Citation Codes

Equivalent Citations

citation codes

Case Number

C.W.J.C No. 7692 of 1992

Judges

S. Hoda
G.S Sharma, JJ.

Acts

provisions of the Bihar Agricultural Produce Markets Act, 1960 (hereinafter referred to as the Act)
S. 4(36) of the Bihar and Orissa General Clauses Act, 1917
provisions of the provisions of the Validation Act
Gazette.Sections 28 of the General Clauses Act
(Validation) Act, 1982 hereinafter
Section 2 of the Validation Act
State Government.7. Section 4

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Smart Summary

Comprehensive Summary of the Opinion

Factual and Procedural Background

The matter arises from a writ application under Articles 226 and 227 of the Constitution of India in which the petitioner— a partnership firm operating a craft paper factory in Dinapur, Kishanganj—challenged the right of respondent Agriculture Produce Market Committees to levy and collect market fee on transactions in paddy straw (referred to in the opinion as "Dhan Ka Puwal"). The petitioner contended that paddy straw was not a scheduled item under the Bihar Agricultural Produce Markets Act, 1960 (the "Act") because the statutory procedure to include it in the Schedule (by notification and publication in the Official Gazette under section 39, and the processes under sections 3 and 4) had not been complied with. The petitioner relied on the absence of a Gazette publication for a memo (No. 14841 dated 27.10.1967) that purported to add paddy straw to the Schedule. The respondents were given an opportunity to file a counter-affidavit but none was filed. The Advocate General for the respondents relied on the Bihar Agricultural Produce Market (Validation) Act, 1982 (the "Validation Act") to argue that publication was not required and that paddy straw should be deemed included in the Schedule, making market fees payable.

Legal Issues Presented

Whether the respondent Market Committees are entitled to levy and collect market fee on the sale and purchase of paddy straw when paddy straw has not been included in the Schedule of the Act by publication in the Official Gazette as required by section 39 (and when the procedures under sections 3 and 4 were not shown to have been followed).
Whether the Bihar Agricultural Produce Market (Validation) Act, 1982 operates to validate the non-published notifications (memo nos. 14841 dated 27.10.1967 and 2028 dated 12.2.1972) such that paddy straw is deemed to be included in the Schedule notwithstanding non-publication in the Official Gazette.

Arguments of the Parties

Petitioner's Arguments

Paddy straw is not a scheduled item under the Act because it was not incorporated in the Schedule by publication in the Official Gazette as required by Section 39; a mere memorandum (No. 14841 dated 27.10.1967) adding paddy straw was not published in the Gazette.
Sections 2(1)(a), 3, 4 and 39 of the Act require a specific procedure (notification of intent, a period for objections/suggestions, consideration of objections and, ultimately, a notification published in the Gazette) before an item can be included in the Schedule and attract market fees; those steps were not complied with for paddy straw.
Consequently, no market fee can be lawfully levied or collected on paddy straw.

Respondents' Arguments (as presented by the Advocate General)

Reliance on Annexure 2 and the Validation Act of 1982: the Validation Act provides that notwithstanding non-publication of the notifications (including the memo dated 27.10.1967), the orders and the Schedule in respect of those notifications shall be deemed valid and effective, and levies/market fees already collected shall be deemed valid and not subject to refund proceedings.
On this basis, the Advocate General argued that no further publication in the Official Gazette is required and that paddy straw must be treated as included in the Schedule for the purposes of levy of market fees.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sree Bihariji Mills Ltd. v. State of Bihar, AIR 1983 Patna 311; 1983 PLJR 408	Held that amendment of the Schedule under section 39 requires publication in the Official Gazette; the procedure under sections 3 and 4 (including notice, opportunity for objections/suggestions and consideration thereof) must be followed and a mere undocumented or unpublished administrative step does not amend the Schedule.	The court relied on this decision to conclude that, absent publication in the Gazette and observance of the statutory procedure, paddy straw could not be treated as a scheduled item and the Market Committees were not entitled to levy fees. The opinion reproduces the reasoning that an ordinance or validation provision cannot bypass the procedural safeguards in sections 3 and 4.
Govind Lal v. Agricultural Produce Market Committee, AIR 1976 SC 263	Supreme Court observations supporting the requirement that statutory procedure to amend markets' lists must be followed so as to protect the right of affected persons to raise objections and suggestions.	The opinion notes that observations in Govind Lal support the view taken in Sree Bihariji Mills that statutory procedures (notification, consideration of objections, enquiry) cannot be bypassed and that affected persons' rights to object must be preserved. The court treated those observations as reinforcing the conclusion that lists cannot be amended without following the prescribed process.

Court's Reasoning and Analysis

The court's analysis proceeded from statutory construction and application of precedent to the facts placed before it:

The court identified the statutory definition of "agricultural produce" in section 2(1)(a) of the Act as being limited to items specified in the Schedule of the Act.
It examined the procedure for introducing or regulating items under the Act: section 3 empowers the State Government to notify its intention to regulate purchase, sale, storage and processing and requires a period (not less than two months) for objections/suggestions; section 4 contemplates declaration of a market area after considering objections and, if necessary, holding an enquiry; section 4(3) permits later inclusions or exclusions but is "subject to the provisions of section 3"; section 39 explicitly empowers the State Government to amend the Schedule by notification (and the court noted the interpretation of "notification" as meaning publication in the Gazette under the General Clauses Act).
The petitioner established that the memo (No. 14841 dated 27.10.1967) that purported to add paddy straw had not been published in the Official Gazette, and that no compliant material showed the required procedures under sections 3, 4(3) and 39 had been followed in respect of paddy straw.
The Advocate General relied on the Validation Act (1982) which provided a deeming provision: notwithstanding non-publication of the notifications in the Bihar Gazette, the orders and schedule would be deemed valid and no suit for refund would be maintainable. The court, however, considered the earlier decision in Sree Bihariji Mills Ltd. v. State of Bihar which interpreted section 39 and related provisions to require Gazette publication and the statutory procedures of section 3 for protective engagement (notice, objections, enquiries) to be followed.
Applying Sree Bihariji Mills and the supporting observations in Govind Lal, the court reasoned that the statutory right granted to traders, agriculturists and other affected persons to offer objections and have those considered is a valuable right that cannot be forfeited by skipping the procedure; therefore, an ordinance or validation measure could not operate to amend the lists for specific Market Committees without the procedure being observed in relation to those Committees and items.
Given the absence of evidence that the procedural requirements were satisfied for paddy straw, and having regard to the authority cited, the court concluded that Market Committees were not entitled to levy or collect fees on paddy straw.
The court also noted as a procedural fact that no counter-affidavit had been filed by the respondents despite an opportunity to do so.

Holding and Implications

Holding: The writ application was allowed and the court directed that the respondents (the Market Committees) shall not demand or collect any fee on paddy straw.

Implications:

Direct effect: The immediate, binding consequence is that the respondent Market Committees are prohibited from demanding or collecting market fee on paddy straw in respect of the petitioner and, by the court's directive, generally in the present proceedings.
Scope and precedent: The opinion relies on prior decisions (notably Sree Bihariji Mills Ltd. v. State of Bihar and supporting Supreme Court observations in Govind Lal) to emphasize that statutory procedures for notification, publication and consideration of objections under sections 3, 4 and 39 must be followed before items can be treated as included in the Schedule and subject to market fees. The opinion does not state that it is laying down a new or broader precedent beyond applying the existing authorities to the facts of this case.

Note: The summary above is strictly confined to the information contained in the provided opinion. Sections of this summary omit matters not addressed in the opinion (for example, no detailed factual findings about the dates or amounts of fees collected beyond the documents and dates expressly referred to in the opinion).

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M/S Saraogt Paper Mills v. The State Of Bihar & Others Opp. Parties.

In this writ application under Articles 226 and 227 of the Constitution of India, the petitioner has prayed that the respondents Agriculture Produce Market Committees are not entitled to levy and to collect market fee on the sale and purchase of paddy straw (Dhan Ka Puwal) under the provisions of the Bihar Agricultural Produce Markets Act, 1960 (hereinafter referred to as the Act) as the same have not been notified in terms of section 3 of the Act and rules framed therein.

2. The petitioner is a partnership firm having its factory and place of business in Dinapur, Kishanganj Town and its place of business is situated within the jurisdiction of the respondent nos. 1 to 3. The petitioner firm inter alia has established a factory for manufacturing the craft papers in Kishanganj town and is using paddy straw (Dhan Ka Puwal) in its factory as the raw material for manufacturing craft papers. To she bast of the knowledge of the petitioner firm the State Government has not issued any notification in the official Gazette under section 3 and/or section 4 of the Act with respect to the paddy straw for the respondent Market Committee. In the Schedule of the Act paddy straw was not incorporated and the State Government has also not added the same in the Schedule of the Act by publishing notification in the Official Gazette as required under the Act.

3. The State Government issued notification dated 29.19.1984 bearing S.O 1187 under section 4 of the Act for 108 market committees including the respondent Market Committees for the purpose of regularisation of sale, purchase, storage and processing of agricultural Produce only mentioned in Schedule of the Act. By memo no. 14841 dated 27.10.1967 the State Government had added paddy straw in the Schedule of the Act but the same has not been published in the official Gazette as per requirement of section 39 of the Act till date. It has been stated that as the paddy straw has not been added in schedule of the Act by publication in the official Gazette the same is not a schedule item.

4. Therefore, no fee can be realised on its transaction. Paddy straw has not been notified as agricultural produce in terms of sections 3 and 4 of the Act and hence no fee can be realised on its transaction.

5. No counter affidavit has been filed in this case inspite of the opportunity given to the respondent.

6. Mr. Ramesh Kumar Agrawal, the counsel for the petitioner, in order to substantiate his arguments, has referred to several provisions of the Act. Section 2(1)(a) of the Act defines the terms “agricultural produce” as the produce specified in the schedule of the Act. Section 3 empowers the State Government to declare its intention by notification of exercising control over purchase, sale, storage and the processing of agricultural produce in such area as may be specified by notifying such objections/suggestion within the period of not less than two months and it reads as follows:

“(1) Notwithstanding anything to the contrary contained in any other Act for the time being in force, the State Government may, be notification, declare its intention of regulating the purchase, sale, storage and processing of such agricultural produce and in such area, as may be specified in the notification.

(2) A notification under sub-section (1) shall state that any objection or suggestion which may be received by the State Government within “period of not less than two months to be specified in the notification, shall be considered by the State Government.”

7. Section 4 provides for declaration of market area after consideration of objections and suggestions received and runs as under:—

(1) After the expiry of the period specified in the notification issued under section 3 and after considering such objections and suggestions as may be received before such expiry and after holding such enquiry as it may consider necessary, the State Government may by notifications, declare the area specified in the notification under section 3 or any porting thereof to be a market area for the purposes of this Act, in respect of all or any of the kinds of agricultural produce specified in the notification under section 3.

(3) Subject to the provisions of section 3, the State Government may at any time, by notification exclude from a market area any areas or any agricultural produce specified therein or include in any market area any area or agricultural produce included in a notification issued under sub-section (1).

8. Under section 5 of the Act by notification the details of principal market yard and the sub-market yard are to be declared. Section 6 provides for establishment of market committee by notification. Section 27 gives power to the market committee to lavy and collect fees on the agricultural produce brought or sold in market area at a given rate. Section 39 gives the power to the State Government to amend the Schedule of the Act by notification.

9. Relying on the aforesaid provisions, the counsel has submitted only on such agricultural produce which are included in schedule of the Act. The paddy straw was neither included in the Schedule of the Act, nor memo no. 14841 dated 27.10.1976 was published in the Official Gazette as required under section 39 of the Act and as such, paddy straw cannot be said to have been included in the schedule.

10. The Advocate General appearing on behalf of the respondents relied on Annexure 2 of the writ application submitted that in view of the Bihar Agricultural Produce Market (Validation) Act, 1982 hereinafter refered to as the ‘Validation Act’) no further publication in the Official Gazette is required and by virtue of the said Validation Act paddy straw would be deemed to have been included in the Schedule and as such, market fee is payable on the sale, and purchase of he paddy straw, Section 2 of the Validation Act reads as follows:—

“Notwithstanding the non-publication of the notification nos. 14841 dated the 27th October 1967 in the Bihar Gazette and 2028, dated the 12th February 1972 in the Bihar Gazette in time, the orders made for regulating the market with respect to such items, and market fees levied, collected or to be levied and collected shall not be illegal and invalid merely on the ground, and notwithstanding anything contained to the contrary in any judgment, decree or order of any Court the Schedule of notification nos. 14841 dated the 27th October, 1967 and 2028, dated the 12th February 1972 shall always be deemed to be valid and effective and all levies made or market fees collected shall be deemed to have been validly realised, taken, done and issued as if the provisions of this Act were in force at all material times when such realisation was made, action token, things done and orders issued and no suit or proceeding shall be maintainable for refund of the levies made on fee collected or actions taken under those notifications.”

11. Unless the agricultural produce is notified and included in Schedule in accordance with law no court (sic) fee can be levied on the said agricultural produce. In the present case, nothing has been brought on the record that the procedure laid down in Sections 3, 4(3) and 39 of the Act have been observed in respect of paddy straw.

12. In the case of Sree Bihariji Mills Ltd. v. State of Bihar reported in AIR 1983 Patna 311 : 1983 PLJR 408 this very question in issue in respect of SUJJI and MAIDA and the provisions of the provisions of the Validation Act which was at the stage of the Ordinance being Ordinance no. 35 of 1982 was noticed and the Division Bench held as follows:—

“7. The question as to when the schedule to the Act got amended appears to be simple. The power in this regard has to be exercised under sec. 39 only by a notification. The expression ‘notification’ has been defined by S. 4(36) of the Bihar and Orissa General Clauses Act, 1917 to mean “a notification in the Gazette’.”

Sections 28 of the General Clauses Act provides that where in any Bihar Act, it is directed that any notification shall be issued, such notification shall be deemed to be duly made if it is published in the Gazette unless the Act otherwise provides. Sec. 39 is not suggesting any alternative method and, therefore, it must be held that until the order was published in the Bihar Gazette, the Schedule was not amended. The language of Section 39 does not suggest that the schedule could be amended with retrospective effect by a later notification. I, therefore, hold that the schedule stood amended on 15th May, 1980 when the order in this regard dt. 12th Aug. 1972 was published in the Bihar Gazette and not earlier.

9. It was contended on behalf of the respondents that items applicable to the Market Committee automatically stood amended by inclusion of Sujji and Maida with effect from the date on which the schedule of the Act stood amended. There does not appear to be any merit in this argument, either, Sect. 4(3) of the Act permiting the amendment in the list of Schedule of agricultural prodoce has been subjected to the provisions of Sec. 3 which enjoins a notification to be issued declaring the inten of the State Government in this regard ??? Sub-sec. (2) of Section 3 makes it obligatory for the notification to state that any objection or suggestion to the proposed step would be considered by the Government. Section 4 reiterates the duty of considering the objections and suggestions received from public. Holding of an enquiry in this connection is also contemplated by the section, valuable right has, therefore, been granted by the Statute to the traders, agriculturists and other effected persons to offer objections and suggestions which have to be decided on merits before taking final decision, admittedly, no notification under-S. 3 was issued with reference to Atta, Sujji and Maida. By holding that the list of agricultural produce in regard to the Market Committee stood amended without resorting to the aforesaid procedure, the right of raising objection by concerned persons bestowed by the Act would stand forfeited and this cannot be allowed. The observations of the Supreme Court in Govind Lal v. Agricultural Produce Market Committee (AIR 1976 SC 263) relied on by Mr. Shreenath Singh, learned counsel for the petitioners supports this view.

10. The learned counsel for the respondents alternatively contended that in view of the Bihar Ordinance No. 35 of 1982 referred to earlier, the petitioner's case must be rejected and the writ application dismissed. The relevant portion of the Ordinance has been quoted in paragraph 6 above. It may be noted that Sec. 3, 4 and 39 or any other provision including the schedule of the Act has not been amended and the right of objection of the concerned members of the public to addition of items of produce has not been disturbed. It must, therefore, be held that unless the necessary notifications mentioned and discussed above are issued, the objections filed to the proposed modification of the schedule are considered and a final decision in this regard is taken thereafter, the lists of agricultural produce in regard to the particular market committees cannot be deemed to have been amended by reason of the Ordinance. The Market Committee are, therefore, not entitled to the fee on the disputed items. The demands in this respect cannot be upheld.”

13. In view of the provisions of the Act noticed above and the decision of this Court as mentioned above, the Market Committees are, therefore, not entitled to the fees on the paddy straw and the demand in this respect cannot be upheld.

14. In the result, this writ application is allowed and the respondent are directed not to demand or collect any fee on the paddy straw.

M/S Saraogt Paper Mills v. The State Of Bihar & Others Opp. Parties.

Comprehensive Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner's Arguments

Respondents' Arguments (as presented by the Advocate General)

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

M/S Saraogt Paper Mills v. The State Of Bihar & Others Opp. Parties.

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