Messrs Pahlad Rai Bhawani Prasad vs The Market Committee and another

M.R. Sharma, J.—The facts giving rise to this petition under Article 226 of the Constitution of India may briefly be stated as follows:

The petitioner firm is carrying on the business of selling cotton seeds, Gur, Shakkar and Khandsari etc. to small shopkeepers and consumers at Kosli after purchasing the said commodities from near markets in Punjab and Uttar Pradesh. It is stated that Kosli is a small village and there is no regular Mandi at that place On 4th December, 1970, the State of Haryana issued a notification u/s 5 of the Punjab Agricultural Produce Markets Act, 1961 (hereinafter called the Act), declaring its intention of exercising control over the purchase, sale, storage, and processing of agricultural produce in the area specified in the notification. On 6th of July, 1971, another notification u/s 6(1) of the Act was issued, which notified the market area of Market Committee, Kosli. It is then submitted that u/s 7 of the Act. it was the duty of the State Government to specify a principal market yard for the Market Committee, Kosli, but the same was not done, nor was a Market Committee established for this notified market area; as laid down in section 11 of the Act, till as late as 4th of February, 1972, but under an earlier notification dated September 28, 1971, the Sub Divisional Officer (Civil) Jhajjar, had been appointed to exercise the powers and to perform the functions of the Market Committee, Kosli, u/s 12 of the Act. The burden of the petition is that the Market Committee has not established any market at Kosli, nor has it taken any steps to provide the services, which it is enjoined upon to provide under the Act and the Rules framed thereunder.

The brief account of the services which the petitioner desires to be given may now be set out. It is stated that under rule 24 of the Punjab Agricultural Produce Markets (General) Rules 1962 (hereinafter called the Rules), for the agricultural produce brought to the Market to be sold by open auction within the fixed timings no arrangements have been made Under rule 25 of the Rules the officials of the Market Committees are required to perform important duties in connection with weighing of agricultural produce brought into the Market. The performance of such duties requires the establishment of an office or a sub-office of the Committee in each market. The respondent-Committee has not set up any office. Under rule 26 (2) of the Rules, every market committee is required to keep in the market area at least one weighing instrument of the capacity of one quintal and two sets of weights or two sets of measures duly verified and stamped in accordance with law. The Committee has not complied with this rule. Nor have a weighbridge and a measuring yard been erected and maintained. The Committee is not taking any steps to prevent adulteration of agricultural pro duce. Because of its failure to perform these functions, it is submitted that the Committee is disentitled to charge any fees.

In the return filed on behalf of the respondents, it has been stated that a proper market would be established when the funds are available. The agricultural produce was being sold by public auction. The Committee has, in fact, set up an office at Kosli, which was functioning properly. The petitioner himself was collecting statutory forms from the said office and submitting returns It has further been averred that 38 licences have been issued u/s 10 of the Act, some of which have been issued in favour of commission-agents and weighmen. It is also stated that the respondent-Committee is rendering services contemplated under the Act and it has provided a rest house with beds, chairs etc. A sweeper has been engaged and arrangements have been nude for serving drinking water to those who visit the Committee. These services are being rendered keeping in view the financial resources of the Committee which consist of fees realised from the dealers.

Shri Anand Sarup, the learned Senior Advocate for the petitioner has levelled his challenge mainly on two grounds. Hi submits that the Committee has not been constituted in accordance with law and as such it is incompetent to levy the fees. Secondly, it has been urged that the Committee is not providing any services and so the exaction amounts to an imposition of tax which is not within the jurisdiction of the Committee.

Before I advert to the submissions made, it is necessary to examine the scheme of the Act. u/s 5 of the Act, the State Government may by notification declare its intention of exercising control over the purchase, sale storage and processing of specified agricultural produce in a specified area. The public at large are called upon to file any objections or make useful suggestions in respect of this matter within a period of 30 days. After these objections and suggestions are considered by the Government he Government issues another notification u/s 6 of the Act. The Government declares the area mentioned in such a notification to be notified market area for the purposes of specified agricultural produce. Such a notification may be effective from the date of its issue or may take effect from a later date As soon as it becomes effective, no person is entitled to establish or continue any place for the purchase, Sale, storage and processing, of agricultural produce, nor is he entitled to purchase, sell, store or process such produce except under a licence granted in accordance with the provisions of the Act. u/s 7 of the Act, for each market area there has to be one principal market area and one or more sub market areas as may be necessary. The effect of a notification u/s 7 of the Act is that no private market can be opened in the area near the places declared to be markets. u/s 11 of the Act, the State Government issues a notification for establishing a market committee for every notified market area. The Government has also to specify the headquarters of the market committee. Section 12 of the Act as applicable to the State of Haryana relates to the constitution of the committee which consists of 9 or 16 members nominated in accordance with sub-section (2) of this section By a special amendment made in the Act as applicable to the Haryana State, the elected committee can be dispensed with and in its place its powers and functions can be invested in an executive officer.

The precise argument of the learned counsel for the petitioner is that the Sub Divisional Officer (Civil) Jhajjar, WAS appointed to exercise the powers and to perform the functions of the market Committee, Kosli, vide Government notification dated September 28, 1971, According to him, this notification could only be issued after the notification u/s 11 of the Act regarding the establishment of the Market Committee had been duly issued. The latter notification was, in fact, issued on February 4, 1972. It is submitted that the manner in which the power has been exercised tantamounts to placing the cart before the horse. Such an exercise of power is illegal.

On the face of it, the argument appears to be attractive, for, in case of bodies corporate they have to be constituted first and then their office bearers are either elected or appointed. In order to properly appreciate this point, it becomes necessary to notice the language employed by the Government in its notification dated September 28, 1971. The relevant portions of the said notification run as follows:

Whereas no Committee u/s 12 of the Punjab Agricultural Produce Market Act, 1961 (as amended by Haryana Act 25 of 1970) has been constituted so far

Now, therefore, in exercise of the powers conferred by proviso to clause (b) of pub-section (5) of section 12 of the said Act, and all other powers enabling him in this behalf, the Governor of Haryana hereby appoints the persons mentioned against each to exercise the powers and to perform the functions of the Committee within the meaning of the said section

The language of this notification shows that the Governor acted under clause (b) of sub-section (5) of section 12 of the Act and "all other powers enabling him in this behalf." The question arises whether the power to establish a Committee and the power to constitute a committee can be exercised at one and the same time or not, because if these powers could be exercised simultaneously then, because of the use of the expression ''all other powers enabling him in this behalf the same could be regarded as an action taken under any other provision of the Act, including section 11. The latter proposition of law is well settled. In P. Balakotaiah Vs. The Union of India (UOI) and Others, venkatarama Aiyar J., speaking for the Court, observed as follows:

It is argued that when an authority passes an order which is within its competence, it cannot fail merely because it purports to be made under a wrong provision if it can be shown to be within its powers under any other rule, and that the validity of an order should be judged on a consideration of its substance and not its form. No exception can be taken to this proposition.

In L.P.A. No 10 of 1972 Inspector General of Police Punjab, Chandigarh, etc. v. Amrik Singh, decided on July 24 1972 Tuli J, speaking for a Division Bench of this Court observed as follows:

We however, do not agree with the learned Single Judge that the disciplinary action taken by the Superintendent of Police could not be sustained on the ground that he purported to exercise his power under rule 16.3 (1) (b) and not rule 16.3 (1) (a). It has been submitted before us by the leaned counsel for the appellant-State that if the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question, as he has keen held by their Lordships of the Supreme Court in J.K. Steel Ltd. Vs. Union of India (UOI), (para 45 of page 1187). Similar observations are to be found in P. Balakotaiah Vs. The Union of India (UOI) and Others, Afzal Ullah Vs. The State of Uttar Pradesh, and Hukumchand Mills Ltd. Vs. The State of Madhya Bharat and Another,

So far as the question of the simultaneous exercise of powers under sections 11 and 12 of the Act is concerned, it may be added that in the absence of any positive prohibition in the Act such an exercise of power cannot be objected to Before a party can complain against a procedural matter, it has to show that some of its rights under the statue have been violated. After the issuance of the notification u/s 11 of the Act the public or the persons affected because of the establishment of a committee have not been given any right by the statute to raise any voice against the constitution, or the manner of the constitution of the market committee. In my considered opinion, the committee can be established and constituted by the Government by issuing one notification only. For the sake of analogy. I might add that under the Land Acquisition Act the Government declare its intention to acquire land by issuing a notification u/s 4 of the Land Acquisition Act. In the case of acquisition of land of an ordinary nature, objections u/s 5-A of the said Act have to be heard and considered before issuing a notification u/s 6 of that Act, but where the provisions of section 5-A are dispensed with the simultaneous publication of notification under sections 4 and 6 of that Act has not been considered irregular Smt. Somavanti and Others Vs. The State of Punjab and Others, the Supreme Court observed as follows:

But where section 5 A is not in the way there is no irregularity in publishing those notifications on the same day.

The aforementioned discussion shows that it was open to the Government to take action under sections 10 and It of the Act in one notification only, and if from the language of the notification it can be inferred that the action was taken under both the sections the procedure adopted cannot be objected.

Coming now to the second question urged by the learned counsel for the petitioner, I may add that Article 265 of the Constitution of India provides that no tax shall be levied or collected except by an authority of law. The expression '' tax '' as used in this Article also includes the levy of fees. In deed, there is no generic difference between a tax and a fee and the taxing power of a State may manifest itself in three different forms known respectively as special assessments, fees and taxes. The difference between a tax and a fee has been brought out by their Lordships of the Supreme Court in The The Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt., in the following terms:

The distinction between a tax and a fee lies primarily in the fact that a tax is levied as a part of a common burden, while a fee is a payment for a special benefit or privilege. Fees confer a special capacity, although the special advantage, as for example in the case of registration fees for documents or marriage licences, is secondary to the primary motive of regulation in the public interest, vide Findlay Shirras on Science of Public Finance, Vol. 1, page 202. Public interest seem to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives. As Seligman says, it is the special benefit accruing to the individual which is the reason for payment in the case of fees ; in the case of a tax, the particular advantage if it exists at all is an incidental result of State action. Vide Seligman''s Essays on Taxation, page 408.

When a broader view of the things is taken, it becomes apparent that the very institution of Government is meant for rendering service to the community at large. In that sense even the taxes collected are utilised for the purpose of serving the interests of the community but the principle underlying the imposition of taxes is wholly different. The payment of tax is generally related to the capacity of a person to pay even if he does not participate in any of the services provided by the State. The fees are, however, collected for a specific service which the State renders and are payable only by those who receive these services voluntarily or involuntarily. The amount of fees collected for rendering such services has to be set apart and not merged with the general revenue of the State. In the aforementioned case, the Supreme Court also observed as follows:

But the material fact which nagatives the theory of fees in the present case is that the money raised by levy of the contribution is not earmarked or specified for defraying the expenses that the Government has to incur in performing the services. All the collections go to the consolidated fund of the State and all the expenses have to be met out of these collections but out of the general revenues by a proper method of appropriation as is done in case of other Government expenses. That in itself might not be conclusive, but in this case there is total absence of any co-relation between the expenses incurred by the Government and the amount raised by contribution under the provision of Section 76 and in these circumstances the theory of a return or counter-payment or ''quid pro quo'' cannot have any possible application to this case.

The Act has been brought on the statute book by the State under Article 246 (2) read with Entry 5 of the List II of the 7th schedule of the Constitution of India. Section 23 of the Act empowers the Committee to levy fees at ad valorem basis upon the transactions of sale of the agricultural produce. Section 27 lays down that all the money received by a committee shall be paid into a fund to be called ''market committee fund'' and all expenditure incurred by the committee for the purpose of this Act shall be defrayed out of such a fund. Section 28 of the Act enumerates the purposes for which the committee fund may be expended. These purposes include the acquision of sites for the market, the maintenance and improvement of the market, construction and repair of buildings which are necessary for the purpose of the market, and for the health, convenience and safety of the person using them etc. etc. In short, all the purposes mentioned in this section are in the nature of services which are rendered to the persons who visit the area of a market committee. There is no provision in the Act which entitles a committee to impose tax in the strict sense of the term. Thus, there is no possibility of the fees collected by a committee being amalgamate into something which may be called the general revenue of a committee. The entire revenue consists of money realised as fees which under the terms of the statute has to be spent for rendering services.

The aforementioned considerations assume importance because in case of some other units of the local self government, like the municipalities, the statute under which they are incorporated provides that such units may in pose taxes for raising their general revenue and they may also levy fees for rendering services. In case of a municipality, levy of octroi duly is in the nature of a tax but a parking fee realised by it would come within the definition of fees as the term is understood in contradistinction with the term ''tax''. Such a fee is realised only from those who avail of the facility of parking their vehicles. In case of municipalities, it might be argued that when a sum is realised as fees it should be set apart for the purpose of rendering a particular service and not merged in the general revenue of a committee, but in case of a market committee such an argument cannot be raised. In case of the State Government and in case of municipalities or district boards which are authorised by law to levy taxes and fees, whenever the levy of fee was challenged the State Government or the municipality was called upon to furnish accounts and to satisfy the Court for the expenses, incurred in rendering particular service or services, for it is well settled that the burden of proving the legality of a levy lies on the Revenue. In case of a market committee, however, there is no possibility of the amalgamation of taxes and fees because the statute does not authorise it to impose taxes. In such a case it would suffice for a committee to show that it was spending the amount collected for the purposes mentioned in the Act Again the services which a statute requires a body corporate to render may be many because the legislature may keep in view the optimum conditions and the ultimate limits to which a body corporate is expected to go in the matter of rendering service. The levy of fees in such a case would not be struck down on the ground that all the services contemplated by the Act were not being rendered.

If the facts and circumstances of the instant case are considered in the light of the above observations, it becomes abundantly clear that the respondent-Committee is acting within its rights to impose the fees complained of. In paragraph No. 2 of the petition, it has been asserted that Kosli is a small village and there is no regular Mandi there. No purchaser of agricultural produce of this village or any other nearby village brings his produce for sale to any place in Kosli. In the return it has asserted that the respondent-Committee is rendering services contemplated by the Act in view of its financial resources and fees realised from the dealers. If the pleas raised by both the sides are read in a reasonable manner, it becomes quite clear that this Committee being in its state of infancy, is not realising substantial amount of fees but whatever little is realised is being spent in rendering service. In these circumstances, it can safely be held that the levy of fees made by the respondent-Committee is justified under law.

The provision regarding the declaration of a market yard u/s 7 of the Act actually places a curb on the right of the petitioner to set up his shop anywhere in the notified market area. u/s 6(3) of the Act, whenever a market area is notified a trader cannot set up a place of business without getting a licence under the Act. The absence of a market yard leaves him free to set up his shop anywhere he likes. There is really no interference in his business activities and for that reason he cannot refuse to pay license fee unless and until a market yard is declared. In C. W. No. 4199 of 1971, a similar point was raised. Sandhawalia, J. and myself held as under:

In C.W. No. 4199 of 1971, Mr. Puran Chand, learned counsel for the petitioners, has submitted that the petitioners are being called upon to pay the market fees even though their business premises are not situate in the market proper. It is, however, admitted by him that their business premises lie within the limits of the area in which business men are prohibited to carry on trade u/s 8 of the Act. Instead of closing their business altogether the Market Committee has allowed them the concession of continuing their business on payment of the prescribed fees. If this is so, then the petitioners in this writ petition instead of challenging the action of the Market Committee should really be thankful to it.

Last of all, it may be stated that the petitioner himself obtained the licence and enjoyed the privilege of carrying on his business in the notified market yard on the basis of that licence After having reaped this advantage, he cannot be allowed to say that the fees imposed under that very Act, under which he obtained the licence, should not be exacted from him In case of market committees if a constituent or a licensee feels that the committee was not performing its duties of rendering the statutory services, it would be more proper for him to pray for the issuance of a writ of mandamas so that such a committee may be directed to perform its statutory duties. In that case it would be open to the committee to assert that in view of its income all or any of the services could not be rendered.

For the reasons mentioned above, this petition fails and is dismissed.