Allowed

The Murugesh Traders, Bilagi v. the Joint Director

Karnataka HC9 Oct 2023WP/64772/2012

Case brief

AI extract

What is this about?

The High Court allowed a writ petition challenging a penalty imposed under Section 70 of the Karnataka Agricultural Produce Marketing Act. Relying on.coordinate precedents, the court held that Section 70 applies only if prosecution is launched. Since no prosecution occurred, the penalty was set aside, directing the authority to levy penalty under Section 65-A.

What did the court decide?

The impugned orders under Sections 70 were set aside. Respondent No.1 is directed to levy penalty under Section 65-A of the 1966 Act.

The Murugesh Traders, Bilagi Vs the Joint… — Pension and Retirement Benefits | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 9^TH DAY OF OCTOBER, 2023

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BEFORE

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THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM

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WRIT PETITION NO. 64772 OF 2012

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BETWEEN:

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THE MURUGESH TRADERS, BILAGI, REPRESENTED BY ITS PROPRIETOR, M.G. NAGRAL, AGE: 36 YEARS, OCC: BUSINESS, R/O: GANDHI NAGAR, BILAGI, TQ: BILAGI, DIST: BAGALKOT.

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PETITIONER

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(BY SRI N.L. BATAKURKI, ADVOCATE)

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AND:

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THE JOINT DIRECTOR, DEPARTMENT OF MARKETING ENFORCEMENT CELL, NORTHERN WING APMC, AMARGOL MARKET, HUBLI.

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THE SECRETARY, AGRICULTURE PRODUCE MARKETING COMMITTEE, BAGALKOT, TQ AND DIST: BAGALKOT.

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MOHANKUMAR B SHELAR

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Digitally signed by MOHANKUMAR B SHELAR Date: 2023.10.11 16:07:20 +0530

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THE DIRECTOR OF AGRICULTURAL MARKETING, 2^ND RAJ BHAVAN ROAD, BANGALORE-1.

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THE SECRETARY, DEPARTMENT OF CO-OPERATION, GOVERNMENT OF KARNATAKA, M.S. BUILDING, BANGALORE.

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…RESPONDENTS

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(BY SRI P.N. HATTI, HCGP FOR R1 AND R4; SRI C.V. ANGADI, ADV. FOR R2 AND R3)

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THIS WRIT PETITION is FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE NATURE OF CERTIORARI QUASHING THE IMPUGNED ORDER PASSED BY RESPONDENT NO.1 IN KRU.MA.E/KA.JA.KO/JAN NI/HU/69:201112 DATED 26.05.2011 VIDE ANNEXURE-E AND ALSO ORDER PASSED BY RESPONDENT NO.3 APPEAL IN NO.KRI.MA.E/08/NI/YA.VI/ APPEALU/2011 DATED 20.08.2011 AT VIDE ANNEXURE-F.

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THIS PETITION HAVING HEARD AND RESERVED FOR ORDERS ON 17.08.2023 COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The captioned writ petition is filed by the licenced

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trader assailing the order passed by respondent No.1 in imposing penalty of Rs.4,04,788/- under Section 70 of the Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 (hereinafter referred to as the '1966 Act' for short). The petitioner feeling aggrieved by the penalty imposed under Section 70 of the 1966 Act preferred an appeal before respondent No.3. Respondent No.3 has dismissed the appeal. These two orders are under challenge by the petitioner.

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Learned counsel appearing for the petitioner reiterating the grounds urged in the petition would vehemently argue and contend that appellate authority has not examined the error committed by respondent No.1 in imposing penalty under Section 70 of the 1966 Act. Placing reliance on the judgment rendered by this court in case of M/s Kethan Trading Co. Vs. The Secretary,

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Agricultural Produce Market Committee in

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W.P.No.16327/2002, he would submit that, Section 70

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of the 1966 Act can be invoked only after prosecution is launched by the officer under Section 114 of the 1966 Act. If no prosecution is initiated, the authorities are bound to impose penalty under Section 65-A of the 1966 Act, which provides minimum 12% of the amount due which may exceed to 30%. To buttress his arguments, he has also placed reliance on the judgment rendered by Coordinate Bench of this court in the case of M/s Sabakath Traders

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Vs. The Secretary Agricultural Produce Market Committee in W.P.No.49396/2012. Referring to these two judgments, he would vehemently argue and contend that under what provisions a penalty can be imposed is given a quietus in the above two cited judgments.

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Per contra, learned counsel appearing for respondent Nos.2 and 3 however would seriously counter the grounds urged in the petition. He would vehemently argue and take this court through the notices issued by the authorities to the petitioner vide Annexure-A. Referring to the impugned notice, he would submit that

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concerned authority has exercised discretion under Section 66 and 67 of the 1966 Act and therefore, it presupposes that respondent No.1 has exercised his authority under Section 70 and not under Section 65-A of the 1966 Act as claimed by the petitioner. He would vehemently argue and contend that present case on hand is clear case of evading market fee. The petitioner is guilty of concealing transaction and therefore, penalty has to be imposed under Section 70 and not under Section 65-A of the 1966 Act. Referring to Annexure-A, he would further bring to the notice of this court that Enforcement Cell has issued in all four notices and on receipt of notice, the petitioner has produced the accounts. Therefore, the authorized officer was justified in invoking Section 70(1)(a) of the 1966 Act. Referring to these two significant details, he would vehemently argue and contend that Section 65-A of the 1966 Act is not applicable to the present case on hand. He would refer to the contents of notice and contend that impugned notice vide Annexure-A is issued by the officer and not by the committee. Therefore, he would contend that if notice vide Annexure-A is not issued by the

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committee under Section 65-A of the 1966 Act, the order of penalty imposed by respondent No.1 under Section 70 of the 1966 Act does not warrant interference at the hands

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of this court.

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Heard the learned counsel for the petitioner,

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learned counsel for respondent Nos.2 and 3 and learned AGA for respondent No.1.

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I have given my anxious consideration to the order sheet placed on record in Crl.Misc.No.32/2008. The order sheet indicates that complaint filed by the authorities under Section 114 of the 1966 Act is dismissed on the ground that appeal against order passed by respondent No.3 is pending consideration before this court. The said proceedings are closed reserving liberty to the authorities to file fresh petition after disposal of the writ petition.

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6. The Coordinate Bench of this court in the case of M/s Kethan Trading Co. (supra) held as follows:

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"The main grievance of the petitioner is in respect of levying penalty. As per Annexure-D, practically a penalty of three

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times the over due market fee is imposed under provisions of Sec.70 of the APMC Act. On a bare reading of Sec.70, it is apparent that this is an enabling provision for compunding the offence i.e., to say, if there is an offence and prosecution is taken or launched against the offenders, he or they are at liberty to compound the offence on the terms mentioned under Sec.70. Admittedly, there is no prosecution launched against the petitioner. Hence, for non-payment of the Market Fee for the year 1999-2000 the only penalty the first respondent can impose is under Sec.65(A) i.e. from the minimum of 12% of the amount due up-to 30% and not more than that. In my view, Sec.70 comes into operation only after the prosecution is launched for the alleged offence under the Act and not before. Hence, levying of penalty three times of amount due under Sec.70 without there being any prosecution, is illegal."

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7. The principles laid in M/s Kethan Trading

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Co.(supra) is followed by Coordinate Bench in an identical

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case. On examination of the principles laid down by this court, what emerges is that Section 70 of the 1966 Act would come into operation only after prosecution is launched for the alleged offence under the Act and not before.

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Though learned counsel for respondent Nos.2 and 3 would vehemently argue and contend that on account of concealment of transaction, penalty needs to be imposed under Section 70 and not under Section 65-A of the 1966 Act, the same is not supported by any law. I am

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not inclined to accede to the arguments advanced by the learned counsel for the petitioner that, unless procedure under Section 65-A of the 1966 Act is exhausted, the authority cannot have recourse to Section 70 of the 1966 Act to impose three times penalty as indicated under Section 70(1)(a) of the 1966 Act.

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On conjoint reading of Section 65-A with Section 66(7) of the 1966 Act, what can be gathered is that, even if action is initiated under Section 66 of the 1966 Act, sub-clause (7) of Section 66 authorizes an officer to levy penalty under Section 65-A of the 1966 Act. Sub-clause (7) of Section 66 is culled out, which reads as under:

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"66(7) If such officer or servant has reason to suspect that any fee or other amount due under this Act has not been paid in respect of the notified agricultural produce taken out of or being transported in, the market area in any vehicle, vessel or other conveyance, he may seize so much of the notified agricultural produce as in his opinion would be sufficient to meet the amount of fee or other amount due and retain the same with him until the fee or other amount due is paid or for ten days, whichever is earlier. After the expiry of the period of ten days, if the fee or other amount due is not paid, the officer or servant shall dispose of the notified agricultural produce in public auction and adjust the

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sale proceeds towards the fee or other amount due. If the sale proceeds are more than the fee or other amount due, the excess amount shall, 101 after deducting the charges incurred by the market committee, be refunded in the prescribed manner:"

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Therefore, on bare reading of sub-clause (7) of

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Section 66 of the 1966 Act, I am of the view that authorities can impose penalty under Section 65-A of the 1966 Act. Therefore, the contention of the learned counsel for the petitioner that committee or an officer can proceed under Section 70 of the 1966 Act only after exhausting the provisions of Section 65-A of the 1966 Act needs to be accepted. The arguments advanced by the learned counsel for respondent Nos.2 and 3 that if there is evasion of payment of market fee, the penalty needs to be levied only under Section 70 and not under Section 65-A of the 1966 Act also cannot be acceded to, in the light of the wordings used in sub-clause (7) of Section 66 of the 1966 Act. Penalty imposed under Section 70(1)(a) of the 1966 Act appears to be too harsh.

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On reading of Section 65-A and 70 of the 1996 Act, the only distinction that can be gathered from these

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two sections is that, where a person fails to pay the market fee payable by him under clause (i), clause (ia), clause (ii) or clause (iii) of sub-section (2-A) of Section 65, to the market committee in addition to the fee as payable, can impose a penalty not exceeding thirty per cent of the fee due. While Section 70 authorizes the committee in case of evasion of any fee can levy three times of the amount of fee under Section 70(1)(a) of the 1996 Act. Though learned counsel for respondent Nos.2 and 3 has persuaded this court by contending that there is evasion of fee and therefore the case falls under Section 70 of the 1996 Act and not under Section 65-A of the 1996 Act, I am of the view that the said stand is not substantiated and no materials are placed on record to justify its action in initiating action under Section 70(1)(a) of the 1996 Act. The judgments of Co-ordinate Bench of this court cited by the learned counsel for the petitioner are squarely applicable to the present case on hand. Therefore, I am of the view that penalty imposed by respondent No.1 and confirmed by respondent No.3 is liable to be set aside.

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