* Author
[2024] 3 S.C.R. 174 : 2024 INSC 174
Sangam Milk Producer Company Ltd.
v.
The Agricultural Market Committee & Ors.
(Civil Appeal No. 6493 of 2014)
05 March 2024
[Sudhanshu Dhulia* and S.V.N. Bhatti, JJ.]
Issue for Consideration
Whether “ghee” is a “product of livestock” under the provisions of
the Andhra Pradesh (Agricultural Produce and Livestock) Markets
Act, 1966 and; whether the Government 1994 notification, which
inter alia notified “ghee” as one of the products of livestock for the
purpose of regulation of purchase and sale of “ghee” in all notified
market areas was published after due compliance of the procedure
contemplated under the provisions of the Act.
Headnotes
Andhra Pradesh (Agricultural Produce and Livestock) Markets
Act, 1966 – “Ghee” if a “product of livestock”:
Held: Yes – The argument that “ghee” is not a product of livestock
is baseless, and bereft of any logic – The contrary argument
that “ghee” is indeed a product of livestock is logically sound –
Livestock has been defined u/s.2(v) of the Act, where Cows and
buffalos are the livestock – Undisputedly, “ghee” is a product of
milk which is a product of the livestock – Reasoning adopted by
the Full Bench of the High Court that ‘Ghee’ is derived out of ‘milk’
by undergoing a process, yet it still remains a product of livestock,
for the purposes of the Act and payment of “market fee”, agreed
with – Further, there was nothing wrong in the 1994 notification
and the challenge to the notification was rightly turned down by
the Full Bench of the High Court – The argument of the appellant
that the procedure given u/s.3 of the Act was not followed, is
not correct – There is a basic difference between the notification
which has to be made u/s.3 of the Act and the notification made
subsequently u/s.4 of the Act – Majority opinion in the Full Bench
concluded that procedural compliance is only necessary when
there is a declaration or later a merger/de-merger of a notified area
and there is no requirement of following any particular procedure
[2024] 3 S.C.R. 175
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
while issuing a notification u/s.4 (4) of the Act notifying/de-notifying
any already notified products for the purpose of regulation by any
respective Agricultural Market Committee – Thus, a prior hearing or
prior publication of the draft notification is not a requirement u/s.4
of the Act, since the notification of the year 1994 is a notification
u/s.4 and not of s.3 of the Act – Therefore, the argument that the
process u/s.3, was not followed is totally misconceived – No prior
process was required to be followed as contemplated u/s.3 of the
Act for working the scheme u/s.4 of the Act – Majority decision of
the High Court upheld. [Paras 10 ,11 and 14]
Andhra Pradesh (Agricultural Produce and Livestock) Markets
Act, 1966 – Issue as regards market fee – 1994 notification
had an effect which made ‘Ghee’ a product that could be
regulated under provisions of the Act, Market Committees
were empowered to levy fee on the sale and purchase of
‘ghee’ as per s.12 of the Act:
Held: Appellants’ argument that the Market Committees did not
provide any facilities, rejected – Appellants availed the facility
given by the Market Committee and hence are liable to pay the
fee – There may also be a question of unjust enrichment here –
Thus, this market fee should be paid as well – Appellants’ prayer
that respondent Market Committees should be restrained from
collecting market fees prior to the date of the High Court Judgment
not accepted. [Para 13]
Case Law Cited
Kommisetty Nammalwar & Co. Guntur v. Agricultural
Market Committee, Tenali & Ors., (2009) SCC OnLine
AP 317 – approved.
Park Leather Industry (P) Ltd. v. State of U.P., [2001]
1 SCR 1035 : (2001) 3 SCC 135; Kishan Lal v. State
of Rajasthan, [1990] 2 SCR 142 : AIR 1990 SC 2269;
Ram Chandra Kailash Kumar v. State of U.P., : (1980)
Supp (1) SCC 27; Smt. Sita Devi (Dead) by LRs. v.
State of Bihar & Ors., [1994] Suppl. 5 SCR 682 : (1995)
Supp (1) SCC 670 – referred to.
List of Acts
The Andhra Pradesh (Agricultural Produce and Livestock) Markets
Act, 1966.
176 [2024] 3 S.C.R.
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List of Keywords
“Ghee”; Livestock; “Product of livestock”; Agricultural Market
Committee; Unjust enrichment; Market Committees; Market fee.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No.6493 of 2014
From the Judgment and Order dated 24.09.2009 of the High Court
of A.P. at Hyderabad in WP No.1897 of 2007
With
C.A. Nos. 6494, 6495, 6496, 6497 and 6498 of 2014
Appearances for Parties
Ajit Bhasme, Sr. Adv., Byrapaneni Suyodhan, Ms. Nitipriya Kar, Bharat
J Joshi, Kumar Shashank, Rupesh Kumar, Mukesh Kumar Pandey,
Ms. Himani Bhatnagar, Sanjay Kumar Visen, Ms. Tatini Basu, Ms.
Pankhuri Shrivastava, Atreya G.C., Advs. for the Appellant.
Mrs. D. Bharathi Reddy, Guntur Prabhakar, Sahil Bhalaik, Tushar
Giri, Siddharth Anil Khanna, Ms. Gulshan Jahan, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Judgment
Sudhanshu Dhulia, J.
1. Two questions arise in these appeals for our determination. The
first question is whether “ghee” is a “product of livestock” under the
provisions of The Andhra Pradesh (Agricultural Produce and Livestock)
Markets Act, 1966 (hereinafter referred to as “the Act”) and the second
would be whether the Government notification (G.O. Ms. No.286 dated
05.07.1994), which inter alia notifies “ghee” as one of the products of
livestock for the purpose of regulation of purchase and sale of “ghee”
in all notified market areas was published after due compliance of the
procedure contemplated under the provisions of the Act?
2. In the erstwhile State of Andhra Pradesh, the above Act was brought
with the purpose to consolidate and amend the laws regulating the
purchase and sale of agricultural produce, livestock and products
of livestock, along with establishment of markets in connection
[2024] 3 S.C.R. 177
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
therewith. The aim was to secure effective and remunerative price
of commodities by bringing producers and traders face to face
thereby eliminating middlemen and do away with some other earlier
unethical trade practices, which were exploiting agriculturists and
farmers. In other words, it was a farmer friendly legislation. The
commodities which were to be regulated were not only agricultural
produce but also livestock as well as products of livestock. Whereas
livestock has been defined under Section 2(v) and products of
livestock has been defined under Section 2(xv). Both the Sections
are reproduced below:
(v) ‘livestock’ means cows, buffaloes, bullocks, bulls,
goats and sheep, and includes poultry, fish and such
other animals as may be declared by the Government by
notification to be livestock for the purposes of this Act;
(xv) ‘products of livestock’ means such products of
livestock as may be declared by the Government by
notification, to be products of livestock for the purposes
of this Act.
3. Under sub-Section (1) of Section 3 of the Act, the Government has to
initially publish a draft notification declaring its intention of regulating
purchase and sale of proposed notified agricultural produce, livestock
or products of livestock in an area. It is only after hearing objections
from public, it finally publishes its notification under sub-Section (3)
of Section 3 declaring the area to be a ‘notified area’ in respect of
such agricultural produce, livestock and products of livestock. Under
Sub-Section (4) of Section 3 the Government also has a power to
exclude from a notified area, any area earlier included in it.
4. After a notification is made under Section 3, there comes the
process of notification under Section 4 of the Act. Under Section
4 (1) of the Act, a process is given wherein the Government
further notifies a market committee for every notified area. Under
Sub Section (3) of Section 4, the market committee is empowered
to establish markets for the purchase and sale of any notified
agricultural produce, livestock or products of livestock. After the
establishment of markets by the market committee under Section 4
(3), the Government declares by a notification under Section 4 (4)1
,
1 Section 4 (4) stands omitted vide the Andhra Pradesh (Agricultural Produce and Livestock) Markets
(Amendment) Act, 2015.
178 [2024] 3 S.C.R.
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the ‘notified market area’ for the purposes of the Act in respect of
the notified products.
In short, the above provisions provide that first there will be a larger
physical unit called “notified area” wherein the market committee
shall establish markets and thereafter, through a notification u/s
4 (4), the Govt. declares a “notified market area” in respect of the
notified products.
5. In the year 1968, the State of Andhra Pradesh had issued a
notification u/s 3 (3) of the Act declaring “notified areas” in the State
where “ghee” was included in Schedule II of the said notification
as a livestock product. Thereafter, in the year 1971, a notification
u/s 4 (4) was published, which declared the ‘notified market areas’
in respect of the respondent-committee, i.e. Agricultural Market
Committee, Guntur and “ghee” was specified as a notified product.
However, in 1972 the 1971 notification was amended and “ghee”
was taken out of the list of notified livestock products in respect of
the respondent-committee, and it remained so for a considerable
period of time. We must clarify here that both these notifications
i.e., notifications of 1971 & 1972 were issued u/s 4 (4) of the Act
and not u/s 3 (3) of the Act.
6. Later, on 15.07.1994, the Govt of A.P. published a general notification
directing all the notified markets within the State of AP to regulate all
the products notified in Schedule II of the 1968 Notification, which
also included Ghee.
7. It is this notification of the year 1994 which came to be challenged
by the producers of livestock products and which has now before
us for determination. This notification was challenged before the
Andhra Pradesh High Court on two grounds. The first challenge was
that “ghee” is not a “product of livestock” and therefore cannot be
regulated and notified. The second ground for challenge was that
there is a procedure which is laid down under the law, mainly under
Section 3 of the Act which prescribes the process i.e., first a draft
notification has to be published, objections are invited against the
notification and only after hearing such objections can this notification
be made. It was contended that this process has not been followed
and therefore the notification is bad.
8. This matter ultimately went to a Full Bench of the Andhra Pradesh
High Court in Writ Petition No. 24818 of 2008 titled Kommisetty
[2024] 3 S.C.R. 179
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
Nammalwar & Co. Guntur v. Agricultural Market Committee, Tenali
& Ors. (2009) SCC OnLine AP 317 and by a 2:1 majority, the Andhra
Pradesh High Court rejected the argument of the appellants and
upheld the notification of the year 1994, holding that the notification
under challenge is not under Section 3 but under Section 4 of the
Act, and is valid and moreover “ghee” is a livestock product. Based
on the said judgment the Writ Petitions filed by the appellants in Civil
Appeal Nos. 6493 of 2014 (M/s Guntur District Milk Production2
),
6494 of 2014 (M/s. Lakshmi Das Premji Ghee Merchants), 6496 of
2014 (M/s Durga Dairy Ltd.), 6497 of 2014 (The Krishna District Milk
Producers Co-operative Union Ltd., Vijaywada) & 6498 of 2014 (M/s.
Karnataka Co-operative Milk Producers Federation Limited) were
also dismissed by the Andhra Pradesh High Court. The decision of
the Full Bench in Kommisetty Nammalwar (supra) upholding the
validity of the 1994 notification is also under challenge before us in
C.A No.6495 of 2014.
9. We have heard learned counsel for the parties at length and have
perused the material on record.
10. The argument that “ghee” is not a product of livestock is baseless,
and bereft of any logic. The contrary argument that “ghee” is indeed
a product of livestock is logically sound. Livestock has been defined
under Section 2(v) of the Act, where Cows and buffalos are the
livestock. Undisputedly, “ghee” is a product of milk which is a product
of the livestock. The majority opinion of the Full Bench decision in
Kommisetty Nammalwar (supra) while referring to the judgments of
this Court in Park Leather Industry (P) Ltd. v. State of U.P. (2001)
3 SCC 135; Kishan Lal v. State of Rajasthan, AIR 1990 SC 2269;
Ram Chandra Kailash Kumar v. State of U.P. 1980 Supp (1) SCC
27 and Smt. Sita Devi (Dead) by LRs. v. State of Bihar & Ors.
(1995) Supp (1) SCC 670 held that all animal husbandry products
would fall within the meaning of ‘products of livestock’ as defined
under Section 2 (xv) of the Act. Further, the majority decision has
also held that the inclusion of “ghee” as a livestock product cannot
be faulted merely because it is derived from another dairy product.
It was observed by the High Court that even though “ghee” is not
directly obtained from milk, which is a product of livestock, it would
2 Vide Order dated 02.01.2024 passed by this Court in IA No.241663 of 2023 in CA No.6493 of 2014
name of appellant is amended as Sangam Milk Producer Company Ltd.
180 [2024] 3 S.C.R.
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still be a “product of a product of livestock”. The relevant portion of
the judgment of the High Court is as under:
“Scientifically or common sense point of view, even though
ghee is not directly obtained from milk (which is certainly a
product of cow/buffalo), it is certainly a product of a product
of livestock i.e., cow or buffalo. It would be rather illogical
or irrational to say that ghee is not a milk/dairy product or
to say that it is not a product of livestock. Ghee is certainly
a product of livestock. It is, therefore, to be seen whether
ghee comes within the definition of product of livestock
or within the meaning of notified product of livestock.
Section 2(x) and 2(xv) of the Act used the plural ‘products
of livestock’. The legislative intention is very clear that not
only a product of livestock like milk (when notified by the
Government), butter etc., are products of livestock but
even derivative items (derived from a product of livestock)
are intended to be product of livestock for the purpose of
the Act. We are convinced that the term ‘ghee’ has to be
interpreted on the basis of expression ‘products of livestock’
as defined in Section 2(xv) of the Act. Whatever products
are declared as such by the Government by notification,
they become products of livestock for purposes of the Act.”
Another case of which a reference must be made here is the decision
taken by this Court in Park Leather Industry (P) LTD. v. State of U.P.
and Others (2001) 3 SCC 135. In this case, the Supreme Court was
dealing with the provisions of U.P. Krishi Utpadan Mandi Adhiniyam,
1964, which has a provision dealing with similar issues as are there
before this Court. In the U.P. Act, “agricultural produce” was widely
defined and it included inter alia produce of animal husbandry which
were specified in the schedule. In the schedule, one of the items
was prescribed under the head “animal husbandry products” was
“hides and skins”. The question was whether tanned leather would
come within the term “hides and skins” or not? This Court held that
the term “tanned leather” can be included under “hides and skins”,
for the purposes of the Act and more importantly for the purposes
of payment of “market fee”. The reason being that although while
making a leather into “tanned leather” a process of cleaning, curing
and adding preservatives may be adopted, yet the finished product
which is “tanned leather” though different in physical appearance or
[2024] 3 S.C.R. 181
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
even chemical combination and even commercially a different item
still remains “leather” and would come under the definition of “hides
and skins”. The same reasoning has been adopted by the Full Bench
of Andhra Pradesh High Court that ‘Ghee’ is derived out of ‘milk’ by
undergoing a process, yet it still remains a product of livestock, for
the purposes of the Act and payment of “market fee”.
We are absolutely in agreement with the above reasoning.
11. The second argument of the appellant that the procedure given under
Section 3 of the Act has not been followed, is also not correct. There
is a basic difference between the notification which has to be made
under Section 3 of the Act and the notification which has to be made
subsequently under Section 4 of the Act. What has to be done under
Section 3 is a one-time measure where the Government notifies an
area where purchase and sale of agricultural produce, livestock and
products of livestock can be made. This is a one-time exercise. What
happens under Section 4 of the Act is that the Govt. declares the ‘notified
market area’ in respect of any notified product (products which have
already been notified under section 3 of the Act). A perusal of Sections
3 and 4 of the Act clearly shows that whereas a draft notification is
mandatory under Section 3 and so is the hearing of objections to the
draft notification, there is no similar provision under Section 4 of the Act.
The two Sections of the Act Section 3 and Section 4 are being
reproduced below for a comparative analysis :
Section 3 Section 4
3. Declaration of notified area :–
(1) The Government may publish in
such manner as may be prescribed
a draft notification declaring their
intention of regulating the purchase
and sale of such agricultural produce,
livestock or products of livestock in
such area as may be specified in such
notification.
4. Constitution of Market Committee
and declaration of notified market
area :-
(1) The Government shall constitute,
by notification, a market committee for
every notified area from such date as
may be specified in the notification and
the market committee so constituted
shall be a body corporate by such
name as the Government may
specify in the said notification, having
perpetual succession and a common
seal with power to acquire, hold and
dispose of property and may, by its
corporate name, sue and be sued:
182 [2024] 3 S.C.R.
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(2) Such notification shall state that
any objections or suggestions which
may be received by the Government
from any person within a period to be
specified therein will be considered
by them.
(3) After the expiration of the period
specified in the draft notification and
after considering such objections and
suggestions as may be received before
such expiration, the Government
may publish in such manner as may
be prescribed a final notification
declaring the area specified in the draft
notification or any portion thereof, to
be a notified area for the purposes of
this Act in respect of any agricultural
produce, livestock and products
of livestock specified in the draft
notification.
(4) Subject to the provisions of
sub-sections (1), (2) and (3), the
Government may, by notification –
(a) exclude from a notified area, any
area comprised therein; or
(b) include in any notified area, any
area specified in such notification; or
(c) declare a new notified area by
separation of area from any notified
area or by uniting two or more notified
areas or parts thereof or by uniting
any area to a part of any notified area;
Provided that where, as result of
declaration of a new notified area
under this clause, the entire area
comprised in an existing notified area
is united to one or more notified areas,
the said existing notified are shall stand
abolished.
Provided that any market committee
functioning immediately before such
constitution in respect of a notified
area abolished under the proviso to
clause(c) of sub-section (4) of section
3 shall stand abolished.
(1-A) Any notification made under
sub-section (1) for the constitution
of a new market committee in
respect of any new notified are
declared under clause (c) of subsection (4) of section 3, may contain
such supplemental, incidental and
consequential provisions, including
provisions as to the composition of
the new market committee or new
and existing market committees and
the apportionment of the assets
and liabilities between the market
committees affected thereby].
[(1-B) Notwithstanding anything
contained in Section 3 and in subsection (1) and (1-A) of Section 4
of the Act, the Government, may,
by notification, also constitution a
separate market committee to a
special market in a notified area.]
(2) It shall be the duty of the market
committee to enforce the provisions
of this Act and rules and bye-laws
made thereunder in the notified area
(3) (a) Every market committee shall
establish in the notified area excluding
the scheduled areas such number of
markets as the Government may, from
time to time, direct for the purchase
and sale of any notified agricultural
produce, livestock or products of
livestock and shall provide such
facilities in the market as may be
specified by the Government, from
time to time, by a general or special
order.
[2024] 3 S.C.R. 183
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
(b) Every market committee shall also
establish in the notified area such
number of markets as the Government
may, from time to time, direct for
the purchase and sale, solely of
vegetables or fruits and shall provide
such facilities in the market as may
be specified by the Government, from
time to time, by a general or special
order.
[(bb) Every market committee may
also establish in the notified area
such number of special market as
the Government may from time to
time direct for the purchase and sale
of any notified agricultural produce,
livestock or products of livestock or
fruits and vegetable and may provide
such facilities in the special market as
may be specified by the Government
from time to time, by a general or
special order.]
[(bbb) Every Market Committee may
also declare in the notified area
any warehouse or cold storage or
processing unit or any other place as
a market by following the procedure
as may be prescribed.]3
[(c) The Market Committee shall
specify the limits of every market
established or declared as a market
by it and the Government may notify
the market with such limits, to be
notified market area for the purposes
of this Act.]4
3 Added by the Andhra Pradesh (Agricultural Produce and Livestock) Markets (Amendment) Act, 2015.
4 Subs. by Ibid.
184 [2024] 3 S.C.R.
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[(4) As soon as may be after the
establishment of a market under
sub-section (3), the Government shall
declare by the notification the market
area such other area adjoining thereto
as may be specified in the notification,
to be notified market area for the
purpose of this Act in respect of any
notified agricultural produce, livestock
or products of livestock.
(5) Subject to the provisions of
sub-sections (1), (2),(3) and (4), the
Government may, by notification –
(a) exclude from a notified market
area, any area comprised therein; or
(b) include in any notified market
area, any area specified in such
notification.]5
After discussing provisions of Sections 3 & 4 of the Act, the majority
opinion in the Full Bench concluded that procedural compliance is
only necessary when there is a declaration or later a merger/demerger of a notified area and there is no requirement of following
any particular procedure while issuing a notification under Section
4 (4) of the Act notifying/de-notifying any already notified products
for the purpose of regulation by any respective Agricultural Market
Committee (AMC). In other words, a prior hearing or prior publication
of the draft notification is not a requirement under Section 4 of the
Act, since the notification of the year 1994 is a notification under
Section 4 and not of Section 3 of the Act. Therefore, the argument
that the process under Section 3, has not been followed is totally
misconceived. No prior process was required to be followed as
contemplated under Section 3 of the Act for working the scheme
under Section 4 of the Act. Consequently, we hold that there was
nothing wrong in the 1994 notification and the challenge to the
notification has rightly been turned down by the Full Bench of the
Andhra Pradesh High Court.
5 Omitted vide the Andhra Pradesh (Agricultural Produce and Livestock) Markets (Amendment) Act,
2015.
[2024] 3 S.C.R. 185
Sangam Milk Producer Company Ltd. v.
The Agricultural Market Committee & Ors.
12. We are now left with one more issue related to the market fee. Since
the 1994 notification had an effect which made ‘Ghee’ a product that
could be regulated under provisions of the Act, Market Committees
were empowered to levy fee on the sale and purchase of ‘ghee’ as
per section 12 of the Act. During the pendency of the matter before
the High Court, the appellants were not required to pay market fee
as they were granted interim protection by the High Court. After the
majority decision of the High Court in Kommissetty Nammalwar
(Supra), market committees started issuing demand notices to the
producers of ‘Ghee’ asking them to pay fees from the date of the
notification in the year 1994 to the date of the High Court judgment
i.e. 01.05.2009. This issue was also raised by appellants in the
present appeals and it was prayed that they should be exempted
from paying the fee to the market committees prior to the High Court
judgment. This Court while issuing the notices in present matters,
vide interim order, restrained market committees from collecting the
market fees for the period prior to the High Court judgment. Even
some of the present appeals were heard on this limited question.
13. As per section 4(2) of the Act, the Market Committee has the duty
to enforce the provisions of the Act within a notified area. Section
4(3), which empowers Market Committees to establish markets within
the notified area, also directs that these Market Committees have to
provide facilities in the markets for the purchase and sale of notified
products. Appellants’ argument that these Market Committees did
not provide any facilities has already been dealt with and rejected
by the High Court and we are also of the same view as that taken
by the High Court. The appellants have availed the facility given
by the Market Committee and hence they are liable to pay the fee.
There may also be a question of unjust enrichment here. For all
these reasons, we are of the opinion that this market fee should
be paid as well. The appellants’ prayer that Respondent Market
Committees should be restrained from collecting market fees prior
to the date of the High Court Judgment cannot be accepted. All the
same, since this fee which has now accumulated for more than 14
years between 05.07.1994 to 01.05.2009 may entail some hardship
on the appellants, they shall be permitted to deposit this fee with the
Committee within two years from today, in four equal instalments.
14. Consequently, we dismiss these appeals and uphold the majority
decision of the Andhra Pradesh High Court. The interim orders
186 [2024] 3 S.C.R.
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passed by this Court in the present batch of cases where we had
restrained the respondents from collecting market fees prior to
the date of the High Court judgment during the pendency of these
appeals, stand vacated.
Headnotes prepared by: Divya Pandey Result of the case:
Appeals dismissed.
