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State of Madhya Pradesh and ors. Vs. the Galla Tilhan Vyapari Sangh and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtSupreme Court of India
Decided On
Judge
Reported inAIR1977SC2208; (1977)1SCC657; [1977]2SCR619; 1977(9)LC151(SC)
ActsConstitution of India - Article 19; Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972 - Sections 37(4) and 37(5)
AppellantState of Madhya Pradesh and ors.
RespondentThe Galla Tilhan Vyapari Sangh and ors.
Excerpt:
.....agent shall be liable (a) to keep the goods of his principal in safe custody without any charge other than the commission payable to him; and the high court thought that this statutory provision places unreasonable restriction on the commission agent and puts great burden on him for storing the goods given to him by the principal without charging the commission for its safe custody. this section clearly empowers the commission agent to charge such rates as may be specified by the bye laws even for the storage of the produce and other services rendered by him. all prohibited from levying any charges for safe custody from the farmer or the principal. this is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges,..........of the produce and other services rendered by him.this section clearly empowers the commission agent to charge such rates as may be specified by the bye laws even for the storage of the produce and other services rendered by him. this provision also does not prevent the commission agent from levying reasonable charges for the storage over & above his commission. all that the storage over and above his commission. all prohibited from levying any charges for safe custody from the farmer or the principal. this is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges, for safe custody. section 37(4), however, compensates the commission agent by authorizing him to charge his commission and all expenses, which may be.....
Judgment:

S. Murtaza Fazal Ali, J.

1. In this appeal by special leave, on an application filed by the respondents before the High Court of Madhya Pradesh, the High Court struck down the constitutional validity of Sub-section (5)(a) of Section 37 of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972- hereinafter referred to as 'the Act'-(No. 24 of 1973). The impugned Sub-section runs as follows:

(5) Every commission agent shall be liable

(a) to keep the goods of his principal in safe custody without any charge other than the commission payable to him; and

The High Court thought that this statutory provision places unreasonable restriction on the commission agent and puts great burden on him for storing the goods given to him by the principal without charging the commission for its safe custody. The Act is a social piece of legislation and should have been liberally construed so as to advance the object of the Act and fulfill the aims to be achieved thereby. The main purpose of the Act is to secure a scientific method of storage; sale, distribution and marketing of agricultural produce and cut out as far as possible middleman's profit. The Act, therefore, contains provisions of a beneficial nature preventing profiteering tendencies. It is not, however, the hardship that can be termed unreasonable so as to make a statute unconstitutional. Moreover, the High Court does not appear to have looked to the scheme of the Act and has in fact completely overlooked the provisions of Section 37(4) which runs as follows:

(4) The commission agent shall recover his commission only from his principal trader at such rates as may be specified in the bye-laws including all such expenses as may be incurred by him in storage of the produce and other services rendered by him.

This section clearly empowers the commission agent to charge such rates as may be specified by the bye laws even for the storage of the produce and other services rendered by him. This provision also does not prevent the commission agent from levying reasonable charges for the storage over & above his commission. All that the storage over and above his commission. All prohibited from levying any charges for safe custody from the farmer or the principal. This is done in order to attract and lure the farmers to place their goods with commission agents without additional payment of charges, for safe custody. Section 37(4), however, compensates the commission agent by authorizing him to charge his commission and all expenses, which may be incurred by the commission agent in connection with the storage of the produce and the services rendered by him. This section, therefore, clearly authorizes the commission agent not only to charge his commission from the principal trader but all expenses incurred by him for the purpose of the storage. That apart Section 2(e) of the Act which defines a 'Commission agent' empowers him to charge any commission or percentage upon the amount involved in such transaction.

2. For these reasons, therefore, we do not see any hardship or unreasonableness in the provisions of Section 37(5)(a) of the Act. The High Court, therefore, committed an error of law in striking down this provision as constitutional. In our opinion, therefore Section 37(5) (a) of the Act is constitutionally valid. In the view we take, it is not necessary to go into the question whether the law violates Article 19 of the Constitution which stands suspended during the emergency.

3. The appeal is accordingly allowed. The order of the High Court is quashed. In the circumstances, where will be no order as to costs.


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