Allowed

Mr Shailesh Ramesh Boob, v. the State of Maharashtra Throug,Secretary Agriculture and Co-Op Department and Ors.

Bombay HC5 Nov 2014WP/3792/2010

Case brief

AI extract

What is this about?

In these clubbed writ petitions challenging supervision charges levied by Market Committees, this Court held that the State Government failed to prove that staff were specifically appointed to supervise purchases. Relying on the Supreme Court's principles, the Court quashed the recovery orders due to the absence of jurisdictional facts.

What did the court decide?

Impugned orders of the Tribunal quashed and set aside. Writ petitions allowed.

Mr Shailesh Ramesh Boob, Vs the State of… — Contract and Commercial Disputes | Bombay HC (2014)

wp1719,3792,9723

ssp

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELATE JURISDICTION
 WRIT PETITION NO.1719 OF 2010

¶5

Karsandas Mulji Thakkar & Ors. ...Petitioners
vs.

¶6

The State of Maharashtra & Ors....Respondents

¶7

 ALONG WITH
WRIT PETITION NO.3792 OF 2010

¶8

Shailesh Ramesh Boob & Ors. ...Petitioners
vs.
The State of Maharashtra & Ors....Respondents

¶9

 ALONG WITH
WRIT PETITION NO.9723 OF 2009

¶10

The Lasalgaon Merchants
Association Ltd. ...Petitioner
vs.
The State of Maharashtra & Ors....Respondents

¶11

Mr.R.F.Totola a/w Mr.Rahul Totola for the
petitioners in all the petitions
Mr.V.S.Gokhale, AGP for the respondent Nos.1, 4 to 7
in W.P.No.1719/2010 for respondent No.1 in
W.P.No.3792/2010 and for respondent Nos.1, 3 to 7 in
W.P.No.9723 of 2009.
Mr.P.N.Joshi for respondent No.2 in
W.P.Nos.1719/2010 and 3792/2010
Mr.Tushar Sonawane for respondent No.2 in
W.P.No.9723/2009.

¶12

CORAM : A.S.OKA, &
 A.S.GADKARI, JJ.
 DATE : NOVEMBER 5,2014

¶13

P.C.:

¶14

1These petitions have been clubbed together as
some of the issues raised therein are common. The

¶15

2 wp1719,3792,9723

¶16

orders impugned in these petitions have been passed
by the Tribunal constituted in exercise of power
under sub-section (4) of section 57 of the
MaharashtraAgriculturalProduceMarketing
(Development and Regulation) Act,1963 (for short
`the said Act). Sub-section 1 of section 34-A in
Chapter IVA of the said Act provides for payment of
cost of supervision charges to the State Government
by the person purchasing agricultural produce, the
marketing of which is regulated in any market or
market area under the said Act under the supervision
of such staff appointed by the State Government as
it may deem to be necessary.

¶17

2The Tribunal constituted by the State
Government, by the impugned orders, has directed the
petitioners to make payment of supervision
charges/cost to the Market Committee of a market
established under the provisions of the said Act.

¶18

3Section 11 of the said Act provides for
establishment of Market Committees. The second
respondent in Writ Petition No.1719 of 2010 is the
Market Committee at Pimpalgaon Baswant in District
Nashik. The second respondent in Writ Petition
No.3792 of 2010 is the same Market Committee. As
far as the Writ Petition No.9723 of 2009 is
concerned, the second respondent is the market
Committee of Lasalgaon, Taluka Niphad, District
Nashik. As submissions have been made essentially
on the basis of the provisions of Chapter IV-A of
the said Act, it will be necessary at the outset to

¶19

¶20

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¶21

reproduce section 34-A, 34-B and 34-C of Chapter IV-
A of the said Act which read thus:

¶22

“34A Supervision over purchase of
agricultural produce in any market or
market area and payment of cost of
supervision by purchasers.

¶23

(1)The State Government may, by general
or special order, direct that the
purchase of agricultural produce, the
marketing of which is regulated in any
market or market area under this Act,
shall be under the supervision of such
staff appointed by the State Government
as it may deem to be necessary: and
subject to the provisions of this
Chapter, the cost of such supervision
shall be paid to the State Government by
the person purchasing such produce in
such market or market area.

¶24

(2)The cost to be paid by a purchaser
shall be determined from time to time by
the State Government and notified in the
market or market area (in such manner as
the State Government may deem fit), so
however that the amount of the cost does
not exceed five paise per hundred rupees

¶25

of the purchase price of the
agricultural produce which is purchased
by such purchasers.]

¶26

wp1719,3792,9723

¶27

¶28

34B Supervision

¶29

(1)The cost of supervision shall be
collected by the Market committee in the
same manner in which the fee levied by it
under section 31 is collected.

¶30

(2)The cost of supervision collected by a
Market Committee shall be paid to the State
Government in the prescribed manner within
a period of fifteen days from the close of
the month in which such cost is collected.

¶31

34C. Defaults of Market Committee in collecting or paying cost of supervision.

¶32

If a market Committee makes default in
the collection or payment to the State
Government of any sum or part thereof due
in respect of the cost of supervision, the
Director may direct that the said sum or
part thereof, as the case may be, together
with a penalty equal to one per cent of
such sum or part, shall be recovered from
the Market Committee as an arrear of land
revenue under section 57]”

¶33

4There are various challenges in these
petitions. There is a challenge to the Constitution
of the Tribunal under sub-section (4) of section 57.
There is a challenge to the jurisdiction of the
Tribunal constituted under section 57 to pass orders
of recovery of supervision cost against a trader at
the instance of a Market Committee. The main ground

¶34

5 wp1719,3792,9723

¶35

of challenge which is pressed into service by the
learned counsel for the petitioner in these
petitions is that for applicability of the relevant
provisions, firstly, it is necessary that the State
Government should appoint the staff for supervision
of purchase of agricultural produce, the marketing
of which is regulated in the concerned Market or
market area. The second contention is that there has
to be a special or general order of the State
Government directing that the purchase of
agricultural produce shall be under the supervision
of such staff appointed by the State Government as
it may deem necessary. The contention of the learned
counsel for the petitioners is that there is no
material placed on record to show that there was a
supervision on the purchase of agricultural produce
by the staff appointed by the State Government. He
has pressed into service various grounds and in
particular ground(C) and (F) of paragraph 11 of the
Writ petition No.1719 of 2010. His contention is
that in absence of any material on record to show
that the State Government had employed the staff for
the work of supervision, there was no authority to
recover the cost of supervision. He invited our
attention to the various affidavits filed on record
by the Market Committee as well as the State
Government. He invited our attention to the order
dated 7th April 2010 passed by this Court in Writ
Petition Nos.1719 of 2010 and 9723 of 2009 and in
particular paragraphs 3 and 5 thereof. He pointed
out that a specific direction was issued by the
Division Bench to the State Government to file an

¶36

6 wp1719,3792,9723

¶37

affidavit dealing with the points (1) to (3)
paragraph 3 of the said order. Inviting our
attention to the affidavits on record, his
submission is that the State Government has not
discharged the burden of showing that it had
appointed the staff to undertake the supervision
work as contemplated by sub-section (1) of section
34-A. He invited our attention to the impugned
orders. He submitted that not only on this ground,
but even on other grounds, the impugned order will
have to be quashed and set aside.

¶38

5The learned counsel representing the Market
Committee at Pimpalgaon Baswant has invited our
attention to the affidavit of Shri Prakash
Ramchandra Ahire, Supervisor of the Respondent No.2-
Agriculture Market Produce Committee filed in the
Writ Petition No.1719 of 2010 and in particular
paragraph 6 onwards. He also invited our attention
to the paragraph 7 of the said affidavit wherein it
is pointed out that the employees whose names appear
in the said paragraph were in fact appointed by the
State Government. Reliance is placed on various
orders of appointment which are annexed as Exhibit-1
(collectively). His submission is that the work of
grading of the agricultural produce is a part of the
supervision work and orders on which the Market
Committee is relying upon show that the Graders were
appointed by the State Government who are in fact
doing the work of supervision as contemplated by
sub-section (1) of section 34-A. His submission is
that the work of grading is the work of supervision.

¶39

wp1719,3792,9723

¶40

¶41

He also invited our attention to the affidavits on
record filed on behalf of the State Government by
Shri Mahesh Sakharam Bhadange, Assistant Registrar,
Co-operative Societies,Nashik as well as Shri Dipak
Sukhadeo Pray. He submitted that the last affidavit
of Shri Mahesh Sakharam Bhadange substantiates the
case of the Government of appointment of staff to
undertake the supervision work. He submitted that
there are findings of fact recorded by the
Assistant Registrar of the Co-operative Society who
was appointed as the Tribunal under section 57. He,
therefore, urged that no interference is called for
in writ jurisdiction as the petitioners have raised
the disputed questions of fact. The learned counsel
for the second respondent-Market Committee in Writ
Petition no.3792 of 2010 while adopting the
aforesaid submissions has also invited our attention
to the various affidavits filed on record. The
learned AGP supported the impugned orders.

¶42

6The learned counsel for the petitioners relied
upon the decision of the Apex Court in the case of
the Mumbai Agricultural Produce Market Committee and
another vs. Hindustan Lever Limited and others1
The submission of the learned counsel representing
the Market Committees on the said decision is that
the decision of the Apex Court is rendered in the
facts of the case and in the present case, there is
more than sufficient material on record to show that
the State Government had appointed its own staff to
do the supervision work.

1 (2008) 5 SCC 575

wp1719,3792,9723

7We have given careful consideration to the
submissions. We have already quoted the relevant
sections forming part of Chapter IV-A of the said
Act. Sub-section (1) of section 34-A empowers the
State Government to pass a special or general order
directing that the purchase of agricultural produce,
the marketing of which is regulated in any market or
market area shall be under the supervision of such
staff appointed by the State Government as it may
deem necessary. Thus, the provision is applicable
to the purchase of agricultural produce, the
marketing of which is in any market or market area
under the said Act. Sub-section (1) further provides
that the cost of such supervision by the staff
appointed by the State Government shall be paid to
the State Government by the person purchasing such
produce in such market or market area. Sub-section
(2) of section 34-A deals with the issue of
determination of the cost to be paid by the
purchaser. Sub-section (1) of Section 34-B
provides that the cost of supervision shall be
collected by the Market Committee in the same manner
in which the fee levied by it is collected. Sub-
section (2) of section 34B makes it clear that after
collecting cost of supervision, the Market Committee
shall pay the same to the State Government within a
period of 15 days from the close of the month in
which such cost is collected. Thus, the Market
Committee is required to collect the cost of
supervision on behalf of the State Government from
the purchasers of agricultural produce.

¶47

9 wp1719,3792,9723

¶48

8As far as the nature of cost of supervision is
concerned, the issue was dealt with by the Apex
Court in the case of Mumbai Agricultural Produce
Market Committee and another (supra). It will be
necessary to make a reference to paragraphs 12 and
13 of the said decision which read thus:

¶49

“12It, however, appears that the validity
of the levy and collection of the supervision
charges was specifically raised by the
respondent herein on the ground that no
service whatsoever of any kind was being
rendered in the said market area. The High
Court, by reason of its Judgment, opined that
the costs for supervision were incidental
charges to be recovered and paid to the
Government in respect of the staff employed
by it. It is not a power vested in the
Committee and, thus, the conditions precedent
therefor were required to be shown to be
existing i.e that the Government had employed
staff and had been rendering services by way
of supervising the buying and selling of the
agricultural produces in the market area.

¶50

13The power to recover the charges for the
supervisory staff employed at the expenses of
a section of the industry is not a general
power. It is provided for specifically in
terms of the Act. When the statute mandates
that the cost of supervision would be borne
by the licensee, it does not constitute levy

¶51

¶52

wp1719,3792,9723

¶53

of tax. It may be a part of contract. It
may have to be paid as a liability to comply
with the provisions of the statute and
statutory rules validly made. The cost has
to be determined. It may have to be
apportioned. It cannot be levied or
calculated in such a manner so as to cause
unjust enrichment in favour of the State.”

¶54

(underline supplied)

¶55

9What is important is what is held in paragraph
12 that the condition precedent for collection of
the supervision charges should be shown to be
existing. That it should be shown that the State
Government had employed the staff and the staff so
appointed has been rendering services by way of
supervision on the sale of agricultural produce in
the market area. The nature of cost is described in
paragraph 13. In paragraph 16, the Apex Court has
held thus:

¶56

“16The principle of equivalence, therefore,

¶57

is the foundation for levy of a fee. It
must be held to be the foundation of a
statutory charge like supervisory charges.
It was for the State to prove it. Once the
State has failed to bring on record the
foundational facts, it is not for the
appellant who is merely a statutory authority
for collecting the same as an agent of the
State to contend that the same was payable.
The State of Maharashtra is not before us.”

¶58

wp1719,3792,9723

¶59

¶60

(Underline supplied)

¶61

10The Apex Court reiterated that as in the case
of levy of the fee, the principle of equivalence
must be held to be the foundation of statutory
charge like supervisory charges and therefore, the
burden is on the State to bring on record the
foundational fact and it is not for the Market
Committee which is an agent to collect the
supervision cost to contend that the supervision
cost is leviable. In the light of the law laid down
by the Apex Court that the submissions made across
the bar will have to be appreciated. Before we go
to the reply affidavits, it will be necessary to
make a reference to the order dated 7th April 2010
passed by the Division Bench of this Court in these
petitions. Paragraph 3 of the said order reads
thus:

¶62

“3After having heard Counsel appearing for the
parties for some time, in our opinion, the Court
is called upon to examine the purport of Section
34A of the Act of 1963. To attract the said
provisions, it is the argument of the
Petitioners that following factual position
ought to prevail:

¶63

(1)The State Government has, in fact, issued
a general or special order directing that the
purchase of specified agricultural produce,
marketing of which is regulated in any market
area shall be done under the supervision of

¶64

¶65

wp1719,3792,9723

¶66

staff to be appointed by the State Government
for that purpose.

¶67

(2)Whether by special or general order, the
State Government had appointed staff to
undertake the supervision work in terms of the
direction given in first part of sub-section
(1) of Section 34-A.

¶68

(3)Thirdly, what amount towards costs is to
be reimbursed for such supervision by the State
Government, on actual basis or up to 5 paise
per hundred rupees of the purchase price of the
agricultural produce, whichever is less.”

¶69

11Paragraph 5 specifically directs the State
Government to file affidavit dealing with the
factual issues referred to in paragraph 3.

¶70

12As far as the market Committee at Pimpalgaon
Baswant is concerned, extensive affidavits have
been filed in the Writ petition No.1719 of 2010. In
Writ petition No.1719 of 2010, in ground(C) of
paragraph 11, a specific contention has been raised
by the petitioners that the State Government has not
employed any such staff. There are three affidavits
filed on behalf of the State Government. The first
one is of 25th March 2010 filed by Shri Mahesh
Sakharam Bhadange, Assistant Registrar of the Co-
operative Societies. While we deal with the said
affidavit, it will be necessary to reproduce the
ground(C) in Writ Petition No.1719 of 2010 which
read thus:

¶71

¶72

wp1719,3792,9723

¶73

“(C)That, in view of section 34A (1) and (2)
it is necessary in the first instance that
the State Government is required to employ
staff to render services in regulating the
purchase and marketing of Agriculture Produce
and then recover the cost of supervision so
as to meet the expenditure incurred on such
staff in terms of their salary and other
benefits etc.Admittedly, in this case
Government has not employed any staff hence
recovery proceedings is illegal.”

¶74

(underline supplied)

¶75

13Paragraph 12 of the aforesaid affidavit in
reply deals with the grounds(C) and (D). A vague
statement has been made that the staff of the
agricultural produce Marketing Committee and the
official of the Co-operation Department from the
State Government have supervised over the purchase
of agricultural produce from time to time. However,
there is no specific statement made that by a
general or a special order passed under sub-section
(1) of section 34-A, the State Government had
appointed the staff for supervision of purchase of
agricultural produce. There is a second affidavit
filed by Shri Mahesh Sakharam Bhadange which is
affirmed on 19th October 2012. Paragraph 8 deals
with the all the grounds (A) to (N) of paragraph 11
of the W.P.No.1719 of 2010. In this paragraph,
there is a mere denial of the allegation that there
was no order made for appointment of the staff for
supervision of the agriculture produce. It is
contended that the supervision fee is the Government

¶76

¶77

wp1719,3792,9723

¶78

revenue. The third affidavit is of Shri Dipak
Sukhdeo Pray, Assistant Registrar of the Co-
operative Societies which is affirmed on 16th August
2010. It seems to be an affidavit filed in terms of
the order dated 7th April 2010 of this Court which is
quoted above. Firstly, reliance is placed on
general order dated 17th July 1985 passed in exercise
of power under sub-section (1) of section 34-A. It
provides that the purchase of agricultural produce,
the marketing of which is regulated in any such
market or market area shall be under the supervision
of Director of Marketing, the Officers subordinate
to him or the other staff of the Co-operation
Department working at Divisional, District or Taluka
levels. This GR does not show that the Government
appointed staff to supervise the purchase of
agricultural produce regulated in market areas of
the two Market Committees which are the subject
matter of these petitions during the relevant period
for which supervision cost is demanded. Reliance is
specifically placed in paragraph 3 on the GR dated
18th June 2010. We have perused the said GR. The GR
records that 156 posts were created by the State
Government “for improvement of the quality of the
agricultural produce and for supervision on the
working of the Market Committees”. The GR records
that the said 156 posts shall continue till 31st
August 2010. Taking the GR as correct, it does not
record that the said 156 posts were created and
continued by the State Government for the purposes
of doing the work of supervision over the purchase
of agricultural produce as contemplated by sub-

¶79

wp1719,3792,9723

¶80

¶81

section (1) of section 34-A of the said Act.

¶82

14Now we turn to the affidavit in reply of Shri
Prakash Ahire on behalf of the Market Committee in
Writ Petition No.1719 of 2010. In paragraph 7, it
is stated that the facts set out will clearly show
that there were employees actually appointed by the
State Government from time to time. It is necessary
to make a reference to what is specifically set out
in paragraph 7 which reads thus:

¶83

“7...I say that the following facts will
clearly show that the said employees were
actually appointed by the State of
Maharashtra from time to time and following
chart will show that the following employees
were appointed by the State of Maharashtra
for the purpose of supervising the APMC as
required under Section 34-A (1 & 2). The
following chart will show the names of the
employees and date of their employment in the
APMC.”

¶84

15Thus, the stand taken by the Market Committee
is that the employees were specifically appointed by
the State Government for supervision work as
contemplated by sub-sections (1) and (2) of section
34-A. Section 34-A does not deal with the
supervision of the Agriculture produce Market
Committee. The section deals with the supervision
on the purchase of agricultural produce, the
marketing of which is regulated in market or market

¶85

¶86

wp1719,3792,9723

¶87

area under the said Act. We have carefully
considered the orders of appointment relied upon by
the Market Committee which are annexed as Exhibit-1
collectively. There is no dispute that none of the
appointment orders show that the appointments were
made to do the work of supervision of purchase of
agricultural produce. The contention of the learned
counsel for the Market Committee is that some of the
orders of appointment show that the staff members
were deputed to do the work of grading of
agricultural produce. There is nothing placed on
record by the State Government to show that the work
of grading is a part of work of supervision of
purchase of agricultural produce as contemplated by
sub-section (1) of section 34-A. Perusal of the
orders relied upon by the Market Committee show that
only in case of few employees that the appointment
has been made for doing the grading work in the
laboratory.

¶88

16The State Government has not produced any
material whatsoever to show that the work of grading
of the agricultural produce is a part of the
supervision of purchase of agricultural produce.

¶89

17Therefore, taking the affidavits filed by the
State Government as well as by the Market Committee
as correct, we find that the State has not
discharged burden of bringing on record the
foundational facts as held by the Apex Court. The
Apex Court has held that once the State fails to
bring on record the jurisdictional facts, the Market

¶90

wp1719,3792,9723

¶91

¶92

committee which is merely an agent of the State to
collect cost of supervision cannot contend that the
cost of supervision is payable. Nevertheless we
have considered the affidavit filed on behalf of the
Market Committee on merits. The said affidavit does
not improve the case of the State Government.

¶93

18We have carefully perused the impugned orders.
Even in the impugned orders, apart from the fact
that there is no clear finding recorded that the
State Government had appointed staff to do the
supervision on the purchase of agricultural produce
in the market areas of the concerned Market
Committees, there is no finding that the work of
grading was a part of the supervision work on
purchase of agricultural produce. We must also note
that it is not even the case made out by the State
Government that the staff appointed by the State
Government for some other work was factually doing
the work of supervision.

¶94

19Thus, as held by the Apex Court, if the
foundational facts are not established by the State
Government, there is no right in the State to
recover the cost of supervision under Chapter IVA of
the said Act. Hence, the petitions must succeed on
this ground.

¶95

20Before we part with the Judgment, we must note
here that the State Government has not understood
the purport of the decision of the Apex Court in
case of Mumbai Agricultural Produce Market Committee

¶96

¶97

wp1719,3792,9723

¶98

and another (supra). The Apex Court has specifically
held that principle of equivalence which is the
foundation for levy of fee is specifically
applicable to the levy of cost under sub-section (1)
of section 34-A. Therefore, in a given case, if the
State Government had really deputed the staff
appointed by it to do the work of supervision of
purchase of agricultural produce in terms of sub-
section (1) of section 34-A, it is the duty of the
State Government to produce the record before the
Tribunal constituted under section 57 of the said
Act to prove the foundational facts. The State
Government will have to take a note of the law laid
down by the Apex Court as regards the burden of
proof on the State.

¶99

21We must make it clear that we have not dealt
with the issue raised regarding the constitution of
the Tribunal and the jurisdiction of the Tribunal as
the petitions must succeed on the first ground
agitated therein.

¶100

22 Hence, we pass the following order : (I) Impugned orders of the Tribunal constituted under section 57 of the said Act are hereby quashed and set aside;

¶101

(II)If the bank guarantees furnished by the
petitioners are alive, the same shall be kept
alive for a period of eight weeks from today.
If there is no order of the Apex Court to the
contrary,after expiry of period of eight weeks
from today the Bank Guarantees shall be

¶102

19 wp1719,3792,9723

¶103

cancelled and shall be returned to the
petitioners;

¶104

(III)Writ petitions are allowed on above terms.

¶105

No costs.

¶106

(A.S.GADKARI,J.)(A.S.OKA,J.)

Mr Shailesh Ramesh Boob, v. the State of Maharashtra Throug,Secretary Agriculture and Co-Op Department and Ors.

Case brief

What is this about?

What did the court decide?

Mr Shailesh Ramesh Boob, v. the State of Maharashtra Throug,Secretary Agriculture and Co-Op Department and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

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Parties & counsel

Coram

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