KRISHI UTPADAN MANDI SAMITI Vs VED RAM
Bench: T.S. THAKUR,DIPAK MISRA
Case number: C.A. No.-009589-009589 / 2010
Diary number: 18872 / 2008
Advocates: Vs
AJAY KUMAR
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9589 OF 2010
Krishi Utpadan Mandi Samiti & Anr. …Appellants
Versus
Ved Ram …Respondent
J U D G M E N T
T.S. THAKUR, J.
1. This appeal by special leave calls in question the
correctness of an order passed by the High Court of
Judicature at Allahabad whereby Civil Misc. Writ Petition No.
58900 of 2007 filed by the respondent-company has been
allowed, the order passed by the Krishi Utpadan Mandi
Samiti, Ghaziabad and that passed by the Deputy Director,
Rajya Krishi Utpadan Mandi Parishad, Meerut in revision set
aside. The High Court has further directed the Krishi
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Utpadan Mandi Samiti, Ghaziabad to make a fresh
assessment of the market fee for the period in question
after providing an opportunity of being heard to the writ-
petitioner or his authorised agent. The challenge arises in
the following factual backdrop.
The respondent-company is engaged in the business
of manufacture and sale of milk products including desi
ghee which it markets under the brand name ‘Paras’. The
company has set up a manufacturing unit at Sahibabad,
District Ghaziabad, which falls within the market area of
Krishi Utpadan Mandi Samiti, Ghaziabad (‘KUMS’ for short).
The company’s case is that it sells the milk products
manufactured by it through its consignee agents located at
several places in different parts of the country. A list of 15
consignee agents spread over the States of West Bengal,
Gujarat, Goa, Orissa, Maharashtra, Rajasthan and New Delhi
was in that regard enclosed by the respondent with the writ
petition filed by it before the High Court. These consignee
agents, according to the respondent-company, provide to
the company services like, unloading of goods from the
trucks, storage in the depots of the company, dispatch of
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the stocks by trucks to redistribution stockists as per sale
orders, raising sale invoices on behalf of the company and
collecting payments for the stocks sold.
In terms of a show-cause notice issued by the
appellant-Samiti, the respondent-company was called upon
to produce all relevant documents with regard to the
production, sale-purchase, movement and storage of its
product for the relevant period. This notice was triggered
by a declaration received from the respondent-company
that consignment note No.94 dated 14th May, 2004
dispatching 5250 Kgs. of desi ghee to Anand Sales
Corporation at Ahmedabad was a stock transfer which did
not require any gate pass for its movement outside the
market area.
On receipt of the notice the respondent-company filed
a reply explaining the nature of the transaction and
claiming that transfer of stocks to its godowns outside the
mandi area was on “stock transfer basis” and not pursuant
to any sale effected within the mandi area. The Mandi
Samiti remained dissatisfied with that explanation with the
result that by an order dated 27th April, 2005 the Samiti
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held that obtaining of gate passes after producing evidence
to rebut the presumption arising under Explanation to
Section 17(iii)(b) of the Uttar Pradesh Krishi Utpadan Mandi
Adhiniyam, 1964 was necessary. The Samiti further held
that the respondent-company had not adduced sufficient
evidence to rebut the presumption that the movement of
goods from the mandi area to places outside such area was
pursuant to a sale effected within the said area. The Samiti
accordingly levied a market fee of Rs.9,39,200/- and
development fee of Rs.2,34,800/- totalling Rs.11,74,000/-
for 3906.80 quintals of desi ghee taken out from the market
area of KUMS, Ghaziabad under Section 17(iii)(b) of the
Adhiniyam mentioned above. It was further directed that in
future the respondent-company shall produce the details of
its business and obtain gate passes whenever it removes
ghee from the market area of KUMS, Ghaziabad.
Aggrieved by the order passed by the Samiti, the
respondent-company filed a revision under Section 32 of
the Adhiniyam before the Regional Deputy Director, Rajya
Krishi Utpadan Mandi Parishad, U.P. which was dismissed by
the Deputy Director by its order dated 31st October, 2007.
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The Deputy Director while affirming the order passed by the
Samiti held that the transactions in question were not by
way of stock transfers but sales within the market area of
KUMS Ghaziabad, hence exigible to market fee.
The respondent-company then filed Writ Petition
No.58900 of 2007 before the High Court of Judicature at
Allahabad, challenging the orders passed by the Samiti and
the Deputy Director on several grounds. The High Court
has, by the order impugned in the present appeal, allowed
the said petition set aside the orders of the Samiti and the
Deputy Director and remanded the matter back to the
Samiti for a fresh assessment in accordance with law.
While doing so, the High Court has not only found fault with
the approach adopted by the Samiti and the Deputy
Director but also commented adversely about the capacity
of the officers making the orders in deciding the questions
of law and fact that arise in connection with such
transactions. According to the High Court the entire
approach adopted by the Samiti and the Deputy Director
was biased, arbitrary, and authoritative and based on a
misreading of the legal provisions and the judgments of this
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Court. The High Court felt that all this happened because
the officers who were handling the issue of such importance
were not equipped with the requisite knowledge about the
legal principles and procedure applicable while dealing with
complex questions of law and fact. More importantly, the
High Court evolved a new and somewhat novel procedure
for examination of the issues involved in such cases while
providing for safeguards by way of securing the amount
claimed by the Mandi Samiti towards market fee. The High
Court observed:
“The market fee is levied on the sale of agricultural produce in the market area. The Explanation only raises a rule of presumption which may be rebutted by manufacturing trader or the trader as the case may be. The Court cannot presume that the movement of goods cannot be occasioned unless the sale is affected. The nature of evidence to be produced at the time of gate pass is a contentious matter which has not been resolved in the last three decades. A number of attempts made by the courts have not succeeded in proper understanding of law by the officers and employees of the market committees and Mandi Parishad. In the circumstances, in addition to the directions, which have been given by the judgments cited above, the Court directs that the Petitioner will furnish to Secretary, KUMS Ghaziabad, a ‘revolving bank guarantee’ of the amount of market fees on yearly basis based on the average of the historical sales and payments of the market fees in the last three years. The bank guarantee will be furnished on the first of April and unless revoked, it shall be revalidated every year. The market committee will issue gate passes on a declaration made by the petitioners that the goods are moving by way of stock transfer and
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have not been sold. They will produce the consignment note, and the proof of dispatch giving names and addresses of stockists. These documents will constitute sufficient proof of rebuttal at the stage of a request for gate pass. The market committee will assess the market fee on yearly basis after 31st March of the next year and consider documents furnished by way of rebuttal of the presumption of sale in respect of each and every transactions separately. It will not be sufficient to say that the gate pass was not obtained or obtained without payment of market fees or that documents are not sufficient. The order would show application of mind and reasoning for both accepting or rejecting the proofs on the furnished in respect of each and every transactions separately.”
2. On behalf of the appellant-Samiti it was argued by Mr.
Rakesh Dwivedi, learned senior counsel, that the
observations made by the High Court regarding the
capacity of the officers to understand and effectively
determine the contentious issues that arose for
determination was wholly unjustified. He submitted that
instead of finding fault with the capacity of the officers to
understand the issues, the High Court would have done
better in pointing out the errors committed by the
authorities below in either appreciating the law or applying
the same to the facts of the case at hand. He urged that the
officers had appreciated the evidence adduced by the
respondent properly and were well within their powers to
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reject the same for reasons which they had set out in their
respective orders. So long as there was no perversity in the
approach adopted by the Samiti and the Deputy Director in
appreciating evidence and/or the application of principles of
law to the facts of the case, the mere fact that those
officers were not formally trained in law was no reason to
dub them as incompetent or incapable, especially when any
such training was no guarantee against commission of
mistakes.
3. It was further argued that the High Court had
completely overlooked the fact that the respondent-
company had, in complete breach of the directions and
procedure sanctioned by the orders passed by this Court,
removed the stock of ghee without the requisite gate
passes necessary for such removal. The High Court had
also committed an error in evolving a procedure which was
different from the one that was stipulated by this Court in
Krishi Utpadan Mandi Samiti and Ors. v. Shree
Mahalaxmi Sugar Works and Ors. 1995 Supp (3) 433
and Krishi Utpadan Mandi Samiti v. M/s Saraswati
Cane Crusher & Co. & Ors. (Civil Appeal Nos. 1769-
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1773 of 1998) decided on 25th March, 1998. Mr. Sudhir
Chandra appearing for the respondent supported the order
passed by the High Court and prayed for dismissal of this
appeal.
4. In Shree Mahalaxmi Sugar Works (supra) this Court
noticed the Explanation under Section 17 of the Uttar
Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 and
declared that the Samiti was entitled to raise demands
against the dealers before passes for removal of the goods
could be issued to them. This Court held that if there was a
valid rebuttal to the statutory presumption that a sale had
taken place within the notified market area, the dealers will
be entitled to the passes, otherwise not. If the dealers are
compelled to pay market fee as demanded, it shall be open
to the aggrieved to challenge the same in the manner
provided under the Act. The order passed by this Court
being a short order may be extracted in extenso:
“1. Leave granted.
2. The Explanation to Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 reads as follows:
“Explanation.— For the purpose of clause (iii), unless the contrary is proved, any specified
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agricultural produce taken out or proposed to be taken out of a market area by or on behalf of a licensed trader shall be presumed to have been sold within such area and in such case, the price of such produce presumed to be sold shall be deemed to be such reasonable price as may be ascertained in the manner prescribed.”
From this it is clear that there is a presumption against the dealers. In view of that presumption, it is open to the appellants-Krishi Utpadan Mandi Samiti to raise demands against the dealers before passes could be issued. If there is a valid rebuttal in that the sale did not take place within the notified market area, the dealers will be entitled to the passes, otherwise not. Of course, even the dealers are compelled to pay the market fee as demanded. It is open to them to challenge it in the manner provided under the Act.
3. The appeals are disposed of in the above terms.”
5. Pursuant to the above pronouncements the Mandi
Samiti appears to have started issuing gate passes on
payment of mandi fee demanded by them at the time of
issue of gate pass. A change in the procedure came about
as a result of the decision of this Court in M/s Saraswati
Cane Crusher (supra). In that case the dealers had argued
that the procedure being followed pursuant in Shree
Mahalaxmi Sugar Works (supra) was not satisfactory
inasmuch as the requirement of hearing and of an
adjudication was not being satisfied unless an aggrieved
dealer was in a position to challenge the assessment in the
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manner provided under the Act. A three-Judge Bench of
this Court found merit in that contention and held that the
order passed in Shree Mahalaxmi Sugar Works (supra)
required some repair work. The Court observed:
“We are satisfied that the orders of this Court afore- referred to would need some repair work. We treat the said order to be conceiving of a provisional assessment where after doors are opened for a final assessment. We conceive that when demands are raised by the Krishi Utpadan Mandi Samiti against a trader before he could ask for transit of goods outside the market area, the trader would be entitled to tender a valid rebuttal to say that no sale had taken place within the notified area and that if the explanation is accepted there and then by the Mandi Samiti, no question of payment would arise as also of withholding the gate passes. If prima facie evidence led by the trader is not accepted by the Mandi Samiti, the trader or the dealer can be compelled to pay the market fee as demanded before issuance of gate pass. If the trader makes the payment without demur, the matter ends and the assessment finalized. But in case he does so and raises protest, then the assessment shall be taken to be provisional in nature making it obligatory on the trader to pay the fee before obtaining the requite gate pass. After protest has been lodged and the provisional assessment has been made, a time frame would be needed to devise making the final assessment. We, therefore, conceive that it innately be read in the order of this Court that a final assessment has to be made within a period of two months after provisional assessment so that the entire transaction in that respect is over enabling the aggrieved party, if any, to challenge the final assessment in the manner provided under the afore Act or under the general law of the land in appropriate fora. Having added this concept in this manner in the two Judge Bench decision of this Court, we declare that what repair has been done instantly would add to the order of the High Court and the instant corrective decision shall be the governing rule. The Civil Appeals would thus stand disposed of.
Since the assessment thus far made against the traders, who are involved in the instant appeals, would
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have to be treated as provisional awaiting final assessment, we permit the concerned traders to move the respective Mandi Samiti within two months from today to hear their objections and proceedings onwards be regulated in accordance with procedure devised hereinbefore. Nonetheless we add that should the basis of provisional assessment be knocked off, the Samiti would refund the market fee to the traders/dealers within two months thereafter.”
6. It appears from the above that the orders passed by
this Court in Shree Mahalaxmi Sugar Works (supra) was
interpreted to mean that a provisional assessment would be
made against the trader before he could ask for a transit
pass for removal of the goods outside the market area. In
the course of the said provisional assessment the trader
would be entitled to tender a valid rebuttal to the statutory
presumption under Section 17 of the Adhiniyam and argue
that no sale having taken place within the notified area, it
was not liable to pay any market fee on the movement of
goods. If the explanation offered by the trader was
accepted the gate pass would be issued without insisting
upon any payment of the fee. But if the evidence laid by
the trader is not prima facie accepted by the Mandi Samiti
the trader or the dealer can be compelled to pay market fee
before issue of gate pass to him. The Court further held that
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if the trader makes the payment without demand the
matter ends and the issue finalised. In case, however, he
raises a protest then the assessment shall be taken to be
provisional in nature making it obligatory for the trader to
pay the fee before obtaining the requisite gate pass. After
protest has been lodged the provisional assessment shall
be followed by a final assessment within a time frame. The
Court prescribed a period of two months in respect of each
such transaction enabling the aggrieved party to challenge
the same under the Act or under the general law of the land
before the appropriate fora.
7. The above procedure has been working effectively for
the past decade and a half and ought to have been
effective in the instant case also. The unfortunate part,
however, was that the respondent-company did not respect
the procedure stipulated under the above orders of this
Court. It did not apply for and obtain gate passes for
removal of its goods. The Samiti, therefore, had no occasion
to pass any provisional or final order based on the material
adduced before it. It is only when the respondent-company
filed a declaration that the removal of the stocks pursuant
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to consignment note No.94 dated 14th May, 2004 in favour
of Anand Sales Corporation at Ahmedabad was a stock
transfer and did not require a gate pass that the Samiti
issued a show-cause notice asking the respondent-company
to furnish the documents with regard to the production,
sale, purchase, movement and storage of the goods. Based
on the figures furnished pursuant to the said show-cause
notice the Samiti determined the market fee and the
development fee and raised a demand for payment thereof
with a direction to the company to follow the prescribed
procedure for removal of goods from the mandi area. The
revisional authority, as seen above, upheld the assessment
of the fee and the consequential directions issued by the
Samiti. The High Court, however, completely overlooked
the effect of the orders passed by this Court in the two
cases mentioned earlier and brought in a new mechanism
which could in its opinion be more effective, in dealing with
the situation that arose so very often between the Samiti on
the one hand and the traders on the other. The High Court
failed to appreciate that it was not on virgin ground. The
matter was fully covered by the decisions of this Court.
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Further repair of the procedure and the mechanism so
provided could only be under the orders of this Court. The
High Court ought to have left it to this Court to determine
as to whether the mechanism and procedure provided by
our orders required any modification, and if so, in what
form and to what extent. Instead of doing that, the High
Court embarked upon an exercise which was not necessary
especially when the same did no service to judicial
discipline.
8. The High Court was also in error in holding that even
when the movement of goods without gate passes may
have been in violation of the rules regulating the issue of
such passes, any such violation could only call for a penalty
under the said rules. Assessment of market fee on the
removal of such goods from the mandi area was, according
to the High Court, a different matter unrelated to the
breach of the rules requiring the traders to remove goods
only on the authority of validly issued gate passes. The
High Court appears to have overlooked the fact that if gate
passes are required to be obtained under the rules, removal
of stocks without applying for such gate passes and without
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furnishing prima facie evidence of proof that there was no
sale of the goods involved, was a reason enough for the
Mandi Samiti to demand payment of the market fee on the
stocks that were removed. The absence of gate passes was
tantamount to removal of the goods in breach of the
relevant rules and also in breach of the directions issued by
this Court in the two cases mentioned above. A dealer who
adopted such dubious procedure and means could not
complain of a failure of opportunity to produce material in
support of its claim that no sale was involved. No
opportunity to a dealer who was acting in defiance of the
rules and removing the goods without any intimation and
permission of the Samiti could be granted for the occasion
to grant such an opportunity would arise only when the
trader applied for the issue of a gate pass. As a matter of
fact, the goods having been taken away without gate
passes and without any material to show that there was no
sale, the Samiti could demand payment of the market fee
and leave it open to the respondent-trader to claim refund
by rebutting the presumption that the removal was
pursuant to a sale. At any rate, the Samiti and the Deputy
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Director have concurrently held that the respondent-
company has not been able to rebut the presumption under
Section 17 of the Adhiniyam. We see no reason to interfere
with that finding especially when the appraisal of the
evidence by the said two authorities has not been shown to
us to be in any way perverse to warrant interference with
the same.
9. In the result, we allow this appeal, set aside the order
passed by the High Court and restore that passed by the
Samiti and the Deputy Director in revision. The parties are
left to bear their own costs.
……………………..………….. …J.
(T.S. THAKUR)
……………………..………….. …J.
(DIPAK MISRA)
New Delhi March 23, 2012
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