Holding

A trader, including the U.P. Forest Corporation, is liable to pay the market fee and cannot escape liability by claiming non‑realisation from the purchaser, and the liability is not contingent upon the trader being licensed.

Summary

The State of Uttar Pradesh appointed the U.P. Forest Corporation as its agent to trade in tendu leaves. Under the Uttar Pradesh Krishi Utpadan Mandi Act, a market fee is payable by traders, and a proviso in Section 17(iii)(3) makes the trader liable even if the fee is not realised from the purchaser. The Corporation agreed to collect the fee from purchasers but failed to do so, leading the Market Committee to issue notices to purchasers, including the respondent. The purchaser obtained a writ order from the High Court directing the Committee to refund the fee. On appeal, the Supreme Court held that the Corporation, as a trader, remains liable for the market fee and the Committee cannot shift that liability to the purchaser; the proviso applies retrospectively and does not require the trader to be a licensed trader for liability. Consequently, the appeals were dismissed.

Issues considered

Whether clause (3) of sub‑section (iii) of Section 17 of the Uttar Pradesh Krishi Utpadan Mandi Act applies to the U.P. Forest Corporation.
Whether the liability to pay market fee rests on the trader (U.P. Forest Corporation) or can be shifted to the purchaser.
Whether a trader must be a licensed trader to be liable for market fee under the Act.

Legislation cited

Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964s. 17(iii)(1), s. 17(iii)(2), s. 17(iii)(3), s. 17(iii)(4), s. 2(f), s. 2(y), s. 9(2)

Subjects

market feetrader liabilityUttar Pradesh Krishi Utpadan Mandi Acttendu leaveslicensingretrospective amendmentSupreme Court

Judgment

DIRECTOR, KRISHI UTP ADAN MANDI SAMITI AND ANR. A
v.
MIS. RAM KISHAN DAYA RAM & CO.

SEPTEMBER 19, 2007
B
[S.B. SINHA AND H.S. BEDI, JJ.)

,,,! Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964-ss. 2,
({), 17(iii) (3)-Market fee-On the trade of tendu leaves-Liability
to pay-Held· The liability to pay the market fee is on the trader and c
not on the purchaser-The corporation cannot be absolvedfrom such
liability on the ground that it has not realized it from the purchaser.
State ofU.P. appointed U.P. Forest Corporation as its agent to
deal in business of 'ten du' leaves. In a litigation, challenging levy D
of market fee on the Corporation by the appellant-committee, it was
agreed between parties that the Corporation would collect market
fee from the purchasers and deposit the same with the appellant.
Corporation did not collect the sam~. Appellant issued notices
against the respondent-purchaser demanding the market fee u/s 17
E
(iii)(4) ofUttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964.
Respondent filed Writ Petition, whieh wa's allowed by High Court.
Hence the present appeals.

"'!.\
Dismissing the appeals, the Court
F
HELD: 1. U.P. Forest Corporation was a trader and it could
not have escaped its liability from payment of the market fee, only
because the appellant as also the State of U.P. Iost the Writ Petition
filed by the U.P. Forest Corporation before the High Court, which
by itself, does not entitle the appellant herein to fall back upon the
G
;.. respondent for the purpose of realization of market fee.
[Paras 8 and 12] {590-C; 592-D]

2. The definition of the term 'trader' u/s 2(f) ofUttar Pradesh
Krishi Utpadan Mandi Adhiniyam, 1964 does not envisage that all
587 H
y
--
588 SUPREME COURT REPORTS [2007] 10 S.C.R.

A traders must be licensed traders for the purpose of realization of the ~
market fee. The proviso appended to clause (3) of sub-section (iii)
of Section 17 of the Act, although was enacted by Act No. 4 of 1999,
the same had been given retrospective effect and retrospective
operation. In no uncertain terms it provides that the trader would be
B bound to pay the market fee and shall not be ~bsolved from such
liability on the ground that he has not realized it from t_he purchaser.
[Para 11] [592-B-C)
,.,.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3732 of
2001.
c
From the Judgment and final Order dated 3.2.2000 of the High Court
of Judicature at Allahabad in Civil Misc. Writ Petition No. 32828of1991.
WITH

D C.A. No. 3079 of 2004.
Shobha Dikshit, Sr. Adv., Pradeep Misra and Daleep Kr. Dhayani \-
for the Appellants.
M. Indrani (for Abhijit Sengupta) for the Respondent.
E The Judgment of the Court was delivered by
S.B. SINHA; J. Appellant is aggrieved by and dissatisfied with the
judgment and order dated 3.2.2000 passed by a Division Bench of the
High Court of Judicature at Allahabad in Civil Misc. Writ Petition X
p No.32828/1991, whereby and whereunder the writ petition filed by the
respondent herein was allowed dU:ecting:
"The petition succeeds. The contention of the petitioner that it is
not liable to pay the market fee to the Market Committee on the
purchases of tendu leaves made by it from the U.P. Forest
G Corporation, is accepted. The Market Committee concerned is
directed to refund the deposit of Rs. 99,310.00 against the market
fee for the year 1991-92 to the petitioner and also· to pay 12
percent per annum interest thereon in accordance with·the interim
order dated 11.11.1991 of this Court."
H
DIRECTOR, KRISHIUTPADANMANDI SAMITI v. 589
M/S~ RAM KISHAN DAY A RAM & CO. [SINHA, J.]

:r 2. Basic fact of the matter is not in dispute. Business in tendu leaves A
is dealt in by the Government ofU.P. It has a monopoly in respect thereof.
The State ofU.P. appointed the U.P. Forest Corporation as its agent.
Questioning the legality of levy of market fee upon the Corporation by
· the appellant herein a writ petition was filed, inter alia, on the premise
that no service having been rendered to the Corporation, the market fee B
was not leviable.
) 3. It is the admitted case of the parties that the said writ petition
>"'
was allowed by a judgment and order dated 20 .1.1983. A special leave
petition was filed thereagainst. Before this Court, the parties to the said
SLP agreed that the U.P. Forest Corporation would collect market fee
c
from the purchasers and deposit the same with the appelJant. However,
the U.P. Forest Corporation did not collect any market fee from the
purchasers for the assessment years 1991-92. Demand notices were
issued against the purchasers by the appellant relying on and/or on the
basis of Clause (4) of sub-section (iii) of Section 17 of the Uttar Pradesh D
Krishi Utpadan Mandi Adhiniyam, 1964 ("Act" for short). Noticesof
demand having been issued to the respondent, a writ petition was filed
before the High Court which, as noticed hereinbefore, has been allowed
by reason of the impugned judgment dated 3.2.2000. It is not in dispute
that the total amount sought to be collected by reason of market fees was E
'
Rs.99,310/-. Respondent deposited the said amount before the High
Court but after delivery of the impugned judgment the said amount has
been returned to it.
~
4. The short question which arises for our consideration is as to F
whether clause (3) of sub-section (iii) of Section 17 is attracted in. the
instant case or not.
5. Mrs. Shobha Dikshit, learned senior counsel appearing on behalf
of the appellant, in support of the appeal, would submit that as the
> .. respondent was not a licenced trader, clause (3) of sub-section (iii) of G
Section 17 would not be applicable in the instant case. According to the
learned senior counsel, a statutory liability having been fixed upon the
purchaser in terms of aforesaid clause the High Court committed a manifest
error in passing the impugned judgment.
H
590 SUPREME COURT REPORTS [2007] 10 S.C.R.

A 6. Learned counsel appearing on behalf of the respondent, however,
would support the impugned judgment.
7. Uttar PradeshKrishi Utpadan Mandi Adhiniyam, 1964 (Act) was
enacted to provide for regulation of sale and purchase of agricultural
produce and for the establishment, superintendence and control of markets
B therefor in the Sate ofUttar Pradesh.
8. Section 2(f) of the Act defines "Committee" to mean a Committee
constituted there. "Trader" has been defined in Section 2(y) of the Act to \-.....,
mean a person who in the ordinary course of business is engaged in b~ying
c or selling agricultural produce as a principal or as a duly authorised agent
of one or more principals and includes a person engaged in processing
of agricultural produce. Indisputably, U.P. Forest Corporation was a
trader.
9. Section 9 of the Act provides for the effects of declaration of
D market area; sub-section (2) whereof reads as under:
"No person shall, in a Principal Market Yard or any Sub-Market
Yard, carry on business or work as a trader, broker, commission .
agent, warehouseman, weighman, Palledar or in such other
E capacity as may be prescribed, in respect of any specified
agricultural produce except under and in accordance with the
conditions of a licence obtained therefor from the Committee
concerned."
I 0. Section 17 delineates the powers of the Committee. Sub-section
F (iii) of Section 17 empowers a Committee to levy and collect fees, the
mode and manner whereof are as under:
"(1) If the produce is sold through a commission agent, the
commission agent may raise the market fee and the development
cess from the purchasers and shall be liable to pay the same to
G
the Committee;
(2) ifthe produce is purchased directly by a trader frorµ a producer,
the trader shall be liable to pay the market fee and development
cess to the Committee;
H
-~);
~
DIRECTOR, KRISHI UTPADAN MANDI SAMIT! v. 591
MIS. RAMKISHANDAYARAM&CO. [SINHA,J.]
(3) if the produce is purchased by a trader from another trader, A
the trader selling the produce may realise it from the purchaser
and shall be liable to pay the market fee and development cess
to the Committee;
Provided that notwithstanding anything to the contrary contained
in any judgment, decree or order of any court, the trader selling B
the produce shall be liable and be deemed always to have been
.>' liable with effect from June 12, 1973 to pay the market fee to
)/I""
the Committee and shall not be absolved from such liability on
the ground that he has not realised it from the purchaser;
c
Provided further the trader selling the produce shall not be
absolved from the liability to pay the development cess on the
ground that he has not realised it from the purchaser;
(4) in any other case of sale of such produce, the purchaser shall
be liable to pay the market fee and development cess to the D
-./ Committee;
Provided that no market fee or development cess shall be levied
or collected on the retail sale of any specified agricultural
produce where such sale is made to the consumer for his .E
domestic consumption only."
Provided further that notwithstanding anything contained in this
Act, the Committee may at the option of, as the case may be,
the commission agent, trader or purchaser, who has obtained
the licence, accept a lump sum in lieu of the amount of market F
fee or development cess that may be payable by him for an
agricultural year in respect of such specified agricultural produce,
for such period, or such terms and in such-manner as the:state-
Government may, by notified order specify;
_.... sf

~
G
Provided also that no market fee or development cess shall be
levied on transaction of sale of specified agricultural produce on
which market fee or development cess has been levied in any
market area if the trader furnishes in the form and manner
prescribed, a declaration or certificate that on such specified H
592 SUPREME COURT REPORTS [2007] 10 S.C.R.

A agricultural produce marker fee or development cess has already
·been levied in any other market area."
11. Relying on and/or on the basis of the various decisions rendered
by this Court Mrs. Dikshit submitted before us that a trader should have
B a licence. A bare perusal of the definition of the said term, in our opinion,
does not envisage that all traders must be licensed traders for the purpose
ofrealisation of the market fee. The proviso appended to clause (3) of
sub-section (iii) of Section 17 of the Act, although was enacted by Act
No. 4 of 1999, the same had been given retrospective effect and
retroactive operation. In no uncertain terms it provides that the trader
C would be bound to pay the market fee and shall not be absolved from
such liability on the ground that he has not realised it from the purchaser.
12. In that view of the matter, we are of the opinion that the U.P.
Forest Corporation could not have escaped its liability from payment of
D the market fee, only because the appellant as also the State ofU.P. lost
the writ petition filed by theU.P. Forest Cori)oration before the High
Court, which by itself, in our opinion, does not entitle the appellant herein
to fall back upon the respondent for the purpose of realisation of market
fee ..
E 13. For the reasons aforementioned, we are of the opinion that tl1ere
is no infirmity in the impugned judgment. The appeals are dismissed
accordingly. No costs ..
K.K.T. Appeals dismissed. ~··