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REPORTABLE

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

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(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  

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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’).    

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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  

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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  

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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,  

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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  

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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  

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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  

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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  

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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  

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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.

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(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.  

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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

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(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  

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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  

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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

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(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,  

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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  

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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  

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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;

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(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.

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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;  

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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:

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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

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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:

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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 ex- ecute  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 addi- tional  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  

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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 sub- section (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;

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(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

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(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   

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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

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(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  

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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  

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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.   

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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.”

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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:  

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“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.

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(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  

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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  

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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  

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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  

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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.

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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  

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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.

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(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  

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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  

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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  

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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  

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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.

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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:

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“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  

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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  

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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.

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    [G.S. Singhvi]

…..…..……..…..………………..J.                        [H.L. Dattu]

New Delhi, August 30, 2012.

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