Full Judgment Text
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PETITIONER:
JAN MOHAMMAD NOOR MOHAMMAD BEGBAN
Vs.
RESPONDENT:
STATE OF GUJARAT AND ANOTHER
DATE OF JUDGMENT:
18/08/1965
BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
GAJENDRAGADKAR, P.B. (CJ)
WANCHOO, K.N.
HIDAYATULLAH, M.
SIKRI, S.M.
CITATION:
1966 AIR 385 1966 SCR (1) 505
CITATOR INFO :
D 1974 SC1489 (6)
R 1979 SC1149 (24,27)
ACT:
Gujarat Agricultural Produce Marketing Act, 1964 (20 of
1964), ss. 5, 6, 27(2) and 30 validity of-Whether violative
of Arts. 14, 19 and 31 of the Constitution-Rules under the
Act, validity of.
HEADNOTE:
The Bombay Agricultural Produce Markets Act (22 of 1939)
was, enacted by the Provincial Legislature of Bombay and
under the said Act the Bombay Agricultural Produce Market
Rules, 1941 were framed. By a notification issued under the
Act, the whole area within a radius of 12 miles of Ahmedabad
City was declared in respect of certain agricultural
produce, a market area for the purposes of the Act. A
market yard and a market proper were also established for
transactions in specified commodities. Under the Bombay
Reorganisation Act 11 of 1960 which became operative as from
May 1, 1960 two States-Maharashtra and Gujarat were carved
out of the territory of the former State of Bombay and the
town of Ahmedabad was included within the State of Gujarat,
but Bombay Act 22 of 1939 continued for the time being to
remain applicable to the Gujarat region by virtue of s. 87
of Act 11 of 1960. Subsequently the Gujarat Agricultural
Produce Markets Act 20 of 1964 was passed but under s. 64 of
the Act the Bombay Agricultural Produce Market Rules, 1941
remained in operation. The petitioner filed a petition
under Art. 32 of the Constitution seeking a declaration that
Gujarat Act 20 of 1964 was illegal, ultra vires,
unconstitutional and violative of Arts. 14, 19 and 31 of the
Constitution of India and therefore null and void and that
the rules framed thereunder (being the Bombay Agricultural
Produce Market Rules, 1941) were also ultra vires,
unconstitutional, illegal, null and void. He prayed for a
writ of mandamus forbidding the State of Gujarat from
enforcing any of the provisions of the Act and the Rules.
The following grounds were urged in support of the petition
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: (1) The powers conferred by ss. 5 and 6 of the Act were
unfettered, wide and unguided and on that account the
fundamental rights of the petitioner were infringed. (2)
Retail sales which were not regulated by the provisions of
the earlier Act were sought to be regulated by Gujarat Act
20 of 1964. (3) Retail trade was completely prohibited by
the Act and the prohibition amounted to an unreasonable
restriction upon the fundamental rights of the petitioner.
(4) Section 30 of the Act gave wide powers to evict a person
carrying on business without a licence from the market area.
(5) Section 27(2) not having provided the maximum licence
fee chargeable was illegal. (6) The market committee had no
power to function as it was not constituted according to
law. The period of office of the old committee which was to
function for three years under Bombay Act 22 of 1939 had
expired in 1961 but the committee continued to function and
no fresh elections were held. (7) The rules pursuant to
which the market committee was constituted and functioned
not having been placed before the Legislature in the first
meeting after the rules were promulgated under Act 22 of
1939 as required by that Act, the rules were unauthorised
and so there was complete absence of machinery for
enforcement of the Act. Despite the suspension of Art. 19
by virtue
506
of the operation of Art. 358 of the Constitution in the
state of Emergency declared by the President in December
1962, the Court decided the petition on merits because
breach of fundamental rights under Arts. 14 and 31 was also
alleged.
HELD: (i) The object of the Act being to ameliorate the
condition of agriculturists and to do away with middlemen,
who, it is a matter of common knowledge, make large and
unconscionable profits out of the transactions carried out
through them, declaration under s. 5, of intention to
regulate trade in agricultural produce in a specified area,
after hearing the objections and suggestions of interested
parties, cannot be regarded as imposing unreasonable
restrictions on the right to carry on trade. The preamble
to the Act and the scheme of the Act clearly indicate that
the powers conferred upon the Director are to be exercised
for the purpose of regulating buying and selling of
agricultural produce and for that purpose to establish
markets for sale and purchase of agricultural produce. The
powers under s. 6 are also to be exercised after giving an
opportunity to persons interested to raise objections or to
make suggestions as to the proposed introduction of control
on sale and purchase of agricultural produce. The authority
conferred upon the Director is not wide and arbitrary merely
because no principles are indicated for guidance. [515 D-H]
(ii) If regulation of trade in agricultural produce by the
declaration of market area and imposition of restrictions
may be regarded as reasonable when operating on the
wholesale trade it would be difficult to hold that the
identical restriction when operating on retail trade may be
per se unreasonable.. [516 F]
Mohan Hussain Gulam Mohammud and Anr. v, State of Bihar &
Anr., [1962] 2 S.C.R. 659, referred to.
(iii) Apart from the generality of the provisions made
in the Gujarat Act and the omission of retail sales from the
scheme of exclusion, the Act and the rules clearly indicate
that retail sales are not sought to be regulated by the
provisions of the Act. It was rightly conceded on behalf
,of the State that the Act read together with the rules does
not purport to place any restriction upon retail
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transactions in agricultural produce. Therefore no licence
is required under the Act for carrying on retail trade in
Agricultural produce in the market area, and there is no
prohibition against the carrying on of retail sale in
agricultural produce in the market area. [518 C-D]
(iv) Section 30 of the Act authorises the eviction from the
market of any person found to be operating in the market
without holding a valid licence. The power of eviction by
the market committee is limited to eviction from the
precincts of the market. The provision is apparently
enacted for the purpose of imposing an additional penalty
against infraction of the prohibition contained in s. 6(2).
’Operating in the market area’ can in the context only mean
using a place in the market area for the purchase or sale of
agricultural produce specified in the notification under s.
6(2) otherwise than in accordance with the provisions of the
Act. The apprehension of the petitioner that a person
infringing the regulatory provisions of the Act may be
compelled to leave his hearth and home at the instance of
the market authorities, was totally unfounded. [518 H-519 C]
(v) In terms s. 27(2) provides that the licences may be
granted in such forms for such periods, on such terms and
conditions and restrictions as may be prescribed or
determined by the bye-laws and on payment of fees determined
by the market committee within such maxima as may be
prescribed,. This clearly contemplated fixation of maxima
by the rules
507
made under s. 59. Therefore the suggestion that s. 27(2) not
having provided the maximum licence fee chargeable was
illegal, could not be accepted. (519 D]
(vi) The life of the market committee elected in 1958 was
validly extended from time to time by legal enactments or
steps taken thereunder. Finally by virtue of s. 64 of Act
20 of 1964 the market committee established under the
earlier Act was deemed to be a market committee established
under the new Act and members of the market committee
holding office immediately before the commencement of the
new Act continued to hold office under the new Act. The
contention that there was no legally constituted market
committee had therefore no force. [521 D]
(vii) Section 26(5) of Bombay Act 22 of 1959 does not
prescribe that the rules acquired validity only from the
date on which they were placed before the Houses of
Legislature. The rules are valid from the date on which
they are made under s. 26(1). Failure to place the rules
before the Houses of Legislature does not affect the
validity of the rules. Having regard to the purposes for
which it is made and in the context in Which it occurs, s.
26(5) cannot be regarded as mandatory. The rules had been
in operation since the year 1941 and by virtue of s. 64 of
the Gujarat Act 20 of 1964 they continued to remain in
operation. [522 B-D]
JUDGMENT:
ORIGINAL JURISDICTION : Writ Petition No.11 of 1964.
Petition under Art. 32 of the Constitution of India for the
enforcement of fundamental rights.
Ahmedmiyen Miyasaheb Peerzada, J. B. Dadachanji, O. C.
Mathur and Ravinder Narain, for the petitioner.
S. V. Gupte, Solicitor General, N. S. Bindra and B. R. G.
K. Achar, for the respondents
The Judgment of the Court was delivered by
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Shah, J. By this petition the petitioner seeks to restrain
the State of Gujarat from enforcing the Gujarat Agricultural
Produce Markets Act 20 of 1964, on the plea that certain
provisions of the Act infringe the fundamental freedoms
guaranteed to petitioner under Arts. 14, 19 and 31 of the
Constitution.
The Bombay Agricultural Produce Markets Act 22 of 1939, was
enacted by the Provincial Legislature of Bombay and rules
were framed thereunder. By a notification issued under the
Act, he whole area within a radius of 12 miles of Ahmedabad
City was declared in respect of certain agricultural
produce, a market area for the purposes of that Act and a
market yard and a market proper were established for
transactions in specified commodities. A, market committee
was established under s. 5 of the Act for he Ahmedabad
market area. In 1959 a locality known as the ’Kalupur
market" was declared a sub-market yard for the purposes of
the Bombay Act, and traders carrying on business in the
Kalupur market yard were required by the market committee to
508
take out licences authorising them to carry on their trade.
Certain traders in agricultural produce faild petition No.
129 of 1959 in this Court under Art. 32 of the Constitution
challenging diverse provisions of the Act and the rules and
bye-laws framed thereunder on the plea that those provisions
placed unreasonable restrictions on their right to carry on
trade in agricultural produce and thereby infringed their
fundamental right guaranteed under Art. 19 (1) (g) of the
Constitution. This Court by judgment dated May 2, 1961
(Mohammad Hussain Gulam Mohammad and another v. The State of
Bombay and Anr) (1) upheld the validity of s. 4 (authorising
declaration of market areas), s. 4A (authorising declaration
of principal and sub-market yards), S. 5 (authorising the
constitution of market committees), s. 5A (specifying the
duties of market committee), s. 5A (authorising the market
committee to issue licences in accordance with rules to
traders, commission agents, brokers, weighmen, measurers,
surveyors, were housemen and other persons to operate in the
market) of the Bombay Act and further held that the fee
authorised to be levied by s. II was a levy charged for
services rendered by the market committee in connection with
the enforcement of the various provisions of the Act and
therefore s. II was valid, that under s. 29 the power given
to the State Government to add to, or to amend, or to cancel
any of the items of the agricultural product specified in
the Schedule in accordance with the local condition,
prevailing in different parts of the State was intra vires,
and that r. 64 being a mere method for enforcing the
regulatory provision with respect to market yards and sub-
market yards was also valid. But the Court held that r. 53
insofar as it authorised the market committee. to fix the
rates of fee to be collected on agricultural produce bought
and sold in the market area, and rr. 65 66 and 67 insofar as
they authorised the market committee to grant a licence for
doing business in any market were beyond the powers
conferred on the market committee by s. 5A and were ultra
vires.
When the petition in Mohammad Hussain’s case(1) was filed
the town of Ahmedabad was part of the State of Bombay.
Under the Bombay Reorganisation Act 11 of 1960 which became
operative as from May 1, 1960 two States-Maharashtra and
Gujarat were carved out of the territory of the former State
of Bombay and the town of Ahmedabad was included within the
State of ’Gujarat, but Bombay Act 22 of 1939 continued until
it was altered to remain applicable by s. 87 of Act 11 of
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1960 to the
(1) [1962] 2 S. C. R. 659
509
Gujarat region. After the decision of this Court in
Mohammad Hussain’s case(1) the Governor of Gujarat amended
in certain matters the Act, the rules and the bye-laws
framed thereunder in their application to the Gujarat State
by Ordinance I of 1961. The Ordinance was intended to
rectify the defects pointed out by this Court in Mohammad
Hussain’s case(2). Four petitions were then filed under
Art. 32 of the Constitution challenging the con-
stitutionality of the Amending Ordinance and especially the
notification which amended r. 53 (specifying the maxima of
fees to be charged) as offending Art. 14 of the
Constitution. It was also contended that s. 5A (authorising
the grant of licences in accordance with the rules to
traders, commission agents, brokers, weighmen, measurers,
surveyors, warehousemen and other persons to operate in the
market area) which was amended was only prospective and
therefore the infirmity noticed in the earlier judgment of
this Court still remained, and that the new section 29-B
which rectified the defect in the establishment of markets
under the Act was insufficient, to validate what had been
done before the Ordinance came into force. It was also
contended that the bye-law under which the market committee
issued licences to dealers was discriminatory and imposed
unreasonable restrictions on the fundamental right to carry
on trade and business and was therefore unlawful and that
the market committee was not entitled to control retail
trade as the same was not within the provisions of the Act
and in consequence the market committee was using r. 64 in a
manner in which it was not intended to be used and therefore
that rule though it was upheld in the earlier judgment had
become ultra vires. This Court rejected all the contentions
raised by the petitioners.
Thereafter Writ Petitions Nos. 71 of 1964 and 112 of 1964
were filed by three traders carrying, on business at Baroda.
The petitioners claimed a declaration that the bye-laws
framed by the market committee were void in that they
infringed the fundamental rights of the petitioners under
Arts. 14 and 19 (1) (g) and also Arts. 301 and 304 of the
Constitution, and that in any event the bye-laws were ultra
vires the Act and the Rules. Those petitions were heard
before this Court on November 9, 1964 and after arguments
were fully heard, the petitioners -applied for leave to
withdraw the petitions.
In the meantime on September 25, 1964 the petitioner Jan
Mohammad Noor Mohammad Bagban filed this petition for a
declaration that the Gujarat Agricultural Produce Markets
Act
(1) [1962] 2 S. C. R. 659
510
20 of 1964 was "illegal, ultra vires, unconstitutional and
violative of Arts. 14, 19 and 31 of the Constitution of
India and therefore null and void," that the rules framed
thereunder being the Bombay Agricultural Produce Market
Rules, 1941 were "also ultra vires, unconstitutional,
illegal, null and void," and for a writ of mandamus or a
writ in the nature of mandamus, direction or order
forbidding the State of Gujarat from enforcing any of the
provisions of the Act and the Rules. Numerous grounds were
set up in the petition, but counsel for the petitioner
restricted his arguments at the hearing to the following
only:
(1) that the powers conferred by ss. 5 & 6
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of the Act were unfettered, wide and unguided
and on that account the fundamental rights of
the petitioner were infringed;
(2) that retail sales which were not
regulated by the provisions of the earlier Act
were sought to be regulated by the Gujarat Act
20 of 1964;
(3) that retail trade was completely
prohibited by the Act and the prohibition
amounted to an unreasonable restriction upon
the fundamental rights of the petitioner;
(4) that S. 30 of the Act gave wide powers
to evict a person carrying on business without
a licence, from the market area;
(5) that s. 27(2) not having provided the
maximum licence fee chargeable was illegal;
(6) that the market committee had no power
to function as it was not constituted
according to law. The period of office of the
old committee which was to function for three
years under Bombay Act 22 of 1939 had expired
in 1961, but the committee continued to
function and no fresh elections were held; and
(7) that the rules pursuant to which the
market committee was constituted and
functioned not having been placed before the
Legislature in the first meeting after the
rules were promulgated under the Bombay
Agricultural Produce Markets Act, 1939, as
required by that Act, the rules were
unauthorised and there was com-
511
plete absence of machinery for enforcement of
the Act.
Counsel submitted that the petitioners fundamental rights
under Arts. 14, 19 & 31 of the Constitution were infringed
by enactment of the Act and the promulgation of the Rules
and byelaws and the exercise of the authority by the State
of Gujarat and the market committee pursuant thereto. It
may at once be observed that the President of India having
declared in the month of December 1962 a state of emergency
in exercise of the powers reserved under the Constitution,
the right to enforce the fundamental rights guaranteed under
Art. 19 of the Constitution remains suspended by virtue of
Art. 358 for the duration of the period of the emergency.
On this ground alone, a large majority of the contentions
raised by counsel for the petitioner may fail. But we have
heard full arguments on the petition and as the petitioner
has attempted to urge that by the Act and the Rules and the
Bye-laws the guaranteed freedoms under Arts. 14 & 31 are
also infringed, we propose to decide this petition on the
merits, apart from the preliminary objection as to the
suspension of Art. 19 which disentitles the petitioner
during the subsistence of the emergency from obtaining any
relief from this Court oil the footing of the breach of his
fundamental right to carry on business.
We may usefully refer in the first instance to certain
provisions of the Act which are material for the purpose of
this petition. The Act is enacted to consolidate and amend
the law relating to the regulation of buying and selling of
agricultural produce and the establishment of markets
for agricultural produce in the State of Gujarat. Section
2 defines various expressions in the Act. "Agricultural
produce" is defined is meaning all produce, whether
processed or not, of agriculture, horticulture and animal
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husbandry, specified in the Schedule, [el. (i)] : "licEnce"
means a licence granted under s. 6, or, as the case may be a
general or special licence granted tinder S. 27, [cl. (ix)]
: "market" mean,, a market declared or deemed to be declared
under the Act, [cl. (xii) ] : "market area" means any area
declared or deemed to be declared to be a market area under
the Act, [cl. (xiii)] : "market committee" means a market
committee established or deemed to be established under the
Act, [cl. (xiv)] : "market proper" means any area declared
or deemed to be declared to be a market proper under the
Act, [(cl. xv)] : "principal market yard" means an
enclosure, building or locality declared or deemed to be
declared to be a principal market yard under the Act,
512
[cl. (xvii)] : "retail sale" means a sale of any
agricultural produce not exceeding such quantity as a market
committee may by bye-laws determine to be a retail sale in
respect of such agricultural produce, [cl. (xviii)] : and
"trader" means any person, who carries on the business of
buying or selling of agricultural produce or of processing
agricultural produce for sale [cl. (xxiii)]. Section 5
authorises the Director (appointed by the State Government)
to declare his intention of regulating the purchase and sale
of such agricultural produce and in such area, as may be
specified therein. Section 6 authorises the Director to
declare an area specified in the notification as market
area. It provides that after the expiry of the period
specified in the notification issued under s. 5 and after
considering the objections and suggestions received before
its expiry and holding such inquiry as may be necessary, the
Director may, by notification in the Official Gazette
declare the area specified in the notification or any
portion thereof to be a market area for the purposes of the
Act in respect of all or any ,of the kinds of agricultural
produce specified in the said notification. By sub-s. (2)
of S. 6 it is provided that notwithstanding anything
contained in any law for the time being in force, from the
date on which any area is declared to be a market area under
sub-s. (1), no place in the said area shall be used for the
purchase or sale of any agricultural produce specified in
the notification except in accordance with the provisions of
the Act. By sub-s. (3 it is provided that nothing in sub-s.
(2) shall apply to the purchase or sale of any such
agricultural produce, if its producer is himself the seller
and the purchaser purchases it for his own private
consumption. Section 7 provides that for each market area,
there shall be a market which shall consist of-(i) one
principal market yard, (ii) sub-market yards, if any, and
(iii) all markets proper notified under sub-ss. (2) & (3);
by sub-s. (2) the Director is authorised to declare any
enclosure, building or locality in any market area to be a
principal market yard and any other enclose re, building or
locality to be a sub-market yard, and a specified area as a
market proper. Section 8 prohibits operations in the market
area or any part thereof except under and in accordance with
the conditions of a licence granted under the Act. Section
9 deals with the establishment and constitution of market
committee or committees. Incorporation. and constitution of
market committees and their powers and duties are dealt with
by Ch. IV of the Act which consists of ss. 10 to 31. By S.
26 it is provided that it shall be the duty of every market
committee to maintain and manage the market, to take all
possible steps to prevent adulteration and to promote
grading and standar-
513
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disation of the agricultural produce as may be prescribed,
to provide such facilities in the market as the Director may
from time to time direct and to enforce in the market area
the provisions of the Act, the rules, bye-laws and the
conditions of licences granted under the Act in connection
with the purchase and sale of the agricultural produce with
which it is concerned. It shall also be the duty of every
market committee to collect and maintain such information
relating to market intelligence as may be prescribed and to
supply the same to Government whenever so required. Section
27 by the first sub-section provides that on the
establishment of a market, the market committee may, subject
to rules made in that behalf, grant or renew a general
licence or a special licence for the purpose of any specific
transaction or transactions to a trader, general commission
agent, broker, weighman, surveyor, warehouseman or any
person to operate in the market area or part thereof, or
after recording its reasons therefore, refuse to grant or
renew any such licence. By sub-s. (2) it is provided that
licences may be -ranted under sub-s. (1) in such forms, for
such periods, on such terms and conditions and restrictions
as may be prescribed or determined by the bye-laws and on
payment of fees determined by the market committee within
such maxima as may be prescribed. By sub-s. (3) power is
conferred upon the market committee to suspend or cancel a
licence. Section 28 authorises the market committee to levy
from time to time prescribed fee and to collect the same on
the agricultural produce bought or sold in the market area.
Chapter V deals with the Market Committee Fund and State
Agricultural Produce Market Fund. Chapter VI prohibits the
collection of trade allowances, other than allowances
prescribed by rules or byelaws made under the Act. Chapter
VII deals with offences, penalties, investigation and
procedure for the trial of offences. Chapter VIII deals
with the control by the Director and the State Government in
the matter of administration of the Act and Ch. IX deals
with miscellaneous matters, including the power to frame
rules and bye-laws. The Act was, as is clear from its
preamble and this review of its provisions, enacted with a
view to provide satisfactory conditions for the growers of
agricultural produce and to sell their produce on equal
terms and at reasonable prices. The ordinary cultivator in
our country suffers from many handicaps : he is generally
illiterate, and often ignorant of the prevailing prices in
the market of agricultural produce. Establishment of
regulated markets is a well-known expedient for ameliorating
the condition of the agricultural producers by eliminating
the middlemen and bringing the consumers in direct contact
with the
514
producers and thereby securing an ordered plan of
agricultural development. The Legislature has, by the Act,
attempted, with this object in view, to set up machinery for
declaring certain areas as markets and for setting up market
yards in which the business of selling and buying
agricultural produce may be carried on. The Act provides
for the constitution of market committees authorised to
maintain and manage the markets and to effectuate super-
vision, prevent adulteration and promote grading and
standardisation of the agricultural produce and to enforce
in the market area -the provisions of the Act and the bye-
laws. For that purpose the market committees are authorised
to grant licences and levy fees within the maxima as may be
prescribed by the rules framed under the Act. The scheme of
the Act is substantially the same as under the, Bombay Act
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22 of 1939 which by S. 87 of the Bombay Reorganisation Act,
1960 continued to apply to the territory of Gujarat even
after the territory was constituted into a separate State.
Power to frame rules under S. 59 for generally carrying out
the provisions of the Act is conferred upon the State
Government by the Act, and until that power is exercised by
virtue of s. 64, anything done or action taken (including
any appointment, order, notification, rule, bye-law made,
licence issued, or fee imposed) under the Bombay Act 22 of
1939 shall be deemed to have been done or taken, under the
corresponding provisions of the Act and shall continue in
force until it is superseded by anything done or action
taken under this Act. It appears that till the date on
which this petition was filed and even thereafter no rules
were framed in exercise of the powers conferred under s. 59
by the State Government of Gujarat, and the rules framed
under Bombay Act 22 of 1939 continue to remain in operation.
Even the market committees which had been formed under the
Act of 1939 continue to function and bye-laws framed by them
hold the field.
This Court in M.C.V.S. Arunachala Nadar etc. v. The State of
Madras and Ors(1) was called upon to deal with the validity
of the Madras Commercial Crops Markets Act 20 of 1933. In
that case certain traders had challenged the validity of
Madras Act 20 of 1933) on the -round that the provisions of
the Act imposed unreasonable restrictions upon their right
to do business, and the Court on an exhaustive review of the
provisions of the Act hold that the provisions which imposed
liability to take out a licence for carrying on trade in
"commercial crops", and the restrictions relating to the
place where the business may be carried
(1) [1959] 1 S.C.R. 92.
515
on were reasonable and did not infringe the right guaranteed
by Art. 19(1)(g) of the Constitution. In Mohammad Hussain’s
case(1) this Court held following the judgment in Arunachala
Nadar’s case (2 ) Nadar’s that the impugned provisions viz.
ss. 4, 4A, 5, 5A and 5AA of the Bombay Agricultural Produce
Markets Act 22 of 1939 were not unconstitutional. It was
pointed out by this Court that the provisions impugned in
that case were substantially the same as were contained in
Madras Act 20 of 1933 and therefore the restrictions imposed
by the impugned provisions could not be regarded as
unreasonable.
Section 5 of the Gujarat Act authorises the Director to
declare his intention to regulate purchase and sale of
agricultural produce in a specified area after inviting
objections or suggestions from the local authorities
functioning in the area, and from other persons. By s. 6 of
the Director after considering the objections aid
suggestions received within the period specified in the
notification is authorised to declare the area or part
thereof a market area for the purposes of the Act in respect
of all or any of kinds of produce specified in the
notification. The object of the Act being to ameliorate the
condition of agriculturists and to do away with the
middlemen, who, it is a matter of common knowledge, make
large and unconscionable profits out of the transactions
carried out through them, declaration of intention to regu-
late trade in agricultural produce in a specified area,
after hearing the objections and suggestions of interested
parties, cannot be regarded as imposing unreasonable
restrictions on the right to carry on trade.
The argument that the authority conferred upon the Director
is wide and arbitrary, because no principles are indicated
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for guidance has no force. The Director is appointed by the
State Government to exercise such powers and perform such
functions and duties as are conferred or imposed on him by
or under the Act, and the exercise of the powers and the
performance of the duties is for the purpose of regulating
the purchase and sale of agricultural produce and thereby
doing away with malpractice in the trade. The preamble to
the Act and the scheme of the Act clearly indicate that the
powers conferred upon the Director are to be exercised for
the purpose of regulating buying and selling of agricultural
produce and for that purpose to establish markets for sale
and purchase of agricultural produce. The powers under s. 6
are to be exercised after giving an opportunity to persons
interested to raise object ions or to make suggestions to
the pro-
(1) [1962] 2 S.C.R. 659
(2) [1959] Supp. 1 S.C.R. 92
516
posed introduction of control on sale and purchase of
agricultural produce. It is only after the objections and
suggestions are received and considered by the Director in
the light of the object and purpose of the Act, and he is
satisfied that it is in the interest of the producer and the
general public that there should be regulation of the trade
in agricultural produce in the specified area that he may
proceed to declare the market area.
It was urged on behalf of the petitioner that in Mohammad
Hussain’s case(1) this Court had upheld the validity of
provisions in the Bombay Act 22 of 1939 analogous to ss. 5 &
6 of the Gujarat Act only on the ground that by the Bombay
Act retail trade was not intended to be controlled, whereas
under the Gujarat Act authority is given to control the
retail trade also, and on that account the provisions of ss.
5 & 6 would be regarded as infringing the fundamental right
to carry on trade and business. The question whether by the
provisions of the Act and the rules framed thereunder the
Legislature has attempted to impose restrictions upon retail
trade in agricultural produce will be presently considered
when we deal with the second and the third contentions
advanced by the petitioner. But assuming that such a power
is conferred, we fail to appreciate how solely on that
account it can be said that the provisions of the Act
infringe Art. 19(1)(g) of the Constitution or may be
regarded as conferring an arbitrary authority. Reasonable
restrictions on the right of a citizen to carry on trade-
retail as well as wholesale-may be placed by legislation.
The test of the validity of the restrictions lies in the
nature of the restrictions and not in the nature of trade.
If regulation of trade in agricultural produce by the
declaration of market area and imposition of restrictions
may be regarded as reasonable When operating on the
wholesale trade, it would be difficult to hold that the
identical restrictions when operating on retail trade may be
deemed unreasonable. We do not think that the observations
made by this Court in Mohammad Hussain’s case(1) justify the
argument urged by the petitioner. Challenge to the validity
of ss. 5 & 6 must therefore fail.
It was urged by counsel for the petitioner that whereas
retail sales were not regulated by the provisions of the
Bombay Act 22 of 1939, those sales were sought to be
regulated by the Gujarat Act, and as a result of the
provisions enacted in that Act retail trade was completely
prohibited. It was urged that there was no provision for
licensing retail trade in agricultural produce, and in
(1) [1962] 2 S.C.R. 659
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517
view of the prohibition contained in s. 6 (2) an
unreasonable restriction was placed upon the right of the
petitioner to carry on retail trade in agricultural produce.
Section 6 (2) expressly provides that no place in any market
area shall be used for the purchase or sale of any
agricultural produce specified in the notification except in
accordance with the provisions of the Act, and by sub-s. (3)
it is provided that nothing in sub-s. (2) shall apply to,
the purchase or sale of any such agricultural produce, if
its producer is himself its seller and the purchaser
purchases it for his own private consumption. It may appear
at first sight that subject to the reservation of
transactions covered by sub-s. (3), all trade in agricul-
tural produce in the market area is sought to be brought
within the r regulatory provisions of the Act. The
exception clause in s. 6(3) is somewhat more restricted than
the exception clause in s. 4(2A) of the Bombay Act 22 of
1939. By s. 4(1) of the Bombay Act the Commissioner was
authorised to constitute a market area and by sub-s. (2) it
was provided that no place in such area shall, subject to
the provisions of s. 5A, be used for the purchase or sale of
any agricultural produce specified in the notification
issued thereunder. Sub-section (2A) of s. 4 provided that
nothing in subs. (2) shall apply to the purchase or sale of
such agricultural produce, if the producer of such produce
is himself its seller and the purchaser is a person who
purchases such produce for his own private use or if such
agricultural produce is sold to such person by way of a
retail sale. There was an express provision made in the
Bombay Act 22 of 1939 which excluded from the operation of
sub-s. (2) sale of agricultural produce by way of retail
sale. Under the Gujarat Act no such exclusion is expressly
prescribed. But, apart from the generality of the
provisions made in the Gujarat Act and the omission of
retail sales from the scheme of exclusion, the Act and the
rules clearly indicate that retail sales are not sought to
be regulated by the provisions of the Act. It may be
noticed that the State of Gujarat has not framed any new
rules the rules framed under the Bombay Act 22 of 1939
remain in operation by virtue of s. 64 and the rules framed
under the Bombay Act 22 of 1939 have been framed on the
footing that no retail sale is sought to be regulated
thereby. Clause (4) of r. 53 excludes from the levy of fee
sellers who are themselves producers of the agricultural
produce offered for sale and buyers who by such produce for
their own private and/or household use. Rule 60 which deals
with sales of agricultural produce and trading in markets by
the first clause provides that all agricultural produce
brought into the market shall pass through the principal
market yard or sub-market yards and shall not, subject to
the provisions
518
of sub-rule (2) be sold at any place outside such yards.
Sub-rule (2) deals with processed agricultural produce. By
sub-rule (3) it is provided that such details of all
agricultural produce resold in the market area shall also be
reported to the market committee in accordance with the
provisions of the bye-laws. Sub-rule (4) enacts that the
price of agricultural produce brought into the market for
sale shall be settled by open auction or by open agreement
and not by secret signs and no deductions shall be made from
the agreed price of the consignment except for any
authorised trade allowance. The provisions with regard to
information and report to the market committee about the
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resale of the agricultural cultural produce and the
prohibition of sales otherwise than by open auction or by
open agreement clearly indicate that r. 60 does not deal
with retail sales. The learned Solicitor-General appearing
on behalf of the State of Gujarat has conceded, and we think
that the concession is rightly made, that the Act read
together with the rules does not purport to place any
restriction upon retail transactions in agricultural
produce. Therefore no licence is required under the Act for
carrying on retail trade in agricultural produce in the
market area, and there is no prohibition against the
carrying on of retail sale in agricultural produce in the
market area.
In this connection bye-law 35 (1) (a) of the Agricultural
Produce Market Committee, Ahmedabad also indicates that no
retail sales are intended to be regulated. That bye-law
states that there will be two classes of licensed traders
viz. "A" class traders and "R" class traders: those holding
"A" class traders’ licence shall be entitled to buy and/or
sell agricultural produce in quantities not below 10 lbs. in
the market yard : those holding "B" class traders’ licence
shall be entitled to purchase agricultural produce in quan-
tities not below 10 lbs. in the market yard and to sell in
retail to ,consumers anywhere in the market area. The "B"
class trader’ licence is manifestly for purchasing
agricultural produce.
It was then contended that s. 30 conferred power upon the
market committee of summarily evicting from the market any
person, if he is found in the market area without holding a
valid licence. This, it was urged, made a large inroad upon
the fundamental right guaranteed to the citizens to move
freely throughout the territory of India, and to reside and
settle in any part of the territory in India. But s. 30
authorises the eviction from the market any person found to
be operating in the market without holding a valid licence.
The power of eviction by the market committee is limited to
eviction from the precincts of the market. The provision is
apparently enacted for the purpose of imposing an
519
additional penalty against infraction of the prohibition
contained in s. 6 (2). "Operating in the market area" can
in the context only mean using a place in the market area
for the purchase or sale of agricultural produce specified
in the notification under s. 6(2) otherwise than in
accordance with the provisions of the Act. The apprehension
of the petitioner that a person infringing the regulatory
provisions of the Act may be compelled to leave his hearth
and home, at the instance of the Chairman, the Vice-Chairman
of the Market Committee, or members, officers, or Secretary
of the Market Committee, who may be authorised in that
behalf, is wholly unfounded. The power conferred is
disciplinary in character, and its exercise is restricted to
the precincts of the market, and only if the offender is
found operating in the market area without a licence. The
language of the section does not at all warrant the,
submission that a person carrying on trade in agricultural
produce without obtaining a licence may be evicted from the
market area.
The argument that s. 27 (2) does not provide fee in excess
of the maximum licence fee may not be charged by the market
committee is also without substance. In terms sub-s. (2)
provides that the licences may be granted in such forms, for
such periods, on such terms and conditions and restrictions
as may be prescribed or determined by the bye-laws and on
payment of fees determined by the market committee within
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such maxima as may be prescribed. That clearly contemplated
fixation of maxima by the rules made under s. 59.
It was then urged that the market committee was not lawfully
constituted because no fresh elections had been held after
the expiry of three years from September 18, 1958 for which
the members of the committee were entitled to hold office
under s. 6(3) of Bombay Act 22 of 1939. Section 64 by the
first sub-section repeals the Bombay Agricultural Produce
Markets Act 22 of 1939 and by the second sub-section,
notwithstanding the repeal, every market committee
established for any market area under any of the Acts so
repealed shall, notwithstanding anything contained in s. 11
but subject to the other provisions of the Act, be deemed to
be a market committee established for the said market area
under the Act and the members thereof holding office
immediately before the commencement of the Act- shall.
continue to hold office for the period for which they would
have held office, had the Act not been enacted or until the
market committee is duly reconstituted under s. 1 1
whichever is earlier. A market committee constituted under
the Bombay Act 22 of 1939 is therefore entitled to function
under the Gujarat Act, subject to the restrictions contained
in
L7Sup.165-5
520
S. 64(2) (ii). It is common ground that no fresh
elections were held for the election of members of the
market committee since, May 1958. Under s. 6 of Bombay Act
22 of 1939 which dealt with the constitution of market
committees by sub-s. (3) it was provided that every member
of a market committee elected or nominated, when it is first
constituted, shall hold office for a term of two years and
every such member elected or nominated thereafter shall hold
office for a term of three years. In the normal course, the
members of the committee elected in 1958 would have held
offence for three years. But by sub-s. (3A) it was provided
that the term of office of the outgoing members of a market
committee shall be deemed to extend to and expire with the
day before the date of the first general meeting of the
market committee constituted in its place. This provision
was enacted by Bombay Act 26 of 1951, presumably with a view
to provide for the interrenum between the expiration of the
period of office of the members and the constitution of a
fresh committee after elections. The lawful authority of
the members of the market committee was, notwithstanding the
expiry of the period, extended by sub-s. (3A) till the date
of the first general meeting of the market committee.
It may be noticed that there has been no deliberate refusal
to hold elections. The period of the market committee was
to end on September 18, 1961 and before that date the
Collector of Ahmedabad had taken steps to hold elections to
the market committee, but as a petition was pending -in this
Court challenging the vires of the Act the elections could
not be held. This Court declared certain provisions earlier
referred to as invalid and an Ordinance had to be issued
modifying or validating those provisions of the Act. That
Ordinance was later replaced by The Bombay and Saurashtra
Agricultural Produce Markets (Gujarat Amendment and
Validating Provisions) Act 21 of 1961. The constitutional
validity of Act 22 of 1939 as amended by Gujarat Act 21 of
1961 was again challenged before this Court and the
elections had further to be postponed. This Court upheld the
validity of the impugned provisions by judgment dated March
15, 1962: see Mohammadbhai Khudabuux Chhipa v. The State of
Gujarat(1). Steps were again taken to hold elections, but in
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the meanwhile a declaration of emergency was made by the
President, and Ordinance 1 1 of 1962 was issued by the
Governor of Gujarat in exercise of the powers conferred upon
him by the Constitution by virtue of which under S. 3 the
term of office, inter alia, of the member of the local
authority was extended for a period during
(1) [1962] Supp. 3 S. C. R. 875.
521
which the proclamation of emergency was in force and
thereafter for a period not exceeding six months. The
market committee constituted or deemed to be constituted
under the Bombay Agricultural Produce Markets Act 22 of 1939
was included in the definition of the term "local authority"
under the said Ordinance. This Ordinance was substituted by
The Gujarat Local Authorities (Extension of Term) Act, 1962.
That Act was repealed by The Gujarat Local Authorities
(Extension of Term) (Repeal) and the Gujarat Panchayats
(Amendment) Act 35 of 1963, by the operation of which the
terms of members of local authorities were to stand extended
upto the end of March 1964 or such earlier date as the State
Government or a person authorised by it may by notification
in the Official Gazette specify. Thereafter the Gujarat
Local Authorities (Further Extension of Term) Act 9 of 1964
was enacted. By that Act the term was extended up to March
1965 by s. 2 thereof. in the meanwhile the Gujarat Act 20 of
1964 being the Gujarat Agricultural Produce Markets Act was
enacted and was brought into force and by virtue of s. 64
thereof the market committee established under the earlier
Acts was deemed to be a market committee established for the
said market under the new Act and members of the market
committee holding office immediately before the commencement
of the new Act continued to hold office under ,he new Act.
The contention that there is no legally constituted market
committee has therefore no force.
Finally, the validity of the rules framed under the Bombay
Act 22 of 1939 was canvassed. By s. 26(1) of the Bombay Act
the State Government was authorized to make rules for the
purpose of carrying out the provisions of the Act. It was
provided by sub-s. (5) that the rules made under s. 26 shall
be laid before each of the Houses of the Provincial
Legislature at the session thereof next following and shall
be liable to be modified or rescinded by a resolution in
which both Houses concur and such rules shall, after
notification in the Official Gazette, be deemed to have been
modified or rescinded accordingly. It was urged by the
petitioner that the rules framed under the Bombay Act 22 of
1939 were not placed before the Legislative Assembly or the
legislative Council at the first session and therefore they
had no legal validity. The rules under Act 22 of 1939 were
framed by the Provincial Government of Bombay in 1941. At
that time there was no Legislature in session, the
Legislature having been suspended during the emergency
arising out of World War II. The session of the Bombay
Legislative Assembly was convened for the first time after
1941 on May 20, 1946 and that session was prorogued on May
24, 1946. The second session of the Bombay Legislative
522
Assembly was convened on July 15, 1946 and that of the Bom-
bay Legislative Council on September 3, 1946 and the rules
were placed on the Assembly Table in the second session
before the Legislative Assembly on September 2, 1946 and
before the Legislative Council on September 3, 1946.
Section 26(5) of Bombay Act 22 of 1939 does not prescribe
that the rules acquired validity only from the date on which
they were placed before the Houses of Legislature. The
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rules are valid from the date on which they are made under
S. 26(1). It is true that the Legislature has prescribed
that the rules shall be placed before the Houses of
Legislature, but failure to place the rules before the
Houses of Legislature does not affect the validity of the
rules, merely because they have not been placed before the
Houses of the Legislature. Granting that the provisions of
sub-s. (5) of s. 26 by reason of the failure to place the
rules before the Houses of Legislature were violated, we
are of the view that sub-s. (5) of S. 26 having regard to
the purposes for which it is made, and in the context in
which it occurs, cannot be regarded as mandatory. The rules
have been in operation since the year 1941 and by virtue of
s. 64 of the Gujarat Act 20 of 1964 they continue to remain
in operation.
All the contentions raised by counsel for the petitioner
must therefore fail and the petition is dismissed with
costs.
Petition dismissed.
523