KRISHI UTPADAN MANDI SAMITI, ALLAHABADversusM/S. BAIDYANATH AYURVED BHAWAN (P) LTD. AND ANR.

                       [2011] 11 S.C.R. 1176


A        KRISHI UTPADAN MANDI SAMIT!, ALLAHABAD
                               v.
      MIS. BAIDYANATH AYURVED BHAWAN (P) LTD. AND
                              ANR.
                (Civil Appeal No. 8963 of 2003)
B                        AUGUST 11, 2011
        [P. SATHASIVAM AND DR. B.S. CHAUHAN, JJ.]

        Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964
C (the Act 1964) - s.9 - Respondent-company purchased
  specified agriculture produce in bulk within the market area
  and used it in manufacturing commercial product - Whether
  respondent-company was exempt from obtaining licence u/
  s. 9(2) of the Act 1964 - Held: Sale of specified agricultural
D produce from any place in the market area is prohibited
  unless the person concerned has a licence - The statute
  provides for an exception of having a licence or from paying
  the market fee if sale of agricultural produce is made to a
  person for his "domestic consumption" in "retail sale" -
E "Domestic consumption" under the Act 1964 has to be given
  a very restricted and limited meaning i.e. for personal use of
  the purchaser, for consumption by the family and not for
  commercial and industrial activities - Purchase of agricultural
  produce in bulk cannot be termed to have been made for
F "domestic consumption"- As respondent-company buys
  specified agricultural produce from the market area which is
  not meant for domestic consumption, the company is required
  to take license uls. 9(2) of the Act 1964 - U. P. Krishi Utpadan
  Mandi Niyamavali, 1965 (the Rules 1965) - Rule 70.

G        Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964
    (the Act 1964) - Object of - Stated.

       Respondent no.1-company manufactures Ayurvedic
    medicines including Chawanprash. For manufacturing
H                               1176
KRISHI UTPADAN MANDI SAMIT!, ALLAHABAD v. BAIDYANATH 1177
             AYURVED BHAWAN (P) LTD.

Chawanprash the said respondent purchases certain           A
agricultural produce e.g. Gur, Amala and Ghee etc. and
uses the same as raw material.

     The appellant served a notice calling upon
respondent no.1 for taking a licence under Section 9 of
                                                           8
the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964
(the Act 1964) as it was purchasing and processing the
aforesaid agricultural produce in its ordinary course of
business. Respondent no. 1 replied that it was not
required to take licence as it was not doing any business C
in' the sale or purchase of agricultural produce. The
appellant issued notice to respondent no.1 for personal
appearance. Respondent no.1 did not comply with the
said notice, whereafter the appellant filed complaint Case
in the court of Special Judicial Magistrate against
respondent no.1, alleging violation of the statutory D
provisions of the Act 1964. Respondent no.1 filed writ
petition before High Court for quashing of the complaint
Case. The High Court aJlowed the writ petition holding
that respondent no.1 had been using the agricultural
produces after buying for inter_nal purpose i.e. for. E
consumption in its factory for manufacturing the end
product and not for further transferringthe agricultural
produces to someone else and thus, respondent no. 1
was not required to take licence under Section 9 of the
~1~.                                                       F
    In the instant appeal the question which arose for
consideration was: Whether the specified agriculture
produce purchased by Respondent No. 1 within the
market area and used in manufacturing a commercial G
product could be held to be for domestic consumption
and thereby would exempt it from obtaining !icence
under Section 9(2) as also from levy and payment of
market fee under Section 17(iii)(b} of the Act 1964.
                                                        . H
           '.
    1178        SUPREME COURT REPORTS        [2011] 11 S.C.R.


A       Allowing the appeal, the Court
       HELD: 1. The Uttar Pradesh Krishi Utpadan Mandi
  Adhiniyam, 1964 (the Act 1964) was enacted with the
  object to regulate the sale and purchase of the specified
  agricultural produce in market area and to curb down the
B unfair trade practices prevalent in the old market system
  within the State of Uttar Pradesh. The object of the Act
  was to reduce the multiple trade charges, levies and
  exactions charged from the producer-seller; to provide
  for the verification of accurate weights and scales and to
C ensure that the producer-seller is not denied his
  legitimate dues. Further to provide amenities to the
  producer-seller in the market and for providing better
  storage facilities, to stop inequalities and unauthorised
  charges and levies from the producer-seller and to make
D adequate arrangements for market intelligence with a
  view to posting the agricultural producer with the latest
  position in respect of the markets dealing with a
  particular agricultural yroduce. [Para 8) [1184-H; 1185-A-
  C]
E      2. Section 2(a) of the Act, 1964 defines "agricultural
  produce". "Trader" is defined under Clause (y) of the
  Section 2. Section 9 of the Act 1964 excludes the
  application of the Act on purchase of agricultural produce
  for "domestic consumption". Section 17 of the Act 1964
F empowers the Committee to issue, renew, suspend or
  cancel a licence, and to levy and collect market fee.
  However, the proviso thereto reads as under: "Provided
  that no market fee or development cess shall be levied or
  collected on the retail sale of any specified agricultural
G produce where such sale is made to the consumer for his
  domestic consumption only." Section 37 of the Act, 1964
  further empowers the Committee to impose penalty on a
  person who contravenes any of the provision contained
  in Section 9 of the Act 1964 or the Rules 1965. The
H cumulative effect of combined reading of the aforesaid
KRISHI UTPADAN MANDI SAMITI, ALLAHABAD v. BAIDYANATH1179
             AYURVED BHAWAN (P) LTD.

statutory provisions comes to the effect that sale of the     A
specified agricultural produce from any place in the
market area is prohibited unless the person concerned
has a licence. The statute provides for an exception of
having a licence or from paying the market fee if the sale
of an agricultural produce is made to a person for his        B
"domestic consumption" in "retail sale". [Paras 9 and 10]
[1185-C-D-F-H; 1186-F-H; 1187-A-F-H]
    3.1. Indisputably, in the instant case the produce
purchased by respondent company are agricultural
produce. In view of the circular dated 18.4.1988, issued      C
by the appellant, a retail trader cannot sell any specified
agricultural produce to any person more than the
prescribed limit therein. The said circular fixed the
maximum quantity of an agricultural produce which the
retail dealer can sell to an individual for domestic          D
consumption. The Circular issued under the Rules 1965
prescribes the limit of sale to an individual. and storage
oLthe agricultural produces, by the retailer. [Para 11]
[f187-H; 1188-A-B]                        -·
     3.2. As the retail trader cannot sell the agricultural E
produce in quantity more than prescribed in the circular
and also such retailer himself cannot purchase and store
more than prescribed in the circular, therefore, the
meanjng of "domestic consumption" has to be
understood in such restricted sense. Thus, meaning F
thereby for personal use i.e. for the use of family
members of the purchaser and not for any. production
activity, otherwise prescribing the limits of purchase and
storage by the retail trader becomes redundant.
P.urchase of agricultural produce in bulk cannot be G
termed to have peen made for "domestic consumption."
The Court cannot travel beyond the pleadings. The
meaning o·; ".domestic trade" and "foreign trade"' had not
been in issue in the instant case. The "domestic
consumption" under the Act 1964 has to be given a very H
    1180    SUPREME COURT REPORTS             [2011] 11 S.C.R.


A   restricted and limited meaning i.e. for personal use of the
    purchaser, i.e. for the consumption by the family and not
    for commercial and industrial activities. [Para 17] (1191 •
    C-F]
         M/s. Kesarwani Zarda Bhandar v. State of Uttar Pradesh
8
    & Ors. AIR 2008 SC 2733: 2008 (8) SCR 801 -
    distinguished.

        Virendra Kumar & Ors. v. Krishi Utpadan Mandi Samiti
    & Ors. (1987) 4 SCC 454 - relied on.
c
        Star Paper Mills Ltd. v. State of U.P. & Ors. (2006) 10
   SCC 201: 2006 (6) Suppl. SCR 380; G. Giridhar Prabhu &
   Ors. v. Agricultural Produce Market Committee, AIR 2001 SC
   1363: 2001 (2) SCR 329; H.P. Marketing Board & Ors. v.
D Shankar Trading Co. Pvt. Ltd. & Ors. (1997) 2 SCC 496:
   1996 (5) Suppl. SCR 515; Vijayalaxmi Cashew Co. & Ors.
   v. Dy. CTO & Anr. (1996) 1 sec 468: 1995 (6) Suppl. SCR
   719; The State of A.P. v. Mis. H. Abdul Bakhi and Bros. AIR
 ;.·1965 SC 531; Krishi Upaj Mandi Sarfiiti & Ors. v. Orient
E Paper & Industries Ltd. (1995) 1 SCC 655: 1994 (5) Suppl.
   SCR 392; Ram Chandra Kai/ash Kumar & Co. & Ors. v. State
   of UP. & Anr. AIR 1980 SC 1124: 1980 SCR 104 - referred
   to.

      4. As the respondent-company buys specified
F agricultural produce from the market area and it is not
  meant for domestic consumption, the company is
  required to take license under Section 9(2) of the Act 1964.
  The impugned judgment passed by the High Court is
  hereby sE>t aside. (Paras 19 & 20] [1192-D·E]
G
                       Case Law Reference:
      2006 (6) Suppl. SCR 380 referred to          Para 6 .
      2001 (2) SCR 329          referred to        Para 12
H    1996 (5) Suppl. SCR 515 referred to           Para 12
KRISHI UTPADAN MANDI SAMITI, ALLAHABAD v. BAIDYANATH1181
             AYURVED BHAWAN (P) LTD.

  1995 (6) Suppl. SCR 719 referred to               Para 12         A
  AIR 1965 SC 531              referred to          Para 13
  1994 (5) Suppl. SCR 392 referred to               Para 14
  1980 SCR 104                 referred to          Para 15
                                                                    B
  (1987) 4 sec 454             relied on            Para16

  2008 (8 ) SCR 801            distinguished        Para 18

    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
8963 of 2003.                                                       C

    From the Judgment & Order dated 14.07.2003 of the High
Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
12372 of 2003.

    Shobha Dikshit, Daleep Dhyani, Suraj Singh, Pradeep             D
Misra for the Appellant.

     Subramonium ~rasad, Lokesh Bhola for the Respondents.

    The Judgment of the Court was delivered by                      E
     DR. B.S. CHAUHAN, J. 1. This appeal has been preferred
against the judgment and order dated 14.7.2003 passed by the
High Court of Judicature at Allahabad in C.M.W.P. No. 12372
of 2003 by which the High Court allowed the writ petition holding
that respondent no.1 was not required to take licence under         F
Section 9 of the Uttar Pradesh Krishi Utpadan Mandi
Adhiniyam, 1964 (hereinafter called 'the Act 1964').

     2. Facts and circumstances giving rise to present appeal
are as under:                                                       G

     A. Respondent no. 1 is a company registered under the
Indian Companies Act, 1956 and manufactures Ayurvedic
medicines including Chawanprash at Naini, Allahabad. For that
purpose, the respondent no. 1 has obtained a licence under          H
    1182    SUPREME COURT REPORTS                 [2011) 11 S.C.R.


A the Drugs and Cosmetics Act, 1940. For manufacturing
  Chawanprash the said respofldent purchases certain
  agricultural produce e.g. Gur, Amala and Ghee etc. and use the
  same as raw material.

         B. The appellants served a notice dated 17.3.1999 calling
8
    upon the respondent po. 1 for taking a licence under section 9
    of the Act 1964 as' it was purchasing and processing the
    aforesaid agricu,ttural produce in its ordinary course of
    business. Respondent no. 1 submitted reply to the said notice
C   on 31.3.1999 pleading that it ¥{as not required to take licence
    as the said respondent was not doing any business in the sale
    or purchase of agricultural produce. The appellant found the
    explanation furnished by respondent no. 1 unsatisfactory and,
    thus, sent another notice dated 2.12.2000 calling upon
    respondent no.1 to take a licence failing which legal
D   proceedings could be initiated against it. Similar notices were
    subsequently sent to respondent no. 1 on 3.12.2000 and
    16.12.2000 but respondent no. 1 did not pay any heed to the
    said notices. The appellant issued notice dated 14.2.2001Ao
    respondent no. 1 for personal appearance and furnishing the
E   explanation as to why the licence under Section 9 of the Act
    1964 was not required. The respondent no. 1 did not comply
    with the said notice, thus the appellant filed complaint Case No.
    480 of 2002 in the court of Special Judicial Magistrate,
    Allahabad against the respondent no. 1, alleging violation of the
F   statutory provisions of the Act 1964.

       C. Being aggrieved, the respondent no. 1 approached the
  High Court by filing Writ Petition No. 12372 of 2003 for .
  quashing of the complaint Case No. 480 of 2002. The High
  Court vide impugned judgment and order dated 14.7.2003
G allowed the writ petition holding that the said respondent had
  been using the agricultural produces after buying for internal
  purpose i.e. for consumption in its factory for manufacturing the
  end product and not for further transferring the agricultural
  produces to someone else and thus, the respondent no. 1 was
H
KRISHI UTPADAN MANDI SAMIT!, ALLAHABAD v. BAIDYANATH1183
   AYURVED BHAWAN (P) LTD. [DR. S.S. CHAUHAN, J.]
not required to take licence under Section 9 of the Act 1964.       A

    Hence, this appeal.

     3. Smt. Shobha Dikshit, learned senior counsel appearing
for the appellant, has submitted that respondent no. 1 is
manufacturing Ayurvedic medicines and purchases Amla, Gur           B
and Ghee etc. from the market area established under the Act
1964, which are admittedly agricultural produce. Therefore,
being a trader, the respondent no. 1 is required to take a
licence so far as the purchase of specified agricultural produce
from the market area is concerned and also pay requisite            C
market fee and any violation of the provisions of the Act 1964
would attract penal consequences i.e. prosecution under
Section 37 of the Act 1964. The use of the aforesaid
agricultural produce for manufacturing of the medicines cannot
be termed as domestic consumption. The word 'domestic'              D
means required for personal use of the family and this term
cannot be interpreted in such wide terms as to include
manufacturing of a different commodity at commercial level in
an industry. The High Court erred in defining the term
'domestic' giving a very wide interpretation i.e. meant for         E
supplying the end product in the country and not for export. Even
otherwise, in view of the fact that an adequate and efficacious
remedy provided under the Act 1964 was available to the
respondent, the High Court ought not to have entertained the
Writ Petition. Thus, the appeal desfi!rves to be allowed.
                                                                    F
     4. Per contra, Shri Subramonium Prasad, learned counsel
appearing for the respondents, has submitted that as per the
statutory provisions of the Act 1964, the respondent no. 1
cannot be held to be the buyer or seller of the agricultural
produce nor it is engaged in processing of agricultural produce,    G
therefore, the provisions of the Act 1964 are not applicable. The
respondent-company purchases agricultural produce only as
raw material for manufacturing of Chawanprash in its factory.
Thus, in such a fact-situation, the respondent no. 1 is not
required to take a licence under Section 9(2) of the Act 1964       H
    1184       SUPREME COURT REPORTS                [2011] 11 S.C.R.


A   read with Rule 70 of the U.P. Krishi Utpadan Mandi Niyamavali,
    1965 (hereinafter called the 'Rules 1965'). The appeal lacks
    merit and is liable to be dismissed.

         5. We have considered the rival submissions made by the
    learned counsel for the parties and perused the record.
8
          6. In Star Paper Mills Ltd. v. State of U.P. & Ors., (2006)
    10 SCC 201, this Court while dealing with the same statutory
    provisions accepted the submissions made on behalf of the
  · State that in view of the fact that adequate and efficacious
C statutory remedy was available to the person aggrieved, the
    High Court ought not to have entertained the writ petition without
    the statutory remedy being exhausted. While deciding the said
    case, this Court placed reliance upon large number of earlier
    judgments of this Court under the Act 1964.
D
          Be that as it may, as the matter has been dealt by the High
    Court on merit and a period of more than 8 years has elapsed,
    it is not desirable to entertain the issue of availability of
    alternative remedy or exhaustion of statutory remedy. The
E matter requires to be considered on merit.

           7. The appeal raises the following substantial question of
    law:

           Whether the specified agriculture produce purchased by
F          the Respondent No. 1·within the market area and used in
           manufacturing a commercial product could be held to be
           for domestic consumption and thereby would exempt it
           from obtaining licence under Section 9(2) as also from levy
           and payment of market fee under Section 17(iii)(b) of the
           Act 1964?
G
        8. The Act 1964 has been enacted with the object to
    regulate the sale and purchase of the specified agricultural
    produce in market area and to curb down the unfair trade
    practices prevalent in the old market system within the State
H
KRISHI UTPADAN MANDI SAMITI, ALLAHABAD v. BAIDYANATH1185
   AYURVED BHAWAN (P} LTD. [DR. B.S. CHAUHAN, J.]

of Uttar Pradesh. The object of the Act has been to reduce the          A
multiple trade charges, levies and exactions charged from the
producer-seller; to provide for the verification of accurate
weights and scales and to ensure that the producer-seller is not
denied his legitimate dues. Further to provide ameni.ties to the
producer-seller in the market and for providing better storage          B
facilities, to stop inequalities and unauthorised charges and
levies from the producer-seller and to· make adequate
arrangements for market intelligence with a view to posting the
agricultural producer with the latest position in respect of the
markets dealing with a particular agricultural produce.                 c
    9. For adjudication of the aforesaid issue, it may be
necessary to refer to some of the statutory provisions of the Act
1964.

    (a} Section 2(a} of the Act, 1964 defines "agricultural             D
produce" as under:

    "Agricultural produce" means such items of produce of
    agriculture, horticulture, viticulture, apiculture, sericfilture,
    piscicultu;e, animal husbandry or forest as are specified           E
    in the 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."

    (b) "Trader" is defined under Clause (y) of the Section 2           F
as under:

    "Trader" means a person who in the ordinary course of
    business is engaged in buying or selling agricultural
    produce as. a principal or as a duly authorised agent of            G
    one or more principals and includ.es a person, engaged
    in processing of agricultural produce."

    (c) Section 9 of the Act 1964 excludes the application of
the Act on purchase of agricultural produce for "domestic
consumption":                                                           H
    1186    SUPREME COURT REPORTS                [2011] 11 S.C.R.


A       "(1) As from the date of declaration of an area as Market
        Area no local body or other person shall, within the Market
        Area, set up, establish or continue, or allow to be set up,
        established or continued, any place for the sale purchase,
        storage, weighment or processing of the specified
B       agricultural produce, except under and in accordance with
        the conditions of a licence granted by the Committee
        concerned, anything to the contrary contained in any other
        law, custom usage or agreement notwithstanding:

        Provided that the provisions of this sub-section shall not
c       apply to a producer in respect of agricultural produce
        produced, reared, caught or processed by him or to any
        person who purchases or stores any agricultural produce
        for his domestic consumption.

D       (2) 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 suct!_.other capacity as may be prescribed, in respect
        of any 'specified agricultural produce except under and in
E       accordance with the conditions of a licence obtained
        therefore from the Committee concerned."

         (d) Section 17 of the Act 1964 empowers the Committee
    to issue, renew, suspend or cancel a licence, and to levy and
    collect market fee. However, the proviso thereto reads as
F   under:

        "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
G       consumer for his domestic consumption only."

                                               (Emphasis added)

       (e) Section 37 of the Act, 1964 further empowers the
    Committee to impose penalty on a person who contravenes
H
KRISHI UTPADAN MANDI SAMITI, ALLAHABAD v. BAIDYANATH1187
   AYURVED BHAWAN (P) LTD. [DR. B.S. CHAUHAN, J.]

any of the provision contained in Section 9 of the Act 1964 or        A
the Rules 1965.

    (f) Rule 70 of the Rules 1965 reads as under:

    "Licensing by the Market Committee (Section 17(i) - (1)
    The Market Committee shall ...... call upon all Local Bodies      B
    and other persons wishing to set up, establish or continue
    any place for the sale, purchase, storage, weighment or
    processing of the specified agricultural produce, in the
    Market Area, and shall likewise call upon all Traders,
    Commission Agents, Brokers, Warehouseman,                         C
    \/Veighmen, Measures, Palledars and other persons
    handling or dealing in specified agricultural produce, in the
    Market Yards, to apply for a licence under sub Section (1)
    of Section 9 or Sub Section (2) of Section 9 of the Act, as
    the case may be, in such form as may be specified by the          D
    Market Committee in its bye-laws, within a period of fifteen
    days from the date of publication of the said notice.

    Provided that the provisions::o6f this sub-rule shall not apply
    to a producer in respect of agricultural produce produced,
                                                                      E
    reared, caught or processed by him and to any person
    who purchases or stores any agricultural produce for his
    domestic consumption."

     10. The cumulative effect of combined reading of the
aforesaid statutory provisions comes to the effect that sale of       F
the specified agricultural produce from any place in the market
area is prohibited unless the person concerned has 51 licence.
The statute provides for an exception of having a licence or
from paying the market fee if the sale of an agricultural produce
is made to a person for his "domestic consumption" in "retail         G
sale".

     11. Indisputably, the aforesaid produce purchased by
respondent company are agricultural produce. In view of the
circular dated 18.4.1988, issued by the appellant, a retail trader    H
    1188    SUPREME COURT REPORTS                      [2011] 11 S.C.R.


A cannot sell any specified agricultural produce to any person
  more than the prescribed limit therein. The said circular fixed
  the maximum quantity of an agricultural produce which the retail
  dealer can sell to an individual for domestic consumption. The
  Circular issued under the Rules 1965 prescribes the limit of
B sale to an individual and storage of the agricultural produces,
  by the retailer~

     Retailer could sell to an               Retailer can purchase
     individual
c              Gur- 20 Kg.                      Gur- 10 Quintals
               Amla- 5 Kg.                      Amla-1 Quintal
               Ghee- 4 Kg.                      Ghee- 50 Kg.


D   12. In G. Giridhar Prabf1iu & Ors. v. Agricultural Produce
    Market Committee, AIR 2001 SC 1363, this Court considered
    similar provisions under the Karnataka Agricultural Produce
    Marketing (Regulation) Act".1966, wherein the Court was
    concerned with the term "trader" contained therein. After
E   considering earlier judgments of this Court, particularly, in H.P.
    Marketing Board & Ors. v. Shankar Trading Co. Pvt. Ltd. &
    Ors., (1997) 2 SCC 496; and Vijayalaxmi Cashew Co. & Ors.
    v. Dy. CTO & Anr., (1996) 1 SCC 468 etc., the Court held
    that transaction by a "trader" includes processing,
F   manufacturing and selling. Therefore, a trader who buys a
    particular agricultural produce, subjects it to selling or
    manufacturing process and brings into existence a different
    agricultural produce would cease to be a trader. The Court
    held as under:
G       " ......... The definition of the\ term "trader" is not a restrictive
        definition. It is not restricte<\l to a person who only buys. If
        a person buys for domestic or personal consumption,
        then he would not be a trader. It is only when a person buys
        for the purpose of selling ~r processing or manufacturing
        that he would become a trader. Thus a person may buy,
                                                             -··




KRISHI UTPADAN MANDI ~ITI. ALLAHABAD v. BAIDYANATH1189
   AYURVED BHAWAN (P) LTD. [DR. B.S. CHAUHAN, J.]

    process or manufacture and then sen. When he processes A
    or manufactures notified agricultural produce which he had ·
    bought, it may change its character and become another
    notified agricultural produce. Thus, by way of examples,
    a person may buy milk and through processes make them
    into butter and/or cheese or a person may buy hides and B
    skins arid by a process make it into leather. However,
    merely because a distinct and separate notified
    agricultural produce comes into existence does not mean
    that the person who bought, processed and sold ceases
    to be a trader. The term "trader" encumbrances (sic         c
    embraces) not just the purchase transaction but the entire
    transaction of purchase, processing, manufacturing and
    selling."

                                         (Emphasis supplied)
                                                                0
    13. In The State of A.P. v. Mis. H. Abdul Bakhi and Bros.,
AIR 1965 SC 531, while dealing with a similar issue, i.e.
defining,;oealer' under the provisions of Andh_r.a Pradesh
General Sales. Tax Act, 1950, held that a person who buys
goods for consumption in a process of manufacturing is also a E
dealer. The Court held that a person who consumes a
commodity purchased by him in the course of his trade, or use
in manufacturing another commodity for sale, could be regarded
as a ·Dealer'.
                                                                 F
    14. In Krishi Upaj Mandi Samiti & Ors. v. Orient Paper &
Industries Ltd., (1995) 1 SCC 655, the similar provisions of
M.P. Krishi Upaj Mandi Adhiniyam, 1973, were considered by
this Court. In the said case, the question arose as to whether
the market fee can be levied on agricultural produce brought G
for sale or sold in the market area in case the mill did not
produce the agricultural produce for sale but produce them for
use as its raw material for manufacturing the end product. That
was a case where the bambo.os were purchased for
manufacturing of paper. The Court held that once the agricultural
                                                                  H
    ·-·-




       1190    SUPREME COURT REPORTS                   [2011) 11 S.C.R.

A     produce is brought in the market area and sold therein, it
      becomes liable to be levied with market fee, as no person can
      be permitted for sale or purchase of the agricultural produce
      within the market area without a licence even a raw material
      for manufacturing some other product. The Court further held
B     as under:

           • ..... It is immaterial for this purpose whether the bamboos
           are purchased by the respondent-Mills for selling them or
           for using them as their raw material in the manufacture
           of paper. The liability of the respondent-Mills to pay the
c          market fees is in no way negated on that account.. .. "

           {Emphasis added)

           15. This case stands squarely covered by the judgment of
o Constitution Bench of this Court in Ram Chandra Kai/ash
      Kumar & Co. & Ors. v. State of U.P. & Anr., AIR 1980 SC
      1124, wherein the provision of the Act 1964, which is involved
      in the instant case was considered and the Court held as under:

           "If paddy is purchased in a particular market area by a rice
E          miller and the same paddy is converted into rice and sold
           then the rice miller will be liable to pay market fee on his
           purchase of paddy from the agriculturist-producer under
           sub-clause (2) of Section 17 (iii) (b). He cannot be asked
           to pay market fee over again under sub-clause (3) in
F          relation to the transaction of rice. Nor will it be open to the
           Market Committee to choose between either of the two n
           the example just given. Market fee has to be levied and
           collected in relation to the transaction of paddy alone."

G      16. In Virendra Kumar & Ors. v. Krishi Utpadan Mandi
  Samiti & Ors., (1987) 4      sec
                                454, this Court considered a case
  where it was claimed that petitioners had been producers in
  respect of agricultural produce (khandsari), and thus they were
  not required to take out any license under Section 9(1) of the
H Act 1964. This court· rejected the argument observing that
KRISHI UTPADAN MANDI SAMITI, ALLAHABAD v. ~DYANATH1191
   AYURVED BHAWAN (P) LTD. [DR. B.S. CHAUHAN, J.)

Section 9(1) would not be applicable to a producer of                 A
agricultural produce only in case the producer processed,
reared, or caught for domestic consumption. In case the
agricultural produce is not for domestic consumption, but for
sale thereafter in the market area, such a producer will not
come within the exception_ of Section 9(1) of the Act 1964.           B

      17. In view of the above, we are of the considered opinion
that as the retail trader cannot sell the agricultural produce in
quantity more than prescribed in the circular and also such
retaile.r himself cannot purchase and store more than                 C
prescribed in the-circular, therefore, the meaning of "domestic
consumption" has to be understood in such restricted sense.
Thus, meaning thereby for personal use i.e. for the use of family
members of the purchaser and not for any production activity,
otherwise prescribing the limits of purchase and storage by the       D
retail trader becomes redundant. The parties could not bring
to the notice of the High Court the relevant provisions of the
Act 1964 which were necessary to be considered to adjudicate
upon the issue in controversy. Purchase of agricultural produce
in bulk cannot be termed to have been made for "domestic
 consumption." The Court cannot travel beyond the pleadings.          E
The meaning of "domestic trade" and "foreign trade", had not
been in issue in the instant case. The "domestic consumption"
 under the Act 1964 has to be given a very restricted and limited
meaning i.e. for personal use of the purchaser, i.e. for the
consumption by the family and not for commercial and industrial       F
 activities.

       18. Shri Subramonium Prasad, learned counsel appearing
 for the respondents, has placed very heavy reliance upon the
 judgment of this Court in Mis. Kesarwani Zarda Bhandar v.            G
 State of Uttar Pradesh & Ors., AIR 2008 SC 2733, wherein it
 has been held that market fee is leviable on specified
  agricultural produce and not on agricultural produce simplicitor.
--Zarda, the e·nd product of the manufacturing process is not a
 specified agricultural produce and it can be subjected to            H
    1192    SUPREME COURT REPORTS                  [2011] 11 S.C.R.


A   payment of market fee provided it is held to be "Tobacco".
    Zafrani Zarda, does not answer the description of specified
    agricultural produce as defined under Section 2(a) of the Act.
    If it is held that Zafrani Zarda is merely a processed form of
    "Tobacco", it could be subjected to levy of market fee, but if it
8   is manufactured it would not.

         The aforesaid judgment has no application in the instant
    case for the reason that issue involved in this case is relating
    to requirement of having a license under Section 9(2) of the Act
c   1964 for the purchase of a specified agricultural produce from
    the market area. The appellants have never asked the
    respondent company to pay market fee on the end product
    Chawanprash.

o        19. In view of the above, we are of the considered opinion
    that as the respondent-company buys specified agricultural
    produce from the market area and it is not meant for domestic
    consumption, the comp~ny is required to take license under
    Section 9(2) of the Act 1964.
E
        20. In such a fact-situation, appeal is allowed. The
    impugned judgment and order dated 14.7.2003 passed by the
    High Court of Allahabad in Writ Petition No.12372 of 2003 is
    hereby set aside. No costs.
F 8.8.8.                                           Appeal allowed.