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Case Number

C.W.J.C No. 1423 of 1992

Attorney(S)

Tara Kant Jha
Ram Balak Mahto
B.N.Singh
Amarendra Sinha

Judges

S.B Sinha, J.

Acts

provisions of Bihar Agricultural Produce Market Act, 1960 (hereinafter referred to as the said Act)
provisions of Bihar Trade Articles (Licenses Unification)
provisions of Trade Articles (Licenses Unification) Order
ESSENTIAL COMMODITIES ACT
ESSENTIAL COMMODITIES ACT
sub-rule (2) of R. 94

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Smart Summary

Structured Summary of the Judicial Opinion (S.B. Sinha, J.)

Factual and Procedural Background

The petitioners are retail traders carrying on business in Gaya who challenged two administrative directions: (a) Memo No. 226.C dated 19-1-1992 (Annexure 1 series) directing them to shift their places of business to the newly constructed principal market yard at Chandauti, and (b) a letter dated 7-2-1992 (Annexure 2 series) asking them to obtain allotted shops in that principal market yard. The petitioners sought, among other reliefs, a declaration that the Bihar Agricultural Produce Market Act, 1960 (the "said Act") does not apply to retail dealers and that Schedule II of the Bihar Agricultural Produce Markets Rules, 1975 (and/or R.94) is ultra vires S.15(1) of the Act and Articles 14, 19(1)(g) and 265 of the Constitution.

The petitioners held retail licences under the Bihar Trade Articles (Licences Unification) Order, 1984 and contended that the licensing regime and the prescribed retail stock limits under that Order entitled them to carry specified quantities of commodities in a Class B town like Gaya. They alleged the respondents who issued the impugned directions had no jurisdiction under the said Act and that, in any event, a market committee did not exist to authorize such directions.

Respondent pleadings included a counter-affidavit by the market committee asserting that the State had, under S.37 of the Act, appointed Shri K.K. Pathak, Deputy Development Commissioner, Gaya, to exercise the powers of the Market Committee, and that Chandauti had earlier been declared the principal market yard. The committee also asserted that license-holders are bound by clause II of their licences to comply with instructions issued under the Act.

Legal Issues Presented

Whether the directions (Annexure 1 series and Annexure 2 series) requiring retail traders to shift their business to the principal market yard at Chandauti were legally valid and issued by competent authorities.
Whether Schedule II of the Bihar Agricultural Produce Markets Rules, 1975 (and/or Rule 94) to the extent it limits retail sale by reference to a monetary value — specifically the phrase "or Rs. 100/- whichever is less" — is ultra vires S.15(1) of the Bihar Agricultural Produce Market Act, 1960.
Whether the Bihar Trade Articles (Licences Unification) Order, 1984 definitions and its clause permitting site alteration only at the instance of a trader preclude the licensing authority or administrative officers (e.g., District Magistrate or Sub-divisional Officer) from directing change of site; and the extent to which clause 10 of the licences permits directions by the Licensing Authority or State.
Whether, in the absence of a constitutionally/legally valid market committee or a valid appointment under S.9(5)/S.37, any person was authorized to exercise the functions of the Agricultural Produce Market Committee of Gaya and thus to enforce the impugned directions.

Arguments of the Parties

Petitioners' Arguments

The second schedule to the Rules is ultra vires S.15(1) because fixing an upper limit of Rs.100 (as an alternative monetary cap) is inappropriate given later price rises; S.15(1) contemplates exemption by quantity, not monetary amount.
The market committee did not exist; therefore respondents 2 and 3 lacked jurisdiction to issue the impugned directions.
Definitions and provisions under the Bihar Trade Articles (Licences Unification) Order, 1984 (including Clause 9) prevent administrative officers from unilaterally altering the situs of a dealer's business; deletion of the words "suo motu" in 1985 removed such power.
The fixation of quantity for retail sale under the Act/Rules as applied to holders of licences under the Unification Order is ultra vires Article 14 of the Constitution.
Petitioners relied on judicial authority including Ramji Prasad v. State of Bihar and Muhammadbhai Khudabux Chippa v. State of Gujarat (AIR 1962 SC 1517) in support of their position.

Respondents' (State / Market Committee / Advocate General) Arguments

Rule 94 is consonant with S.15(1) of the Act and thus valid; the Act's reach includes not just agriculturists but also manufacturers, agricultural producers and industrialists.
The State (via S.37) had appointed Shri K.K. Pathak to exercise the powers of the Market Committee and thereby respondents were entitled to enforce the Act and Rule 94; principal market yard had been validly declared earlier.
The definitions of 'wholesale traders' and 'retail dealers' in the Unification Order cannot be used to construe the word 'trader' under the said Act; licensing authorities must ensure licensees comply with the Act and can enforce directions to prevent commission of offences under the Act's penal provisions.
Reliance was placed on judicial authority including Belsand Sugar Company Ltd. v. The State of Bihar to support the broader reach of the Act.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ramji Prasad v. State of Bihar (1991 (1) PLJR 446)	Authority under S.37 can be exercised only when a committee exists; limits on Board's power to appoint/act when no committee in existence.	The Court held that subsequent notifications purporting to exercise S.37 powers were invalid because, after 1987, no committee existed; therefore no person was authorised to carry out functions of the Market Committee, Gaya, under those notifications.
Muhammadbhai Khudabux Chippa v. State of Gujarat (AIR 1962 SC 1517)	Considered in the context of the scope of market regulation and whether transactions between traders can be controlled.	The Court noted the Supreme Court had earlier considered such authorities when upholding the competence to regulate trader-to-trader transactions; Porwal (below) relied on it in holding such control permissible.
Belsand Sugar Company Ltd. v. The State of Bihar (1976 BBCJ 453 / AIR 1976 Pat 136)	Illustrates that the Act can operate in respect of manufacturers/industrially processed agricultural produce; supports broad scope of 'agricultural produce'.	The Court relied on this decision and related authority to conclude that industrially produced goods are within the sweep of the Act and may be subjected to levy and regulation under the Act.
Raptakos, Brett & Company Ltd. v. The Bihar State Agricultural Marketing Board (1988 PLJR 830)	Holds that industrially produced goods are subject to levy under the Act.	The Court cited this decision for the proposition that the Act extends to goods produced by industrial processing of agricultural produce.
Mahabir Tea Company v. State of Bihar (1979 BLJR 560)	Earlier authority on the scope of the Act and market regulation.	Cited as precedent supporting the broader application of the Act to various transactions involving agricultural produce.
Rameshchandra Kachardas Porwal v. State of Maharashtra (AIR 1981 SC 1127 / 1982 PLJR 32 (SC))	Upheld that rules requiring marketing operations to occur only in principal and subsidiary markets are within the competence of the rule-making authority; recognized that trader-to-trader transactions must be controlled to prevent circumvention.	The Court relied on Porwal to reject the petitioners' contention that trader-to-trader transactions need not be confined to market yards; it applied Porwal to sustain the proposition that the Act's control can legitimately extend to such transactions.
Ram Chandra Kailash Kumar & Co. v. State of U.P. (AIR 1980 SC 1124)	Considered by the Supreme Court in Porwal regarding market regulation and the competence of rules.	Referred (via Porwal) as part of the Supreme Court reasoning that supported control over trader-to-trader transactions.
Keshoram Agarwala v. The State of Bihar (C.W.J.C. No. 1802 of 1991) (disposed 25-4-1992)	Observations recommending amendment of the Act/rules to permit retail dealers to continue in the market area to protect public interest and consumers.	The Court reiterated the observations and recommendation that the State consider suitable amendments to permit retail dealers to continue their places of business within the market area rather than forcing them to the principal market yard.

Court's Reasoning and Analysis

The Court undertook a statutory and contextual analysis of the Bihar Agricultural Produce Market Act, 1960, and the Bihar Agricultural Produce Markets Rules, 1975 (in particular S.3, S.4, S.5, S.15 and R.94), together with the licences issued under the Bihar Trade Articles (Licences Unification) Order, 1984.

Key analytical steps taken by the Court:

Statutory framework: The Court reviewed S.3 (notification to regulate purchase/sale), S.4 (declaration of market area and the statutory prohibition against establishing or continuing places of purchase/sale other than in accordance with the Act/rules), S.5 (declaration of market yards), and S.15 (restriction on carrying on trade outside principal/sub-market yards except retail sales within prescribed limits).
Nature of R.94 and Schedule II: The Court examined R.94 which requires agricultural produce brought into or processed in the market area (except retail/consumption quantities per Schedule II) to pass through the principal market yard or sub-market yards. The second schedule fixed quantity limits and, in certain entries, fixed an alternative monetary cap (e.g., "50 kg. or Rs.100 whichever is less" for cereals).
On interpretation of S.15(1) vs. Schedule II: The Court observed that S.15(1) and R.94 contemplate exemption by reference to quantity of agricultural produce and not by reference to monetary value. The Court accepted the Advocate General's concession that the monetary values in Schedule II probably reflected prices prevailing when the rules were framed (1975) and that prices have since changed. The Court reasoned that the State could not impose further restrictions by reference to a monetary value when the Act and rule focus on quantity. Consequently it held the portion of the rules containing the words "or Rs. 100/- whichever is less" to be ultra vires S.15(1) and R.94.
On applicability to industrially processed goods and trader-to-trader transactions: The Court relied on earlier decisions (including Raptakos, Belsand, Mahabir Tea and the Supreme Court's Porwal decision) to conclude that the Act's regulation extends beyond the first sale by producers — it includes processed/industrial products and transactions between traders. R.94(ii) imposes an obligation to report resale or re-purchase within the market area to the market committee, thereby bringing second sales within the Act's purview.
On the relevant definitions and interplay with the Unification Order: The Court held that the definition of 'trader' in the Act (S.2(w)) differs from 'wholesale dealer' and 'retail dealer' under the Unification Order; therefore the Unification Order definitions cannot be used to construe the Act or rules. Determination of whether a person is a retail dealer for the Act's purposes must be made with reference to S.4(4) of the Act read with R.98(xi) of the Rules rather than the Unification Order definitions.
On the existence and authority of the Market Committee: The Court analyzed the statutory scheme for constitution of market committees (S.9) and the Board's power under S.37 to make arrangements in the absence of a committee. It found that the committee's term had expired in 1986 and that interim appointments under S.9(5) were limited and not continuously renewed; the Court concluded (relying on Ramji Prasad) that after 1987 there was no committee and that the Board's exercise of S.37 in the circumstances (as in the notifications relied upon) was not valid. Therefore, no person was authorized to exercise the functions of the Market Committee for Gaya at the relevant time.
On enforcement by licensing authorities and clause 10 of licences: The Court accepted that respondents 2 and 3, as licensing authorities under the Unification Order, may not strictly have powers under the said Act to enforce shifting. However, clause 10 of the licences (a residuary power) required licensees to comply with any direction given by State, Collector or Licensing Authority regarding purchase, sale and storage, and allowed the licensing authority in an appropriate case to give directions necessary to give effect to both the Act and the Unification Order. The Court read clause 10 as permitting such directions in an appropriate case.
Application of law to facts: Even though the traders had, in a meeting dated 12-1-92, agreed to shift by 31-1-92 and failed to do so before filing the writ on 17-2-92, the Court held that because there was no valid Market Committee or authorized person to negotiate/authorize shifting, the impugned administrative orders (Annexures 1 and 2) could not be sustained. The Court clarified that shifting could be undertaken when a regular market committee is constituted.

Holding and Implications

Core Ruling: The writ application is allowed. The impugned directions contained in Annexure 1 series and Annexure 2 series cannot be sustained in the absence of a legally constituted Market Committee or an authorised person under the Act; and the portion of the Rules/Schedule II containing the phrase "or Rs. 100/- whichever is less" is declared ultra vires S.15(1) of the Bihar Agricultural Produce Market Act, 1960, and R.94 of the Rules.

Direct Consequences for the Parties

The impugned orders requiring the petitioners to shift to the principal market yard at Chandauti (Annexures 1 and 2) are set aside because no person was properly authorised to exercise the functions of the Agricultural Produce Market Committee of Gaya at the relevant time.
The monetary alternative cap in Schedule II (e.g., "or Rs.100/- whichever is less") is struck down as being ultra vires S.15(1) and R.94; exemptions under S.15(1) and R.94 must be understood in terms of quantity rather than monetary value.
The petition is allowed without any order as to costs (the Court expressly recorded "without any order as to costs").

Broader Implications and Directions

The Court reaffirmed that the Act may regulate not only sales by producers but also transactions between traders and sales of industrially processed agricultural produce; hence market regulation may legitimately extend to trader-to-trader transactions.
The Court recognized a residuary power in the licensing authority (clause 10 of the licences) to issue directions in appropriate cases to ensure that both the Unification Order and the Act can be given effect to; however, such licensing directions cannot substitute for actions that only a valid Market Committee could properly authorize when the committee is statutorily required.
The Court reiterated (by reference to Keshoram Agarwala) a policy observation that the State may consider amending the Act/rules/notifications so retail dealers can continue to operate within the market area rather than being required to operate only from the principal market yard, to protect consumer interest and avoid undue hardship to consumers required to travel long distances.
The Court noted that any trader who can demonstrate that his transactions fall within the limits as to quantity under R.94 read with Schedule II (as interpreted by the Court) may apply to the Market Committee (once constituted) for appropriate orders; authorities of the committee can then verify and pass orders in accordance with law.
No fresh statement was made that a new precedent altering the statutory scheme has been set beyond the adjudication on ultra vires of the monetary cap and the conclusions about the absence of a valid Market Committee; the decision applies to the facts and statutory construction presented in this matter.

Disposition: Petition allowed. (I.P. Singh, J. agreed.)

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M/S. Swagat Stores And Others v. The State Of Bihar And Others

S.B Sinha, J.:— The petitioners, who are said to be retail traders and carry on business in the town of Gaya, in this writ application, have questioned the legality and/or validity of the directions which are contained in memo No. 226.C, dated 19th January, 1992, as contained in Annexure 1 series to the writ application, whereby they have been directed by respondent No. 2 to shift their place of business to the market yard at Chandauti, as also the letter dated 7-2-1992, issued by respondent No. 3, as contained in Annexure 2 series to the writ application, whereby the petitioners have been asked to get the shops allotted in the name of the aforesaid market yard, as also sought for declaration that the provisions of Bihar Agricultural Produce Market Act, 1960 (hereinafter referred to as the ‘said Act’) have no application in relation to the retail dealers and Schedule II of the Bihar Agricultural Produce Markets Rules, 1975 (hereinafter referred to ‘as the said Rules’) and/or R. 94 thereof are ultra vires S. 15(1) of the said Act as also Arts. 14, 19(1)(g) and 265 of the Constitution of India.

2. According to the petitioners, they hold retail licences under the Bihar Trade Articles (Licences Unification) Order, 1984, and deal with food grains etc. The town of Gaya being a Class B town the retail dealers in terms of the provisions of the said Order are entitled to hold stock of different commodities in the following manner:

Foodgrains— 100 quintals. Edible Oilseeds— 150 quintals. Edible Oil— 15 quintals. Sugar— 5 quintals. Khandsari— 5 quintals.

The petitioners by reason of the impugned orders have been directed to shift their respective places of business in the newly constructed market yard by the respondent No. 2 and have further been directed by respondent No. 3 to get shops allotted in their favour failing which it has been threatened that legal action would be taken against them and their respective licences would be cancelled.

3. The petitioners have, inter alia, contended that the respondents 2 and 3 are not the authorities and have no role to play in the matter of enforcement of the provisions of the said Act and the Rules framed thereunder and, as such, the impugned orders, as contained in Annexure 1 series and Annexure 2 are wholly illegal and without jurisdiction. It has further been contended that at present no agricultural produce market committee exists and in that view of the matter too, the direction of the respondents as contained in Annexure 1 series and Annexure 2 series must be held to be illegal and without jurisdiction.

4. In this case a counter affidavit and a supplementary counter affidavit have been filed on behalf of the respondent-market committee. In the said counter affidavit it has been asserted that the State of Bihar in exercise of its power conferred upon it under S. 37 of the said Act has appointed Shri K.K Pathak, Deputy Development Commissioner, Gaya, to exercise all the powers and carry out all functions of the Market Committee and its sub-committees by a Notification dated 20th November, 1991, as contained in Annexure ‘A’ to the counter affidavit. It has been further asserted that by a Notification dated 31-12-86. Chandauti within Gaya Market Area has been declared to be the principal market yard in respect of food-grains, pulses, oil seeds and edible oils. It has been further asserted that the petitioners have been granted licences under the provisions of the said Act and in terms of Cl. II thereof, they are bound to carry out all instructions as may be given by the authorities under the said Act from time to time. It has further been contended that all facilities have been provided in the principal market yard, Gaya, and the petitioners are under a legal obligation to shift their places of business in the newly constructed principal market yard.

5. Mr. Tara Kant Jha, learned counsel appearing on behalf of the petitioners has principally raised three contentions in support of this application. The learned counsel firstly submitted that second schedule appended to the rules is ultra vires S. 15(1) of the Act so far as it relates to the amount of Rs. 100/- mentioned therein, being the upper limit of the quantum of sale. It has been submitted that the prices of the commodities have increased many fold and thus the quantity of the agricultural produce and the price of Rs. 100/- fixed thereby have lost all relevances. It has also been submitted that as the market committee has become non-existent the impugned directions, as contained in Annexures 1 series and 2 series are wholly illegal and without jurisdiction. The learned counsel is this connection has relied upon a Division Bench decision of this Court in Ramji Prasad v. State of Bihar, 1919 (1) PLJR 446. He has also placed reliance upon the decision in Muhammadbhai Khudabux Chippa v. The State of Gujarat, AIR 1962 SC 1517. It was further submitted that fixation of quantity for retail sale so far as retail dealers under Bihar Trade Articles (Licences Unification) Order are concerned, under the provisions of the said Act and the Rules is ultra vires Art. 14 of the Constitution.

6. It was next contended that the District Magistrate or the Sub-divisional Officer being not authorities under the provisions of the said Act or the Rules framed thereunder, they had no jurisdiction to issue the impugned orders, particularly, in view of the fact that in terms of Cl. 9 of the Bihar Trade Articles (Licenses Unification) Order, 1984, alteration or change of the site is permissible only at the instance of the trader. In this connection it has been pointed out that the State of Bihar by a Notification issued in 1985 had deleted the words ‘suo motu’ occurring in Cl. 9 of the Unification Order as a result whereof the District Magistrate does not have the power to direct any change of place of business, so far as a dealer under the said order is concerned suo motu.

7. Mr. Ram Balak Mahto, the learned Advocate General, on the other hand, submitted R. 94 of the Rules being in consonance with the provisions of sub-sec. (1) of S. 15 of the said Act, the same must be held to be valid. It was further submitted that the said Act not only controls the transactions of agricultural produces by the agriculturists but also brings within the sweep manufacturer, agricultural producers and the industrialists. The learned counsel in this connection placed reliance upon a Division Bench decision of this Court in Belsand Sugar Company Ltd. v. The State of Bihar, 1976 BBCJ 453 : (AIR 1976 Pat 136). The learned Advocate General further contended that the definition of ‘wholesale traders’ and ‘retail dealers’ as contained in the Unification order cannot be taken aid of for the purpose of construction of the word ‘trader’ as defined in the said Act and thus the provisions relating to the control of business of retail traders under the provisions of the said order cannot have any relevance in relation to ‘control of buying and selling of agricultural produce’ by the Market Committee in terms of the provisions of the said Act and the Rules framed thereunder. It has further been submitted that the provisions of the said Act contains a penal provision and as upon publication of a notification under sub-sec. (2) of S. 5 of the said Act all traders tend prohibited from carrying on any business at any place other than the principal market yard or sub-market yards this Court will not allow any person to commit offence under the said Act.

8. According to the learned Advocate General, therefore, the action of the respondents 2 and 3 although may not be strictly under the provisions of the said Act but the same is for enforcement of the provisions of the said Act, the same must be held to be legal.

9. The said Act was enacted for the better regulation of buying and selling of agricultural produce and the establishment of markets for agricultural produce in the State of Bihar and for matters connected therewith. S. 3 of the said Act provides for issuance of notification by the State declaring its intention of regulating the purchase, sale, storage and processing of agricultural produce.

Sub-sec. (1) of S. 4 provides for declaration of market area. Sub-sec. (2) of S. 4 and the explanations appended thereto read as follows:—

“On and after the date of publication of the notification under sub-sec. (1), or such later date as may be specified therein, no municipality or other local authority, or other person, notwithstanding anything contained in any law for the time being in force, shall within the market area, or within a distance thereof to be notified in the official Gazette in this behalf, set up, establish, or continue, or allow to be set up, established or continued, any place for the purchase, sale, storage or processing of any agricultural produce so notified, except in accordance with the provisions of this Act, the rules and bye-laws.

Explanation— A municipality or other local authority or any other person shall not be deemed to set up, eatsblish or continue or allow to be set up, established or continued a place as a place for the purchase, sale, storage or processing of agricultural produce within the meaning of this section. If the quantity is as may be prescribed and the seller is himself the producer of the agricultural produce offered for the sale at such place or any person employed by such producer to transport the same and the buyer is a person who purchases such produce for his own use or if the agricultural produce is sold by retail sale to a person who purchases such produce for his own use.”

Section 5 of the said Act provides for declaration of market yards. It is not in dispute that there has been a valid declaration of market area as provided for under S. 4 of the said Act as also a market yard as envisaged under S. 5 thereof.

10. It is also not in dispute that S. 15 of the said Act puts a complete embargo upon carrying on any trade or business by any trader at any place other than principal market yard or sub-market yard save and except a retail sale made by any person or for personal consumption to the limit prescribed by the rules. R. 94 of the said rules reads as follows:—

“94. Sale of agricultural produce— (i) All agricultural produce brought into or processed in the market area except such quantity for retail sale or consumption as per Schedule II of the rules or such description of agricultural produce exempted under S. 15 by the Board shall pass through the principal market yard or sub-market yard or yards, and shall not be bought or sold at any other place within the market area.

(ii) Such details of agricultural produce resold or re-bought in the market area shall also be reported to market committee in accordance with the provisions of bye-laws.

(iii) The price of agricultural produce intended for sale in the principal market yard or sub-market yard, shall be settled by open auction or tender system and not otherwise and no deduction shall be made from the agreed price of the consignment except for any authorised trade allowance as prescribed in the bye-laws.”

The second schedule appended to the said rules limits the quantity of sale in amount, as for example, so far as cereals are concerned, the limit has been fixed at 50 kg. or Rs. 100 whichever is less.

11. Section 15 of the said Act exempts as those persons from the applicability thereof who sells within the prescribed quantity of agricultural produce and/or for personal consumption. The dealers thus whose quantum of sale is confined to the limits prescribed by R. 94 are thus not required to carry on any business in the principal market yard or sub-market yard.

12. The said Act apparently has been enacted for control of the purchase and sale of agricultural produce. The price at which agricultural produces are brought or sold have no relevance except for the purpose of assessing the quantum of market fee provided for under S. 27A of the said Act.

13. Even R. 94 of the said rules does not postulate fixing of the prescribed limit in terms of any amount. Learned Advocate General, when questioned, very fairly stated that in Schedule II the limit of the quantity both of kg. and in money value might have been fixed keeping in view the price of the commodities prevailing at the point of time when the said rules had been framed. The said rules were framed in 1975. There is no doubt that there has been many fold increases in the prices of the commodities. S. 15(1) of the said Act as also R. 94 postulate grant of exemption in terms of quantity of the agricultural produce and not in terms of monetary value thereof. By reason of Schedule II, therefore, the State could not have imposed further restrictions. In that view of the matter, it must be held that portion of rules containing the words “or Rs. 100/- whichever is less” is ultra vires S. 15(1) of the said Act and R. 94 of the said Rules.

14. It is true that in terms of the provisions of Bihar Trade Articles (Licenses Unification) Order, the quantities prescribed for retail sale are different than mentioned in the second Schedule of the said rules. The said Act as also the Essential Commodities Act, as is well known, operate in different fields. The definition of trader, as contained in S. 2(w) of the said Act is different than ‘wholesale dealer’ and ‘retail dealer’ as defined in Cls. 2(P) and 2(u) of the Unification Order. The definition of ‘whole-sale dealer’ or, retail dealer’ in the said order, therefore, cannot be brought in aid of for the purpose of the said Act and the Rules framed thereunder.

15. In terms of sub-sec. (4) of S. 4 of the said Act, nothing in the said Act would apply to a trader whose daily or annual turnover does not exceed such amount as may be prescribed. Although no limit has been laid down in S. 4(4) of the Act the same can clearly be inferred from R. 98 of the rules. Accordingly, in terms of the provisions of the said Act, whether a person is a retail dealer or not within the meaning of the said Act can be determined only with reference to S. 4(4) thereof read with R. 98(xi) of the said rules and not with reference to the definition of ‘wholesale dealer’ and ‘retail trader’ as envisaged under the Bihar Trade Articles (Licences Unification) Order. The provisions of the said Act are not repugnant to the provisions of the Essential Commodities Act and the orders made thereunder. The said Act has been enacted by the State in terms of Entries 26 and 27 of the State list whereas Essential Commodities Act has been enacted under Entry 33 of the concurrent list of VIIth Schedule of the Constitution of India. The provisions of the said Act cannot, therefore, be held to be repugnant to any order made under Essential Commodities Act and, thus, they cannot also be held to be ultra vires. Art. 14 of the Constitution of India.

16. From a bare perusal of sub-rule (2) of R. 94 itself it would appear that the said Act brings within the sweep control not only in respect of the first sale of the agricultural produce i.e from the agriculturists to trader but also controls transactions from trader to trader. R. 94(ii) merely puts an obligation upon the trader to inform the market committee when second sale takes place within the same market yard. It is, therefore, clear that even a second sale comes within the perview of the provisions of the said Act. The words ‘agricultural produce’ has been defined in S. 2(a) of the said Act which reads as follows:—

It is, therefore, not only confined to agricultural produce alone but also an industrial product by processing of agricultural produces.

17. This aspect of the matter has been considered by a Division Bench of this Court in Raptakos, Brett & Company Ltd. v. The Bihar State Agricultural Marketing Board, 1988 PLJR 830 wherein this Court held that even industrially produced goods are subjected to levy under the said Act. This Court in the aforementioned decision relied upon its earlier decision in Belsand Company v. State of Bihar, 1976 BBCJ 453 : (AIR 1977 Pat 136) and Mahabir Tea Company v. State of Bihar, 1979 BLJR 560.

18. In Rameshchandra Kachardas Porwal v. State of Maharashtra, 1982 PLJR 32 (SC) : (AIR 1981 SC 1127) it has been held by the Supreme Court that regulation of marketing of notified agricultural produce and establishment of principal and subsidiary markets are among the prime objects of the Act. It was held that if for more effective regulation of marketing it is thought that all marketing operations in respect of declared agricultural produce should be carried out only in the principal and subsidiary markets established under the Act, it cannot be said that a rule made for that purpose is beyond the competence of the rule making authority under the Act. It has further been held that both the principal objects sought to be achieved by the Act is the securing of a fair price to the agriculturist for his produce, by the elimination of middlemen and other detracting factors. But it would be wholly incorrect to say that the only object of the Act is to ensure a fair price to the agriculturist.

The Supreme Court states the law thus:

“It is because of these and various other services performed by the market committee for the benefit of the trader that the trader is required to pay a fee. It is, therefore, clear that the regulation of marketing contemplated by the Act involves benefits to traders too in a large way. It is also clear to our mind that the regulation of marketing of agricultural produce, if confined to the sales by producers within the market area to traders, will very soon lead to its circumvention in the guise of sales by traders to traders or import of agricultural produce from outside the market area to within the market area.”

19. The Supreme Court in the aforesaid decision took into consideration its earlier decisions in Mohammadbhai Khudabux Chhippa v. State of Gujarat, AIR 1962 SC 1517 and in Ram Chandra Kailash Kumar & Co. v. State of U.P, AIR 1980 SC 1124 : (1980 All LJ 490) and came to the conclusion that transactions between traders and traders have to be controlled, if the control in the interest of agricultural producers and the general public has to be effective. It is, therefore, clear that the said Act also is applicable in relation to transactions between traders to traders with regard to the object of transaction of business of agricultural produce at one place i.e either at the Principal market yard or sub-market yard, the Supreme Court in Porwal's case (supra) has observed (at page 1139 (of AIR)):

“One of the submissions strenuously pressed before us was that the statute itself imposed and provided for such stringent supervision and control sufficient and more, to regulate transactions between traders and traders, that it was superfluous to insist that such transactions do take place in the market only. We do not agree. Human ingenuity is such that vents and escapes will always be found in any system of controls. We are unable to say that the other supervisory measures for which there is provision in the Act are sufficient to make it unnecessary for the traders to move their places of business into the market. No amount of supervision may be as effective as when all the transactions take place within the market. Nor is effective supervision at all possible if traders are dispersed all over the market area.”

The second contention raised on behalf of the petitioner, therefore, has to be rejected.

20. Constitution of the second and subsequent market committees is governed by S. 9 of the said Act. Section 37 provides that in absence of the market committee the Board has the power to make arrangement for the purpose of duties and functions of the market committee. However, in this case, the term of the market committee expired in 1986. The State of Bihar in exercise of its power under S. 9(5) of the said Act appointed one Sachchitanand Singh, Sub-divisional officer only to discharge the functions of the committee for the period 28-5-1986 to 27-5-1987. The assertion of the petitioners to the effect that thereafter no notification under S. 9(5) of the. Act was issued has not been denied. It has also been accepted that by a notification dated 13-6-1990, Shri C.S Choubey was conferred power by the Board for the period 5-5-1990 to 4-11-1991 (Annexure 4).

21. From Annexure A of the counter affidavit filed on behalf of the respondent-Market Committee it appears that the Board in exercise of its power under S. 37 of the Act has made arrangements by directing that Shri K.K Pathak, Deputy Development Commissioner, Gaya, shall carry out the duties and functions of Market Committee, Gaya, from 5-11-91 to 4-5-92.

22. This Court in Ramji Prasad v. State of Bihar reported in 1991 (1) PLJR 446 clearly held that the power under S. 37 of the Act can be exercised when a committee is in existence. After 1987, there was no committee. The Board, thus, had no power to issue the notifications as contained in Annexure 4 to the writ application as also Annexure A to the counter-affidavit.

In this view of the matter it must be held that no person is now authorised to carry out the functions of the Agricultural Produce Market Committee, Gaya.

23. There cannot be any doubt, as it is well settled, that the provisions of the said Act and the Essential Commodities Act operate in different fields. Respondents 2 and 3, therefore, in their capacities as authorities under the provisions of Trade Articles (Licenses Unification) Order may not be entitled to enforce the provisions of the said Act. However, in terms of the provisions of the Essential Commodities Act as also the provisions of the said order, it becomes the duty of the Licensing authority to see that the licensees under the said order carry out their business not only in accordance with the provisions of the Essential Commodities Act or the orders made thereunder but also in terms of the provisions of the said Act. It seems that by reason of a Notification Clause (9) of the said order has been amended in terms whereof the words “suo motu” have been deleted. Thus, the respondent No. 2 or for that matter the respondent No. 3 may not have any power to make corrections in the situs of the business of the licensees in terms of Cl. (9) of the said order. However, in my opinion, such a direction is permissible in law in terms of condition No. 10 of the licenses granted to the licensee which reads:

“10. The licensee shall comply with any direction that may be given to him by the State Government or the Collector or the Licensing Authority with regard to the purchase, sale and storage for sale, of these trade articles and in regard to the language in which the registers, returns, receipts or invoice shall be written and in regard to the authentication and maintenance of the register in paragraph 3 above.”

Such a residuary power of the licensing authority has been preserved for its exercise only in an appropriate case like the present one. The licensing authority, therefore, although do not have any power to direct change of place of business so far as the licensee under the said order is concerned in terms of clause 9 thereof, but in a given situation, in my opinion, he can exercise such a power under Cl. 10 of the said order. Only, if such a construction is put, provisions of both the Act and rules, in my opinion, can be given effect to.

24. Further S. 48 of the said Act contains a penal provision in terms whereof any person who violates the provisions of the Act, Rules or orders passed thereunder will be punished to the extent of imprisonment for one year or a fine of Rs. 1,000/- (One Thousand) or both. It has not been disputed that the petitioners are licensees under the said Act. The petitioners in terms of the provisions of licence and particularly clause II thereof (Annexure C) are also bound to comply with such directions as may be given by the State from time to time. In terms of the aforementioned Notification issued under sub-sec. (2) of S. 5 of the Act, the principal market yard has been declared. The petitioners who are licenced traders, thus, are bound to comply with the said direction of the State of Bihar and thus they cannot carry on any business at a place other than the principal market yard.

However, only a market committee or a person authorised in this behalf by the State of Bihar by reason of a notification under S. 9(5) of the Act could carry the functions of the committee. Such committee being not in existence, the petitioners could not be directed by the respondents 2 and 3 to shift their places of business at the Principal market yard. Respondents Nos. 2 and 3 could issue the directions only in the event the market committee existed but not otherwise. From a perusal of Annexure 1 it appears that a meeting has been held with the traders on 12-1-92 and in the said meeting it has been decided that shifting to the market yard would be completed by 31-1-92. Despite the agreement of the traders to shift their place of business by the said period, they did not do so and file this application on 17-2-92. Under ordinary circumstances the petitioners, therefore, would not have been entitled to enforcement of any equity in their favour but in absence of the market committee, the respondent No. 2 could not have held any negotiations with the traders at all. The impugned orders, therefore, cannot be sustained. It is, however, made clear that steps for shifting of the places of business by the traders can be undertaken as and when a regular market committee is constituted.

25. Before parting with the case 1 may, however, reiterate the observations of a Bench of this Court in Keshoram Agarwala v. The State of Bihar (C.W.J.C No. 1802 of 1991) (R)), disposed of on 25-4-1992 which are to the following effect:

“However, we feel that in the interest of general public and particularly the consumers, it is desirable that the State should make necessary amendments in the Act and as also in the notifications, so that the retail dealers may be allowed to continue their place of business within the market area and not at the principal market yard. If it is so done, the same would not only facilitate the market committee to carry out their functions properly but also thereby consumers would be saved from being put in a disadvantageous position to go to the principal market yard which in some cases would require the consumers to cover more than 20 k.m for purchasing the essential articles for their consumption. This purpose in our opinion may also be achieved by amending the second schedule of the Rules suitably for the present.”

26. It may be observed that although the petitioners being the licensees are not exempted from the purview of the said Act. However, it can be demonstrated by any of the traders that their transactions are limited to the extent as, mentioned in R. 94 of the said Rules read with Schedule II of the Rules, as has been interpreted hereinbefore. It would, thus, be open to any trader to file an application in that regard before the committee as and when the same comes in existence and authorities of the said committee may thereupon verify the same and pass appropriate orders in accordance with law.

27. In the result, this writ application is, therefore, allowed with the aforementioned observations, but without any order as to costs.

I.P Singh, J.:— 28. I agree.

Petition allowed.

M/S. Swagat Stores And Others v. The State Of Bihar And Others

Structured Summary of the Judicial Opinion (S.B. Sinha, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments

Respondents' (State / Market Committee / Advocate General) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Direct Consequences for the Parties

Broader Implications and Directions

M/S. Swagat Stores And Others v. The State Of Bihar And Others

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