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Gummadi Narayana Reddi and ors. Vs. State of Andhra Pradesh - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. Nos. 13, 55 and 184 of 1963
Judge
Reported inAIR1964AP373
ActsConstitution of India - Articles 14, 19(1), 245, 301, 305 and 366; Hyderabad Markets Act - Sections 1 and 2(1)
AppellantGummadi Narayana Reddi and ors.
RespondentState of Andhra Pradesh
Appellant AdvocateK. Ramachandra Rao, ;K. Venkateswara Rao, Advs. and ;P.A. Choudary and Manohar Singh
Respondent Advocate3rd Govt. Pleader
DispositionPetition dismissed
Excerpt:
.....from giving effect to any provisions of act on ground that act is ultra vires the constitution - state government empowered to notify any commodity as 'agricultural produce' under section 2 (1) - definite criteria and standards set by section to be followed by government before making notification - section cannot be said to be conferring uncontrolled power - purpose of act is to provide for establishment of open market for agricultural produce and for better regulation of market - regulations provided in act are reasonable restriction imposed in public interest - right to carry on business not unreasonably restricted by regulations - restrictions imposed by act confined to cities of hyderabad and secunderabad - limited application of act founded on intelligent differentia..........in mohammed hussain v. state of bombay, : [1962]2scr659 . section 29 of that act provides that the state government may by notification in the official gazette add to, amend or cancel any of the items of agricultural produce specified in the schedule to the act. it was contended that this section gave a completely unregulated newer to the state government to include any crop within the schedule without any guidance or control whatsoever. their lordships held that 'in enacting section 29, the legislature had not stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate newer which was deemed necessary to carry out the purpose and policy of the act.' they rejected the contention that sec: 29 gave uncontrolled power to the.....
Judgment:

Satyanarayana Raju, J.

1. These petitions under Article 226 of the Constitution, arc for the issue of a writ of mandamus or other appropriate writ, direction or order, to the State of Andhra Pradesh to forbear from enforcing G. O. Ms. No. 2271, Agriculture, dated 29th November, 1962, or any of the provisions of the Hyderabad Markets Act (II of 1339 Fasli) or the rules or bye-laws thereunder, in respect of vegetables and fruits.

2. The petitioners are ryots engaged in the cultivation of vegetables wholesale commission agents and fruit merchants in and around the Cities of Hyderabad and Secunderabad.

3. The material averments, in the affidavits filed in support of the petitions are these:

There are three wholesale markets in the Cities of Secunderabad and Hyderabad, in which vegetables and fruits are sold. They are Hissamganj in Secunderabad, and Mirialamandi and Subzimandi in Hyderabad. From times immemorial, the wholesale commission agents, the growers and the retail purchasers have been carrying on business in those market's according to certain well recognised and well established usages, customs and practices. After the vegetables and fruits are brought to the markets by the growers, the commision agents invite the retail dealers to officer their bids. The rates vary from hour to hour depending on the quantities available and on the demand for particular varieties. When the bids are accepted, the commodities are weighed and delivered to the retail dealers.

For the services rendered by them, the commission agents are paid their commission by the growers as well as the retail dealers. The commission agents serve as useful intermediaries for bringing together the growers and the retail dealers. The growers receive financial aid from the commission agents. The retail dealers do not have the necessary finance to pay for the commodities purchased by them. The commission agents also extend credit to the retail dealers. The mode of business transacted in the markets has been highly beneficial to all the parties concerned. If the notification issued by the Government, declaring vegetables and fruits to be agricultural produce for the purposes of the Act, is to be enforced it would be detrimental to the business of the petitioners.

4. The allegations made by the petitioners, and in particular, the averment that the mode of business now in vogue in the markets is highly beneficial to all the parties concerned, are denied by the Government in their counter affidavit. Itis stated that there are several unwholesome practices which are prevalent in the markets which are not advantageous either to the growers or to the consumers. It is stated that the Act, the rules, the bye-Laws and the notification constitute reasonable restrictions imposed in the public interest.

5. The contentions raised on behalf of the petitioners cover a wide ground, and they may be summarised as follows:

(1) Section 2(1) of the Act, which empowers the Government to notify and include any produce within the ambit of 'agricultural produce', confers uncanalised and uncontrolled power on the Government without prescribing any criteria or standards or principles on which a produce of land could be so notified.

(2) The provisions of the Act impose unreasonable restrictions on the petitioners' light to carry on business in vegetables and fruits and are repugnant to the rights guaranteed under Part III of the Constitution.

(3) The provisions of the Act and the rules and the bye-laws, in so far as they are confined only to the Telangana area and the persons carrying on business therein, are discriminatory.

(4) The provisions of the Act in so far as they are sought to be made applicable to vegetables and fruits and persons carrying on business in those commodities in the Telangana area, are violative of the provisions of Article 301 of the Constitution as they affect the freedom of inter-State trade and commerce.

(6) Before dealing with the contentions raised on behalf of the petitioners, it is necessary torefer to the material provisions of the Act. The Act was passed to provide for the establishment of open markets for the purchase and sale of cotton and of other agricultural produce and live stock in the State of Hyderabad and for thebetter regulation of such markets. It was amended by Act XXII of 1956. Section 3 provides for the constitution of markets and market committees and empowers the Government to notify the place which is declared to be a market for agricultural produce or cotton or for both. The said notification shall specify the limits of such markets and these limits shall include the local area determined by the Government.

Section 5 empowers the Government to make rules, either generally or specially, for the management and conduct of any market pr group of Markets. Section 6 empowers the Government to make bye-laws. Section 16 provides that no person shall work as a broker, load carrier, measurer or surveyor or go down-keeper within the limits of a market, so long as he is not employed by the Market Committee or has received a licence therefrom. Section 17 provides that no private market shall be established at places declared to be markets by the Government or at places adjacent thereto, except with the written sanction of the Government signed by a Secretary to the Government. Section 18 provides penalties for contravention of the provisions of the Act. These are the main provisions of the Act. As already stated, vegetables and fruits have been included within the definition of agricultural produce by the notification issued by the Government.

7. We will now deal with the contentions raised by the petitioners.

8. Section 2 is the definition section. The definition of 'agricultural produce' contained in 6. 2(1) is as follows:

' 'Agricultural produce' means every produce of land other than cotton declared by the Government by a notification in the Jarida (Gazette) to be agricultural produce for the purposes of this Act.'

9. As supporting his contention that the Legislature has not specified the criteria and prescribed the standards or principles on which a particular produce of land is to be notified as agricultural produce, Sri K. Ramachandra Rao, the learned counsel for the petitioners, has relied upon a decision of the Supreme Court, Hamdard Dawakhana v. Union of India, : 1960CriLJ671 d. There the facts were these: The Hamdard Dawakhana alleged that soon after the Drug and Magic Remedies (Objectionable Advertisement) Act came into force, they were intimated by the Drugs Controller, Delhi, that the provisions of Section 3 of the Act had been contravened by them and they were directed to recall their products sent to Bombay and other States. Subsequently, objections were taken by the Drugs Controllers of other States with regard to the advertisements of medicines and drugs prepared by the petitioners. The petitioners contended before the Supreme Court that the power given to the rule-making authority under Clause (d) of Section 3 of the Act was unconstitutional. That provision ran as follows:

Section 3 -- 'Subject to the provisions of this Act, no person shall take any part in the publication of any advertisement referring to any drug in terms which suggest or are calculated to lead to the use of that drug for.........

(d) the diagnosis, cure, mitigation, treatment or prevention of any venereal disease or any other disease or condition which may be specified in rules made under' this Act.' (Italics (here in ' ') ours).

10. Their Lordships have held that the power of specifying diseases and conditions as given in Section 3(d) goes beyond the permissible boundaries of valid delegation and that the delegation was unconstitutional in that the administrative authority had not been supplied with proper guidance. It is also held that Parliament has established no criteria, no standards and has not prescribed any principle on which a particular disease or condition is to be specified in the Schedule. This was based on the conclusion that the words 'or any other disease or condition which may be specified in rules made under this Act,' conferred uncanalised and uncontrolled power on the Executive. This decision is distinguishable.

11. The Hyderabad Agricultural Markets Act is modelled on the Bombay Agricultural Produce Markets Act. Their Lordships of the Supreme Court had occasion to consider the provisions of the Bombay Act in Mohammed Hussain v. State of Bombay, : [1962]2SCR659 . Section 29 of that Act provides that the State Government may by notification in the Official Gazette add to, amend or cancel any of the items of agricultural produce specified in the Schedule to the Act. It was contended that this Section gave a completely unregulated newer to the State Government to include any crop within the Schedule without any guidance or control whatsoever. Their Lordships held that

'in enacting Section 29, the Legislature had not stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate newer which was deemed necessary to carry out the purpose and policy of the Act.'

They rejected the contention that Sec: 29 gave uncontrolled power to the State Government and was therefore unconstitutional.

12. In Arunachala Nadar v. State of Madras, : AIR1959SC300 the Supreme Court considered a similar contention with regard to the provisions of the Madras Commercial Crops Markets Act (XX of 1933). That Act specified certain crops as commercial crops in the definition section and added that the words 'commercial crop' used in trial Act would include any other crop or product notified by the State Government in the Fort. St. George Gazette as a commercial crop for the purposes of that Act. In view of this inclusive definition of 'commercial crop' in the Madras Act, it was open to the State Government to include any crop within the meaning of the words 'commercial crop' which was to be regulated by that Act. The Act had a schedule, when it was originally passed, in which certain crops were included. Under that Act, therefore, it was open to the State Government to bring any crop other than those specified originally in the Schedule within its regulatory provision.

13. There is thus no distinction so far as the main provisions are concerned between the impugned Act and the Madras Act whose constitutional validity was upheld by the Supreme Court. We may add that Section 2 (1) of the impugned Act establishes definite criteria and standards in that it defines agricultural produce as produce of the land. We are, therefore, unable to accede to the petitioner's contention that Section 2 (1) confers uncontrolled power on the State Government to notify commodities as agricultural produce.

14. It is next contended that the provisions of the Act impose unreasonable restrictions on the petitioners' right to carry on business in vegetables and fruits and are repugnant to the rights granted under Part III of the Constitution. As already stated, the preamble introduced the Act with a recital that

'It is expedient to provide for the establishment of open markets for the purchase and sale of cotton and of other agricultural produce and livestock in the State of Hyderabad and for the better regulation of such markets.'

15. Tracing the historical background of the Madras Commercial Crops Markets Act, which is similar to the present Act, their Lordships of the Supreme Court observed in A I R 1959 S C 300;

'Marketing legislation is now a well-settled feature of all commercial countries. The object of such legislation is to protect the producers of commercial crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their produce.'

These observations are equally applicable in considering the validity of the present Act. The Act empowers the Government to establish markets for agricultural produce or cotton or for both. There is a provision for the constitution of Market Committee Fund which shall be utilised for the establishment and improvement of the markets, for the construction and repair of buildings necessary for the purposes of the market and the health, convenience and safety of the persons using the market. When the Government has notified any place to be a market persons other than those licensed for the purpose are prohibited from trading within the limits of the market. There is also a provision that no private market shall be established at places declared to be markets or at places adjacent thereto.

16. Among other things, the Rules framed under the Act provide for settlement by arbitration of all disputes between a buyer and a seller or their agents regarding the quality or weight, the price or rate to be paid, the allowance for wrappings, dirt or impurities or deductions for any cause; for prohibiting brokers from acting both on behalf of the seller and the buyer in any transaction for the manner in which the auction shall be conducted and bids made or accepted in the market; for providing godowns and storage facilities for cotton and other agricultural pro-duce.

17. The bye-laws provide for the management of the affairs of the market and for the conditions of purchase and sale therein

18. Hyderabad and Secunderabad have a population of more than 14 lakhs and are the largest vegetable and fruit consuming centres in the State. It is averred in the counter-affidavit filed on behalf of the State Government that there are unhealthy trade practices prevailing in the market where vegetables and fruits are sold. In particular it is stated that commission agents are charging a high rate of commission both from the sellers and the retailers; that consumers are made to pay mote than 30 to 40 per cent than what the grower gets because of the intervention of middlemen: and that the commission agents very often create artificial scarcity of commodities by purchasing the entire produce from the sellers at a cheap rate and withholding supplies. It is stated that due to these practices and due to emergency created by the Chinese aggression and due to the creation of artificial scarcity by the commission agents, there has been an enormous rise in the prices of vegetables and fruits and compared with the prices prevailing in the corresponding periods of the previous year, there has been an increase of two to three times in the prices of these commodities and it was therefore that the Government had decided to enforce the provisions of the Act, These averments have not been controverted by the petitioners.

19. The purpose and object of the Act is not to eliminate middlemen altogether but to control their activities in such a way as to promote the interests of the community at large. Dealing with a somewhat identical attack on the validity of the provisions of the Bombay Agricultural Produce Markets Act, on which the present Act is modelled, their Lordships of the Supreme Court have held in : [1962]2SCR659 that the material provisions of the Act are constitutional and intra vires and do not impose unreasonable restrictions on the right to carry on trade in the agricultural produce regulated by the Act. A similar view was taken by the Supreme Court with regard to the validity of the Madras Commercial Crops Markets Act, which is somewhat similar in its scope and purpose. We hold that the provisions of the Act do not impose unreasonable restrictions on the right of citizens to carry on trade. The regulatory provisions off the Act are reasonable restrictions conceived in the interests of the growers of agricultural pro-duce and the community at large.

20. It is then contended that the restrictions imposed by the Act have been confined to the Cities of Hyderabad and Secunderabad and that they constitute unfair discrimination and offend Article 14 of the Act. As pointed out by their Lordships of the Supreme Court in Moti Das v. S.P. Sahi, : AIR1959SC942 :

'It is now well settled by a series of decisions of this Court that while Article 14 forbideclass legislation, it does not forbid reasonable classification for the purpose of legislation, and in order to pass the test of permissible classification, two conditions must be fulfilled, namely (1) that the classification muse be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (2) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases such as, geographical, or according to objects or occupations and the like. The decisions of this Court further establish that there is a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional guarantee: that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; and further that the legislature is free to recognise degree of harm and may confine its restrictions to those cases where the need is deemed to be the clearest.'

21. Article 14, therefore, permits classification if there is a reasonable basis for the differentiation.

22. Judged by the test laid down by their Lordships of the Supreme Court, the question for consideration is whether there could be a differentiation between the Cities of Hyderabad and Secunderabad and the other areas covered by the Act. As already indicated, the Act deals with the regulation of purchase and sale of agricultural produce and the establishment of markets for such produce. It provides for the formation of market areas and market committees. There is undoubtedly a difference between conditions obtaining in the Cities of Hyderabad and Secunderabad and other towns and villages which are covered by the Act. The cities have a large population of over fourteen lakhs of people. They are the largest vegetable and fruit consuming centres in the State. As stated by the petitioners themselves, there are three wholesale markets in the Cities, namely Hissam Gunj in Secunderabad, Miriyal Mandi and Sabzi Mandi in Hyderabad. There are certain usages and practices prevailing in these markets which are not found elsewhere.

23. If what is stated in the counter-affidavit filed on behalf of the State represents the correct position, we have no doubt that the application of the Act to the Cities of Hyderabad and Secunderabad satisfies the test of permissible classification. The classification is founded on an intelligent differentia which distinguishes the Cities from towns and villages in the area covered by the Act. The differentia has also a reasonable relation to the object sought to be achieved by the statute in question.

24. The next contention is that no law similar to the impugned Act is in force in the Andhra area and, therefore, there is discrimination which is hit by Article 14. Under the States Re-organisation Act, 1956, certain districts which formed part of the erstwhile Slate of Hyderabad have been added on to the State of Andhra, which has been renamed the State of Andhra Pradesh consists of two areas, one of which came to that State from the former Part A State of Madras and the other from the former Part B State of Hyderabad. These two areas naturally had different laws. Under Section 119of the States Re-organisation Act, all laws in force are to continue till repealed or altered by the appropriate legislature. Following the ratio of Bhaiyalal Shukla v. State of Madhya Pradesh, : AIR1962SC981 , their Lordships of the Supreme Court held in Anant Prasad v. State of Andhra Pradesh, : AIR1963SC853 , that a geographical classification based on historical reasons could be upheld as being not contrary to the equal protection clause in Article 14. Therefore, the attack on the basis of violation of Article 14 must be repelled in this case on the authority of the decision of the Supreme Court.

25. The next of the contentions raised on behalf of the petitioners is (and this is raised in Writ Petitions Nos. 55 and 184 of 1963) that the Telangana Act cannot have for its objective protection of the interests of ryots growing vegetables and fruits outside the area, In elaborating this point, it is stated by learned counsel for the petitioners that 99 per cent of the fruits consumed in the Cities come from Maratwada area and that the Act to the extent to which it benefits the growers of vegetables and fruits outside the limits of the State, is not a valid piece of legislation. The purpose of the Act is to eliminate exploitation at the stage of marketing of agricultural produce. The place of residence of the grower and the place where the produce is grown are not material. The Act governs the purchase and sale of agricultural produce. For the Act to apply, two tests must be satisfied:

(1) Whether it is agricultural produce?

(2) Whether there is a transaction of sale or purchase of that produce within the area covered by the Act?

26. A similar contention was raised before their Lordships of the Supreme Court in Muhammadbhai v. State of Gujarat, : AIR1962SC1517 . There it was urged that the provisions of the Bombay Agricultural Produce Markets Act not only affected transactions between traders and traders but also affected produce not grown within the market area if it was Sold in the market area. Repelling this contention, their Lordships stated:

'This is undoubtedly so. But if control has to be effective in the interest of the agricultural producer such incidental control of produce grown outside the market area and brought into the market yard for sale is necessary as otherwise the provisions of the Act would be evaded by alleging that the 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.'

27. For the reasons stated in the above decision, we are unable to accede to the contention of the learned counsel for the petitioners' under this head.

28. There remains another contention which is that the Act, the rules and the bye-laws, in so far as they are sought to be made applicable to vegetables and the persons carrying on business therein in the Telangana area unconstitutional and are violative of the rights guaranteed under Article 301 of the Constitution and that the said provisions also affect inter-State trade and commerce and the Government have no power to impose any restriction on the same.

29. Article 305 provides as follows:

'Nothing in Articles 301 and 303 shall affect the provisions of any existing law except in sp far as the President may by order otherwise directand nothing in article 301 shall affect the operation of any law made before the commencement of the Constitution (Fourth Amendment) Act, 1955, in so far as it relates to, or prevent Parliament or the Legislature of a State from making any law relating to any such matter as is referred to in Sub-clause (ii) of Clause (6) of Article 19'

30. According to this Article the provisions of Article 301 do not affect the provisions of any existing law except in so far as the President may otherwise direct and there is no such direction by the President 'Existing law' has been defined in Article 366, Clause (10), to mean;

'any law, ordinance, order, bye-law or regulation passed or made before the commencement of this Constitution by any Legislature, authority or persons having power to make such a law, ordinance, order, bye-law, rule or regulation.'

By Article 372 all laws in force in the territory of India immediately before the commencement of the Constitution shall continue to be in force until altered, or repealed or amended by a competent legislature. Being an existing law, the impugned Act is saved by Article 305 of the Constitution.

31. It is also contended by the learned Government Pleader that by reason of the proclamation of emergency, the petitioners are not entilled to invoke the rights guaranteed under Part III of the Constitution. It is unnecessary to go into this question by reason of the conclusions reached by us.

32. All the contentions raised on behalf ofthe petitioners having been negatived, these writpetitions must fail and are dismissed with costs.Advocate's fee in each Rs. 100/-.


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