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Case Title: Sangam Milk Producer Company Ltd. v. The Agricultural Market Committee & Ors.

Case No: C.A. No. 6493/2014

Dated on: 5 March 2024

Coram: Hon’ble JUSTICE SUDHANSHU DHULIA and JUSTICE S.V.N. BHATTI

FACTS OF THE CASE

In the State of Andhra Pradesh The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966 was brought with the purpose to consolidate and amend the laws regulating the purchase and sale of agricultural produce, livestock and products of livestock, along with establishment of markets in connection therewith. The aim was to secure effective and remunerative price of commodities by bringing producers and traders face to face thereby eliminating middlemen and do away with some other earlier unethical trade practices, which were exploiting agriculturists and farmers. In 1968, the Andhra Pradesh government issued a notification under Section 3(3) of the Act declaring certain “notified areas” where “ghee” was included in Schedule II as a livestock product. In 1971, another notification under Section 4(4) was issued, declaring the “notified market areas” in respect of the Agricultural Market Committee, Guntur, and included “ghee” as a notified product. In 1972, the 1971 notification was amended to remove “ghee” from the list of notified livestock products for the respondent-committee. On 15.07.1994, the Andhra Pradesh government published a general notification directing all notified markets within the state to regulate all products listed in Schedule II of the 1968 notification, which included ghee. Producers of livestock products challenged the 1994 notification on two grounds mainly, that “ghee” is not a “product of livestock” and thus cannot be regulated. Secondly, They contended that the procedure prescribed under Section 3 of the Act, which involves publishing a draft notification and considering objections, was not followed. The matter went to a Full Bench of the Andhra Pradesh High Court, which, by a majority decision, rejected the appellants’ arguments and upheld the 1994 notification. The court held that “ghee” is a livestock product and that the notification under challenge was issued under Section 4, not Section 3, hence not requiring the draft notification procedure. The appellants finally approached the Supreme Court, challenging the validity of the 1994 notification and the High Court’s decision.

ISSUES

• whether “ghee” is a “product of livestock” under the provisions of The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966.
• whether the Government notification (G.O. Ms. No.286 dated 05.07.1994), which inter alia notifies “ghee” as one of the products of livestock for the purpose of regulation of purchase and sale of “ghee” in all notified market areas was published after due compliance of the procedure contemplated under the provisions of the Act?

LEGAL PROVISIONS

The Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966:

Section 2 (Definitions):

• Section 2(v): Defines “livestock” to include cows and buffaloes.
• Section 2(xv): Defines “products of livestock,” which is central to the argument about whether “ghee” falls under this definition.

Section 3 (Declaration of Notified Area):

• Section 3(1): The government may publish a draft notification declaring its intention to regulate the purchase and sale of agricultural produce, livestock, or products of livestock in a specified area.
• Section 3(2): The draft notification should invite objections or suggestions within a specified period.
• Section 3(3): After considering the objections or suggestions, the government may publish a final notification declaring the area as a notified area for the purposes of the Act.
• Section 3(4): Provides the government with the authority to exclude or include areas in the notified area and to declare new notified areas through notifications.

Section 4 (Constitution of Market Committee and Declaration of Notified Market Area):

• Section 4(1): The government shall constitute a market committee for every notified area and the committee shall have corporate status.
• Section 4(1-A): Details the provisions for constituting new market committees and apportionment of assets and liabilities.
• Section 4(1-B): Allows the government to constitute a separate market committee for a special market in a notified area.
• Section 4(2): The market committee’s duty is to enforce the provisions of the Act within the notified area.
• Section 4(3): Empowers market committees to establish markets and provide facilities for the purchase and sale of notified products.
• Section 4(4): Allows the government to declare by notification the market area and adjoining areas to be notified market areas for the purposes of the Act.

Section 12 (Levy of Fees by Market Committee):

• Market committees are empowered to levy fees on the sale and purchase of notified agricultural produce, livestock, and products of livestock within the notified market area.

CONTENTIONS OF THE APPELLANT

The appellants argued that “ghee” should not be classified as a “product of livestock” under the Act. They contended that since ghee is derived from milk and not directly from livestock, it does not fall within the definition provided in the Act. The appellants claimed that the 1994 notification did not follow the procedural requirements laid out in Section 3 of the Act. They argued that a draft notification should have been published, objections should have been invited and considered, and only then could a final notification be issued. They asserted that this process was not adhered to, making the 1994 notification invalid. The appellants contended that the market committees did not provide the necessary facilities for the purchase and sale of “ghee” as required by the Act. They argued that since the committees did not fulfil their responsibilities, they should not be liable to pay market fees. The appellants argued that they should be exempted from paying market fees for the period prior to the High Court’s judgment in 2009 as payment of accumulated market fees for the period from 1994 to 2009 would be unjust, as these fees had been accumulated over a long period due to the prevailing legal uncertainty.

CONTENTIONS OF THE RESPONDENTS

The respondents argued that “ghee” is indeed a product of livestock. They maintained that since ghee is derived from milk, which is a direct product of cows and buffaloes (livestock), it qualifies as a product of livestock under the Act. The respondents contended that the 1994 notification was valid and properly issued under Section 4 of the Act, not Section 3. They argued that the procedural requirements for issuing a notification under Section 4 do not necessitate a draft notification or the invitation of objections, unlike Section 3. Thus, the 1994 notification did not violate any procedural rules. The respondents refuted the appellants’ claim that market committees did not provide necessary facilities. They argued that market committees were fulfilling their duties as mandated by Section 4(2) and 4(3) of the Act. The respondents emphasized that the appellants had benefited from the market facilities and were therefore responsible for paying the market fees on the sale and purchase of “ghee” from the date of the 1994 notification.

COURT’S ANALYSIS AND JUDGEMENT

The court agreed with the respondents and upheld the majority opinion of the Andhra Pradesh High Court. It concluded that “ghee” is indeed a product of livestock. The court reasoned that livestock, as defined under Section 2(v) of the Act, includes cows and buffaloes. Since “ghee” is derived from milk, which is a direct product of cows and buffaloes, it qualifies as a product of livestock under Section 2(xv) of the Act. The court referenced the case of Park Leather Industry (P) Ltd. v. State of U.P., Kishan Lal v. State of Rajasthan, and so on to support the interpretation that products derived from livestock, even though intermediate products like milk, still qualify as livestock products. The Court clarified that Section 3 requires a draft notification and an opportunity for objections before finalizing a notified area, which is a one-time measure. In contrast, Section 4 allows for the declaration of a notified market area for already notified products and does not require a similar procedure. Therefore, the 1994 notification, issued under Section 4 to regulate “ghee,” did not violate procedural requirements, and the appellants’ argument on this ground was rejected. The court upheld the High Court’s finding that the Market Committees had provided necessary facilities within the notified market areas. The court agreed that the appellants, having availed these facilities, were liable to pay the market fees. The court ruled that the appellants must pay the market fees for the period from 1994 to 2009, allowing payment in installments to ease the financial burden. Consequently, The Supreme Court of India dismissed the appeals and upheld the majority decision of the Andhra Pradesh High Court vacating its interim orders that had restrained the respondents from collecting market fees during the pendency of the appeals.

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Judgement Reviewed by – PRATYASA MISHRA

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