VIJAY INDUSTRIES vs. THE STATE OF KARNATAKA

- 1 - IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 25TH DAY OF APRIL, 2017 BEFORE THE HON’BLE MR. JUSTICE G.NARENDAR W.P. No.109226/2015 C/W W.P. No.109404/2015 (APMC) IN W.P. No.109226/2015 BETWEEN: VIJAY INDUSTIRES T.M.C. UNIT, P.O.BOX NO.12 BELAGAVI ROAD BAILHONGAL-591102 REP BY ITS PROPRIETOR SHRI VIJAY S/O SHRISHAIL METGUD AGE:39 YEARS, OCC: BUSINESS R/O BELAGAVI ROAD BAILHONGAL ... PETITIONER (BY SRI. R.M.KULKARNI-ADV FOR SMT. HEMALEKHA K.S.-ADV) AND: 1. THE STATE OF KARNATAKA REP BY ITS SECRETARY DEPARTMENT OF AGRICULTURE MARKETING M.S. BUILDING, BENGALURU. 2. THE DIRECTOR DEPARTMENT OF AGRICULTURE MARKETING NO.16, 2ND RAJ BHAVAN ROAD BENGALURU-01. 3. THE ADDITIONAL DIRECTOR DEPARTMENT OF AGRICULTURE MARKETING NO.16, 2ND RAJ BHAVAN ROAD BENGALURU-01.

- 2 - 4. THE AGRICULTURAL PRODUCE MARKET COMMITTEE BAILHONGAL, APMC YARD BELAGAVI ROAD BAILHONGAL, DISTRICT BELAGAVI REP BY ITS SECRETARY ... RESPONDENTS (BY SMT. K.VIDYAVATI-AGA FOR R1-R3; SRI.MALLIKARJUN C.BASAREDDY-ADV FOR R4) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE CLARIFICATION DATED 26.7.2014 BEARING NO.KRA MA E/NI YA VI/LICENSE/234/2008 ISSUED BY THE 3RD RESPONDENT PRODUCED AS PER ANNEXURE-A AND ETC. IN W.P. No.109404/2015 BETWEEN: M/S THUNGABHADRA GINNING AND PRESSING FACTORY REP BY ITS PARTNER SRI. K.G.THIMMA REDDY AGED ABOUT 61 YEARS ANDRAL ROAD BALLARI DISTRICT-583101 ... PETITIONER (BY SRI.R.V.PRASAD-ADV FOR M/S VASAN ASSTS AND SRI.K.HEMA KUMAR AND SRI. SUREN THUMBOOCHETTY-ADVs) AND: 1. THE SECRETARY AGRICULTURAL PRODUCE MARKETING COMMITTEE BALLARI-583101. 2. THE ADDITIONAL DIRECTOR (PLANNING) OFFICE OF THE AGRICULTURAL PRODUCE MARKETING COMMITTEE NO.16, 2ND RAJBHAVAN ROAD BENGALURU-560001

- 3 - 3. THE DIRECTOR AGRICULTURAL PRODUCE MARKETING COMMITTEE NO.16, 2ND RAJBHAVAN ROAD BENGALURU-560001 ... RESPONDENTS (BY SRI.MALLIKARJUN C.BASAREDDY-ADV FOR R1; SMT. K.VIDYAVATI-AGA FOR R2 & R3) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 28.7.2015 NO.KRUMA E/NE YAV V/APPEAL/15-14-15 ANNEXURE-J PASSED BY THE 3RD RESPONDENT IN THE CASE OF THE PETITIONER AND ETC. * * * THESE WPs HAVING BEEN HEARD AND RESERVED FOR ORDERS, THIS DAY THE COURT PRONOUNCED THE FOLLOWING: DATE OF RESERVING THE ORDER : 6.12.2016 DATE OF PRONOUNCING THE ORDER : 25.04.2017 ORDER Both the writ petitions were heard and orders reserved as both writ petitions were canvassed on common grounds and as they involve similar facts 0and legal issues. Both the writ petitions are taken up for disposal by this common order.

- 4 - 2. The petitioner in W.P. No.109404/2015 is referred to as the first petitioner and the petitioner in W.P. No.109226/2015 is referred to as the second petitioner for the sake of brevity and convenience. 3. The case of the petitioners is that they are engaged in the activity of Ginning and Pressing of Cotton and in the course of their business they purchase raw cotton which is notified as an agricultural produce under the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 (Hereinafter referred to as the ‘Act’ for the sake of brevity). That the primary raw-material in their manufacturing process is this raw-cotton. Hence, they intended to facilitate the same by effecting direct purchase of the notified agricultural produce from the growers themselves. 4. The first petitioner applied for grant of licence and pursuant to the application the licence in Form 48 came to be issued to the first petitioner vide licence dated 29.05.2009. Similarly, the application of

- 5 - the second petitioner came to be processed and the licence in favour of the second petitioner was also issued in Form 48 read with Rule 87-C (4) of the Karnataka Agricultural Produce Marketing (Regulation and Development) Rules, 1968 (hereinafter referred to as “the Rules”) and the same is produced vide Annexure-D to the writ petition. It is contended by the petitioners that the petitioners were affecting direct purchases of the notified produce directly from the agriculturists and were remitting the market fee payable in accordance with the third proviso appended to Section 65 (2) of the Act at the rate of 70% of the market fee payable under the provisions of the Act. 5. That in the year 2014, the State legislature was pleased to introduce certain amendments to the provisions of the Act vide Karnataka Act No.5/2014 and that the said Act received the assent of the Governor on 03.01.2014 and came to be published in the Karnataka Gazette Extraordinary on 04.01.2014 and came into effect at once. By the said Karnataka Act No.5/2014

- 6 - amongst the other amendments brought about to the Act, the legislature inserted a further proviso after the third proviso to Section 65 (2) of the Act. It is this fourth proviso which is now the bone of contention between the petitioners and the respondent-State. The same is extracted below for the sake of convenience and reads as under:- “Provided also that in case of any private markets established under Section 72-A of the Act, market fee shall be levied and collected at the rate of 33% of market fee payable under this Act, provided that no market fee is leviable on flowers, fruits and vegetables. Instead, the market committee may collect user charges in respect of the above articles, user charges for such services provided by the market committee from the buyer of the produce at such rates as may be specified in the byelaws as approved by the Director of Agricultural Marketing.” 6. It is contended by the first petitioner that for the month of January 2014 it paid the market fee at the rate of 70% in accordance with the third proviso appended to Section 65 (2) of the Act. But thereafter, on

- 7 - account of the introduction of the fourth Proviso vide the Amendment Act No.5/2014, it addressed a letter dated 03.02.2014 to the first respondent requesting the first respondent to refund the excess market fee paid contending that in view of the new fourth proviso inserted after the third Proviso, the petitioner is liable to pay only @ 33% of the market fee levied and not at the rate of 70% of the market fee in view of the new fourth proviso and thereafter continued paying @ 33% of the market fee only instead of original rate of 70% of the market fee as provided under the 3rd proviso. It is contended that in reply the second respondent on approval from the third respondent, addressed a letter dated 30.06.2014 putting on notice the petitioner that it is required to pay market fee on the purchase of notified agricultural produce at the rate of 70% of the market fee payable and as the petitioner had been paying a market fee at 33% only, it was called upon to make good the differential amount of the market fee payable.

- 8 - 7. It is contended that upon receipt of the said communication, the first petitioner addressed a letter directly to the third respondent contending that as it has granted a licence under Section 72-A of the Act as a private market, the petitioner comes within the ambit of the 4th proviso to Section 65 (2) of the Act and is due and liable to pay only at the rate of 33% of the market fee. This was responded to by the second respondent whereby, the first petitioner was informed that he was only granted a licence enabling him to effect direct purchase under the provisions of Section 72-A (1)(b) of the Act read with Rule 87-C of the Rules. Thereby, it was asserted by the respondents that the petitioner was due and liable to pay at the rate of 70% of the market fee and not at the rate of 33% as provided under the fourth proviso. Yet again the petitioner indulged in correspondence dated 04.09.2014 whereunder the petitioner once again reiterated the same contention and once again the said contention came to be rejected by the second respondent vide communication dated 29.10.2014. Aggrieved by the said communication, the

- 9 - petitioner preferred an appeal contending that the stand adopted by the second respondent was erroneous and contrary to the language employed in the provisions of the Act more particularly the fourth proviso. The appeal was heard. In the interregnum, the second respondent by communication dated 27.03.2015 intimated the petitioner that it was decided that pending disposal of the appeal, market fee would be collected @ 33% and called upon the petitioner to execute an undertaking whereby it was required of the petitioner to undertake that in the event of dismissal of the appeal, the differential amount would be remitted immediately. Thereafter, the appeal came to be rejected by an order passed by the third respondent dated 27.03.2015 whereby, it was held that the petitioner is an entity who is liable to pay @ 70% of the market fee and thereby rejected their contention, that it is squarely covered by the provisions of the fourth proviso and entitled to the exemption or payment of market fee at the concessional rate of 33%. Aggrieved, the petitioners have preferred the above writ petition impugning the order in appeal

- 10 - being Annexure-J to the writ petition. The first petitioner has prayed for the following reliefs:- “(i) This Hon’ble High Court may be pleased to issue a writ of certiorari or a direction in the nature of a writ of Certiorari, quashing the order dated 28.07.2015 No.KRUMAE/NE YAV V/APPEAL/15-14-15 (ANNEXURE-“J”) passed by the Third Respondent in the case of the petitioner. (ii) This Hon’ble High Court may be pleased to declare and hold that the Petitioner’s case is bound by the fourth proviso inserted to Section 65(2) of the Act, by Karnataka Act No.05/2014 with effect from 04.01.2014 and that the market fee payable is at the rate of 33% of the market fee payable under the provisions of the Act.” 8. In the case of second petitioner, it is stated that the second petitioner, upon coming into force of the Karnataka Act 5/2014 proceeded to pay the market fee at the rate of 33% in view of the fourth proviso inserted into the Act. That, upon such payment the fourth respondent, who is the first respondent in the first

- 11 - petition, raised demand vide demand notice dated 24.01.2015 calling upon it to deposit the differential amount within three days. The demand also included a penalty levied as per the provisions of Section 65-A of the Act. Aggrieved the petitioner effected a detailed reply contending that there was no violation of the provisions of Section 65(2) of the Act in view of the new provisions introduced vide Amendment Act 5/2014 and that the second petitioner comes within the ambit and scope of the fourth Proviso. After further correspondences, the third respondent by communication dated 04.08.2015 clarified to the second petitioner that the intendment of the fourth Proviso was to extend the benefits only to private market yards and not to direct purchasing centres and that the petitioner falls within the ambit of the third proviso to Section 65(2) of the Act. He further reiterated the demand for the pending dues and put the petitioner on notice that in the event of failure to comply with the demand, action would be initiated as per law. Aggrieved, the petitioner

- 12 - is before this court and has sought for the following reliefs:- “(i) Issue a writ of certiorari or any other order or direction quashing the clarification dated 26.07.2015 bearing No.Krs Ma E/Ni Ya Vi/License/234/2008 issued by the 3rd respondent produced as per ANNEXURE-A in so far as petitioner only. (ii) Issue a writ of certiorari or any other order or direction quashing the communication dated 04.08.2014 wrongly shown as 04.08.2014 bearing No.Kra Ma E/Ni Ya Vi/Ne Ka Ke/113/14-15 addressed by the 3rd respondent produced as per ANNEXURE-B. (iii) Issue a writ of mandamus directing the respondents to collect the market fee as per the 4th proviso to section 65(2) of the Act in respect of the petitioner in view of Karnataka Act No.5/2014.” 9. Heard the learned counsel for the petitioners who are led by learned counsel Sri. R.V. Prasad and the

- 13 - learned Additional Government Advocate on behalf of the respondents. 10. It is contended by the learned counsel for the petitioners that they are licensees under the provisions of Section 72-A of the Act and hence are liable to be bestowed with a right to pay the market fee at the concessional rate of 33%. It is contended that the order by the Appellate authority is vitiated by non application of mind and is a non speaking order as the Appellate authority has failed to adduce cogent reasons for rejecting the claim of the petitioners. 11. This preliminary argument requires to be rejected on the short ground of being fallacious. On perusal of the detailed exchange of correspondences and the reasoning set-forth by the Appellate authority in the order impugned herein would suffice to demonstrate that the Appellate authority has passed a considered order. Further, the issue which has been much debated upon by the parties is a legal debate pertaining to the

- 14 - interpretation of the provisions of the fourth proviso to Section 65(2) of the Act. 12. The learned counsel for the petitioner would contend that the newly inserted fourth proviso would clearly indicate that the intent of the legislature was to bring within its scope and ambit all the private markets as envisaged under the Act more particularly, those licensed under Section 72-A of the Act. He would further contend that the legislature while introducing the fourth proviso to Section 65(2) of the Act has by the use of the phrase “any private market”, taken adequate care to avoid the mischief of discrimination as between the licencees falling under Sub-Clauses-(a), (b) or (c) of Sub-section-(1) of Section 72-A of the Act and hence, would contend that the beneficial or concessional rate of market fee stipulated under the fourth proviso only is to be collected from the licence of a private market. He would draw sustenance for this submission from the phrase “in case of any private markets established under Section 72-A of the Act” (emphasis by court) used

- 15 - by the legislature in the fourth proviso. He would contend that the legislature in its wisdom has specifically used the word “any” only in order to bring within its scope all private market yards irrespective of any distinctive characteristics and that the above phrase is self-explanatory to the fact that the legislature did not intend any discrimination amongst the various types of private players in the field of regulated market. Hence, he would contend that the impugned order distinguishing between the various private operators in the application of the fourth proviso is per-se discriminatory and is liable to be quashed. 13. The learned counsel developing on the above contention, would canvass that the fourth proviso was envisaged by the legislature for the benefit of all the private operators or rather the licencees envisaged under the provisions of Section 72-A of the Act and it is not open to the executive to discriminate amongst the persons who are being licenced under the provisions of Section 72-A of the Act. The learned counsel would

- 16 - draw the attention of the court to the provisions of Section 72-A of the Act which reads as under:- “[72-A. Establishment of private market yards and direct purchase from agriculturist or from producer.-(1) No person shall.- (a) establish, a private market yard; or (b) purchase notified agricultural produce directly from an agriculturist; or (c) establish a farmer consumer market; unless he possesses a valid licence issued under the provisions of this Act or rules made there under. (2) Subject to such conditions and such fees as may be prescribed, the Director of Agricultural Marketing or any other Officer authorized by him may grant a licence for purchase or sale of notified agricultural produce by establishing private market yards or to purchase notified agricultural produce directly from the agriculturist in one or more market area for the purpose of.- (a) processing of the notified agricultural produce;

- 17 - (b) establish a Direct Purchase Centre to purchase notified agricultural produce directly from an agriculturist. or (emphasis by court). (c) export of notified agricultural produce; (d) Grading, packing and transaction in other way by value addition of notified agricultural produce.” 14. He would also draw the attention of the court to the State Agricultural Marketing Policy of 2013 and would contend that the direct purchase centre was a result of an enabling legislation and create an environment, in order to encourage investment in infrastructure and on such initiative, to allow establishment of direct purchase centers consequent to amendment to the Act and the private markets and direct purchase centers are one form of initiatives visualized by the State and hence, all the private markets ought to be placed on the same platform and consequently resulting in equal treatment. He would also draw the attention of the court to the stated

- 18 - objectives therein and would point out that one of the objectives is ensuring a level playing field for all market participants. He would further contend that one other object was to encourage and enable establishment of private markets as an alternate facility for marketing of agricultural produce. He would further place before this court an extract from the website maintained by the department of agricultural marketing and Karnataka State Agricultural Marketing Board titled “Krishi Marata Vahini” an online agricultural market information system wherein, it is shown that private markets include direct purchase centers, Private Market Yards and spot exchanges and would culminate his submissions by contending that the legislature by using the phrase “any private markets under Section 72-A of the Act”, would include all three forms of market as set out under Section 72-A of the Act. 15. The learned counsel to buttress his contention would place reliance on two rulings of the Apex Court interpreting the word ‘Any’. In the first

- 19 - ruling reported in AIR 1987 Supreme Court 1668, the same arises out of Tamil Nadu Buildings (Lease and Rent Control) Act. The Hon’ble Apex Court while interpreting the provisions of the Act was pleased to hold as follows: “18. In construing S. 10(3)(c) it is pertinent to note that the words used are “any tenant” and not “a tenant” who can be called upon to vacate the portion in his occupation. The word “any” has the following meaning :- “some; one out of many; an indefinite number. One indiscriminately of whatever kind or quantity.” Word “any” has a diversity of meaning and may be employed to indicate “all” or “every” as well as “some” or “one” and its meaning in a given statute depends upon the context and the subject-matter of the statute. It is often synonymous with “either”, “every” or “all”. Its generality may be restricted by context; (Black’s Law Dictionary; Fifth Edition).”

- 20 - 16. Nextly, the learned counsel for the petitioner placed reliance on the ruling of the Hon’ble Apex Court reported in (2005) 1 Supreme Court Cases 754 rendered under the Representation of People Act, 1951. The learned counsel would draw the attention of the Court to paragraph No.49, 50 and 51 where the Hon’ble Apex Court while interpreting and construing the word “any” was pleased to hold as follows:- “49. In Shri Balaganesan Metals v. M.N. Shanmugham Chetty the word “any” came up for consideration of this Court. It was held that the word “any” indicates “all” or “every” as well as “some” or “one” depending on the context and the subject-matter of the statute. Black’s Law Dictionary was cited with approval. 50. In Black’s Law Dictionary (6th Edn.) the word “any” is defined (at p.94) as under: “Any.-Some; one out of many; an indefinite number. One indiscriminately of whatever kind or quantity.

- 21 - One or some (indefinitely). ‘Any’ does not necessarily mean only one person, but may have reference to more than one or to many. Word ‘any’ has a diversity of meaning and may be employed to indicate ‘all’ or ‘every’ as well as ‘some’ or ‘one’ and its meaning in a given statute depends upon the context and the subject-matter of the statute. It is often synonymous with ‘either’, ‘every’, or ‘all’. Its generality may be restricted by the context; thus, the giving of a right to do some act ‘at any time’ is commonly construed as meaning within a reasonable time; and the words ‘any other’ following the enumeration of particular classes are to be read as ‘other such like’, and include only others of like kind or character.” 51. The word “any” may have one of the several meanings, according to the context and the circumstances. It may mean “all”; “each”; “every”; “some”; or “one or many out of several”. The word “any” may be used to indicate the quantity such as “some”, “out of many”, “an infinite number”. It may also be used to

- 22 - indicate quality or nature of the noun which it qualifies as an adjective such as “all” or “every”. (See The Law Lexicon, P. Ramanatha Aiyar, 2nd Edn. At p.116.) Principles of Statutory Interpretation by Justice G.P. Singh (9th Edn., 2004) states (at p.302) - “When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which that word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that ‘the meanings of words and expressions used in an Act must take their colour from the context in which they appear’. Therefore, ‘when the context makes the meaning of a word quite clear, it becomes unnecessary to search for an select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers’.” 17. The learned counsel would conclude his submissions by contending that the Hon’ble Apex Court has interpreted the word “any” as meaning “all and every” and hence, the phrase “any private

- 23 - markets” used in the fourth proviso ought to be construed as including not only the licencees of direct purchasing but also the other type of licencees under Section 72-A of the Act. The learned counsel for the second petitioner would replicate the submissions made on behalf of the first petitioner. 18. Per contra, the learned Addl. Govt. Advocate would contend that the contention on behalf of the petitioners is wholly baseless. He would contend that though licences are envisaged under Section 72-A(2) of the Act, but the present licencees have been granted under Section 72-A (1) (b) read with Rule 87-C of the Rules. 19. He would contend that the Government promulgated a notification dated 19.03.2008 which came into effect on 20.03.2008, whereby, Rule 87-B and Rule 87-C of the Rules came to be inserted into the rules. He would contend that Rule 87-B of the Rules governs the grant of licence for establishment of Private Market Yard and Rule 87-C of the Rules for

- 24 - grant of a licence for direct purchase centers (emphasis by court). He would further contend that the third proviso to Section 65 (2) of the Act was inserted by Act No.23/2007 with effect from 16.08.2007 whereby, it provided for a licence for direct purchase and licence for spot exchange of notified agricultural produces and it stipulated that the market fee should be levied and collected at the rate of 70%. It is relevant to note that the corresponding Rule 87-C was inserted subsequently in the year 2008 only. 20. He would further contend that by Act 5/2014 Clause-(b) of Section 72-A(2) of the Act was substituted to distinguish and emphasis the role of Direct Purchase Centre and the corresponding Rule 87-C of the Rules remains the same. He would further contend that Act 5/2014 categorically and specifically relates to private markets under Section 72-A of the Act and stipulates the rate of market fee payable. He would draw the attention of the Court to

- 25 - the provisions of Rule 87-C of the Rules which reads as follows:- “87-C. Grant of licence for direct purchase of agricultural produce from agriculturists or producers. – (1) Subject to the provisions of Section 72-A of the Act, any person desiring to purchase agricultural produce directly from the agriculturists or producer- sellers in one or more market areas may submit an application in writing to the Director of Agricultural Marketing in Form 50 for grant of licence, along with the documents specified in that form subject to the following conditions.- (i) The applicant shall furnish details of direct purchase centers proposed to be opened initially in Form 51. He shall also submit the names of new centers likely to be opened in the course of his business in Form 52 before fifteen days of their opening. (ii) The applicant shall submit details of financial status, resources with supportive documents, bank statements, income tax returns, list of permanent assets and

- 26 - liabilities, memorandum and articles of association if it is a company and other documents showing the credibility of the applicant for direct purchase of notified agricultural produce from agriculturists, producer-seller. (iii) The applicant shall provide necessary infrastructure facilities for weighment, storage, shelter and other basic facilities as may be specified by the Director of Agricultural Marketing from time to time. (2) The licence fees for grant or renewal of licence for establishment of a direct purchase centre shall be Rupees fifty thousand payable by demand draft in favour of the Director of Agricultural Marketing, Bangalore: Provided that the amount of licence fee paid by the applicant may be refunded if the licence is not granted or renewed for the reasons other than non compliance of requirements of the conditions of licence after deducting ten percent of the fees towards processing cost.

- 27 - (3) The Director of Agricultural marketing shall record the date of receipt of the application in the register maintained in Form 47 and shall evaluate the proposal. He may also in consultation with the person/persons as he deemed fit suggest necessary measures for improvement of the activities of a direct purchase centre. (4) The Director of Agricultural marketing may after satisfying himself that the arrangements made for purchasing of notified agricultural produce from the agriculturists in the direct purchase centre are sufficient to carry on the activities, grant licence in Form 48 to start business in such centre subject to the conditions specified therein. (5) The applicant shall deposit an irrevocable continuous bank guarantee or cash security of rupees five lakhs or an amount equal to two percent of the annual turnover of the previous year whichever is more with the Director of Agricultural Marketing: Provided that the bank guarantee specified under this rule shall be fifty per cent to the

- 28 - Government organizations and co-operative institutions. (6) The direct purchase licensee shall do cash and carry business in the direct purchase center and pay the seller in cash or cheque immediately. (7) The Direct Purchase Centre licensee shall submit application for renewal of licence in Form 49 to the Director of Agricultural Marketing. The Director of Agricultural Marketing after making such enquiries as he deemed fit, may renew the licence of the Direct Purchase Centre for purchase of notified agricultural produce from agriculturist, producer-sellers. (8) The Director of Agricultural Marketing after giving the applicant an opportunity of being head, for the reasons to be recorded in writing refuse to grant, suspend or cancel licence to the applicant. (9) A licence granted under sub-rule (4) shall, unless renewed remain in force till the end of tenth market year including the year in which it has been granted.

- 29 - (10) Every application for renewal of licence shall be made one month before the expiry of its period. If the application applied for renewal of licence by the applicant is in accordance with the provisions of the Act and Rules, the applicant shall be deemed to be duly licensed until orders are passed on the application. (11) Subject to the provisions of the Act, Rules and the directions issued by the Director of Agricultural Marketing from time to time, the direct purchase center licensee shall operate in the area or place for which licence has been granted. (12) Direct purchase licensee may sell his produce either in the market established by the market committee or private market yard or sell in retail or process such agricultural produce or may export by value addition through grading, packing etc.” 21. He would contend that Rule 87-C of the Rules provides that any person who is desirous of purchasing notified agricultural produce directly

- 30 - from the purchaser/seller in a market area may apply for licence which would be granted in Form 48. He would contend that the present contentions are frivolous as the licencees were hitherto paying the market fee at the rate specified under the third proviso, which has been enacted specifically for licencees who are carrying on spot exchange or licencees who are indulging in direct purchase of notified agricultural produce and to a contract farming sponsor buying from a contract farming producer. The third proviso is exclusively relatable to three categories of licencees only and it does not relate to a private market established by a licencee under Section 72-A of the Act. 22. He would contend that the objective behind licencing direct purchase center was to enable the producers to sell their notified produces at the nearest point in the vicinity of their farms and thus some money spent on transporting to distant markets is saved and the beneficiary is the farmer. It

- 31 - is contended that unlike the private market, the licencee of a direct purchasing center is required to provide minimal facilities only like drinking water facilities, electronic weighing machine and storage space, in case the farmer desires to wait for a better price. He would further contend that neither the Act nor Rules stipulate any minimal investment for a licencee aspiring to establish a direct purchase center unlike a licencee who desires to establish a private market. He would contend that as per the Act and Rules the licence who desires to establish a private market is required to invest a minimum of 10 crores if the market is to be established in Bengaluru City or 5 crores if the market is established to be in a district head quarters and 2 crores in other places. He would also contend that the minimum facilities required to be set up by private market licence holders are as follows, i.e., auction halls, sheds, shops, godowns, storages, pre-cooling, cold storages, Raith Bhavan, canteen, ripening chambers, laboratory facilities to evaluate quality of produce,

- 32 - grading and packaging facilities, loading and unloading site, electrical display of market rates, electronic weighbridges, internal rates, drinking water, sanitary facilities etc. 23. He would further state that the minimum area stipulated for establishing a private market is three acres and it ought to conform to the norms of the Town Country Planning Act and Fire Safety Regulations. He would further draw the attention of the Court to the provisions of Section 64-A of the Act which enumerates the duties and responsibilities of the Private Market Yard. He would also draw the attention of the court to the provisions of Section 64- A of the Act which reads as follows:- “[64-A. Duties and responsibilities of a private market yard licensee.- Subject to the provisions of this Act and rules, it shall be the duty of a private market yard licensee.- (a) to provide in the private market yard the necessary infrastructure facilities for making

- 33 - purchases from the growers of notified agricultural produce and for storage, for sale under the conditions of licence granted to him and as per the procedure prescribed; (b) to levy and collect registration fees, other charges for the services rendered and utilities provided to the sellers, buyers and all other functionaries registered with or using the private market yard not exceeding such amount as may be prescribed.” 24. He would also draw the attention of the court to Section 2 [(31-A) which defines as follows: “Private Market Yard” means such place other than the market yard, market sub-yard and sub- market Yard in the market area where infrastructure has been developed, managed and controlled by a person for marketing of notified agricultural produce holding a licence for this purpose under this Act;].” 25. He would contend that a Private Market Yard and direct purchase centers are incomparables and that there is a vast difference in the terms and conditions

- 34 - specified under the Rules for obtaining licence and for running a Private Market Yard and direct purchase centre. It is contended that the Private Market Yard is akin to the APMC market yard established and run by the government. Similarly, the licencee of a private market Yard is required to invest and create huge infrastructure facilities and the rule empowers the licencee to control the Yard. 26. That apart, the learned Addl. Govt. Advocate would contend that the Marketing Policy of 2013 cannot be read in isolation and has to be read in conjunction with Rule 87-B and 87-C of the Rules and that the policy that has not translated into law. It is contended that the amendment by way of insertion of the fourth proviso was to extend a concessional rate to the licencees who have established a Private Market Yard by incurring huge investment and hence the concessional 33% market fee rate has been extended only to the Private Market Yards. He would contend that out of the market fee charge 0.5% is to be contributed to the

- 35 - revolving fund set up for implementation of the floor price scheme and for accruing a minimum support price to farmers in times of distress and to prevent distress sale of the agricultural produce by the farmers. He further contends that provisions of Section 64-B and 64-C of the Act deal with the constitution of revolving fund and its applications. He would submit that the 33% levied upon the Private Market Yard licencee would go into the revolving fund only. 27. The learned Addl. Govt. Advocate would conclude his submissions by stating that the Private Market Yard and the Direct Purchase Centers cannot be equated and the fourth proviso has been inserted vide Act No.5/2013 in order to extend a concessional rate of market fee for Private Market Yards only and would pray that the writ petitions be rejected. 28. From the above facts and circumstances the point that falls for consideration by this court is;

- 36 - “Whether the legislature has by the word “any” and the phrase “private markets established” under Section 72-A of the Act,” have brought within the sweep of the fourth proviso apart from the Private Market Yard even the direct purchasers, spot exchangers and contract farming sponsor as contended by the petitioners.” 29. The undisputed facts are that the State and the legislature have permitted a measure of deregulation by opening up an arena which hitherto was the sole domain of State controlled Agricultural Produce Marketing Committee, which were established under the Act. By the amendment introduced in the year 2007, the legislature inserted the provisions of Section 72-A to 72-E vide Act No.23 of 2007 which came into effect from 16.08.2007. Section 72-A(1) of the Act prohibited the establishment of a private market yard or direct purchase or farmer consumer market unless the person was licenced to do so. Sub-Section (2) of Section 72-A of the Act empowered the Director of Agricultural Marketing or any other officer as authorized by him to

- 37 - grant a licence for purchase or sale of notified agricultural produce by establishing a Private Market Yards or to purchase notified agricultural produce directly from the agriculturist in one or more market area for various purposes subjected to the conditions stipulated in Section 72A(1)(a) to (c) and fees prescribed. The provision subjects the activity to the conditions and fees as prescribed by the Director. Section 72-B of the Act pertains to the establishment of a farmer consumer market for direct sale by the producer. Section 72-C of the Act pertains to the grant or renewal of licence of Private Market Yard and farmer consumer market. 30. It is seen that Sub-Section-(1)(a) of the Section 72-C of the Act is the enabling section in the sense that it is this section which enables a person who intends to directly purchase notified agricultural produce from the agriculturists to make an application to the Director of Agricultural Marketing or Authorized Officer for grant or renewal of the licence. Sub-Section (2) mandates the deposit of the prescribed fee. Sub-

- 38 - Section(3) empowers the authority to accept or reject the application for licence for reasons to be recorded in writing. Clause (i) to (iv) of Sub-Section (3) details the persons who are ineligible to make an application. The Clauses–(v) & (vi) vest the authority with the discretion to reject the application. Sub-Section(4) state that all licences granted or renewed under the Section shall be subject to the provisions of the Act or Rules made there under. 31. From a reading of the above provision it is apparent that Section 72-A of the Act, the charging section, merely sets out the activities by private players in an arena where they were hitherto prohibited. In furtherance of this, the Government vide notification dated 19.03.2008 inserted into the Rules among other provisions Rule 87-B and 87-C of the Rules. 32. Part VI-A of the Rules, 1968 provides for the establishment of Private Market Yards, direct purchase centers and farmer consumer markets. Rule 87-B of the

- 39 - Rules pertains to grant of licence for establishment of a Private Market Yard and reads as under:- “87-B. Grant of licence for establishment of private market yard.-(1) Subject to the provisions of Section 72-A and 72-C of the Act, any person who has already established the infrastructure or desiring to establish a private market yard in one or more market areas may submit an application in writing to the Director of Agricultural Marketing in Form 46 for grant of licence or renewal thereof, along with the documents. The Director of Agricultural Marketing may grant licence for establishment of private market yard or renew the same.” Sub-Rule (1) of Rule 87-B of the Rules states that subject to the provisions of Section 72-A and 72-C of the Act, any person who has already established the infrastructure or is desirous to establish a private market yard in one or more market areas make an application in writing to the Director of Agricultural Marketing in Form 46 for grant of licence. It also details the three types of private market yard under Clause-(i), (ii) and (iii). In respect of a market yard under Clause-I,

- 40 - the legislature has set out the infrastructure which requires to be mandatorily established by the proposed licencee. It also stipulates the minimum investment on infrastructure, which is fixed between 10 crores to 2 crores depending on the center where the market is to be set up and it is stipulated that this infrastructure shall not include the cost of the land. Clause-I deals with a private market yard where the licensee develops, manages and controls the yard. Clause-(ii) pertains to a licensee who by himself takes up the activity of buying or selling of notified agricultural produce on wholesale basis. The clause does not detail inextenso the infrastructure that is required to be set up. In respect of any such markets the minimum investment stipulated is rupees five crore on infrastructure. It also stipulates the minimum extent of land that is to be possessed by the proposed licensee under Clause-(i) is of three acres of land in the city or town situated in the district head quarters. Clause-(iii) pertains to the setting-up of a private market with the assistance from Central or State Government called as terminal markets. The minimum

- 41 - investment stipulated is 25 crores. Sub-Rule (3) indicates the licence fee payable for grant or renewal of licence. Sub-Rule (5)(i) states that the authority may issue a letter of permission for commencement or refuse to issue the permission letter. Sub-Rule (7) authorises the authority to issue the licence once the project is completed or the infrastructure is set up pursuant to the permission letter. Sub-Rule (7) authorises the authority to issue a notification under Section 6 of the Act to declare the market as a private market yard for the regulation of marketing of notified agricultural produce specified in the notification. Sub-Rule (8) mandates that after the issue of notification under Sub- Rule (7), the authorities may subject to the provisions of Section 72-C of the Act, grant licence in Form 48 for establishment of a private market yard and the said licence shall be subject to the conditions specified therein. Sub-Rule (9) mandates that the operator of the private market yard shall, before commencement of marketing of agricultural produce, deposit an irrevocable and continuous bank guarantee or cash

- 42 - security equivalent to rupees fifty lakhs or 2% of the annual turn over of the previous year whichever is more. Sub-Rule(10) stipulates that the private market yard licencee shall apply for renewal in Form 49. The Sub-Rule (14) reads as under: “(14) The private market yard licensee who himself is a buyer or any person operating as a buyer in a private market yard shall pay market fee at the rates as specified under Section 65 of the Act.” 33. The next provision, which is of relevance for consideration of the above point formulated is Rule 87-C of the Rules which reads as under:- “87-C. Grant of licence for direct purchase of agricultural produce from agriculturists or produces.- (1) Subject to the provisions of Section 72-A of the Act, any person desiring to purchase agricultural produce directly from the agriculturists or producer-sellers in one or more market areas may submit an application in writing to the Director of Agricultural Marketing

- 43 - in Form 50 for grant of licence, along with documents specified in that form subject to the following conditions.- (i) The applicant shall furnish details of direct purchase centers proposed to be opened initially in Form 51. He shall also submit the names of new centers likely to be opened in the course of his business in Form 52 before fifteen days of their opening. (ii) The applicant shall submit details of financial status, resources with supportive documents, bank statements, income tax returns, list of permanent assets and liabilities, memorandum and articles of association if it is a company and other documents showing the credibility of the applicant for direct purchase of notified agricultural produce from agriculturists, producer-seller. (iii) The applicant shall provide necessary infrastructure facilities for weighment, storage, shelter and other basic facilities

- 44 - as may be specified by the Director of Agricultural Marketing from time to time. (2) The licence fees for grant or renewal of licence for establishment of a direct purchase centre shall be Rupees fifty thousand payable by demand draft in favour of the Director of Agricultural Marketing, Bangalore: Provided that the amount of licence fee paid by the applicant may be refunded if the licence is not granted or renewed for the reasons other than non compliance of requirements of the conditions of licence after deducting ten per cent of the fees towards processing cost. (3) The Director of Agricultural Marketing shall record the date of receipt of the application in the register maintained in Form 47 and shall evaluate the proposal. He may also in consultation with the person/persons as he deemed fit suggest necessary measures for improvement of the activities of a direct purchase centre. (4) The Director of Agricultural Marketing may after satisfying himself that the arrangements made for purchasing of notified

- 45 - agricultural produce from the agriculturists in the direct purchase centre are sufficient to carry on the activities, grant licence in Form 48 to start business in such centre subject to the conditions specified therein. (5) The applicant shall deposit an irrevocable continuous bank guarantee or cash security of Rupees five lakhs or an amount equal to two per cent of the annual turnover of the previous year whichever is more with the Director of Agriculture Marketing: Provided that the bank guarantee specified under this rule shall be fifty per cent to the Government organizations and co-operative institutions. (6) The direct purchase licensee shall do cash and carry business in the direct purchase center and pay the seller in cash or cheque immediately. (7) The Direct Purchase Centre licensee shall submit application for renewal of licence in Form 49 to the Director of Agricultural Marketing. The Director of Agricultural Marketing after

- 46 - making such enquiries as he deemed fit, may renew the licence of the Direct Purchase Centre for purchase of notified agricultural produce from agriculturist, producer-sellers. (8) The Director of Agricultural Marketing after giving the applicant an opportunity of being heard, for the reasons to be recorded in writing refuse to grant, suspend or cancel licence to the applicant. (9) A licence granted under sub-rule (4) shall, unless renewed remain in force till the end of tenth market year including the year in which it has been granted. (10) Every application for renewal of licence shall be made one month before the expiry of its period. If the application applied for renewal of licence by the applicant is in accordance with the provisions of the Act and Rules, the applicant shall be deemed to be duly licensed until orders are passed on the application. (11) Subject to the provisions of the Act, Rules and the directions issued by the Director

- 47 - of Agricultural Marketing from time to time, the direct purchase center licensee shall operate in the area or place for which licence has been granted. (12) Direct purchase licensee may sell his produce either in the market established by the market committee or private market yard or sell in retail or process such agricultural produce or may export by value addition through grading, packing etc.” 34. A reading of the Sub-Rule (1) of the Rule 87- C of the Rules stipulates that the applicant is required to make an application in writing in Form 50. Under Clause-(1) the applicant is required to furnish the details of the direct purchase centres in Form 51; as per Clause-(ii) the applicant is required to furnish details of his financial status including resources, tax returns etc. to demonstrate the financial credibility of the applicant; and Clause-(iii) envisages the infrastructure required to be provided by the licencee i.e. facilities for weighment, storage, shelter and other basic facilities. It is

- 48 - interesting to note that neither minimum nor maximum investment on infrastructure is stipulated in respect of these centres. Sub-Rule-(2) fixes the licence fee at Rs.50,000/-; Sub-Rule (4) states that the Authority after satisfying itself with regard to the arrangement made for purchasing of agricultural produce may grant a licence in Form 48 to start business in such centre subject to the conditions specified therein. Sub-Rule (5) is of some relevance. Earlier Sub-Rule 5 as originally inserted mandated security deposit or irrevocable deposit of rupees fifty lakhs or an amount equivalent to 2% of annual turn over as was in the case of a private market yard. Subsequently, by notification dated 15.06.2012 Sub-Rule (5) came to be amended and the words Rs.50 lakhs came to be substituted with the word Rs.5 lakhs. The provision of Sub-Rule (6) mandates that the licencee involved in direct purchase shall do cash and carry business and is required to pay the seller or in other words his vendor the consideration in the form of cash or cheque immediately. Rule 87-D of the Rules relates

- 49 - to the grant of licence to establish a farmer consumer market and reads as under:- “87-D. Grant of licence to establish farmer-consumer market.- (1) Subject to the provisions of Section 72-B and 72-C of the Act, any person desiring to establish a farmer- consumer market in one or more market areas shall submit an application in writing to the Director of Agricultural Marketing or the Officer authorized by him in Form 46 for grant of licence or renewal thereof in Form 49 along with the documents specified in that Form subject to the conditions specified below. The Director of Agriculture Marketing or the Officer authorized by him shall record the date of receipt of such applications in the register maintained in Form 47. (2) The Farmer-Consumer Market shall be established on a land with clear title or leasehold title having the lease agreement for a minimum period of five years with a peaceful possession. (3) The applicant shall provide infrastructure facilities such as sheds, drinking

- 50 - water facilities, sanitary facilities, roads, storage facilities including stalls for the farmers/growers, shops for ancillary service such as booths for sale of seeds, fertilizers, fruits, vegetable, milk, etc. (4) The licence fee for establishing a farmer-consumer market shall be rupees ten thousand. (5) The Director of Agricultural Marketing or the Officer authorized by him shall verify the documents submitted by the applicant and after inspection of the proposed farmer-consumer market established by the applicant may grant licence in Form 48 within a period of thirty days from the date of receipt of the applications subject to the conditions specified therein. (6) In the farmer-consumer market the farmer or the producer-seller shall not be permitted to sell more than the quantity of notified agricultural produce as may be specified by the Director of Agricultural Marketing from time to time.”

- 51 - The said Rules-Sub-Rule (1) stipulates that the grant of licence is subject to the provisions of Section 72-B and 72-C of the Act and an application shall be made in Form 46. Sub-Rule (3) provides for the infrastructure facilities that are required to be provided by the licensee, no minimum quantum of investment is stipulate as provided under Rule 87-B of the Rules. Sub-Rule (4) fixes the licence fee at Rs.10,000/-. Sub-Rule (6) stipulates that the producer/seller shall not be permitted to sell more than the quantity specified by the authority from time to time. 35. A reading of the above, would demonstrate that the parameters or criteria stipulated under the relevant rules varies with the type of activity that is proposed by the licencee. An enumeration of the duties and responsibilities visualized under the Act and Rules would prima-facie demonstrate that the legislature has conceived the private market yard, direct purchase centre and farmer consumer market as distinct activities and the duties and responsibilities have been

- 52 - enumerated keeping in mind the scope of the activity which the licencee would be authorized to exercise. The three concepts are neither synonymous nor complementary and are distinct spheres of activity. The scope of the activity under private market yard also visualizes the licencee as an authority empowered to control the activity in the private yard. The licencee under Clause-I is almost on an equal footing as a market committee constituted under the Act. This interpretation by the court is further fortified by a reading of the provisions of Section 2 (31-A) of the Act which defines a Private Market Yard and reads as under:- “2 (31-A) “Private Market Yard” means such place other than the market yard, market sub- yard and sub-market yard in the market area where infrastructure has been developed, managed and controlled by a person for marketing of notified agricultural produce holding a licence for this purpose under this Act; (emphasis by Court).

- 53 - 36. Further reference to the provisions of Section-6 of the Act is necessary for a better understanding of the emphatic distinction between the various entities. Sub-Section-(1) of Section-6 declares that for every market area, declared under Section 4, there shall be a market and one or more sub-markets and for every market there shall be a market yard and for every market yard, there may be one or more sub market yards. Sub-Section (I-A) inserted by Act 23/2007 with effect from 16.08.2007 provides for one or more private market yard or farmer consumer market yard in any market area and it reads as under:- “[(1-A) in any market area, there may be one ore more private market yard or farmer- consumer market yard managed by a person who is a private market licensee or farmer- consumer market licensee other than the market committee.]” 37. Clause (d) of Sub-section (2) of Secction 6 which again came to be inserted vide Act 23/2007 empowered the competent authority to, by notification declare a place, licenced under Section 72-C of the Act in the market area to be a private market yard or a

- 54 - farmer consumer market. The Sub-Section (2)(d) reads as under:-

“[(2-d) The Director of agricultural marketing may, by notification, declare a place, licensed under Section 72-C, in the market area to be a private market yard or farmer-consumer market yard as the case may be, as may be specified in the notification, for marketing of notified agricultural produce.”] 38. A reading of the provisions of Section 6 would go to show that one other differential criteria enumerated under the Act for establishing a private market yard is a notification under Sub-Section (2)(d) of Section 6 of the Act. In the case of a direct purchase centre no such requirement of a declaration of a market area is mandated under the Act and the Rules specify that, licencee is entitled to carry on the business of direct purchase of notified produce in the place specified under the licence. Another contrasting feature is that the direct purchase licencee may in terms of Sub-Rule (12) of Rule 87-C of the Rules sell his produce either in

- 55 - the market established by the market committee or a private market yard. Had it been the intendment of the Legislature to equate a Direct Purchase Centre with a market, the amendment to the Act by insertion of Section 2-31-A and Section 6(2)(d) would have also included the Direct Purchase Centre in the inserted provisions. 39. A perusal of the licences issued to the petitioners would demonstrate that it is a grant of licence for establishment of a direct purchase centre only. It further stipulates that the direct purchase center shall be established in the premises of the licencee which otherwise is the premises where the petitioners are respectively carrying on their business of Ginning and Pressing of Cotton and the notified produce which permits it to purchase Cotton which is yet again the raw-material used in the industry set up in the said premises itself. Further condition 11 of the licence prohibits the licencee from soliciting or receiving any fees or recovering any charge other than those which

- 56 - entitled to receive or recover in accordance with the provisions of the Act and the Rules. It is seen that the direct purchase centre is only a facilitation to the farmers in the vicinity of the direct purchase centre to sell their notified produce at a place which otherwise is not a declared market area as required under the provisions of Section 4 of the Act. It only enables the relaxation of the rigor of prohibition which is otherwise prohibited under the Act. The provisions of the Act prohibits the sale of notified agricultural produce in a place other than the regulated market area so declared under the provisions of Section 4. 40. From the above discussion of the provisions of the Act, the inescapable conclusion that flows from the discussion is that the direct purchase centre is not a notified market area. The Legislature never intended nor has it equated a Direct Purchase Centre with a Private Market. Whereas, a private market yard is an area notified as a private market under the provisions of Sub-Section (2)(d) of Section 6 of the Act.

- 57 - 41. In the above background this court proceeds to interpret the amendment to the provisions of Section- 65 by way of insertion of the fourth proviso. Before this court advents to conclude regarding the contention canvassed on behalf of the petitioner, it is necessary to appreciate certain provisions of the Act. Section 2(48) which defines a trader which reads as follows:- “2(48) “Trader” means a person who buys notified agricultural produce either for himself or as agent of one or more persons for the purpose of selling, processing, manufacturing or for any other purpose, except for the purpose of domestic consumption;” Section 2(5) defines as follows: “2(5) “Buyer” or “Purchaser” means a person, who himself or on behalf of any other person or agent buys or agrees to buy notified agricultural produce in the market area;” 42. The above provisions are culled out and necessitated on account of the pleading by the

- 58 - petitioners which indicates that the petitioners are mere purchasers or consumers of the notified agricultural produce for the purposes of the industry they are running. In the light of this conclusion it is necessary for the court to have a look into the verse of Section 65 which is the enabling provision which invest a right in the market committee to levy and cast a duty on every buyer of an agricultural produce to pay a market fee at the rate specified. It is seen that Section 65 came to be amended by way of substitution by Act 24 of 1975 and Sub-section (1) came to be omitted with effect from 28.09.1978. The provisions of Section 65 are reproduced herein below for the sake of convenience.

“[65. Levy of market fees.-(1)xxxxx] (2) The market committee shall levy and collect market fees from every buyer in respect of agricultural produce bought by such buyer in the market area, at such rate as may be specified in the bye-laws [(which shall not be more than two rupees per one hundred rupees of the value of such produce bought except in case

- 59 - of livestock where the market fee shall not be more than [five rupees per head] of cattle other than sheep or goat, and in the case of sheep or goat such fee shall not be more than [one rupee per head)]] in such manner and at such times as may be specified in the bye-laws:” Sub-section (2) deals with the levy and collection of market fee from every buyer in respect of an agricultural produce bought by such buyer in the market area. The first proviso pertains to remission of market fee at the rate of 80% of the market fee payable under this Act in respect of doing of business in agricultural produce by a cooperative society in the market yard. The second proviso came to be inserted by Act 22/2004 with effect from 17.05.2004. By the said proviso agricultural produce which had already suffered the levy of a market fee and such produce is processed and sold in any other market area, such processed agricultural produce should be exempted from the levy of market fee once again. The third proviso came to be inserted by Act 23/2007 with effect from 16.08.2007. The third proviso provided for the levy of market fee at

- 60 - the rate of 70% of the market fee, payable by a buyer in a spot exchange established by a licencee or a licensee for direct purchase (in the instant case the petitioners) of a notified agricultural produce. Sub-section (2-A) of Section 65 stipulates as from whom the market fee shall be realized. Clause (i) mandates that if the produce is sold through a commission agent, the commission agent (shall) realize the market fee from the purchaser and shall be liable to pay the same to the committee; Clause (ia) mandates that if the produce is sold through a commission agent, the commission agent (shall) realize the market fee from the purchaser and shall be liable to pay the same to the committee; Clause (ii) mandates that if the produce is purchased directly by a trader from a producer, the trader shall be liable to pay the market fee to the committee; Clause (iii) mandates that if the produce is purchased by a trader from another trader, the trader selling the produce (shall) realize it from the purchaser and shall be liable to pay the market fee to the committee; Clause (iv) is of relevance in the instant facts. It mandates that in any other case of sale

- 61 - of such produce, the purchaser shall be liable to pay the market fee to the committee. Sub-section (2-B) mandates that the market fee shall be remitted to the market committee within such time as may be specified in the bye-laws; Sub-section (3) mandates that notwithstanding anything contained in this Act, if any market committee in the State has already levied and collected market fee under Sub-section (2) from a buyer, no market fee shall be levied and collected from the agricultural produce by any other market committee. Sub-section (4) pertains to new industries involved in processing of agricultural produce in respect of purchases made by them for such processing and in accordance with the Industrial policy of the Government vide Government Order dated 26.08.2006. Sub-section (5) also pertains to exemption in certain other cases. 43. A reading of the provisions of Section 65 prior to the insertion of fourth proviso would demonstrate the fact that the enabling section provided for levy and collection of market fee at the rate specified

- 62 - under Sub-section (2) of Section 65 even in respect of and from the private market yards and no concession was accorded to the licencees establishing a private market yard and private market yards were treated on par with the markets established by the State. It is an undisputed fact that prior to de-regulation or liberalization introduced subsequently, the market fee was levied and collected at the rate of market fee stipulated was under Sub-section 2 of Section 65 and the only player was a market committee as established under Chapter 3 of the Act as the Controlling Section 8 of the Act prohibited the establishment or authorization or continuance of the marketing of any notified agricultural produce in any area notified as a market area under Section 4 of the Act. The market area and the markets were initially established by the State and hence, a uniform rate of market fee as provided under Section 65 (2) existed. 44. With the liberalization and relaxation of the stringent provisions of the Act prohibiting the sale of

- 63 - notified agricultural produces, the State saw the necessity to introduce different rates for different market players. Initially with the advent of the cooperative societies into the marketing of notified agricultural produce, the first proviso to Section 65(2) of the Act came to be inserted and such cooperative societies were required to pay market fee at the rate of 80% of the market fee payable under the Act. With the further liberalization, that is with the introduction of Section 72-A, B and C of the Act, envisaging different marketing concepts the same necessitated the further insertion of the third proviso. The third proviso categorically and specifically deals with the rate of market fee payable by a buyer in a spot exchange or by the licencee under a direct purchase licence and the contract forming sponsors buying from a contract farming producers (underlying by Court). Though the third proviso to Section 65(2) and Section 72-A, B and C of the Act were inserted by the Act 23/2007 with effect from 16.08.2007, the State had not provided for any concessional rate of payment of market fee in respect of

- 64 - a private market yard as envisaged under Sub-section (1)(a) of Section 72-A and as established under Sub- Section 1-A of Section 72-C read with Rule 87-B of the Rules whereas the petitioners are persons who are licenced to purchase agricultural produce directly from the agriculturists as envisaged by the provisions of Sub- section (1)(b) of Section 72-A and established under Sub-section (1)(a) and Sub-section (C) read with the provisions of Rule 87-C and the Rules of 1968. By the present amendment by way of insertion of the fourth proviso, the legislature has conferred a concession upon a private market enabling them to pay the market fee at the rate of 33% of the market fee payable under the Act. The petitioners, who were, till the date of the insertion of the fourth proviso, paying the market fee at the rate of 70% as provided under the third proviso, are now contending that they are entitled to the concessional rate of 33% as provided under the fourth proviso inserted by the Act 5/2014. It is relevant to note at this juncture itself that the Act 5/2014 has merely inserted the fourth proviso and has not omitted the third proviso

- 65 - and the third proviso continues to remain on the statute book. 45. On an enumeration of the facts and law involved in the present case, it is concluded by this court that the private market yards and the direct purchase centres are neither synonymous nor one and the same but distinct entities under the Act as a result of distinct marketing concept envisaged under the provisions of Section 72-A, 72-B and 72-C in conjunction with Rules 87-B, 87-C, 87-D of the Rules and the concept of spot exchange as provided under Section 131-D in conjunction with the provisions of Rule 91-J of the Rules. 46. From a reading of the Act, the conclusion that follows is that the private market yard is akin to a market area as notified under Sub-section (2)(d) of Section 6 of the Act which is not so in the case of direct purchase centre. The inescapable conclusion is that a private market stands on a footing on par with the market yard as envisaged under Section 6(1) of the Act

- 66 - which is a creation under a notification issued by the competent authority. The only activity in which the petitioners indulges is one of purchasing that is as defined under Section 2(5) of the Act, whereas a private market yard is one as defined under Section 2 (31-A) of the Act. As understood in common parlance, a market visualizes not only the activity of buying but also selling and ancillary activities like storing, preserving, processing etc. The conclusion arrived at by this court is further buttressed by enumeration of the duties and responsibilities cast upon a private market yard and a direct purchase centre. Certain onerous duties are cast upon a licencee who wishes to establish a private market yard. If a licencee desires to establish a private market yard in a city he/it is required to hold a minimum extent of 10 acres of land and the licencee is required to invest a minimum of 10 crores on infrastructure alone excluding the cost of the land and is required to provide auction halls, sheds, shops, godowns, storages, pre-cooling, cold storages, Raitha Bhavan, canteen, ripening chambers, laborary facilities

- 67 - to evaluate quality of produce, grading and packaging facilities, loading and unloading site, electrical display of market rates, electronic weighbridges, internal rates, drinking water, sanitary facilities etc. which are indicative of a wider scope of activity. The conditions imposed is, even at first sight, onerous, that apart the private market yard licencee is also required to furnish an irrevocable guarantee of deposit to the tune of Rs.50 lakhs or 2% of the annual turn over whichever is higher. The inescapable conclusion is that a person establishing a private market yard is required to make huge investments that too under a beneficial legislation which is formulated to aid and protect the interest of farmers and producers of agricultural produce. On the other hand, the persons like the petitioners are mere buyers/purchasers with the requirements to set-up minimal infrastructure facilities like weighment, storage, shelter and other basic facilities. These are facilities which would normally be available in any industry and are very minimal to state the least. Even the deposit demanded of such licencees is only Rs.5.00 lakhs being

- 68 - merely 10% of the sum deposited by the private market yards. Mere use of the a word ‘any private market’ cannot be interpreted in a manner as canvassed by the petitioners, as accepting such contention would be equating a mere purchaser with a market which is clearly illogical. 47. In this regard the observations of the Hon’ble Apex Court in the citations relied upon by the petitioners would be of relevance for the determination of the issue. The Hon’ble Apex Court in the case of K. Prabhakaran Vs. P. Jayarajan reported in (2005) 1 SCC quoting from the book of justice Mr. G.P. Singh on Principles of Statutory Interpretation P.S.I as it is extracted in the following:- “when a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which that word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule

- 69 - that on ‘the meanings of words and expressions used in an Act must take their colour from the contest in which they appear.’ Therefore, ‘when the context makes the meaning of a word quite clear, it become unnecessary to search for and select a particular meaning out of the diverse meaning a

word is capable of, according to Lexicographers.” 48. From the reading of the above it is apparent that a word used in the statute which is not defined therein has to be understood with reference to the context when the word has several meanings. The basic rules of interpretation requires that a statute to be considered as a whole or otherwise, could result in absurdity and also so as to avoid any inconsistency or repugnancy among its several provisions and the words and sentences have to be construed in an ordinary and natural meaning. If this court is persuaded to accept the contention canvassed on behalf of the petitioners, that in view of the use of the phrase “private market” even spot exchange centres and direct purchase centres

- 70 - would come within the sweep of the fourth proviso, it would result in rendering otiose the third proviso and it is well settled law that no interpretation of the statute is permissible which would render any other provision nugatory. 49. This Court in support of the above conclusion draws sustenance from the observation of the Hon’ble Apex Court at para 8 of the ruling reported in AIR 1987 SC1668 “It is a well settled rule of interpretation of statutes that the provisions of an Act should be interpreted in such a manner as not to render any of its provisions otiose unless there are compelling reasons for the Court to resort to that extreme contingency.” 50. As concluded supra, by no stretch of imagination the direct purchase centre can be equated with a market. It cannot even be gainfully argued that the intendment of the legislature was to confer the benefits of the concessional rate of payment of market fee under the fourth proviso on entities like direct

- 71 - purchase centres or spot exchange centres. Further, the rules of interpretation also requires that the provision must be read as a whole and the language used in the provision has to be understood in the meaning conveyed by the language used by the legislature. If the fourth proviso is read as a whole it provides for exemption of levy of market fee on flowers, fruits and vegetables. But instead empowers the market committee to collect user charges in respect of the above articles for such services provided by the market committee and the buyer is liable to pay the user charges as levied. The language employed in the fourth proviso if read in its entirety would conclusively lead to an understanding that what is envisaged by the fourth proviso is not merely a purchasing activity as is carried on in a direct purchase centre and the very fact that it envisages the collection of user charges is reflection of activities more than just purchasing. Hence, the fourth proviso must be interpreted as being applicable only to private market yards. The petitioners and persons similarly situated cannot be permitted to take an undue

- 72 - advantage of the absence of the word ‘yard’ in the fourth proviso as neither the Act nor the Rules speak of any private market. The Act relates to market areas and market yards. The phrase ‘private markets’ is neither defined under the Act nor the Rules. What is defined under the Act is a ‘market’ under Section 2(18) of the Act, ‘market area’ under Section 2 (19) and ‘private market yard’ under Section 2 (31-A) of the Act. The definition of market under the Act means any notified area declared or deemed to be declared to be a market under this Act. It is neither the case of the petitioners, nor is it canvassed before this court that the direct purchase centre is a notified market area. It is also a fact that the petitioners have not been able to demonstrate as to why the third proviso is inapplicable to them when the third proviso, in categorical terms includes within its ambit a buyer in a spot exchange established by licencee or a licencee for a direct purchase who have been made liable to pay market fee at the rate of 70% of the market fee payable under the Act.

- 73 - In view of the above discussion, the point for consideration is answered against the petitioners. The writ petitions being devoid of merits, deserves to be rejected. Accordingly, the writ petitions stand dismissed. Sd/- JUDGE SS-CT Chs