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Food Corporation of India Vs. State of Gujarat and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtGujarat High Court
Decided On
Judge
Reported in(1983)2GLR1485
AppellantFood Corporation of India
RespondentState of Gujarat and ors.
Excerpt:
- - a combined effect of these sections would be that a person who wants to operate in the market area has to obtain a license and has to carry on his operations only in accordance with the conditions of license as well as in accordance with law. even the averment in the petition clearly shows that food grains are being purchased by the food corporation from the surplus states and that it is sold to the state government on the price fixed by the government of india. in view of this averment in the petition as well as the provisions of the food corporation act it cannot be said that the petitioner cannot be termed as 'trader' within the meaning of section 2(xxiii) of the act......the gujarat agricultural produce markets rules, 1965 (hereinafter referred to as 'the rules').the food corporation of india has filed these special criminal applications for quashing proceedings of criminal cases pending before the learned judicial magistrate, first class, khambhat and judicial magistrate, first class, baroda, arising from different criminal complaints filed by agricultural produce market committee, khambhat and by the inspector of agricultural produce market committee, baroda. it is further prayed that a writ of mandamus or any other appropriate writ, order or direction may be issued against the respondents for not, insisting upon obtaining the licence by the petitioner corporation from the respective respondents for the purpose of carrying its activities in respective.....
Judgment:

M.B. Shah, J.

1. This group of Special Criminal Applications raises one common point whether the Food Corporation of India is bound to obtain licence under Section 27 of the Gujarat Agricultural Produce Markets Act, 1963 (hereinafter referred to as 'the Act') read with Rules 56 & 57 of the Gujarat Agricultural Produce Markets Rules, 1965 (hereinafter referred to as 'the Rules').

The Food Corporation of India has filed these Special Criminal applications for quashing proceedings of criminal cases pending before the learned Judicial Magistrate, First Class, Khambhat and Judicial Magistrate, First Class, Baroda, arising from different criminal complaints filed by Agricultural Produce Market Committee, Khambhat and by the Inspector of Agricultural Produce Market Committee, Baroda. It is further prayed that a writ of mandamus or any other appropriate writ, order or direction may be issued against the respondents for not, insisting upon obtaining the licence by the petitioner Corporation from the respective respondents for the purpose of carrying its activities in respective market areas and not to levy any market fees or any fees whatsoever from the petitioners.

In Criminal Case No. 907 of 1980 filed before the Judicial Magistrate, First Class, Khambhat it has been averred that the Food Corporation of India had purchased large quantity of wheat from village Tarapur which is situate within the Khambhat market area, and that it had stored it and subsequently sold it to the Government and the flour mills. During the time from 1-6-1978 to 10-4-1979 the Corporation had purchased 96632 quintals of wheat and from this purchase 902 quintals of wheat were sold to flour mills and 1186 quintals of wheat were sold to the government. So in all the petitioner had sold 2088 quintals of wheat at village Tarapur, Taluka Khambhat. It is further averred that on 11-4-1979 the petitioner had stocked 94,544 quintals of wheat and, therefore, the Corporation had committed breach of Section 6(2) and Section 8 of the Act and for the said breach the Corporation is punishable under Section 36(1) of the Act.

Criminal Complaint No. 920 is filed in the Court of the Judicial Magistrate, First Class, Khambhat for breach of Rules 48 & 49 of the Rules as the Food Corporation had not paid the licence fees for which it is punishable under Rule 52 of the Rules.

Criminal Case No 1666 of 1980 is also filed for the offence punishable under Rule 52 for the breach of Roles 48 & 49 of the Rules. Criminal Case No. 1667 of 1980 is filed for breach of Section 6(2) and Section 8 of the Act for which it is punishable under Section 36(1) of the Act. Criminal Case No. 2685 of 1980 is filed for violation of Rules 48 and 49 of the Rules for which it is punishable under Section 52 of the Act.

In all these types of 8 complaints are filed before the learned Judicial Magistrate, First Class, Khambhat and one complaint is filed before the learned Judicial Magistrate, First Class, Baroda for breach of Section 6(2) and Section 8 of the Act.

2. The learned advocate appearing on behalf of the petitioner has contended that the activities of the Food Corporation of India would not be covered under Section 26 of the Act and Rules 56 & 57 of the Rules. It was further submitted by him that Food Corporation of India cannot be said to be trader within the meaning of Section 23 of the Act as it was not carrying on any business of buying or selling of agricultural produce as averred by him in his petition para 3. In any set of circumstances, the petitioner is carrying on it's activities on no loss no profit basis and hence, the said activities cannot be said to be 'business'.

3. Before dealing with the contentions raised by the petitioner it would be necessary to refer to the relevant provisions of the Act. Section 2 (xxiii) of the Act reads as under:

'trader' means any person who carries on the business of buying or selling of agricultural produce or of processing of agricultural produce for sale and includes ft co-operative Society, joint family or an association of persons, whether incorporated or not, which carries on such business.

In view of this section it is clear that if any person Who is carrying on business of buying or selling agricultural produce would be considered as a 'trader' within the meaning of the Act, and also a person who carries on business of processing of agricultural produce for sale.

Section 6(2) and Section 8 of the Act read as under:

6(2). Notwithstanding anything contained in any law for the time being in force, from the date on which any area is declared to be market area under Sub-section (i), no place in the said area shall be used for the purchase or sale of any agricultural produce specified in the notification except in accordance with the provisions of the Act.

Provided that pending the establishment of a market in such area the Director may grant a licence to any person to use any place in the said area for the purchase or sale of any such agricultural produce and a licence so granted shall, unless it is cancelled or otherwise ceases to be in force, continues in force until the establishment of a market in the said area and for such period thereafter as may be prescribed.

8. No person shall operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under, this Act.

Section 6(2) of the Act is a general section which prohibits any activity of purchase or sale of any agricultural produce specified in the notification except in accordance with the provisions of this Act. Further Section 8 of the Act prohibits any person from operating in the market area or any part thereof except under and in accordance with the conditions of a licence granted under this Act. This section prohibits that no person can operate in any manner for purchase or sale of agricultural produce in the market area without any licence and he has to operate in accordance with the conditions of licence granted under the Act. A combined effect of these sections would be that a person who wants to operate in the market area has to obtain a license and has to carry on his operations only in accordance with the conditions of license as well as in accordance with law.

4. Section 27(1) of the Act reads as under:

27(1). On the establishment of a market, the Market Committee may, subject to rules made in that behalf, grant or renew a general licence or a special licence for the purpose of any specific transaction or transactions to a trader, general commission agent, broker, weighman, surveyor, warehouseman or any person to operate in the market area or part thereof, or after recording its reasons therefor, refuse to grant or renew any such licence.

This section provides that either a general licence or a special licence for the purpose of any specific transaction or transactions, to a trader, general Commission agent, broker, weighman, surveyor, warehouse-man or any person to operate in the market area can be granted by the market committee.

Rule 57 prohibits business in market area except under licence and the person is required to pay licence fees as may be determined by the market committee. This rule also contemplates that any person desiring to operate in any other manner in any market area other than a person desiring to hold licence as a broker, weighman, measurer, warehouse-man, hamal, carting agent, clearing agent, or surveyor, is required to make an application to the market committee for licence and he is required to pay licence fees as determined by the market committee. Therefore, looking to the scheme of Section 2(xxiii), Section 6(2), Section 8, Section 27(i) and Rule 57 it is clear that no person including the corporate body is entitled to operate in any manner in the market area either for purchase or sale of agricultural produce or for processing agriculture produce for sale except under the licence granted under Section 27 of the Act. He may be a trader, general commission agent, broker weigh-man, surveyor, warehouseman or any person who operates in market area either for purchase or sale of agriculture produce or for processing agriculture produce for sale.

5. The learned Counsels appearing on behalf of respondents, Mr. Panchal and Mr. Vakharia, have rightly pointed out that under the provisions of the Food Corporation Act, 1964 the petitioner is a corporate body under Section 3 having perpetual succession and common seal with power to acquire, bold and dispose of property and to contract, and may, by same name, sue and be sued.

Section 13(i) of the Food Corporation Act specifically provides that it shall be primary duty of the Corporation to undertake the purchase, storage, movement, transport, distribution and sale of food grains and other food stuffs. Sub-sec, 2(b) provides that with the previous approval of the Central Government Food Corporation of India may set up, or assist in the setting up of, rice-mills, flour-mills and other undertakings for the processing of foodgrains and other food stuffs; Section 31 provides that the Food Corporation shall have its own fund and all receipts of the Corporation shall be credited thereto and all payments of the Corporation shall be met therefrom and such fund shall be applied for meeting all administrative expenses of the Food Corporation and for carrying out the purposes of this Act. Section 42 of the Act provides as follows:

42. Provision relating to income-tax, super-tax, etc. - For the purposes of the Income-tax Act, 1961 or any other enactment for the time being in force relating to income-tax, super-tax or any other tax on income, profits or gains, a Food Corporation and it shall be a company within the meaning of the Income-tax Act, 1961, and shall be liable to tax accordingly on its income, profits and gains.

Even the averment in the petition clearly shows that food grains are being purchased by the Food Corporation from the surplus States and that it is sold to the State Government on the price fixed by the Government of India.

In view of this averment in the petition as well as the provisions of the Food Corporation Act it cannot be said that the petitioner cannot be termed as 'Trader' within the meaning of Section 2(xxiii) of the Act. Food Corporation is carrying on business of buying and selling agricultural produce. Further under Section 13(2) of the Food Corporation Act, Food Corporation is entitled to set up rice mills for process of food grains and, therefore, also it would be covered within the definition of Section 2(xxiii) because if it is process of the agricultural produce for sale it will be covered within the definition of the said section. Whether it does business of buying and selling agricultural produce or it carries out processing or not, would be a question to be decided on the facts of the complaint filed against the petitioner, but at present it cannot be said that the Food Corporation of India cannot be termed as 'trader' within the meaning of the Act, because the object, purpose and function of the Food Corporation of India, as stated above, is to purchase and sell the agricultural produce. It may be that the Food Corporation of India may be selling or carrying out it's activities on the basis of no loss no profit as alleged by the petitioner. The averment of the petitioner in the petition that the petitioner Corporation is carrying on the business on no profit no loss basis seems contrary to the provision of the Food Corporation Act, because Section 31 read with Section 33 contemplates that there would be some profit. Further under Section 42 Food Corporation is also treated as a company under the Income Tax Act, 1961 and is required to pay tax on it's income, profit and gains.

6. In view of these provisions it is clear that Food Corporation of India is corporate autonomous body capable of acquiring, holding and disposing of property and having the power to contract. It has its own separate funds and profit is required to be invested as provided under Section 33 of the Corporation Act. It is required to pay income tax, supertax or any other tax on income, profit or gains under the Income-Tax Act, 1961. It may sue or be sued by its own name. Its main function is to undertake the purchase, storage, movement, transportation, distribution and sale of food grains and other foodstuffs. It may also set up rice-mills, flour mills and other undertakings for processing of food grains and other agricultural foodstuffs. Hence it cannot be said that the petitioner Food Corporation of India is not a 'trader' within the meaning of Section 2(xxiii) of the Act and that it is not required to obtain licence under Section 27 of the Act or that it can operate within the market area inspite of the bar under Sections 6(2) and 8 of the Act.

7. In the result, all the special criminal applications are dismissed. Rule is discharged and ad interim relief granted to the petitioners is vacated in each of the petition. As criminal complaints are of 1980, the learned Judicial Magistrate, First Class is directed to dispose of the case as expeditiously as possible.


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