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Pepsico India Holdings Private Limited v/s State of Punjab & Others

    CWP No.13012 of 2005 (O&M)

    Decided On, 27 April 2012

    At, High Court of Punjab and Haryana

    By, THE HONOURABLE ACTING CHIEF JUSTICE MR. M.M. KUMAR & THE HONOURABLE MR. JUSTICE ALOK SINGH

    For the Petitioner: Nageshwar Rao, Sr. Advocate, Rohit Khanna, Chetan Chopra, Santosh Krishanan, Rohit Chandel, Advocates. For the Respondents: R2 - Piyush Kant Jain, Addl. A.G., Punjab, Sarjit Singh, Sr. Advocate, M.S. Virk, Advocate.



Judgment Text

ALOK SINGH, J.

1. In all the writ petitions being CWP No.13012 of 2005 (Pepsico India Holdings Private Limited vs. State of Punjab and others), CWP No.8355 of 2001 (Pepsi Foods Limited vs. State of Punjab and others), CWP No.818 of 2006 (Pepsico India Holdings Private Limited vs. State of Punjab and others) and CWP No.6604 of 2007 (Pepsico India Holdings Private Limited vs. State of Punjab and others) identical questions of law are involved, therefore, all the writ petitions are being heard and disposed of together with the consent of learned counsel for the parties.

2. To understand the controversy, facts of CWP No.13012 of 2005 (Pepsico India Holdings Private Limited vs. State of Punjab and others) are being narrated as under.

3. Petitioner has invoked the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, assailing the action of the respondents asking the petitioner to pay market fee, rural development fee and penalty thereon.

4. Brief facts of the present case, inter alia, are that petitioner has set up one factory for manufacturing of potato chips at village Channo, District Sangrur, Punjab. The raw material for potato chips is potato, which the petitioner has been procuring within the State of Punjab from other States and from the farmers directly in accordance with the arrangement made under an agreement. The ground of challenge is that since petitioner is engaged in the business of manufacturing and selling potato chips, therefore, he is covered under the expression 'confectioners and purveyors of parched, fried and cooked food' as provided in Rule 18 of the Punjab Agricultural Produce Markets (General) Rules, 1962 (hereinafter referred to as 'the Rules'). The petitioner has claimed that it is exempted from taking licence under Section 6 of the Punjab Agricultural Produce Markets Act, 1961 (hereinafter referred to as 'the Act') and in view of Section 23 of the Act, no fee can be levied on the petitioner for purchase of agricultural produce. Another ground of challenge is that since potatoes were purchased in different States and not bought within the State of Punjab, therefore, no market fee can be levied on the petitioner.

5. Respondents have refuted the assertions of the petitioner and have stated that since petitioner himself has obtained license, therefore, petitioner cannot claim that he was not supposed to obtain license and is exempted under Rule 18 of the Rules; since petitioner is engaged in the manufacturing of potatoes chips within the State of Punjab and is storing the potatoes in the factory premises in Punjab, therefore, is liable to pay fee. No evidence is placed on record to prove that entire transaction regarding the purchase of potatoes was completed in other States by paying market fee in those States. The petitioner has failed to prove that potatoes were in fact purchased in different States outside the State of Punjab; petitioner does not fall within the definition of confectioners and purveyors of parched, fried and cooked food.

6. We have heard Mr. Nageshwar Rao, learned senior counsel, for the petitioners, Mr. Sarjit Singh, learned senior counsel for the Marketing Board, and Mr. Piyush Kant Jain, learned Additional Advocate General, Punjab.

7. Mr. Nageshwar Rao, learned senior counsel, for the petitioners, has vehemently argued that in view of Rule 18(1) of the Rules, confectioners and purveyors of parched, fried and cooked food are exempted from taking licence for the purchase of agricultural produce. He has further argued that since petitioner is engaged in the manufacturing and supply of potato chips, therefore, petitioner would fall within the definition of 'confectioner' and in any case within the definition of 'purveyor of parched, fried or cooked food'. He has further submitted that as per Section 23 of the Act, market fee can be levied on the agricultural produce bought or sold by a licencee in the notified market area. He has further argued that since petitioner cannot be termed as licencee in view of exemption under Rule 18(1)(a) of the Rules, therefore, Section 23 of the Act has no application in the present case. He has further argued that in view of the proviso of Section 23 of the Act, fee cannot be levied in respect of any transaction in which delivery of the agricultural produce bought or sold is not actually made within the market area. Mr. Nageshwar Rao in alternative, has argued that Rule 29 of the Rules, whereby definition of bought or sold is extended, is ultra vires in view of the fact that Rules can only be framed under Section 43 of the Act for carrying out the purpose of this Act and without amending Section 23 Act, definition of bought and sold in a notified area cannot be extended by amending Rule 29 of the Rules.

8. Per contra, Mr. Sarjeet Singh, learned senior counsel, and Mr. Piyush Kant Jain, learned Additional Advocate General, Punjab, have vehemently argued that petitioner does not fall within the definition of confectioner and purveyor, therefore, it was duty bound and has rightly obtained licence under Section 6 of the Act, therefore, agricultural produce bought by a licencee in the market area or sold to the licencee in the market area would attract market fee as per Section 23 of the Act.

9. To appreciate the respective arguments advanced by learned counsel for the parties, we would like to reproduce Section 6 of the Act and Rule 18 of the Rules, which read as under: -

Section 6 of the Act

'6. Declaration of notified market area: -

(1) x x x

(2) x x x

(3) After the date of issue of such notification or from such later date as may be specified therein, no person, unless exempted by rules made under this Act, shall, either for himself or on behalf of another person, or of the State Government within the notified market area, set up, establish or continue or allow to be continued any place for the purchase, sale, storage and processing of the agricultural produce so notified; or purchase, sell, store or process such agricultural produce except under a licence granted in accordance with the provisions of this Act, the rules and byelaws made thereunder and the conditions specified in the licence.

Provided that a licence shall not be required by a producer who sells himself or through a bona fide agent, not being a commissions agent, his own agricultural produce or the agricultural produce of his tenants on their behalf or by a person who purchases any agricultural produce for his private use.

(4) x x x'

Rule 18 of the Rules

'18. Persons exempt from taking licences under section 6. - [Section 6]. - (1) Under sub-section (3) of section 6 the following persons shall be exempt from taking licences for the purchase of agricultural produce: -

(a) confectioners and purveyors of parched, fried or cooked food;

(b) x x x

(c) hawkers and petty retail shop-keepers who do not engage in any dealing in agricultural produce other than such hawking or retail purchases;'

10. Having perused Section 6(3) of the Act, we have no hesitation to hold that no person, unless exempted by Rules made under this Act, shall set up, establish or continue or allowed to be continued any place for the purchase, sale, storage and processing of the agricultural produce so notified or purchase, sell, store or process such agricultural produce except under a licence granted in accordance with the provisions of this Act.

11. Admittedly, the petitioner is potato chips manufacturer. For the purpose of manufacturing potato chips, the petitioner is storing potatoes in his factory premises, which is situated in the market area within the State of Punjab. Not only this, by processing of the potatoes, petitioner was converting the potatoes into potato chips, therefore, petitioner is covered under Section 6(3) of the Act and has rightly obtained licence.

12. Now, we have to see as to whether petitioner falls within the definition of confectioner or purveyor as mentioned in Rule 18(1)(a) of the Rules. Hon'ble Apex Court in the case of South Bihar Sugar Mills Ltd., etc. vs. Union of India, AIR 1968 SC 922, has held that dictionary meaning should be referred when terms are statutorily undefined. In the Act, term 'confectioner' or 'purveyor' is not defined, therefore, we would like to refer Oxford Dictionary and Thesaurus to see the definition of confectioner and purveyor.

13. As per dictionary meaning, confectioner means dealer in sweets or pastries. Since petitioner is not a dealer rather is a manufacturer of potato chips by processing the potatoes, therefore, it would not fall within the definition of confectioner.

14. As per definition of purveyor, purveyor would be a supplier of food as one's business. As per the Oxford Dictionary (Online), purveyor means a person who sells or deals in a particular goods or he who spreads or promotes idea, views etc. or he who deals in traditional Christian values.

15. The sine quo non to attract Rule 18(1)(a) is that a person should be supplier or dealer (Purveyor) of perched, fried or cooked food. Petitioner is manufacturer of potato chips and cannot be regarded as supplier or dealer of the food, therefore, petitioner is not exempted from taking licence under Section 6 in view of provision of Rule 18(1)(a) of the Rules, therefore, is duty bound and has rightly applied and granted licence under Section 6(3) of the Act.

16. The question then arises as to whether any market fee can be levied on the petitioner in view of Section 23 of the Act read with Rule 29 of the Rules?

17. The petitioner has not produced any document on record to say that agreements of sale or purchase of the potatoes were entered in other States and deliveries of potatoes were taken in those States and thereafter the potatoes were transported to the State of Punjab. Petitioner by way of producing evidence could say that entire cost of potatoes was paid in other States and market fee was also paid on the purchase of potatoes in those States. Petitioner has not placed on record any evidence viz. entries on the barriers or builties to prove that potatoes were transported within the State of Punjab by the petitioner himself. In the absence of any material evidence, we are not inclined to accept the arguments of Mr. Rao that agreement to purchase the potatoes was entered outside the State of Punjab, payment was made outside the State of Punjab to the sellers and thereafter potatoes were transported to the State of Punjab by the petitioner on his own. Therefore, adverse inference has to be drawn against the petitioner to say that potatoes were delivered in the factory of Punjab and no duty was paid in the other States, therefore, petitioner is duty bound to pay market fee on such purchases in view of Section 23 of the Act. Moreover, Division Bench of this Court in the Case of The Market Committee, Dhariwal vs. The British India Corporation, Limited & another, 1976 PLJ 525 in paragraph Nos.7 and 8 has held as under: -

'7. The crucial words in the section are 'bought or sold by licensees'. The question to be determined is as to what is the import of these words. Though no definition of these words finds place in the Act, reference may, usefully, be made to section 4 of the Sale of Goods Act, 1930, which speaks of a contract of sale. It recites that where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale. The argument advanced on behalf of the Mill, as already noticed is that all transactions in regard to the purchase of the raw material are carried out by their Head Office at Kanpur, and hence nothing is 'bought' by the Dhariwal Mill within the notified area. The contention is, however, misplaced. The examination of the record voluntarily made available by the Mill, revealed the existence of numerous original contracts entered into by the respondent Firm (though at Kanpur) with various suppliers of raw wool in India, and in practically all these transactions it was indicated that 80 per cent of the price of the goods was payable against document and the balance after receipt and examination of the goods which were required to be despatched to the Dhariwal Mill directly.

8. Rule 29 of the Punjab Agricultural Produce Markets (General) Rules, 1962 framed under the Act, makes provision for the levy of the fees on the agricultural produce bought or sold by licensees in the notified market area and sub-rule (7) thereof is to the following effect :

'29. (7) For the purpose of this rule agricultural produce shall be deemed to have been bought or sold in a notified market area -

a) if the agreement of sale or purchase thereof is entered into the said area; or

b) if in pursuance of the agreement of sale or purchase the agricultural produce is weighed in the said area; or

c) if in pursuance of the agreement of sale or purchase the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser.'

Clause (b) of the above sub-rule is immediately attracted so as to bring a transaction within the term 'bought or sold', if in pursuance

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of the agreement of sale or purchase the agricultural produce is weighed in the market area, and clause (c) would be applicable if in pursuance of the agreement of sale or purchase, the agricultural produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser. To our mind, both these sub-clauses are applicable even in view of the admitted facts of this case. Mr. Bhagirath Das Seth has, however, contended that Rule 29(7) has unjustifiably enlarged the scope of the words 'bought or sold' as used in the Act itself. This point not having been raised in the Writ Petition, was not allowed to be agitated by the learned Single Judge and for this reason we do not propose to go into the same in the present appeal. Even otherwise, it is not necessary to go into the merits of this contention in view of the undisputed facts of the present case. As already noticed, the transaction of sale is completed immediately on the delivery of the goods to the Dhariwal Mill and this would bring the transaction within the meaning of the word 'bought' as used in the Act itself.' 18. In view of the above factual position, we are not inclined to discuss validity of Rule 29. 19. No other point has been raised. Therefore, impugned orders passed by the authorities below do not warrant any interference. All the writ petitioners deserve to be dismissed. Hence are dismissed. 20. A photocopy of this order be placed on the files of connected cases.
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