Holding

Products such as ‘Frooti’ and ‘Appy’, not specified in the Schedule, are not agricultural produce under the Bihar Agricultural Produce Market Act, 1960, and the Board cannot levy market fee on them.

Summary

Edward Keventer Pvt Ltd, a manufacturer of the ready‑to‑serve fruit drinks ‘Frooti’ and ‘Appy’, challenged a market fee notice issued by the Bihar State Agricultural Marketing Board under the Bihar Agricultural Produce Market Act, 1960. The Board treated the drinks as mango and apple products and sought fee collection. The appellant argued that the beverages were not listed in the Schedule of the Act and therefore were not ‘agricultural produce’ within its ambit. The Supreme Court examined the definition in Section 2(1)(a) and held that only items specified in the Schedule qualify, and processed products that lose the identity of the original fruit are excluded unless expressly listed. Consequently, the Board had no authority to levy the fee. The Court set aside the High Court’s order and allowed the appeal.

Issues considered

Whether ready‑to‑serve fruit beverages made from mango pulp or apple concentrate fall within the definition of ‘agricultural produce’ under Section 2(1)(a) of the Bihar Agricultural Produce Market Act, 1960.
Whether the Schedule’s inclusion of raw mango and apple extends to processed drinks derived from them.
Whether the Bihar Act permits the Board to levy market fees on processed items not expressly listed in the Schedule.

Subjects

agricultural producemarket feeschedule of statutesprocessed foodBihar Agricultural Produce Market Actstatutory interpretationfruit drinks

Judgment

A EDWARD.KEVENIBR PVT. LIMITED -~~

v..
BIHAR STATE AGRICULTURAL MARKETiNG BOARD AND ORS.

APRIL 11, 2000

B [V.N. KHARE AND DORAISWAMI RAJU, JJ.]

Bihar Agricultural Produce Market Act, 1960-Section 2( 1)(a)-Agri-
cultural produce-Power to levy fee-If any agricultural produce not specified
in the Schedule-No power with State Agricultural Marketing Board to levy
c fee on such produce-Products like 'Frooti' and 'Appy', ready to serve
beverages, not being specified in the Schedule-Whether covered by the term
agricultural produce, as defined in section 2( 1)(a) of the Act-Held, No.

The respondents Bihar State Agricultural Marketing Board set up
under the Bihar Agricultural Produce Market Act, 1960, treating 'Frooti'
D and 'Appy', products manufactured by the appellant company, as mango
and apple products, issued a notice requiring the appellant to pay market
fee on the products. The appellant challenged the demand of fee by ming a
writ petition claiming that both the drinks are not covered by the schedule
to the Act whereas the respondents submitted that the products being
mango and apple juices are covered under the item 'mango' and 'apple' as
E
specified in the Schedule. However, the Writ Petition was dismissed and
Letters Patent Appeal filed against the Judgment of the Single Judge was
"'
also dismissed. Hence this appeal. The question raised for consideration in
the appeal was, whether the products which are ready to serve beverages
.
F
under the brand name 'Frooti' and 'Appy' fall under the description of
mango and apple, specified in the Schedule.

Allowing the appeal, the Court

HELD : 1.1. A perusal of Section 2(1)(a) of the Bihar Agricultural
Produce Market Act unambiguously shows that the agricultural produce
G which are to be covered by the sweep of the Act necessarily has to be
specified in the Schedule. If any agricultural produce is not specified in the
Schedule, it goes beyond the purview of the Act and the Agricultural
Board has no power to levy fee on such produce. In the Schedule under
caption 'fruits' mango and apple have been specified as agricultural pro-
-;•

duce. (1198-A-B]
H
1194
EDWARD KEVENTER PVT. LTD. v. B.S.A.M.J1. 1195
1.2. 'Frooti' and 'Appy' are 'manufactured out of mango pulp and A
apple concentrate, but after the mango pulp and apple concentrate are
processed and beverages are manufactured, the products become entirely
different items and the fruits mango and apple lose their identity. In
common parlance, these beverages are no longer known as mango and
apple as fruits. In other words, after processing mango pulp and apple
B
concentrate, although the basic character of the mango pulp and apple
concentrate may be present in beverages, but the end products are not
fruits i.e. mango and apple which are specified in the Schedule. Under such
circumstances, the products like 'Frooti' and 'Appy' which are ready to
serve beverages not being specified in the Schedule are not covered by the
term agricultural produce, as defined in Section 2(1)(a) of the Act. There- c
fore, the respondent had no authority to demand any fee from the appel-
lant on marketing the said products. (1198-E-H; 1200-C]

Belsund Sugar Co. Ltd. v. State of Bihar & Ors., (1999] 9 SCC 620,
followed. D

Krishi Utpadan Mandi Samiti & Am: v. Mis. Shankar Industries & Ors.,
[1993] Supp. 3 SCC 361, distinguished.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2503 of 1998. E

From the Judgment and Order dated 20.1.98 of the Patna High Court
in L.P.A. No. 778 of 1997.

Utpal Mazumdar, Raja Chatterjee and Mrs. Sarla Chandra for the
F
Appellant.

Mukul Rohtagi, Irshad Ahmad and Rashid Saeed for the Respondents.

The Judgment of the Court was delivered by
G
V.N. KHARE, J. The appellant herein is a company registered under

- the Indian Companies' Act and has its head office and factory outside the
State of Bihar. The company manufactures fruit drinks and markets them
under the brand name of 'Frooti" and 'Appy' in the State of Bihar through
its agents. The Bihar Legislature has enacted an Act known as 'Bihar H
1196 SUPREME COURT REPORTS [2000) 2 S.C.R.
A Agricultural Produce Market Act, 1960' (hereinafter referred to as the Act).
The object of the Act is to provide better regulation of buying and selling of
agricultural produce and the arrangement of market for agriculturhl produce
in the State of Bihar. Under Section 27 of the Act, the Market Committee set
up under the Act has power to levy and collect market fee on the agricultural
B produce, which are specified in the Schedule and are bought or sold in the
marl; ;t area. It is not disputed that the entire district of Patna is declared as
a market area. Section 2(l)(a) of the Act defmes agricultural produce which
runs as under:

" 'Agricultural produce' means all produce whether processed or
c non-processed, manufactured or not, of Agriculture, Horticultul'f!,
Plantation, animal Husbandry, Forest, Sericulture, Pisciculture, and
includes livestock or poultry as specified in the Schedule ".

Under Section 39 of the Act, the State Government by a notification
D is empowered to add, amend, or cancel any of the items of the agricultural
produce in the Schedule as required by Section 2(l)(a) of the Act. In the
Schedule, as contemplated under Section 2(l)(a), mango and apple are speci-
fied under the caption 'fruits' as items No. I and 13 respectively. The
respondents treating 'Frooti' and 'Appy' as mango and apple products, issued
a notice dated 28.3.89, requiring the appellant to pay market fee on the
E products marketed under the brand name Frooti' and 'Appy', failing which
action under the Act would be taken. Under such circumstances, the appellant
challenged the aforesaid demand by means of a writ petition under Article
226 of the· Constitution. However, the said writ petition was dismissed and
Letters Patent Appeal filed against the judgment of the learned Single Judge
F was also dismissed. It is in this way the appellant is in appeal before us.

The short question that arises for consideration in this case is, whether
the products which are ready to serve beverages under the brand name
'Frooti' and 'Appy' fall under the description of mango and apple, specified
in the Schedule. The contention of the learned counsel for the appellant is
G
that, both the fruit drinks are not covered by the Schedule, whereas the
contention of the respondents' counsel is that the products being the mango
and apple juices are covered under the item 'mango' and 'apple', as specified
in the Schedule. --
H The appellant has described the manufacturing process of beverages
EDWARD KEVENTER PVT. LTD. v. B.S.A.M.B. [V.N. KHARE, J.] 1197
'Frooti' and 'Appy' as under: A

"Frooti and Appy are fruit drinks and manufacturing process of both
are cumbersome. It is alleged that one of the ingredients of Frooti is
mango pulp and not mango which is procured by the appellant
compay as raw material from outside agencies. Similarly, one of the
B
ingredients of Appy is apple concentrate and not apple. The pulp is
first, passed through a filter and stored in beverage tank. Similarly
sugar in proportionate quantity is processed in the form of syrup after
heating it to a certain temperature and then cooling it. Demineralised
water is then added to the sugar syrup to the extent that it attains a
certain 'brix' content. Meanwhile in the beverage tank requisite c
amount of Citric. acid, non alcoholic beverage oase(NA1,3B), other
permitted additives, sodium citrate, vitamin C are added. Thereafter
the sugar syrup and the mixture in the beverage tank are mixed in
proportionate quantity. Thereafter the said mixture is passed through
homogeniser and crushed at a very high pressure to disintegrate all D
the fibres, which are present in the beverage mixture. After homog-
enisation, the mixture is then required to be passed through i>,asteuriser
where it is heated to a temperature between 95 to 100 degrees
centigrade for killing all the bacteria and micro organism, if there be
any. Subsequently, the said mixture is passed through a cooling E
channel for cooling down to the room temperature and passed through
\
pipe lines into the steriliser of the tetra 'brik aseptic packaging
... machine for packing the ~everage in tetra brik packs of 200ml size
which requires high technical expertise. The paper which is used for
the packaging, consists of seven layers of materials which include
aluminum foil, laminated polythene etc. for taking care of asepticity
F
ensuring high safety and required life for the produce. The 200 ml
pack is then packed in the packaging machine and which passes
through the conveyor system on way to the tray packing machine,
where it is accumulated in trays. The said tray containing the fruit
drink pack is then shrink wrapped by means of the shrink wrapper G
machine. After everything is completed, the fruit drink packs are kept
under incubation for a period of seven days for detection of growth
of any microorganism through a microbiological analysis. Sirmiltane-
ously, organoliptic test is also conducted for testing the colour and
taste of the beverage. After all that the 'Frooti' and 'Appy' are ready H
1198 SUPREME COURT REPORTS [2000] 2 S.C.R.
A for being delivered in the market.

A perusal of Section 2(l)(a) unambiguously shows that the agricultural
produce which are to be covered by the sweep of the Act necessarily has to
be specified in the Schedule. If any agricultural produce is. not specified in
the Schedule, it goes beyond the purview of. the Act and respondent has no
B
power to levy fee on such produce. In the Schedule under caption 'fruits'
mango and apple have been specified as agricultural produce. We further find
in the Schedule that under caption 'cereals' wheat is specified at item No. 3,
whereas 'wheat atta' 'sujji' and 'maida' which ai:e the. products of wheat are
separately specified at item Nos. 14, 15 and 16, respectively. This shows that
c the agricultural produce 'wheat' has been treated as ·a Separate agricultural
produce as compared to its own product manufactured out of 'wheat' namely,
'atta', 's1tjji and 'maida'. 'Atta', 'sujji' and 'maida' are basically the agricul-
tural products of 'wheat'. Similarly, the Schedule shows that under the caption
'Animal Husbandry Product', milk excluding liquid milk is specified at item
D No. 19 whereas 'butter', 'ghee' 'cream', 'chena' and 'khoya· which are
manufactured out of milk are separately specified at item Nos. 7,8,16, 17 and
19 respectively. Under caption 'miscellaneous', 'mango pickles' is specified
at item No. 18. 'Mango pickles' is a product of mango, which is a fruit; and
specified in Schedule but 'mango pickles' have been specified separately.
E This shows basic ingredients may be the same but the end product which is
known differently is treated as a separate item. It is true that 'Frooti' and
"Appy" are manufactured out of mango pulp and apple concentrate, but after
the mango pulps and apple concentrate are processed and beverages are
manufactured, the products become entirely different items and the fruits
mango and apple loose their identity. In common parlance, these beverages
F

--
are no longer known as mango and apple as fruits. In other words, after
processing mango pulp and apple concentrate, although the basic character of
the mango pulp and apple concentrate may be present in beverages, but the
end products are not fruits i.e. mango and apple which are specified in the
Schedule. Our views also find support from a Constitution Bench decision of
G this Court in the case of Belsund Sugar Co. Ltd. v. State of Bihar & Ors.,
[1999] 9 SCC 620 wherein it was held that Lactodex and Raptakos which are
baby foods do fall under the description milk, specified in the Schedule of
the Act. Under such circumstances, we find that the products like 'Frooti' and

H
'Appy' which are ready to serve beverages not being specified in the
Schedule are not covered by the term agricuitural produce, as defined in
-..
EDWARD KEVENTER PVT. LTD. v. B.S.A.M.B. [V.N. KHARE, J.] 1199
Section 2(1 )(a) of the Act. A
Learned Additional Solicitor General then cited a decision of this Court
in the case of Krishi Utpadan Mandi Samiti and Another v. Mis. Shankar
Industries and Others, [1993] Supp. 3 SCC 361 II for the proposition that the
meaning of 'agriculture produce' in the definition is not restricted to any
products of agriculture specified in the Schedule, but also include such items B
which come into being in the processed form, and has strongly relied para 12
of the said decision, which reads as under:

"We have considered the arguments advanced on behalf of the parties
and have perused the record. A persual of the definition of agriculture
produce under Section 2 (a) of the Act shows that apart from items c
of produce of agriculture, horticulture, viticulture, piculture, sericulture.
pisciculture, animal husbandry or forest as are specified in the
Schedule, the definition _further 'includes admixture of two or more
such items' and thereafter it further 'includes taking any such item
in processed form' and again for the third time the words used are D
'and further includes gur, rab, shakkar, khandsari and jaggery'. It is
a well settled rule of interpretation that where the legislature uses the
words 'means' and 'includes' such definition is to be given a wider
meaning and is not exhaustive or restricted to the items contained or
included in such definition. Thus the meaning of 'agricultural pro-
duce' in the above definition is not restricted to any products of E
agriculture as specified in the Schedule but also includes such items

- which come into being in processed form and further includes such
items which are called as gur, rab, shakkar, khandsari and jaggery' ."

We are of the view that the said decision is wholly inapplicable to the present
controversy. In the Uttar Pradesh Act, the agricultural produce is defined as
F

-- under:

"Section 2(a) 'agricultural produce' means such items of produce of
agriculture, horticulture, viticulture, apiculture, sericulture,
pisciculture, animal husbandry or forest as are specified in the G
Schedule, and includes admixture of two or more of such items, and
also includes any such item in processed form, and further includes
gur, rab, shakkar. khandsari and jaggery'. "

The controversy in the case of Krishi Utpadan Samiti (supra), was
whether gur-lauta and raskat and rabgolawat and salawat, which are products H
1200 SUPREME COURT REPORTS (2000] 2 S.C.R.
A of molasses, are agricultural produce. This Court while interpreting words
'means' and 'includes' used in the definition, was of the view that these
words have to be given wider meaning and processed item of a good specified
in Schedule would be agricultural produce. In U.P. Act, the defmiti.on of
'agricultural produce' provided that any processed item of a specified good
is an agricultural produce. Such is not the defmiti.on of 'agricultural produce'
B
in the Bihar Act with which we are concerned in the present case.

For the reasons aforestated, we are of the view that the product 'Frooti.~
and 'Appy' not being specified in ·the Schedule, the respondent had no
authority to demand any fee from the appellant on marketing the said
C products. Consequently, the order and judgment of the High Court is set aside
and the appeal is allowed. There shall be no order as to costs.

RA. Appeal allowed.