PETITIONER:
STATE OF MADHYA PRADESH & ORS.
Vs.
RESPONDENT:
GALLA TILHAN VYAPARI SANGH & ORS.
DATE OF JUDGMENT17/01/1977
BENCH:
FAZALALI, SYED MURTAZA
KAILASAM, P.S.
CITATION:
1977 AIR 2208 1977 SCR (2) 619
1977 SCC (1) 657
ACT
Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, S.
37(5)(a), constitutional validity of--Whether unreasonable
to commission agents.
HEADNOTE
The respondents challenged the constitutional validity
of s. 37(5)(a) of the Madhya Pradesh Krishi Upaj Mandi
Adhiniyam, 1972, before the High Court on the ground that it
places unreasonable restriction on the commission agent and
puts a great burden on him for storing the goods given to
him by his principal, without charging the commission for
its safe custody. The plea was accepted and the High Court
struck down the impugned provision as unconstitutional.
Allowing the appeal by Special Leave, the Court,
HELD: Section 37(5)(a) is constitutionally valid and
there is no hardship or unreasonableness in it. The provi-
sion prevents the commission agent from levying any addi-
tional charges from the farmer or the principal for safe
custody of the goods. but s. 37(4) of the Act compensates
him by authorising him to charge not only his commission
from the, principal trader, but also the expenses incurred
by him for the purpose of storing the produce, and the
services rendered by him. [620 D, E, G]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1912-
1914 of 1976.
(Appeal by special Leave from the Judgment and order
dated 7-2-1975 of the Madhya Pradesh High Court in Misc.
Petition No. 231/74 and 685 and 732/73 respectively.)
I.N. Shroff and H.S. Parihar, for the appellants.
S.K. Gambhir, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by
FAZAL ALI, J. In this appeal by special leave, on an
application filed by the respondents before the High Court
of Madhya Pradesh, the High Court struck down the constitu-
tional validity of sub-s. (5) (a) of s. 37 of the Madhya
Pradesh Krishi Upaj Mandi Adhiniyam, 1972 --hereinafter
referred to as ’the Act’--(No. 24 of 1973). The impugned
sub-section runs as follows:
"(5) Every commission agent shall be liable--
(a) to keep the goods of his principal in safe
custody without any charge other than the
commission payable to him; and"
620
The High Court thought that this statutory provision places
unreasonable restriction on the commission agent and puts
great burden on him for storing the goods given to him by
the principal without charging the commission for its safe
custody. The Act is a social piece Of legislation and
should have been liberally construed so as to advance the
object of the Act and fulfil the aims to be achieved there-
by. The main purpose of the Act is to secure a scientific
method of storage, sale, distribution and marketing of
agricultural produce and cut out as far as possible middle-
man’s profit. The Act, therefore, contains provisions of a
beneficial nature preventing profiteering tendencies. It is
not, however, the hardship that can be termed unreasonable
so as to make a statute unconstitutional. Moreover, the
High Court does not appear to have looked to. the scheme of
the Act and has in fact completely overlooked the provisions
of s. 37(4) which runs as follows:
"(4) The commission agent shall recover
his commission only from his principal trader
at such rates as may be specified in the bye-
laws including all such expenses as may be
incurred by him in storage of the produce and
other services rendered by him."
This section clearly empowers the commission agent to charge
such rates as may be specified by the bye-laws even for the
storage of the Produce and other services rendered by him.
This provision also does not prevent the commission agent
from levying reasonable charges for the storage over and
above his commission. All that the Act prevents is that the
commission agent is prohibited from levying any charges for
safe custody from the farmer or the principal. This is done
in order to attract and lure the farmers to place their
goods with commission agents without additional payment of
charges for safe custody. Section 37 (4), however, compen-
sates the commission agent by authorising him to charge his
commission and all expenses which may be incurred by the
commission agent in connection with the storage of the
produce and the services rendered by him. This section,
therefore, clearly authorises the commission agent not only
to charge his commission from the principal trader but also
expenses incurred by him for the purpose of the storage.
That apart s. 2(e) of the Act whiCh defines a "Commission
agent" empowers him to charge any commission o.r percentage
upon the amount involved in such transaction.
For these reasons, therefore, we do not see any hardship
or unreasonableness in the provisions Of s. 37(5)(a) of the
Act. The High Court, therefore, committed an error of law
in striking down this provision as unconstitutional. In our
opinion, therefore, s. 37 (5) (a) of the Act is constitu-
tionally valid. In the view we take, it is not necessary to
go into the question whether the law violates Art. 19 of
the Constitution which stands suspended during the emergen-
cy.
The appeal is accordingly allowed. The order of the
High Court is quashed. In the circumstances, there will be
no order as to. costs.
M.R. Appeal al-
lowed.
621