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In view of the aforesaid judgments of the Constitution Benches, we hold that Article 254(2) of the Constitution is not available to the appellants for seeking a declaration that the Market Act would prevail over the Control Order and that transactions involving the purchase of sugarcane by the factories operating in the market areas would be governed by the provisions contained in the Market Act. As a corollary, we hold that the High Court did not commit any error by quashing the notices issued by appellant – Market Committees to the respondents requiring them to take licence under the Market Act and pay market fee on the purchase of sugarcane from Cane Growers/Cane Growers Cooperative Societies.

REPORTABLE

English: Ram Raja Temple, Orchha, Madhya Prade...

English: Ram Raja Temple, Orchha, Madhya Pradesh, India. Français : Temple Ram Raja, Orchha, Madhya Pradesh, Inde. (Photo credit: Wikipedia)

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6186 OF 2012
(Arising out of SLP(C) No.19092 of 2006)

Krishi Upaj Mandi Samiti, Narsinghpur … Appellant(s)
versus
M/s. Shiv Shakti Khansari Udyog and others … Respondents
With
CIVIL APPEAL NO.6187 OF 2012
(Arising out of SLP(C) No.3414 of 2007)

CIVIL APPEAL NO.6188 OF 2012
(Arising out of SLP(C) No.3308 of 2007)

CIVIL APPEAL NO.6189 OF 2012
(Arising out of SLP(C) No.3792 of 2007)

CIVIL APPEAL NO.6190 OF 2012
(Arising out of SLP(C) No.4606 of 2007)

CIVIL APPEAL NO.6191 OF 2012
(Arising out of SLP(C) No.4607 of 2007)

CIVIL APPEAL NO.6192 OF 2012
(Arising out of SLP(C) No.4777 of 2007)

CIVIL APPEAL NO.6193 OF 2012
(Arising out of SLP(C) No.5625 of 2007)

CIVIL APPEAL NO.6194 OF 2012
(Arising out of SLP(C) No.15296 of 2007)
CIVIL APPEAL NO. 6195 OF 2012
(Arising out of SLP(C) No.15229 of 2007)

CIVIL APPEAL NO.6196 OF 2012
(Arising out of SLP(C) No.15315 of 2007)

CIVIL APPEAL NO.6197 OF 2012
(Arising out of SLP(C) No.15230 of 2007)

CIVIL APPEAL NO.6198 OF 2012
(Arising out of SLP(C) No.15297 of 2007)

CIVIL APPEAL NO.6199 OF 2012
(Arising out of SLP(C) No.15318 of 2007)

CIVIL APPEAL NO.6200 OF 2012
(Arising out of SLP(C) No.6961 of 2009)

 

J U D G M E N T
G. S. Singhvi, J.
1. Leave granted.

2. The questions which arise for consideration in these appeals filed by
the State of Madhya Pradesh and the Market Committees against the orders
passed by the Division Benches of the Madhya Pradesh High Court are whether
the provisions of the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972
(hereinafter described as, ‘the Market Act’) are applicable to the
transactions involving the purchase of sugarcane by the factories operating
in the market areas of the State and whether market fee can be levied on
such transactions.

3. The contesting respondents are operating sugar factories in different
market areas of the State and have been purchasing sugarcane from Cane
Growers and Cane Growers’ Co-operative Societies. Thus, they are covered
by the general sweep of the Market Act because sugarcane is a notified
agricultural produce and by virtue of Section 19, the Market Committees are
empowered to levy market fee on the transactions involving purchase of
sugarcane.

4. The respondents filed writ petitions for quashing the notices issued
by the Market Committees requiring them to take licence under the Market
Act and to pay market fee on the purchase of sugarcane, by asserting that
the provisions of the Market Act are not applicable to the transactions
which are exclusively governed by the Madhya Pradesh Sugarcane (Regulation
of Supply and Purchase) Act, 1958 (for short, ‘the Sugarcane Act’) and the
Sugarcane (Control) Order (for short, ‘the Control Order’) issued by the
Central Government under Section 3 of the Essential Commodities Act, 1955
(for short, ‘the EC Act’).
5. The appellants contested the writ petitions and pleaded that there is
no conflict between the Market Act on the one hand and the Sugarcane Act
and the Control Order on the other because the two sets of legislations
operate in different fields and in view of Section 19 of the Market Act,
the respondents are bound to pay market fee on the purchase of sugarcane
within the market areas.

6. The Division Bench of the High Court referred to the provisions of
the Market Act, the Sugarcane Act and the Control Order and held that the
transactions involving the sale and purchase of sugarcane are governed by
Sections 12, 15, 16, 19, 20, 21 and 22 of the Sugarcane Act and Clauses
(3), (4), (5), (5A) and (6) of the Control Order, which are in the nature
of special legislations vis-à-vis the Market Act and, as such, market fee
cannot be levied by the Market Committees. The reasons assigned by the
High Court for arriving at this conclusion are contained in paragraph 17 of
order dated 6.7.2006 passed in Writ Petition No. 391/1995 and batch, which
is extracted below:
“17. Sub-section (1) of Section 36 quoted above clearly provides that
all notified agricultural produce brought into the market for sale
shall be brought into market yard/yards specified for such produce and
shall not, subject to the provisions of sub-section (2), be sold at
any other place outside such yard. Sub-section (3) of Section 36
further provides that the price of the notified agricultural produce
brought into the market yard for sale shall be settled by tender bid
or open auction system and no deduction shall be made from the agreed
price on any account whatsoever. Sub-section (4) of Section 36 of the
Market Act further provides that weighment or measurement of all the
notified agricultural produce so purchased shall be done by a licensed
weighman in the market yard or any other place specified by the market
committee for the purpose. Sub section (1) of Section 37 of the Market
Act states that any person who buys notified agricultural produce in
the market area shall execute an agreement in triplicate in such form
as may be prescribed, in favour of the seller. Sub-section (2) of
Section 37 provides for payment of price of agricultural produce
brought in the market yard on the same day to the seller at the market
yard and additional payment at the rate of one percent, per day of the
total price of the agricultural produce payable to the seller within
five days. These provisions of Sections 36 and 37 of the Market Act
are in direct conflict with the provisions of Clauses (3), (4), (5),
(5A) and (6) of the Control Order made by the Central Government under
Section 3 of the Essential Commodities Act, 1955 discussed above.
Similarly these provisions of the Market Act are in direct conflict
with the provisions of Sections 12, 15, 16, 19, 20, 21 and 22 of the
Sugarcane Act made by the State Legislature of Madhya Pradesh,
discussed above. In view of such conflict, either, the aforesaid
provisions of the Market Act apply to the transactions of buying and
selling of sugarcane between the occupiers of factories and the
sugarcane growers or sugarcane growers cooperative societies, or the
provisions of the Control Order made by the Central Government and the
aforesaid provisions of the Sugarcane Act made by the State Government
apply to such transactions of buying and selling between the occupiers
or owners of sugar factories and the sugarcane growers or sugarcane
growers cooperative societies. The Control Order made by the Central
Government and the Sugarcane Act made by the State Legislature being a
Special Order and Special Act relating to supply and purchase of
sugarcane will apply to transactions of sale and purchase of sugarcane
between the occupiers of the factory and the sugarcane growers or
sugarcane growers cooperative societies and the provisions of the
Market Act being a General Act with regard to agricultural produce
will stand excluded and will not apply to such transactions of buying
and selling of sugarcane between the occupiers of factories and the
sugarcane growers or sugarcane growers cooperative societies.”

7. Shri Vivek Tankha, learned senior counsel appearing for the Market
Committees and Shri B.S. Banthia, learned counsel appearing for the State
argued that the object of the Sugarcane Act and the Control Order is to
regulate the supply and purchase of sugarcane and to ensure that price
determined by the competent authority is paid to the Cane Growers without
delay, but these enactments have nothing to do with the levy of market fee
on transactions involving the purchase of sugarcane by the factories within
the market areas and the High Court committed serious error by declaring
that the provisions of the Sugarcane Act and the Control Order would
prevail vis-à-vis those contained in the Market Act. The learned counsel
further argued that the ratio of the judgment in Belsund Sugar Co. Ltd. v.
State of Bihar (1999) 9 SCC 620, on which reliance has been placed by the
High Court, has no bearing on the interpretation of the provisions of the
Sugarcane Act and the Market Act because there is significant difference
between the Bihar Acts and the Madhya Pradesh Acts. Shri Tankha emphasized
that the Market Act and the Sugarcane Act operate in different fields and
even if there appears some conflict between the two enactments, the
provisions contained in the Market Act would prevail because the Sugarcane
Act does not provide for levy of market fee on the purchase of sugarcane by
the factories. Learned senior counsel relied upon the judgment in Krishi
Upaj Mandi Samiti v. Orient Paper and Industries Ltd. (1995) 1 SCC 655 and
argued that the sugarcane factories are liable to pay market fee on the
purchase of sugarcane which takes place within the market areas because
they are benefitted by the development works undertaken by the Market
Committees and the Madhya Pradesh Agricultural Marketing Board. Shri Tankha
also relied upon Article 254 of the Constitution and argued that even
though the Control Order has been framed under a Central legislation, the
provisions contained therein cannot override the Market Act which was
enforced after receiving Presidential assent. In support of this argument,
Shri Tankha relied upon the judgments in Basantlal Banarsilal v. Bansilal
Dagdulal AIR 1955 Bom. 35, Tika Ramji v. State of U.P. AIR 1956 SC 676 =
1956 SCR 393, Kailash Nath v. State of U.P. AIR 1957 SC 790, Basantlal
Banarsilal v. Bansilal Dagdulal AIR 1961 SC 823, Janardan Pillai v. Union
of India (1981) 2 SCC 45, M/s. Hoechst Pharmaceuticals Ltd. and others v.
State of Bihar 1983 (4) SCC 45, Gram Panchayat of Village Jamalpur v.
Malwinder Singh and others 1985 (3) SCC 661, Bharat Shivram Singh and
others v. State of Gujarat and others (1986) 4 SCC 51, Krishi Upaj Mandi
Samiti and others v. Orient Paper and Industries (supra), P.N. Krishnalal
v. Govt. of Kerala 1995 (Supp.) 2 SCC 187, H.S. Jayanna and others v.
State of Karnataka (2002) 4 SCC 125, Kaiser-I-Hind Private Limited and
another v. National Textile Corporation (Maharashtra North) Ltd. and others
(2002) 8 SCC 182, Subhash Ramkumar Bind Alias Vakil and another v. State of
Maharashtra (2003) 1 SCC 506, Dharappa v. Bijapur Co-operative Milk
Producers Societies Union Limited (2007) 9 SCC 109 and Grand Kakatiya
Sheraton Hotel and Towers Employees and Workers Union v. Srinivasa Resorts
Limited and others (2009) 5 SCC 342.

8. Shri Jayant Bhushan and Shri A. K. Sanghi, Senior Advocates and Ms.
Pragati Neekhra, learned counsel appearing for the respondents supported
the impugned orders and argued that being a special legislation, which
covers all aspects of the supply and purchase of sugarcane including the
payment of price to Cane Growers, the Sugarcane Act will prevail over the
Market Act, which generally empowers the market committees to levy market
fee on the sale and purchase of notified agricultural produce. More so,
because the procedure prescribed under Section 36 of the Market Act for the
purchase of agricultural produce within the market yard or market proper is
in direct conflict with the provisions of the Sugarcane Act which postulate
the purchase of sugarcane by the factories at an identified place or at the
factory gate. Learned senior counsel then argued that the sugar factories
cannot be burdened with the liability of paying market fee on the purchase
of sugarcane because the same is not taken into consideration while fixing
the price of sugar under Clause 3 of the Control Order. Shri Bhushan
submitted that the Court should not entertain the argument made by Shri
Tankha with reference to Article 254 of the Constitution because no such
argument was raised before the High Court and no document has been produced
before this Court to show that Presidential assent was obtained for
amendment in the Market Act with specific reference to the Sugarcane Act.

9. For deciding whether there is any conflict between the Sugarcane Act
and the Control Order on the one hand and the Market Act on the other, it
will be useful to notice the relevant statutory provisions:

The Sugarcane Act

10. The Sugarcane Act was enacted by the State legislature in the
backdrop of inadequate supply of sugarcane to the factories and the
difficulties faced by the cultivators in selling their produce and getting
the price. Section 2 of the Act contains definitions of various terms.
Section 3 mandates the State Government to establish Sugarcane Board for
the State. In terms of Section 4, the Sugarcane Board is required to
advise the State Government on matters pertaining to the regulation of
supply and purchase of cane for sugar factories; the varieties of cane
which are suitable for use in sugar factories; the maintenance of healthy
relations between occupiers, managers of factories, Cane-growers’ Co-
operative Societies, Cane Development Council and purchasing agents and
such other matters as may be prescribed. Section 5 provides for
establishment of a Cane Development Council, whose functions are to
consider and approve the programme for development of the zone; to advise
regarding the ways and means for the execution of the development plan in
all its essentials such as cane varieties, cane-seed, sowing programme,
fertilizers and manures; to undertake the development of irrigation and
other agricultural facilities in the zone; etc. Section 8 lays down that
there shall be a fund at the disposal of the Council to meet the expenses
required to be incurred for the discharge of duties and performance of its
functions under the Act. The fund shall consist of the grants made by the
Indian Central Sugarcane Committee and the State Government, sums received
by the Council by way of commission under Section 21 and any other sum
which may be credited to the fund under the general or special order of the
State Government. Section 12 empowers the Cane Commissioner to call upon
the occupier to furnish an estimate of the quantity of cane which will be
required by the factory during the crushing season. The Cane Commissioner
is obliged to examine every such estimate and publish the same with
modification, if any. Section 13 casts a duty on the occupier to maintain
a register of all such Cane Growers and Cane-Growers’ Co-operative
Societies which are required to sell cane to the factory. Section 14
empowers the State Government to make provision for survey of an area
proposed to be reserved or assigned for supply of cane to a factory.
Section 15 postulates declaration of reserved area and Section 16 provides
for declaration of an assigned area. Under Section 19, the State
Government has the power to issue an order for regulating the distribution,
sale or purchase of cane in any reserved or assigned area and purchase of
cane in any area other than the reserved or assigned area. Section 20
deals with the payment of price. Section 21 provides for payment, by the
occupier, of a commission for every one maund of cane purchased by the
factory. Section 22 gives power to the State Government to declare
varieties of cane which are unsuitable for use in the factories. Chapter IV
contains miscellaneous provisions including Section 30 under which the
State Government is empowered to make rules for giving effect to the
provisions of the Act. For the sake of reference, Sections 5, 6, 8, 15, 16,
19, 20 and 21 of the Sugarcane Act are reproduced below:
“5. The Cane Development Council.— (1) There shall be established, by
notification for the reserved area of a factory a Cane Development
Council which shall be a body corporate by the name of such area or
such other name as the State Government may notify in this behalf
having perpetual succession, and subject to such restrictions or
qualifications as may be imposed under this Act or any other
enactment, vested with the capacity of suing and being sued in its
corporate name, of acquiring, holding, administering and transferring
property both movable and immovable, and of entering into contracts :

Provided that where the Cane Commissioner so directs, the Council may
be established for a larger or smaller area than the reserved area of
a factory.

(2) The area for which a Council is established shall be called a
zone.

(3) to (6) xxxx xxxx xxxx

 

6. Functions of the Council.— (1) Functions of the Council shall be—

a) to consider and approve the programme of development for the zone;
b) to devise ways and means for the execution of the development plan in
all its essentials such as cane varieties, cane-seed, sowing
programme, fertilizers and manures;
c) to undertake the development of irrigation and other agricultural
facilities in the zone;
d) to take necessary steps for the prevention and control of diseases and
pests and to render all possible help in the soil extension work;
e) to impart technical training to cultivators in matters relating to the
production of cane;

f) to administer the funds at its disposal for the execution of the
development scheme subject to such conditions as may be prescribed;
and
g) to perform other prescribed functions pertaining and conducive to the
general development of the zone.

(2) The State Government may at any time direct the Cane Commissioner
to convene a joint meeting of two or more councils. Every such meeting
shall be presided over by such person as may be nominated in that
behalf by the State Government.
8. Council Fund.— (1) There shall be a fund at the disposal of the
Council to meet the charges in connection with the discharge of its
duties and performance of its functions under this Act.

(2) The fund of the Council shall consist of—
a) grants, if any, made by the Indian Central Sugarcane Committee;
b) grants, if any, made by the State Government;
c) sums received by the Council by way of commission under Section
21; and
d) any other sums which may be credited to it under the general or
special orders of the State Government.
15. Declaration of reserved area. – Without prejudice to any order
under clause (d) of sub-section (2) of Section 19, the Cane
Commissioner may, after consulting in the prescribed manner, the
occupier and Cane-growers’ Co-operative Society, if any, in any area
to be reserved for a factory reserve such area for such factory and
thereupon occupier thereof shall subject to provisions of Section 22
be liable to purchase all cane grown in such area which is offered for
sale to the factory.
16. Declaration of assigned area.- Without prejudice to any order
under clause (d) of sub-section (2) of Section 19, the Cane
Commissioner may after consulting in the manner prescribed, the
occupier and Cane-growers’ Co-operative Society, if any, in any area
to be assigned, assign such area for the purpose of the supply of cane
to a factory in accordance with the provisions of Section 19 during
any crushing season; and thereupon the occupier thereof shall subject
to the provisions of Section 22 be liable to purchase such quantity of
cane grown in that area and offered for sale to the factory as may be
determined by the Cane Commissioner.
19. Regulation of purchase and supply of cane in the
reserved and assigned areas.- (1) The State Government may, for
maintaining supplies, by order regulate—
(a) distribution, sale or purchase of cane in any reserved or
assigned area; and
(b) purchase of cane in any area other than a reserved or assigned
area.
(2) Without prejudice to the generality of the foregoing powers such
order may provide for—
(a) the quantity of cane to be supplied by each Cane-grower or
Cane-growers’ Co-operative Society in such area to the factory
for which the area has been so reserved or assigned;
(b) the manner in which cane grown in the reserved area or the
assigned area shall be purchased by the factory for which the
area has been so reserved or assigned and the circumstances in
which the cane grown by a cane-grower shall not be purchased except
through a Cane-growers’ Co-operative Society;
(c) the form and terms and conditions of the agreement to be
executed by the occupier of the factory for which an area is
reserved or assigned for the purchase of cane offered for sale:
(d) the circumstances under which permission may be granted—
(i) for the purchase of cane grown in reserved or as-
signed area by a purchasing agent or any person
other than the factory for which area has been
reserved or assigned; and
(ii) for the sale of cane grown in a reserved or assigned
area to any other person or factory other than the
factory for which the area is reserved or assigned;
(e) such incidental and consequential matters as may appear to
be necessary or desirable for this purpose.
20. Payment of cane price.- (1) The occupier shall make suitable
provision to the satisfaction of the Collector for the payment of the
price of cane.
(2) Upon the delivery of cane, the occupier shall, subject to the
deductions specified in sub-section (2-a) be liable to pay immediately
the price of the cane so supplied, together with all other sums
connected therewith and where the supplies have been made through a
purchasing agent, the purchasing agent shall similarly be liable in
addition to the occupier.
(2-a) Where a Cane-grower or a Cane-growers’ Co-operative Society, as
the case may be, to whom price is payable under sub-section (1) has
borrowed a loan for cane development from any agency notified by the
State Government in this behalf, the occupier or the purchasing agent,
as the case may be, shall be, on being authorised by that agency so to
do, entitled to deduct from the price so payable, such amount as may
be prescribed, towards the recovery of such loan and pay the same to
the agency concerned forthwith.
(3) Where the person liable under sub-section (2) is in default in
making the payment of the price for a period exceeding fourteen days
from the date of delivery he shall also pay interest at the rate of 14-
1/2 per cent, per annum from the said date of delivery upto the date
of payment but the Cane Commissioner may, in any case, direct with the
approval of the State Government that no interest shall be paid or be
paid at such reduced rate as he may fix.
(4) The Cane Commissioner shall forward to the Collector a certificate
under his signature specifying the amount of arrears on account of the
price of cane plus interest, if any, due from the occupier and the
Collector, on receipt of such certificate, shall proceed to recover
from such occupier the amount specified therein as if it were an
arrear of land revenue together with further interest up to the date
of recovery.”

 

21. Commission on purchase of cane.— (1) There shall be paid by the
occupier a commission for every one maund of cane purchased by the
factory—
(a) where the purchase is made through a Cane-growers’ Co-
operative Society, the commission shall be payable to the Cane-
growers’ Co-operative Society and the Council in such proportion as
the State Government may declare; and
(b) where the purchase is made directly from the Cane- grower, the
commission shall be payable to the Council.
(2) The commission payable under clauses (a) and (b) of sub-section
(1) shall be at such rates as may be prescribed provided, however,
that the rate fixed under clause (b) shall not exceed the rate at
which the commission may be payable to the Council under clause (a).
(3) The provisions relating to payment, interest and recovery,
including recovery as arrears of land revenue, applicable to price of
cane shall mutatis mutandis apply to payment and recovery of
commission under sub-section (1).”

 

11. In exercise of the power vested in it under Section 30 of the
Sugarcane Act, the State Government framed the Madhya Pradesh Sugarcane
(Regulation of Supply and Purchase) Rules, 1959 (for short, ‘the Rules’).
Rules 2(f), 35, 36, 40, 41 and 43, which have bearing on these appeals,
read as under:
“2(f) ‘Purchasing Center’ means any place at which cane is purchased,
delivered, weighed or paid for and includes such portion of the
premises of the factory as is used for any of these purposes.
35. At any purchasing centre adequate facilities for weighment shall
be provided to the satisfaction of the Cane Commissioner by the
occupier of a factory to avoid congestion and undue delay in
weighment. Cane carts and trucks shall not be kept waiting for more
than ten hours without adequate reasons.
Explanation.- A cart shall not be deemed to have been kept waiting
unduly if the supplier of cane, having received instructions in
writing to deliver cane on a certain day, ignores such instructions or
where the practice of issuing written instructions is in force, brings
cane without receiving such instructions.
36. The occupier of a factory shall — (a) provide, metalled
approaches from the public roads to the parking ground at the factory
premises, from the parking ground to the cane carrier of factory, and
metalled exits from the cane carrier to public roads, up to such
distances as may be directed by the Cane Commissioner and keep the
same in a proper state of repairs;
(b) provide to the satisfaction of the Cane Commissioner reasonable
space with metalled tracks separated by railings or walls and properly
lighted, for parking of carts waiting for weighment and keep the same
in a proper state of hygienic cleanliness;
(c) provide shelter and drinking water facilities for both cartmen and
bullocks at the factory gate and drinking water facilities at all
purchasing centres as directed by the Cane Commissioner; and
(d) provide such other facilities as may be directed by the Cane
Commissioner from time to time.
40. Payments of the price of cane shall be made on the recorded
weight of the cane at the purchasing centre. The price shall be
calculated to the nearest Naya Paisa.
41. Payments for cane shall be made only to the Cane-grower or his
representative duly authorised by him in writing to receive payment or
to a Cane-Growers’ Co-operative Society.
43. The occupier of a factory or a purchasing agent shall not make
any deduction from the amount due for cane sold to him by a Cane-
grower or Cane-grower’s Co-operative Society:
Provide that recovery of the dues of a Cane-growers’ Co-operative
Society may be made by deduction form the price payable for cane.”

 

The Control Order

12. In exercise of the power vested in it under Section 3 of the EC Act,
the Central Government framed the Control Order, the relevant provisions of
which are reproduced below:
“2(g) ‘price’ means the price or the minimum price fixed by the
Central Government, from time to time, for sugarcane delivered—
(i) to a sugar factory at the gate of the factory or at a sugarcane
purchasing centre;
(ii) to a khandsari unit;
3. Minimum price of sugarcane payable by producer of sugar.—(1) The
Central Government may, after consultation with such authorities,
bodies or associations as it may deem fit, by notification in the
Official Gazette, from time to time, fix the minimum price of
sugarcane to be paid by producers of sugar or their agents for the
sugarcane purchased by them, having regard to—
(a) the cost of production of sugarcane;
(b) the return to the grower from alternative crops and the general
trend of prices of agricultural commodities;
(c) the availability of sugar to the consumer at a fair price;
(d) the price at which sugar produced from sugarcane is sold by
producers of sugar; and
(e) the recovery of sugar from sugarcane:
Provided that the Central Government or, with the approval of the
Central Government, the State Government, may, in such circumstances
and subject to such conditions as specified in Clause 3-A, allow a
suitable rebate in the price so fixed.
Explanation.—(1) Different prices may be fixed for different areas or
different qualities or varieties of sugarcane.
(2) No person shall sell or agree to sell sugarcane to a producer of
sugar or his agent, and no such producer or agent shall purchase or
agree to purchase sugarcane, at a price lower than that fixed under
sub-clause (1).
(3) Where a producer of sugar purchases any sugarcane from a grower of
sugarcane or from a sugarcane growers’ co-operative society, the
producer shall, unless there is an agreement in writing to the
contrary between the parties, pay within fourteen days from the date
of delivery of the sugarcane to the seller or tender to him the price
of the cane sold at the rate agreed to between the producer and the
sugarcane grower or sugarcane growers’ co-operative society or that
fixed under sub-clause (1), as the case may be, either at the gate of
the factory or at the cane collection centre or transfer or deposit
the necessary amount in the bank account of the seller or the co-
operative society, as the case may be.
(3-A) Where a producer of sugar or his agent fails to make payment for
the sugarcane purchased within 14 days of the date of delivery, he
shall pay interest on the amount due at the rate of 15 per cent per
annum for the period of such delay beyond 14 days. Where payment of
interest on delayed payment is made to a cane growers’ society, the
society shall pass on the interest to the cane growers concerned after
deducting administrative charges, if any, permitted by the rules of
the said society.
(4) to (6) xxxx xxxx xxxx
(7) In case, the price of the sugarcane remains unpaid on the last day
of the sugar year in which cane supply was made to the factory on
account of the suppliers of cane not coming forward with their claims
therefor or for any other reason it shall be deposited by the producer
of sugar with the Collector of the district in which the factory is
situated, within three months of the close of the sugar year. The
Collector shall pay, out of the amount so deposited, all claims,
considered payable by him and preferred before him within three years
of the close of the sugar year in which the cane was supplied to the
factory. The amount still remaining undisbursed with the Collector,
after meeting the claims from the suppliers, shall be credited by him
to the Consolidated Fund of the State, immediately after the expiry of
the time limit of 3 years within which claims therefor could be
preferred by the suppliers. The State Government shall, as far as
possible, utilise such amounts, for development of sugarcane in the
State.”
The Market Act

13. Initially, the State Legislature had enacted the Madhya Pradesh
Agricultural Markets Act, 1960. After noticing certain defects in the
scheme of that Act and with a view to ensure efficient functioning of the
Market Committees which would benefit agriculturists and traders, a
committee of the members of the State Legislature was formed in 1965. The
recommendation made by the Committee for enactment of a new legislation was
accepted by the State Government. Accordingly, the Market Act was enacted
for better regulation of buying and selling of agricultural produce and for
the establishment and proper administration of markets of agricultural
produce in the State. The relevant provisions of the Market Act read as
under:
“2. Definitions.- (1) In this Act, unless the context otherwise
requires,
(a) “agricultural produce” means all produce of agriculture,
horticulture, animal husbandry, apiculture, pisciculture, or forest as
specified in the Schedule;
(b) to (f) xxxx xxxx xxxx
(g) “Market” means a market established under Section 4;
(h) “market area” means the area for which a market is
established under Section 4;
(i) “market committee” means a committee constituted under Section
11;
(j) xxxx xxxx xxxx
(k) “market proper” in relation to a market yard means an area
declared to be a market proper under clause (b) of sub-section (2) of
Section 5;
(l) “market yard or sub-market yard” in relation to a market area
means a specified place declared to be a market yard or sub-market
yard under clause (a) of sub-section (2) of Section 5;
(m) to (p) xxxx xxxx xxxx
3. Notification of intention of regulating marketing of notified
agricultural produce in specified area.—(1) Upon a representation made
by local authority or by the growers of any agricultural produce
within the area for which a market is proposed to be established or
otherwise, the State Government may, by notification, and in such
other manner as may be prescribed, declare its intention to establish
a market for regulating the purchase and sale of agricultural produce
in such area as may be specified in the notification.

(2) A notification under sub-section (1) shall state that any
objection or suggestion which may be received by the State Government
within a period of not less than one month to be specified in the
notification shall be considered by the State Government.
4. Establishment of market and of regulation of marketing of notified
agricultural produce therein.- After the expiry of the period
specified in the notification issued under Section 3 and after
considering such objections and suggestions, as may be received before
such expiry and making such inquiry, if any, as may be necessary, the
State Government may, by another notification, establish a market for
the area specified in the notification under Section 3 or any portion
thereof for the purpose of this Act in respect of the agricultural
produce specified in the Schedule and the market so established shall
be known by the name as may be specified in that notification.
5. Market yard and market proper.- (l)(a) In every
market area,—
(i) there shall be a market yard; and
(ii) there may be more than one sub-market yards;
(b) for every market yard or sub-market yard there shall be a market
proper.
(2) The State Government shall, as soon as may be, after the issue of
notification under Section 4, by notification,—
(a) declare any specified place including any structure, enclosure,
open place, or locality in the market area to be a market yard or sub-
market yard, as the case may be; and
(b) declare in relation to such market yard or sub-market yard as the
case may be, any specified area in the market area to be a market
proper.
7. Establishment of Market Committee and its incorporation.-
(1) For every market area, there shall be a Market Committee having
jurisdiction over the entire market area.
(2) Every Market Committee shall be a body corporate by the name
specified in the notification under Section 4. It shall have
perpetual succession and a common seal and may sue and be sued in its
corporate name and shall subject to such restrictions as are imposed
by or under this Act, be competent to contract and to acquire, hold,
lease, sell or otherwise transfer any property and to do all other
things necessary for the purposes of this Act:
Provided that no immovable property shall be acquired without the
prior permission of the Managing Director in writing;
Provided further that no immovable property shall be transferred by
way of sale, lease or otherwise in a manner other than the manner
prescribed in the rules made by the State Government for the purpose.
(3) Notwithstanding anything contained in any enactment for the time
being in force, every Market Committee shall, for all purposes, be
deemed to be a local authority.
19. Power to levy market fee.- (1) Every Market Committee shall levy
market fee,—
(i) on the sale of notified agricultural produce whether
brought from within the State or from outside the State
into the market area; and
(ii) on the notified agricultural produce whether brought
from within the State or from outside the State into the
market areas and used for processing;
at such rates as may be fixed by the State Government from time to
time subject to a minimum rate of fifty paise and a maximum of two
rupees for every one hundred rupees of the price in the manner
prescribed:
Provided that no Market Committee other than the one in whose market
area the notified agricultural produce is brought for sale or
processing by an agriculturist or trader, as the case may be, for the
first time shall levy such market fee.
(2) The market fees shall be payable by the buyer of the notified
agricultural produce and shall not be deducted from the price payable
to the seller:
Provided that where the buyer of a notified agricultural produce
cannot be identified, all the fees shall be payable by the person who
may have sold or brought the produce for sale in the market area:
Provided further that in case of commercial transaction between
traders in the market area, the market fees shall be
collected and paid by the seller:
Provided also that no fees shall be levied upto 31st March, 1990 on
such agricultural produce as may be specified by the State Government
by notification in this behalf if such produce has been sold outside
the market yard or sub-market yard by an agriculturist to a co-
operative society of which he is a member:
Provided also that for the agricultural produce brought in the market
area for commercial transaction or for processing the market fee shall
be deposited by the buyer or processor as the case may be, in the
Market Committee office within fourteen days if the buyer or processor
has not submitted the permit issued under sub-section (6) of Section
19.
(3) to (5) xxxx xxxx xxxx
(6) No notified agricultural produce shall be removed out of the
market yard, market proper or the market area as the case may be,
except in accordance with a permit issued by the Market Committee, in
such form and in such manner as may be prescribed by the bye-laws:
Provided that if any person removes or transports the processed
product of notified agricultural produce from the market yard, market
proper or the market area, as the case may be, such person shall carry
with him the bill or cash memorandum issued under Section 43 of the
Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995).
(7) xxxx xxxx xxxx
31. Regulation of persons operating in market area.- No person shall,
in respect of any notified agricultural produce, operate in the market
area as commission agent, trader, broker, weighman, hammal, surveyor,
warehouseman, owner or occupier of processing or pressing factories or
such other market functionary except in accordance with the provisions
of this Act and the rules and bye-laws made thereunder.
32. Power to grant licences.- (1) Every person specified in Section 31
who desires to operate in the market area shall apply to the Market
Committee for grant of a licence or renewal thereof in such manner and
within such period as may be prescribed by bye-laws.
(2) to (5) xxxx xxxx xxxx
36. Sale of notified agricultural produce in markets.- (1) All
notified agricultural produce brought into the market proper for sale
shall, subject to the provisions of sub-section (2), be sold in the
market yard/yards specified for such produce or at such other place as
provided in the bye-laws:
Provided that it shall not be necessary to bring agricultural produce
under contract farming, in the market yard and it shall be sold at any
other place to the person agreed to purchase the same under agreement.
(2) Such notified agricultural produce as may be purchased by the
licensed traders from outside the market area in the course of
commercial transaction may be brought and sold anywhere in market area
in accordance with the provisions of the bye-laws.
(3) The price of the notified agricultural produce brought into the
market yard for sale shall be settled by tender bid or open auction
system and no deduction shall be made from the agreed price on any
account whatsoever:
Provided that in the market yard the price of such notified
agricultural produce of which support price has been declared by the
State Government, shall not be settled below the price so declared and
no bid shall be permitted to start, in the market yard, below the rate
so fixed.
(4) Weighment or measurement of all the notified agricultural produce
so purchased shall be done by such person and by such procedure as may
be provided in the bye-laws or any other place specified by the Market
Committee for the purpose:
Provided that the weighment, measurement or counting as the case may
be, of Plantain, Papaya or any other perishable agricultural produce
as may be specified by the State Government, by notification, shall be
done by a licensed weighman in the place where such produce has been
grown.
37. Conditions of buying and selling.- (1) Any person who buys
notified agricultural produce in the market area shall execute an
agreement in triplicate in such form as may be prescribed, in favour
of the seller. One copy of the agreement shall be kept by the buyer,
one copy shall be supplied to the seller and the remaining copy shall
be kept in the record of the Market Committee.
(2) (a) The price of the agricultural produce bought in the
market yard shall be paid on the same day to the seller at the
market yard;
(b) In the case purchaser does not make payment under clause (a), he
shall be liable to make additional payment at the rate of one percent
per day of the total price of the agricultural produce payable to the
seller within five days;
(c) In case the purchaser does not make payment with additional
payment to the seller under clauses (a) and (b) above within five days
from the day of such purchase, his licence shall be deemed to have
been cancelled on the sixth day and he or his relative shall not be
granted any licence under this Act for a period of one year from the
date of such cancellation.
Explanation.- For the purpose of this clause “relative” means the
relative as specified in the explanation in clause (a) of subsection
(1) of Section 11.
(3) No wholesale transaction of notified agricultural produce shall be
entered into directly by licensed traders with producers of such
produce except in the market yards or such other place as provided in
the bye-laws.
(4) to (5) xxxx xxxx xxxx

 
38. Market Committee Fund.- (1) All moneys received by a
Market Committee shall be paid into a fund to be called, “The Market
Committee Fund” and all expenditure incurred by the Market Committee
under or for the purposes of this Act shall be defrayed out of the
said fund. Any surplus remaining with the Market Committee after such
expenditure has been met, shall be invested in such manner as may be
prescribed:
Provided that all such sums of money received by the Market Committee
as security deposit, contributions to Provident Fund or for payment in
respect of any notified agricultural produce, or charges payable to
weighman, hammal and other functionaries shall not form part of Market
Committee Fund but shall be accounted for separately.
(2) xxxx xxxx xxxx
39. Application of Market Committee Fund.- Subject to
the provisions of Section 38, the Market Committee Fund may be
expended for the following purposes only, namely,-
i) the acquisition of a site or sites for the market yards;
ii) the maintenance and improvement of the market
yards;

(iii) the construction and repairs of buildings necessary for
the purposes of the market and for convenience or
safety of the persons using the market yard;
(iv) the maintenance of standard weights and measures;
(v) xxxx xxxx xxxx
(vi) the payment of interest on the loans that may be raised
for the purpose of the market and provisions of sinking
fund in respect of such loans;
(vii) the collection and dissemination or information relating to
crops statistics and marketing of agricultural
produce;
(viii) (a) xxxx xxxx xxxx
(b) xxxx xxxx xxxx
(c) contribution to State Marketing Development Fund;
(d) meeting any expenditure for carrying out order of the State
Government and any other work entrusted to Market Committee under
any other Act;
(e) contribution to any scheme for increasing agricultural
production and scientific storage;
(f) for development of market area in the manner prescribed;
(g) to educate or promote and undertake sale of agricultural
inputs, for increasing production, with the prior sanction of
Managing Director;
(gg) to undertake development of Haat Bazars for marketing of
agricultural produce;
(h) xxxx xxxx xxxx
(ix) any other purpose whereon the expenditure of the Market
Committee Fund is in the public interest, subject to the prior
sanction of the State Government.
43. State Marketing Development Fund.-(l) Every Market Committee shall
pay on the 10th day of every month to the Board at such percentage of
its gross receipts comprising of licence fees and market fees as the
State Government may, by notification, declare from time to time. The
amount so paid and collected shall be called “Madhya Pradesh State
Marketing Development Fund”.
(2) to (7) xxxx xxxx xxxx
44. Purposes for which Madhya Pradesh State Marketing Development Fund
shall be expended.- The Madhya Pradesh State Marketing Development
Fund shall be utilised by the Board for the following purposes,
namely,-
(i) market survey and research, grading and standardization of
agricultural produce and other allied subjects;
(ii) propaganda and publicity and extension services on the
matters relating to general improvement of conditions
of buying and selling of agricultural produces;
(iii) (a) construction of minimum infrastructure as prescribed
by the Board in the market yard or sub-market yard established
for the first time and for giving grant to the extent of two lakh
rupees to defray the establishment expenses;
(b) giving aid to financially weak Market Committees the
State in the form of loans and or grants;
(c) loans to any Market Committee for development of market yard
and/or sub-market yard, construction of cold storage, godown or
warehouses, distribution of plant protection equipments and
other purpose as may be considered desirable;
(iv) acquisition or constructions or hiring by lease or
otherwise of buildings or land for performing the duties of the
Board;
(v) xxxx xxxx xxxx
(vi) xxxx xxxx xxxx
(vii) better control of Market Committee;
(viii) xxxx xxxx xxxx
(ix) imparting education in regulated marketing of agricultural
produce;
(x) training the agriculturists, officers and staff of the Market
Committees;
(x-a) provision of technical assistance to the Market Committees in
the preparation of site plans and estimates of construction and in the
preparation of project reports or master plans for development of
market yard;
(x-b) xxxx xxxx xxxx
(x-c) marketing the sale of agricultural inputs for increasing
agricultural production in the market areas;
(x-d) development of Haat Bazars for marketing of agricultural produce
and construction of infrastructure for facilitating the flow of
notified agricultural produce in the market area;
(x-e) xxxx xxxx xxxx
(x-f) xxxx xxxx xxxx
(x-g) development of testing and communication infrastructure relevant
to agriculture and allied sectors.
(xi) any other purposes of general interest to regulate
marketing of agricultural produce.”

Analysis
14. The primary object of the Sugarcane Act is to ensure adequate supply
of cane to the factories and timely payment of price to the cultivators.
The Act contains comprehensive provisions for making available sugarcane to
the factories and protection of the rights of Cane Growers to get adequate
remuneration for their labour. Under Section 15, the Commissioner is
empowered to declare any area to be reserved for any particular factory and
once such declaration is made, the occupier of the factory is bound to
purchase cane grown in that area which is offered for sale to the factory.
Likewise, under Section 16, the Commissioner can make a declaration that
any area shall be an assigned area for the purpose of supply of cane to a
factory and, in that event, the factory is required to purchase the
specified quantity of cane grown in that area. For achieving the object of
maintaining supplies, the State Government can pass an order under Section
19 for regulating distribution, sale or purchase of cane in any reserved or
assigned area; and purchase of cane in any area other than a reserved or
assigned area. In such an order, the State Government can specify the
quantity of cane to be supplied by each Cane Grower or Cane-Growers’ Co-
operative Society to the factory for which the particular area has been
reserved or assigned, the manner of purchase by the factory, details of the
sale agreements and grant of permission for sale and purchase. Section 20
mandates that payment for the cane shall be made by the occupier
immediately upon delivery and only such deductions as authorised in lieu of
loans can be made. The Development Council established under Section 5(1)
has been assigned various functions enumerated in Section 6 for ensuring
proper development of the zone. The Development Council is required to
devise ways and means for the execution of the development plan which
includes cane varieties, cane-seed, sowing programme, fertilizer and
manure; development of irrigation and other agricultural facilities;
prevention and control of diseases and pests, soil extension work and
training to cultivators in matters relating to the production of sugarcane.
One of the components of the fund required for the Council is the
commission received by it under Section 21 from the occupiers of the
factory for every maund of cane purchased. The rules framed under Section
30 of the Sugarcane Act help in achieving the objectives of the Act. Rule
35 mandates the occupier to provide facilities for weighment at the
purchasing centre so that there is no congestion and undue delay in
weighment. Rule 36 requires that the occupier should provide metalled
approaches and exits to the parking area in the factory and shelter and
drinking water at the purchasing centres. Rules 40, 41 and 43 ensure
payment of the price of cane by the occupier to the factory or the
purchasing agent without any deduction.

15. The Control Order deals with the fixation of minimum price of
sugarcane to Cane Growers or Cane Growers’ Co-operative Societies. Clause
3(1) of the Control Order empowers the Central Government to fix the
minimum price of sugarcane to be paid by the producers of sugar or their
agents for the sugarcane purchased by them. For this purpose, the Central
Government is required to take into account the cost of production of
sugarcane; return to the grower from alternative crop and the general trend
of prices of agricultural commodities; the availability of sugar to the
consumers at a fair price; the price at which sugar is sold by producers of
sugar; and the recovery of sugar from sugarcane. Clause 3(2) mandates that
no person shall sell or agree to sell sugarcane and no producer or his
agent shall purchase or agree to purchase sugarcane at a price lower than
the minimum price. Clauses 3(3) and (3-A) mandate payment of the price of
cane within 14 days from the date of delivery and levy interest at the rate
of 15% per annum for the period of delay beyond 14 days.

16. The Market Act was enacted to regulate the transactions involving the
sale and purchase of agricultural produce with the aim of preventing
exploitation of the agriculturists and the establishment and proper
administration of markets of agricultural produce in the State. Section 4
read with Section 3 provides for the establishment of a market for the area
specified in the notification issued under Section 3 for regulating the
purchase and sale of agricultural produce in such area. Once a market is
established for the particular area, the prohibition contained in Section
6(a) and (b) against the setting up, establishment, continuance or use of
any place in the market area for the marketing of any notified agricultural
produce comes into play and no person can use any place in the market area
for the marketing of the notified agricultural produce or operate in the
market area as a market functionary. Proviso to this section carves out
certain exceptions regarding the sale or purchase of agricultural produce
not exceeding four quintals at a time for domestic consumption, etc.
Section 5(1)(a) read with Section 5(2) lays down that in every market area
there shall be a market yard and there may be more than one sub-market
yards. Section 5(1)(b) read with Section 5(2) declares that for every
market yard or sub-market yard there shall be a market proper. In terms of
Section 7(1), a Market Committee is required to be established for every
market area. Section 7(2) declares that every Market Committee shall be a
body corporate. Section 7(3) contains a deeming provision by which every
Market Committee is treated as a local authority. Section 17 specifies the
powers and duties of a Market Committee. Section 19(1) casts a duty upon
every Market Committee to levy market fee on the sale of notified
agricultural produce whether brought from within the State or from outside
the State into the market area and on the notified agricultural produce
whether brought from within the State or from outside the State into the
market area and used for processing. Under Section 19(2), the market fee
is payable by the buyer of such produce and is not to be deducted from the
price payable to the seller. It is only if the buyer of the produce cannot
be identified that all fees are payable by the seller or by the person who
brought the produce for sale in the market area, provided further that in
case of a commercial transaction between traders in the market area, the
market fees are to be collected and paid by the seller. Section 19(6)
provides that no notified agricultural produce shall be removed out of the
market yard, market proper or the market area except in accordance with a
permit issued by the Market Committee. Section 32 empowers the Market
Committee to grant licence to any person who desires to operate in the
market area. Section 36(1) provides that all notified produce brought into
the market proper for sale shall be sold in the market yard/yards specified
for such produce. Proviso to this Section, which was added by MP Act No. 15
of 2003, carves out an exception in respect of agricultural produce under
contract farming and lays down that it shall not be necessary to bring such
produce in the market yard and it can be sold at any other place to the
person who has agreed to purchase the same under an agreement. Section
36(2) carves out another exception and lays down that the produce purchased
from outside the market area by licenced traders in the course of a
commercial transaction may be bought and sold anywhere in the market area
in accordance with the bye-laws. Section 36(3) lays down that the price of
the notified agricultural produce brought into the market yard for sale
shall be settled by tender bid or open auction system and no deduction
shall be made from the agreed price on any account whatsoever. Proviso to
this sub-section lays down that where support price of any notified
agricultural produce has been declared by the State Government, the price
shall not be settled below the support price and no bid shall be permitted
below such price. Section 36(4) provides for weighment or measurement of
the notified agricultural produce purchased under other sub-sections of
this section. Section 37(1) mandates execution of an agreement by any
person who buys agricultural produce in the market area. In terms of
Section 37(2)(a), the price of the agricultural produce bought in the
market yard is required to be paid on the same day to the seller at the
market yard. If the purchaser fails to make payment in accordance with
Section 37(2)(a), then he has to make additional payment at the rate of 1%
per day of the total price of the agricultural produce. In case of further
delay of more than 5 days, his licence stands cancelled with a bar on grant
of further licence to him or his relative. Section 38(1) provides that all
monies received by a Market Committee including market fee shall be paid
into “the Market Committee Fund”, which is to be utilized for the purposes
specified in Section 39 which include, the acquisition of a site or sites
for the market yards; the maintenance and improvement of the market yards;
the construction and repairs of buildings of the market; the maintenance of
standard weights and measures; contribution to any scheme for increasing
agricultural production and scientific storage; development of market area
in the manner prescribed and development of Haat Bazars for agricultural
produce. In terms of Section 43(1), every Market Committee is required to
pay to the State Agricultural Marketing Board a specified percentage of its
gross receipts comprising of licence fee or market fee, as may be notified
by the State Government. This amount is called Madhya Pradesh State
Marketing Development Fund and is to be used for the purposes specified in
Section 44, which include, market survey and research, grading and
standardization of agricultural produce and other allied subjects;
construction of minimum infrastructure in the market yard or sub-market
yard established for the first time; grant of loan to Market Committees for
development of market yard/sub-market yard; construction of cold storage,
godown or warehouses, distribution of plant protection equipments;
acquisition or construction or hiring by lease or otherwise of buildings or
land for the Board; imparting education in regulated marketing of
agricultural produce; training the agriculturists, officers and staff of
the Market Committees; provision of technical assistance to the Market
Committees in the preparation of site plans and estimates of construction
and in the preparation of project reports/master plan for development of
market yard; development of Haat Bazars for marketing of agricultural
produce; construction of infrastructure for facilitating the flow of
notified agricultural produce in the market area; and development of
testing and communication infrastructure relevant to agricultural and
allied sectors.
17. The above analysis of the provisions of the Sugarcane Act and the
Control Order along with the Market Act brings to fore the conflict between
the three statutes insofar as they relate to the transactions involving
sale of sugarcane by Cane Growers / Cane Growers’ Co-operative Societies to
the occupiers of factories. While the Sugarcane Act and the Rules framed
thereunder constitute a complete code for regulating the supply of
sugarcane by Cane Growers and Cane Growers’ Co-operative Societies to the
occupiers of the factories at the purchasing centres established and
maintained by them and payment of price without delay, the Market Act
regulates sale and purchase of notified agricultural produce in the market
yards specified for the particular produce or at other places provided in
the bye-laws and mandates that the price of the notified agricultural
produce should be settled by tender bid or open auction system. (Sugarcane
was included in the Schedule w.e.f. 7.6.1979 by M.P.Act No.18/1997). The
Control Order not only lays down the mechanism for determination of the
minimum price of sugarcane payable by the producers of sugar or their
agents for the sugarcane purchased by them, but also prescribes the mode of
payment of the price. The Sugarcane Act and the Rules framed thereunder
also prescribe the mode of payment of the price by the occupier of the
factory. Likewise, the Market Act contains provisions for payment of the
price of the notified agricultural produce brought into the market yard for
sale. It is thus evident that so far as sugarcane is concerned, there is
direct conflict between the provisions of the Sugarcane Act and the Market
Act both, in matters relating to sale and purchase of sugarcane, and,
payment of price. Likewise, there is conflict between the Control Order and
the Market Act in the matter of determination of price of the sugarcane and
mode of payment.

18. The argument of Shri Tankha and Shri Banthia that the Sugarcane Act
and the Control Order are silent on the issue of levy of market fee on
transactions involving the purchase of sugarcane by the factories within
the market areas and, therefore, the provisions contained in Sections 19
and 36 of the Market Act would prevail and the High Court committed an
error by applying the ratio of the judgment in Belsund Sugar Co. Ltd. v.
State of Bihar (supra) sounds attractive, but we have not felt persuaded to
agree with them because the Sugarcane Act is a special statute enacted for
regulating the supply and purchase of sugarcane to the factories and covers
the entire spectrum of the transactions involving sale and purchase of
sugarcane. The Sugarcane Act and the Rules framed thereunder cast a duty on
the occupier of the factory to provide amenities and facilities for supply
of cane at the purchasing centres from factory premises and pay the price
of cane without any tangible delay. The occupier is also obliged to pay
commission under Section 21 which becomes part of the Council Fund and is
utilised for overall development of the production of sugarcane by
providing better varieties of seeds, fertilizers and manures, devising
appropriate sowing programme, improving irrigation and other facilities and
taking steps for prevention and control of diseases and pesticides. The
Council Fund is also to be invested for imparting technical training to
cultivators in matters relating to the production of cane. The mechanism
for fixing the minimum price of cane is contained in Clause 3 of the
Control Order and the mode of payment of the price is contained both in the
Sugarcane Act and the Control Order. The Market Act contains a
comprehensive mechanism for establishment of market area and Market
Committee having jurisdiction over such area, market yard/sub-market yard
and market proper. Section 19 which obligates every Market Committee to
levy market fee, which is payable by the producer on the sale of notified
agricultural produce finds place in Chapter IV (Conduct of Business and
Powers and Duties of Market Committee). Proviso to sub-section (2) thereof
also postulates payment / collection of market fee from the seller in
certain contingencies. The sale of notified agricultural produce in the
markets is governed by Section 36 which finds place in Chapter VI of the
Market Act (Regulation of Trading). That section mandates that all
notified agricultural produce brought into the market proper for sale shall
be sold in the market yard/yards specified for such produce or at such
other places as provided in the bye-laws. Sub-section (3) of Section 36
contains the mechanism for determination of price on notified agricultural
produce brought for sale into the market yard by tender bid or open
auction. Section 37(2) provides for payment of price of the agricultural
produce on the same day but only in relation to the produce bought in the
market yard. These provisions are irreconcilable with those contained in
Section 19 read with Sections 15 and 16 of the Sugarcane Act and Clause 3
of the Control Order. Sections 38 and 43 of the Market Act talk of ‘Market
Committee Fund’ and ‘State Marketing Development Fund’ which are to be used
for overall development of market areas. The benefit of development of
market areas and other activities undertaken by the Market Committees and
the State Marketing Board is available to all the agriculturists who sell
their produce in the market yards/sub-market yards and buyers of such
produce in accordance with Section 36 of the Market Act and no special
facility is provided to the Cane Growers and the occupiers of the factories
who purchase sugarcane at the purchasing centres or within the factory
premises. Rather, the Development Council constituted under Section 5 of
the Sugarcane Act is required to spend funds, which include the commission
paid by the occupier for every maund of cane purchased by the factory on
overall development of the zone and take measures for improvement of the
production of sugarcane by ensuring supply of quality seeds, fertilizer and
manure to the Cane Growers and improving the soil quality and irrigation
facilities. Therefore, even though the Market Act is a subsequent
legislation and one of its objectives is to regulate buying and selling of
agricultural produce including sugarcane, the general provisions contained
therein cannot prevail over the Sugarcane Act and the Control Order, which
are special legislations exclusively dealing with issues relating to
increase in the production of sugarcane, supply of sugarcane by Cane
Growers/Cane Growers Cooperative Societies to the factories from any
reserved or assigned area or otherwise and payment of the price of cane by
the occupier of the factory.

19. Though, there is no significant difference in the Control Order and
the Market Act insofar as the mode of payment of the price of sugarcane is
concerned, but the mechanism enshrined in the two statutes for
determination of price is vastly different. The Control Order envisages
fixation of the minimum price of sugarcane by the Central Government after
considering the factors enumerated in Clause 3 and consulting such
authorities, bodies or associations as it may think fit and the producer of
sugar is bound to pay at least that price to Cane Growers/Cane Growers
Cooperative Societies. As against this, the Market Act postulates
determination of the price of the notified agricultural produce (sugarcane
is only one of such produce) brought into the market yard for sale under
Section 36(3) by tender bid or open auction. In that exercise, the State
Government/the concerned Market Committee does not have any role to play.
Of course, such price cannot be less than the support price declared by the
State Government. This difference also indicates that the Control Order is
a special legislation vis-à-vis the Market Act.

20. We shall now deal with two of the many judgments relied upon by the
learned counsel for the parties. In Belsund Sugar Co. Ltd v. State of
Bihar (supra), the Constitution Bench considered the legality of levy of
market fee under the Bihar Agricultural Produce Markets Act, 1960 on the
transactions relating to sale and purchase of sugarcane by the sugar
factories. The Constitution Bench first considered Entries 26, 27, 28 and
33 of List II of the Seventh Schedule of the Constitution and observed:

“In the first instance, we shall deal with the transactions of
purchase of sugarcane by the sugar factories functioning in the market
areas falling within the jurisdiction of respective Market Committees
constituted under the Market Act. The Market Act has been enacted by
the Bihar Legislature as per the legislative power vested in it by
Entries 26, 27 and 28 of List II of the Seventh Schedule of the
Constitution. These entries read as under:
“26. Trade and commerce within the State subject to the provisions of
Entry 33 of List III.
27. Production, supply and distribution of goods subject to the
provisions of Entry 33 of List III.
28. Markets and fairs.”
It becomes at once clear that if location of markets and fairs
simpliciter and the management and maintenance thereof are only
contemplated by the Market Act, then they would fall squarely within
the topic of legislative power envisaged by Entry 28 of List II.
However, the Market Act, as we will presently show, deals with supply
and distribution of goods as well as trade and commerce therein as it
seeks to regulate the sale and purchase of agricultural produce to be
carried on in the specified markets under the Act. To that extent the
provisions of Entry 33 of List III override the legislative powers of
the State Legislature in connection with legislations dealing with
trade and commerce in, and the production, supply and distribution of,
goods. Once we turn to Entry 33 of the Concurrent List, we find that
on the topic of trade and commerce in, and the production, supply and
distribution of, goods enumerated therein at sub-clause (b), we find
listed items of foodstuffs, including edible oilseeds and oils. Thus
to the extent to which the Market Act seeks to regulate the
transactions of sale and purchase of sugarcane and sugar which are
foodstuffs and trade and commerce therein, it has to be held that the
Market Act being enacted under the topics of legislative powers under
Entries 26, 27 and 28 of List II will be subject to any other
legislation under Entry 33 of the Concurrent List. As it will be seen
hereinafter, the Bihar Legislature itself has enacted the Sugarcane
Act in exercise of its legislative powers under Entry 33 of the
Concurrent List and, therefore, the field covered by the Sugarcane Act
would obviously remain exclusively governed by the Sugarcane Act and
to the extent the latter Act carves out an independent field for its
operation, the sweep of the general field covered by the Market Act
which covers all types of agricultural produce, would pro tanto get
excluded qua sugarcane and the products prepared out of it.”

 

The Constitution Bench then took congnizance of the fact that the
Bihar Sugarcane Act, 1981 was a later enactment, referred to the provisions
of that Act and proceeded to observe:
“The aforesaid provisions of the Sugarcane Act leave no room for doubt
that the Bihar Legislature in its wisdom has enacted a special
machinery for regulating the purchase and sale of sugarcane to be
supplied to sugar factories for manufacturing sugar out of the
sugarcane produced for them in the reserved area. The relevant
provisions of the Act project a well-knit and exhaustive machinery for
regulating the production, purchase and sale of sugarcane for being
supplied as appropriate raw material to the factories manufacturing
sugar and molasses out of them.
The aforesaid provisions, therefore, clearly indicate that the need
for regulating the purchase, sale, storage and processing of
sugarcane, being an “agricultural produce”, is completely met by the
comprehensive machinery provided by the Sugarcane Act enacted by the
very same legislature which enacted the general Act being the Market
Act.
Once that conclusion is reached, it becomes obvious that the Market
Act which is an enabling Act empowering the State authorities to
extend the regulatory net of the said Act to notified agricultural
produce as per Section 3(1) will get its general sweep curtailed to
the extent the special Act being the Sugarcane Act enacted by the very
same legislature carves out a special field and provides special
machinery for regulating the purchase and sale of the specified
“agricultural produce”, namely, sugarcane. It has also to be kept in
view that the very heart of the Market Act is Section 15 of the Act
which reads as under:
“15. Sale of agricultural produce.—(1) No agricultural produce
specified in notification under sub-section (1) of Section 4, shall be
made, bought or sold by any person at any place within the market area
other than the relevant principal market yard or sub-market yard or
yards established therein, except such quantity as may on this behalf
be prescribed for retail sale or personal consumption.
(2) The sale and purchase of such agricultural produce in such
areas shall notwithstanding anything contained in any law be made by
means of open auction or tender system except in cases of such class
or description of produce as may be exempted by the Board.”

It is this section which enables the Market Committee concerned to
monitor and regulate the sale and purchase of the agricultural
commodity which is covered by the protective umbrella of the Act. Once
such an agricultural produce is brought for sale in the market yard or
sub-market yard, the sale is to be effected by auction or by inviting
tenders. Such a scheme is in direct conflict with the scheme of the
Sugarcane Act wherein there is no question of a sugar factory being
called upon to enter into a public auction for purchasing sugarcane
which is specially earmarked for it out of the reserved area. In fact,
the provisions of the Sugarcane Act and the provisions of the Market
Act, especially Section 15 read with Section 3(1), cannot harmoniously
coexist.”

 

After further discussion, the Court observed:
“It must, therefore, be held that the entire machinery of the Market
Act cannot apply to the transactions of purchase of sugarcane by the
appellant Sugar Factories as they are fully covered by the special
provisions of the Sugarcane Act. It is also necessary to note that if
both these Acts are treated to be simultaneously applying to cover
sale and purchase of sugarcane, the possibility of a clear conflict of
decisions of officers and authorities acting under the Sugarcane Act
on the one hand and the Market Act on the other would arise. These
authorities acting under both the State Acts, dealing with the same
subject-matter and covering the same transactions may come to
independent diverse conclusions and none of them being subordinate to
the other may create a situation wherein there may be a head-on
collision between the decisions and the orders of these authorities
acting on their own in the hierarchy of the respective statutory
provisions. For example, the Marketing Inspector may find that
weighment of sugarcane was not proper at a given point of time, while
the Cane Officer may find to the contrary. In the hierarchy of
proceedings under the Market Act the Market Committee may take one
decision with respect to the same subject-matter, for which the
Collector exercising appellate powers under the Sugarcane Act may take
a contrary decision. This would create an irreconcilable conflict of
decisions with consequential confusion. So far as the buyers and
sellers of “agricultural produce — sugarcane” are concerned, it is of
no avail to contend as submitted by learned counsel for the
respondents that for avoiding such conflicts, Section 15 is dispensed
with by the State in exercise of its power under Section 42 of the
Market Act, whether such an exemption can be granted by the State
under Section 42 or not is not a relevant consideration for deciding
the moot question whether the statutory scheme of the Market Act can
harmoniously coexist with the statutory scheme of the Sugarcane Act as
enacted by the very same legislature. It is possible to visualise that
the State authorities may not exercise powers under Section 42 of the
Act. In such an eventuality, the Sugarcane Act would not countenance a
public auction of sugarcane to be supplied by the cane-grower to the
earmarked factory for which sugarcane is grown in the reserved area.
On the other hand, the Market Act would require the very same
sugarcane to be brought to the market yard for being sold at the
public auction to the highest bidder who may not be the sugar factory
itself. Thus what is reserved for the sugar factory by way of raw
material by the Sugarcane Act would get dereserved by the sweep of
Section 15 of the Market Act. To avoid such a head-on conflict, it has
to be held that the Market Act is a general Act covering all types of
agricultural produce listed in the Schedule to the Act, but out of the
listed items if any of the “agricultural produce” like sugarcane is
made the subject-matter of a special enactment laying down an
independent exclusive machinery for regulating sale, purchase and
storage of such a commodity under a special Act, then the special Act
would prevail over the general Act for that commodity and by necessary
implication will take the said commodity out of the sweep of the
general Act. Therefore, learned counsel for the appellants are right
when they submit that because of the Sugarcane Act the regulation of
sale and purchase of sugarcane has to be carried out exclusively under
the Sugarcane Act and the said transactions would be out of the
general sweep of the Market Act. None of its machinery would be
available to regulate these transactions.”

 

The Constitution Bench also considered the provisions of the Control
Order and observed:
“It has to be appreciated that the aforesaid provisions of the
Sugarcane (Control) Order operate in the same field in which the Bihar
legislative enactment, namely, the Sugarcane Act operates and both of
them are complementary to each other. When taken together, they wholly
occupy the field of regulation of price of sugarcane and also the mode
and manner in which sugarcane has to be supplied and distributed to
the earmarked sugar factories and thus lay down a comprehensive scheme
of regulating purchase and sale of sugarcane to be supplied by
sugarcane-growers to the earmarked sugar factories. It is, however,
true that a comprehensive procedure or machinery for enforcing these
provisions is found in greater detail in the Sugarcane Act of the
Bihar Legislature. But on a combined operation of both these
provisions, it becomes at once clear that the general provisions of
the Market Act so far as the regulation of sale and purchase of
sugarcane is concerned get obviously excluded and superseded by these
special provisions.”

 

21. In H.S. Jayanna v. State of Karnataka (supra), the appellants had
challenged the levy of market fee on rice by the Marketing Committees
constituted under the Karnataka Agricultural Produce Marketing (Regulation)
Act, 1966 on the ground that the provisions of the Act are repugnant to
those contained in the Karnataka Rice Procurement (Levy) Order, 1984 framed
under the Essential Commodities Act. The learned Single Judge allowed the
writ petitions filed by the appellants but his order was reversed by the
Division Bench. Before this Court, reliance was placed on the judgment in
Belsund Sugar Co. Ltd. v. State of Bihar (supra) in support of the argument
that the provisions of the State Act were inconsistent with those contained
in the Control Order. The two Judge Bench extensively referred to the
findings and conclusions recorded in Belsund Sugar Co. Ltd. case (supra)
and proceeded to observe:

“We have no hesitation in concluding that the entire field of
regulating the purchase and sale of paddy or the rice produced out of
paddy is not covered under the Control Order. The provisions of the
Marketing Act do not trench up the field covered by the Control Order.
There is no inconsistency between the Control Order and the Marketing
Act. They do not cover the same field and therefore the question of
any inconsistency, repugnancy or the Marketing Act being ineffectual
in terms of Section 6 of the Essential Commodities Act in view of the
Control Order issued under Section 3 of the Essential Commodities Act
would not arise. The Control Order deals with the compulsory
acquisition of 1/3rd of rice of each variety produced by a miller at a
purchase price fixed by the Government. It requires the miller to
supply to the Government or its purchase agent and deliver the
procured rice at a notified place. It does not deal with the sale and
purchase of the remaining 2/3rd rice except that the miller is not
permitted to remove the stock of rice from the mill premises without
delivery of rice to the Government or its purchase agent and without
obtaining a release certificate required to be taken under clause 8 of
the said Order. It does not deal with the marketing or the facilities
to be provided to the grower, seller and purchaser of paddy in the
market area or to the seller or purchaser of rice. The Control Order
is thus limited in operation. The Marketing Act provides for the
regulation of marketing of agricultural produce (which rice is) and
the establishment and administration of markets for agricultural
produce and matters connected therewith in the State of Karnataka. The
Marketing Act deals with the entire gamut of marketing of agricultural
produce starting from the establishment of the Market Committees,
markets, declaration of market area, market yard, market sub-yard,
regulation of marketing of specified agricultural produce therein and
for obtaining a licence under the Act, the process of
appointing/electing the Market Committees, the powers and duties of
the Market Committee [Section 63(1)], the facilities to be provided by
the Market Committee [Section 63(2)] and the levy of market fee
(Section 65). The Marketing Act does not deal with any of the
provisions made in the Control Order. The Control Order and the
Marketing Act do deal with the same subject but do not cover the same
field. There is no conflict between them. They do not occupy the same
field.”
(emphasis supplied)

 

22. In our view, the above extracted observations do not help the
appellants. Rather, they support the conclusion recorded by us that the
entire field of the sale and purchase of sugarcane is covered by the
Sugarcane Act and the Control Order, which are special legislations and the
provisions contained in the Market Act, which generally deal with sale and
purchase of agricultural produce specified in the Schedule cannot be
invoked for compelling the occupier of a factory engaged in the manufacture
of sugar to take licence under Section 31 read with Section 32 and pay
market fee in terms of Section 19 thereof because the same are in direct
conflict with the provisions contained in the Sugarcane Act and the Control
Order.

23. The argument of the learned senior counsel appearing for the
appellants that the provisions of the Control Order cannot prevail over the
Market Act because the same was enforced after receiving Presidential
assent merits rejection. The reasons for this conclusion of ours are:

(i) In the counter filed before the High Court, no such plea was raised
and no document was produced to show that the Market Act was reserved for
Presidential Assent on the ground that the provisions contained therein are
in conflict with those contained in the Control Order.

(ii) It was not argued before the High Court that the President had been
apprised of the conflict between the Control Order and the Market Act and
he accorded assent after considering this fact.

(iii) It also deserves to be mentioned that during the course of hearing,
this Court had after taking cognizance of the aforesaid argument,
directed Shri B. S. Banthia, learned counsel for the State of Madhya
Pradesh to produce the record to show as to in what context the Market Act
was reserved for Presidential assent. After the judgment was reserved, Shri
Banthia handed over an envelope containing File No.17/62/73-Judicial of the
Ministry of Home Affairs, perusal of which reveals that the request of the
State Government for Presidential assent was processed by the Ministry of
Home Affairs. In the first instance, the Departments of Agriculture, Food
and Internal Trade as also the Planning Commission were asked to offer
their comments. The Department of Agriculture conveyed no-objection but
wanted its suggestions to be incorporated in the Bill. The others did not
offer any comment. Thereafter, the Joint Secretary (Home) recorded a note
that the suggestions given by the Agriculture Department will be sent to
the State Government for consideration. He also prepared the following
summary for consideration of the President:
“S U M M A R Y
The Madhya Pradesh Krishi Upaj Mandi Vidheyak, 1972.
The Madhya Pradesh Agricultural Produce Markets Act, 1960 has been in
force in the State since October, 1960. During the operation of the
Act for the last twelve years, the number of agricultural market
committees has risen from 87 to 230. The working of the Act has
revealed certain shortcomings and it was considered desirable by the
State Government to review the Act in order to ensure efficient
working of the market committees to the best advantage of the
agriculturists as well as traders. A committee was constituted by the
State Government for the purpose and the committee recommended
revision of the Act of 1960. Hence the State Government have got
passed the present Bill.
2. The salient feature of the Bill are as follows:
(i) Establishment of markets for the specified areas and of
regulation of marketing of notified agricultural produce
therein.
(ii) Establishment of market committee for every market area
and constitution of State Marketing Service to secure efficient
administration of market committees.
(iii) Constitution of the Madhya Pradesh State Agricultural
Marketing Board at the State level to coordinate the work of
market committees in the State and to advise the State
Government.
(iv) Election of Chairman of market committee from amongst the
representatives of agriculturists.
(v) Provision for deterrent punishment for resorting to trade
malpractices by market functionaries in the market area.
3. Having regard to the provisions of article 31(3), 254(2) and 304
of the Constitution of India, the Governor of Madhya Pradesh has
reserved the Bill for the consideration and assent of the President.
4. The Department of Agriculture, Department of Food, Planning
Commission and the Department of Internal Trade who were consulted
have no objection to the assent of the President being given to the
Bill. The Department of Agriculture have, however, suggested that the
details of the composition of the State Marketing Board, which have
not been given in the Bill, should be specified in the Bill. This
suggestion will be communicated to the State Government. The Ministry
of Law who were consulted do not see any objection to the assent of
the President being given to the Bill from the legal and
constitutional point of view. Accordingly, if the Minister approves,
the Bill may be recommended to the President for his assent.
(Sd/-)
(P.P. Nayyar)
Joint Secretary.”

 

24. From the summary reproduced hereinabove, it is clear that the State
Government had not reserved the Market Act for Presidential assent on the
ground of any repugnancy between the provisions of that Act and the Control
Order. As a matter of fact, the State Government could not have even
thought of any repugnancy between these statutes because at the relevant
time, sugarcane was not treated as an agricultural produce and was not
included in the Schedule appended to the Market Act.

25. The nature and scope of Presidential assent under Article 254(2) of
the Constitution was considered by the Constitution Bench in Gram Panchayat
of Village Jamalpur v. Malwinder Singh (supra). In that case, it was
argued that the President’s assent to Section 3(a) of the Punjab Village
Common Lands (Regulation) Act, 1953 would give it precedence over the
Administration of Evacuee Property Act, 1950, which was enacted by
Parliament. The Constitution Bench held that the assent of the President
under Article 254(2) of the Constitution is not an empty formality and the
President has to be apprised of the reason why his assent was being sought.
The Constitution Bench further held that if the assent is sought for a
specific purpose, the efficacy of assent would be limited to that purpose
and cannot be extended beyond it. The relevant observations made on this
issue are contained in Para 12, which is extracted below:
“12. The Punjab Act of 1953 was reserved for consideration of the
President and received his assent on December 26, 1953. Prima facie,
by reason of the assent of the President, the Punjab Act would prevail
in the State of Punjab over the Act of the Parliament and the
Panchayats would be at liberty to deal with the Shamlat-deh lands
according to the relevant Rules or bye-laws governing the matter,
including the evacuee interest therein. But, there is a complication
of some nicety arising out of the fact that the Punjab Act was
reserved for the assent of the President, though for the specific and
limited purpose of Articles 31 and 31-A of the Constitution. Article
31, which was deleted by the Constitution (Forty-fourth Amendment)
Act, 1978 provided for compulsory acquisition of property. Clause (3)
of that article provided that, no law referred to in clause (2), made
by the Legislature of a State shall have effect unless such law,
having been reserved for the consideration of the President, has
received his assent. Article 31-A confers protection upon laws falling
within clauses (a) to (e) of that article, provided that such laws, if
made by a State Legislature, have received the assent of the
President. Clause (a) of Article 31-A comprehends laws of agrarian
reform. Since the Punjab Act of 1953 extinguished all private
interests in Shamlat-deh lands and vested those lands in the Village
Panchayats and since, the Act was a measure of agrarian reform, it was
reserved for the consideration of the President. The judgment of the
High Court shows that the hearing of the writ petitions was adjourned
to enable the State Government to place material before the Court
showing the purpose for which the Punjab Act of 1953 was forwarded to
the President for his assent. The record shows, and it was not
disputed either before us or in the High Court, that the Act was not
reserved for the assent of the President on the ground that it was
repugnant to an earlier Act passed by the Parliament, namely, the
Central Act of 1950. In these circumstances, we agree with the High
Court that the Punjab Act of 1953 cannot be said to have been reserved
for the assent of the President within the meaning of clause (2) of
Article 254 of the Constitution insofar as its repugnancy with the
Central Act of 1950 is concerned. The assent of the President under
Article 254(2) of the Constitution is not a matter of idle formality.
The President has, at least, to be apprised of the reason why his
assent is sought if, there is any special reason for doing so. If the
assent is sought and given in general terms so as to be effective for
all purposes, different considerations may legitimately arise. But if,
as in the instant case, the assent of the President is sought to the
Law for a specific purpose, the efficacy of the assent would be
limited to that purpose and cannot be extended beyond it. Not only was
the President not apprised in the instant case that his assent was
sought because of the repugnancy between the State Act and the pre-
existing Central Act on the vesting of evacuee properties but, his
assent was sought for a different, specific purpose altogether.
Therefore, that assent cannot avail the State Government for the
purpose of according precedence to the law made by the State
Legislature, namely, the Punjab Act of 1953, over the law made by the
Parliament, even within the jurisdiction of the State.”
(emphasis supplied)

 

26. The proposition laid down in Gram Panchayat of Village Jamalpur v.
Malwinder Singh (supra) was considered by another Constitution Bench in
Kaiser-I-Hind Pvt. Ltd. v. National Textile Corporation (Maharashtra North)
Ltd. (supra). Speaking for the majority of the Court, Shah, J. observed:
“In view of the aforesaid requirements, before obtaining the assent of
the President, the State Government has to point out that the law made
by the State Legislature is in respect of one of the matters
enumerated in the Concurrent List by mentioning entry/entries of the
Concurrent List and that it contains provision or provisions repugnant
to the law made by Parliament or existing law. Further, the words
“reserved for consideration” would definitely indicate that there
should be active application of mind by the President to the
repugnancy pointed out between the proposed State law and the earlier
law made by Parliament and the necessity of having such a law, in the
facts and circumstances of the matter, which is repugnant to a law
enacted by Parliament prevailing in a State. The word “consideration”
would manifest that after careful thinking over and due application of
mind regarding the necessity of having State law which is repugnant to
the law made by Parliament, the President may grant assent. This
aspect is further reaffirmed by use of the word “assent” in clause
(2), which implies knowledge of the President to the repugnancy
between the State law and the earlier law made by Parliament on the
same subject-matter and the reasons for grant of such assent. The word
“assent” would mean in the context as an expressed agreement of mind
to what is proposed by the State.”
(emphasis supplied)

 

Shah, J. then referred to various meanings of the word “assent” and
observed:
“Applying the aforesaid meaning of the word “assent” and from the
phraseology used in clause (2), the object of Article 254(2) appears
that even though the law made by Parliament would have supremacy,
after considering the situation prevailing in the State and after
considering the repugnancy between the State legislation and the
earlier law made by Parliament, the President may give his assent to
the law made by the State Legislature. This would require application
of mind to both the laws and the repugnancy as well as the peculiar
requirement of the State to have such a law, which is repugnant to the
law made by Parliament. The word “assent” is used purposefully
indicating affirmative action of the proposal made by the State for
having law repugnant to the earlier law made by Parliament. It would
amount to accepting or conceding and concurring to the demand made by
the State for such law. This cannot be done without consideration of
the relevant material. Hence, the phrase used is “reserved for
consideration”, which under the Constitution cannot be an idle
formality but would require serious consideration on the material
placed before the President. The “consideration” could only be to the
proposal made by the State.
It is true that the President’s assent as notified in the Act nowhere
mentions that assent was obtained qua repugnancy between the State
legislation and specified certain law or laws of Parliament. But from
this, it also cannot be inferred that as the President has given
assent, all earlier law/laws on the subject would not prevail in the
State. As discussed above before grant of the assent, consideration of
the reasons for having such law is necessary and the consideration
would mean consideration of the proposal made by the State for the law
enacted despite it being repugnant to the earlier law made by
Parliament on the same subject. If the proposal made by the State is
limited qua the repugnancy of the State law and law or laws specified
in the said proposal, then it cannot be said that the assent was
granted qua the repugnancy between the State law and other laws for
which no assent was sought for. Take for illustration — that a
particular provision, namely, Section 3 of the State law is repugnant
to enactment A made by Parliament; other provision, namely, Section 4
is repugnant to some provisions of enactment B made by Parliament and
Sections 5 and 6 are repugnant to some provisions of enactment C and
the State submits proposal seeking “assent” mentioning repugnancy
between the State law and provisions of enactments A and B without
mentioning anything with regard to enactment C. In this set of
circumstances, if the assent of the President is obtained, the State
law with regard to enactments A and B would prevail but with regard to
C, there is no proposal and hence there is no “consideration” or
“assent”. Proposal by the State pointing out repugnancy between the
State law and of the law enacted by Parliament is a sine qua non for
“consideration” and “assent”. If there is no proposal, no question of
“consideration” or “assent” arises. For finding out whether “assent”
given by the President is restricted or unrestricted, the letter
written or the proposal made by the State Government for obtaining
“assent” is required to be looked into.”

 

27. In his concurring judgment, Doraiswamy Raju, J. made the following
observations:
“The assent of the President envisaged under Article 254(2) is neither
an idle or empty formality, nor an automatic event, necessitated or to
be given for the mere asking, in whatever form or manner and whether
specific, vague, general or indefinite — in the terms sought for to
claim that once sought and obtained as well as published, a curtain or
veil is drawn, to preclude any probe or contention for consideration
that what was sought and obtained was not really what should and ought
to have been, to claim the protection envisaged under clause (2) in
respect of a particular State law vis-à-vis or with reference to any
particular or specified law on the same subject made by Parliament or
an existing law, in force. The repugnancy envisaged under clause (1)
or enabled under clause (2) to get excepted from under the protective
coverage of the assent obtained from the President, is such that there
is a legislation or legislative provision(s), covering and operating
on the same field or identical subject-matter made by both the Union
and the State, both of them being competent to enact in respect of the
same subject-matter or legislative field, but the legislation by
Parliament has come to occupy the entire field. Necessarily, in the
quasi-federal structure adopted for the nation, predominance is given
to the law made by Parliament and in such circumstances only the State
law which secured the assent of the President under clause (2) of
Article 254 comes to be protected, subject of course to the powers of
Parliament under the proviso to the said clause. Therefore, the
President has to be apprised of the reasons at least as to why his
assent is being sought, the need or necessity and the justification or
otherwise for claiming predominance for the State law concerned. This
itself would postulate an obligation, inherent in the scheme
underlying as well as the very purpose and object of seeking the
assent under clause (2) of Article 254, to enumerate or specify and
illustrate the particular Central law or provision with reference to
which the predominance is desired. The absence of any standardized or
stipulated form in which it is to be sought for, should not detract
the State concerned, to disown its obligation to be precise and
specific in the extent of protection sought having regard to the
serious consequences which thereby inevitably follow i.e. the
substitution of the Union law in force by the State law, in the
territorial limits of the State concerned, with drastic alteration or
change in the rights of citizen, which it may, thereby bring about.
The mere forwarding of a copy of the Bill may obviate, if at all, only
the need to refer to each one of the provisions therein in detail in
the requisition sent or the letter forwarding it, but not obliterate
the necessity to point out specifically the particular Central law or
provisions with reference to which, the predominance is claimed or
purported to be claimed. The deliberate use of the word
“consideration” in clause (2) of Article 254, in my view, not only
connotes that there should be an active application of mind, but also
postulates a deliberate and careful thought process before taking a
decision to accord or not to accord the assent sought for. If the
object of referring the State law for consideration is to have the
repugnancy resolved by securing predominance to the State law, the
President has to necessarily consider the nature and extent of
repugnancy, the feasibility, practicalities and desirabilities
involved therein, though may not be obliged to write a judgment in the
same manner, the courts of law do, before arriving at a conclusion to
grant or refuse to grant or even grant partially, if the repugnancy is
with reference to more than one law in force made by Parliament.
Protection cannot be claimed for the State law, when questioned before
courts, taking cover under the assent, merely asserting that it was in
general form, irrespective of the actual fact whether the State
claimed for such protection against a specific law or the attention of
the President was invited to at least an apprehended repugnancy vis-à-
vis the particular Central law. In the teeth of innumerable Central
laws enacted and in force on concurrent subjects enumerated in List
III of the Seventh Schedule to the Constitution, and the hoard of
provisions contained therein, artificial assumptions based on some
supposed knowledge of all those provisions and the presumed regularity
of official acts, cannot be blown out of proportion, to do away with
an essential exercise, to make the “assent” meaningful, as if they are
empty formalities, except at the risk of rendering Article 254 itself
a dead letter or merely otiose. The significant and serious alteration
in or modification of the rights of parties, both individuals or
institutions resulting from the “assent” cannot be overlooked or
lightly brushed aside as of no significance, whatsoever. In a federal
structure, peculiar to the one adopted by our Constitution it would
become necessary for the President to be apprised of the reason as to
why and for what special reason or object and purpose, predominance
for the State law over the Central law is sought, deviating from the
law in force made by Parliament for the entire country, including that
part of the State.”
(emphasis supplied)

 

28. In view of the aforesaid judgments of the Constitution Benches, we
hold that Article 254(2) of the Constitution is not available to the
appellants for seeking a declaration that the Market Act would prevail over
the Control Order and that transactions involving the purchase of sugarcane
by the factories operating in the market areas would be governed by the
provisions contained in the Market Act. As a corollary, we hold that the
High Court did not commit any error by quashing the notices issued by
appellant – Market Committees to the respondents requiring them to take
licence under the Market Act and pay market fee on the purchase of
sugarcane from Cane Growers/Cane Growers Cooperative Societies.

29. In the result, the appeals are dismissed. The parties are left to
bear their own costs.
…..…..…….………………….…J.
[G.S. Singhvi]

 

…..…..……..…..………………..J.
[H.L. Dattu]
New Delhi,
August 30, 2012.
———————–
2

 

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