Holding

The State’s auction of plots in the new Mandi is lawful and does not violate Articles 14, 19(1)(g) or 21; existing licensees have no preferential right to allocation of sites.

Summary

The State of Punjab declared a new grain market (new Mandi) and denotified the old market, directing licensed commission agents to shift their businesses. Plots in the new Mandi were sold by public auction, and the appellants, who owned shops in the old Mandi, sought allocation of alternative sites on a no‑profit‑no‑loss basis, alleging violations of Articles 14, 19(1)(g) and 21 of the Constitution. The High Court dismissed their writ petitions; the appellants appealed to the Supreme Court. The Court held that the Punjab Agricultural Produce Markets Act and its Rules do not obligate the State to provide preferential sites to existing licensees and that auctioning plots is a fair, non‑discriminatory method. Consequently, the shift does not infringe any statutory or fundamental rights, and the appellants have no entitlement to preferential allocation. The appeal was dismissed with costs imposed on the appellants.

Issues considered

The validity of the State's procedure of shifting the market and selling plots by public auction without preferential allocation to existing licensed commission agents.
Whether the appellants have a statutory or constitutional right to be allotted alternative sites in the new Mandi at concessional rates.
Whether the procedure violates Articles 14, 19(1)(g) and 21 of the Constitution of India.

Legislation cited

Constitution of Indias. 14, s. 19(1)(g), s. 21, s. 31
Punjab Agricultural Produce Markets Act, 1961s. 10, s. 6, s. 7, s. 8
Punjab Agricultural Produce Markets (General) Rules, 1962s. 17(5), s. 24

Subjects

Punjab Agricultural Produce Markets Actpublic auctionlicence holdersfundamental rightsArticle 14Article 19(1)(g)Article 21allocation of market plotsconstitutional challenge

Judgment

CHINT RAM RAM CHAND AND ORS. A
v.
STATE OF PUNJAB

FEBRUARY 8, 1996

[B.P. JEEVAN REDDY AND B.N. KIRPAL, JJ.] B

Punjab Agticultural Produce Markets Act, 1961 : Sections 6 and 7 :
Agticultural Produce-Ma1ket yard-Shifting of-Existing licensed commis-
sion agents/dealers directed to shift to new Mandi--Plots in the new market
yard sold by auction-Auction sale challenged-Allotment of altemative sites C
in new market claimed-Held : challenge not sustainable and no right to
claim allotment of altemative sites-Not violative of Articles 14, 19(1)(g) and
21 of the Constitution of India.

Punjab Agticultural Produce Markets (General) Rules, 1962 : Rule
17(5}-Disposal of property-Sale by auction--One of the fairest D
means-Gives equal opp01tunity to all sections of public to bid.

The State under Section 7 of the Punjab Agricultural Markets Act,
1961 declared a new grain market and the old Mandi was denotified as the
principal market yard. By another notification the new Mandi was E
declared as the Principal Market yard. This was followed by a notification
whereby it was directed that no transaction in agricultural produce would
..... be transacted within 5 K.Ms. of the new Mandi. The appellants were
licensed commission agents carrying on business of sale and purchase of
agricultural produce and having shops in the old Mandi. They were
directed to shift to the new Mandi, for the purpose of conducting the F
business of sale and purchase of agricultural produce. In the new Mandi,

-- plots were sold by auction for shops.

The appellants had applied to the State Government for allotment
of alternative sites in the New Mandi on no profit no loss basis, which was G
rejected. The appellants filed a writ petition in the High Court challenging
the auction sale which was dismissed. Aggrieved by the High Court's
judgment the appellants preferred the present appeal.

- On behalf of the appellants it was contended that alternative sites
should be allotted to them at concessional rates or on lease; that the State H
283
284 SUPREME COURTilEPORTS [1996] 2 S.C.R.

A was duty bound to provide to them a place to do business in the New
Mandi; that without such provision having been made, the old Mandi
cannot be stopped; that the State could not adopt a procedure of allotment
in.the New Mandi by which they could be thrown out of business altogether .,.._
by forcing them to compete with outsi.ders; and that non-allotment of
alternative sites to them was violative of Articles 14, 19(1)(g) and 21 of the
B Constitution of India.

Dismissing the appeal, this Court,

HELD : 1. In the State all the sites are allotted by public auction.
C This gives an opportunity to all the existing licenced dealers, and also to I
the new entrants, to compete and obtain sites in the new Mandi. Therefore,
all the existing licenced dealers who may be having a place of business in
L
the old Mandi do have a right to acquire by auction sites at the new place
of business in the new Mandi. [292-H; 293-A]

D 2.1. The Scheme of the Act and the Rules framed thereunder show
that shifting of the Mandi from one place to another, without providing
for an alternative site or a shop to a licenced dealer, cannot violate any
statutory or fundamental right of any of the licensees. [293-D-E]

2.2. A dealer is granted a licence under Section 10 of the Punjab
E Agricultural Markets Act, 1961 which allows him to carry on business in
a notified market area. A dealer having one place of business in a notified
area is required to have only Qne licence which would entitle him to carry
on business in any of the Mandies situated in that notified area but, if he
has more than one place of business, then for each place he is obliged
F under Rule 17(5) of the Punjab Agricultural Produce Markets (General)
Rules, 1962 to have a separate licence. Neither the Act nor the Rules
requires that the place of business of a licenced dealer must be within the
precincts of the Mandi. All that the Act and the Rules require is that the
auction for the sale and purchase of agricultural produce shall be within
-
I

I•

G the notified market yard or sub-yard. The appellants and other licensees
wh~ are already having shops or plots in the old Mandies have not been
deprived of the same; nor are they prevented, in any manner, from carrying
on in their shops their trade or business other than that of purchase and
sale of agricultural produce in public auction. The sale of agricultural
produce by auction, as contemplated by the Act and the Rules, does not
-
H take place in the business premises or shops of the licenced dealers even
CHINT RAM RAM CHAND v. STATE 285

if they are located within the Mandi. It can only take place on the platforms A
in the said market yards. [296-C-F]

2.3. Once the purchase and sale take place, then bye-law 11 of the
Bye-laws framed under the Rules makes it obligatory for the buyer to lift
the agricultural produce bought by him within 48 hours of auction or B
purchase. The agricultural produce brought to the Mandi by the agricul-
turist has thus to be removed from the auction platforms by the buyers
and there is no requirement of law that the produce so purchased has to
be stored within the Mandi itself. Therefore as long as the licenced dealers
continue to hold valid licences for a notified area, then, irrespective of the
locations of their shops or offices, they are entitled to do their business, c
even if they do not have shops within the Mandi. This being so, the question
of appellants' fundamental rights under Articles 14, 19(1)(g) or 21 of the
Constitution of India being violated does not arise. [296-G-H; 297-A]

3.1. The decision to sell the sites in the new Mandi by auction would D
mean that the existing licensees may have to compete with the non-licen-
sees or newcomers for the purchase of the sites within the Mandi. It is not
possible to accept the contention that adoption of a procedure to sell by
auction is in any way bad in law. If the contention of the appellants is
accepted, the result would be that the business of commission agents would E
continue to be in the hands of the old and established licenced dealers and
no new person would have any chance of entering the said business. The
Act and the Rules framed thereunder do not contain any provision which
provides for or makes it obligatory on the State to construct shops or to
provide for sites and to give preference to the existing licenced dealers.
F
[297-B-C]

3.2. It is well recognised that one of the fairest means which a State
can adopt without showing any favour in disposing of the property, is to
sell it by auction specially where the property in question is business
premises. The sale of plots by public auction is a judicious method for G
providing sites/plots and gives an equal opportunity to all sections of
public who may be interested in carrying out trade for the purchase and
sale of agricultural produce including the appellants or other licensees
who had already been carrying on such trade or business in the old
Mandies. [297-D-E] H
286 SUPREME COURT REPORTS [1996] 2 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2944 of
1996 Etc. Etc.

From the Judgment and Order dated 20.12.94 of the Punjab &
Haryana High Court in C.W. No. 15831 of 1993.

B M.L. Sareen, Advocate General (Punjab), R.K. Jain, R.L. Batta, Har
Dev Singh, Brijender Singh Chahar, Ashok Mathur, B.S. Chahar, Neeraj
Jain, Ms. Abha R. Sharma, G.K. Bansal, Ajay Jain, P.N. Puri, Ms. Madhu
Moolchandani and S.M. Sareen for the appearing parties.

The Judgment of the Court was delivered by :
c
KIRPAL, J. Leave granted.

The question which arises for consideration in these appeals is that
when a market yard is shifted from one site to another whether the
licensees, working in the old market yard, are entitled to have new sites in
D the :Qew market yard, as a matter of right by virtue of their being earlier in
business or whether they have also to compete with the general public in
open auction for acquiring land in the new market yard.

The aforesaid question of law is common in all the present appeals.
E Appeals arising out of Special Leave Petition (C) Nos. 10997 of 1995 and
11139 of 1995 pertain to the market in Jagraon, appeal arising out of
Special Leave Petition (C) No. 9992 of 1995 relates to Ludhiana and the
appeal arising out of Special Leave Petition (C) No. 24712 of 1995 is with
regard to Fazilka. For the purpose of deciding the point in issue, it is
sufficient to refer to the facts pertaining to Jagraon only, as the facts
F regarding'Ludhiana and Fazilka are similar, barring minor details, which
are not relevant.

Under the provision of Section 6 of the Punjab Agricultural Markets
Act, 1961 (hereinafter referred to as 'the Act'), J agraon was declared as a
notified market area. Thereafter, on 23.8.1963, old grain market
G (hereinafter referred to as the 'Old Mandi'), Jagraon was declared as a
principal market yard under Section 7 of the Act by the State of Punjab.
The appellants herein are persons who had obtained licences as commis-
sion agents for carrying on their business of sale and purchase of agricul-
tural produce. It is the case of the appellants that they were owners/tenants
H ~nd were licensees of shops which 'Yere situated within the old Mandi. The
r
CHINT RAM RAM CHAND v. STATE [KIRP AL, J.] 287

State of Punjab on 27.3.1978, under Section 7 of the Act, declared a new A
grain market, J agraon (hereinafter referred to as 'the new Mandi') to be
established as a sub-market yard. On 17.9.1984, by Notification issued
under Section 7 of the Act, the old Mandi was denotified as the principal
market yard. By another Notification of the same date, the Punjab Govern-
ment declared the new Mandi as the principal yard under Section 7 of the B
Act. This was followed by Notification of the Punjab Government under
Section 8 of the Act, issued on 30.3.1988, whereby it was directed that no
transaction in agricultural produce would be transacted within the 5 K.Ms.
of the New Mandi.

The promulgation of the aforesaid Notifications gave rise to the C
filing of a number of writ petitions before the Punjab & Haryana High
Court. With regard to Jagraon, the first Writ Petition (C) No. 6174of1988
was filed by 92 dealers of the old Mandi of Jagraon on 26.7.1988 in favour
of the petitioners (appellants herein). This petition was dismissed on
26.7.1990 by the Single Judge and Letter Patent Appeal No. 1107 of 1990 D
was filed. In the meantime, Civil Writ Petition No. 4199 of 1991 was filed
on 18.3.1991 by the dealers of Sirhind, Patiala. The said petition was
admitted and referred to the full Bench and, in that case also, interim stay
was granted.

Circular dated 2.3.1993 was issued by the Punjab Mandi Board to the E
effect that the dealers/licensees will arrange for themselves plots in the new
Mandi, Jagraon. This was followed by Notices dated 18.10.1993 which were
issued by the Punjab State Agricultural Marketing Board to some of the
dealers. In these Notices, reference was made to the Notification issued
under Sections 7 & 8 of the Act and the dealers/licensees were directed to F
shift to new Mandi for the purposes of conducting the business of sale and
purchase of agricultural produce. Aggrieved by these Notices 149 dealers,
including the appellants in the appeal arising out of Special Leave Petition
(C) No. 11139 of 1995, filed Civil Writ Petition No. 15831 of 1993. It
appears that 16 of these petitioners were the petitioners in the first Writ
Petition No. 6174 of 1988 but the fact of filing of earlier Writ Petition was G
not disclosed in this petition. Civil Writ Petition No. 15831 of 1993 was
admitted and was also referred to the full Bench and in the meantime
interim stay was granted.

On 17.2.1994, an order was passed by the Division Bench of the H
288 SUPREME COURT REl'9~TS (1996] 2 s.c.R.

A Punjab & Haryana High Court in Civil Writ Petition No. 15831 of 1993
vacating the interim stay on the ground that the said 16 persons (wrongly
mentioned as 19 in the High Court's order) had not disclosed that they had
joined in the filing of earlier Writ Petition No. 6174 of 1988. The interim
orders were, therefore, vacated because of the concealing of this material
fact. Special Leave Petition (C) No. 12306 of 1994 was filed in this Court
B -
against this order and the same was dismissed on 16.8.1994.

On 30.5.1994, yet another W~it Petition being Civil Writ Petition No.
7211 of 1994 was filed purporting to challenge the constitutional validity of
Section 8 of the said Act. It appears that out of these petitioners, 34 were
C those who were party to the earlier writ petition. While admitting this
petition, interim stay was granted. This Writ Petition was dismissed by a
Single Judge on 4.9.1995 for the reason that the petitioners had deliberately
withheld the facts from the Court and had succeeded in misleading the
Court to pass interim orders in their favour. Furthermore, it was observed .
D that the conduct of the petitioners who had filed. successive petitions to
challenge various Notifications issued under Section 7(2) and 8 of the Act
on one ground or the another was condemnable and, therefore, they had
disentitled themselves from hearing of the case on merits. While dismissing
the writ petition, cost bf Rs. 20,000 was also imposed.

E The main grievance before the High Court in all the petitions which
were filed was to the effect that the licensees had applied to the Govern-
ment of Punjab for allotment of alternative sites in the new Mandies on no
profit no loss basis. The licensees had challenged the selling of the plots
in the new Mandies by open auction. It was contended that in case the
F auction takes place, the licensees would be compelled to shift their business
to the new Mandies even if they fail to buy plots in competition with other
non-licensees on higher rates and, in the welfare state while making plan
for establishment of a new Mandi, the State Government should not act
\\jth the motive of profit earning and that the petitioners/licensees should
be allotted plots first and only the remaining plots should be auctioned. It
G was contended that the application for allotment of alternative sites on no
profit no loss basis having rejected by the State Government the same had
resulted in violation of the petitioner's fundamental rights under Articles
14, 19(1)(g) and 31 of the Constitution of India.

H The Punjab Mandi Board, in its written statement filed before the
CHINT RAM RAM CHAND v. STATE [KIRP AL, J.] 289

High Court, raised preliminary objection that the writ petition was highly A
belated. The process of sale of the plots/spaces in the new Mandi began
as far back as in the year 1986 and allottees had taken possession and had
either raised or were in the process of raising structures upon them and to
disturb the process of formation of new Mandi at this belated stage would
cause great harm. It was admitted that the appellants were licensees B
carrying on their business in the old Mandi. However, it was pleaded that
the old Mandi was not a planned Mandi and was grossly inadequate for
the needs of the farmers and the public and the formation of the new
Mandi was on the request of the farmers and had all modern amenities
and facilities. Further the business of the Mandi was being carried out in C
an over-crowded area of the town within the municipal limits. It was also
pleaded that the appellants do not have any prior claim to the plots in the
new Mandi which were being sold in open auction and the appellants were
at liberty to compete in open auction and purchase the plots and space
and the appellants, as old licensees, had no legal or preferential right to D
get the plots by allotment. Nor there was any legal obligation on the part
of the respondents to provide alternative sites to the _appellants. It was
further pleaded that the appellants had no such fundamental right and
none of the fundamental rights of the appellants had been violated and that
nobody had interfered with their ownership in the premises in the old
Mandi. The State of Punjab and the Administrator, New Mandi Township E
in their joint written statement pleaded that the plea of allotting plots on
reserve price had been thoroughly examined at all levels of the Govern-
ment, at different times, and it was considered more suitable to sell the
plots in open auction only. It was denied that the auctioning the plots in
the new Mandi would result in the appellants being up-rooted or that they F
had any legal right for allotment of plots. Further the policy of the State
Government was only to sell the plots in open auction to the public at large.
It was further pleaded that there was no policy of the State Government
to allot the plots in the new Mandi; that the appellants could not be allotted
plots and they could purchase the same in open auction, which in no way G
was unconstitutional and that the demands of the appellants for allotment
Of plots was neither legal nor justifiable. It was also denied that the motive
of the State Government was profit earning. Since the Government was
determined not to preserve the monopoly of the existing Commission
Agents and with a view to free farmers from the exploitation/malpractices H
290 SUPREME COURT REPORTS [1996] 2 S.C.,R.
•
A rampant in the trade, carried out in old Mandi where there was no space
for unloading of good-trains it had been decided to sell the plots by public
auction. In rainy season, water collected up to knee level in the old Mandi
which resulted in damaging the produce of the poor farmers. It was also
pleaded that the appellants were not entitled to get plots in new Mandi as
B they would not be removed from their existing shops in the old Mandi or
compelled to shift their business in the new Mandi. Further, the' existing
sub-yard or the old Mandi would not be abolished. It was denied that the
action of the respondents to sell the plots in public auction is violative of
Articles 14, 19(1)(g) and 31 of the Constitution of India.

c By the impugned judgment dated 20.12.1994, the full bench of the
High Court while dismissing the Writ Petitions and Letter Patent Appeals,
came to the .following conclusion :

"In view of the above discussion, we are of the considered view
D that the oustees of the old Mandi are not entitled to get plots/sites
in the new Mandi as a matter of right by virtue of their being earlier
..._,,._,
(
in business for sale and purchase of agricultural produce par-
ticularly when there was sufficient time gap between the denotifica-
tion of the old Mandi notification of new Mandi as a principal
Market yard on one hand and Notification under Section 8 of the
E Act on the other hand, where after notification of the new Mandi
all the sale and purchase of agricultural produce within a specified
distance from the new principal market yard is prohibited and the
State of the competent authority had already made provisions for
adequate number of plots/open sites in the new Mandi and the
F plots made available in, the new Mandi are sold in open auction
giving equal opportunity to the licensees and other persons from -
I
the public who wanted to enter in the trade of purchase and sale
l
of agricultural produce' in the new Mandi. Apart from that the fact
that aggrieved persons including the petitioners had been given
two months time by the Single Bench to shift their business to the
G new Mandi would also be a most relevant factor for determining
the right of the oustees from the old Mandi for getting plots or
sites in the new Mandi. We are further of the view that the sale of
plots in the new Mandi by public auction is the best method for
giving such plots and would be preferable to the allotment of plots
H to such oustees by pick and choose method. Thus in order to get
CHINT RAM RAM CHAND v. STATE [KIRP AL, J.] 291

new sites or plots in the new Mandi, in our view, the oustees of A
the old Mandi shall have to compete with general public in open
auction."

On behalf of the appellants, three contentions have been raised by
Mr. R.K. Jain, the learned counsel. While relying upon the order of this
Court dated 9.5.1995 in Appeal arising out S.L.P. (C) No. 20644 of 1993,
B
Harbans Lal Subhash Chand & Ors. v. State of Punjab & Ors. and appeal
arising out of S.L.P. (C) No. 5229 of 1994, Lachman Das Sunder Dass &
Ors. v. State of Punjab & Ors., relating to allotment of plots in the new
Mandies at Ferozepur and Rajpura, it was submitted that in the present
case also, alternative sites should be allotted at the concessional rates or c
on lease to the appellants. In the said order it was, inter alia, stated that
the auction already held in the new Mandies will not be affected. A person
who was an existing licensee would be allotted a plot in the new Mandi on
payment of a lump sum of Rs. 1,65,000 for Ferozepur and Rs. 2,50,000 for
Rajpura. The second submission was that the State was duty bound to D
provide to the existing licensees a place to do business at the reasonable
prices in the new Mandi and without such provision being made, the old
Mandi cannot be stopped from functioning. It was, lastly, submitted that
the state cannot adopt a procedure of allotment in the new Mandi by which
the existing licensees can be thrown out of business altogether by forcing
them to compete with outsiders, including the properly dealers. E

The aforesaid order dated 9.5.1995 can be of on assistance to the
appellants. Firstly, the order was passed with the consent of both the
parties, which consent is lacking in the present case. Secondly, the order
specifically states that the same "shall not be treated as precedent". Faced F
with this, Mr. Jain contended that even though the said order may not be
regarded as a precedent, nevertheless, the State which had earlier agreed
to allot plots to the existing licensees in Ferozepur and Fazilka cannot take
a different stand with regard to the establishment of new Mandies in other
parts of State. There is no force in this contention. What are the cir- G
cumstances, which led the State to agree to the passing of the consent
order, are not known. Furthermore the contention of the appellant is that
the alternative sites should be sold to them at the reserve price plus 25%.
In the aforesaid order, however, this formula was not adopted and the
Court had directed the proposed sites to be allotted on lump sum payment
of Rs.1,65,000 per plot in Ferozepur Mandi and Rs. 2,50,000 per plot in H
1

f
292 SUPREME COURT REPORTS [1996] 2 S.C.R.

A Rajpura Mandi. According to the Advocate General, the State had agreed
to the passing of the consent order inasmuch as on 24.9.1995 a letter had
been written by the Government to the effect that allotment of plots in the
new Mandies will be made at the reserve price plus 25% to all Artias. By
another letter dated 26.9.1985 the aforesaid decision of the Government
was withdrawn. Auction at Ferozepur was notified for 4.12.1985 while in
B
Rajpura, auction was held on 10.11.1986. The State Government, it was
submitted by the Advocate General, had consented to sell all the plots at
fixed price in favour of the appellants therein and not by auction because
of the aforesaid letter dated 24.9.1985. It was further contended that the
transfer was to be at price which was above the reserved price and the
C figure of Rs. 1,65,000 and Rs. 2,50,000 in respect of Rajpura was stated to
have arrived at by taking the average of the auction prices which had been
realised on the auction of the other plots in the said Mandies. It is clear,
therefore, that the aforesaid order of this Court can give no right to the
appellants to the allotment of land at a concessional rate.
D
In support of this contention that the State was bound to provide
alternative sites at the reasonable prices in the new Mandi to the existing
licensees. Mr. Jain relied upon an order dated 7.8.1991 passed in Civil
Appeal Nos. 3194-95 of 1991, Prem Chand Tarlok Chand & Ors. v. State
of Haryana. In that case the State of Haryana had a policy whereby 45%
E of the available accommodation at the new site was reserved for the existing -
licensees which wa~ to be allotted on the basis of lots to be cast. In this
connection it was observed that "normally once the Government starts
regulating the place of sale of agricultural produce covered by the Act and
does not permit any other place to be used for the purpose, there is an
F inherent obligation on the Government to proviae a~ the new site for all
the licenced dealers sufficient accommodation for carrying on their trade
and until that is done, it would not be possible for the Government to direct
closure of the old site". The Advocate General is right in contending that
the aforesaid observation did not require the allotment of alternative sites
to be made at the concessional rates. In fact this was not the issue in that
G case. All that was observed was that sufficient accommodation was to be
provided to all the licenced dealers to carry on their trade. Moreover, the
policy of allotment of sites of the State of Punjab is different from the
policy of the State of Haryana with regard to which the order in Prem
Chand's case (supra) was passed. In the State of Punjab, all the sites are
H allotted by public auction. This gives an opportunity to all the existing
CHINT RAM RAM CHAND v. STATE [KIRPAL, J.] 293

licenced dealers, and also to the new entrants, to compete and obtain sites A
in the new Mandi. Therefore, all the existing licenced dealers who may be
having a place of business in the old Mandi do have a right to acquire by
auction sites at the new place of business in the new Mandi. This Court
never directed in Premchand's case (supra) that alternative sites should be

- allotted at a reasonable price or be given on lease. Putting new sites to
auction and allowing everyone to compete would tantamount to the
Government providing an opportunity to enable the existing licensees to
B

shift their place of business to the new Mandi, if they so desire. Therefore,
the observations in Premchand's case (supra) to the effect that there was

-
an obligation to provide new sites for all licenced dealers would only mean
that an opportunity should be granted to the licenced dealers to acquire c
sites in the new Mandi.

It was submitted by Mr. Jain that if alternative sites are not provided
to the existing licenced dealers in the new Mandi, they would be deprived
of their livelihood and this will result in violation of their fundamental
rights under Articles 14, 19(1)(g) & 21 of the Constitution of India. D

The scheme of the Act and the Rules framed thereunder show that
shifting of the Mandi from one place to another without providing for an
alternative site or a shop to a licenced dealer, cannot violate any statutory
or fundamental right of any of the licensees. E
.It is not in dispute that after declaration of a notified market area
under Section: 6 of the Act, the State Government may notify one principal ·
market yard and one or more sub-market yards under Section 7 of the Act.
These market yards are established so as to enable the agriculturists to
bring their agricultural produce to the market for sale. The sale is to take F
place, in the markets established in Punjab, in the manner provided by Rule
24 of the Punjab Agricultural Produce Markets (General) Rules, 1962
(hereinafter referred to as 'the Rules') which reads as under :

"SALE OF AGRICULTURAL PRODUCE
G
(1) All agricultural produce brought into the market for sale
shall be sold by open auction in the principal or sub market yard.

(2) Nothing in sub-rule (1) shall apply to a retail sale as may
be specified in the bye laws of the committee. H
294 SUPREME COURT REPORTS [1996] 2 S.C.R.

A (3) A committee may, and on being directed by the (Chairman
of the Board or an officer authorised by him) shall fix timings for
the starting and closing of the auction in respect of any agricultural
produce, other than fruits and vegetables.

(4) The price of agricultural produce shall not be settled by
B secret signs or secret bid and no deduction shall be made from
the agreed price of the consignment.

(5) The auction shall not be conducted by any person other
than the person engaged by the Committee :
c Provided that under special circumstances the (Chairman of
the Board or an officer authorised by him) may allow a Committee
to make or permit any alternative arrangement.
-
Provided further that nothing in this sub-rule shall apply to the
D auction of vegetables and fruits.

(6) The highest bid offered by a buyer at an auction and at
which the seller of the produce gives his consent to sell his produce,
shall be the sale price of the produce.

E (7) The buyer shall be considered to have thoroughly inspected
the produce for which he has made a bid and he shall have no
right to retra,ct it.

(8) As soon as the auction for a lot is over the auctioneer shall
fill in the particulars in a book to be maintained in Form H and
F shall secure both the buyer and the seller or their respective
representatives, whoever may be present at the spot. -'
"

.
[(8-A) A register in From HH shall be maintained by the
Committee. The agricultural produce which remained unsold
during the course of auction be entered and it shall be obligatory
G
for every dealer or kacha Arhtiya or commission agent, as the case
may be, to report about the unsold produce to the committee as
soon as his agricultural produce is sold.]
............

(9) The buyer shall be responsible to get the agricultural
H produce weighed immediately after the auction or on the same day
CHINTRAMRAMCHANDv. STATE[KIRPAL,J.] 295

the produce is purchased by him land the seller or the buyer shall A
be liable for any damage to, or loss of, or deterioration in, the
produce after the auction according to the local usage or custom
[or as per provisions of rule 13].

(10) A person engaged by a producer to sell agricultural
produce on his behalf shall not act as a buyer either for himself B
or on behalf of another person in respect of such produce [without
the prior consent of the producer: ]

(11) The kacha Arhtiya shall make payment to the seller im-
mediately after the weighment is over.
c
(12) Every kacha Arhtiya shall, on delivery of agricultural
produce to a buyer, execute a memorandum in Form I and deliver
the same to the buyer on the same day or the following day,
mentioning sale proceeds plus market charges admissible under
rules and bye-laws. The counterfoil shall be retained by the kacha D
Arhtiya;

· [Provided that nothing in this sub rule shall apply where agricul-
tural produce, being vegetable or fruit, not exceeding one quintal
in weight is delivered.]
E
(13) In the absence of any written agreement to the contrary
the sale price of agricultural produce purchased under these rules
shall be paid by the buyer to the kacha Arhtiya on delivery of Form
I.

F
- (14) Delivery of agricultural produce after sale shall not be
made or taken unless and until the kacha Arhtiya or, if the seller
does not employ a kacha Arhtiya, the buyet has given to the seller
a sale voucher in Form J, the counterfoil whereof shall be retained
by the kacha Arhtiya or the buyer, as the case may be."

It is apparent that the aforesaid Rule stipulates that all agricultural
G
produce brought into the market for sale shall be sold by open auction in
the principal or the sub-market yard. In order to enable the sale by auction
to take place, platforms are constructed for the producers to come and
place their produce. Establishment of a Mandi in effect means the erection
of the platforms where agricultural produce is brought and placed for sale H
296 SUPREME COURT REPORTS [1996] 2 S.C.R.

A by auction. In order to further facilitate the purchase and sale, shops are
constructed which are acquired by the licenced dealers. Neither the Act,
nor the Rules, makes in obligatory on the State Government to construct
such shops before notifying a market yard. The existence of such shops
only make it convenient for the licenced dealers to conduct their business
but is not essential that they must have shops within the Mandi to enable
B them to carry on their business activities.

A dealer is granted a licence under Section 10 of the Act which
allows him to carry on business in a notified market area. According to
Rule 17(5) of the Rules, a separate licence is required by a person for
c "setting up establishing or continuing or allowing to be continued more
than one place for the purchase, sale, storage and processing of agricultural
produce in the same notified market area". In other words, a dealer having
one place of business in a notified area is required to have only one licence
which would entitle him to carry on business in any of the Mandies situated
D in that notified area but, if he has more than one places of business, then
for each place he is obliged under Rule 17(5) of the Rules, to have a
separate licence. Neither the Act nor the Rules requires that the place of
business of a licenced dealer must be within the precincts of the Mandi.
All that the Act and the Rules require is that the auction, for th.e sale and
purchase of agricultural produce, shall be within the notified market yard
E or sub-yard. The appellants and other licensees who are already having
shops or plots in the old Mandies have not been deprived of the same and
nor are they prevented, in any manner, from carrying on in their shops their
trade or business other than that of purchase and sale of agricultural
produce in public auction. The sale of agricultural produce by auction, as
F contemplated by the Act and the Rules, does not take place in the business
premises or shops of the licenced dealers even if they are located within
the Mandi. It can only take place on the platform in the said market yards.
Once the purchase and sale take place, then bye-law 11 of the Bye-laws
-
•.
framed under the Rules makes it obligatory for the buyer to lift the
G agricultural produce bought by him within 48 hours of auction or purchase.
The agricultural produce brought to the Mandi by the agriculturist has
thus to be removed from the auction platforms by the buyers and there is
no requirement of law that the produce so purchased has to be stored
within the Mandi itself. Therefore, as long as the licenced dealers continue
to hold valid licences for a notified area then, irrespective of the locations
-
H of their shops or offices, they are entitled to do their business, even if they
CHINT RAM RAM CHAND v. STATE [KIRP AL, J.] 297

do not have shops within the Mandi. This being so, the question of A
appellants' fundamental rights under Articles 14, 19(1)(g) or 21 of the
Constitution of India being violated do not arise.

The decision to sell the sites in the new Mandi by auction would
mean that the existing licensees may have to compete with the non-licen-
sees or newcomers for the purchase of the site~within the Mandi. It is not
B
possible to accept the contention that adoptio.n- of a procedure to sell by
auction is in any way bad in law. If the coiitention of the appellants is
accepted, the result would be that the business ~f commission agents would
continue to be in the hands of the old and established licenced dealers and
no new person would have any chance of entering the said business. The C
Act and the Rules framed thereunder do not contain any provision which
provides for or makes it obligatory on the State to construct shops or to
provide for sites and to give preference to the existing licenced dealers. It
is well recognised that one of the fairest means, which a State can adopt
without showing any favour in disposing of the property, is to sell it by D
auction specially where the property in question is business premises. The
sale of plots by public auction is a judicious method for providing
sites/plots and gives an equal opportunity to all sections of public who may
be interested in carrying out trading for the purchase and sale of agricul-
tural produce including the appellant or other licensees who had already
been carrying on such trade or business in the old Mandies. E

Mr. R.L. Batta, learned Senior Counsel appearing for some other
dealers of I agraon, submitted that in the old Mandi, which was spread over
an area of 25 acres, there were 109 grain shops measuring 57" x 14". The
total number of licensees working therein were stated to be 250. In the new p
Mandi, there are 139 grain shops measuring 125" x 20". By providing for
bigger shops, it was submitted, the smaller traders have not been able to
get shops in the new Mandi in public auction. Referring to Circular dated
14.11.1994 issued by the Director, Colonization, Punjab, it was submitted
that more grain shops of smaller sizes can be constructed in the new
Man~ G
In the aforesaid Circular dated 14.11.1994, it is stated that five grain
shops in the new Mandi in J agraon remained to be auctioned. The Circular
recognised the need for more grain shops and provision being made for
future expansion of the Mandi. It was stated in the Circular that an a!ea H
298 SUPREME COURT REPORTS [1996] 2 S.C.R.

A.. measuring 6.33 acres "has been earmarked for additional auction platforms
in the north~west of the Mandi site. Some smaller or bigger size grain shops
can be carved out in this area. Divisional Town Planner, Mandi Board is
being requested to send the requirement of additional grain shops. Some
grain shops of suitable size be planned in the reserve area mentioned above
in such a way that there is a parking in the front of these shops and service
B lane on the sides keeping in view the immediate requirement of plots in
Mandi".

The area of the grain shops of the new Mandi is much larger than
that of the area of the shops of old Mandi. Though, the new Mandi is
C spread over an area of 75.125 acres, the number 9f shops which are
earmarked for grain are only 139. The Advocate General, however, sub-
mitted that apart from 139 shops which are earmarked for grain, large
number of booths have been constructed which can also be used by the
licenced dealers dealing in grain. Apart from that, considering the nature
D of the business of the licenced dealers, it is possible for them to conduct
their business in smaller shops. Therefore, even if shops are to be allotted
by auction, the smaller size shops would be within easy reach of the smaller
~raders. Keeping in view the aforesaid circular dated 14.11.1994, but
without issuing any formal directions, it is hoped that some more grain
shops or booths of similar sizes will be constructed or earmarked in the
E aforesaid area measuring 6.33 acres and when this is done, the smaller
traders who are still out of the new Mandi, would be in a position to
acquire business premises within the new Mandi. The scheme envisaged in
the circular dated 14.11.1994 should be considered, and if possible, imple-
mented at an earlier date.
F
Before the High Court, provision of Section 8 of the Act was chal-
lenged by contending that the same infringes upon the freedom to carry on
trade and business enshrined in Article 19(1)(g) of the Constitution be-
cause the power is given to the State Government to notify a place as sub
market yard under Section 7 and to prohibit any person to set up or
G establish any other market within the limits of such notified market or
within a distance thereof to be notified in the official gazette. The said

.H
Act has been enacted for the purpose of better regulation of the pur-
chase/sale/storage and processing of agricultural produce and estab-
lishment of markets for agricultural produce in the State of Punjab. It is
quite obvious that for the proper regulation or monitoring of such sale
-
CHINT RAM RAM CHAND v. STATE [KIRP AL, J.] 299

unauthorised markets within the notified area should not be allowed to be A
established. It cannot be doubted that Section 8 does give the power to
place a restriction on the establishment of unauthorised markets, but such
a restriction is in public interest and bears a reasonable nexus to the object
which is sought to be achieved by the Act. The new Mandies have been
established with a view to remove the old Mandies from the congested
B
areas and with the object of providing better and more modern facilities
to the farmers and others connected with the purchase and sale of agricul-
tural produce. The new Mandies have been located at such places so as to
provide suitable and convenient location to all concerned after taking into
consideration the development of the town and city as a whole. In fact no
argument was addressed impugning the locations which have been selected c
for the establishment of new Mandies. The High Court was therefore, right
in concluding that neither the provisions of Section 7 or 8 of Act nor the
restrictions imposed by the impugned Notification violated the fundamen-
tal rights contained in Article 19(1)(g) of the.i;:onstitution and that the
restrictions imposed were reasonable.
D
As already mentioned the proposal to shift the Mandies to new sites
has given rise to a spate of Writ Petitions being filed before the Punjab &
Haryana High Court. This has resulted inordinate delay in the estab-
lishment of the new Mandies and the closure of the old ones. Even though
a new grain Mandi was declared to be established in J agraon in March, E
1978, it is only recently, according to the Advocate General, that the old
Mandi has been closed and business has started in the new Mandi. The
litigation has presumably resulted in the escalation of the cost of construct-
ing now shops, besides resulting in the old Mandies to continue in the
congested areas perhaps causing great deal of inconvenience to the general F
public living in the vicinity. Though, all the plots in the new Mandies at
J agraon and Fazilka have been auctioned but in Ludhiana the old Mandi
has not yet been denotified and a single auction of plots has taken place.
It is clear that this delay in shifting to new sites has occurred due to the
actions of the existing licensed dealers of the old Mandies. Different Writ
Petitions have been filed in the High Court without disclosing the pendency G
of earlier petitions and the orders passed thereon. The conduct of some of
the appellants of withholding this relevant fact from the Court and mis-
leading it to pass interim orders, despite the fact that similar stay orders
passed earlier had been vacated, has been adversely commented upon in
Civil Writ Petition No. 7211 of 1994 by G.J. Singhvi, J. of the Punjab & H
300 SUPREME COURT REPORTS [1996] 2 S.C.R.

A Haryana High Court in his judgment dated 4.9.1995. That Writ petition was
dismissed on the ground of the said conduct of the appellants and heavy
costs were imposed. Some of the petitioners (appellants herein) in the said
Writ Petition No'. 7211 of 1994 before the High Court are the appellants
in appeal arising out of Special Leave Petition (C) No. 10997o~1995. These
are appellant Nos. 3, 7, 9, 21, 24, 32, 37 and 41. Appellant Nos. 1, 2, 16,
B
19, 20, 23, 28, 34, 35, 36, 37, 39, and 45 in the Appeal arising out of Special
Leave Petition (C) No. 11139of1995 are persons who were also petitioners
in the said Writ Petition No. 7211 of 1994.

Apart from the fact that these appellants were parties to the latter
C writ petition and had not disclosed the filing of the earlier writ petition in
the High Court these appellants in Appeal arising out of Special Leave
Petition (C) No. 11139 of 1995 have also not disclosed the filing of Writ
Petition No. 15883 of 1993 in the Punjab & Haryana High Court. That
petition was filed by persons who had purchased sites in the new Mandi at
Jagraon and had wanted a· direction for the establishment of the said
D Mandi and the closure of the old one .. 149 of the appellants in Special
Leave Petition (C) No. 11139of1995 moved an application before the High
Court and were impleaded as parties. The said Writ Petition No. 15831 of
1993 was allowed and the validity of the Notification issued under Sections
7 & 8 of the Act was upheld. _The filing of the said Civil Writ Petition No.
E 15831 of 1993 and its being allowed by the Punjab & Haryana High Court
by its judgment dated 8.4.1994 has not been disclosed in Special Leave
Petition (C) No. 11139 of 1995 even though there were some common
petitioners. There is a merit in the contention of the Advocate General that
even in this Court, an attempt has been made on the part of the appellants
not to disclose full facts and to secure a favourable order. Such a practice
F cannot be encouraged and has to be deprecated. Accordingly, while dis-
missing these appeals, we impose a cost of Rs. 5,000 on each of the
appellant Nos. 3, 7, 9, 21, 24, 32, 37, and 41 in the Appeal arising out of
S.L.P. (C) No. 10997 of 1995 and appellant Nos. 1, 2, 16, 19, 20, 22, 23,
28, 34, 35, 36, 37, 39 and 45 in the Appeal arising out of S.L.P.(C) No.
-
G 11139 of 1995. The cost to be paid to the State of Punjab.
v.s.s. Appeal dismissed.