Featured image for Supreme Court Judgment dated 24-01-2019 in case of petitioner name Britannia Industries Ltd. vs Bombay Agricultural Produce Ma
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Agricultural Produce and Market Fees: Supreme Court Rules on Maharashtra Agricultural Produce Marketing Act

The case of Britannia Industries Ltd. vs. Bombay Agricultural Produce Marketing Committee & Others addressed a dispute concerning the applicability of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 (Marketing Act) to certain processed food products like edible oil, vanaspati, and sugar. The Supreme Court was called upon to determine whether these items qualify as ‘agricultural produce’ under the Act, and whether market fees could be levied on transactions involving these products.

Background of the Case

The appellant, Britannia Industries Ltd., filed a writ petition challenging the inclusion of sugar, cashew nuts, refined oil, vanaspati, and dry fruits under the provisions of the Marketing Act. During the proceedings, the appellant withdrew its challenge regarding cashew nuts and dry fruits, limiting the issue to edible oil, vanaspati, and sugar.

The Maharashtra government had issued a notification on 25.09.1987, adding these items to the Schedule of the Act, thereby bringing them under the regulatory framework of agricultural markets and making them subject to market fees.

Petitioner’s Arguments (Britannia Industries Ltd.)

  • The Marketing Act should not apply to processed food items like refined edible oil, vanaspati, and sugar, as they are manufactured products rather than raw agricultural produce.
  • The notification adding these items to the Schedule of the Act was illegal and ultra vires.
  • Bulk sugar was purchased directly from sugar mills located outside the market area and should not be subject to market fees.
  • Processing agricultural raw materials into refined products significantly alters their characteristics, making them distinct from agricultural produce.

Respondent’s Arguments (Bombay Agricultural Produce Marketing Committee)

  • Under Section 2(1)(a) of the Marketing Act, agricultural produce includes all produce of agriculture, horticulture, animal husbandry, apiculture, pisciculture, and forestry, regardless of whether it is processed.
  • Sugarcane is explicitly listed under Item VI in the Schedule along with sugar, indicating legislative intent to treat sugar as an agricultural produce.
  • Edible oil and vanaspati originate from agricultural raw materials and remain within the definition of agricultural produce.
  • The Market Committee had the authority to enforce statutory rights under Section 31 of the Act, including levying market fees on transactions within its jurisdiction.

Supreme Court’s Judgment

The Supreme Court, in a judgment delivered by Justices R. Banumathi and R. Subhash Reddy, upheld the High Court’s decision affirming the applicability of the Marketing Act to sugar, edible oil, and vanaspati. The Court’s key findings were:

  • Definition of Agricultural Produce: The Court held that sugar, edible oil, and vanaspati fall within the definition of agricultural produce under Section 2(1)(a) of the Act.
  • Legislative Intent: The inclusion of sugarcane and sugar in the Schedule showed clear legislative intent to regulate sugar as an agricultural product.
  • Market Fees on Sugar: The Court ruled that market fees could only be levied on sugar transactions occurring within the market area and not on sugar purchased outside the market limits.
  • Processing Does Not Change Agricultural Status: The Court reiterated that processing agricultural products does not remove them from the scope of agricultural produce unless they undergo a fundamental transformation.

Observations from the Judgment

The Court referred to its decision in Champak Lal H. Thakkar v. State of Gujarat (1980), reaffirming that refined oil remains oil even after processing, and that certain processing steps do not alter the fundamental nature of agricultural produce.

“Oil will remain oil if it retains its essential properties and merely because it has been subjected to certain processes would not convert it into a different substance.”

The Court further emphasized:

“The inclusion of sugar in the Schedule is based on legislative intent to regulate it under the Marketing Act, and its removal in 1982 followed by re-inclusion in 1987 does not affect its agricultural status.”

Impact of the Judgment

This ruling has significant implications for the regulation of agricultural markets:

  • It establishes that processed products derived from agricultural raw materials can be classified as agricultural produce if included in the Schedule.
  • It clarifies that market fees apply only to transactions within designated market areas.
  • It reinforces the authority of agricultural market committees in regulating listed products.
  • It prevents manufacturers from evading regulatory oversight by claiming that processing alters the fundamental nature of agricultural produce.

Conclusion

The Supreme Court’s verdict in Britannia Industries Ltd. vs. Bombay Agricultural Produce Marketing Committee reinforces the regulatory framework of agricultural markets. The decision affirms that sugar, edible oil, and vanaspati qualify as agricultural produce and are subject to market fees, ensuring compliance with state marketing laws. This ruling provides clarity on the scope of agricultural regulation and maintains the integrity of market committees in enforcing statutory obligations.


Petitioner Name: Britannia Industries Ltd..
Respondent Name: Bombay Agricultural Produce Marketing Committee & Others.
Judgment By: Justice R. Banumathi, Justice R. Subhash Reddy.
Place Of Incident: Maharashtra.
Judgment Date: 24-01-2019.

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