A.A. Dave, J.
1. The learned Additional Sessions Judge, Mensana has made this reference recommending that the order of conviction and sentence passed by the learned Judicial Magistrate, First Class, Patan in Criminal Case. No. 3373 of 1971 for the offences punishable under Section 8 read with Section 36(1) of the Gujarat Agricultural Produce Markets Act, 1964, hereinafter referred to as the Act, be set aside and for passing such orders as may be deemed fit.
2. This reference raises an important question of law regarding interpretation of Section 36(1) of the Act- whether a trader trading in agricultural produce outside the market area is required to obtain a licence for purchasing agricultural produce in the market yard through a commission agent holding necessary licence.
3. In order to appreciate this point, it will be worthwhile to refer to certain undisputed facts. The present applicants are the traders doing business at Harij. Admittedly, they do not hold a licence either as traders or commission agents for buying or purchasing agricultural produce in the market yard of Patan. There is no dispute that the firm of Yashwantlal Mafatlal possesses a licence for doing business of commission agent and through this firm, the applicants had purchased and sold certain agricultural produce in the market area in question. The managing committee, therefore, passed a resolution to prosecute the applicants for an offence under Section 8 read with Section 36(1) of the Act, for operating in the market area without a licence. The learned Judicial Magistrate, First Class, Patan convicted them and sentenced them to pay a fine of Rs. 25/- in default S.I. for 15 days for each transaction. Against that order of conviction and sentence passed by the learned Judicial Magistrate, First Class, Patan, a revision application was preferred in the Sessions Court, Mehsana which was heard by the learned Additional Sessions Judge. In the opinion of the learned Additional Sessions Judge, it was not necessary for the applicants to obtain any licence as they had entered into the transactions through a commission agent who was holding a licence as required under the Act. In the opinion of the learned Judge, therefore, no offence was deemed to have been committed by the accused under Section 8 read with Section 36(1) of the Act. He has, therefore made the present reference to this Court.
4. Mr. Viresh C Desai, learned Advocate for the applicants invited my attention to the definition of a trader, commission agent and relevant sections of the Act under which a licence is required for operating in the market area. He also referred to the relevant rules particularly Rules 45, 56 and 62 framed by the Government as per Section 59 of the Act. Mr. Desai urged that a personal of the Act and the rules will clearly go to show that if a trader residing outside the market area does not physically transact any business in the market area but enters into transactions of purchase or sale through a commission agent who held a licence, he could not be said to have committed any offence either under Section 6 or Section 8 of the Act. Mr. Desai, therefore, urged that the reference made by the learned Judge below should be accepted.
5. Mr. S.K. Zaveri, learned Advocate for opponent No. 2 on the other hand urged that the whole scheme of the Act is to regulate transactions relating to the agricultural produce and if a trader residing outside the market area entered into transactions through a commission agent without obtaining a licence, there would be no control over his activity and the whole purpose of enacting this Act would be made nugatory. He urged that it was immaterial if the present applicants were residing outside the market area. But the fact remains that they had purchased or sold agricultural produce in the market area. It was immaterial, Mr. Zaveri urged that, these transactions were not physically carried out by this applicants in the market area but they did so through the intervention of the commission agent. But the evidence clearly shows that the bills were issued in the name of the applicants, the goods were stored in the godown of the commission agent at the risk of the applicants, the property or goods had passed to the applicants and therefore, the applicants are deemed to have purchased or sold the goods themselves in the market area. He submitted that in that case, the applicants can clearly be said to have contravened the provisions of Section 8 of the Act. In support of his submissions, Mr. Zaveri referred to several decisions of this Court as well as the Supreme Court which I will consider in due course.
6. The contention raised by Mr. Zaveri is that the applicants being the direct purchasers through the commission agent are deemed to be operating in the market area for that particular transaction. As they have done so without a licence, they have contravened the provisions of Section 8(1) punishable under Section 36(1) of the Act. His contention is that a trader is a trader whether he has entered into a single transaction or more. The term 'operate' does not mean that he should be physically present in the market. He could operate through an agent who may be a broker or a commission agent. In such a case, Mr. Zaveri urged that even though the applicants had entered into transactions of sale or purchase through the commission agent, they would be contravening the provisions of the Act, if they operate in the market area without holding a valid licence.
7. In order to appreciate the contentions raised by Mr. Zaveri, it would be worthwhile to refer to some of the relevant provisions of the Act and Rules made thereunder. Section 2(3) of the Act defines 'broker.'A broker means an agent whose ordinary course of business is to negotiate and make contracts on payment of commission for purchase or sale of agricultural produce on behalf of his principal but does not include a servant of such principal whether engaged in negotiating or making such contracts.' Sub-section (7) defines general commission agent. General commission agent means 'a trader who bona fide buys or sells or offers to buy or sell for an agreed commission, any agricultural produce on behalf of another person and does or offers to do anything necessary for completing and carrying out the transaction of such sale or purchase.' Sub-section (23) defines a trader. Trader means- 'any person, who carries on the business of buying or selling of agricultural produce or of processing of agricultural produce for sale and includes a co-operative society, joint family or an association of persons, whether incorporated or not, which carries on such business.' A market area is defined in Sub-section (13) which says 'market area means any area declared or deemed to be declared to be a market area under this Act.' Sub-section (12) defines market. 'Market means a market declared or deemed to be declared under this Act.' Director is defined in sub Section (6). 'Director means the Director of Agricultural Marketing and Rural Finance, Gujarat State.' Section 5 of the Act authorises the Director to make a declaration of intention of regulating the purchase and sale of the agricultural produce in any specified area. Section 6 says-
6(1) After the expiry of the period specified in the notification issued under Section 5 (hereinafter referred to in this section as 'the said notification'), and after considering the objections and suggestions received before its expiry and holding such inquiry as may be necessary, the Director may, by notification in the official gazette, declare the area specified in the said notification or any portion thereof to be a market area for the purposes of this Act in respect of all or any of the kinds of agricultural produce specified in the said notification. A notification under this section shall also be published in Gujarati in a newspaper having circulation in the said area and in such other manner, as may be prescribed.
(2) xxx xxx xxx
Provided that pending the establishment of a market in such area the Director may grant a licence to any person to use any place in the said area for the purchase or sale of any such agricultural produce and a licence so granted shall, unless it is cancelled or otherwise ceases to be in force, continue in force until the establishment of a market in the said area and for such period thereafter as may be prescribed.
Section 8 says:
No person shall operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under this Act'. Section 9 provides for establishing a market committee for every market area.
Section 37 states:
On the establishment of a market, the market committee may, subject to rules made in that behalf, grant or renew a general licence or a special licence for the purpose of any specific transaction or transactions to a trader, general commission agent, broker, weighman, surveyor, warehouseman or any person to operate in the market area or part thereof, or after recording its reasons therefor, refuse to grant or renew any such licence.
Section 36 provides a penalty for contravention of Section 6 or 8. It says:
(1) Whoever without holding a licence uses any place in a market area for the purchase or sale of any agricultural produce or operates in a market area or any part thereof and thereby contravenes the provisions of Section 6 or 8 shall, on conviction, be punished:
8. Mr. Zaveri submitted that the distinction made by the legislature in the wordings of Sections 6 and 8 is very illuminating. He urged that under Section 6, a licence is necessary for using any place in the market area for the purchase or sale of any agricultural produce. Section 8 uses the word 'operate'. Mr. Zaveri urged that the import of the word 'operate' is very wide in its nature. A person may operate in the market area in different ways. Thus, any transaction in the nature of sale, purchase, storing, etc. would amount to operating as stated in Section 8 of the Act. He submitted that in order to operate in the market area, it may not always be necessary to remain physically present in the market area. A person residing outside the market area could transact his business in the market area through his agent. But even if he acts through an agent without holding a licence, he would be said to have contravened the provisions of Section 8. He submitted that the interpretation of Jan Mahomed's case before the Supreme Court made by the learned Additional Sessions Judge while interpreting the word 'operate' is erroneous. The Supreme Court had interpreted the meaning of the word 'operate' in the context of Section 30 of the Act which permits Chairman, Vice-chairman or the Secretary of the market committee or any other member, officer or servant authorised by the committee to evict from the market area any person found to be operating in the market area without holding a valid licence. Mr. Zaveri urged that before any action could be taken by the market committee as provided in Section 30, it is necessary that the person operating in the market area should be physically present. There could be no question of evicting him unless he was physically present. In this context, he urged that the Supreme Court had made certain observations relied upon by the learned Additional Sessions Judge in the case of Jan Mahomed v. State of Gujarat : [1966]1SCR505 . At page 393, it was observed:
It was then contended that Section 30 conferred power upon the market- committee of summarily evicting from the market any person, if he is found in the market area without holding a valid licence. Thus, it was urged, made a large inroad upon the fundamental right guaranteed to the citizens to move freely throughout the territory of India, and to reside and settle in any part of the territory of India. But Section 30 authorises the eviction from the market any person found to be operating in the market without holding a valid licence. The power of eviction by the market committee is limited to eviction from the precimets of the market. The provision is apparently enacted for the purpose of imposing an additional penalty against infraction of the prohibition contained in Section 6(2). 'Operating in the market area' can in the context only mean using a place in the market area for the purchase or sale of agricultural produce specified in the notification under sec, 6(2) otherwise than in accordance with the provisions of the Act. The apprehension of the petitioner that a person infringing the regulatory provisions of the Act may be compelled to leave his hearth and home, at the instance of the Chairman, the Vice-chairman of the Market Committee, or members, officers, or secretary of the Market Committee, who may be authorised in that behalf, is wholly unfounded.
I, therefore, agree with Mr. Zaveri that the interpretation on the word 'operate' put by the Supreme Court is with specific reference to the condition in Section 30 of the Act and does not in any way limit the connotation of the words 'operating in market area'. In this context, it will be worthwhile to remember the distinction made in Section 6 and Section 8 of the Act. The legislature has intentionally used the words 'use of the premises for purchase and sale' in Section 6 while in Section 8, the words used are operating in the market area'. Thus, the meaning of operating in the market area' cannot be limited to physical use of the market area or any portion thereof for the purpose of purchase or sale. In my opinion, therefore, the learned Judge is not right when he relied on the interpretation of the Supreme Court in Jan Mahmod's case in defining the words 'operating in the market area'. The word 'operate' is not defined in any part of the Act, or the rules made thereunder. Normally, connotation of the word 'operate' in the light of the scheme of the Act would include all transactions relating to purchase or sale of agricultural produce carried on in the market area. These transactions may include use for the purpose of purchase or sale, actual transaction of sale or purchase in the market area, weighing of agricultural produce in the market area, storing of the said produce in the market area, and so on. All these transactions relating to sale or purchase of the agricultural produce cannot be carried on without holding a valid licence as provided in Section 27 of the Act after the market committee is formed. The pertinent question, however, which arises for my consideration in this reference is whether a trader not residing within the market area entering into a transaction of sale or purchase of agricultural produce in the market area through a commission agent who held a valid licence, could be said to have contravened the provisions of Section 8 of the Act, punishable under Section 36(1) thereof. My answer to this question is in the negative. It may be noted that nowhere the Act prohibits sale or purchase of agricultural produce brought in the market area to a trader residing outside the market area. The scheme of the Act is to regulate the whole transaction of sale and purchase with regard to agricultural commodities brought in the market area. For that purpose, it is enacted that no person without holding a valid licence could operate in the market area. In order that the transaction of sale and purchase could be controlled, a fee is levied on the transactions of sale and purchase of goods brought in the market area. Mr. Zaveri invited my attention to Rule 48 of the Gujarat Agricultural Produce Market Rules, 1965, hereinafter referred to as the Rules, which states-
48(1) The market committee shall levy and collect fees on agricultural produce bought or sold in the market area at such rate as may be specified in the bye-laws subject to the following minima and maxima viz.
(i) rates when levied ad valoram shall not be less than 10 paise and shall not exceed 40 paise per hundred rupees.
(ii) rates when levied in respect of cattle, sheep or goat shall not be less than 10 paise per animal and shall not exceed Rs. 2 per animal.
The explanation appended to it says-
For the purposes of this rule a sale of agricultural produce shall be deemed to have taken place in the market area if it has been weighed or measured or surveyed or delivered in case of cattle in the market area for the purpose of sale, notwithstanding the fact that the property in the agricultural produce has by reason of such sale passed to a person in a place outside the market area.
Relying on this explanation, Mr. Zaveri urged that even though the property of agricultural produce purchased by the applicants who were residing outside the market area under him, by reason of such sale for the purpose of levying fees under Rule 48, the sale shall be deemed to have taken place in the market area. Mr. Zaveri urged that even though the commission agent had purchased the agricultural produce on behalf of the present applicants, the sale is deemed to have taken place in the market area in favour of the applicants and, therefore, the applicants are deemed to have contravened the provision of Section 8 of the Act as they did not hold a valid licence, for the purpose of buying or selling in the market area. It is difficult to agree with the submission made by Mr. Zaveri. The whole scheme of the Act seems to be that no transaction with regard to sale or purchase of agricultural produce could be effected in the market area by any person without holding a valid licence. Under Section 27 a licence is issued to a trader, general commission agent, broker, weighman, surveyor, warehouseman or any person to operate in the market area or part thereof. Naturally, therefore, in all transactions between traders and traders in the market area or all transactions between traders and commission agents or all transactions between traders and brokers on behalf of the third party a licence would be necessary. But the question is, if a trader who is not residing in the market area, purchases or sells agricultural produce in the market area, through a commission agent who holds a valid licence, could it be said that another licence would be required by the trader residing outside the market area? In my opinion, if such a interpretation is put on Section 8 read with Section 27 of the Act, there would be unnecessary restriction on the trade as such. Market areas are declared in almost all important centres of business in the State. If a trader residing in a particular market area wants to purchase or sell agricultural produce in another market area through a commission agent who held a valid licence of that particular market area, he should not be compelled to hold a licence merely for the purpose of the said transaction. A commission agent is a trader who buys or purchases or offers to buy or purchase, on the basis of the commission, agricultural produce on behalf of another person. Thus, transaction in fact entered into by the commission agent though it is effected on behalf of the trader residing outside the market area, may be said to have taken place in the market area. If the commission agent did not possess a valid licence, the person on whose behalf he has purchased or sold the agricultural produce, could be said to have contravened the provisions of Section 8. In the instant case, the actual act of operation is done by the commission agent. There is no dispute that he has purchased and sold certain agricultural produce in the market area on behalf of the applicants. The evidence shows that the bills were issued in the name of the applicants. But the fact remains that the applicants themselves have not transacted the acts of purchase or sale in the market area. They have done so through the commission agent who held a valid licence. The Act makes a distinction between a trader and agent. Trader does the business on his own behalf while a commission agent though described as a trader, enters into a transaction of sale and purchase on behalf of others on the basis of commission. Thus, when the act of purchase or sale of agricultural produce was transacted between a trader and commission agent both of whom hold a valid licence, it would be too much to expect a third party on whose behalf the commission agent was acting, to hold a separate licence for this transaction. I do not agree with Mr. Zaveri that the connotation of the words 'operating in market area' is very wide and that the trader actually doing business of sale or purchase in the market area even through a commission agent, would be required to hold a licence. Mr. Zaveri submitted that in the instant case, the property in goods had already passed to the applicants. The goods were stored in the godown of the commission agent at the risk of the applicants. The goods were sold away by the commission agent because the applicants failed to pay money in time. This would go to show that in effect, the goods were purchased by the applicants and not by the commission agent. I am unable to agree with the reasoning of Mr. Zaveri. If a trader residing outside the market area is required to hold a licence, there would be no meaning in having a commission agent doing business of buying and selling of agricultural produce on behalf of others on commission basis. Rule 48 referred to by Mr. Zaveri does not in any way negative this view. Rule 48 says that whenever agricultural commodities are brought in the market area and are bought or sold, a fee is levied thereon. Thus, even though property in such goods passes to a person residing outside the market area, goods are deemed to have been sold in the market area. There is no quarrel with this proposition. It is admitted that the goods in question were sold in the market area of Patan. Goods were sold by the commission agent possessing a valid licence of doing business in the market area. He had lawfully acted on behalf of the applicants. Under the circumstances, it cannot be said that the applicants had contravened the provisions of Section 8 read with Section 36 of the Act because they did not possess a valid licence. In my opinion, no licence in fact is necessary in this case. So many persons residing outside the market area transact business through commission agents who hold valid licence.
9. Other provisions of the Act and rules referred to by the learned Advocates for the parties are not very material. Rules 56 and 57 enumerate persons who are required to hold a licence. Rule 62 requires that licensed trader or general commission agent shall provide or arrange to provide all such necessary authorised weights and measures etc. as may be specified in the bye-laws. These questions are not in dispute and I need not refer to the same in details. As already observed earlier, the Act nowhere defines the words 'operating in the market area.' No doubt, these words have wider import than the words 'uses market area or any portion thereof for the purpose of sale or purchase.' I would readily concede that if the applicants had entered into the transaction of purchase or sale in the market area without a licence, they would be guilty for having contravened the provisions of Section 8 of the Act. But in the instant case, they have not directly entered into any transaction of sale or purchase in the market area. The actual act of sale and purchase has been done by the general commission agent on their behalf. This general commission agent holds a valid licence which is clear from the evidence of Babulal Ramchand who is serving as a Munim in the partnership firm of Yashwantlal Mafatlal. He has stated that the accused applicants had purchased and sold goods through them on commission basis as per particulars in bill, Ex. 14. The goods were stored in the warehouse for which a special charge was levied. Thus, there is no evidence on record to show that the applicants had directly purchased or sold any goods in the market area. Under the circumstances, it is difficult to agree with the submission made by Mr. Zaveri that the applicants would be liable under Section 8 of the Act for entering into these transactions without holding any licence.
10. Mr. Zaveri referred to the case of Mahammadbhai Khudabux Chhipa and Anr. etc. v. The State of Gujarat : AIR1962SC1517 . He particularly referred to the following observations made at page 1527:
Next it is urged that the provisions in the Act also affect transactions between traders and traders, and also affect produce not grown within the market area if it is sold in the market area. That is undoubtedly so. But if control has to be effective in the interest of the agricultural producer such incidental control of produce grown outside the market area and brought into the market yard for sale is necessary as otherwise the provisions of the Act would be evaded by alleging that the particular produce sold in the market yard was not grown in the market area. For the same reasons, transactions between traders and traders have to be controlled if the control in the interest of agricultural producers and the general public has to be effective. We are, therefore, of opinion that the Act and the Rules and bye-laws thereunder cannot be struck down on this ground.
I fail to understand how these observations would in any way help the learned Advocate in his contention raised before me. There can be no dispute that the Act has been enacted for the purpose of controlling the transactions with regard to agricultural produce between traders and traders. With respect, the Supreme Court has, therefore, rightly held the Act arid the Rules to be valid and did not strike down the same. Similarly, the case of M/s. Fulabhai Govindbhai v. The Kaira District Tobacco Market Committee and Anr. 12 G.L.R. 71 does not help the opponents. It merely states.
Sections 27 and 28 as also Sections 6 and 8 of the Gujarat Agricultural Produce Markets Act cannot be said to suffer on the ground of excessive delegation. The guidelines are clearly laid down in the section itself so far as Sections 27 and 28 are concerned and no further guidelines are necessary so far as the rules and byelaws are concerned to prescribe the maxima and minima and the actual rates of the market fees.
11. Thus, after going through the whole Act and the Rules made thereunder, it is difficult to hold that the licence would be necessary for a trader residing outside the market area for carrying transactions of purchase and sale of agricultural produce in the market area through a commission agent who holds a valid licence. I entirely agree with the reasoning of the learned Additional Sessions Judge that the conviction of the applicants under Section 8 read with Section 36(1) of the Act cannot be sustained.
12. Mr. V.C. Desai, learned Advocate for the applicants contended that in the instant case, the prosecution had not proved by leading any cogent evidence that in fact the market area in Patan was declared as provided in Sections 5, 6, and 7 of the Act. He referred to the observations of the learned Judge in this connection. In my opinion, there is no substance in the submission made by Mr. Desai. Section 64 of the Act says:
64(1) The Bombay Agricultural Produce markets Act, 1939 (Bom. XXII of 1939) and the Saurashtra Agricultural Produce Markets Act, 1955 (Sau. Act XIII of 1955) are hereby repealed.
(2) Notwithstanding the repeal of the said Acts.:
(i) every market area, principal market yard, sub-market yard and market proper declared under any of the Acts so repealed and existing immediately before the commencement of this Act shall be deemed to be declared as such under this Act and the provisions of this Act shall apply thereto;
(ii) every market committee established for any market area under any of the Acts so repealed shall, notwithstanding anything contained in Section 11 but subject to the other provisions of this Act, be deemed to be a market committee established for the said market area under this Act and the members thereof holding office immediately before the commencement of this Act shall continue to hold office for the period for which they would have held office, had this Act not been enacted or until the market committee is duly reconstituted under Section 11 whichever is earlier;
13. It is not in dispute that there was a market area in Patan under the Bombay Agricultural Produce Markets Act, 1939. Thus, assuming that no separate declaration of market area in Patan is made under the Gujarat Agricultural Produce Markets Act, 1964, every market area existing immediately before the commencement of this Act shall be deemed to be declared as such under this Act. The learned Judge was not right in holding that the prosecution had failed to prove that there was a market area in Patan and that there was validly constituted market committee.
14. As already stated earlier, I am of the opinion that the outsider trader selling or purchasing agricultural produce in the market area through a general commission agent cannot be said to be using the market area or any part thereof, but only the licensed commission agent is said to have used the market area for the purpose of sale and purchase on behalf of the trader residing outside. Thus, an outsider trader purchasing or selling goods through a licensed commission agent in the market area in Patan without a licence, does not commit any breach of either Section 6 or Section 8 of the Act and consequently, he would not be guilty of any offence punishable under Section 36(1) of the Act. The order of conviction and sentence passed by the learned Magistrate therefore is clearly illegal and must be set aside.
15. In the result, I accept the reference. The order of conviction and sentence passed by the learned Magistrate, Patan for offences punishable under Section 8 read with Section 36(1) of the Act is hereby set aside and the accused-applicants are acquitted of the same. Fine if paid is ordered to be refunded.