T.M. KANNAPPA MUDALIAR AND ORS. Vs. THE STATE OF MADRAS REPRESENTED BY THE SECRETARY TO GOVERNMENT, FOOD AND AGRICULTURE DEPARTMENT AND ANR.

JUDGEMENT

(1.) THESE petitions have been heard together as they raise common points of law. The petitioner in each case is a dealer in purchase and sale of paddy in North Arcot District. By G.O.Ms. No. 766, Food and Agriculture, dated 9th March, 1964, which was duly notified in the Fort St. George Gazette, the State Government declared that the North Arcot District would be a notified area for the purposes of the Madras Agricultural Produce Markets Act (XXIII of 1959). There is no question that in making this notification the procedure prescribed therefore by the Act was duly followed. By Section 38(1), the Madras Commercial Crops Markets Act, 1933 was repealed but by Sub -section (2), the market committee established for the notified area under the repealed Act and holding office immediately before the date of the commencement of the Act is deemed to be a market committee established under the new Act for that area and all its members are deemed to be members appointed by the Government or elected under the new provisions. The sub -section further provided that any market established under the repealed Act should be deemed to be a market under the later Act. The market committee, which was functioning under the deeming provisions notified that paddy merchants on and from 1st April, 1964 should purchase their requirements of paddy only from regulated markets and announced the licence fee payable by wholesale dealers and retail dealers in paddy and the rate of cess that would be charged.

(2.) THE petitioners contended that the Madras Agricultural Produce Markets Act, 1959, is invalid as no previous sanction had been obtained as required by the Proviso to Article 304 of the Constitution. They make a further point that, in any case, the market committee deemed to continue for the notified area has not been duly constituted in accordance with the provisions of the Act. We shall first deal with the second contention.

(3.) THE history of marketing legislation in this State need not detain us except to state that the question was the subject -matter of several reports of committees appointed by the Government for the purposes, and the earliest legislation on this matter in the State of Madras was the Madras Commercial Crops Markets Act, 1933. Substantially all its provisions have been re -enacted with a few changes of which the main is that the Act, unlike before deals not with commercial crops as such but agricultural produce which by notification can be extended to cover any agricultural produce for the purpose of the Act. The Madras Agricultural Produce Markets Act (hereinafter called the Act) received the assent of the Governor on 24th December, 1959 was published in the Fort St. George Gazette, on 13th January, 1960 and came into force on 22nd October, 1962. The Act is intended to provide for better regulation of buying and selling of agricultural produce and establishment and proper administration of markets for agricultural produce in the State of Madras. It has a definition section and among others the term agricultural produce is defined as including anything produced in the course of agriculture and any other produce, whether processed or unprocessed, declared by the Government, by notification, to be an agricultural produce for the purpose of this Act; market means any market established under Sub -section (3) of Section 5 and the market committee is one which is established under Sub -section (1) or Sub -section (2) of Section 5. The phrase notified agricultural produce means any agricultural produce specified in the notification under Section 4. notified area is any area notified under Section 4 as altered by any notification under Section 7 and notified market area signifies any area notified Under Sub -section (4) of Section 5 as altered by any notification under Section 7. The intention of the Government to exercise control over the purchase and sale of any specified agricultural produce has to be declared by a notification which shall also call for objections or suggestions to be received within a stated period. After the expiry of the period and after considering such objections and suggestions as may be received, the Government by notification may declare the area specified therein or any portion thereof to be a notified area for the purposes of the Act in respect of any agricultural produce specified in the notification. Once a notified area comes into existence in that manner and in accordance with Sections 3 and 4, the Government is required under Section 5 to establish a market committee for every notified area. It is the duty of the market committee to enforce the provisions of the Act as well as the rules and by -laws made thereunder in such notified area. Special provisions have been made in respect of co -operative marketing society which we need not notice for the present purpose. Section 5 further requires any market committee to establish in the notified area such number of markets providing for such facilities as the Government may direct from time to time for the purchase and sale of the notified agricultural produce. After the establishment of a market by a market committee, the Government may by notification declare the area of the market and such area around the market as may by specified in the notification to be a notified market area for the purposes of the Act in respect of any notified agricultural produce. Section 6 provides for control of trading in agricultural produce in a notified area. Within a notified area, no person shall set up, establish or use or continue or allow to be continued any place for the purchase or sale, storage, weighment, pressing or processing of any notified agricultural produce, except under and in accordance with the conditions of a licence granted to him by the market committee. Power is given to the market committee to exempt from this restriction any person who carries on business for the purchase or sale of any notified agricultural produce in any quantity not exceeding that prescribed. There is also a similar power in the market committee to exempt any producer of an agricultural produce or a co -operative marketing society selling notified agricultural produce which has been produced by it from that restriction. Purchasers of agricultural produce in the notified area of notified agricultural produce for their own domestic consumption below a prescribed quantity are not affected by this restriction. Section 6 also contains provisions which specify the circumstances in which a licence may be refused to a person as well as provisions enabling the market committee in certain circumstances to cancel or suspend the licence after giving the licence -holder a reasonable opportunity of showing cause against such action. Power is given to the Government under Section 7 to alter notified area or notified market area from time to time by notification. Section 8 deals with constitution of market committees by election. Every market committee shall consist of members not exceeding eighteen of whom nine shall be elected by and from among the producers of the notified agricultural produce in the notified area, four by and from among the persons licensed under Sub -section (1) of Section 6 in the notified area in respect of the notified agricultural produce and one member is to be appointed by the Government who shall be a producer residing in the notified area and on the recommendation of the Registrar. This member is intended to represent the co -operatives. In addition the Government may nominate to the committee not exceeding three members. The elective principle will be inapplicable to establishment of a first market committee for any notified area. The Government in such a case may appoint all the members to function for a period of one year. The elected members under Section 11 will hold office for a term of five years. We have already referred to Section 38 under which the market committee established under the old Act shall be deemed to continue as a market committee established under the new Act. The other provisions which immediately follow that relating to the constitution of market committees deal with officers, meetings, sub -committees, special committee and some of their powers. Section 18 relates to levy of cess by market committee and says that notwithstanding anything contained in the Madras General Sales Tax Act, 1959, the market committee shall levy a cess by way of sales tax on any notified agricultural produce bought or sold in the notified area at a rate not exceeding fifty naye paise for every hundred rupees of the aggregate amount for which the notified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable consideration. Sub -section (1) of Section 18 has two explanations, the first of which says that for the purposes of this sub -section, all notified agricultural produce taken out or proposed to be taken out of a notified market area shall unless the contrary is proved, be presumed to be bought or sold within such area. Sub -section (2) says that the cess under Sub -section (1) has to be paid by the purchaser of the notified agricultural produce concerned and it is only where such purchaser cannot be identified the seller shall be liable to pay the cess. Under Section 20 a separate fund called the market committee fund is to be constituted to which all moneys received by a market committee shall be paid into and from which all expenditure incurred by the market committee under or for the purposes of the Act shall be defrayed. The purposes for which the fund may be expended are set out in Section 21 which includes acquisition of site or sites, for the market, maintenance and improvement of the market, construction and repair of the buildings which are necessary for the purposes of such market and for the health, conveniences and safety of the persons using it, provision and maintenance of standard weights and measures, pay, pension, leave allowances, gratuities, compassionate allowances, etc. of the officers and servants employed by the market committee, payment of interest on loans, collection and dissemination of information regarding all matters relating to statistics and marketing in respect of the notified agricultural produce, schemes for extensions or cultural improvement of the notified agricultural produce within the notified area including the grant of financial aid to schemes for such extension or improvement : within such area, schemes for grading of agricultural produce and also expenses of and incidental to elections. The rest of the provisions in the Act provide for borrowing power of the market committee and the powers of the Government to supersede such committee in any notified area. Under Section 25 any person who fraudulently evades payment of any fee, cess or other amount due from him under the Act or the rules or by -laws made under the Act or wilfully acts in contravention of any of the provisions of the Act commits an offence punishable with fine. The Act also provides for composition of offence. Section 29 vests in the Government rules making powers in general and specifies certain matters in respect of which the Government may make rules. A market committee under Section 30 is empowered to make by -laws for its notified area for the regulation of the business and the conditions of trading in that area. Any by -law so made may provide that any contravention thereof shall be punishable with fine which may extend to fifty rupees. Elaborate rules called the Madras Agricultural Produce Market : Rules, 1962, have been framed.