Chimanlal Premchand v. The State of Bombay

Agricultural produce-Packed or pressed-If loses identity-State Government-Powers to make rule for regulation of business and condition of trading-Bombay Agricultural Produce Market Act, I939 (Bom. 22 of z939), ss. 2 and 26-Bombay Agricultural Produce Market Rules r94r, r. 65.

The appellant as a trader made purchases of full pressed cotton bales in the market area of Broach without requisite licence from the market committee. thereby contravening the provisions of r. 65(1) of the Bombay Agricnltural Produce Market Rule 194i. The appellant, inter alia;. contended that the Act and Rules passed thereunder did not apply to pressed cotton which having been pressed into bales had lost its identity and was no more an agricultural produce and that r. 65 was ultra vires inas-much as its provisions were in excess of the rule making power of the State Government.

Held, that an agricultural produce by being packed in containers or pressed into bales does not in any way change its essential character, and continues to be an agricultural produce, The fact that the cotton ginned or unginned is pressed into bales, I959 or packed otherwise does not make it any less the cotton and is an agricultural produce as defined under s. 2 of the Bombay Chimanlal Agricultural Market Act, 1939. Ptemchanil

Under s. 26 of the Act, the State Government has ample v. powers to make rules for the regulation of business and conditions The State of of trading in the market and sub-s. (1) of the said s. 26 confers Bombay power on the State Government to maker. 65.

CRIMINAL Al.>PELI,ATE JURISDICTION: Criminal Appeal No. 200 of 1957.

Appeal by special leave from the judgment and order dated the September 11, 1956, of the Bombay High Court, in Criminal Appeal No. 742 of 1956, arising out of the judgment and order dated Decem-ber 31, 1955, of the Joint Civil Judge (J.D.) and Judicial Magistrate, First Class, Broach, in Criminal Case No. 605of1953.

Purshottam Tricumdas, J.B. Druku,hanji, S. N. Andley and Rameshwar Nath, for the appellants.

H.J. Umrigar and R.H. Dhebar, for the respond-ent.

1959. September 15. The Judgment of the Court was delivered by

SuBBA RAO J.-This is an. appeal by special leave Subba Rao J. against the judgment of the High Court of Judicature at Bombay setting aside that of the :First Class Magist-rate, Broach, and convicting the appellant for contra-vening the provisions of r. 65 (1) of the Bombay Agricultural Produce Markets Rules, 1941, hereinafter called the Rules, and imposing on him a fine of Rs. 25.

The appellant was a trader carrying on business in cotton at Broach. On February 7 and 9, 1953, he purchased full pressed cotton bales from M/s. Ratanji Faramji & Sons in two instalments of 200 bales each through a licensed broker, Dahyabhai Acharatlal.

Re also purchased 100 bales from Halday Multi-Pur-pose Co-operative Society. All these purchases were made by the appellant as a trader in the market area of Broach without the requisite licence from the Market Committee. He was charged in the Court of '959 the Joint Civil Judge (Junior Division) and Judicial

Magistrate, :First Class, Broach, for committing the Chimanlal breach of r. 65 (1) of the Rules. The Judicial Magis-Premehand trate held that pressed cotton was not cotton, ginned

v. or unginned, within the meaning of one of the items The State of

Bombay mentioned in the schedule to the Bombay Agricul-

tural Produce Markets Act (hereinafter called "the Subba Rao]. Act"), and, therefore, the appellant did, not commit

any offence under the Act or the Rules framed there-under. The State of Bombay carried the matter by way of appeal to the High Court of Bombay, and a Division Bench of the said High Court, consisting of Chainani and Shah, JJ., allowed the appeal and convicted the appellant for contravening the provi-sions of r. 65(1) of the Rules and imposed upon him a fine of Rs. 25. This appeal challenges the correctness of the judgment of the High Court,

Learned Counsel for the appellant raised before us the following three contentions : (i) the Act and the Raj.es framed thereunder did not apply to pressed cotton, and, therefore, the appellant did not contra-vene the provisions of r. 65 (1) of the Rules; (ii) r. 65 is ultra vires inasmuch as its provisions are in excess of the rule making power of the State Government; and (iii) the transactions in question were forward contracts for future delivery, and, as no delivery was intended or in fact made, the appellant cannot be said to have traded in cotton within the market area.

The answer to the first contention turns upon the interpretation of cl. (1) of sub-s. (1) of s. 2 of the Act read along with the relevant items or items in the Schedule. The relevant provisions read:

S. 2 (1): In this Act unless there is anything repugnant in the subject or context,- (i) "Agricultural Produce" includes all produce of agriculture, horticulture and animal husbandry specified in the schedule ;

• • • (vi) " Market Area" means any area declared to be a market area under section 4.

s.o.R. SUPREME COURT REPOR'.rS 767

Schedule E. r959 I. Fibres· · (i) Cotton (ginned and unginned) Chimanlal Premchand The Bombay Agricultural Produce Markets Rules, v. 1941: The Stale of

Rule 65. (1): No person shall do business as a Bombay trader or a general commission agent in agricultural Subba Rao]. produce in any market area except under a licence granted by the market committee under this rule.

* * * (7) : Whoever does business as a trader or a· general commission agent in agricultural produce in any market area without a licence granted under this rule or otherwise contravenes any of the provi-sions of this rule shall, on conviction, be punishable with a fine which may extend to Rs. 200 and in the case of a continued contravention with a further fine which may extend to Rs. 50 for every day during which the contravention continues after the date of the first conviction, subject to the maximum of Rs. 200.

The gist of the aforesaid provisions may be stated thus: Agticultural produce includes all produce of agriculture specified in the Schedule. Cotton, ginned and unginned, is specified in the Schedule as an agri-cultural produce. A trader cannot do business in the said produce in any market area without obtaining licence from the Market Committee. If he does such business without a licence, he is liable to punishment under r. 65 of the Rules.

If pressed cotton is "cotton, ginned or unginned '', specified in the Schedule, the appellant, having admit-tedly done business in the said cotton in the market area, has contravened the provisions of r. 65, and, therefore, he is liable to be convicted under r. 67 of the Rules.

It is contended that ginned cotton which has been pressed into bales is not cotton within the meaning of the Act. What is " pressed cotton " in bales ? It involves a simple process described as pressing, and cotton is pressed into bales only to facilitate its trans-port from one place to another; it does not involve

any chemical change or even a manufacturing process. Ginned. cotton, after it is pressed into bales, continues c~;,.....z.z to be ginned cotton, and it is sold and purchased 1'r...,.llond only as cotton, though in bales. We find it difficult to

v.

The Staie of accept the argument that pressed cotton is a different

BCnllb•Y commodity. Nor do we find any relevancy in the

argument that stockists, industrialists and exporters Su/Iba Rllo ]. deal with pressed cotton and not loose cotton, because

the said fact does not in any way change the essential character of the agricultural produce. If a trader carries on business in that commodity, tho considera-tion whether the trader or the buyer is an agriculturist or a non-agriculturist is not relevant to the enquiry,

Items II to XI of the Schedule specify cereals, pulses, oilseeds, narcotics, sugarcane, fruits, vegetables, animal husbandry products, condiments, .spices and others, and grass and fodder. A perusal oftheitems indicates that most of them would be sold in containers like b1>skets, packages, tins etc. It cannot be argued that when the pulses, fruits or vegetables are packed in a basket, the basket with its contents becomes a different commodity from that contained in it. So too, when tobacco is pressed and packed, it cannot be suggested that paqked tobacco has changed its character. So also in the case <lf other products mentioned in the Schedule. \Ve do not, therefore, see any principle or reason for treating cotton in a different way from other agricultural products.

It is said that the primary object of the Act is to help agriculturists, that agriculturists do not ordinarily deal or do business in bales of cotton and tnat. the fogislature could not, therefore, have intended to make the Act applicable to pressed cotton. It cannot be disputed that one of the objects of the Act is to protect the producers. That object would certainly be defeated, if within the market area a trader, whether he is an agriculturist or not, can do business of buying and selling cotton pressed into bales, for by that simple process he would be free from the restrictions imposed to protect the agriculturists. The object of such legis-lation is to protect the producers of agricultural crops from being exploited by the middlemen and profiteers and to enable them to secure a fair return for their I959 produce. This object would certainly be defeated if we were to accept the contention of the learned Counsel Chimanlal Premchand J:Or the appellant. v.

Shortiy stated tb,e position iA this : Cotton, ginned The State of or unginnod; continues to be cotton till it loses its Bombay identity by some chem1cal or industrial process. So J. long as the identity is not lost, the fa.ct that it is press· Subba Rao ed into bales or packed otherwise does not make it any the lefts cotton specified in 'the Schedule to the Act. In this view, the pressed cotton in bales is an ~gr1(}1l!tura.l produce ae defi.ru¥1 in s. 2(l)(i) of the Act, and, therefore, the appellant in doing business in the said produce without licence has contravened r. 65 of the Rules.

The second contention is that ·r; 65 is in excess of the rule making power of the State Government. This argument is elaborated by the· learned Counsel in the followingma.nner: Purporting to exercise the powers conferred by s. 26 of the Act, the Government of '.Bombay ma.de r. 65 prohibiting any person from doing business as a trader, or as a commission agent, in any agricultural produce in any market 'area except under a. licence .granted by the Market Committee under that rule. Under s. 26(.2)(e) of the Act, t.he State Govern-ment has power only to make rules fiXingthe maximum fees which may be levied by the Market Committee. in respect of agricultural produce bought and sold by persons holding a licence under the Act in the market area. Under the Act the State Government .is only empowered to grant a licence to any person to use any place in the market area for the purpose of buying or selling of any agricultural produce; therefore, under s. 26(2) (e) of the Act, the Government can only make a rule prescribing the fees in respect of a licence issued to a person to use any place in the said area and not prohibiting any other person from doing business without a licence in that area. So stated the argument appears to be plausible, but a scrutiny of the relevant provisions of the Act, the Rule"1 made by the Govern-ment and the Bye-laws framed· by the Market Com-mittee shows that there is no basis for this contention.

The relevant provisions read :

I959 The Bombay Agricultural .Produce Markets Act, 1939. 8. 26 (1): The Provincial Government may, either Chimanlal generally or specially for any market area or market Prenu;hand areas, make rules for the purposes of carrying out

v.

The State of the provisions of this Act.

Bombay (2). In particular a.nd without prejudice to the

generality of the foregoing . provisions, such rules