The Belsund Sugar Co. Ltd. Vs. The State of Bihar & Ors [1999] INSC 256 (10 August 1999)
S.B.Majmudar, Sujata V. Manohar, K.Venkataswami, V.N.Khare S.B. Majmudar, J
Leave granted in the Special Leave Petitions.
These appeals and writ petitions mainly raise the question regarding the legality of the levy of market fee under the provisions of Bihar Agricultural Produce Markets Act, 1960 (hereina'fter referred to as the Market Act for short). The grievance made by the appellants/writ petitioners pertained to the following commodities with which the respective proceedings are concerned. 1.
Sugarcane, Sugar and molasses (briefly referred to as Sugar matters) matters) 2. Wheat products Atta, Maida, Suzi, Bran etc.; 3.
Vegetable Oil; 4. Rice milling; 5. Milk and milk products; 6. Tea.
It will, therefore, be appropriate to deal seriatim the grievances centering round the levy of market fee on transactions concerning the aforesaid commodities.
GRIEVANCES IN CONNECTION WITH MARKET FEE CONCERNING SUGAR MATTERS So far as this group of matters is concerned, first two Civil Appeal Nos. 398 & 399 of 1977 arise out of certificates of fitness granted by the High Court of Judicature at Patna under Articles 132(1) and 133(1) of the Constitution of India. The said certificates pertain to a common judgment of the High Court rendered in two writ petitions of two sugar mills located in the State of Bihar.
By the common judgment dated 20th April, 1976 the High Court dismissed both the writ petitions. The said judgment of the High Court is reported in The Belsund Sugar Co. Ltd., Riga and another vs. The State of Bihar and others, (AIR 1977 Patna 136). By the impugned common judgment, the imposition of market fee under the Market Act on the transactions of purchase of sugarcane by the sugar mills concerned and also on their transactions covering sale of sugar and molasses manufactured by utilising the purchased sugarcane was upheld by the High Court. In view of the fact that the certificates of fitness were granted by the High Court as aforesaid this group of matters was directed to be placed before a Constitution Bench of this Court as per Article 145 of the Constitution of India. Though initially they were directed to be placed before a Bench of seven Judges, subsequently by a latter order dated 9th December, 1998, these appeals were directed to be placed before a five Judge Bench and that is how these appeals and other cognate matters were placed before this Bench for final hearing.
Though the certificates of fitness granted by the High Court were on the basis that the cases involved a substantial question of law as to the interpretation of Article 254(1) of the Constitution of India, at the time when these appeals and the cognate matters reached final hearing before us, learned senior counsel Shri Shanti Bhushan and Shri Gupta appearing for the appel lants, raised mainly two contentions for our consideration :
1. Whether the Market Act can apply to the transactions of purchase of sugarcane and sale of sugar and molasses by the appellant sugar mills in view of the fact that regulation of these transactions is already effected by Bihar Sugarcane (Regulation of Supply and Purchase) Act, 1981 (for short Sugarcane Act) as well as and Sugar both issued under Section 3 of the Essential Commodities Act, 1955 (hereinafter referred to as the Essential Commodities Act) and also under the provisions of Bihar Molasses (Control) Act, 1947.
2. In the alternative, whether imposition of market fee under the Market Act by the respective market committees is justified in the absence of any service rendered to the appellant sugar mills under the provisions of the Market Act and consequently the levy of market fee can be said to be not supported by any quid pro quo.
RIVAL CONTENTIONS :
Learned senior counsel for the appellants vehemently submitted in support of the aforesaid twin contentions that the Market Act which was enacted by the Bihar legislature under Entries 26 and 27 of the State List read with Entry 28 therein had to be read subject to Entry 33 of the Concurrent List and as the Bihar Legislature itself had enacted the Sugar Act in exercise of its legislative powers under Entry 33 of the Concurrent List, there was no occasion left for the State of Bihar to get satisfied about the need to regulate the production and sale of sugarcane as well as manufactured items therefrom as per the Market Act. In short, the invocation of Section 3 read with Section 4 of the Market Act was totally misconceived and uncalled for.
It was further contended that once the State of Bihar in exercise of its power of exemption under Section 42 of the Market Act had exempted the appellant sugar factories from applicability of Section 18 of the Market Act, the entire machinery under the Market Act became inapplicable to regulate the sale and purchase of transactions concerning sugarcane, sugar and molasses as entered into by the appellant sugar factories. Consequently, there remained no occasion for the authorities functioning under the Market Act for demanding any market fee from the appellants under Section 27 of the Market Act. It was also contended in further support of this submission that the Sugarcane Control Order, 1966 as well as the Sugar (Control) Order of the same year issued under Section 3 of the Essential Commodities Act, 1955 and also the provisions of the Bihar Molasses (Control) Act, 1947 fully occupied the field of regulation of sale and purchase of sugarcane, sugar and molasses and on that ground also the provisions of the Market Act could not be pressed in service against the appellant sugar factories undertaking the purchase and sale of the concerned transactions. In the alternative, it was contended that once Section 15 of the Market Act is out of picture and once it remains an admitted position that the appellant sugar factories have to purchase sugarcane from purchase centres, there remains no occasion for the market committees to give any services under the Market Act to the appellant sugar factories. Hence the market committees were not entitled to recover any market fee from the appellants as there was no return benefit or quid pro quo made available to the appellants by the market committees and hence the impugned market fee in substance became a tax which could not be recovered under the Market Act by the market committees.
Replying to these contentions, learned senior counsel for the State of Bihar and learned senior counsel appearing for the market committees submitted that the appellant sugar factories have no locus standi to maintain these proceedings for the simple reason that so far as their challenges to the levy of market fee on transactions of sale of sugar and molasses were concerned, as under Section 27 of the Market Act levy was imposed on the buyers of sugar and molasses manufactured by the appellant companies, these sugar mills were not affected by the levy. That the appellant companies may at the highest be collecting agents of market fee if the buyers were not licensed under the Act but in most of the cases the appellant sugar companies were selling levy sugar to the Food Corporation of India and even free sugar was mostly sold by them to licensed buyers. Same was the case of sale of molasses to the concerned buyers. They, however, rightly conceded that the appellants cannot be said to be not having any locus standi to challenge the market fee levied on their purchase of sugarcane as the charge of market fee would be on them as buyers of sugarcane.
On the merits of the contentions raised by learned senior counsel for the appellants, learned senior counsel for the respondents submitted that even if the exemption notification under Section 42 of the Act purports to exempt the appellant sugar companies from whole of Section 15 of the Market Act, in substance the exemption is confined to Section 15(2) of the Act as there is already a declaration under Section 4 of the Market Act treating the purchase centres of the appellant sugar companies at the factory gates as well as at other places in the market area as sub-market yards. On a conjoint reading of these two notifications, therefore, it can be seen that exemption under Section 42 of the Act was confined to excluding the operation of Section 15(2) of the Act qua these sugar factories. In the alternative, it was submitted that if the exemption notification is treated to cover entire Section 15 even then once the transactions of sale and purchase take place within the market area, charge under Section 27 would get settled on these transactions. It was further submitted that there is enough return benefit made available to the sugar factories admittedly situated within the market area.
That, in fact, their service centres are also declared to be sub-market yards even beyond the factory gate. That they utilise the link roads made available by the market committee for bringing sugarcane produce to the factory premises by giving facility of swift transportation. Thus the sugarcane as a raw material is brought to the factory premises before it gets dried up. This yields better quality and larger quantity of sugar and molasses. In addition thereto facilities of supply of necessary information regarding the prevalent prices of sugarcane are made available by the market committee. But even apart from that, the market committee can act as a mediator in enabling the sugarcane growers to get better price of sugarcane above the minimum price fixed under the Control Order and the Sugarcane Act and this role of the market committee would be beneficial not only to the producers of sugarcane but also to the factories which can be assured of appropriate good quality sugarcane purchased from the sugarcane growers. It is, therefore, wrong to suggest that there is no quid pro quo between the charge of market fee and the payment thereof by the sugarcane factories, that the infrastructural facilities made available to the industry as a whole have to be seen and transactions are not to be dissected for finding out the quid pro quo between charging of the market fee and the burden thereof borne by the sugar companies. It was, therefore, contended that none of the submissions canvassed by learned senior counsel for the appellants deserved to be accepted. In the light of the aforesaid rival contentions, we now proceed to deal with the twin contentions submitted for our consideration by learned senior counsel for the appellants in support of these appeals. However, before we deal with the merits of these contentions, the question of locus standi of the appellants is required to be considered at the outset.
LOCUS STANDI OF THE APPELLANTS TO MAINTAIN THESE PROCEEDINGS :
It has to be kept in view that as per Section 27 of the Market Act the charge of the market fee is on the buyer of the agricultural produce bought or sold in the market area. The said section reads as under :
"Power to levy fees - (1) The Market Committee shall levy and collect market fees on the agricultural produce bought or sold in the market area at the rate of rupee one per Rs.100 worth of agricultural produce.
Xxxxx xxxx xxxx (2) The market fee chargeable under sub-section (1) shall be payable by the buyer, in the manner prescribed.
(3) The fee chargeable under sub-section (1) shall not be levied more than once on a notified agricultural produce in the same notified Market Area.
It is not in dispute between the parties that sugarcane is an agricultural produce as it is grown in fields by the cultivators. Both sugarcane and sugar are listed as Item nos. 1 and 3 in Para XII dealing with miscellaneous items as found in the Schedule to the Market Act enacted as per Section 2(1)(a) of the Act.
Section 2(1)(a) of the Act defines agricultural produ as under : Agricultural produce means all produce whether processed or non-processed, manufactured or not, of Agriculture, Horticulture, Plantation, Animal, Husbandry, Forest, Sericulture, Pisciculture, and includes livestock or poultry as specified in the Schedule.
In the light of the aforesaid provisions, it is obvious that the sugar factories operating in the market area within the jurisdiction of the market committee concerned can be said to be buyers of sugarcane, an agricultural produce. Their purchase centres are situated within the market area. As submitted by learned senior counsel for the respondents, all the purchase centres at which the appellant sugar factories purchase sugarcane as raw material are not only situated within the market area but are also declared as submarket yards. In fact the entire Bihar State is comprised of various market areas within the jurisdiction of different market committees. If that is so, it has to be held that when the charge under Section 27 of paying market fee is imposed on the sugar factories as buyers of sugarcane within the market area, they have to be treated to be having sufficient locus standi as buyers of sugarcane to challenge the imposition of market fee on their purchase transactions. On this aspect, learned senior counsel for the respondents did not contest.
However, their submission was that when purchased sugarcane is processed at the factories and converted into sugar and molasses and when such sugar and molasses are sold by the sugar factories, the charge of market fee on these sale transactions would settle on the buyers of sugar and molasses who have not made any grievance about payment of market fee. That may be so, however, the fact remains that if the sugar factories sell manufactured sugar and molasses out of the purchased raw material-sugarcane, and if the buyers are not licensed then as per the provisions of Rule 82 (iii) of the Bihar Agricultural Produce Markets Rules, 1975 the sugar factories as sellers have to realise the market fee from the buyers and have to deposit the same with the market committees. That obligation by itself would give sufficient locus standi to the sugar factories which sell sugar and molasses within the market area to challenge the aforesaid statutory obligation imposed on them by the Act and the Rules and to submit as to how they are not covered by the provisions of the Act. It may be that when they sell levy sugar to the Food Corporation of India, they may not have to undertake this liability as collecting agents of the market committee, so far as the market fee is concerned.
Still even if partially in case of sale of free sugar to unlicensed buyers they have to be called upon to discharge their statutory obligation under Rule 82 (iii), it cannot be said that they have no locus standi to challenge the imposition of market fee on the transactions of sale effected by them in connection with sugar and molasses. The preliminary objection of learned senior counsel for the respondents against the locus standi of the appellants to maintain these proceedings is, therefore, over-ruled. This takes us to the consideration of the main twin contentions canvassed by learned senior counsel for the appellants for our consideration. CONTENTION NO. 1 : Applicability of the Market Act to appellants transaction of purchase of sugarcane and sale of sugar and molasses.
So far as this contention is concerned, we have to keep in view the relevant provisions of the Market Act, Sugar Act as well as the Orders under the Essential Commodities Act. In the first instance, we shall deal with the transactions of purchase of sugarcane by the sugar factories functioning in the market areas falling within the jurisdiction of respective market committees constituted under the Market Act. The Market Act has been enacted by the Bihar Legislature as per the legislative power vested in it by Entries 26, 27 and 28 of List II of Seventh Schedule of the Constitution. These entries read as under : 26.
Trade and commerce within the State subject to the provisions of entry 33 of List III. 27. Production, supply and distribution of goods subject to the provisions of entry 33 of List III. 28. Markets and fairs.
It becomes at once clear that if location of markets and fairs simpliciter and the management and maintenance thereof are only contemplated by the Market Act, then they would fall squarely within the topic of legislative power envisaged by Entry 28 of List II. However, the Market Act, as we will presently show, deals with supply and distribution of goods as well as trade and commerce therein as it seeks to regulate the sale and purchase of agricultural produce to be carried on in the specified markets under the Act. To that extent the provisions of Entry 33 of List III override the legislative powers of the State Legislature in connection with legislations dealing with trade and commerce in, and the production, supply and distribution of, goods. Once we turn to Entry 33 of the Concurrent List, we find that on the topic of trade and commerce in, and the production, supply and distribution of, goods enumerated therein at sub-clause (b), we find listed items of foodstuffs, including edible oilseeds and oils.
Thus to the extent to which the Market Act seeks to regulate the transactions of sale and purchase of sugarcane and sugar which are foodstuffs and trade and commerce therein, it has to be held that the Market Act being enacted under the topics of legislative powers under Entries 26, 27 and 28 of List II will be subject to any other legislation under Entry 33 of the Concurrent List. As it will be seen hereinafter, the Bihar Legislature itself has enacted the Sugarcane Act in exercise of its legislative powers under Entry 33 of the Concurrent List and, therefore, the field covered by the Sugarcane Act would obviously remain exclusively governed by the Sugarcane Act and to the extent the latter Act carves out an independent field for its operation, the sweep of the general field covered by the Market Act which covers all types of agricultural produce, would pro tanto get excluded qua sugarcane and the products prepared out of it. So far as the Market Act is concerned, it is necessary to note that it is an Act to provide for 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. The said Act is enacted essentially to protect the growers of agricultural produce in the State who on account of their ignorance, illiteracy and lack of collective bargaining power may get exploited by middlemen and economically strong purchasers of their agricultural produce with the result that the agriculturists may not get adequate price for their produce. It is with that end in view that the Market Act has been enacted. The constitutional validity of the Madras Commercial Crops Markets Act, concerned with the regulation of purchase and sale of commercial crops grown by agriculturists was considered by a Constitution Bench of this Court in the case of M.C.V.S. Arunachala Nadar Etc. vs. The State of Madras & Others [(1959) Supp.(1) SCR 92]. Subba Rao J., speaking for the Court while upholding the constitutional validity of the said Act emphasised the necessity of such enactment with a view to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce. The learned Judge referred to, with approval, the following recommendations of Royal Commission on Agriculture in India appointed in 1928. That cultivator suffers from many handicaps : to begin with he is illiterate and in general ignorant of prevailing prices in the markets, especially in regard to commercial crops. The most hopeful solution of the cultivators marketing difficulties seems to lie in the improvement of communications and the establishment of regulated markets and we recommend for the consideration of other Provinces the establishment of regulated markets on the Berar system as modified by the Bombay legislation. The establishment of regulated markets must form an essential part of any ordered plan of agricultural development in this country. The Bombay Act is, however, definitely limited to cotton markets and the bulk of the transactions in Berar market is also in that crop. We consider that the system can conveniently be extended to other crops and, with a view to avoiding difficulties, would suggest that regulated markets should only be established under Provincial legislation.
Reference was also made to the Report of an Expert Committee appointed by the Government of Madras which graphically described the difficulties of the cultivators and their dependence upon the middlemen. The following is the extract from the Report of the Expert Committee as noted by Subba Rao J., for highlighting the need for regulated markets for cultivators of commercial crops. The middleman plays a prominent part in sale transactions and his terms and methods vary according to the nature of the crop and the status of the cultivator. The rich ryot who is unencumbered by debt and who has comparatively large stocks to dispose of, brings his produce to the taluk or district centre and entrusts it to a commission agent for sale. If it is not sold on the day on which it is brought, it is stored in the commission agents godown at the cultivators expense and as the latter generally cannot afford to wait about until the sale is effected he leaves his produce to be sold by the commission agent at the best possible price, and it is doubtful whether eventually he receives the best price. The middle class ryot invariably disposes of his produce through the same agency but, unlike the rich ryot he is not free to choose his commission agent, because he generally takes advances from a particular commission agent on the condition that he will hand over his produce to him for sale. Not only, therefore, he places himself in a position where he cannot dictate and insist on the sale being effected for the highest price but he loses by being compelled to pay heavy interest on the advance taken from the commission agent.
His relations with middlemen are more akin to those between a creditor and a debtor, than of a selling agent and producer. In almost all cases of the poor ryots, the major portion of their produce finds its way into the hands of the village money-lender and whatever remains is sold to petty traders who tour the villages and the price at which it changes hands is governed not so much by the market rates, but by the urgent needs of the ryot which are generally taken advantage of by the purchaser. The dominating position which the middleman occupies and his methods of sale and the terms of his dealings have long ago been realized.
Relying on the aforesaid observations Subba Rao J., speaking for the Constitution Bench, justified the need for such legislations and upheld the Act by laying down as under : The aforesaid observations describe the pitiable dependence of the middle-class and poor ryots on the middlemen and petty traders, with the result that the cultivators are not able to find markets for their produce wherein they can expect reasonable price for them. With a view to provide satisfactory conditions for the growers of commercial crops to sell their produce on equal terms and at reasonable prices, the Act was passed on July 25, 1933. The preamble introduces the Act with the recital that it is expedient to provide for the better regulation of the buying and selling of commercial crops in the Presidency of Madras and for that purpose to establish markets and make rules for their proper administration. The Act, therefore, was the result of a long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated markets by eliminating middlemen and bringing face to face the producer and the buyer so that they meet on equal terms, thereby eradicating or at any rate reducing the scope for exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and overreach the scope of the object to achieve which it is enacted.
It, therefore, cannot be gainsaid that the need to have a regulated market where the agriculturist who grows sugarcane as a commercial crop can be assured of adequate price of the sugarcane produced by him and may not be exploited by middlemen, would justify the enactment of the protective umbrella of the Market Act. However, if the Act had stood by itself, no legitimate grievance could have been made by anyone on this score. But so far as the facts of the present cases are concerned, the very same Bihar Legislature enacted the Sugarcane Act of 1981 which has operated simultaneously with the Market Act for the entire State. The said latter Act is obviously enacted by the very same legislature in exercise of its legislative powers under Entry 33 of the Concurrent List. It is, of course, true that the Union Parliament has not passed any similar legislation in exercise of its concurrent legislative power under the very same Entry 33 of List III. We will, therefore, have to see to what extent the Sugarcane Act, which is a latter Act, has carved out a field for itself for protecting the sugarcane growers resulting in withdrawing the same subject matter from the general sweep of the Market Act which covers not only sugarcane but also number of other agricultural produce. In this connection, Section 3 of the Market Act requires to be noted. It reads as under : 3.
Notification of intention of exercising control over purchase, sale, storage and processing of agricultural produce in specified area - [(1) Notwithstanding anything to the contrary contained in any other Act for the time being in force, the State Government may, by 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 a period of not less than two months to be specified in the notification, shall be considered by the State Government.
As per the aforesaid provisions, it has to be kept in view by the State Government concerned while forming the requisite intention whether there is any special legislation of the same State Legislature holding the field and serving the very same purpose of regulating such transactions. Mr. Shanti Bhushan, learned senior counsel for the appellant, vehemently contended that the Bihar Legislature itself had enacted the Sugarcane Act of 1981 whereunder adequate provision was made for regulating the purchase, sale, storage and processing of sugarcane. The complete machinery was provided thereunder for protecting the sugarcane growers and, therefore, there was no occasion for the State of Bihar to continue the regulation of purchase and sale transactions of sugarcane atleast after 1981 as per Section 3(1) of the Market Act. The preamble of the Sugarcane Act shows that amongst others it is enacted to regulate the production, supply and distribution of sugarcane intended for use in sugar factories and taxation of sugarcane and matters incidental thereto. Chapter II of the Sugarcane Act provides for Administrative Machinery for carrying out the purposes of the Act. Section 3 thereof deals with Establishment of Sugarcane Board. Section 4 lays down the Functions of the Board –
(1) The Board shall advise the State Government on the following matters, namely :-
(a) planning of development schemes connected with production, research, transport and sale of sugarcane;
(b) matters pertaining to regulation of supply, purchase and weighment of cane;
(c) the varieties of sugarcane, tested by the Sugarcane Research Institute in the State, which are suitable or unsuitable for use in a factory;
(d) recommendations in respect of the price of cane to be supplied to factories;
(e) determination of the price of cane payable by owners of units;
(f) maintenance of healthy relations between the occupiers and managers of factories on the one hand and the cane-growers and co-operative societies on the other; and
(g) such other matters as may be prescribed.
Section 7 deals with Establishment of Zonal Development Council working of which can be supervised by the Board. The Collector of the District or the Sub-divisional Officer is to be the Chairman of the Zonal Development Council and is to be assisted by various persons as provided by Section 7. Section 8 deals with Functions of the Council - The functions of the Council shall be as follows :(a) to consider and prepare the programme for the development of communications, irrigations, soil analysis and other agricultural facilities relating to sugarcane;
(b) to devise ways and means for executing development plan in all its essential including improvement and development of communications, cane varieties, supply of good quality seeds, fertilisers and manures, plant protection and prevention and control of diseases and pests;
(c) to render all possible help in agricultural extension work of cane;
(d) to assist in arrangements for the training of cultivators in improved methods of sugarcane cultivation;
and (e) to perform such other functions pertaining and conducive to the general development of the reserved area as may be prescribed.
Section 12 deals with Appointment of Cane Commissioner. It reads as under :- (1) The State Government may, by notification in the official Gazette, appoint any person to be the Cane Commissioner for the State of Bihar and to exercise the powers and perform the duties conferred and imposed on the Cane Commissioner by or under this Act.
(2) The State Government may, by notification in the official Gazette, appoint such persons as it thinks fit to be the Additional Cane Commissioner, Joint Cane Commissioner, Deputy Cane Commissioner and Assistant Cane Commissioner to assist the Cane Commissioner within such local limits as may be assigned to them and confer and impose upon them all or any of the powers and duties of the Cane Commissioner within their respective jurisdiction.
Section 13 deals with Appointment of Cane Officer.
Then comes Chapter IV which deals with Purchase and Supply of Cane to sugar factories. Section 25 deals with Appointment of Manager and provides as under :- (1) Within thirty days of the commencement of this Act and thereafter within the same period before the commencement of every crushing year the occupier of a factory shall send to the Collector a notice of appointment of any person as manager for the purposes of this Act or the rules :
Provided that until the first notice of appointment of manager under this Act is sent, the person appointed or deemed to be appointed as manager under the Bihar Sugarcane (Regulation of Supply and Purchase) Ordinance, 1973 (Bihar Ordinance 47 of 1973) shall be deemed to be a manager under this Act.
(2) No person shall be deemed to have been appointed as manager until a sum of two thousand and five hundred rupees is deposited by him or on his behalf as security, with the Collector concerned in the prescribed manner.
(3) Whenever a new manager is appointed, the occupier of the factory shall send to the Collector a written notice of the change within fifteen days of the date on which the new manager assumes charge of his work.
(4) During any period for which provisions of sub-sections (1) and (2) are not complied with or the person appointed as manager does not manage the factory, or his security money is not replenished to the extent of its forfeiture under sub-section (2) of section 57, the occupier of the factory himself shall be deemed to be the manager of the factory for the purposes of this Act and the rules.
Section 27 deals with Estimate of quantity of cane required by factory and lays down as follows:- (1) The occupier of every factory shall submit to the Cane Commissioner, on or before the prescribed date, in every crushing year, an estimate, in the prescribed manner, of the quantity of cane which may be required in the factory during such crushing year.
(2) The Cane Commissioner shall examine every estimate submitted under sub-section (1) and where the occupier of a factory has failed to submit an estimate under subsection (1), he shall draw up an estimate by himself in the prescribed manner and shall publish the same in such manner as may be prescribed with such modifications, if any, as he may think fit, after consultation with the council concerned.
(3) The prescribed authority may, either suo motu or on an application made to it by the occupier of the factory, within thirty days of the publication of the estimate under sub-section (2), revise the estimate, published under that sub-section and that authority shall cause the estimate so revised to be published in the prescribed manner.
Section 28 deals with Conditions precedent to commencement of purchase of cane. It states as under :(1) The occupier of a factory or any person acting on his behalf shall not commence the purchase of cane unless adequate arrangements, as may be prescribed, have been made in respect of the following matters, namely :- (a) weighment of cane to be purchased; (b) payment of the price of cane purchased; (c) parking of cane-carts;
(d) approach roads to the place of weighment; and (e) distribution of requisition slips.
(2) Where survey has not been made under section 34, the occupier of the factory shall, before the commencement of purchase of cane, have the survey of the standing cane-crop made as the prescribed manner.
Then follows Section 29 which deals with Establishment of purchasing centres. It reads as under :-
(1) The occupier of a factory, or the Secretary of a Cooperative Society may establish a purchasing centre after giving a notice in writing to the Collector at least thirty days before the commencement of purchase of cane and copies of such notice shall be sent by the occupier of the factory or the Secretary of the Society forthwith to the Cane Officer concerned and the Cane Commissioner .
The remaining sub-sections of Section 29 lay down the procedure under which the Collector can direct shifting of the location of any purchasing centre to another place and also the power of the prescribed authority to revise the order of the Collector. Section 31 deals with Declaration of reserved area and provides as follows :(1) The Cane Commissioner may, having regard to the crushing capacity of the factory, the availability of sugarcane in such area and the need for production of sugar and after consulting the council concerned and the occupier of the factory or the occupiers of other affected factories and after considering any objection that may be raised, issue an order, by notification in the official Gazette, declaring any area to be the reserved area for the purpose of supply of cane to the factory during a particular crushing year or years and may likewise cancel any such order or alter the extent of the area so reserved :
Section 32 deals with Purchase of cane grown in a reserved area. Sub-section (6) thereof reads as follows Except with the permission of the State Government, cane grown in a reserved area shall not be sold to or purchased by - (i) the occupier of any factory other than the factory for which the area is reserved; or (ii) any person for the purpose of supply to any factory other than the factory for which the area is reserved; or (iii) the owner of a unit to whom a licence has not been granted under section 16.
Sub-section (9) of Section 32 reads as follows :- Subject to the provisions of sub-section (1), the State Government may prohibit or restrict or otherwise regulate the movement of sugarcane from any reserved area except under and in accordance with a permit issued by it in this behalf.
Section 39 deals with Recording of correct weight of cane and reads as under :- (1) The occupier of every factory, the owner of every unit, Secretary of every Co-operative Society and every person in charge of weighmens shall maintain, subject to such limits of error as is prescribed by the State Government under the law relating to weights and measures, for the time being in force, a record of the correct weight of cane purchased at the place of weighment.
(2) No cane shall be purchased without being weighed.
Section 40 deals with Provisions for approach roads etc., at the purchasing centres and reads as under :The occupier of a factory or a co-operative society purchasing cane at any purchasing centre shall make such provisions for the following and keep them in such repairs as may be prescribed, namely :- (a) approach road and parking space for animal-driven carts;
(b) sheds for animals and cart-drivers;
(c) drinking water for persons using the purchasing centre; and (d) drinking water and water-trough for animals.
Then follows Chapter V which deals with Payment of price of cane and other matters. Section 42 deals with minimum price of cane supplied to a unit and reads as under :The State Government may, after consulting the Board, determine by notification in the official Gazette, in respect of any area the minimum price of cane payable by the owners of units to the cane-growers or co-operative societies for cane supplied to them in the crushing year concerned :
Provided that the minimum price so determined shall not exceed the minimum price payable by the occupier of a factory under any law for the time being in force, in respect of the cane supplied from the same area.
Mode of payment of price of cane to the sugarcane growers is provided by Section 43. Section 44 deals with Deduction and provides as follows :(1) The occupier of a factory or any person on his behalf shall not make any other deductions from the price of cane except the deduction on account of any loan advanced by him, or on his guarantee or otherwise advanced by a bank or other institutions under section 50(1).
The remaining sub-sections of Section 44 deal with the circumstances under which any person in charge of payment of price of cane on behalf of a co-operative society cannot make deductions from the price of cane as fixed. Section 46 deals with Decision of certain disputes and reads as under :- (1) If any dispute arises regarding the price of cane supplied to the occupier of a factory the person entitled to the price or the document on the basis of which the price is claimed, payment of the price shall be withheld and the occupier of the factory to which the cane was supplied shall enter the dispute in a register in the prescribed form and refer it within the prescribed period to the prescribed authority who shall, after giving the parties a reasonable opportunity of being heard and after such inquiry as he may consider necessary, decide the dispute :
Provided that whenever the payment of the price is whether held under this sub-section, the occupier of the factory shall deposit with the prescribed authority in the prescribed manner the amount in dispute, within one week of such reference.
(2) Any other dispute touching an agreement for purchase of cane by the occupier of a factory or its supply to him and any dispute relating to purchase of cane or cane-juice by the owner of a unit and payment of price thereof shall be referred to the authority prescribed under sub-section (1) who shall decide it in the manner laid down in that subsection.
Xxxx xxxx xxxx (3) Any person aggrieved by a decision made under subsection (1) or sub-section (2) may, within thirty days of the decision, prefer an appeal to the Collector who shall, after giving the parties a reasonable opportunity of being heard and after such inquiry as he may consider necessary, pass such order, as he thinks fit.
(4) An order of the Collector under sub-section (3) and subject to such order, the decision of the prescribed authority under sub-sections (1) or sub-section (2) shall be final.
Section 48 deals with Payment of commission on purchase of cane and reads as follows :(1) The State Government may, by notification in the official Gazette, require the occupier of a factory to pay in the prescribed manner a commission not exceeding fifteen paise per quintal on the purchase of cane made by him or on his behalf and may, by a like notification exempt the occupier of any new factory to be specified in the notification, from the payment of such commission for prescribed period.
Section 49 imposes Tax on Sugarcane which reads as follows :(1) The State Government may, by notification in the official Gazette, impose - (a) a tax not exceeding one rupee per quintal on entry of sugarcane into a local area specified in such notification, for consumption or use of, or sale to a factory situated therein :
(b) a tax not exceeding one rupee per quintal on the purchase of sugarcane by or on behalf of the occupier of a factory :
Section 50 deals with Advance of loan by occupier of factory and lays down as follows :(1) The occupier of a factory or any person working on his behalf or any bank may advance loan to a cane-grower or a Co-operative Society for such purposes connected with cultivation or supply of cane to the extent of the amount and in the manner as may be prescribed.
(2) Interest at the rate specified in section 51 shall be payable on the loan advanced under sub-section (1) and the loan and the interest shall be realisable in the prescribed manner.
Chapter VI deals with miscellaneous items. Section 52 of the said chapter deals with penalty for offences and provides as follows :If any person contravenes or attempts to contravene or abets the contravention of any of the provisions of this Act or the rules or of any order made or direction given thereunder or the terms and conditions of any licence, he shall be punishable with imprisonment which may extend to six months or with fine which may extend to five thousand rupees or with both and in the case of a continuing contravention, with an additional fine which may extend to one thousand rupees for every day during which such contravention continues after conviction for the first contravention :
Section 58 deals with the power to summon and enforce attendance of witnesses and production of documents and provides as under :For the purposes of enquiries under this Act the Cane Commissioner or any person exercising the powers of the Cane Commissioner or a Cane Officer or an Officer appointed under section 34 shall have the same powers to summon and enforce the attendance of witnesses and parties and to examine them on oath and to compel the production of document as a civil court under the Code of Civil Procedure , 1908 (5 of 1908) :
Provided that for the purpose of any penalty under the provision of the said Code upon any defaulter, a reference shall be made to the civil court of competent jurisdiction for appropriate action.
The aforesaid provisions of the Sugarcane Act leave no room for doubt that the Bihar Legislature in its wisdom has enacted a special machinery for regulating the purchase and sale of sugarcane to be supplied to sugar factories for manufacturing sugar out of the sugarcane produced for them in the reserved area. The relevant provisions of the Act project a well knit and exhaustive machinery for regulating the production, purchase and sale of sugarcane for being supplied as appropriate raw material to the factories manufacturing sugar and molasses out of them. We may also turn to Rule 22 of the 1978 Rules, made under the Bihar Sugarcane Act, which provides that the factory shall not commence the purchase of cane at any purchasing centre unless
(a) all the weighbridges to be used for weighment of cane have duly been checked and certified as workable by the competent authority under the law relating to weights and measures;
(b) appropriate arrangements to the satisfaction of the Collector have been made for arranging funds for making payment of the price of cane;
(c) Cane Officer of the area concerned has certified that suitable arrangements for parking of cane carts and approach roads, as specified in rule 30 and for distribution of requisition slips and identification cards have been made; and
(d) adequate arrangements for weighment, adequate staff, sufficient number of weighbridges and adequate means of transport for carrying cane from all outlying purchasing centres to the factory, to the satisfaction of the Collector, have been made.
Rule 30 requires the sugar factory to :
(a) provide at every purchasing centre suitable approach roads connecting the nearest public roads with the parking ground and likewise suitable tracks from the parking ground to the point where cane is unloaded after weighment;
(b) keep such roads and tracks repaired and satisfactorily workable at all times the purchasing centre is in operation;
(c) provide space in the parking ground for accommodating at least one-fourth of the maximum number of animal-driven carts carrying cane required to be brought to the purchasing centre on any day for weighment and purchase;
(d) keep the metalled tracks neat and clean and separated by railing or trenches;
(e) provide shelters for animals and cart-drivers at every purchasing centre, to the satisfaction of the Collector;
(f) provide at least four water taps or hand pumps at convenient points of each purchasing centre located at or adjoining factory premises (referred to hereinafter as mill gate purchasing centre) and one such water tap or hand pump at every purchasing centre other than the mill gate purchasing centre (referred hereinafter as the outstation purchasing centre),
(g) provide adequate number of water troughs in each parking yard to be located at such points as may be determined by the Cane Officer concerned, and;
(h) provide such other facilities at any purchasing centre as may be specified in the directions of the Cane Commissioner issued from time to time.
The aforesaid provisions, therefore, clearly indicate that the need for regulating the purchase, sale, storage and processing of sugarcane, being an agricultural produce, is completely met by the comprehensive machinery provided by the Sugarcane Act enacted by the very same legislature which enacted the general Act being the Market Act. Once that conclusion is reached, it becomes obvious that the Market Act which is an enabling Act empowering the State Authorities to extend the regulatory net of the said Act to notified agricultural produce as per Section 3(1) will get its general sweep curtailed to the extent the special Act being the Sugarcane Act enacted by the very same legislature carves out a special field and provides special machinery for regulating the purchase and sale of the specified agricultural produce, namely, sugarcane. It has also to be kept in view that the very heart of the Market Act is Section 15 of the Act which reads as under : [15. Sale of agricultural produce - (1) No agricultural produce specified in notification under sub-section (1) of section 4, shall be made bought or sold by any person at any place within the market area other than the relevant principal market yard or sub-market yard or yards established therein, except such quantity as may on this behalf be prescribed for retail sale or personal consumption.
(2) The sale and purchase of such agricultural produce in such areas shall not withstanding anything contained in any law be made by means of open auction or tender system except in cases of such class or description of produce as may be exempted by the Board.] It is this section which enables the market committee concerned to monitor and regulate the sale and purchase of the agricultural commodity which is covered by the protective umbrella of the Act. Once such an agricultural produce is brought for sale in the market yard or sub-market yard, the sale is to be effected by auction or by inviting tenders. Such a scheme is in direct conflict with the scheme of the Sugarcane Act wherein there is no question of sugar factory being called upon to enter into a public auction for purchasing sugarcane which is specially earmarked for it out of the reserved area. In fact, provisions of the Sugarcane Act and the provisions of the Market Act, especially Section 15 read with Section 3(1), cannot harmoniously co-exist. It is precisely to avoid such a possible conflict and head-on collision between general Act, namely, the Market Act and the special Act, namely, the Sugarcane Act which was later on enacted in 1981 by the very same Bihar Legislature, that the State Government in exercise of its exemption power under Section 42 of the Market Act issued a notification dated 22nd March, 1976 to the following effect: S.O. 550 the 22nd March, 1976 (Published in Bihar Gazette (ex-order) dated 23-3-1976) .- In exercise of the powers conferred under Section 42 of the Bihar Agricultural Produce Markets Act, 1960, the Governor of Bihar is pleased to exempt all sugar mills from the provisions of Section 15 of the Bihar Agricultural Produce Markets Act, 1960 with regard to their sale and purchase of agricultural produce notified under sub-section (1) of Section 4 of the said Act) This very notification shows that the State Government had given up its erstwhile intention of regulating the sale and purchase of sugarcane as per Section 3(1) of the Market Act which could not survive any further after the issuance of the aforesaid exemption notification. It is easy to visualise that the market committee can control purchase, sale, storage and processing of agricultural produce in the specified area under the Market Act only when the sale and purchase of agricultural produce can be effected as per Section 15 in the principal market yard or sub-market yard.
Market is defined by Section 2(1)(h) of the Market Act which reads as under : market means a market established under this Act for the market area and includes, a principal market yard and sub-market yard or yards, if any.
It is at such market yard that the regulation of sale and purchase of agricultural produce shall be effected as required by Section 15. Once Section 15 is out of picture, the mere declaration of market area as per Section 4 and the general declaration of intention to regulate purchase, sale, storage and processing of agricultural produce like sugarcane as per Section 3 of the Market Act or declaration of market yard or sub-market yards as per Section 5 would remain an empty formality or would represent an empty eggshell with its contents taken out. The entire machinery of the Market Act would be rendered redundant qua agricultural produce to which Section 15 does not apply.
Section 15 is the heart and soul of the Act. Due to its inapplicability to a given agricultural produce there would remain no occasion for the market committee concerned to exercise its regulatory functions for such a produce. This is the precise result which has ensued regarding regulation of purchase and sale of sugarcane by the market committee concerned in view of the combined operation of the relevant provisions of the Sugarcane Act and the exemption notification under Section 42 of the Market Act excluding the application of Section 15 of the Market Act to the sale and purchase transactions of sugarcane in the market area.
It is not possible to agree with learned senior counsel for the respondents that notification under Section 42 of the Act in substance excludes only the applicability of Section 15(2). On the express wordings of the said notification it is not possible to countenance this contention. Even if declaration under Section 5 treating the premises of the sugar factories and the purchase centres from which they have to purchase sugarcane as per the Sugarcane Act is to be held to be operative, such a declaration would be devoid of any efficacy under the Market Act as the very purpose of the declaration of such market yard would not get fructified once sugarcane will not be required to be brought for purchase and sale in such declared market yard. It has to be kept in view that the relevant provisions of the Market Act laying down the machinery for effecting the regulation of purchase, sale, storage and processing of agricultural produce cannot be of any avail once purchase and sale of such an agricultural produce are not required to be effected at the relevant market yard and have not to be subjected to open auction or tender for fixing proper prices for such agricultural produce to be paid to the growers of such produce. It must, therefore, be held that the entire machinery of the Market Act cannot apply to the transactions of purchase of sugarcane by the appellant sugar factories as they are fully covered by the special provisions of the Sugarcane Act. It is also necessary to note that if both these Acts are treated to be simultaneously applying to cover sale and purchase of sugarcane, the possibility of a clear conflict of decisions of Officers and Authorities acting under the Sugarcane Act on the one hand and the Market Act on the other would arise. These authorities acting under both the State Acts, dealing with the same subject-matter and covering the same transactions may come to independent diverse conclusions and none of them being subordinate to the other may create a situation wherein there may be head-on collision between the decisions and the orders of these authorities acting on their own in the hierarchy of the respective statutory provisions. For example, the Marketing Inspector may find that weighment of sugarcane was not proper at a given point of time, while the Cane Officer may find to the contrary. In the hierarchy of proceedings under the Market Act the market committee may take one decision with respect to the same subject matter, for which the Collector exercising appellate powers under the Sugarcane Act may take a contrary decision. This would create an irreconcilable conflict of decisions with consequential confusion. So far as the buyers and sellers of agricultural produce-sugarcane are concerned, it is of no avail to contend as submitted by learned counsel for the respondents that for avoiding such conflicts, Section 15 is dispensed with by the State in exercise of its power under Section 42 of the Market Act, whether such an exemption can be granted by the State under Section 42 or not is not a relevant consideration for deciding the moot question whether the statutory scheme of the Market Act can harmoniously co-exist with the statutory scheme of the Sugarcane Act as enacted by the very same legislature. It is possible to visualise that the State Authorities may not exercise powers under Section 42 of the Act. In such an eventuality, the Sugarcane Act would not countenance a public auction of sugarcane to be supplied by cane grower to the earmarked factory for which sugarcane is grown in the reserved area. On the other hand, the Market Act would require the very same sugarcane to be brought to the market yard for being sold at the public auction to the highest bidder who may not be the sugar factory itself. Thus what is reserved for the sugar factory by way of raw material by the Sugarcane Act would get de-reserved by the sweep of Section 15 of the Market Act. To avoid such a head-on conflict, it has to be held that the Market Act is a general Act covering all types of agricultural produce listed in the Schedule to the Act, but out of the listed items if any of the agricultural produce like sugarcane is made subject-matter of a special enactment laying down an independent exclusive machinery for regulating sale, purchase and storage of such a commodity under a special Act, then the special Act would prevail over the general Act for that commodity and by necessary implication will take the said commodity out of the sweep of the general Act.
Therefore, learned counsel for the appellants are right when they submit that because of the Sugarcane Act the regulation of sale and purchase of sugarcane has to be carried out exclusively under the Sugarcane Act and the said transactions would be out of the general sweep of the Market Act. None of its machinery would be available to regulate these transactions. But even apart from the provisions of the Sugarcane Act, learned senior counsel for the appellants also placed reliance on the Sugarcane (Control) Order, 1966 enacted under the provisions of Section 3 of the Essential Commodities Act, 1955 for submitting that purchase and sale of sugarcane is also controlled by the aforesaid Central Government Order issued under the Essential Commodities Act, and consequently the said provision would supersede the general provisions of the Market Act. We, therefore, now proceed to consider this submission. Sugarcane (Control) Order, 1966 is issued by the Central Government in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955. Clause 2 sub-clause (c) defines factory and reads as under : factory means any premises including the precincts thereto in any part of which sugar is manufactured by vacuum pan process.
Price is defined by sub-clause (g) thereof which reads as under : price means the price or the minimum price fixed by the Central Government from time to time for sugarcane delivered Clause 3 of the Order deals with the fixation of minimum price by the Central Government for making it payable by purchaser of sugar to the sugarcane growers.
Clause 3A deals with rebate that can be deducted by purchaser of sugar from the price to be paid to the sugarcane grower or the sugarcane growers co-operative society. Rebate provided therein pertains to the minimum price of sugarcane fixed under Clause 3, or the price agreed to between the producer or his agent and the sugarcane grower or the sugarcane growers co-operative society.
There is a provision for additional price to be paid to the sugarcane grower by the purchaser of sugarcane as laid down in Clause 5. Clause 5-A deals with additional price for sugarcane purchased on or after 1st October, 1974 by the producer of sugar. Clause 6 deals with power of the Central Government by Order to regulate distribution and movement of sugarcane. As per this clause the Central Government can, by order, direct the sugarcane growers to supply the earmarked quantity of sugarcane grown by them in the reserved area fixed for sugar factories to ensure continuous supply of sugarcane as raw material to such factories. This provision is parallel to the statutory provisions enacted by the Bihar Legislature in the Sugarcane Act referred to earlier by us. Clause 9 refers to the power of the Central Government or any person authorised in this behalf to call for information from various sources as enacted therein.
Clause 9-A deals with the power of entry, search and seizure of premises which obviously has to be exercised for fructifying the purposes of the Act. Clause 11 deals with delegation of powers by the Central Government to any officer or authority thereof or to any State Government or any officer/authority of a State Government. The aforesaid relevant provisions of the Sugarcane (Control) Order show that it seeks to lay down the minimum guaranteed price of sugarcane to the sugarcane growers with a corresponding obligation on them to supply sugarcane to the earmarked factories for which the reserved areas can be fixed. This Order also contemplates negotiated price between the sugarcane growers on the one hand and the sugarcane factories on the other, for whom fixed quota of sugarcane can be earmarked. It has to be appreciated that the aforesaid provisions of the Sugarcane (Control) Order operate in the same field in which the Bihar Legislative enactment, namely, the Sugarcane Act operates and both of them are complementary to each other. When taken together, they wholly occupy the field of regulation of price of sugarcane and also the mode and manner in which sugarcane has to be supplied and distributed to the earmarked sugar factories and thus lay down a comprehensive scheme of regulating purchase and sale of sugarcane to be supplied by sugarcane growers to the earmarked sugar factories. It is, however, true that comprehensive procedure or machinery for enforcing these provisions is found in greater detail in the Sugarcane Act of the Bihar Legislation. But on a combined operation of both these provisions, it becomes at once clear that the general provisions of the Market Act so far as the regulation of sale and purchase of sugarcane is concerned get obviously excluded and superseded by these special provisions. In this connection, we may refer to a decision of the Karnataka High Court in the case of Vasavi Traders vs. State of Karnataka & Ors. (1982 (2) Karnataka Law Journal 357). In that case Venkatachaliah J., (as he then was) speaking for a Division Bench of the Karnataka High Court, considered the impact of Sugarcane (Control) Order on the general sweep of the Karnataka Agricultural Produce Market (Regulation) Act, 1966. Point no. 3 was framed in this connection, which reads as under : Whether the Act as amended by Act 17 of 1980 in so far it provides for regulation of marketing of sugarcane is unconstitutional, as its marketing is regulated by the provisions of the Central Act, viz., The Essential Commodities Act, 1955, and the Sugarcane (Control) Order made thereunder? While answering point no.3 in affirmative, the learned Judge at para 39 of the report, made the following pertinent observations : .. It appears to us that the Sugarcane (Control) Order regulates every aspect of marketing of sugarcane and its provisions are irreconcilable with the provisions relating to the marketing under the Act. For instance, the place of delivery, the price, the manner of its payments are all fixed by the statutory order. The same aspects of marketing are sought to be regulated by the Act.
The two sets of provisions collide. S.6 of the Essential Commodities Act gives overriding effect to the orders made under S.3 of that Act as against any other Law. The small portion of the sugarcane grown by the grower the sale of which is left regulated under the statutory Order is again a matter - and part - of the policy of the regulation itself.
Accordingly, point no.3 in that case was answered in affirmative apart from the question of repugnancy which strictly did not arise for their consideration. The aforesaid reasoning of the learned Judges of the Karnataka High Court clearly indicates that the entire field of regulation of purchase and sale of sugarcane in the market area is occupied by the Sugarcane Control Order. This reasoning was left untouched by this Court in appeal against the said decision and, therefore, got confirmed in the case of I.T.C. Ltd. and Others vs. State of Karnataka and Others (1985 (Suppl.) SCC 476). Learned senior counsel for the respondents was right when he contended in the aforesaid dec
