milk Powder) is an "agricultural produce", and therefore, market fee was payable. The Director, Marketing Board asked the Secretary, Agricultural Produce Market Committee, Jamshedpur (Market Committee for short) to recover the market fee from Hindustan Lever Limited (now merged with petitioner, M/s. Lipton India Limited), vide Letter No. 1424/Patna dated 2nd March, 1983. The Marketing Secretary, Market Committee, Jamshedpur, in its turn, informed the petitioner vide Letter No. 1595/Jam dated 31st July, 1986 and Letter No. 1913/Jam dated 8th September, 1986 to pay the market fee on sale of Anik Spray (Skimmed Milk Powder) being payable under the Bihar Agricultural Produce Market (Amendment) Act, 1982, failing which action under Section 31-B and 32-B of the Bihar Agricultural Produce" Market Act, 1960 was threatened to be taken.
2. The petitioner challenged the aforesaid decision and directions, contained in Letter No. 1424/Patna dated 2nd March, 1983, Letter No. 1595/Jam dated 31st July, 1986 and Letter No. 1913/Jam dated 8th September, 1986.
3. In the writ petition, the only plea as was taken by the petitioner was that the 'Milk' having been deleted from the Schedule of the Bihar Agricultural Produce Market Act, 1960, vide S.O. No. 1002 dated 21st August, 1984 and the "Skimmed Milk Powder" having not been Included in the schedule, the authorities had no jurisdiction to impose Market Fee on the sale of "Skimmed Milk Powder".
4. At the time of admission of the case, the counsel for the State brought to the notice of the Court a Division Bench judgment of Patna High Court in the case of Tata Oil Mills v. Director, Marketing, Bihar State Agricultural Marketing Board and Anr., reported in 1986 PLJR 172, wherein the Court held, as follows :
"....... In my view, under the new definition whether a produce or product thereof has been specified in the Schedule is not of much consequence for being held as an agricultural produce. The only thing which has to be established is as to whether the item in question is a processed or non-processed or manufactured product of agriculture, horticulture, plantation, animal husbandry, forest, sericulture, pisciculture, live stock or poultry......"
The aforesaid finding of Division Bench was doubted by a Division Bench in the present case and so, the case was referred to a larger Bench.
5. During the pendency of this case, the Supreme Court rendered two decisions on the subject taking into consideration the definition of 'agricultural produce' as defined under the amended Section 2(1)(a) of the Bihar Agricultural Produce Market Act, 1960. In the case of Belsund Sugar Company Ltd. v. State of Bihar, reported in AIR 1999 SC 3125, the Supreme Court held ;
",........ that the said term 'agricultural produce' as defined by section 2(1)(a) clearly indicates that the agricultural produce which is to be covered by the sweep of the Act has to be one which should be specified in the schedule....."
Similar was the finding of Supreme Court in the case of Edward Keventer Pvt. Ltd. v. Bihar State Agricultural Marketing Board, AIR 2000 SC 1976, as quoted hereunder :
"A perusal of section 2(1)(a) unambiguously shows that the agricultural produce which are to be covered by the sweep of the Act necessarily has to be specified in the schedule, it goes beyond the purview of the Act and respondent has no power to levy fee on such product."
6. In view of the authoritative pronouncements of law laid down by the Supreme Court on the issue in question, we have no hesitation in declaring that the judgment rendered by the Division Bench in the case of Tata Oil Mills v. Director, Marketing, Bihar State Agricultural Marketing Board and Anr., reported in 1986 PLJR 172, is no more good in so far as it relates to the interpretation of the amended section 2(1)(a).
7. At the time of hearing of the case, when it was pointed to the counsel that vide S.O. No. 1002 dated 21st August, 1984, only 'Liquid Milk' was deleted, but any 'Milk product consisting of solidified milk, like 'Milk Powder' is contemplated, as observed by the Supreme Court in the case of Belsund Sugar Company Ltd. v. State of Bihar, reported in AIR 1999 SC 3125 (Paragraph '133'), the counsel for the petitioner submitted that the 'Skimmed Milk Powder' is not even a solidified milk. It is a 'Milk Product' like Butter; Ghee; Cream; Chhena; Khowa and is different than Milk.
It was further submitted that while 'Milk Products' such as Butter, Ghee; Cream; Chhena and Khowa have been included in Schedule No. VIII of the Act, 1960, 'Skimmed Milk Powder' has not been included therein. Therefore, no market fee can be levied nor can be realized on the sale of Anik Spray (Skimmed Milk Powder).
8. The question, that thus arises for determination is :
"Whether Skimmed Milk Powder can be said to be 'Milk', as enumerated at sub-item No.9 of Item No. VIII, under the heading 'Animal Husbandry Product' of the Schedule of Bihar Agricultural Produce Market Act, 1960, so as to bring it within the purview of the Bihar Agricultural Produce Market Act, 1960, for the purpose of realization of market fee or not.
9. In the writ petition, the petitioner has not pleaded that 'Skimmed Milk Powder' is not 'Milk'. On the other hand, the whole pleading is based on the presumption that 'Milk' as shown at Item No. 9, has been deleted from the Schedule VIII by Notification No. S.O. 1002 dated 21st August, 1984. Meaning thereby, the petitioner presumes that 'Skimmed Milk Powder' is 'Milk', but the same having been deleted from the Schedule VIII by the said Notification dated 21st August, 1984, it is not liable to pay market fee.
10. Counsel for the petitioner submitted that Anik Spray is Skimmed Milk Powder and was being manufactured by petitioner- Company at its Factory located outside the erstwhile State of Bihar. The manufacturing of Skimmed Milk Powder involves complicated industrial manufacturing process and require, apart from Milk various other ingredients for bringing into existence the finished products - Skimmed Milk Powder.
Though aforesaid submission advanced on behalf of the petitioner, but the ingredients and constituents of the product have not been detailed in the writ petition.
11. In the case of Belsund Sugar Company Ltd., AIR 1999 SC 3125, the Supreme Court noticed the ingredients and constituents which were processed by addition of all other extra items with the result that finished products, like Baby Foods (Lactodex and Raptakos S.I.F.) emerged as manufactured items for serving as substitute for Milk and came to a definite finding that the Baby Foods i.e. Lactodex and Raptakos S.I.F. cannot be treated to be an 'agricultural produce.' In the present case, the petitioner has not detailed the ingredients and constituents of Anik Spray (Skimmed Milk Powder) nor has given the names of other extra items added with the result that finished product like Anik Spray emerged as manufactured item,
12. The Dictionary meaning of 'Milk' is - "A white fluid of female mammals, secreted for the nourishment of the young" (Webster Dictionary).
"Milk" - Milk, commercially speaking, means, Skimmed Milk" (per Mathew, J., Lane v. Collins, 54 LJMC 76).
(quoted from the Law Lexicon - of P. Ramanatha Aiyar, 1997 Ed.) "Skimmed Milk" means: "Milk from which the white cream which naturally raises to the surface has been skimmed in the ordinary manner" (Law Lexicon of P. Ramanatha Aiyar, 1997 Ed.) While the 'Milk' contains the nutrients, as shows hereunder :
13. In absence of any definition of 'Milk' in the Bihar Agricultural Produce Market Act, 1960; apart from the general definition of 'Milk' and 'Skimmed' Milk Powder', no definition can be imported on the basis of any other Act.
14. The Supreme Court in the case of Belsund Sugar Company Ltd, v. State of Bihar, AIR 1999 SC 3125, held :
".....When we turn to the Schedule of the Act framed as per per section 2(1)(a), we find one of the animal husbandry products at Item VIII, sub-item (20) as milk except liquid milk. Thus any product, consistent of solidified milk, like milk powder is contemplated by the said item."
15. For conversion of 'Milk' (liquid form) to 'Skimmed Milk Powder' (solidified form), no separate ingredient is added, nor any ingredient is taken out, except water and the basic ingredients of 'Milk' remain in the 'Skimmed Milk Powder'. The product of petitioner Anik Spray (Skimmed Milk Powder) can be said to be a solidified form of Milk as contemplated under Item 9 of Schedule VIII of Bihar Agricultural Produce Market Act, 1960.
16. Therefore, it is well within the jurisdiction of the respondents to ask the petitioner to pay the market fee on the sale of 'Anik Spray' (Skimmed Milk Powder).
17. There being no merit, the writ petition is dismissed. However, there shall be no order, as to costs.
Tapen Sen, J.--I agree.
Vikramaditya Prasad, J.--Humbly, I wish to supplement the views of Hon'ble Mr. Justice S.J. Mukhopadhaya as expressed by his Lordship in the judgment-prepared by him.
19. I take judicial notice of what is displayed on the containers (one of such I have of the year 1997) of Anik Spray marketed by the petitioner, It reads, as follows :
Anik Spray [Spray dried] Skimmed Milk Powder Dissolves without a Trace Leaves great Taste.
Black's Medical Dictionary described various preparation of Milk and the manner of their preparations is as follows :
"One of the preparations is dried Milk. Dried milk is prepared by evaporation of the fluid so that milk is reduced to the form of powder. In spray drying a very fine spray of milk is forced into a heated chamber where drying is almost instantaneous. Milk powder thus prepared is nearly completely soluble in water.
20. Thus when the containers display that Anik Spray is spray dried Skimmed Milk Powder, dissolving in water without a trace, it simply conforms to the aforesaid manner of preparation of such milk. Thus in the event of petitioner's failing to give ingredient/constituents the display in container simply means that milk when spray dried becomes Skimmed Milk Powder. This is simply a physical change brought by mechanical process in the form of the Skimmed Milk and not a chemical one and if dissolves into water (instantaneously dissolved) and takes the form of 2.5 Liters of Skimmed Milk (against every net weight of 200 gm. as shown in container) claimed by the petitioner in the marketed containers.
21. Thus the spray dried Skimmed Milk is only physically changed form of Fluid Milk which falls within the definition of Milk. Writ dismissal.
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