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D.V. Kempaiah and ors. Vs. the Chief Marketing Officer, Karnataka and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution;Constitution
CourtKarnataka High Court
Decided On
Case NumberWrit Petns. Nos. 6499, 7190 of 1975 and 14, 35 and 73 of 1976
Judge
Reported inAIR1979Kant195; ILR1979KAR1291
ActsKarnataka Agricultural Produce Marketing Regulation Act, 1966 - Sections 75, 76, 77 and 84; Constitution of India - Article 19(1)
AppellantD.V. Kempaiah and ors.
RespondentThe Chief Marketing Officer, Karnataka and ors.
Appellant AdvocateH.K. Vasudeva Reddy, ;S.G. Sundaraswamy and ;C.N. Kamath, Advs.
Respondent AdvocateR.N. Byra Reddy, Advocate General, ;S.G. Doddakalegowda, 1st Addl. Government. Advs. H.B. Datar, Adv. For K.S. Desai and ;B.G. Sridharan, Advs.
Excerpt:
.....even as between traders and traders could be prohibited in a specified area like outside the market yard and inside the market air1956bom21 and [1971]3scr370 .having regard to these principles, we cannot but reject the contention urged for the petitioners that s. the challenge to the validity of section 8(2), therefore, has to fail. but this enunciation can no longer hold good. the learned counsel contended that there is absolutely no reason why transactions between traders and traders should be subject to such restrictions,.prima facie, it appears to us, that there is a good deal of substance in the criticism. that principle has been well settled by a string of decisions of the supreme court commencing from the case in a. [1976]1scr552 .15. we also do not find any substance in the..........fallow); 15 % forested; and 23 % barren, uncultivated or used for non-agricultural purposes. the state produces a wide diversity of agricultural crops. the act in question falls within the legislative entries 26 and 28 of list ii of the seventh schedule to the constitution. these legislative entries deal with 'trade and commerce within the state', and 'markets and fairs' respectively. it is stated that the state of karnataka in its agricultural development plan has stressed development of modern regulated markets for improved marketing of agricultural produce. the improved marketing facilities are found to be particularly important for the 7 lakhs small farmers, who hold less than 2 hectares each, and whose bargaining power is nowhere near the big farmers. to increase competition and.....
Judgment:

Jagannatha Shetty, J.

1. Petitioners in all these writ petitions are either traders or commission agents. They are also called as market functionaries under the Karnataka Agricultural Produce Marketing (Regulation Act, 1966, hereinafter referred to as 'the Act'. They are presently carrying on their business in agricultural produce in a locality called 'Old and New Tharagupet along with Krishna Rajendra Market' at Bangalore. The area consisting of these localities was once notified as 'market yard', but now a new market yard has been established at Yeshwanthpur on Tumkur Road and the Market Committee has issued notices to the petitioners to shift their business to the new market yard. The petitioners have challenged the validity of the notices contending, inter alia, that the objections filed by them against the proposal to shift the market yard were not considered, and there were no adequate facilities for trading in the new market yard.

2. During the pendency of the writ petitions, that Act was amended by Karnataka Act 43 of 1976 widening the scope of the parent Act so as to bring within its fold all activities of buying and selling of notified agricultural produce. The amending Act ('Act 43 of 1976') also prohibited the sale and purchase of notified the agricultural produce in any area in the market other than the market yard, sub-yard or the sub-market yard. The petitioners by seeking appropriate amendments to the writ petitions, have also challenged the constitutional validity of Act 43 of 1976.

3. Before examining the salient featured of the Act, it may be necessary to have a bio-data of the State of Karnataka and the economic philosophy informing the legislation. The State with an area of about 192,000 km. Is located in the south-western part of the Deccan Plateau. It has a coastline of about 300 km. Population is about 29.3 million (Provisional figures of 1971 population census) representing some 5. 5 % of the total population of India, Karnataka ranks sixth and eighth in area and population, respectively. About 76 % of the population live in rural areas (29,500 villages). The remaining 24 % live in the State's 245 towns, about one-half (12%) in the 11 principal centres of over 100,000 people. For administrative purposes, the State is divided into 4 divisions 19 districts, and 175 Talukas (administrative units)

Some 6.7 million persons are engaged in agriculture, representing 65 % of the total working population. The total land area in the State is some 19.0 million ha, and of this some 62% is cultivated (of which about one seventh is fallow); 15 % forested; and 23 % barren, uncultivated or used for non-agricultural purposes. The State produces a wide diversity of agricultural crops.

The Act in question falls within the legislative entries 26 and 28 of List II of the Seventh Schedule to the Constitution. These legislative entries deal with 'Trade and Commerce within the State', and 'Markets and Fairs' respectively. It is stated that the State of Karnataka in its agricultural development plan has stressed development of modern regulated markets for improved marketing of agricultural produce. The improved marketing facilities are found to be particularly important for the 7 lakhs small farmers, who hold less than 2 hectares each, and whose bargaining power is nowhere near the big farmers. To increase competition and improve efficiently in marketing of agricultural produce, a meeting place for buyers and sellers has been found to be necessary. The facilities of handling large quantities of produce under a system that assures maximum competition and a minimum of wastage should be provided to them. With that end in view, the legislature has enacted the Act in question.

4. We may now look at some of the provisions of the Act. The Act provides for delimitation, by notification, of a market area (Section 3). In the market area the notified agricultural produce shall be regulated (Section 4). For every market area there shall be a market. For every market there shall be a market yard (Section 6). No place in the market or the sub-market, except the market yard, sub-yard or the sub-market yard, as the case may be, shall be used for the purchase or sale of notified agricultural produce (Section 8). Only licensed traders, commission agents and other market functionaries are allowed to operate in such markets. There commission and other charges are fixed. The aim of these regulated markets is the eradication of weighing malpractices, excessive market deductions and collusion among traders. The Act provides for the constitution of Market Committees which is a representative body of agriculturists, traders, commission agents etc. (Sections 10 and 11). These Committees are statutory legal bodies with designated powers. (Section 63). They have to maintain and manage the market yards, provide facilities for marketing of agricultural produce and supervise the traders and licences. In addition to their regularity functions, they are granted corporate powers, enabling them to own property, borrow money, collect fees, sue and be sued etc. All moneys received or realised by a Market Committee either by way of fees or penalty, loans or grants shall form part of a fund called 'the Market Fund'. (Section 90).

5. The historical background for this kind of legislation has been succinctly stated by the Supreme Court in Arunachala Nadar v. State of Madras, AIR 1956 SC 300 paras 6 and 7 as follows:

'6. There is a historical background for this Act. Marketing legislation is not a well-settled feature of all commercial countries. The object of such legislation is to protect the procedures of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce....................................................

7. The Act, therefore, was the result of a exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of commercial crops by providing suitable and regulated market by eliminating middlemen and bringing face to face the producer and the buyer so that they may meet on equal terms, thereby eradicating or at any rate reducing the scope of the exploitation in dealings. Such a statute cannot be said to create unreasonable restrictions on the citizens' right to do business unless it is clearly established that the provisions are too drastic, unnecessary harsh and overreach the scope of the object to achieve which it is enacted.'

6. We now turn to Act 43 of 1976. It just contains five sections, and it would be better to set out the same hereunder:

'1. Short title-This Act may be called the Karnataka Agricultural Produce Marketing (Regulation) (Second Amendment) Act, 1976.

2. Amendment of long title.-In the long title of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966 (Karnataka Act No. 27 of 1966) (hereinafter referred to as the principal Act), for the words 'buying and selling' the word 'Marketing shall be substituted.

3. Amendment of Preamble-In the Preamble to the principal Act, for the words 'buying and selling', the word 'marketing' shall be substituted.

4. Amendment of Section 2.-In Section 2 of the Principal Act, after clause (18), the following clause shall be inserted, namely,-

'18-A. 'Marketing' means buying and selling of agricultural produce and includes grading, processing, storage, transport, packaging, market information and channels of distribution.'

5. Amendment of Section 8.-In Section 8 of the principal Act,-

(1) in sub-section (1), for item (ii) to the proviso to clause (b) the following item shall be substituted, namely:-

(ii) to the purchase of such produce if the purchaser is a person who purchases such produce for his domestic consumption;'

(2) in sub-section (2), the words 'belonging to a producer' shall be omitted.

(3) for the proviso to sub-section (2), the following proviso shall be substituted, namely,-

'Provided that nothing in this sub-section shall be applicable to the purchase or sale of such agricultural produce by way of retail sale'.'

The words 'buying and selling' in the preamble and the title to the Act have been substituted by the word 'marketing', and 'Marketing' has been defined to mean not only 'buying and selling of agricultural produce' but also 'grading processing, storage, transport, packaging, market information and channels of distribution.' The amendment has this widened the scope of the Act. There is also an important change in Section 8. Sub-section (2) of Section 8 before its amendment read as follows:

'8(2) No place in the market or the sub-market, except the market yard, sub-yard or the sub-market yard, as the case may be, shall be used for the purchase or sale of notified agricultural produce belonging to a producer.

Provided that nothing in this sub-section shall be applicable to the purchase or sale of such agricultural produce by way of retail sale if the producer of such produce is himself its seller and the purchaser is a person who purchases such produce for his domestic consumption.'

It is clear from the section that there was no impediment or prohibition for trading on agricultural produce as between traders and traders outside the market yard or sub-yard and inside the market. But the transactions with the producer or trading on the produce belonging to a producer should be confined exclusively within the market yard, sub-yard or the sub-market yard. The retail sale of agricultural produce with the producer was however not barred in any place. After the amendment, sub-section (2) of Section 8 provides as follows:-

'8(2) No place in the market or the sub-market, except the market yard, sub-yard or the sub-market yard, as the case may be, shall be used for the purchase or sale of notified agricultural produce:

Provided that nothing in this sub-section shall be applicable to the purchase or sale of such agricultural produce by way of retail sale.'

The last words 'belonging to a producer' in sub-section (2) have been omitted. The result is that there would be a total ban on wholesale purchase or sale of agricultural produce outside the market yard, sub-yard or sub-market yard and inside the market. There cannot be any such sale or purchase even as between two traders. In other words, the Act now creates 'a no man's land' or a 'buffer zone' where sale or purchase of agricultural produce except by way of retail is totally barred.

7. Sub-section (2) of Section 8 has been challenged by the petitioners mainly on two grounds: (i) That it has imposed an unreasonable restriction on their right to trade guaranteed to them under Article 19(1)(g) of the Constitution; and (ii) That since the Act was intended to safeguard the interests of only the producer, the amendment to Section 8 should be so construed as imposing no restrictions on transactions between traders and traders.

8. It will be convenient to consider these two contentions at this stage itself.

9. Article 19(1)(g) of the Constitution confers on all citizens a right to practise any profession, or to carry on any occupation, trade or business subject to the power of the State to impose reasonable restrictions in the interests of the general public. The reasonable restriction connotes that the limitation imposed on a citizen in the enjoyment of that right should not be arbitrary and must have a reasonable relation to the object which the legislation seeks to achieve. It follows, therefore, the reasonableness of a restriction has to be determined in an objective manner and from the stand-point of the interests of the general public and not from the point of view of the persons upon whom the restrictions are imposed or upon abstract considerations.

10. The petitioners' grievance is that the State cannot prevent then from carrying on wholesale trade in notified agricultural commodities in their existing places and they cannot by compulsion be asked to confine their trade only within the new market yard.

While considering this question, we must bear in mind that the liberty of an individual to do as he pleases even in innocent matters is not absolute. As we have observed in a recent case Sohanlal Jain v. State of Karnataka (W. P. No. 5525 of 1975 and connected W. Ps. Disposed of on 19-1-1979) (Kant):

'That liberty frequently must and is very often made to yield to the common good. The striking of the right balance between the individual liberty on the one hand and the common good-as the State conceives it-on the other, is a perennial and continuing exercise beset with recurring difficulty. The restraints on liberty should be judged not only subjectively as applied to a few individuals who come within their operation, but also objectively as securing the liberty of a greater number. This stems from the theory that 'the whole is greater than the sum total of all the parts'. The concept, of public welfare is a broad and inclusive concept, the social, economic, moral and physical well-being of the community, as well as its political well-being coming within its content...................'

The petitioners in our view, cannot legitimately contend that the restriction complained of is unreasonable. There is no fundamental right to carry on any trade in any particular locality. It is perfectly open to the State to prohibit business being done in a particular place or locality. It is equally legitimate to permit a business being done in a particular locality if public interest demands. In Bapubhai v. State of Bombay, : AIR1956Bom21 Chief Justice Chagla while considering the scope of a similar restriction in the Bombay Agricultural Produce Markets Act, 1939, held that it was reasonable. This Court in Ramakrishna Hari Hegde v. The Market Committee, Sirsi, (1965) 4 Law Rep 366 at p. 375 was also of the same view. Honniah, J., while considering the validity of a provision in the Bombay Agricultural Produce Markets Act, 1939 prohibiting the sale of purchase of any agricultural produce in some place, observed:

'............... The amended Section 4-A(3) is based on this rule. It would be seen that according to this rule, within the larger market area, which is declared by the Government under Section 4, there should be a market yard in which the business should be transacted and contiguous to the market yard, there should be an area known as market proper where no business should be transacted. This area, where no business should be transacted is set apart in order to protect the producers. If a producer came to the market area with the intention of displaying his goods in the market yard and selling them there, he should not be inveigled into parting with his produce before he reached the market yard, the intention being that the producer should be allowed to sell his produce at competitive rates and he could only get competitive rates, provided he sold his goods in the market yard, the middlemen have to put through the transactions, in accordance with the rules and regulations in force. Hence the producer is likely to get a fair deal for his produce.' (Underlining is ours).

The learned Judge continued at p. 376, para 10: .'..........Outside that belt there is no restriction and within the belt the only place where business could be transacted is in the market yard because outside the market yard the whole contiguous area becomes as it were a prohibited zone. The Act does undoubtedly restrict the freedom of a citizen to trade 'as and where he wills'. This was enacted for the very purpose of controlling the business in commercial crops. The restrictions imposed are reasonable restrictions and they do not infringe the rights of a citizen to trade 'as and where he wills''

The decision of this Court in Ramakrishna Hari Hedge's case was affirmed by the Supreme Court in Ramakrishna Hari Hedge v. The Market Committee, Sirsi, : [1971]3SCR370 , Jaganmohan Reddy, J., while speaking for the Supreme Court observed at page 1019, para 8:

'........................... The declaration of the Market area subject to Section 5-A has the effect of prohibiting the purchase or sale of agricultural produce in any place in that area except in the area declared as a principal Market Yard or Sub-Market yard or yards, if any. This Court had earlier in Mohammad Hussain Gulam Mohammad v. State of Bombay, : [1962]2SCR659 held Sections 4, 4-A, 5, 5-A and 5-AA to be constitutional and that none of the said provisions imposed unreasonable restrictions on the right to carry on trade in the agricultural produce regulated under the Act and as such were not violative of Article 19(1)(g) of the Constitution.'

11. In Mohammadbhai v. State of Gujarat, : AIR1962SC1517 the Supreme Court again observed:

'Next it is urged that the provisions in the Act also affect transactions between traders and traders, and also affect produce not grown within the market area if it is sold in the market area. That is undoubtedly so. But if control has to be effective in the interest of the agricultural producer such incidental control or produce grown outside the market area and brought into the market yard for sale is necessary as otherwise the provisions of the Act particular produce sold in the market yard was not grown in the market area. For the same reasons transactions between traders and traders have to be controlled, if the control in the interest of agricultural producers and the general public has to be effective.'

The following principles clearly emerge from the above decisions: (i) If the Act intends to protect the producer by eradicating or at any rate reducing the scope of the exploitation in dealings, it cannot be said to create unreasonable restrictions on the citizens' right to do business unless it is clearly established that the provisions are too drastic, unnecessarily harsh and over-reach the scope of the object of the Act, : AIR1959SC300 , (ii) If the control on marketing of agricultural produce has to be effective in the interest of the agricultural producer, transactions between traders and traders have also to be controlled, : AIR1962SC1517 . And (iii) In order to achieve the objects of the Act, transactions on agricultural commodities even as between traders and traders could be prohibited in a specified area like outside the market yard and inside the market : AIR1956Bom21 and : [1971]3SCR370 .

Having regard to these principles, we cannot but reject the contention urged for the petitioners that S. 8(2) imposes an unreasonable restriction on the right guaranteed to them under Article 19(1)(g) of the Constitution. The challenge to the validity of Section 8(2), therefore, has to fail.

12. Nor there is any merit in the second contention urged for the petitioners that we should so construe Act 43 of 1976 as imposing no restrictions on transactions between trades and traders. The decision of this Court in K. N. Marularadhya v. The Mysore State, AIR 1970 Mys 114 of course lends support to this contention. Therein it was observed that the Act, as it then stood, was intended to protect only the first sale of agricultural produce to which the producer was a party. But this enunciation can no longer hold good. Sections 8(2) and 65 in particular, do not have the original colour and content. The Act has thrown the protective net wider so as to cover not only the transactions between traders and producers, but also those between traders and traders. Its present object, among others, is to regulate the marketing or agricultural produce and not merely to regulate the buying and selling to which a producer is a party. We cannot, therefore, construe that Act 43 of 1976 as it stands, was not intended to cover transactions between traders and traders in the area outside the market yard and inside the market. It is not the contention for the petitioners that the provisions of the Act are beyond the legislative competence. In B. Rajasekhariah v. The Secretary, Trptue Agricultural Produce Market Committee, Tiptur, W. P. No. 2839/75 and connected W. Ps. disposed of on 28-9-1978 this Court has observed that the Act could be more comprehensive to control every transaction on agricultural commodities.

13. Mr. Sundaraswami, learned counsel for the petitioners next contended that some of the provisions in the Act are too drastic and unrelated to the objects of the Act. He laid particular emphasis on Sections 75, 76, 77 and 84, Section 75 provides for payment of price subject to such deductions, in cash only. Section 76 provides sale of agricultural produce by tender system or by public auction or by open agreement or by sample etc. Section 77 states that every licensed trader who buys notified agricultural produce shall at such time enter into a written agreement with the seller executed in triplicate of which one copy shall be retained by the buyer, one copy shall be retained by the seller and the third copy shall be submitted to the Market Committee. Section 84 provides for arbitration for settlement of disputed. The learned counsel contended that there is absolutely no reason why transactions between traders and traders should be subject to such restrictions,. Prima facie, it appears to us, that there is a good deal of substance in the criticism. The learned counsel for the Market Committee was not unmindful of the force that criticism. He has produced a memo dated 1st December, 1978 undertaking that the above provisions will not be enforced on transactions between traders until the Government takes appropriate action in amending those provisions. Mr. Advocate General was still more gracious. On behalf of the State he has also produced a memo dated 6th December, 1978. It reads thus:

'The Government is willing to remove the restrictions in relation to licensed trader exclusively by making necessary amendments to Sections 75, 76, 77 and 84 of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1966.

As regards Section 85(3), the feasibility of amendment is being considered by the Government.'

These memos are recorded. In view of the undertaking contained therein it is unnecessary to consider the contention urged for the petitioners.

14. Last contention on this part of the case relates to the repugnancy of the legislation. It was urged that Act 43 of 1976 conflicts with the several provisions of Sale of Goods Act, the Contract Act and Arbitration Act and the former has not been reserved for consideration of the President as required under Article 254(1) of the Constitution. It is too hard to accept this contention also. The question of repugnancy can arise only with reference to legislations falling under the concurrent list. That principle has been well settled by a string of decisions of the Supreme Court commencing from the case in A. S. Krishna v. State of Madras : 1957CriLJ409 to the Kerala State Electricity Board v. Indian Aluminium Co. : [1976]1SCR552 .

15. We also do not find any substance in the next contention urged for the petitioners that Act 43 of 1976 is bad for want of Presidential sanction as required under Article 304(b) of the Constitution. We have already held that the restrictions imposed by Act 43 of 1976 are in the nature of regulatory measures and it is well settled that such measures need not comply with the requirement of the provisions of Article 304(b). See Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan : [1963]1SCR491 and G. K. Krishna v. State of Tamil Nadu : [1975]2SCR715 .

16. What remains to be considered is the grievance of the petitioners relating to the factual aspects of the matter. The first complaint in this regard was that there was no consideration of the objections filed by the petitioners against the proposal to shift the business to the new market yard. In order to examine this question, we perused the records produced by the Government Advocate. We find there from that the Chief Marketing Officer has considered the objections raised by the petitioners and made a considered order rejecting them. It was only after rejecting those contentions, he directed that the impugned notification should be issued. There is, therefore, no substance in this contention.

The grievance next made by the petitioners was in regard to the inadequate facilities provided in the new market yard and denial of a reasonable period to shift their life-long business. It is no doubt true that the time allowed to the petitioners by the impugned notices was just six days; but the petitioners have obtained stay of those notices and they have been still continuing their business in the existing premises. Even if there should be any inconvenience in the immediate shifting the same could be relieved by grant of a reasonable time to shift.

17. Similar is the fate of the complaint of the petitioners regarding the facilities provided in the new market yard. Maybe when the petitioners were asked to shift their business to the new market yard there were no adequate facilities for trading purposes. But the Market Committee has since improved the market yard providing almost every facility to the market functionaries. This is quite evident from the records produced by the Market Committee, and also from the admission made by not less than 119 market functionaries who have been trading in the new market yard since a couple of years. These 119 traders have been impleaded as respondents in these petitions. They are supporting the Market Committee in resisting the writ petitions with a contention that there are adequate facilities and premises in the new market yard. When a substantial number of persons are already trading in the new market yard, the contention of the petitioners that they cannot move to the new market yard for want of adequate facilities can hardly be accepted. However, Mr. Datar, learned counsel for the Market Committee at the fanged of his arguments, made a statement before us that those petitioners who had applied for sites and who have not yet been granted would be given accommodation if they approach the Market Committee with all the evidence. He also submitted that the Market Committee would try as far as possible to provide accommodation for the purpose of trading even for the other petitioners who have not yet applied for sites. This is indeed quite a generous attitude. Mr. Datar has no objection to have these submissions placed on record. We accordingly place them on record.

In view of these submissions, it is for the petitioners to approach the Market Committee for allotment of premises for the purpose of their trading activities.

18. Before parting with the case, we would like to record one other submission made by Sri Sridharan, counsel for the Market Committee. At the request for time prayed by the petitioners for shifting their business to the new market yard, Mr. Sridharan said that the Market Committee has no objection to allow six months time from today for the petitioners to continue their business at their present habitat. This submission is also recorded.

19. In the result, subject to the time thus given these petitions fail and the rules are discharged. In the circumstances, we make no order as to costs.

20. Petition dismissed.


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