Case Note & Summary
The dispute arose under the Himachal Pradesh Agricultural Produce Marketing Act. Respondent No.1, Shanker Trading Co. Pvt. Ltd., a private limited company, had established a sale depot at Una, within the notified market area of Marketing Committee, Una. The company purchased khairwood and subjected it to physical and chemical processes to manufacture katha. The appellants, Himachal Pradesh Marketing Board and Marketing Committee, Una, required the respondent to obtain a licence and pay market fee at one per cent on sale of katha. The demand was made on the basis that the respondents were manufacturers and dealers of katha. Aggrieved, the respondents filed Writ Petition No. 238 of 1989 before the High Court of Himachal Pradesh, contending that they were producers and not dealers, and hence exempt from licensing and fee obligations. The appellants countered that the exemption under Section 2(h) only protected actual producers like farmers, not companies; that purchasers who process raw materials into end products were not exempt; and that the respondents were dealers under Section 2(i) because they had set up a place for purchase, sale, storage and processing. The High Court allowed the writ petition on 30 November 1994. It accepted that manufacturing processes were required to obtain katha from khairwood and that katha was not grown or produced by agricultural process. It held that manufacturers of a forest produce as defined in Section 2(h) were not dealers under Section 2(i); a dealer only sets up a place for purchase, storage or processing but does not produce agricultural produce. Consequently, the respondents were producers, not dealers, Section 4(3) was not attracted, and Section 21 fee was not leviable. The High Court quashed the directions, restrained the appellants from requiring licence or fee, and directed refund of any fee collected. On appeal to the Supreme Court, the appellants argued that the respondents, being a company and not farmers, could not claim producer exemption; that processing of goods was not included in the proviso to Section 4(3); and relied on Ramesh Chandra v. State of U.P. The respondents contended that the Act exempted producers of specified agricultural produce from licensing liability. The provided judgment text ends during the respondents' submissions and does not include the Supreme Court's final decision. Section 2(a) of the Act defines agricultural produce as all produce whether processed or not, of agricultural, horticulture, animal husbandry or forest as specified in the Schedule. Section 4(3) prohibits any person from setting up or continuing any place for purchase, sale, storage or processing of notified agricultural produce without a licence, but the proviso exempts a producer who sells his own agricultural produce. Section 21 authorises market committees to levy ad-valorem fees on agricultural produce bought or sold by licensees. The High Court reasoned that the distinction between producer and dealer is that a producer grows, manufactures, rears or produces agricultural produce and may dispose of the same, whereas a dealer only establishes a place for purchase, storage or processing and does not produce agricultural produce. Since the writ petitioners manufactured katha from khairwood, they were producers and not dealers; therefore no licence under Section 4(3) was required and no market fee under Section 21 was leviable. The Supreme Court heard the appeal against this High Court judgment, but the excerpt provided does not reveal the final decision of the Supreme Court.
Headnote
A) Agricultural Produce Regulation - Definition of Producer - A person who manufactures agricultural produce personally is a producer - Himachal Pradesh Agricultural Produce Marketing Act, Section 2(h) - The High Court accepted that katha is obtained from khairwood only after manufacturing processes and that such manufacturers are producers, not dealers, because a producer grows, manufactures, rears or produces agricultural produce and may dispose of the same. Held that writ petitioners were producers and not required to obtain licence under Section 4(3) (Paras Not mentioned). B) Agricultural Produce Regulation - Definition of Dealer - A dealer sets up a place for purchase, sale, storage or processing but does not produce agricultural produce - Himachal Pradesh Agricultural Produce Marketing Act, Section 2(i) - The High Court held that the respondents, being producers of katha, were not dealers because a dealer only establishes a place for purchase, storage or processing of agricultural produce and does not produce it. Held that the respondents were not dealers under Section 2(i) (Paras Not mentioned). C) Licensing and Market Fee - Exemption for Producer Selling Own Produce - Producer selling own agricultural produce is exempt from licence - Himachal Pradesh Agricultural Produce Marketing Act, Sections 4(3) and 21 - The High Court held that since the petitioners were not dealers and were exempt as producers selling their own produce, Section 4(3) was not attracted, and consequently Section 21 market fee was not leviable. The direction to obtain licence and pay fee was quashed and any collected fee was ordered to be refunded. Held that no licence or market fee was required (Paras Not mentioned).
Issue of Consideration
Whether respondents who purchased khairwood and processed it into katha are 'producers' within meaning of Section 2(h) of the Himachal Pradesh Agricultural Produce Marketing Act; whether such respondents are 'dealers' within meaning of Section 2(i) and required to obtain licence under Section 4(3); whether market fee under Section 21 is leviable on their sale of katha
Final Decision
The provided excerpt does not include the Supreme Court's final decision. The High Court of Himachal Pradesh had allowed the writ petition, quashing the demand for licence and market fee and directing refund of any collected fee.
Law Points
- Definition of agricultural produce includes processed or unprocessed produce of agriculture
- horticulture
- animal husbandry or forest as specified in Schedule
- producer means a person who grows
- manufactures
- rears or produces agricultural produce personally
- through tenants or otherwise
- but does not include dealers or brokers
- dealer means any person who within notified market area sets up
- establishes or continues any place for purchase
- sale
- storage or processing of agricultural produce or purchases
- sells
- stores or processes such produce
- Section 4(3) prohibits setting up any place for purchase
- storage and processing without licence but proviso exempts producer selling his own agricultural produce
- Section 21 levies ad-valorem fee on agricultural produce bought or sold by licensees in notified market area
