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Tuesday, December 3, 2013

Market fee on castor seeds purchased by company in the market area of Agricultural Produce Market Committee, Baroda (for short “APMC”) - Apex court held as the company bought the seeds , it is not entitled for any exemption for fee as it is agriculture product = The respondent-Company, manufacturing castor oil from out of the castor seeds purchased by it comes under the jurisdiction of the market area of the APMC and therefore, it is liable for paying the market fees/cess for the trading activities carried out by it in the market area. APMC levied market fee on the castor seeds bought by the Company on the basis that castor seeds were brought within the market area of APMC. = AGRICULTURAL PRODUCE MARKET COMMITTEE ……APPELLANT Versus BIOTOR INDUSTRIES LTD. & ANR. ….RESPONDENTS = published in http://judis.nic.in/supremecourt/imgst.aspx?filename=41040

 Market fee on castor seeds purchased by company in the market area of Agricultural
Produce Market Committee, Baroda (for short “APMC”) - Apex court held as the company bought the seeds , it is not entitled for any exemption for fee as it is agriculture product =

  The
respondent-Company, manufacturing castor oil from out of  the  castor  seeds
purchased by it comes under the jurisdiction of the market area of the  APMC
and therefore, it is liable for paying the market fees/cess for the  trading
activities carried out by it in the market area. APMC levied market  fee  on
the castor seeds bought by the Company on the basis that castor  seeds  were
brought within the market area of  APMC.  =

We
hold that the demand for the market fee made by the APMC for  castor  seeds is justified as per the reasoning given in our judgment  in  the  connected Civil Appeal No. 3130 of 2008, that the castor seeds  were  bought  in  the market area and not brought into the market area. 
 It would suffice to  say
that the order dated 10.02.2009 of the Division Bench of the High Court  in
Letters Patent Appeal No. 1383  of  2008  setting  aside  the  order  dated
13.11.2008 of the learned single Judge in  Special  Civil  Application  No.
9705 of 2008 and affirming the order dated  30.06.2008  of  the  Revisional
Authority in Revision Application No.69  of  2008,  without  examining  the
correctness of  Rule 48(2) of the Rules and  applying  the  Division  Bench
Judgment  rendered  in  Letters  Patent  Appeal  No  139  of  2006  without
considering the factual matrix and  therefore, the same is liable to be set
aside. 
Accordingly, we set aside the same and remand the matter to the High
Court to place the matter before the roster  of  learned  single  Judge  to
examine the validity of  Rule  48(2)  of  the  Rules,  as  questioned  with
reference to Section 28A of the amended provision of Act No. 17 of 2007 and
the impugned order of the Revisional  Authority.  The  appellant  may  also
approach the State Government to amend the Rules by deleting Rule 48(2)  of
the Rules. It is open for the appellant to either press the  Special  Civil
Application to be decided on merits with regard to  the  validity  of  Rule
48(2) and also examine the impugned order of levying  market  fees  on  the
goods purchased by  the  respondent-Company  on  the  basis  of  facts  and
material evidence or to make revision application to the  State  Government
seeking for the deletion of Rule 48(2) by amending the Rules with the above
said observation.
7.  This Civil Appeal is accordingly allowed in the above terms by  setting
aside the impugned order of the Division Bench and remanding the matter  to
the High Court to place the same before the roster of learned single  Judge
with a request to him to examine the validity of the impugned Rule  if  the
APMC so desires and the impugned order passed by the  Revisional  Authority
and decide the same on merits. The interim directions given by the  learned
single Judge by way of interim order dated 13.11.2008 directing to  deposit
50% of the demanded amount towards the  market  fee  is  restored.  If  the
company has not complied with that interim order, it shall comply with  the
same within two weeks from  the  date  of  receipt  of  the  copy  of  this
judgment.

                      REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                     CIVIL APPEAL NOS.3130-3131 OF 2008



AGRICULTURAL PRODUCE MARKET COMMITTEE     ……APPELLANT

                                   Versus

BIOTOR INDUSTRIES LTD. & ANR.             ….RESPONDENTS










                               J U D G M E N T


V. Gopala Gowda, J.


      These appeals have been directed against the common judgment and order
dated 24.04.2007 passed by  the  High  Court  of  Gujarat  at  Ahmedabad  in
Letters Patent Appeal Nos. 139 of 2006 and 195  of  2006  in  Special  Civil
Application No. 13606 of 2005 with Civil Application No.  514  of  2006  and
Civil Application No. 1380  of  2006  filed  by  the  appellant-Agricultural
Produce Market Committee, Baroda (for short “APMC”) as it  is  aggrieved  by
the dismissal of its Letters Patent Appeal No.195 of 2006.  The  High  Court
allowed Letters Patent Appeal         No.  139  of  2006  preferred  by  the
respondent-Company. Both the Letters Patent Appeals were filed  against  the
order dated 22.12.2005 of learned  single  Judge  passed  in  Special  Civil
Application No.13606 of 2005 whereby the learned single Judge  substantially
set aside the order dated 19.4.2005 of the Revisional Authority  and  partly
allowed the application filed by the APMC by framing questions of law.

2.    The brief facts of the case are stated below to appreciate  the  rival
claims of the parties and to find out as to whether  the  appellant-APMC  is
entitled for the relief sought for in these appeals:


      The appellant-APMC was constituted pursuant to Notification issued  on
14.1.1958 under the provisions of the Bombay  Agricultural  Produce  Markets
Act, 1939 and the area of Baroda city and Baroda Taluk  of  Baroda  District
was declared as the market area for  the  purpose  of  Gujarat  Agricultural
Produce Markets Act, 1963  (hereinafter  referred  to  as  “the  Act”).
The
respondent-Company, manufacturing castor oil from out of  the  castor  seeds
purchased by it comes under the jurisdiction of the market area of the  APMC
and therefore, it is liable for paying the market fees/cess for the  trading
activities carried out by it in the market area. APMC levied market  fee  on
the castor seeds bought by the Company on the basis that castor  seeds  were
brought within the market area of  APMC. 
 The  respondent-Company  contested
the said levy by filing Revision Application No. 2 of 2005 under Section  48
of the Act before the State Government contending  that  castor  seeds  were
brought into the market area of the APMC, Baroda as provided under  sub-rule
(2) of Rule 48 of the Gujarat Agricultural Produce Market Rules,  1965  (for
short “the Rules”) and no fees are leviable on agricultural produce  brought
from outside the market area into the market area for  use  therein  by  the
industrial concern situated in the market area. The  State  Government  vide
its order dated 19.04.2005 decided the Revision Application No.  2  of  2005
in favour of  the  respondent-Company  by  setting  aside  the  order  dated
27.12.2004 issued by the APMC levying the market fee.

3.    The APMC filed a Special Application No. 13606 of 2005 under  Articles
226, 14 & 19 of the Constitution of India before the High Court against  the
said order of the State Government. The learned single  Judge  of  the  High
Court  after  hearing  the  parties  at  length  partly  allowed  the   said
application holding that the sale of  the  castor  seeds  in  question  took
place within the market area of APMC, Baroda, therefore, APMC was  right  in
levying the market fee on the  castor  seeds  purchased  by  the  respondent
within the market area of APMC. The  learned  single  Judge  in  respect  to
exemption clause in sub-rule 2 of Rule 48 held that the said  exemption  was available to the agricultural produce  brought  by  the  industrial  concern itself from outside the market area into the market area  of  APMC  and  the exemption was not available where the castor seeds were  bought  within  the market area by the seller and sold to  the  industrial  concern  within  the
market area. 
As such the learned single Judge upheld the plea  of  APMC  for
levy of market fee on the castor seeds purchased by the  respondent-Company.
In respect to the levy of market fee on de-oiled cake by  APMC  the  learned
single Judge accepted the contention urged  on  behalf  of  the  respondent-
Company and held that de-oiled cake could not be treated as  oil  cake,  and
therefore, it was not eligible for levy of  market  fee  since  it  was  not
mentioned in the Schedule. Both the respondent-Company as well as  the  APMC
being aggrieved by the judgment and order dated 22.12.2005  of  the  learned
single Judge preferred Letters Patent Appeal  No.139  of  2006  and  Letters
Patent Appeal No. 195 of 2006 respectively. The Division Bench of  the  High
Court allowed the appeal preferred by the respondent-Company  and  dismissed
the  appeal  preferred  by  the  APMC  and  stated  that  as  soon  as   the
agricultural produce, namely, castor seeds, bought  by  the  representatives
of the Company, is brought from outside the  market  area  into  the  market
area, after payment of octroi on such produce in their capacity as owner  of
the goods, the same would be treated  as  completion  of  sale  outside  the
jurisdiction of the market area. The  Division  Bench  of  the  High  Court,
therefore,  held that the collection of market  fees  from  the  respondent-
Company by APMC is contrary to the provisions of  the  Rules,  namely,  Rule
48, sub-rule (2) of  the  Rules,  which  grants  exemption  to  agricultural
produce brought from outside into market area by  the  industrial  unit  for
its own use.  On the second issue, the High Court held that the  by-product,
namely, de-oiled cake contains less than 1% oil and is not notified  in  the
Schedule as per Section 2(i) of the Act and hence, the above  product  being
totally different from oil cake, there is no liability upon the  respondent-
Company to pay the market fees. Hence, the present Civil Appeals.

4.    It is the case of the APMC that on 31.3.2004, the  Director  of  APMC,
Baroda and Rural Finance, Gujarat State, in exercise of the power vested  in
him under the Act, issued Notification including  castor  seeds  and  castor
cake in the regulated agricultural produces of APMC,  Baroda.  On  19.4.2004
the Notification issued  by  the  APMC,  Baroda  through  its  Director  was
published in the daily  newspaper  intimating  that  the  trading  of  those
produces is liable for paying of market fees/cess to the  APMC,  Baroda.  On
28.6.2004 the APMC issued notices to the  respondent-Company  asking  it  to
produce the accounts for the period 19.4.2004 to 30.11.2004  in  respect  of
the goods being used in the mill and further asked to  obtain  license  from
Market Committee for the year 2004-2005. The  respondent-Company  failed  to
submit the  accounts  and  further  failed  to  obtain  license  within  the
stipulated period as mentioned in an earlier  letter  dated  28.6.2004,  and
therefore, the APMC sent the reminder to the  respondent-Company  and  asked
to comply with the direction. Vide letter dated  7.12.2004  the  respondent-
Company submitted monthly statement for the period 19.4.2004  to  30.11.2004
in respect of the purchases of castor seeds made by the  Company.  APMC   on
the basis of the details  provided  by  the  respondent-Company  prepared  a
statement showing the names of the suppliers, weight,  price,  quantity  and
amount paid by the company as per the weighment made by  the  Company  which
clearly shows that as per  bills,  different  parties  were  selling  castor
seeds to the respondent-Company for which weighment was  done  at  the  mill
site in the market area Baroda and payment made to the parties  as  per  the
weighment done by the respondent-Company. On  27.12.2004  on  the  basis  of
statement submitted by the respondent-Company, the APMC assessed the  market
cess for the purchases of the castor seeds in the market area in respect  of
the same being used for processing and converting them into castor  oil  and
oil cake and on the basis of assessment the respondent-Company was  directed
to pay the market cess of           [pic] 1,27,46,349.38 within a period  of
10 days.

5.    Being aggrieved by the said assessment made  by  APMC  on  27.12.2004,
the respondent-Company preferred Revision Application No. 2  of  2005  under
Section 48 of the Act before the State of Gujarat on 05.01.2005  challenging
the decision of the APMC directing it to pay the  market  cess  as  per  its
letter dated 27.12.2004. To the said Revision Application,  APMC  filed  its
reply on 23.01.2005. The respondent-Company filed  rejoinder  on  23.02.2005
to the reply filed by the APMC.  The Deputy Secretary, (Appeal) allowed  the
Revision Application No. 2 of 2005 by its  cryptic  order  dated  19.04.2005
and set aside the order dated 27.12.2004 passed by APMC. It is the  case  of
the  APMC  that  the   Revisional  Authority  erroneously  arrived  at   the
conclusion that Rule 48(1) is not applicable and   wrongly  held  that  Rule
48(2) was applicable to the fact situation and further wrongly held that  no
market fee is to be paid by the respondent-Company on the de-oiled cake.

6.    Being aggrieved  by  the  order  of  the  Revisional  Authority  dated
19.4.2005  in  Revision  Application  No.  2  of  2005  of  the   Revisional
Authority, the APMC preferred Civil Application  No. 13606  of  2005  before
the learned single Judge of the High Court of Gujarat.  The  learned  single
Judge after hearing the parties vide its order dated  22.12.2005  set  aside
the order of revision in so far as the levy of  market  fee  on  the  castor
seeds is concerned holding that the sale did take place  within  the  market
area and therefore APMC was authorized to charge fee  from  the  respondent-
Company for such purchase and partly allowed the application.  However,  the
learned single Judge, with respect to the levy of fee on the  de-oiled  cake
which was sold by the respondent-Company held that it is the  by-product  in
the course of manufacturing of castor oil  and   therefore,  it  is  not  an
agricultural produce and not liable to levy of market fee.

7.    Being aggrieved by the said judgment dated 22.12.2005, the respondent-
Company filed Letters Patent Appeal No. 139 of 2006 on 18.1.2006 before  the
Division Bench of  the  Gujarat  High  Court  challenging  the  findings  of
learned single Judge that market fee is exigible on the purchase  of  castor
oil seeds by the industrial concern. The APMC also being  aggrieved  by  the
said order dated 22.12.2005 of learned single  Judge  filed  Letters  Patent
Appeal No. 195 of 2006 for rejecting of claim of  APMC,  Baroda  for  market
fees/cess on de-oiled  cake.  The  Division  Bench  of  the  High  Court  on
24.4.2007 after hearing the parties allowed the appeal  of  the  respondent-
Company and dismissed the appeal of the APMC,  Baroda  after  setting  aside
the order of the learned single Judge holding that Rule 48(2) is  applicable
and that the castor seeds were brought from outside  the  market  area.  The
Division Bench upheld the rejection of the  Special  Civil  Application  No.
13606 of 2005 filed by the APMC, Baroda not accepting the  case  pleaded  by
it that market fee is levied on de-oiled cake which is a by-product sold  by
it and is  not  exigible  goods  as  it  is  not  an  agricultural  produce.
Aggrieved by the common judgment, present appeals are filed.

8.    On the basis of the legal grounds urged in these  appeals  questioning
the correctness of the findings and reasons recorded by the  Division  Bench
of the High Court on both the points which have been formulated by  it,  the
following points would arise for the consideration of this  Court  in  these
appeals:-
                    1) Whether the APMC,  Baroda  is  liable  to  claim  the
                       market fee on  the  castor  seeds  purchased  by  the
                       respondent-Company on the plea  that  the  same  were
                       purchased within the  market  area  of  APMC,  Baroda
                       which castor seeds are used by  the  said  industrial
                       concern for manufacture  of  castor  oil  within  the
                       market area of APMC, Baroda?
                    2) Whether purchase of the castor seeds for use  of  the
                       respondent  industrial  concern   for   manufacturing
                       castor oil falls within Rule 48(2) of  the  Rules  to
                       get exemption from payment of market fee?
                    3) Whether the Division Bench was justified  in  setting
                       aside the finding of fact  recorded  by  the  learned
                       single Judge, holding that the castor seeds purchased
                       by the respondent-Company are within the market  area
                       of APMC?
                    4) Whether the Division Bench is justified in  recording
                       the finding on point No.2 in connection with LPA  No.
                       195 of 2006 that the respondent concern is not liable
                       to pay any market fee on the de-oiled cakes  sold  by
                       it which are stated  to  be  the  by-product  in  the
                       course of manufacturing castor oil which is  not  one
                       of the items enumerated in the Schedule  to  the  Act
                       and notification issued by the Directorate?
                    5) What order?


Answer to Point Nos. 1 to 3

9.    The point Nos. 1 to 3 are answered together as they are  inter-related
with each other by assigning the following reasons:
      It would be necessary for this Court to refer  to  the  definition  of
‘Agricultural Produce’ under Sections 2(i) and provisions relating  to  levy
of market fee under Section 28 of the Act and under Rule 48(1) of the  Rules
for the purpose of appreciating the factual matrix  with  reference  to  the
rival legal contentions urged on behalf of the parties:-
           “2(i)-“agricultural  produce”   means   all   produce,   whether
           processed  or  not,  of  agriculture,  horticulture  and  animal
           husbandry, specified in the Schedule.

           Section  28:  The  market  committee  shall,  subject   to   the
           provisions of the rules and the maxima and minima from  time  to
           time prescribed  levy  and  collect  fees  on  the  agricultural
           produce bought or sold in the market area:


           Provided that the fees so levied may be collected by the  Market
           Committee through such agents as it may appoint.


           Rule 48: Market fees:- (1) The market committee shall  levy  and
           collect fees on agricultural  produce  bought  or  sold  in  the
           market area at such rate as may  be  specified  in  the  by-laws
           subject to the following minima and maxima vis.,


              1) rates when levied ad valorem shall not  be  less  than  30
                 paise and  shall  not  exceed  [pic]2  (two)  per  hundred
                 rupees.


              2) Rates when levied in respect  of  cattle,  sheep  or  goat
                 shall not be less than 25 paise per animal and  shall  not
                 exceed [pic]4 per anmimal.

           Explanation-  For  the  purposes  of  this  Rule   a   sale   of
           agricultural produce shall be deemed to have taken  place  in  a
           market area if it has been weighed or measured  or  surveyed  or
           delivered in case of cattle in the market area for  the  purpose
           of sale, notwithstanding the  fact  that  the  property  in  the
           agricultural produce has by reason of  such  sale  passed  to  a
           person in a place outside the market area.


           (2)   No fee shall be levied  on  agricultural  produce  brought
           from outside the market  area  into  the  market  area  for  use
           therein by the industrial concerns situated in the  market  area
           of for export and, in respect of which declaration has been made
           and a certificate has been made  and  a  certificate   has  been
           obtained in Form V:-


           Provided that if such  agricultural  produce  brought  into  the
           market are for export  is  not  exported  or  removed  therefrom
           before the expiry of twenty days from the date on which  it  was
           so brought, the market committee shall levy and collect fees  on
           such agricultural produce from the person bringing  the  produce
           into the market area at such rates as may be specified in the by-
           laws subject to the maximum and minimum  specified  in  sub-rule
           (i):


           Provided that no fee shall be payable on a sale or  purchase  to
           which sub-section (3) of Section 6 applies.”




10.   It is an undisputed fact that the respondent-Company is an  industrial
concern which has been undertaking manufacture of  castor  oil  out  of  the
castor seeds which are declared as agricultural produce in the  Schedule  to
the Act vide notification issued by the Directorate of APMC, Baroda.

11.   It  is  the  case  of  the  respondent-Company  that  the  demand  and
assessment made and levying the market fee  on  the  castor  seeds  for  the
period from 19.04.2004 to 30.11.2004  is  erroneous  as  castor  seeds  were
purchased from outside the market area of APMC, Baroda  and  the  same  were
brought for the use of the industrial concern which is situated  within  the
market area  of  APMC,  Baroda  for  the  purpose  of  using  the  same  for
manufacturing of the oil.  In this regard, the  APMC  has  called  upon  the
respondent-Company to produce the accounts  for  the  period  19.04.2004  to
30.11.2004 in respect of the goods being used in the mill  and  was  further
asked to obtain license from the Market Committee for  the  year  2004-2005.
On 07.12.2004, the respondent-Company submitted monthly  statement  for  the
aforesaid period in respect of the purchases made of  castor  seeds  by  the
company.  The APMC on the basis  of  details  provided  by  the  respondent-
Company  prepared  the  statement  showing  the  names  of  the   suppliers,
weighment, quantity of the agricultural produce goods purchased  and  amount
paid by the company to its trader as per the weighment made by the  company.
 According to the committee, the  purchases  made  by  the  company  clearly
show, as per the bills issued to different parties for castor seeds sold  to
the respondent-Company, that the weighment of castor seeds was made at  mill
site in Baroda and payment was made to the  parties  as  per  the  weighment
done by the respondent-Company.  Therefore, on the basis of the  assessment,
the  respondent-Company  was  directed   to   pay   the   market   cess   of
[pic]1,27,46,349.38 vide its order dated 27.12.2004. The  respondent-Company
aggrieved by the said assessment order preferred Revision Application No.  2
of 2005 under Section 48 of the Act before the State of Gujarat  questioning
the correctness of the assessment  order  made  by  the  APMC.   The  Deputy
Secretary (Appeal) after hearing the parties passed a  cryptic  order  dated
19.04.2005 by allowing the Revision Application and setting aside the  order
of assessment of the market Committee dated 27.12.2004. While  allowing  the
Revision Application, the Revisional Authority  arrived  at  the  conclusion
that Rule 48(1) of the Rules is not applicable  and  held  that  Rule  48(2)
will be applicable to the fact situation.  The correctness of the  same  was
challenged before the learned single Judge of the High Court of  Gujarat  by
filing a petition under Article 226 of the Constitution  i.e. Special  Civil
Application No. 13606 of 2005.

12.   The learned single Judge after giving opportunity to  the  respondent-
Company and hearing both the learned counsel  appearing  on  behalf  of  the
parties has held that castor seeds have been bought within the  market  area
of APMC, therefore, sub-rule (1) of  Rule  48  is  applicable  to  the  fact
situation and not sub-rule (2) of Rule 48 upon which reliance was placed  by
the respondent-Company’s counsel.  In arriving at the  said  conclusion  the
learned single Judge has referred to the factual aspects with  reference  to
certain documents such as invoices, bill  receipts  etc.  exchanged  between
the respondent-company and its suppliers of castor seeds.  The  bill  issued
by one Manish Trading Company of  Naroda,  Ahmedabad  dated  03.05.2004  for
supply of 150 bags of castor seeds weighing  75  kilos  each  was  examined.
The rate charged was [pic]305/- per 100 kg.  The total  quantity  shown  was
112.50 quintals and the total amount claimed  was  [pic]1,71,562/-.  In  the
said bill dated 03.05.2004, it was indicated that  payment  was  yet  to  be
made. At page 28 to the compilation, there is a purchase  voucher/remittance
note issued by the respondent-Company.  It is not in dispute that  the  said
purchase  voucher/remittance  note  pertains   to   the   same   consignment
transported by the Manish Trading Company under the bill  dated  03.05.2004.
The purchase voucher  indicates  that  the  quantity  of  the  castor  seeds
received was short by 37.50 kilos.  Weight of bags of  150  kilos  was  also
deducted from the quantity of castor seeds.  The agreed rate  of  [pic]305/-
for 100 kilos remained constant and the respondent-Company therefore  agreed
to remit a total amount of [pic]1,70,991/- to  the  Manish  Trading  Company
referred to supra.  To  the  query  from  the  court,  the  learned  counsel
appearing on behalf of the company, on instructions, made  submissions  that
consignments were received from the sellers within the market area  for  the
purpose of finding out shortfall or pilferage and the  payment  is  made  to
the extent of actual quantity received.  The learned single Judge  has  also
referred to the total quantity of  castor  seeds  weighing  112.50  quintals
which was transported to the respondent-Company by  Manish  Trading  Company
and it had made payment after weighing consignment  and  after  finding  out
the correct weight of the castor seeds received by it.

13.   On the basis of the said  material  facts  the  learned  single  Judge
arrived at the conclusion  that  the  respondent-Company  placed  order  for
purchase of castor seeds from its suppliers from  outside  the  market  area
but no payment was immediately made for the same.   On  the  demand  of  the
respondent-Company, the quantity of castor seeds so requisitioned by it  was
transported by the supplier which was  received  by  it  within  the  market
area.  It is an  undisputed  fact  that  the  consignment  so  received  was
weighed by the Company within the market area.  Thereafter, on  finding  out
the exact weight of castor seeds received by it, the payment at  the  agreed
rate was made by the  Company  to  the  supplier.   Therefore,  the  learned
single Judge came to the conclusion on the  basis  of  appreciation  of  the
aforesaid  facts  and  held  that  the  sale  was  not  effected  till   the
consignment was received by the respondent-Company and the same was  weighed
within the market area.  The learned single Judge has rightly  rejected  the
assertion made by the learned counsel on behalf of the Company holding  that
in case of shortfall or loss or damage during transport,  the  seller  could
claim damage from the transporter and that would  further  demonstrate  that
the respondent-Company did not become owner of the goods till  it  took  the
physical delivery thereof, weighing the same  and  satisfying  itself  about
the quantity received by it.  It was held that it was not a  mere  formality
to find out the quantity by it but it has the essential  element  of  making
payment depending on the extent of quantity received  and  in  case  of  any
drastic shortfall in the quantity, the issue would be between  the  supplier
and the transporter. Further  finding  was  recorded  that  if  against  the
quantity of 100 quintals  of  castor  seeds  supplied  by  the  trader,  the
respondent-Company received only half of it on account of  loss,  damage  or
pilferage, the company would make payment only for such quantity leaving  it
for the trader to recover the damages from the  transporter.    There  would
also  be  a  case  where  on  account  of  some  untoward   and   unforeseen
circumstances, such as natural calamity  or  theft,  the  respondent-Company
did not receive the full quantity of castor  seeds,  the  payment  shall  be
made only for the quantity received by it and not for  the  entire  quantity
to be supplied by the trader. The learned single Judge has  further  rightly
recorded the finding of fact that when the castor  seeds  reach  the  market
area, it was weighed by the Company and payment thereof  was  agreed  to  be
made to the tune of  quantity  received  and  till  then  the  castor  seeds
continue to be in the ownership of  the  seller.  The  Company  becomes  the
owner of the property only once the exact weight of  the  castor  seeds  was
ascertained and purchase voucher was obtained.   The  learned  single  Judge
rightly held that APMC is justified in contending that the  sale  of  castor
seeds  did  take  place  within  the  market  area  and  the  appellant  was
authorized to charge fees from the  respondent-Company  for  such  purchase.
Therefore, the learned single Judge held that the castor seed was bought  by
the respondent-Company within the market area of APMC, Baroda and  therefore
Rule 48(1) of the Rules is applicable to the fact  situation  and  not  Rule
48(2) as contended by the counsel. The said conclusion was arrived at  after
referring to the provisions of Sections 19, 20 and 21 of the Sale  of  Goods
Act, 1930 and the Privy Council judgment  in  Hoe  Kim  Seing  v.  Maung  Ba
Chit[1].  Sections 19, 20  and  21  of  Sale  of  Goods  Act  are  extracted
hereunder :-


      “19. Property passes when intended to pass.-
          (1) Where there  is  a  contract  for  the  sale  of  specific  or
           ascertained goods the property in them  is  transferred  to  the
           buyer at such time as the parties to the contract intend  it  to
           be transferred.


           (2) For the purpose of ascertaining the intention of the parties
           regard shall be had to the terms of the contract, the conduct of
           the parties and the circumstances of the case.


           (3) Unless a different intention appears, the rules contained in
           Section 20 to 24 are rules for ascertaining the intention of the
           parties as to the time at which the property in the goods is  to
           pass to the buyer.


       20. Specific goods in  a  deliverable  state.-  Where  there  is  an
       unconditional  contract  for  the  sale  of  specific  goods  in   a
       deliverable state, the property in the goods  passes  to  the  buyer
       when the contract is made, and it is immaterial whether the time  of
       payment of the price or the time of  delivery of the goods, or both,
       is postponed.


       21. Specific goods to be put into a deliverable state.- Where  there
       is a contract for the sale of specific goods and the seller is bound
       to do something to the goods for the purpose of putting them into  a
       deliverable state, the property does not pass until  such  thing  is
       done and the buyer has notice thereof.”




The above judgment of the Privy Council is referred to by this Court in  the
decision  of  Agricultural  Market  Committee  v.  Shalimar  Chemical  Works
Limited[2] wherein the learned single Judge rightly extracted the  following
paragraph from the said judgment and it is worthwhile to  extract  the  same
hereunder :-
       “40. In order that Section 20 is attracted, two conditions  have  to
       be fulfilled :


                 i) the contract of sale is for specific goods which are  in
                    a deliverable state; and
                ii) the contract is an unconditional contract. If these  two
                    conditions are satisfied, Section 20 becomes  applicable
                    immediately and it is at this stage that it  has  to  be
                    seen whether there is anything either in  the  terms  of
                    the contract or in the conduct of the parties or in  the
                    circumstances of the case  which  indicates  a  contrary
                    intention. This exercise has to be done to  give  effect
                    to  the  opening  words,  namely,  “Unless  a  different
                    intention appears” occurring in Section  19(3).  In  Hoe
                    Kim Seing v. Maung Ba Chit, it was held  that  intention
                    of the parties was the decisive factor as  to  when  the
                    property in  goods  passes  to  the  purchaser.  If  the
                    contract is silent, intention has to  be  gathered  from
                    the conduct and circumstances of the case.”

14. Therefore, the learned single Judge on the basis of documents which  are
all admitted documents came to  the  right  conclusion  and  held  that  the
castor seeds were bought by the respondent-Company within the  market  area.
Therefore, APMC has rightly made assessment of market  fee  and  levied  the
same as per  Section  28  of  the  Act,  which  assessment  order  has  been
erroneously  set  aside  by  the   Revisional   Authority   without   proper
appreciation of facts and applying the relevant provisions  namely,  Section
28 and Rule 48(1) and came to the erroneous conclusion  and  held  that  the
goods bought were brought from outside the market area for  the  purpose  of
manufacturing oil by the Company in its factory.  Therefore, the  contention
that these are not exigible, was rightly set aside  by  the  learned  single
Judge and it was held that the respondent-Company is liable  to  pay  market
fee which is cess on the purchase of castor seeds, justifying the  claim  of
the APMC.   The order dated 22.12.2005 was questioned by the Company  filing
Letters Patent Appeal No.139 of 2006 and  that  order  was  erroneously  set
aside by the Division Bench by answering the point No.1  in  favour  of  the
Company  after  referring  to  Rule  48(2)  and  erroneously  applying   the
aforesaid  judgments.  The  learned  single  Judge  rightly  placed   strong
reliance on the said judgment referred  to  supra  and  came  to  the  right
conclusion and held that the sale of goods of castor  seeds  is  within  the
market area of APMC.  The learned Division Bench on the other hand,  further
placed strong reliance upon Rule 48(2) by placing reliance upon Form  No.  V
of the Rules, which is the Form of declaration and certificate  produced  by
the Company which  were  found  from  pages  79  to  86  which  are  totally
irrelevant for the purpose of finding out whether the goods i.e. the  castor
seeds were bought by the Company within the market area of APMC or not.

15. The factual matrix is supported by the documents  produced  at  Annexure
‘F’ to the Special Civil  Application  No.  13606  of  2005  which  are  the
documents of the respondent-Company which have been extensively referred  to
by the learned single Judge in his judgment  at  para  11  to  come  to  the
conclusion holding that the castor oil seeds were bought by the  respondent-
Company within the market area of APMC and, therefore, he has  rightly  held
that Rule 48(2) is not applicable to the fact situation as  claimed  by  the
respondent-Company and the reliance placed upon Form  No.  V  which  is  the
Form  of  declaration  and  certificate  obtained  from  the  APMC   seeking
exemption from payment of market fee on the castor seeds brought by it  from
outside APMC area, is contrary  to  the  material  evidence  on  record  and
therefore, the Division Bench has gravely erred in reversing the finding  of
fact recorded  by  the  learned  single  Judge  on  proper  appreciation  of
undisputed material evidence on record and  recorded  the  finding  of  fact
with reference to Sections 19, 20 and 21 of the Sale of Goods  Act  and  the
judgment of Privy Council referred to supra which has been  referred  to  by
this Court in the Shalimar Works  Ltd.  case  (supra)  wherein  the  learned
single Judge rightly came to the  conclusion  that  the  castor  seeds  were
purchased by the Company in the market  area  for  the  relevant  period  in
question  in respect of which the assessment order was  passed  levying  the
market fee and directing the Company to pay the same was  legal  and  valid.
The same came to be  erroneously  set  aside  by  the  Revisional  Authority
without proper application of mind and law to the  fact  situation  and  the
same was then set aside by the learned single Judge of the High  Court.  The
said findings of the learned single Judge have been  erroneously  set  aside
by the learned Division Bench at the instance of the  respondent-Company  in
LPA No.139 of 2006.  Therefore, we have to hold that  the  said  finding  of
the Division Bench  in  reversing  the  legal  and  valid  finding  of  fact
recorded by the learned single Judge on proper  appreciation  of  facts  and
undisputed evidence on record and rightly applying  the  provisions  of  the
Sale of Goods Act referred to supra and Rule 48(1) is erroneous.  Therefore,
we have to set aside the said order passed  in  LPA  No.  139  of  2006  and
restore the order of the  learned  single  Judge  passed  in  special  civil
application No. 13606 of 2005 and allow the C.A. No. 3130 of 2008.

Answer to Point No. 4


16. The point No. 4 is answered against the APMC upholding the order of  the
learned single Judge affirmed by the Division Bench of  the  High  Court  in
dismissing the Letters Patent Appeal No. 195 of 2006  of  the  appellant  by
assigning the following reasons :-


      It is an undisputed fact that oil cake is included in the Schedule  as
an agricultural produce which is exigible agricultural produce in  terms  of
section 2(1)(i)of the Act. Sub-rule (iv) therein contains  oil  seeds.  Item
No. 8 therein is castor seed and Item No. 11 therein is oil cakes.


      The oil cake is the exigible agricultural produce for the  purpose  of
levying market fee upon such produce. On the basis of the factual and  rival
contentions and  on the basis of material evidence produced by  the  parties
the learned single Judge has arrived at the finding  held  at  paragraph  23
with  regard  to  the  process  undertaken  by  the  respondent-Company  for
extraction of castor oil from the castor seeds  purchased  by  it.  The  by-
product which is produced by the respondent-Company is de-oiled  cake  which
contains less than 1% of castor oil and  castor  seeds  have  to  undergo  a
complex process so as to extract maximum possible oil  out  of  it.  At  the
first stage, after cleaning and separating raw  seeds  from  husk  etc.  the
castor seeds are crushed through mechanical devices to extract oil from  the
same.  After  the  mechanical  process  which  is  involved  in   extracting
substantial amount of oil in the oil cake, the residual product is  the  de-
oiled cake which is sold in the market. The same does  not  fall  under  the
head of oil cake. The process which is adopted for the  purpose  of  getting
the said by-product of de-oiled cake has been  extensively  referred  to  in
the paragraph 23 of the  order  of  the  learned  single  Judge  and  it  is
worthwhile to extract the same hereunder:-
       “23.The process undertaken by  respondent  no.2  for  extraction  of
       castor oil from the castor seeds purchased by it is not seriously in
       dispute. The fact that ultimately by-product which  respondent  no.2
       claims to be de-oiled cake which the respondent no.2  sells  in  the
       market and on which the petitioner is seeking  to  levy  market  fee
       contains less than 1% castor oil is also not seriously  in  dispute.
       The respondent no.2 has explained the complex process through  which
       the castor seeds are made  to  undergo  so  as  to  extract  maximum
       possible oil out of it.  At  the  first  stage  after  cleaning  and
       separating raw seeds from husk etc., the castor  seeds  are  crushed
       through mechanical devices  to  extract  oil  from  the  same.  This
       mechanical process would obviously leave substantial amount  of  oil
       in the oil cake which may come into existence  after  extraction  of
       oil. If this residual product was sold by  respondent  no.2  in  the
       market, same would squarely fall under the head of oil cake. To that
       extent there is no serious dispute raised  by  the  respondent  no.2
       also. However, respondent no.2 does not  sale  the  oil  cake  which
       comes into existence by extracting oil from castor seeds through the
       above mentioned mechanical process. The oil cake so produced is made
       to undergo further extensive sophisticated and  complex  process  by
       which instead of leaving 10% oil  contents  in  the  oil  cake,  the
       percentage of residue of the oil is brought down to less than 1%. By
       sophisticated means of operation, the wastage of  oil  is  minimised
       and the oil extraction percentage is improved. Ultimately therefore,
       final by-product which comes into existence and which is sold by the
       respondent no.2 in the market is de-oiled cake having less  than  1%
       oil contents. It can thus be seen that oil cake  and  de-oiled  cake
       are two separate products. By very nature of  terminology  used  for
       both products it would indicate that  oil  cake  would  contain  the
       residue of oil seeds which would also  include  some  percentage  of
       oil. It is only when almost entirely the oil cake is devoid  of  oil
       contents that it is labeled as de-oiled cake. Gujarat Sales Tax  Act
       also takes cognizance of two different products namely oil cake  and
       de-oiled cake. I am only drawing further support from these  entries
       contained in Gujarat Sales Tax  Act  and  not  for  the  purpose  of
       interpretation of the term so defined in the said Act. As noted said
       Act does not define the term oil cake. From the  available  material
       on record, such as difference in the contents of oil in oil cake and
       de-oiled cake, cognizance of different  terms namely oil cake and de-
       oiled cake in the Gujarat Sales  Tax  Act,  the  difference  in  the
       process of oil extraction which would lead to by-product of the  oil
       cake and de-oiled cake, the certificate produced on  record  by  the
       respondent no.2 indicating  the  difference  of  percentage  of  oil
       contents in oil cake and de-oiled cake, it can be seen that two  are
       independent, separate and distinct products  and  so  understood  in
       common parlance as well.  The  term  “oil  cake”  contained  in  the
       Schedule therefore, in my opinion would not  include  deoiled  cake.
       The attempt on the  part  of  the  petitioner-  Agriculture  Produce
       Market Committee to levy market fees on sale and purchase of such de-
       oiled cake in my opinion is not permissible.  Schedule  to  the  Act
       specifies oil cake as one of  the  agricultural  produces  on  which
       market fee can be charged. In view of my conclusion, that  term  oil
       cake does not include deoiled cake, I find that  petitioner  is  not
       authorised to charge market fees on the de-oiled cake  sold  by  the
       respondent no.2. The difference  in  process  which  would  lead  to
       obtaining oil cake and de-oiled cake was  also  noticed  by  Hon'ble
       Supreme Court in the case of State of A.P. and others v. M/s. Modern
       Proteins ltd.[3]  on  which  reliance  was  placed  by  the  learned
       advocate for the respondent no.2. It was noted that groundnut  seeds
       obtained after the  process  of  decortication  are  of  high  grade
       quality, rich in proteins but free from harmful materials  processed
       in the expeller and the outcome is groundnut oil and  groundnut  oil
       cake. The groundnut oil cake again is pressed through the solvent in
       which  “food  hexane”  is  sprayed  resultantly  groundnut  oil  and
       groundnut de-oiled cakes are obtained.”


17.  Further reference was made to the Gujarat Sales  Tax  Act  wherein  the
oil cake and de-oiled cake are considered to be two different products  from
the entries contained in the said Act and the  Schedule.  The  said  entries
are referred to for the purpose of interpretation of the  terms  so  defined
in the said Act. The term oil cake is  not  defined  in  the  APMC  Act  and
further on the basis of the available material on  record  which  elaborates
the difference in the contents  of  oil  in  oil  cake  and  de-oiled  cake,
cognizance of different terms namely, oil cake  and  de-oiled  cake  in  the
Gujarat Sales Tax Act, difference in the process  of  oil  extraction  which
would lead to by-product of the oil cake and de-oiled cake, we have to  hold
that de-oiled cake is a completely different product than oil cake. Also  we
have to refer to the judgment of this Court in the case  of  State  of  A.P.
and Ors. v. Modern Proteins Ltd.[4] on which strong reliance was placed   by
the respondent-Company wherein in the said  case,  it  was  noted  that  the
groundnut seeds obtained after the process of  decortication   are  of  high
grade quality, rich in proteins but free from  harmful  materials  processed
in the expeller and the outcome is groundnut oil  and  groundnut  oil  cake.
The groundnut oil cake again is pressed through the solvent in  which  “food
hexane” is sprayed resultantly groundnut oil and  groundnut  de-oiled  cakes
are obtained. On the basis of the said decision and applying it to the  fact
situation on hand with regard to  the  process  adopted  for  obtaining  by-
product of de-oiled cake, it is clear that it  is  different  from  the  oil
cake as it contains oil less than 1% and it is not included in the  Schedule
for the purpose of charging market fee, therefore, the learned single  Judge
accepting the case against levying the market  fee  on  the  de-oiled  cake,
rejected the prayer in this regard in Special Civil  Application  No.  13606
of 2005. The same was questioned in the Letters Patent Appeal filed  by  the
APMC that has been examined by the Division Bench with  reference  to  rival
legal contentions and it has answered the said point  against  the  APMC  by
extracting paragraph No. 23 from the judgment of the learned single Judge.


18.   The by-product obtained out of the manufacturing process  is  not  oil
cake but is de-oiled cake after undergoing the process which would  lead  to
obtaining de-oiled cake. After noticing the judgment of  the  Supreme  Court
in the case of Modern Proteins Ltd. (supra), the learned single  Judge  came
to the conclusion that de-oiled cake containing less  than  1%  oil  is  not
mentioned in the Schedule  as  per  Section  2(1)(i)  of  the  APMC  Act  as
‘agricultural produce’ by the authority and  further  held  that  the  above
produce is totally different from the oil cake.  Therefore,  no  market  fee
can be levied by the APMC to be paid by  the  respondent-Company.  The  said
finding of fact of the learned single Judge has been rightly concurred  with
by the Division Bench of the High Court. The  same  was  sought  to  be  set
aside by the APMC.  We  have  carefully  examined  the  correctness  of  the
concurrent finding of fact arrived at by the Division Bench on  this  aspect
of the matter. We are in agreement with the view taken by the High Court  of
Gujarat in holding that the by-product of the manufacture in  producing  the
oil from the castor seeds is only de-oiled  cake  and  is  not  one  of  the
Schedule items in the Notification for the purpose of  levying  market  fee.
Therefore, we do not find any good reason whatsoever to interfere  with  the
concrete finding of fact on this aspect of the matter.  Hence,  we  have  to
affirm the concrete finding of fact recorded by  the  learned  single  Judge
and of the Division Bench of the High Court. We do not find  any  valid  and
cogent reasons to arrive at a  different  conclusion  other  than  the  view
taken by them as the said view is based on  a  proper  appreciation  of  the
factual matrix  and  the  statutory  provisions  as  de-oiled  cake  is  not
mentioned in the Schedule to the Act and the Notification.  The  item  which
is mentioned is oil cake which is different and distinct from  the  de-oiled
cake as distinguished by  this  Court  in  the  Modern  Proteins  Ltd.  case
referred to supra. The High Court has rightly applied the said  decision  to
the fact situation. Therefore, we are of the view that the said  finding  of
fact recorded by the High Court is legal and valid. The same does  not  call
for interference. Accordingly, the appeal of the APMC on this aspect of  the
matter must fail as we are affirming the order of the Division Bench of  the
High Court on the levy of the market fee on de-oiled cake by directing  that
the amount in relation to the market fee levied on de-oiled cake  is  to  be
reduced.


19.   For the reasons recorded by us on the point Nos. 1 to 3  in  C.A.  No.
3130 of 2008 the APMC must succeed. Accordingly, we  allow  the  appeal  and
set aside the order of the Division Bench  of  the  High  Court  in  Letters
Patent Appeal No. 139 of 2006 and uphold the  levy  of  market  fee  on  the
castor  seeds  purchased  by  the  respondent-Company  for  the  period   in
question, and it is liable to pay the said market fee.


20.   For the reasons recorded in answer to the point No. 4, we dismiss  the
C.A. No. 3131 of 2008 filed by APMC, Baroda against order passed in  Letters
Patent Appeal No. 195 of 2006, upholding the order  of  the  learned  single
Judge which was affirmed by the Division Bench of the High Court.


21.   In view of the aforesaid reasons, Civil  Appeal  No.3130  of  2008  is
allowed and Civil Appeal No.3131 of 2008 is  dismissed.  There  will  be  no
order as to costs.
                                              …………………………………………………………J.
                                        [G.S. SINGHVI]




                           ………………………………………………………J.      [V.
                                GOPALA GOWDA]
New Delhi,
November 29, 2013
                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 4860 OF 2009


AGRICULTURAL PRODUCE MARKET COMMITTEE     ……APPELLANT

                                   Versus

BIOTOR INDUSTRIES LTD. & ANR.             ….RESPONDENTS






                               J U D G M E N T


V. Gopala Gowda, J.

      This matter is connected to the Civil Appeal       Nos.  3130-3131  of
2008 upon which we have pronounced the judgment today.


2.    The appellant-APMC herein challenged the correctness of  the  judgment
dated 10.2.2009 passed by the  Division  Bench  of  Gujarat  High  Court  in
Letters Patent Appeal No. 1383 of 2008  in  Special  Civil  Application  No.
9705 of 2008 with Civil  Application  No.  13651  of  2008  whereby  it  has
dismissed the Special Civil Application holding that the  same  lacks  merit
and also vacated interim relief granted by the learned single Judge of  High
Court. Being aggrieved, the APMC filed this  Civil  Appeal  framing  certain
questions of law and urging grounds in support of the same, praying  to  set
aside the impugned judgment and order and to pass such other  order  as  may
be deemed fit and proper in the circumstances of the case.


3.    The brief necessary facts for the purpose of  examining  the  legality
and validity of the impugned order are stated herein:-


      The appellant-APMC had filed Special Civil  Application  No.  9705  of
2008  under Articles 14, 19, 21 and 226 of the Constitution of India  before
the learned single Judge  of  the  High  Court  impleading  the  respondent-
Company and the State of Gujarat as parties, seeking relief  for  the  issue
of writ of certiorari or any other appropriate writ, order or direction,  to
set aside order dated 30.6.2008 passed in Revision  Application  No.  69  of
2008 by  respondent  No.2–the  State  (Revisional  Authority)  and   further
sought for declaratory relief to declare that the APMC is entitled  to  levy
market fee on the respondent-Company for purchase of  castor  seeds  as  per
the demand notices dated 5.3.2008 and 15.4.2008  given  to  the  respondent-
Company. Further, by way of amendment to the prayer column,  it  has  sought
for declaratory relief to declare Rule 48(2)  of  the  Gujarat  Agricultural
Produce Markets Rules, 1965 (for short “Rules”) as ultra vires  of  Sections
28A  and  59  of  the  Gujarat  Agricultural  Produce  Markets   Act,   1963
(hereinafter referred to as  “the  Act”)  urging  various  facts  and  legal
grounds. The amended Sections  were  added  to  the  Act  vide  the  Gujarat
Agricultural Produce Markets (Amendment) Act, 2007.


4.    The learned single Judge of the High Court after hearing  the  learned
counsel for the parties passed an interim order  on  13.11.2008  in  Special
Civil Application No. 9705 of 2008  referring to Section 28(1)  of  the  Act
and amended Section 28(2)(a),(b),(c),(d) & (e) of the Act  and  issued  Rule
to examine the correctness of Rule 48(2) in view of  the  amendment  to  the
Act incorporating Section 2(a) to Section 28 of the  Act  and  directed  the
respondent-Company by giving directions, particularly direction Nos. 2   and
3 which are extracted hereunder :-

          “(2) Respondent No.2 deposits 50% of the outstanding  market  fees
          with this Court and furnishes an undertaking before this Court for
          the remaining 50% of the amount to the effect that they shall  pay
          up the remaining market fees with interest as and when  it  is  so
          ordered  by  this  Court.  Such  amount  shall  be  invested,   if
          deposited, by the Registrar in the FDR initially for a  period  of
          two years, renewable further with the State Bank of India, Gujarat
          High Court Branch, Ahmedabad.

          (3) Respondent No.2 shall be at liberty to comply with  either  of
          the conditions within two months from the date of  intimation  and
          calculation of the Market Fees recoverable by the Market Committee
          from respondent No.2.”



Further, at paras 14 and 15 of the order dated 13.11.2008 of learned  Single
Judge, certain observations were made, which read thus:-
          “14. It is also observed and directed that it would be open to the
          petitioner to make representation to the State  Government,  which
          is Rule Making Authority, for amendment of the Rule 48 in light of
          the amended provisions of Section 28 of  the  Agriculture  Produce
          Market Committee. If such representation is made, the pendency  of
          this petition, shall not operate as  a  bar  to  the  Rule  Making
          Authority for bringing about amendment, as may be  permissible  in
          law.


          15. It would be open to either side to move this Court  for  final
          hearing if the rules are amended or the  matter  before  the  Apex
          Court is finally decided, whichever is earlier.”



The correctness of this interim order dated 13.11.2008  was  challenged  by
the respondent-Company by filing Letters Patent Appeal  No.  1383  of  2008
urging various legal contentions. The Division Bench examined whether  sub-
section (2)(a) added to Section 28 of the Act by amendment Act  No.  17  of
2007 has the effect of taking away the substratum  of  the  Division  Bench
judgment dated 24.4.2007 passed in Letters Patent Appeal No. 139 of 2006 in
connected matters. The Division Bench after referring to  certain  relevant
facts and Rule 48(2) of the Rules, came to its conclusion on the  basis  of
the judgment rendered by the Division Bench of High Court  in  the  Letters
Patent Appeal No. 139 of 2006 and connected matters for the  interpretation
of Section 28 of the Act read with Rule 48(2) of the  Rules.  The  relevant
paragraph 8 from the Division Bench  judgment  rendered  in  the  aforesaid
Letters  Patent  Appeal  filed  by  the  respondent-Company  is   extracted
hereunder:-

        “8. Section 28 of the Act empowers the Market Committee to levy and
        collect fees on notified agricultural produce bought or sold in the
        market area, subject to the provisions of the Rules and at the rate
        maxima and minima, from time to time prescribed. Thus, the power of
        the Market Committee to levy prescribed fees is  envisaged  in  the
        above section.  In  juxtaposition  to  the  above  section,  it  is
        necessary to refer to Rule 48 of the Rules, and  more  particularly
        Rules 48 and 49, placed in Part VI with  heading  'Fees,  Levy  and
        Collections', pertaining to market fees. Rule 48, sub-rule (1)  and
        the explanation is highlighted by  the  learned  Single  Judge  and
        discussion has  taken  place  on  the  basis  of  certain  material
        available on record with regard to sale  of  castor  seeds  by  one
        Manish Trader of Ahmedabad to the Company and  after  relying  upon
        Sections 19 to 22 of the Sale of  Goods  Act,  the  learned  Single
        Judge found that sale does take place within the market  area  and,
        therefore, the Company is liable to pay market fees. However,  sub-
        rule  (2) of Rule 48 of Part VI of  the  Rules  clearly  prescribes
        that no fee shall be levied on agricultural  produce  brought  from
        outside the market area into the market area for use therein by the
        industrial concerns situated in the market area or for export  and,
        in respect of which declaration has been made and a certificate has
        been obtained in Form V. Thus, the above sub-rule (2)  of  Rule  48
        nowhere prescribes that agricultural produce brought  from  outside
        the area of market committee has to be by  the  industrial  concern
        itself. The preceding word is 'brought' and not 'bought'. Even  the
        facts of the present case are examined,  nowhere  it  is  mentioned
        that purchase took place within the area of the  market  committee.
        In the affidavit in reply filed  by  the  Company,  it  is  clearly
        mentioned that purchase of castor seeds did take place outside  the
        market area and no sale takes place within the market  area.  Even,
        weighment, etc. is also done outside the market area and bills  are
        prepared  accordingly  and,  that  too,  after  selection  by   the
        representative of the Company. Not only that, but, the Company  has
        produced bills of one Manish Traders at page 109 of Letters  Patent
        Appeal No.195 of 2006, having numbered as Bill No.93, dated 3rd May
        2004, is clearly indicative of the fact that  sale  does  not  take
        place within the area of Market  Committee,  Baroda.  Besides,  the
        octroi paid to the  Baroda  Municipal  Corporation  on  the  goods,
        namely, castor seeds imported and produced  at  page  107  is  also
        suggestive of the fact that sale does not  take  place  within  the
        area of market committee. Even, the Company has produced number  of
        forms prescribed under Rule 48, sub rule (2) from page  79  to  86,
        the fact not denied by the Market Committee, which also establishes
        the  case  of  the  Company  with  sufficient  declaration  and   a
        certificate that the abovementioned agricultural  produce,  namely,
        castor seeds, has been brought  from  outside  the  limits  of  the
        market area and brought  within  the  limits  of  market  area  for
        industrial purpose, and for production  of  castor  oil  and  other
        byproducts. Thus, the Company fully complied with  the  requirement
        of Rule 48 of the Rules and is entitled for exemption from  payment
        of market fees.  Therefore,  exercise  undertaken  by  the  learned
        Single Judge to find out the place of sale, so as to bring the case
        of the Company under Rule 48, subrule (1) of the Rules,  is  of  no
        help and the finding, on that basis,  arrived  at  by  the  learned
        Single Judge, will have to be quashed and set aside in the backdrop
        of the above discussion and the fact situation.”

5.    Thereafter the amended provisions of Sections 28A and 31D of the  Act
are referred to by the Division Bench along with Section 28(1) of  the  Act
and Rule 48(2) of the Rules as well as sub-sections 2(a)and (b) of  Section
28 of the amended provisions of the Act to come to the conclusion, that  in
view of the factual  legal situation, the Revisional Authority had  rightly
interfered with the demand notices issued by the APMC  and  therefore  held
that Civil Appeal filed by the APMC lacks merit and dismissed the same  and
the interim relief granted was set aside and  consequently  Rule  was  also
discharged. The correctness of  the  same  is  challenged  here  by  urging
various questions of law and grounds in support of the same. The same  need
not be adverted to in  this  judgment  for  the  reason  that  the  learned
Division Bench of the Gujarat High Court while examining the directions  in
interim order dated  13.11.2008 given in Special Civil Application No. 9705
of 2008  filed  by  the  APMC  has  gone  into  the  merits  of  the  case.
Considerable reliance was  placed  upon  the  Division  Bench  Judgment  in
Letters Patent Appeal No. 139 of 2006 by the counsel  for  the  respondent-
Company, contending that the amendment Act has not brought  any  change  to
Section 28 of the Act and further submitted that the  Revisional  Authority
has rightly held that the APMC has no legal right to levy market fee on the
respondent-Company. The appellant-APMC in this appeal  has  submitted  that
the Division Bench of the High Court, instead of examining the  correctness
of the discretionary powers  exercised  by  the  learned  single  Judge  in
Special Civil Application No. 9705 of 2008 and passing  the  interim  order
with certain observations,  has passed the orders on merits  of  the  civil
application without adverting  and  examining  the  grounds  urged  in  the
petition, which approach of the Division Bench is not correct and it should
not have pronounced decision on the merits of the Special Civil Application
while examining the correctness of the interim order passed by the  learned
single Judge. The APMC has also sought declaratory relief to  declare  Rule
48(2) as ultra vires to Section 28A of the amended provision of the Act and
submitted that the Division Bench of the High Court  failed  to  appreciate
the same and also that Section 28 of the Act deals with levy of market  fee
which is a  mandatory  provision  that  does  not  give  any  exemption  to
respondent-Company and as such a Rule cannot  override  provisions  of  the
Act. The Division Bench of the High Court has simply affirmed the order  of
the Revisional Authority by setting aside the assessment  order  passed  by
the APMC vide notices dated 5.03.2008 and 15.4.2008  without  awaiting  the
decision to be rendered by the learned single Judge  on  the  legality  and
validity of the Rule 48(2) in the backdrop of Section 28,  of  the  amended
provision.

6.    After hearing learned counsel for the parties, we have pronounced the
judgment today in Civil Appeal     No.  3130  of  2008  on  similar  demand
notices demanding the market fee from the respondent-Company on the  castor
seeds bought in the market area for the purpose of manufacturing of oil.
We
hold that the demand for the market fee made by the APMC for  castor  seeds is justified as per the reasoning given in our judgment  in  the  connected Civil Appeal No. 3130 of 2008, that the castor seeds  were  bought  in  the market area and not brought into the market area.
 It would suffice to  say
that the order dated 10.02.2009 of the Division Bench of the High Court  in
Letters Patent Appeal No. 1383  of  2008  setting  aside  the  order  dated
13.11.2008 of the learned single Judge in  Special  Civil  Application  No.
9705 of 2008 and affirming the order dated  30.06.2008  of  the  Revisional
Authority in Revision Application No.69  of  2008,  without  examining  the
correctness of  Rule 48(2) of the Rules and  applying  the  Division  Bench
Judgment  rendered  in  Letters  Patent  Appeal  No  139  of  2006  without
considering the factual matrix and  therefore, the same is liable to be set
aside. 
Accordingly, we set aside the same and remand the matter to the High
Court to place the matter before the roster  of  learned  single  Judge  to
examine the validity of  Rule  48(2)  of  the  Rules,  as  questioned  with
reference to Section 28A of the amended provision of Act No. 17 of 2007 and
the impugned order of the Revisional  Authority.  The  appellant  may  also
approach the State Government to amend the Rules by deleting Rule 48(2)  of
the Rules. It is open for the appellant to either press the  Special  Civil
Application to be decided on merits with regard to  the  validity  of  Rule
48(2) and also examine the impugned order of levying  market  fees  on  the
goods purchased by  the  respondent-Company  on  the  basis  of  facts  and
material evidence or to make revision application to the  State  Government
seeking for the deletion of Rule 48(2) by amending the Rules with the above
said observation.
7.  This Civil Appeal is accordingly allowed in the above terms by  setting
aside the impugned order of the Division Bench and remanding the matter  to
the High Court to place the same before the roster of learned single  Judge
with a request to him to examine the validity of the impugned Rule  if  the
APMC so desires and the impugned order passed by the  Revisional  Authority
and decide the same on merits. The interim directions given by the  learned
single Judge by way of interim order dated 13.11.2008 directing to  deposit
50% of the demanded amount towards the  market  fee  is  restored.  If  the
company has not complied with that interim order, it shall comply with  the
same within two weeks from  the  date  of  receipt  of  the  copy  of  this
judgment.

                          …………………………………………………………J.
                                        [G.S. SINGHVI]








                              ………………………………………………………J.
                                      [V. GOPALA GOWDA]


New Delhi,
November 29, 2013



ITEM NO.1A               COURT NO.13             SECTION IX
(For Judgment)

            S U P R E M E   C O U R T   O F   I N D I A
                         RECORD OF PROCEEDINGS
                    CIVIL APPEAL NO(s). 3130-3131 OF 2008

AGRICULTURAL PRODUCE MARKET COMMITTEE             Appellant (s)

                 VERSUS

BIOTOR INDUSTRIES LTD. & ANR.                     Respondent(s)

WITH Civil Appeal NO. 4860 of 2009

Date: 29/11/2013  These Appeals were called on for pronouncement
 of judgments today.


For Appellant(s)    Mr. B.K.Satija,Adv.

For Respondent(s)      Mr. Rabin Majumder,Adv.

                 Ms. Parul Kumari, Adv.
                 Ms. Preeti Bhardwaj, Adv.
                    Ms. Hemantika Wahi ,Adv

                    Dr. (Mrs.) Vipin Gupta, Adv.


            Hon'ble Mr.  Justice  V.  Gopala  Gowda  pronounced  reportable
         judgments of the Bench comprising Hon'ble Mr. Justice G.S. Singhvi
         and His Lordship.
            C.A. No. 3130 of 2008 is allowed, C.A.  No.  3131  of  2008  is
         dismissed and C.A. No. 4860 of 2009 is allowed  in  terms  of  the
         signed reportable judgments.


            [RAJNI MUKHI]                 [USHA SHARMA]
              SR. P.A.              COURT MASTER

      [Two separate signed reportable Judgments are placed on the file]
-----------------------
                           [1]    AIR 1935 PC 182
                        [2]    AIR 1997 SC page 2502
                        [3]    1994 Supp (2) SCC 496
[4]    (1994) Supp (2) SCC 496

                           -----------------------


                                     57


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