Holding

Section 23‑A is a valid legislative measure within the State’s competence that prevents unjust enrichment and does not retrospectively validate an illegal levy.

Summary

The Supreme Court examined the constitutional validity of Section 23‑A of the Punjab Agricultural Produce Markets Act, which permits market committees to retain market fees collected in excess of the statutory rate when the burden has been passed on to the next purchaser. The appellants argued that the provision was an attempt to validate a levy declared illegal by the Court in Kewal Krishan Puri v. State of Punjab and that the legislature lacked competence to retain illegally collected fees. The Court held that Section 23‑A merely prevents unjust enrichment of dealers who have already shifted the fee burden to consumers and does not retrospectively validate the illegal levy. It further held that the provision falls within the State’s legislative competence under the Constitution. Consequently, the challenge to Section 23‑A was rejected and the appeals were dismissed with costs.

Issues considered

The constitutional validity of Section 23‑A of the Punjab Agricultural Produce Markets Act.
Whether Section 23‑A amounts to a validation of a levy declared illegal by the Supreme Court.
Whether the State Legislature is competent to enact a provision allowing retention of excess market fees.

Legislation cited

Punjab Agricultural Produce Markets Acts. 13, s. 15, s. 23, s. 23-A, s. 26, s. 28, s. 33, s. 41, s. 6
Punjab Agricultural Produce Markets (Amendment and Validation) Act, 1976s. 6

Subjects

constitutional validitylegislative competencemarket feefee vs taxunjust enrichmentPunjab Agricultural Produce Markets ActSection 23-Aconsumer protectionstate legislation

Judgment

,

1• I

A M/S. AMAR NATH OM PARKASH AND ORS. ETC
v.
STATE OF PUNJAB AND ORS. ETC.
B November 29, 1984

(0. CHINNAPPA REDDY, A.P. SEN AND E.S. VENKATARAMIAH, JJ.]

Punjab Agricultural Produce Markets Act-Excess fee collected from
dealers by Market Committee u/s 23 declared invalid by Court-Sec. 23A enacted
c enabling market committees to retain excess collection in case of dealers who had
passed on the burden of such fee to the next purchaser of such atricultura/ pro· '
duce-Section-Whether within legislative competence-Whether State Legislature
competent to validate levy declared by Court as bad in law.

After the decision of the Supreme Court in Kewal Kri1han Puri
v. State of Punjab AIR 1980 SC 1008 holding that the increase of the
D market fee from Rs. 2 to Rs. 3 perhundred leviable on the agricultural
produce brought or sold by a licensee in the notified market area under
section 23 of the Punjab Agricultural Produce Markets Act was not justified,
some dealers wanted refund of the market fee in excess of Rs. 2/-per
hundred already collected by various market committees. But, the Supreme
Court held in Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC 1
1037 that dealers who had not passed on the liabilities to others and
E others who bad contributed to or paid the excess one parcent were entitled
to make claim for such sums as were due to them from the concerned
market committees a'Jd directed the market committees to pay the same.
The Court further directed that the unclaimed amounts, if anyJ shall be
permitted to be used by the respective market committee for the purposes
falling within the statute as interpreted by this Court in C.A. 1083 of
1977. Thereafter more or less in tune wilh these directions given by the
F Court, the Punjab Agricultaral Produce Markets Act was amended by
the introduction of section 23-A It priovided, inter alia, that nctwith-
standing anything contained in any judgment decree or order of any courtJ
it shall be lawful for a committee to retain the fee levied and collected
by it from a licensee in excess of that leviable under section 23 if the
burden of such fee passed on by the licensee to the next purchaser of the
agricultural produce in respect whereof such fee was levied and coliected.
The appellants challenged before the High Court the constitutional validity
G of section 23·A and the same was upheld.

The appellant contended (I) that Section 23-A was a blatant. attempt
to validate a levy which had been declared invalid by the Supreme Court
and this was not permissible (2) that while the legislature was competent
to enact a law for the levy of fee and matters incidental and ancillary
thereto, it was incompetent to legislate providing for the retention by any
H authority of fee illegally levied.
AMAR. NATH OMPARi:ASH v. PUNlAli

Dismissing the appeals by tho appellants A
.'
HELD : (1) The general scheme of the Pnnjab Agriculture Produce
Markets Act and the Act, as amended and in force in Haryana, are broadly
on the same lines as the Madras and the Andbra Pradesh Acts and similar
enactments in other States. Sections 13, 26 and 28 of the Act covers a
vast range of topics and are so wide as take in a multitude of direct and
indirect ways of achieving the principal object of the Act, namely, the B
better regulation of the purchase, sale, storage and processing of agricultural
produce and the establishment of markets for agricultural produce. Some
' of the purposes for which the funds may be expended may on a first
· impression appear to be municipal or govenmental functions, but a closer
scrutiny will reveal that they are clearly associated with providing better
facilities for marketing of agricultural produce. [81H; 86C-D)
c
; (2) The primary pµrpose of s. 23·A is to prevent the refund of licence
fee by the market committee to dealers, who have already passed on the
burden of such fee to the next pucrhaser of the agricultural produce and
who want to unjustly enrich themselves by obtaining the refund from the
market committee. S. 23·A, in truth recognises the consumer-pubiic who
have borne the ultimate burden as the persons who have really paid the
amount and so entitled to refund of any excess fee collected and there·
D
fore directs the market committee representing their interests to retain the
amount. It has to be in this form because it would, in practice, be a
difficult and futile exercise to attempt to trace the individual purchasers and
consumers who ultimately bore the burden. It is reaJly a law returning
to the public what it has taken from the public, by enabling the Committee
to utilise the amount for the performance of services required of it under
the Act. Instead of allowing middlemen to profiteer by illgotton gaios, E
the legislature bas· devised a procedure to undo the wrong that has bel'o done
by the excessive levy by allowing the Committee• to retain the amount to
be utilised hereafter for the benefit of the very persons for whose benefit
the marketing legislation was enacted. [97D-G)

(3) There is Dt> substance in the argument that sec. 23-A is an attempt
• at validating an illegal levy. Sction 23-A does not permit any recovery of fee F
-1 at the rate of Rs 3 per hundred in respe~t of any sales of agricultural produce
before or after the coming into force of that provision. There is no
attempt at retrospective validation of excess collection nor any attempt at
providing for future collection at the rate of Rs. 3 per hundred. AJI that
section 23-A does is to prevent unjust enrichment by those dealers who
have already passed on the burden of tho fee to the next purchaser and
so reimbursed themselves by also claiming a refund from the market com·
mittees. It gives to the public through the market committee what jt has G
taken from the public and is due to it. There is no justification for
characterising a provision like section. 23-A as one aimed at validating an
illegal levy. It is consistent with the spirit of Kewal Jrrlshan case and th~
Jetter of Shiv Shankar Dal Mills case. [98B·D)

Walati Ram Mahabir Prasad v. State of Punjab, AIR 1983 P & H J20 &
R. S. Joshi v. Ajlt Mills AIR 1977 SC 2279 approved. ff
74 st1PIUlMB COURt REPORTS (1985) 1 S.C,R.
A Shiv Shankar Dal Mills v. State of Haryana AIR 1980 SC 1037
followed.

Orient Paper Mills Limited v. State of Oris.<a [1962] I SCR 549,
R.S. Joshi v. Ajit Mills AIR 1977 SC 2279 relied upon.

Kewal Krishan Puri v. State of Punjab AIR 1980 SC 1008, Srinivasa
D . General Traders State of Andhra Pradesh AIR 1983 S. C. 1246, Kutt/ Keya
v. State of Marfra>'. AIR 1954 Mad 621 Arunachala Nadar, Stare of Madra~,
AIR 1959 SC 300, Inimedisetti RamKrishnaiah Sons v. State of Andhra Pradesh,
AIR 1976 AP \93 Sreenivasa General Taaders v. State of A. P. AIR 1983
SC 1246, Shirur Matt [1954] SCR 1005; Hingir-Rampur Coal Co. Ltd. v. •
State of Orissa, [1962] 2 SCR 537, Corporation of Calcutta v. Liberties
Cinema [1965] 2 SCR 477, H. H. Sudhundra Thirtha Swamiar v. Commissioner,
c [1963] Supp. 2 SCR 302, [{. [{. S;ri Swamlji v. Commissioner, Hindu
Rellgiou~ and Charitable Endowments Department [1980] I SCR 368, Muni-
cipal Corporation Delhi v. Mohd. Yasin [1983] 3. SCC 229, Graving Dock
Co. Ltd. v. Horton, [1951] A. C. 737 at 761, Home Office v. Dorset Yacht
Co., [1970[ 2 All E. R. 294, Herington v. British Railways Board [1972] 2
W. LR. 537, & State of Bombay v. Un/tea Motors (India) Ltd, [19l3] SCR
1069 referred to.
D
A. V Nachane and Ors. v. Union of India, [1982] 1 SCC 2,'6 and
Abdul Quadar & Co. v. Sales Tax Officu, AIR 1964 SC 922; held inappli-
cable.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4500 and
4501 of 1984.
E 1
Appeals by Special leave from the Judgment and Order dated
the 18th January and 25th January, 1984 of the Punjab and Haryana
High Court in Civil Writ Nos. 3300 of 1981 and 4757 of 1982.

H.K. Puri, M.P. Jha and Sanjeev Wa/ia for the Appellants.
F
S.K. Bagga for the Respondent.

L.N. Sinha, A.K. Panda and Ashwani Kumar for the Respon- <-
dent.
The Jndgment of the Court was delivered by

G CHINNAPPA REDDY, .I. The appellants, who are traders engaged
in the purchase and sale of agricultural produce, appear to be a
determined lot. For over a decade, they or those similarly placed
have been litigating and impeding the levy and collection of market
fee by the Market Committees constituted under the Punjab Agri-
cultural Produce Marke!s Act. Sometimes they have been successful,
sometimes they have not. One of the occasions when they appeared
to be successful was when this Court in Kewal Krz~han Puri v. S.tate
\
AMAR NATI! oi.IPARICASH v. PUNJAll (Chlnnappa Reddy, J.) 'JS
,
ofPrmja/Al) declared that the enhancement of the fee from 2 % to A
:t % was illegal. the court while striking down the enhancement or
foe fee laid down no new principles but made certain general obser- _
vations which, we regret to say, have been so misuderstood and
misinterpreted as to lead_ to some confusion and public mischief.
The misunderstanding and confusion have also naturally led to more
\ litigation. _Fortunately, in Srinivasa General Traders v. State of n
Andhra Pradesh(2), this Court has removed much of the misunder-
standing, clear_ed_many of the cobwebs and retrieved the situation.

Before we proceed to consider the question at issue in the
present case, it will be fair to recall the object and purpose of the
Punjab Agricultural Produce Markets Act aud similar enactments c
in force in other States. -Far back in 1953, Rajamannar, CJ and
· T.L. Venkatarama Aiyar, J, in Kut ti Keya v. The State' of Madrak(a),
considered the provisions of the Madras Commercial Crops Markets
Act, 1933(one of the fore-runner of the Punjab Agricultural Produce
Markets Act and other similar enactments elsewhere. The general D
nature oithe legis!atiori was explained .b~ Venkatarama Aiyar, J.,
as follows: "
·"... the Subject-matter of the impugned Act is market-
in~ and legislation on marketing is now a well-recognised
feature ·of all commercbl countries. The need for such a
_ legislation arises whenever societies passed on from the stage E
_of self-s'lpporting economic unit, producing only articles for
· its own consumption to that of a commercial community
·...._ prcducing articles for sale in outside areas for profit.
,_ While_ in the former stage, transactions would be generally
~~--settled directly between the sd!er and the purchaser, the
price being paid and delivery of the commodity taken at F
------the time of the deal, the conditions would be different when-
-_ ·commercial crops are begun to be raised. The ultimate pur-
- chasers of these commodities would generally be persons
outside the area of production, a merchant residing - in
, -'another State and even in a foreign country.
G
-"To bring about a deal botween the local producers
and the outside purchasers, there emerged a class of

(I) AIR 1980 SC 1008.
(2) AIR 1983 S.C, 1246.
01 AIR 1954 Mad. 621. n
'76 sUPREME COURT illlPORti\ f1985) 2 s.c.ll..
A middlemen. Even in well-organised and economically +·
advanced countries like England, it was found that the
agr'.culturist producer had not facilities for disposing of the
goods to his best advantage (vide the statement of Dr.
Addison, Minister for Agriculture, quoted at page 80 of
the Indian Central Banking Enquiry Committee Report,
B Vol. I, Part II). It is these conditions that have led up to
the enactment of marketing laws in all countries having a
large volume of trade in ~omme1cial crops. The object of
this legislation is to protect the p(Oducers of commercial
crops from being exploited by middlemen and profiteers
and to enable them to secure a fair need for their produce.
c
The need for such legislation is even greater in India
as the producers are as a class illiterate and economically
dependent and unstable. This question had engaged the
attention of several committees which had been constituted
D to report on various economic matters. Indian Cotton was a
commodity greatly in demand in England and other coun·
tries and in the Central Provinces and Berar open markets
for cotton were established through legislation. In 1919, the
In jian Cotton Committee observed in their report that the
marketing system afforded great protection to the producers 1
E and that special legislation should be undertaken to establish
such markets in every cotton growing area.

The Royal Commission on Agriculture in India recor·
ded a considerable body of evidence on the state trade in
food crops and it ghowed the need for legislative action for
F safeguarding the fo.terests of the producers (vide report
dated 1928). In 1931 the Indian Central Banking Enquiry ,_
Committee considered in Chapter VII of its report th@
condilions with reference to marketing. It is therein pointed
out that the village producer was seldom able to get a
proper price because he was chronically indebted to the •
G
middlemen who advanced loans on the security of the
crops to be grown and were thus in a position to dictate
their own terms and that the bari:ains were seldom fair to
the seller. '

"It was also observed that for want of facilities fot
ware· housing the produce, the grower was not in a position
ff to wait and sell the commodities for proper price (vido
\
AMAR NATH OMPAll.KASH v. PUNJAB (Chinnappa Reddy, J.) 77

pages 78 and 79). In 1933 the Act now under consideration A
was passed with the object of providing for "the better
regulation of buying and selling of commercial crops". It
must be mentioned that at that time the only products
which had become commercial crops having an internat10nal
market were cotton, groundnuts and tobacco ; and the
' definition of commercia I crops as enacted originally com· B
prised only these three crops."
··············································································
"Various suggestions were ·made for improving the
' market conditions (vide pp. 92 and 63). In the report
of the Planning, Comission published in 1952, Chapter c
XVII, Vol. 1, deals l'tith agricultural marketing and after
referring to the working of the regulated markets in Bombay,
Madras, Hyderabad and Madhya Pradesh, it throws out
several suggestions for future improvements. It must be
added that there has been legislation on lines similar to
those of the Madras Act in several of the States in India.
D
"It will be clear from the above survey of the market-
ing legislation that its object is to enable producers to get
a fair price for their commodities and that it has been
generally adopted in all commercial States. Such laws have
been held in America to be within the Police l>ower of the
State as tending to promote general welfare (Vide- 'Parker E
v. Brown', ((1942) 87 Law ED 315 (D).] Under the Indian
Constitution, they must be upheld under Art. 19 (6) as
reasonable and enacted in the interests of the general
public."
The decision of the Madras High Court in Kutti Kera v. The F
State was affirmed by a Constitution Bench of the Supreme Court
• in Arunachala Nadar v. State of Madras.( 1) Subba Rao, J. referring
to the background of the Act, observed :

"There is a historical background for this Act. Market-
ing legislation is now a well·settled feature of all commercial
countries. The object of such legislation is to protect the
G
producers of commercial crops from being exploited by the
middlemen and profiteers and to enable them to secure a
fair return for their produce. In
Madras State, as in other
78
\ SUPREME coun REPORTS (1985) 2 S.C.R.

A parts of the country, various Commissions and Committees
have been appointed to investigate the prob!em, to su)';est
ways and means of providing a fair deal to the gr<•.',crs
of crops. pa1ticularly commercial crops, and find a m~.·:kt
for selling their produce at proper rates. Several Commit·
tees, in their reportl, considered this question and suggested
. that a satisfactory system of agricultural marketing should
be introduced to achieve the object of helping the agri·
culturists to secure. a proper return for the produce grown
·by them."

The learned Judge then referred to the report of the Royal
c Commission on Agriculture in India, the report of the Expert
Committee appointed by the Government of Madras, and proceeded
to observe:

1
"With a view to provide satisfactory conditions for the
growers of commercill crops to sell their produce on equal
D terms and at reasonable prices, the Act was passed OD 25th
July, 1933. The preamble introduces the Act with the
recital that it is expedient to provide for the better regufa·
tion of the buying and selling of commercial crops · m · the
Presidency of Madras and for that purpose to establish·
E
market and make rules for
their proper administration. The
Act, therefore, was the result of a long exploratory investi· ·
gation by exports in the field, conceived and enacted to
· regulate the buying and selling of commercial crops by .
providing suitable and regulated market by eliminating
middlemen and bringing face to face the produces and the
buyer so that they may meet on equal terms, thereby
eradicating or at .any rate reducing the scope for exploita· ·
tion in dealings. Such a statute cannot be said to create
unreasonable restrictions on the citizens and right to do
businesss unless it is clearly established that the provisions
are too dmstic, unnecessarilyr harsh and over-reach the
scope of the object to achieve which it is enacted."
G
................................. ······· ..... ······· ............. ······· ... .
..............................................................................
" ... Shortly stated, the Act, Rules and the Bye-laws framed
thereunder have a long-term target of providing a net work
of markets where in facilitiel for correct weighment are
!I ensured! stora~e accommodation is provided! and equal
AMAR NATH OMPARKASH v. PUNJAB (Chinnappa Reddy, J.) 79

powers of bargaining emured, so that the growers may
bring their commercial crops to the market and sell them
at reasonable prices. Till such markets ace established,
the said provisions, by imposing licensing restrictions,
enable the buyers and sellers to meet in licensed premises,
ensure correct weighment, make available to them reliable
market information and provide for them a simple machi· B
nery for settlement of disputes. After the markets are built
, or opened by the marketing committees, within a reasonable
I

radius from the market, as prescribed by the Rules, no
licence is issued ; thereafter all growers will have to resort
to the market for vending their goods. The result of 'the
implementation of the Act would be to eliminate, as far c
as possible, the middlemen and to give reasonable facilities
for the growers of commercial crops to secure best prices
for their commodities"

In Immedisetti Ramkrishnaiah Sons v. State of Andhra Pra- D
desh(l), the nature of the duties of a Market Committee was
explained :

"Another unfounded assumption of the learned counsel
was that the activities of the Market Committee and the
facilities provided by it were confined by the Act to the
market area only. The establishment, maintenance and E
improvement of the market is one of the purposes for
which the Market Committee lcund might be expended
under Sec. 15 of the Act. The other Services such as the pro·
vision and maintenance of standard weights and measures,
the collection and dissemination of information regarding
all matters relating to crop statistics and marketing in
F
• respect of notified agricnltural produce, livestock and pro·
ducts of livestock schemes for the extension or cultural
improvement of notiJiad agricultural produce including the
grant of financial aid to scheme for such extension on
improvement within such area undertaken by other bodies
or individuals, propaganda for the improvement of agricul· G
ture, livestock and products of livestock and thrift, the
promotion of grading services, measures for the preser·
vation of the foodgrains, etc. are not services which are
80 SUPREME COURT REPORTS (1985) 2 S.C.R.

confined to the market area only. They area services which
A
are required ~o be performed by the Market Committe nn<' '
which may be rendered throughout the notified market
area without being confined to the market. Further, the'
facilities provided in the market are available for the use
of every grower of agricultural produce and owner of .live-
B stock within the notified market area. It is too much to
expect the Market Committee to provide the same'facilities
as are available in the market area in every nook and ·
corner of the notified market area. It is up to the growers
of agricultural produce and owners of livestock to avail
themselves of the facilities afforded in the market. None can
c complain against the levy of licence fees on the ground that
some may not avail themselves of· the facilities available in
the market."

lmmedisetti Ramakr!shnayya Sons v. State of Andhra Pradesh
{supra) was approved by this Court in Sreenivasa General Traders
D · v. State of A.P.,(1) where it was observed :
"It is obviously in the interests of the producers of
agricultural produce that they can get the best competitive
prices in an open market and that they have not to pay the
middlemen. Sale or purchase of agricultural produce in
such a' market under the supervision and control of the
-market committee is likely to be in ready cash and there-
fore advantageous to the producers and the use of standard
·weights must eliminate the possibility of his being victimiz-
ed by malpractices. Supervision of the operations in the
notified market area can be . more conveniently done if
F
business is carried on in a specified area or areas intended
for that purpose. The Act is an integrated one and it
regulates the buying and selling of notified agricultural
produce, livestock and products of livestock from a centra·
. Jized place." '
G ... ········· ..................................................................
... ... ...... ... ... ... ... ... ... ... ...... ... ... .. .... ... ... ... ...... ... ... ... ...
"The contention that there is no liability cast on the
petitioners to pay market fee on transactions of sale and
purchase of notified agricultural produce, livestock and
H (1) ATR. 19S3 S.C. 1246.
AMARNATI{ OMPARUSll v. PUNJAB (Chinnappa Reddy, J') 81

products of livestock proceeds on a wrongful assumption A
that they can still carry on such trade from their premises
in the notified market area, but outside the market in that
area. In view of the express prohibition contained in sub-
section (6} of Sec. 7, the petitioners cannot carry on such
trade by not resorting to the market proper."
B
..............................................................................
..... ..................... ······ ................................... ' ........ .
'

"There is a fallacy underlying the argument that since
the services are rendered by market committees within'· the
market proper, there is no liability to pay a market fee on c
purchase or sale taking place in the notified market area
but outside the market. The contention does not take
note of the fact that establishment of a regulated market
for the purchase or tale of notified agricultural produce,
livestock or products of livestock is itself a service render-
D
ed to persons engaged in the business of purchase or sale
of such commodities. The duty of a market committee
constituted under sub-section (I) of sec. 4 of the Act does
not end with establishing such number of markets in the
notilled market area under the first part of sub-section (3)
but also extends to the providing of such facilities in the E
market as the Government may from time to·. time by
general or special order specify under the second part of
sub-section (3). In exercise of their powers under sec. 33
of the Act, the State Government have framed the Andhra
Pradesh (Agricultural Produce and Livestock) Markets
Rules, 1969. Chapter V relates to 'Regulation of trading'. F
It would appear that Rules 48 to 53 are the machinrey
provisions for controlling the trade in notified agricultural
produce, livestock and products of livestock in a notified
•
area while Rules 54 to 73 impose restrictions on the carry-
ing on of all such trade in such area. It is clear from the
provisions of 11ec. l S of the Act that the services to be G
rendered by the market committee and facilities to be pro-
vided are not confined to the market proper but extend
throughout the notified area."

The general scheme of the Punjab Agricultural Produce
Marlcets Aqt and the Act, as amendec\ anc;I in force in Haryana, H
82 SUPREME COURT REPORTS (1985] 2 S.C.R·

are broadly on the same lines as the Madras and the Andhra
Pradesh Acts and similar enactments in other States. Thongh
we do not consider it necessary to refer to all the provisions of the
Punjab and H.aryana Acts, we think it may be appropriate to men-
tion here those provisions of the Act which enumerate some of the
B
duties and powers of the Market Committees constituted under the
Acts and the purposes for which the Marketing Development Fund
and the Market Committee Fund may be expended. We may men-
tion that while there is to be a State Agricultural Marketing Board
for .the entire State for performing the functions and duties assigned
c
to the Board by the Act, the State Government may declare speci-
) fied, notified areas as market areas for each of which there shall be
a market committee. The Board is vested with powers of superin-
tendence and control over the committees. Section 13 prescribes
the duties and powers of market committees and is in the following
D terms:

"13-Duties and powers of Committee-(1) It ihall be
· the duty of a Committee-

(a) .to enforce the provisions of this Act and the rules
and bye-laws made thereunder in the notified market area
and, when so required by the Board, to establish a market
. therein providing such facilities for persons visiting it in
connection with the purchase, sale, storage, weighment and
processing of agricultural produce concerned as the Board
may from time to time direct ;
F

(b) to control and regulate the admission to the
market, to determine the conditions for the use of the mar-
ket and to prosecute or confiscate the agricultural produce
belonging to person trading without a valid licence ;
•
G
(c) to bring, prosecute or defend or aid in bringing,
prosecuting or defending any suit, action, preceding,
application or arbitration, on behalf of the Committee or
otherwise when directed by the Boards.

(2) Every person licensed under sec. 10 or sec. 13
and every person exempted nnder sec. 6 from taking out
licence, shall on demand by the Committee or any person
AMARNA TH OMPARKASH v. PUNJAB (Chinnappa Reddy, J.) 83
authorised by it in this behalf furnish such information
A
and returns, as may be necessary for proper enforcement
of Act or the rules and bye-laws made thereunder.

(3) Subject to such rules as the State Government may
make in this behalf, it shall be the duty of a Committee to
issue licences to brokers, weighmen, measurers, surveyors, 8
gddown keepers and other functionaries for carrying on
their occupation in the notified market area in respect of
agricultural produce and to renew, suspend or cancel such
licences.

(4) No broker, weighman, measurer, surveyor, godown c
keeper or other functionary shall, unless duly authorised
by licence, carry on his occupation in a notified market
area in respect of agricultural produce:

Provided that nothing in sub-sections (3) and (4) shall
apply, to a person carrying on the business of warehouse- D
man who is licensed under the Punjab Warehouses Act,
1957 (Punjab Act No.2 of 1958)".

Section 25 provides for the creation of a Marketing Development
Fund out of which the Board has to defray its expenditure. Sections
E
27 Provides for the creation of Market Committee Fund out of
which the Committee has to defray its expenditure. The purpose
for which the Marketing Development Fund may be expended are
specified in sec. 26 as follows :

"26-The Marketing Development Fund shall be utilised out 11
of following purposes :-

(i) Better marketing of agricultural produce ;
•
(ii) Marketing of Agricultural produce on co-operative lines;
(iii) collection and dissemination of market rates and news ;
G
(iv) grading and standardisation of agricultural produce ;
(v) general improvements in the markets or their respective
notified ;
(vi) maintenance of the office of the Board and construction
and repair or its office buildings, rest-house and staff
quarters ; ff
84 SUPREMI! COURT REPORTS [1985] 2 S.C.R. \
r
{vii) giving aid to financially weak Committees in the shape
A ' ·· ofloans and grants ; ·
{viii) payment of salary, leave allowance, gratuity, com-
passionate allowance, compensation for injuries or death
resulting from accidents while on duty, medical aid,
, pension or provident fund to the persons employed by
'B . ,. the Board and leave and pension contribution to Govern-
, ment servants on deputation ;
·{ix)'· iravelling and other allowances to the · employees
of the Board, its members and members· of Advisory
Committees ;
c {x) . propaganda, demonstration and publicity _in favour of
1- ; 1 agricultural improvements ;
{xi) production and betterment of agricultural. produce ;
I
· (xii) -meeting any legal expenses incurred by the Board ;

{xiii) imparting educaiion in marketing or agricultur~ ;
D ! If •
{xiv) .construction of godowns ; -
{xv) 1.oans and advances to· the employees ;
{xvi) expenses incurred in auditing the accounts of the Board;
\ .
{xvii) -witli the previous senction of the State Government,
E ·any other purpose which is calculated to promote the
general interests of the Board and the Committees {or
the national or public interests) ;

Provlded that if the Board decides to give aid of more
F than five thousand rupees to a financially weak Committee
under clause (vii), the prior approval of the State Govern·
ment to such payment shall be obtained.
- (
The purposes for which the Market Committees Fund may be .
expended are specified in sec. 28 as follows :-
G
"28-Purposes for which the· Market Committee Funds
may be expended. Subject to the provisions of section 27
the Market Committee Funds shall be expended for the
· following purposes :-
:1
H (I) AIR 1983 SC 1246
AMARNATli OMPARKASH v. PUNIAB (Chinnappa Reddy, J.) 85

rt
(i) acquisition of sites for the market ;
(ii) maintenance aud improvement of the market ;
(iii) construction and repair of buildings which are neces-
sary for the purposes of the market and for the health,

- ~
convenience and safety of the persons using it ;
(iv) provision and maintenance of the standard weights
B

and measures ;

(v) pay, leave, allowances, gratuities, compassionate
allowances and contributions towards leave allowances,
compensation for injuries and death resulting from
a
accidents while on duty, medical aid, pension or pro-
vident fund of the persons employed by the
Committee;
(vi) payment of interest on loans that may be raised for
purposes of the market and the provisions of a sinking D
fund in respect of such loans ; 'I

(vii) collection and dissemination of information regard-
ing all matters realting to prop statistics and market-
ing in respect of the agricultural produce concerned ;
(viii) providing comforts and facilities, such as the shelter, E.
shade, parking accommodation and water for the per-
sons, draught cattle vehicles and pack animals link
roads I coming or being brought to the market or on
construction and repair of approach roads, culverts,
bridges and other such purposes :
F
(ix) expenses)ncurred in the maintenance of the offices and
in auditing the accounts of the Committees ;
(x) propaganda in favour of agricultural improvements and
thrift ;
(xi) production and betterment of agricultural produce ; G;
. :1
(xii) meeting any legal expenses incurred by the Committee ;
(xiii) imparting education in marketing or agriculture ;
(xiv) payments of travelling and other allowances to the
members and employees of the committ.ee, as pres;,
cribed ; II
86 SUPREME coiJRt REPORTS [198S] 2 s.c.it.

(xv) loans and advances to the employees ;
A
(xvi) expenses of and incidental to elections, and
(xvii) with the previous sanction of the Board, any other pur-
pose which is calculated to promote the general interest
of the Committee or the notified market area (supra)
B (or with the previous sanction of the State Govern-
ment, any purpose calculated to promote the national
or public interest)".

It will be seen that sections 26 and 28 cover a vast range of
topics and are so wide as to take in a multitude of direct and in-
c direct ways of achieving the principal object of the Act, namely, the
better regulation of the purchase, sale, storage and processing of •
agricultural produce and the establishment of markets for agricul-
tural produce. Some of the purposes for which the funds may be
expended may on a first impression appear to be municipal or
govemental functions, but a closer scrutiny will reveal that they are
D clearly associated with providing better facilities for marketing of
agricultural produce. In fact, some of them may be municipal or
governmental functions, but may yet be purpose for which the funds
of the marketing board and marketing committees may be usefully,
lawfully and perhaps necessarily expended. For example, it is of
fundamental importance that there should be a network of roadways
if effective aid is to be given to farmers to transport and market
their produce. Section 23 of the Act enables the Committee, sub-
ject to such rules as may be made by the State Government in that
behalf, to levy on ad volorem basis, fee on the agriculrural produce-
bought or sold by a licensee in the notified market area at a rate not
exceeding the rate mentionej in sec. 23 from time to time for every
F
one. hundred rupees. The fee which was originally 50 paise per 100
was ·raised to Re. l per 100 in 1969, thereafter to Rs. 1.50 in 1973
and to Rs. 2.25 in 1974. Later the fee was raised to Rs. 3 per
100. It was this enhancement of fee to Rs. 3 per 100 that was
challenged by several dealers from Punjab and Haryana in Kewal
G Krishan v. State of Punjab (Supra). A Constitution Bench of this
Court, after referring to the principles laid down in the leading cases
of Shirur Matt,( 11 Hingir-Rampur Coal Co. Ltd. v. State of Orissa,('J
Corporation oJ,Calcutta v. Liberties Cinema etc. thought that in all the

(I) (1954) SCR 1005
H (2) [1962] 2 SCR 537
AMARNATH OMPARKASH v. PUNJAB (Chinnoppa Reddy, J.) 87.
/

.' circumstances of the case, an increase of the license fee beyond Rs 2
per 100 was not justified. The court noticed that each of the market
A
Committees had huge surpluses and had made large donations to edu-
cational institutions and expended funds for other purposes wholly
unconnected with the purpose stipulated by the Act. It appeared
that the increase from Rs. 2 to Rs. 3 in the year 1978 was made
largely to compensate the market committees for having contributed B
the huge sum of Rs. One crore to the Medical College, Faridkot.
Having regard to the huge surpluses and unauthorised items of
expenditures, the court came to the conclusion, on the facts of the
case, that the in crease of fee above Rs. 2 per 100 was not justified.
In the course of the discussion, Untwalia, J. who spoke for the Court
1 made certain observations which when turn out of context appear c
to give rise to some misunderstanding. For example, at page 1016 of
AIR, he said :

"But generally and broadly speaking, it must be shown
with some amount of certainty, reasonableness or preponde-
D
rance of probability that quite a substantial portion of the
amount of the fee realised is spent for the special benefit of
its payers''.
This sentence should not be read in isolation. It must be read
in the context of the facts of the case. In fact, in the very sentence,
E
preceding the one quoted, it was said :

"It may be so intimately connected or interwoven with
the services rendered to others that it may not be possible
to do a complete dichotomy and analysis as to what
amount of special service was rendered to the payers of the F
fee and what proportion went to others".

That was why Sen J. in Sreenivasa General Traders v. State of
Andhra Pradesh (Supra) took immense pains to explain the observa-
• tions of Untwalia J. and place them in their proper setting. He
observed, very rightly indeed, G

"In the ultimate analysis, the Ccurt held in Kewal
Krishan Puri's case, supra that so long as the concept of fee
remains distinct and limited in contrast to tax, such expen-
diture of the amounts recovered by the levy of a market fee
cannot be countenanced in law. A case is an authority··· 1
88 )lUPllilME COuRT llEPollrs [1985] 2 s.c.tt.

only for what it actually decides and not for what may
A logically follow from it. Every judgment must be read as
applicable to the particular facts proved, or assumed to be
proved, since the generality of the expressions which may be
founded there are not intended to be expositions of the
whole Jaw but governed or qualified by the particular facts
B of the case in which such expressions are to be found. It
would appear that there are certain observations to be
found in the judgment in Kewat Krishan Puri's case, supra.
which were really not necessary for purposes of the decision
and go beyond the occasion and therefore they have no bin-
ding authority though they may have merely persuasive
0 value. The observation made therein seeking to quantify
the extent of correlation between the amount of fee collec-
ted and the cost of rendition of service, namely :
"At least a good and substantial portion of the amount
collected on account of fees, may be in the Mighbourhood
D of two-thirds or three-fourths must be shown with reason-
able certainty as being spent for rendering serv!ces in the
market to the payer of fee". appears to be an obiter''.

Obviously Untwalia, J. did not purport to lay down any new
principles and could not have intended to depart from the series of
E earlier case of thi> Court. For instance, in H. H. Sudhtmdra
Thirtha Swamiar v. Commissioner(') the Court had said,

" ......... nor is it a postulate of a fee that it must have
direct relation to the actual services rendered by the autho-
rity to individual who obtains the benefit of the service.
F
lf with a view to provide a specific service, levy is imposed
· by Jaw and expenses for maintaining the service are met
out of the amounts collected there being a reasonable rela-
tion between the levy and the expenses incurred for rende-
ring the service, the levy would be in the nature of a fee
G' and not in the nature of a tax ......... b\Jt a levy will not be
regarded as a tax merely because of the absence of unifor-
. mity in its incidence, or because of compulsion in the collec-
tion thereof, nor because some of the contributories do not
obtain the same degree of service as others may".

(I) [1!163] Supp 2 "'CR 302 ..
H
I
\
'AMAl\NATH OMPARKASH •• PllNJAB (Chinnappa Reddy, J.) 89
In Hingir-Rampur Coal Co. Ltd. v. State of Orissa (Supra) the
A
Court bad said, :

"If specific services ,are rendered to a specific area or
to a specific class of persons or trade or business in any
local area, and as a condition precedent for the said services
or in return for them cess is levied against the said area or B.
the said class of person; or trade or business, the cess is
distinguishable from a tax and is described as a fee"' •
......... ........................ ...... ... ············ ......... ········· ......
"It is true that when the Legislature levies a fee for
rendering specific services to a specified area or to a speci- \
lied class of persons or trade or business, in the last analysis a
such services may indirectly form part of services to the
public in general. If the special service rendered is distin-
ctly and primarily meant for the benefit of a specified class
or area the fact that in benefiting the specified class or area
the State as a while may ultimately and indirectly be bene- D
fited would not detract from the character of the levy as a
fee. Where, however, the specific service is indistinJ:Uish-
able from public service, and in essence is directly a part
of it, different considerations may arise. In such a case, it
is necessary to enquire what is the primary object of the
levy and the essential purpose which it is intended to achi- E
eve. Its primary object and ;the essential purpose must be
distinguished from its ultimate or incidental results or conse-
quences. That is the true test in determining the character
of the levy,
Again in H.H. Shri Swamiji v. Commissioner, Hindu Religious F
and Chariiable Endowmmts Department (1) Chandracud C.J. said :
' .
"For the purpose of finding whether there is a
correlationsbip between the . services rendered to the fee
payers and the fees charged to them, it is necessary to know
the cost incurred for orgainsing and rendering the services.
But matters involving consideration of such a correlation-
• sbip are, not required to be proved by a mathematical
formula. ' What bas to be seen is whether there is a fair
correspondence between the fee charged and the cost of

(I) [1980] 1 S.C.R. 368. H
90 . SUPREME COURT REPORTS [1985] 2 S.C.R •

A services rendered to the fee payers as a class. The furth(r
and better particulars asked for by the appellants uc~q· ~_,
Order 6, Rule 5 of the Civil Procedure Code, would have
driven the Court, had the particulars been· supplied, to a
laborious and fruitless inquiry into minute details of the
Commissioner's departmental budget. A vivisection of
B .the amounts spent py the Commissioner's establishment at
different places and for various purposes and the ad hoc
allocation by the ·Court of different amounts to different
heads would at best have been speculative. It would have
been no more possible for the High Court if the informa·
tion were before it, than it would be possible for us if the
/ c information were before us, to find out what part of the
expenses incurred by the Commissioner's establishment at
various places and what part of the salary of his staff at
those places should be allocated to the functions discharged
by the establishment in connection with the services
q rendered to the appellants. We do not therefore think
D that any substantial prejudice has been caused to the
appellants by reasons of the non-supply of the information
sought by them."
II , : '

On a consideration , of · these cases Sen J. concluded as
follows in Sreenivasa General Traders v. State of Andhra Pradesh
.E
(Supra) : '

"The traditional. view that there must be actual quid
pro quo for a fee has undergone a sea change in the
subsequent decisions. The distinction between a tax and
F' a fee lies primarily in the fact that a tax is levied as part of
"a cominon burden, while a fee is for payment of a specific
benefit or privilege although the special advantage is
secondary to the primary motive of regulation in public
interest .... ::· .•..•...•.•..... ~ .............•...............................
······ ........................... ········· ....................................
G ..•.•....... ···•·· ...........••.•...•••....••.••..•..•.....•......•..••••..•••
In determining whether a levy is a fee, the true test must
· be whether its primary and ·essential purpose is to render
specific services to a specified area or class; it may be of no
·consequence that the State may ultimately and. indirectly
., be benefited by it. The power of any legislature to levy a
Ii fee is conditioned by the fact that it must be "by and latge"
AMAR.NATH OMPARKASli v. PUNJAB (Chinnappa Reddy, J.) 91
a quid pro quo for the services rendered. However, correla-
T \
tionship between the levy and the services rendered
expected is one of general character and not of mathema-
tical exactitude. All that is necessary is that there should
be a "reasonable relationship" between the levy of the fee
and the services rendered."
Referring to the catena of these cases it was observed by this
Court in Municipal Corporation Delhi v. Mohd. Yasin (1) :
"What do we learn from these precedents? We learn
that there is no generic difference between a tax ond a
fee, though broadly a tax is a compulsory exaction as part

I
of a common burden, without promise of any special advan- c
tages to classes of taxpayers whereas a fee is a payment for
services rendered, benefit provided or privilege conferred.
Compulsion is not the hallmark of the distinction between
a tax and a fee. That the money collected does not go into
a separate fund but goes into the consolidated fund does
not also necessarily make a levy a tax. Though a fee must
have relation to the services ren<:lered, or the advantages
conferred, such relation need not be direct, a mere causal
relation may be enough. Further, neither the incidence of '·
the fee nor the service rendered need be uniform. That
others besides those paying the fees are also benefited does
not detract from the character of the fee. In fact the £
special benefit or advantage to the payers of the fees may
even be secondary as compared with primary motive of
regulation in the public interest. Nor is the court to assnme
the role of a cost accountant. It is neither necessary nor
expedient to weigh too, meticulously the cost of his service
rendced etc. not against the amount of fees collected so as to F
evenly balance the two. A broad correlationship is all that
is necessary. Quid pro quo the strict sense is not the one and
only true index of.a fee; nor is it necessarily absent in a
tax."
Earlier on a question of interpretation it was pointed out : ~
"A word on interpretation. Vicissitudes of time and
necessitudes of history contribute to changes of philosophi-
cal attitudes, concepts, ideas and ideals and, with them, 1
the meanings of words and phrases an,d the language itself.
Tl;ie phjlosophy and. q1e language .of th~ Jaw are no eXC!!P·.
(I) [1983) 3 S.C.C. 229.
92 SUPREME COURT kEPORTS . [1985] 2 S.C.R.

A tions. Words and phrases take colour and character from
· the context and the times and speak differently in diffcrc .·
contexts and times. And, it i~ worthwhile remembering
that words and phrases have not only a meaning but also a
content, a living content. which breathes, and so, expands
and contracts. This is particularly so where the words
B and phrases properly belong to other disciplines. 'Tax'
. and 'fee' are such words. They properly belong to the
world of Public Finance but since the Constitution and the
. laws are also concerned with Public Finance, these words
. have often been adjudicated upon in an effort to discover
content."
/ c
In Sreenivasa General Traders v.' State of Andhra Pradesh ·
(supra), Sen, J. had also pointed out that there was no generic
difference between a tax and a fee, that both were compulsory
exactions/of money by public authorities and that a levy in the
D nature of a fee did not cease to be of that character merely because
there was an element of compulsion or coerciveness present in it
nor was it a postulate of a fee that it must have direct relation to
the actual service rendered by the authority to each individual,
who obtains the benefit of the service. He also drew attention to
the increasing realization ·that the element of quid pro quo in the
E
'trict sense was not always sine quo non for fee. Nor was the
element of quid pro quo necessarily absent in every tax. He further
pointed out that an insistence upon a good and substantial portion
of an amount collected on account· of fee, say in the neigh-
bourhood of two-thirds or three-forths, being shown with reasonable
F certainty as having been spent for rendering services in the market
to the payer of fee, could not be a rule of universal application, and
that it' was a rule which had necessarily to be confined to the
special facts of Kewal Krishan Puri' s case. Otherwise, it would
affect the validity of marketing legislations undertaken throughout
the country during the past half a century. We agree with the view
G of Sen, J. that the observations extracted by him from Kewal
Krishan Puri's case were not really necessary for that case and
we also agree with the clarification of the observation made by
Sen, J.

There is one other significant sentence in Sreenivasa
General Traders v. Stttte of A.P. (supra) with which we must
H
AMARNATH OMPA!tU.SH v. FUN1AB (Chinnappa Reddy, J.) 93
express our agreement. It was said, ''with utmost respect, these .
observations of the learned judge are not to be read as !Euclid's
theorems, nor as provisions of the statute. These observations must
be read in th~ context in which they appear." We consider it proper
to say, as we have already said in other cases, that jud:ments of
courts are not to be construed as statutes. To interpret words, phrases
and provisions of a statute, it may become necessary for jud~es
to .embark into lengthy discussions but the discussion is meant to B
explain and not to define. Judges interpret statutes, they do not
interpret judgments. They interpret words of statutes; their words
are not to be interpreted as statutes. In London GravinK Dock Co.
Ltd. v. Horton (1) Lord Mac Dermot observed,
c
"The. matter cannot, of course, be settled merely by
. treating the ip sissime vuba of Willes, J.', as though they
were part of an Act of Parliament and applying the rules
of interpretation appropriate thereto. This is not to
detract from the great weight to be given to the language '
actually used by that most distinguished judge." D

In Home Office v. Dorset Yacht Co.(•) Lord Reid said, "Lord
~!kin's speech ............ is not to be treated as if it was a statutory
definition. It will require qualification in new circumstances."
Mcgarry, J. in 1971 (1) W.L.R. 1062 observed, "One must not
.

of course, construe even a reserved judgment of even Russell L. J.
.. E

as if it were an Act of Parliament." And, in Herington v. British
Railways Board."(') Lord Morris said :

"There is always peril in treating the words of a
speech or judgment as though they arc words in a legislative F
enactment, and it is to be remembered that judicial
utterances arc made in the setting of the facts of a particular
case.

There are a few other observations in Kewal Krishan Puri's G
case to which apply with the same force all that we have said above.
It is needless to repeat the of quoted truism of Lord Halsbury that

(I) [1951] A.C. 137 at 761
(I) [1970] 2 All. E.R. 294
(2) (1972] 2 W.I,.R,. ~37
ff
9.\ SUPREME COURT REPORTS (1985] 2 S.C.R,

A a case is only an authority for what it actually decides and not for
what may seem to follow logically from it. We have said so muc!i
about Kewal Krishan Puri's case because the learned counsel placed
implicit reliance upon it though as we shall presently show, wed<>
not see how a mere declaration that the levy and collection oi
fee in excess of Rs.2 per hundred automatically vest in the dealer
B the right to get at the excess amount when io fact he did not bear
the burden of it and when the moral and equitable owner.of it was
the consumer-public to :-vhom the burden bad been passed on.
Soon after judgment was pronounced in Kewal Krishan' s case,
. the question arose as to what was to be done with the fee in excess
/ c of Rs.2 per 100 collected by various market "committees. ·Were
the Market Committees to be permitted to retain the excess
amounts ? Were the excess amounts to be refunded to the traders
from whom the amounts had been collected notwithstanding the
fact that the traders themselves had already passed on the burden
to the next purchasers and. consumers 7 In other· words, were the
traders to be allowed to get a refund from 'the market committees
and unjustly enrich themselves 7 Were they to be allowed to
profiteer by ill-gotten gains 7 Or were the next purchasers or
consumers to be· traced and the amounts refunded to them, which
of course, would well-nigh be an' impossible task in ·practice 7
ir it was not possible to trace the individual consumers who. had
borne the burden, vias it not right thaHhe ' public authority who
levied and collected it should be allowed to hold and retain the
amount as if it were ·it> trust for their ~benefit ·to be used for the
purposes for which the statute : desired the !ev'y of the fee 7 · Some
dealers, however, wanted the monies to be refuned to them and
F moved this Court. Instead, in the circumstances, the court in Shiv
Shankar Dal Mills v. State of Haryana."(1) gave the following
directions : · ·
"!. Subject to the directions given below, all the sums
collected by the various market committees who are res-
pondents in these various writ petitions or appeals shall be
G
liable to be paid into the High Court of Punjab and •
Haryana within one week of intimation by the Registrar of
the amount so liable to be paid into the court.
-'!!
"II. A statement of the amounts collected in excess ·

H Cl) AIR 1980 SC 1037 '
AMARNATH OMPARl:ASH v. PUNJAB ( Chinnappa Reddy, J.) 95

(I %l shall be put into this Court by the de~lers with c?pies
to the various market committees aforesaid and furmsbed
fo the writ petitioners and appellant within 10 days from to-
day, and if there is any difference between the parties it
shall be brought to the notice of this Court in the shape of
miscellaneous petitions. On final orders, if any passed
thereon by this Court, those amounts, so as determined,
' shall be treated as final.

III. The Registrar of the High Court shall issue public
notice and otherwise give due publicity to the fact that dea-
lers who have not passed on the liabilities to others and others
who have contributed to or paid the excess one precent
covered by these writ petitions and appeals may make claims
for such sums as are due to them from him within one
month or such other period as he may fix. The Registrar
shall scrutinise such claims and ascertain the sums so pro-
ved. He will thereupon demand of all the market commit- ii
D
tees concerned payment into the Registry of such sums in .,
regard to which proof of claims have been made. On such
intimation, the market committees shall pay into the Regis-
try the amounts so demanded by the Registrar within one
week of such intimation. The amount shall be paid toge-
ther with interest at 10 per cent per annum from today up E
to the date of deposit with the Registrar.

IV. It shall be open to the Registrar to make such
periodical claims on appropriate proof by claimants on th=
line stated above.
F
V. He will devise the mechanics of processing the
claims as best as he may and, in the event of dispute, may
refer to the High Court for its decision of such disputes, if
he thinks it necessary. Otherwise, he may dispose of the
objections finally.
G

VI. If any further directions regarding the mechanics
of the claim of refund or otherwise are found necessary
from this Court, the High Court will report about such .,
matter to this Court and orders made thereon will bind the
parties. u''
....

96 SUPRl!MB COURT R!PORTS (198,] 2 S.C.R.

VII. If parties eligible for repayment of amounts do
not claim within one year from today the Registrar will not
entertain any further claims. It will be open to such parties
to pursue their remedies for recovery for any sums that
may be due to them.

B VIII. Each State Marketing Board will deposit within
10 days from today a sum of Rs. 5.000/- before the Regis-
trar for the preliminary expenses of publicity and other
incidentals for the implementation of the directions given
above. Any unexpended amount, at the end of Ohe year,
will be repaid to the respective State Marketing Board.

IX. We further direct that the unclaimed amount, if
any, shall be permitted to be used by the respective Marke-
ting Committees for the purpose falling within the statute
a1 interpreted by this Court in the C. A. No. 1083/77". ·

D Thereafter, more or less in tune with the directions given by
the Court in Shiv Shankar Dal Mil/J case, the Punjab Agricultural
Produce Markets Act was amended. by the introduction of sec. 23-A
providing as follows :

, "In the Principle Act, after Section 23, the following section
shall be inserted namely :-

'23-A (1) Notwithstanding anything contained in any judgment
decree or order of any Court, it shall be lawful for a
Committee to retain the fee levied and collected by it
from a licensee in excess of that leviable under Section
23, if the burden of such fee was passed on by the licen·
see to the next purchaser of the Agricultural Produce
in respect whereof such fee was levied and collected.
(2) No suit or other proceedings shall be instituted, main·
tained or continued in any court for the refund of
G whole or any part of the fee retained by a Commitee
under sub-section (1) and no court shall enforce any
decree or order directing the refund of whole or any
part of such fee.
(3) If any di1pute arises as to the refund of any fee retai-
H 11ed by a Committee by virtue of sub-sectio11 (1) a11d
AMARNATH OMPARKASH v. PUNJAB (Chinnappa Reddy, J.) 97
••
the question is whether the burden of such fee was pas-
sed on by the licensee to the next purchaser of the
concerned agricultural produce, it shall be presumed
unless proved otherwise that such burden was so pas-
sed on by the licensee.
(4). If any amount offee retainable by a Committee under
1 sub-section (I) has been refunded to any licensee, the B
same shaUbe recoverable by the Committee in the man-
ner indicated in sub-section (2) of Section 41.

(5). The provisions of this section shall not effect the opera-
I tion of Section 6 of the P~njab Agricultural Produce
Markets (Amendment and Validation) Act, 1976". c
The primary purpose of sec. 23-AOis seen on the face of it ; it
prevents the refund of license fee by the market committee to dea-
lers, who have already passed on the burden of such fee to the next
purchaser of the agricultural produce and who went to unjustly
enrich themselves by obtaining the refund from the market commi- D
ttee. S. 23-A, in truth, recognises the Consumer public who have
borne the ultimate burden as the persons who have really paid the
amount and so entitled to refund of any excess fee collected and
therefore directs the market committee representing their interests
to retain the amount. It has to be in this form because it would, in
E
practice, be a difficult and futile exercise to attempt to trace the in-
dividual purchasers and consumers who ultimately bore the burden.
It is really a law returning to the public what it has taken from the
public, by enabling the Committee to utilise the amount for the per-
formance of services required of it under the Act. Instead of allo-
wing middlemen to profiteer by illgotten gains, the legislature has F
devised a procedure to undo the wrong item that has been done by
the excessive levy by allowing the Committees to retain the amount
to be utilised here after for the benefit of the very persons for whose
• benefit the Marketing legislation was enacted. The constitutional
validity of sec. 23A was questioned before the High Court of Punjab
and Haryana, but was upheld in Walati Ram Mahabir Prasad v. G
State of Punjab('). The correctness of this decision is questioned be-
fore us in these two civil appeals.

The submission of the learned counsel was that sec. 23-A was

(!). AIR 1984 P&H 120 ff
I

98 SIJPllllMB COURT RBPORTS (1985) 2 s.c.R.

a blatant attempt to validate a levy which had been declared inva-
lid by this court and this, according to the learned counsel, wa~ not
permissible. . We entirely disagree with the submission that sec.
23-A is an attempt at validating on illegal levy. Section 23-A does
not permit any recovery of fee @Rs. 3 per 100 in respect of any
sales of agricultural produce before or after the coming into force
B of that provi~ion. There is no attempt at retrospective validation t
of excess collection nor any attempt at providing for future collec-
tion at the rate of Rs. 3 per 100. All that sec. 23-A does is to
prevent unjust enrichment by those dealers who have already passed
on the burden of the fee to the next purchaser and so reimbursed
G
themselves by also claiming a refund from the Market Committees.
We have already explained the trve purpose of S 23-A. It gives to
the public through the mar!et committee what it has taken from the
public and is due to it. It renders into Caesar what is Caesar's.
We do not see any justification for characterising a provision like
Sec. 23-A as one aimed at validating an illegal levy. The decision
D of this Court in A. V. Nachane and Ors. v. Union of Jndia( 1) on which
the counsel placed· reliance has no application whatsoever. Section
23-A in our view, is consistent with the spirit of Kewal Krishan and
the letter of Shiva Shankar Dal Mills.

E Another submission of the learned counsel was that while the
legislature was competent to enact a law for the levy ofa fee and
matters incidental and ancillary thereto it was incompetent to legis-
late providing for the retention by any authority of fee illegally
levied. For this purpose, reliance was placed by the learned coun-
sel on the decision of this Court in Abdul Quadar & Co. v. Sales tax
Officerc•>. We are afraid that this decision also is of no avail to the
F appellants.

In Orient Paper Mills Limited v. State of Orissa(8 ), a dealer had
been assessed to tax and had paid the tax. Later he applied for re- •
fund of tax which was held to be not exigible by this Court in State
of Bombay v. · United Motor3 (India) Ltd<') . When the appeals
G
were pending in this Court, the Orissa Legislature intervened in the
matter and introduced sec. 14-A in the Principal Act providing that

OJ 119s211 sec 206.
(2) AIR 1964 SC 922.
(3) [196211 SCR 549
ff (4) (1953! SCR 1069.
AMARNATH OMPARKAS!I v. PUNJAB (Chinnappa Reddy, J.) 99

• c·i'cwd could be claimed only by a person from whom the dealer.has A
. ,, otu::.lly realised the amount as tax. The vires of the provision was
cilallanged in this Court, but it was upheld on the ground that it
came within the incidental power arising out of Entry 54 of List II.
The matter was ,considered to be a question of refund and it was
held that it could not be doubted that refund of the tax collected
was always a matter covered by incidental and ancillary powers rela· B
ting to the levy and collection of tax: The Constitution Bench
held,

"By item 54 of List II of Schedule 1 to the Constit~·
tion, the ·State Legislature was indisputably competent tci
legislate with respect to taxes on sale or purchase or'
c
papersand paper-boards. The power to· ·legislate with
respect to a . tax comprehends the power · to impose
the tax, to prescribe machinery for collecting .the tax,
to designate the offers by whom the lia~ility may be
enforced and to prescribe the authority, obligations and · ·o
indemnity of those officers. The diverse heads of legislation
in the Schedule to the Constitutio~ demarcate the periphery
of legislative competence and include all matters which are.
ancillary or subsidiary to the primary head. Tue Legisla·
ture or the Orissa State was therefore competent to exercise
power in respect of the subsidiary or anciitai-y matter of' E
granting refund of tax improperly: or. illegally collected;
and the competence of the legislature in.this behalns not .
. canvassed by counsel for the assessees. If compet~hce to
legislate for granting refund of sales-taX: i.mproperly .collec-
ted be granted, is there any reason to ,exclude the power ,to
declare that refund shall be claimable only by· the person
from whom the dealer has actually realised the amounts by ·
way of sales-tax or otherwise 1 We see none. The question
is one of legislative competence and ,there is no restriction
either express or implied imposed ·upon the power· of the
Legislature in that behalf."
G

The present c~se is a case akin to Orient Paper Mills case
(supra). Section 23-A, as we have seen, disables a dealer fron:i
getting a refund of fee paid by him, the , burden of which
he has already passed on to the next purchaser.. As we said
all that sec. 23-A does is to prevent unjust· enrichment ·by means
• , · · r t / I " · ,! ; • '· H
100 SUPREME COURT REPORTS [1985) 2 s.c.R.

A of a refund to which the person claiming it has no moral or
equitable entitlement.

Abdul Quader & Co. v. Sales Tax Officer (supra) on which
considerable reliance was placed by the learned counsel for the
appellants was an entirely different case. The dealer in that case
B had collected sales tax from the purchasers in connection with the
sales made by him on the basis that the incidence of the tax Jay on •
the sellers and assured the purchaser that after paying the tax to
the appellant, there would be no further liability on them. After
realising the tax, however, the appellant did not pay the amount
realised to the Government, but kept it in a suspense account;
c When the Sales Tax Department discovered this and called upon
the appellant to pay the amount realised, he refused to do so. On
behalf of the Government, reliance was placed upon sec. 11 (2) of
the Hyderabad General Sales Tax Act which laid down that any
amount collected by way of tax otherwise than in accordance with
D the provisions of the Act shall be paid over to the Government and
in default of such payment, the said amount shall be recovered
from such person as if it were arrears of land revenue. The Court
held that it was clear that the words "otherwise than in accordance
with the provisions of this Act", included amounts which may have
E been collected by way of tax though not exigible as tax under the
Act. The Court then held that the State Legislature was incompe-
tent to enact a provision like sec. 11(2) as it enabled the Govern-
ment to recover an illegal levy and it could not possibly be said to
be an incidental or ancillary power capable of exercise in aid of
the main topic oflegislation, which was, a tax on the sale or pur-
chase of goods. The decision in Orient Paper Mills case was dis-
tinguished on the ground that it dealt with a case of refund and not
the collection of tax, not really due as a tax under the law. In
F
their precise words, they said :

"The matter (In Orient Paper Mills case) dealt with a
question of refund and it cannot be doubted that refund
of the tax collected is always a matter covered by inci-
G dental and ancillary powers relating to the levy and collec-
tion of tax. We arc not dealing with a case of refund in
the present case. What sec. 11(2) provides is that some-
thing collected by way of tax, though it is not really due
as a tax under the law enacted under Entry 54 of List II
H mu1t be paid to the Government. This situation in our
AMARNATH OMPARKASH v. PUNJAB (Chinnappa Reddy, i.) 101

opinion is entirely different from the situation in Orient
Paper Mills case."

The decision in Orient Paper Mills case was expressly affirmed
by a Bench of Seven Judges of this Court in R.S. Joshi v. Ajit Mills(')
and observations to the contrary Ashoka Marketing Company case<:)
' I
were expressly dissented from. We are, therefore. satisfied that B
sec. 23-A of the Punjab Agricultural Produce Markets Act was
within the competence of the Punjab Legislature and that it was
not also otherwise invalid in any manner. The appeals are, there-
fore, dismissed with costs.
c

M.L.A. Appeals dismissed.

-i

(l) AIR 1977 SC 2279.
ti) AIR 1971 SC 946.

...,