Case Note & Summary
The Supreme Court dealt with a batch of appeals by Krishi Utpadan Mandi Samiti, Haldwani and other Market Committees against the judgment of the High Court which had held that in trader-to-trader sales of specified agricultural produce under the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, the selling trader, and not the purchasing trader, was liable to pay market fee if the selling trader did not collect it. The appeals arose from writ petitions filed by purchasing dealers challenging the market fee demands. The only question was the interpretation of Section 17(iii)(b) of the Act, which provided for levy and collection of market fee on transactions of sale of specified agricultural produce in the market area. The provision prescribed four situations: sale through commission agent, direct purchase by trader from producer, purchase by trader from another trader, and any other case. The High Court accepted the purchasing dealers' contention that under sub-clause (3), the levy was on the selling trader, who could choose to collect or not collect from the purchaser, but remained liable. The appellant Market Committees contended that the scheme of the provision made the purchaser primarily liable in all cases, and the selling trader was merely a collecting agent if he realized the fee. The Supreme Court, after examining the language, held that a reading of all sub-clauses showed that liability to pay market fee was always upon the purchaser. Sub-clauses (1), (2) and (4) expressly so provided, and sub-clause (3) was no different. The court reasoned that if ultimate liability were not on purchaser, there would be no purpose in the legislature saying that the selling trader may realize the fee from the purchaser and make it over to the Committee. The word 'shall' in sub-clause (3) meant that if the selling trader realizes the fee from the purchasing trader, he is bound to remit it to the Committee; but if he does not realize it, he is under no obligation to pay, and the liability to pay remains on the purchasing trader. The court rejected the argument based on the amendment introduced by U.P. Act 7 of 1973. While the unamended clause expressly placed levy on purchaser, the amendment did not abandon the basic concept of purchaser liability; it only elucidated it with reference to specific situations. The court also relied on its earlier decision in Upaj Mandi Samiti & Ors. v. Orient Paper & Industries Limited, construing an analogous provision under the Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1973, where it had held that primary liability to pay fee was on the buyer and the proviso merely enabled the seller to collect and pass it on to the Committee. The court acknowledged minor language differences between the two Acts but found the central concept the same. On the issue of individual factual questions raised by some respondents, the court observed that such questions could not be gone into in writ petitions; the proper course was to raise them through remedies provided under the Act. Accordingly, the Supreme Court set aside the High Court judgment and held that where the selling trader does not collect the fee from the purchasing trader, the liability to pay the market fee remains that of the purchaser, who cannot refuse to pay. If the selling trader collects the fee, he is under an obligation to make it over to the Market Committee. The appeals were allowed with no order as to costs.
Headnote
A) Statutory Interpretation - Market Fee Liability - Primary Liability on Purchaser - Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, Section 17(iii)(b) - The court examined sub-clauses (1) to (4) of Section 17(iii)(b) and held that liability to pay market fee is always on purchaser; sub-clause (3) is no different. The selling trader's role is only to realize and remit when collected. Held that purchasing trader cannot escape liability when selling trader does not collect. (Paras 4-6) B) Statutory Interpretation - Meaning of 'Shall' - Conditional Obligation of Selling Trader - Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, Section 17(iii)(b)(3) - The word 'shall' in sub-clause (3) means that if the selling trader realizes the fee from the purchasing trader, he is bound to make it over to the Committee; but if he does not realize, he is under no obligation to pay. Held that ultimate liability remains on purchaser in such cases. (Para 6) C) Legislative Amendment - Effect of Uttar Pradesh Act 7 of 1973 - No Shift in Ultimate Liability - Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964, Section 17(iii)(b) as amended by U.P. Act 7 of 1973 - The court rejected the argument that the amendment shifted levy from purchaser to selling trader in trader-to-trader transactions; the unamended clause had expressly placed levy on purchaser, and the amendment only elucidated specific situations. Held that basic concept of purchaser liability was retained. (Paras 7-9) D) Precedent - Analogous Madhya Pradesh Provision - Primary Liability on Buyer - Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1973, Section 19(2) - The court relied on Upaj Mandi Samiti & Ors. v. Orient Paper & Industries Limited, where it was held that primary liability to pay market fee is on buyer and the proviso merely enables seller to collect and pass on to Committee. Held that despite language differences, central concept is same under U.P. Act. (Para 10) E) Procedural Law - Writ Petition Factual Disputes - Statutory Remedies to be Availed - Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 - Individual factual questions raised by respondents could not be gone into in writ petition; proper course is to raise them through remedies provided under the Act. Held that appeals allowed with this observation. (Para 12)
Issue of Consideration
Whether in a transaction of sale of specified agricultural produce between a trader and a trader, the purchasing trader is liable to pay the market fee in cases where the selling trader does not collect it from him, under Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964
Final Decision
Appeals allowed; High Court judgment set aside. Held that where the selling trader does not collect the market fee from the purchasing trader, the liability to pay the market fee remains that of the purchaser and he cannot refuse to pay. If the selling trader collects the fee, he is under an obligation to make it over to the Market Committee. No order as to costs.
Law Points
- Liability to pay market fee is primarily upon the purchaser
- Section 17(iii)(b) of U.P. Krishi Utpadan Mandi Adhiniyam
- 1964 read as a whole places ultimate liability on purchaser
- sub-clause (3) does not shift levy to selling trader
- word 'shall' in sub-clause (3) creates conditional obligation on selling trader to remit only if fee is actually realized
- if selling trader does not collect fee purchaser remains liable
- amendment by U.P. Act 7 of 1973 did not alter basic concept of purchaser liability
- producer of specified agricultural produce is not liable to pay fee
- decision in Upaj Mandi Samiti v. Orient Paper construed analogous M.P. provision similarly
