Shri Ramkrishna Flour & Besan Mills, Nagpur v. State of Maharashtra through Secretary Department of Co-operation, Mantralaya & others
1991-07-15
G.D.PATIL, M.M.QAZI
body1991
DigiLaw.ai
JUDGMENT - QAZI M.M., J.:---Since common questions of facts and law are involved in both the petitions, they are being disposed of by this common judgment. The petitioner is a Private Limited Company and runs a Roller Flour Mill at Nagpur and manufactures Atta, Maida and Rawa. For this, it needs wheat in large quantity. In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955, the Government of India has framed an order called "The Wheat and Flour Mills (Licensing and Control) Order, 1957" (for short the "Roller Flour Mills Order"). The petitioner was purchasing wheat from the Food Corporation of India (respondent No. 3) at a fixed price. The petitioner was not allowed to purchase wheat from the open market under the Roller Flour Mills Order. There is no dispute that the petitioner was carrying on its business within the area of the Market Committee (Respondent No. 2) without obtaining any licence from it. Consequently, the Market Committee, vide notice dated 16-1-1986, demanded fee amounting to Rs. 4,40,000/- and odd. The petitioner refused to pay the fee. Nonetheless, the Market Committee was not satisfied with the explanation of the petitioner and it insisted on the payment of fee and hence the present petitions. 2. The petitioner in the present petition raised essentially three challenges: (1) That the transaction between the petitioner and the Food Corporation of India did not amount to 'sale' and hence there was no marketing. (2) That no service was being rendered to the petitioner by the Market Committee and hence the element of quid pro quo was absent and, consequently the demand for fee was wholly unjustifiable; and (3) That there is conflict between the provisions of the Agricultural Procedure Marketing (Regulation) Act, 1963 (for short the 'A.P.M.C. Act') and the Roller Flour Mills Order which is a Central enactment and hence section 31 of A.P.M.C. Act is void. The main plank of the argument of Shri Manohar on behalf of the petitioner was that the petitioner had no choice in the matter of purchase of wheat. It was bound to purchase wheat from the Food Corporation of India at a fixed price and, therefore, the transaction did not amount to 'sale' and hence it would be amount to 'marketing'.
It was bound to purchase wheat from the Food Corporation of India at a fixed price and, therefore, the transaction did not amount to 'sale' and hence it would be amount to 'marketing'. In this connection, he has also relied on the decision reported in 1974 Mh.L.J. 463, (Devendra Trading Company v. State of Maharashtra and others)1, wherein 'sale' has been explained. In our view, the argument is wholly without substance. There is no dispute that wheat is an agricultural produce and its marketing is regulated by the provisions of the A.P.M.C. Act. The petitioner has been operating within the market area in its capacity as a trader and processor of wheat without obtaining a valid licence from the Market Committee. The property in the wheat stands transferred from the Food Corporation of India to the petitioner on account of purchase of the same by the latter and hence the transaction certainly would amount to 'sale' and, consequently, it would constitute 'marketing'. Mr. Deshpande has rightly relied on the decision reported in A.I.R. 1980 S.C. 1124 (Ram Chandra Kailash Kumar and Co. v. State of U.P.)2. Paragraph 30 of the said judgment is reproduced below: "30. Point No. 19:---This point has no substance and has got to be rejected. As held in (Vishnu Agencies (Pvt.) Ltd. v. Commercial Tax Officer)3, A.I.R. 1978 S.C. 449, on a review of earlier decisions even if a commodity is sold pursuant to the controlled regulations still some small area is left to make it a transaction of sale. It may well be that no freedom is left to the parties in a large-area of the transaction yet it is a transaction of sale." There appears to be an area within which the volition operates and hence it would constitute 'sale'. This principle is laid down in A.I.R. 1978 S.C. 449, M/s. Vishnu Agencies v. Commercial Tax Officer, Eluru, where it has been observed that offer and acceptance need not always be in an elementary form, nor does the Law of Contract or Sale of Goods require that consent to the contract must be express. These facts can be inferred from the conduct of parties. These principles have been explained by Their Lordships of the Supreme Court in paras 32 and 33 in (A.I.R. 1978 S.C. 499 cited supra) which read as under: "32.
These facts can be inferred from the conduct of parties. These principles have been explained by Their Lordships of the Supreme Court in paras 32 and 33 in (A.I.R. 1978 S.C. 499 cited supra) which read as under: "32. These limitations on the normal right of dealers and consumers to supply and obtain the goods, the obligations imposed on the parties and the penalties prescribed by the Control Order do not, in our opinion, militate against the position that eventually, the parties must be deemed to have completed the transactions under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the noticed price and the other party consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority. Offer and acceptance need not always be in an elementary form, nor indeed does the Law of Contract or of Sale of Goods require that consent to a contract must be express. It is common place that offer and acceptance can be spelt out from the conduct of the parties which covers not only their Acts out but omissions as well. Indeed, on occasions, silence can be more eloquent than eloquence itself. Just as correspondence between the parties can constitute or disclose an offer and acceptance, so can their conduct. This is because, law does not require offer and acceptance to conform to any set pattern or formula. 33. In order, therefore, to determine whether there was any agreement or consensuality between the parties, we must have regard to their conduct at or about the time when the goods changed hands. In the first place, it is not obligatory on a trader to deal in cement nor on any one to acquire it. The primary fact, therefore, is that the decision of the trader to deal in an essential commodity is volitional. Such volition carries with it the willingness to trade in the commodity strictly on the terms of the Control Orders. The consumer too, who is under no legal compulsion to acquire or possess cement, decides as a matter of his volition to obtain it on the terms of the permit or the order of allotment issued in his favour.
Such volition carries with it the willingness to trade in the commodity strictly on the terms of the Control Orders. The consumer too, who is under no legal compulsion to acquire or possess cement, decides as a matter of his volition to obtain it on the terms of the permit or the order of allotment issued in his favour. That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it. When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit. His conduct reflects his consent. And when, upon the presentation of the permit, the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity. His conduct too reflects his consent. Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the transaction on statutory terms, one agreeing to supply the commodity to the other on those terms and the other agreeing to accept it from him on the very terms. It is, therefore, not correct to say that the transactions between the appellant and the allottees are not consensual. They, with their fee consent, agreed to enter into the transactions." Neither the Laws of Contract nor of Sale of Goods require that in order to constitute contract, it must be express. Offer and acceptance can always be spelt out from the conduct of the parties. In the facts and circumstances of this case, there can hardly be any doubt that the decisions of the petitioner to purchase wheat from the Food Corporation of India was volitional. Such volition carries with it the willingness to trade in the said commodity strictly on the terms and conditions of the enactment. In our view, the aforesaid decision is a complete answer to the argument of Mr. Manohar. Thus the challenge that the transaction between the petitioner and the Food Corporation of India does not amount to 'marketing' fails. 3. The next challenge that the demand for fee, in the absence of any service to the petitioner by the Market Committee, is illegal, is also unfounded.
Manohar. Thus the challenge that the transaction between the petitioner and the Food Corporation of India does not amount to 'marketing' fails. 3. The next challenge that the demand for fee, in the absence of any service to the petitioner by the Market Committee, is illegal, is also unfounded. To substantiate his argument that rendering of a service is a must to demand fee. Mr. Manohar has relied on several decisions. On principle, there can hardly be any dispute that if no service is being rendered, the Market Committee would not be entitled to make any demand of fee. But the crucial question that falls for our consideration while considering this point is whether the Market Committee has rendered any service or not. Mr. Deshpande, on behalf of the Market Committee, has, in our view, rightly submitted that it is not always necessary to demonstrate that the service is being rendered to each and every individual. Even if it is possible to demonstrate that a service is being rendered to the class of buyers as a whole, that should be sufficient to hold that a service is being rendered to the petitioner as well, whose capacity is also that of a buyer when he goes to purchase wheat. In the decision reported in A.I.R. 1983 S.C. 1246 (Sreeivasa General Traders and others v. State of Andhra Pradesh)4, the Supreme Court has observed as under in paragraphs 37 and 38: "37. It is obvious that the phrase 'payer of the fee' used by this Court in the authorities referred to above represents collectively the class of persons to whom the benefit is directly intended by the establishment of a regulated market in notified agricultural produce, livestock or products of livestock and not the actual individual who belongs to that class i.e. the trader. No doubt the petitioners initially pay the market fee under sub-section (2) of section 12 of the Act, but there is passing on of liability by them to the consumer as part of the price. The observation in (Kewal Krishan Puri and another v. State of Punjab and others)5, A.I.R. 1980 S.C. 1008, supra, as to the service to the 'payer of fee' must, therefore, be understood as meaning service to the users of the market.
The observation in (Kewal Krishan Puri and another v. State of Punjab and others)5, A.I.R. 1980 S.C. 1008, supra, as to the service to the 'payer of fee' must, therefore, be understood as meaning service to the users of the market. The services are rendered to the users of the market i.e. the growers of agricultural produce, livestock or products of livestock and persons engaged in the business of purchase or sale of the same. 38. The contention that the increase in the rate of market fee levied by the market Committee in the State under sub-section (1) of section 12 of the act from 50 paise to rupee one was illegal and invalid on the ground that there was no quid pro quo i.e. there was no correlation between the increase in the rate of market fee and the service rendered must therefor fail." From the above observations, it is clear that it is not necessary for the Market Committee to prove that service is being rendered to an individual. It is enough if services are rendered to the buyers as a class. It is not the case of Mr. Manohar that services are not being rendered to buyers as a class. Thus, we are satisfied that the Market Committee has rendered service to the petitioner and hence the element of quid pro quo is very much there to enable the Market Committee to demand the fee from the petitioner. 4. As regards the last challenge, namely, that there is conflict between section 31 of the A.P.M.C. Act (State Enactment) and the Roller Flour Mills Order (Central Enactment) and hence section 31 of the A.P.M.C. Act is void being repugnment to the Central enactment in view of Article 254 of the Constitution of India, there is no dispute about the legal position that if a State enactment is in conflict with the Central enactment then the Central enactment prevails and the State enactment deserves to be declared void. But, again the question that falls for our consideration is whether really there is any conflict between the two enactments. Mr. Manohar has relied on the decision reported in A.I.R. 1959 S.C. 648 (Deep Chand v. State of U.P.)6.
But, again the question that falls for our consideration is whether really there is any conflict between the two enactments. Mr. Manohar has relied on the decision reported in A.I.R. 1959 S.C. 648 (Deep Chand v. State of U.P.)6. The portion which is material for our purpose is from para 29 which is reproduced below: "Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions; (2) Whether Parliament intended to lay down an exhaustive Code in respect of the subject-matter replacing the Act of the State Legislature; and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field." On the touchstone of the principles laid down by Their Lordships of the Supreme Court, referred to supra, it is difficult to hold that this challenge raised by Mr. Manohar stands any of the tests. In order to appreciate the objects, section 3 of the Essential Commodities Act, 1955, under which the Roller Flour Mills Order was enacted, reads thus : "3. Power to control production, supply, distribution etc. of essential commodities.— (1) If the Central Government is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the defence of India or the efficient conduct of military operations, it may, by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.........." The Roller Flour Mills Order issued under the Essential Commodities Act pertains to the product of wheat and not to wheat itself; reference to wheat therein is incidental. Mr. Deshpande, in our view, is right in his submission that the pith and substance of the enactment has to be seen in order to appreciate its real object. The close scrutiny of the two enactments will show that they are not at all identical to each other nor do they occupy the same field. There is no provision in the Central enanctment dealing with imposition of fee. That provision is exclusively found only in section 31 of the A.P.M.C. Act.
The close scrutiny of the two enactments will show that they are not at all identical to each other nor do they occupy the same field. There is no provision in the Central enanctment dealing with imposition of fee. That provision is exclusively found only in section 31 of the A.P.M.C. Act. There is no dispute that wheat is an agricultural produce under the Act and the marketing of agricultural produce would certainly fall within the competence of the State Legislature in view of Entry 14 in List II of the seventh schedule of the Constitution, Entry 26 in List II of Seventh schedule relates to 'trade and commerce' and, therefore, the State Government is fully within its competence to legislate in regard to these subjects. The question of levy of fee is specifically dealt within in section 31 of the A.P.M.C. Act, the material portion of which is reproduced below: "31(1). It shall be competent to a Market Committee to levy and collect fees in the prescribed manner at such rates as may be decided by it (but subject to the minimum and maximum rates which may be fixed by the State Government by Notification in the Official Gazette in that behalf), from every purchaser of agricultural produce marketed in the market area : ........................." We have already observed above that there is no provision in the Central enactment dealing with levy of fee. Therefore, there is no question of any conflict between the two enactments. Roller Flour Mills Order is enacted in the exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955). It essentially deals with wheat's products such as Maida, Atta, Rawa. It requires the Roller Flour Mills to obtain licence and lays down the condition that no Roller Flour Mill shall manufacture any wheat product except under and in accordance with the terms and conditions of a licence. It requires that every licensee shall maintain correct and true accounts in respect of the business in such form and manner as the Licensing Authority may specify. The licensee is further required to submit on or before the fifth of every month to the Licensing Authority a return in Form III. It lays down the power of the Licensing Authority.
It requires that every licensee shall maintain correct and true accounts in respect of the business in such form and manner as the Licensing Authority may specify. The licensee is further required to submit on or before the fifth of every month to the Licensing Authority a return in Form III. It lays down the power of the Licensing Authority. It requires the source from which and the manner in which wheat shall be obtained for the purpose of manufacturing wheat products. It further provides that if any licensee contravenes any of the provisions of this order or any of the conditions of the licence, the Licensing Authority may, after giving him an opportunity of making his objections suspend or cancel the licence, whereas the preamble of the A.P.M.C. Act reads thus : "An Act to regulate the marketing of agricultural and certain other produce in market areas and markets to be established therefore in the State; to confer powers upon Market Committee to be constituted in connection with or acting for purposes connected with such markets; to establish Market Fund for purposes of the Market Committees and to provide for purposes connected with the matters aforesaid." Thus, from the preamble as well as from various other provisions of the A.P.M.C. Act, it is clear that it is enacted to regulate the marketing of agricultural and certain other produce in market areas. Thus from the Roller Flour Mills Order, it does not appear that the Central Government enacted the same to lay down an exhaustive Code in respect of the subject matter replacing the Act of the State Legislature. There is no conflict between the two laws occupying the same field. 5. In view of the above facts, it is not possible to accept any of the challenges raised by the petitioner before us. The 0petitions are without substance and hence dismissed. Rule is discharged. No order as to costs. Petitions dismissed. -----