1 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF OCTOBER, 2019 BEFORE THE HON’BLE MR.JUSTICE G.NARENDAR CRIMINAL PETITION No.163/2014 BETWEEN SRI ANJAN GOSWAMI THE SENIOR MANAGER KHADKESHWAR HATCHERIES LTD., SIDDHARTH ARCADE, OPP. MTDC, STATION ROAD, AURANGABAD, MAHARASTRA-431005 ITS ZONAL OFFICE AT NO.232, MARUTHI NILAYA HAGDUR COLONY, BEHIND RAMA TEMPLE, HAGDUR VILLAGE, WHITEFIELD, BANGALORE-560066 (BY SRI GIRIDHAR.H, ADV.) AND THE AGRICULTURE PRODUCE MARKET COMMITTEE, KOLARA REPRESENTED BY ITS SECRETARY, APMC YARD, KOLARA-563101.
... PETITIONER ... RESPONDENT (BY SRI T.SWAROOP, ADV.) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C. PRAYING TO QUASH THE COMPLAINT IN C.C.NO.469/11 ON THE FILE OF THE I ADDL.C.J., AND JMFC, KOLAR FILED BY THE RESPONDENT AGAINST THE PETR.
THIS CRIMINAL PETITION COMING ON FOR ‘ADMISSION’ THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER Heard the learned counsel for the petitioner and learned counsel for the respondent.
2. Petitioner is before this Court being aggrieved by the complaint lodged by the respondent-Market Committee, Kolara invoking the provision of Section 200 of Cr.P.C. complaining violation of the provision of Sections 8, 65 & 66 and punishable under the provisions of Sections 144, 117 and 117(A) of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 (hereinafter referred to as ‘the Act’ for short).
3. The allegation against the petitioner is that the petitioner is the Senior Manager of M/s.Khadkeshwar Hatcheries Private Limited and in the conduct of its business, it purchases notified produces like Broken Rice, Maize etc., for the use and consumption in the hatcheries, that is, to manufacture chicken feed to feed the chicken, which in turn is subsequently sold to its customers. That the petitioner is buying notified commodities in bulk quantities. That the petitioner has been sourcing notified agricultural produces from various market areas like Davangere, Harapanahalli, Kottur, Baramasagara and Ranebennur. That the petitioner who indulges in purchase of bulk quantities of notified agricultural produces, comes within the ambit of the definition of “Trader” under Section 2 (48) of the Act and that the petitioner without obtaining license has been carrying on the business of purchase of notified agricultural produces in bulk quantities. That the petitioner neither obtained permit nor he is able to produce invoices or the bills evidencing payment of market fee by him. That the turnover that has been detected is at Rs.3,67,88,149/- and the petitioner is liable to pay 1½% on the turnover i.e., Rs.5,51,822/- as market fee. That he has evaded payment of the said sum.
That the Enforcement Cell visited the premises of the petitioner and on inspection, they found Bills and Invoices, Books of Accounts evidencing purchase of Broken Rice and Maize in bulk quantities and when questioned, the petitioner was unable to produce the permit or the records for having paid the market fee. That despite giving the petitioner an opportunity to furnish the same, the petitioner has failed to produce the material to demonstrate payment of market fee or the permits enabling him to purchase the said notified agricultural produces. That on account of failure to satisfy the Authorities, the petitioner is liable to pay penalty calculated at the rate of three times the sum evaded and hence, he is liable to pay penalty which is around Rs.16,55,466/-. That failure to produce the permit would constitute an offence punishable under Sections 114, 117 and 117(A) of the Act. That all in 179 bills/invoices were found and seized by the Enforcement Cell. In this background, the petitioner is before this Court.
4. It is contended by the learned counsel for the petitioner that in terms of Section 2(48) of the Act, the petitioner would not come within the definition of ‘Trader’ as purchase is for the domestic consumption. He would contend that the purchases made, were for the purpose of manufacturing/processing the same into chicken feed and that the chicken feed so manufactured has been used by the petitioner hatcheries only and there has been no sale of processed or manufactured chicken feed. He would further contend that the petitioner is carrying on his business outside the market yard and hence, he would not come within the ambit of definition of ‘Trader’.
5. Per contra, learned counsel for the respondent would submit that the phrase of ‘Domestic Consumption’ has been gone into by the Hon’ble Apex Court and the Hon’ble Apex Court has laid down the law in this regard in the case of Krishi Utpadan Mandi Samiti, Allahabad vs. Baidyanath Ayurved Bhawan Private Limited and Another reported in (2011) 12 SCC 277.
6. Per contra, learned counsel for the petitioner would vehemently contended that the ratio as laid down by the Hon’ble Apex Court in the case stated supra is not applicable to the facts and circumstances of the instant case. He would submit that in the ruling relied upon the facts are at variance to the facts of the case on hand. He would further contend that in the cited case, the notified agricultural produce is purchased for the purpose of manufacturing the Ayurvedic potion called ‘Chawanprash’ and that the said Ayurvedic preparation was sold in the market. In the instant case, he would submit that the agricultural produces have been used for manufacturing feeds to feed the chickens in the hatcheries and that there is no selling of the agricultural produces. Hence, he would submit that the said ruling is inapplicable.
7. In the considered opinion of this Court, the said contention cannot be appreciated as this is the very issue that has been formulated as a substantial question of law and the Hon’ble Apex Court has been pleased to hold contrary to the contention being canvassed by the petitioner. The Hon’ble Apex Court in paragraph No.11 of the ruling stated supra has formulated the substantial question of law as under:
“11. The appeal raises the following substantial question of law:
Whether the specified agriculture produce purchased by Respondent 1 within the market area and used in manufacturing a commercial product could be held to be for domestic consumption and thereby would exempt it from obtaining licence under Section 9(2) as also from levy and payment of market fee under Section 17(iii)(b) of the 1964 Act?”
8. The Hon’ble Apex Court after examining the various provisions of the Act including the definition of the Agricultural Produce and the definition of the ‘Trader’ and more particularly Section 9 of the Uttar Pradesh Krishi Utpadan Mandi Adhiniyam, 1964 which excludes the application of the Act on purchase of agricultural produce for ‘Domestic Consumption’ has clearly held contrary to the contention now canvassed by the petitioner’s counsel. The substantial question of law framed and the ratio of the said judgment rendered by the Hon’ble Apex Court clearly negates the case canvassed by the petitioner.
9. The Hon’ble Apex Court after relying upon its own ruling rendered in the case of G.Giridhar Prabhu v. Agricultural Produce Market Committee reported in (2001) 3 SCC 405 was pleased to examine the term ‘trader’ and was pleased to hold that the definition embraces within it ambit not just the purchase transaction but the entire transaction of purchase, processing, manufacturing and selling and it further held in the said case, that the trader who buys particular agricultural produce and uses the same for either selling, manufacturing, processing and brings into existence a different agricultural produce would answer the definition of a trader. It further relied on the observation made in paragraph No.17 of G.Giridhar’s case, which reads as under:
“17. The Court held as under: (G. Giridhar case.) “17. … The definition of the term ‘trader’ is not a restrictive definition. It is not restricted to a person who only buys. If a person buys for domestic or personal consumption, then he would not be a trader. It is only when a person buys for the purpose of selling or processing or manufacturing that he would become a trader. Thus a person may buy, process or manufacture and then sell. When he processes or manufactures notified agricultural produce which he had bought, it may change its character and become another notified agricultural produce. Thus, by way of examples, a person may buy milk and through processes make it into butter and/or cheese or a person may buy hides and skins and by a process make it into leather. However, merely because a distinct and separate notified agricultural produce comes into existence does not mean that the person who bought, processed and sold ceases to be a trader. The term ‘trader’ encumbrances (sic embraces) not just the purchase transaction but the entire transaction of purchase, processing, manufacturing and selling.”
10. It further placed reliance on its own ruling rendered in the case of State of A.P. v. H.Abdul Bakhi and Bros reported in AIR 1965 SC 531 and also on its ruling in the case of Krishi Upaj Mandi Smaiti v. Orient Paper & Industries Ltd. reported in (1995) 1 SCC 655 and after examining the various decisions, the Hon’ble Apex Court in paragraph No.23 was pleased to lay down the ratio and hold that the meaning of ‘Domestic Consumption’ has to be understood in a restricted sense, meaning thereby that the domestic consumption would restrictedly refer to the consumption for personal use i.e., for the purpose of use of the family members of the purchaser and not for any production activities. It further held that the purchase of agricultural produces in bulk cannot be termed to have been made for ‘domestic consumption’. Further, it held that the phrase ‘domestic consumption’ under 1964 Act has to be given a very restricted and limited meaning i.e., for personal use of the purchaser or consumption by the family and not for commercial and industrial activities and proceeded to conclude in paragraph No.26 as under:
“26. In view of the above, we are of the considered opinion that as the respondent Company buys specified agricultural produce from the market area and it is not meant for domestic consumption, the Company is required to take a licence under Section 9(2) of the 1964 Act.”
11. In view of the fact that the Company buys specified agricultural produce from the market area, the same does not amount to domestic consumption in the light of the dictum of the Hon’ble Apex Court. The Company was required to obtain license and the Hon’ble Apex Court while allowing the appeal has been pleased to lay down the law by interpreting the phrase ‘domestic consumption’. The Hon’ble Apex Court has observed in paragraph Nos.14, 15, 18, 19, 20, 21 and 23 as under:
14. The cumulative effect of a combined reading of the aforesaid statutory provisions comes to the effect that sale of the specified agricultural produce from any place in the market area is prohibited unless the person concerned has a licence. The statute provides for an exception of having a licence or from paying the market fee if the sale of an agricultural produce is made to a person for his “domestic consumption” in “retail sale”.
15. Indisputably, the aforesaid produce purchased by the respondent Company are agricultural produce. In view of the circular dated 18- 4-1988, issued by the appellant, a retail trader cannot sell any specified agricultural produce to any person more than the prescribed limit therein. The said circular fixed the maximum quantity of an agricultural produce which the retail dealer can sell to an individual for domestic consumption. The circular issued under the 1965 Rules prescribes the limits of sale to an individual and storage of the agricultural produces, by the retailer:
Retailer could sell to an individual Retailer can purchase Gur- 20 kg Gur- 10 quintals Amla- 5 kg Amla- 1 quintal Ghee- 4 kg Ghee- 50 kg 18. In State of A.P. v. H. Abdul Bakhi and Bros. while dealing with a similar issue i.e. defining “dealer” under the provisions of the Andhra Pradesh General Sales Tax Act, 1950, held that a person who buys goods for consumption in a process of manufacturing is also a dealer. The Court held that a person who consumes a commodity purchased by him in the course of his trade, or use in manufacturing another commodity for sale, could be regarded as a “dealer”.
19. In Krishi Upaj Mandi Samiti v. Orient Paper & Industries Ltd. the similar provisions of the M.P. Krishi Upaj Mandi Adhiniyam, 1973 were considered by this Court. In the said case, the question arose as to whether the market fee can be levied on agricultural produce brought for sale or sold in the market area in case the mill did not produce the agricultural produce for sale but produced them for use as its raw material for manufacturing the end product. That was a case where the bamboos were purchased for manufacturing of paper. The Court held that once the agricultural produce is brought in the market area and sold therein, it becomes liable to be levied with market fee, as no person can be permitted for sale or purchase of the agricultural produce within the market area without a licence, even a raw material for manufacturing some other product.
20. The Court further held as under: (Krishi Upaj Mandi case) “32. … It is immaterial for this purpose whether the bamboos are purchased by the respondent Mills for selling them or for using them as their raw material in the manufacture of paper. The liability of the respondent Mills to pay the market fees is in no way negated on that account.”
21. This case stands squarely covered by the judgment of a Constitution Bench of this Court in Ram Chandra Kailash Kumar & Co. v. State of U.P. wherein the provision of the 1964 Act, which is involved in the instant case was considered and the Court held as under:
“20. … If paddy is purchased in a particular market area by a rice miller and the same paddy is converted into rice and sold, then the rice miller will be liable to pay market fee on his purchase of paddy from the agriculturist- producer under sub-clause (2) of Section 17(iii)(b). He cannot be asked to pay market fee all over again under sub-clause (3) in relation to the transaction of rice. Nor will it be open to the market committee to choose between either of the two in the example just given. Market fee has to be levied and collected in relation to the transaction of paddy alone.”
23. In view of the above, we are of the considered opinion that as the retail trader cannot sell the agricultural produce in quantity more than that prescribed in the circular and also such retailer himself cannot purchase and store more than that prescribed in the circular, therefore, the meaning of “domestic consumption” has to be understood in such restricted sense. Thus, meaning thereby for personal use i.e. for the use of the family members of the purchaser and not for any production activity, otherwise prescribing the limits of purchase and storage by the retail trader becomes redundant. The parties could not bring to the notice of the High Court the relevant provisions of the 1964 Act which were necessary to be considered to adjudicate upon the issue in controversy. Purchase of agricultural produce in bulk cannot be termed to have been made for “domestic consumption”. The Court cannot travel beyond the pleadings. The meaning of “domestic trade” and “foreign trade”, had not been in issue in the instant case. The “domestic consumption” under the 1964 Act has to be given a very restricted and limited meaning i.e. for personal use of the purchaser i.e. for the consumption by the family and not for commercial and industrial activities.”
12. From the reading of the above paragraphs, it is amply clear that the Hon’ble Apex Court has been pleased to exclude the entity like the petitioner from the ambit of the exemption provided under the definition of ‘trader’ and has held that the purchase made by the Commercial entity for its business purpose would not come within the exception of domestic consumption.
13. In the facts and circumstances of the case, there is no dispute that the petitioner has been purchasing notified agricultural produce like Broken Rice and Maize for the purpose of chicken feed and the said product is pursuant to the process/manufacturing and the product is used to advance its business activities i.e., feeding the chicken which are meant for sale to the public and not for any personal consumption.
14. In that view of the matter, this Court is of the considered opinion that the law laid down by the Hon’ble Apex Court in the case of Krishi Utpadan Mandi Samiti, Allahabad vs. Baidyanath Ayurved Bhawan Private Limited and Another and reported in (2011) 12 SCC 277 squarely applies to the facts and circumstances of the instant case.
Hence, the petition stands dismissed. The observations made hereinabove are for the purposes of disposal of the instant petition and the trial Court shall adjudicate the case uninfluenced by the observations made hereinabove.
Sd/- JUDGE VM CT:HR