Deva Sharif Cold Storage Pvt.Ltd, Barabanki vs Krishi Utpadan Mandi Committee, Barabanki

R. K. Gulati, J.—This is a writ petition filed under Article 226 of the Constitution of India. The petition is directed against the order dated 10th December, 1980 contained in Annexure3 to the writ petition. By the impugned order the petitioner was called upon to pay a sum of Rs. 22,733.68 N. P. as Mandi fee within one week, failing which the same would be realised from the petitioner as arrears of land revenue under Section 20 (1) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964 (for short, ''the Act''). The petitioner disputes liability to pay the aforesaid demand on various grounds set out in the writ petition. The dispute relates to the year 197778. At the relevant time the petitioner owned a Cold Storage in the Town Area Dewa, District Barabanki and held a licence for a Warehouse under Rule 67 of the Rules framed under the Act. By a letter dated 20th May 80 the petitioner was required to pay the disputed amount as market fee, on the allegation, inter alia, that the petitioner had advanced a sum of Rs. 8,30,000/ to the agriculturists against their storage of Potatoes to the extent of 21039 quintals and under Section 2 (r) of the Act the amount advanced by the Cold Storage to the agriculturists against their storage of potato is regarded as a transaction of sale. The petitioner objected to the letter dated 20th May, 1980 and the demand made therein and filed objections denying its liability to pay any market fee as well the suggestion that the petitioner had admitted having advanced the amount or was in any way connected with the loan that had been advanced by the Bank to its constituents against the goods or their products stored with he petitioner and given as security to the Bank its advance/loan to them. The petitioner asserted in its objection that it had not entered into any such transaction attributed to it in the letter dated 20th May, 1980, and if the hirers had taken any loan from the bank, no liability for payment of market fee could arise and become payable by the petitioner. The petitioner alleges that without making any enquiry and without following the principles of natural justice, the respondent by the impugned order dated 10th December, 1980 has concluded that the petitioner had admitted that there had been a transaction of Rs. 8,30,000/ of loan relating to 21039 quintals potatoes in the petitioner''s cold storage, whereas the true position was that there was no such admission ever made by the petitioner, nor the petitioner was associated with the loans given to its constituents by the Bank.

The petitioner preferred an appeal against the impugned order, but it was rejected by an order dated 19th January, 1981 on the ground that the impugned order was not appealable as orders under subsections (1) and (ii) of section 17 of the Act alone were appealable, and the impugned order had not been passed under those provisions. On these facts the petitioner has approached this Court through this writ petition and has prayed for a writ of certiorari seeking quashing of the order dated 10th December, 1980 contained in Annexure3 to the writ petition. The petitioner has also asked for a writ of mandamus and a writ of prohibition commanding the respondent to refrain from realising the disputed amount of market fee from the petitioner on the basis of the impugned order. Further respondents be directed to act according to law and to refrain from levying market fee on the petitioner and at any rate to make such enquiries as this Court may direct in accordance with the procedure prescribed by law for the purposes of assessment and levy of the fee.

We may at this stage observe that Section 17 (iii) (b) entitles the Market Committee to levy and collect fee in market area. Those provisions envisage that a Committee shall, for the purposes of the Act, have the power to levy and collect market fee which shall be payable on transaction of sale of specified agricultural produce in the market area at such rates, being not less than one per centum and not more than one and a half per centum of the price of the agricultural produce so sold, as the State Government may specify by notification, and such fee shall be realised in the manner as provided by subclauses (1) to (4) of the said provision. The expression ''sale'' has been defined under Section 2 (r) which reads as under:

" ''Sale'' includes barter or deposit of goods by way of pledge or as security for the amount received as advance "

We have heard learned counsel for the petitioner. No one had appeared on behalf of the respondent when the writ petition was heard although a counter affidavit on behalf of the respondent Krishi Utpadan Mandi Committee has been filed. The main thrust of the arguments advanced on behalf of the petitioner was that the petitioner had not been given a fair deal by the respondent committee, in as much as opportunity had been afforded to the petitioner to put up its case that has been set up against it. The case of the petitioner is that it merely stores potato on behalf of its customers who pay store charges at the time they take delivery of their crops at such time as they desire. The petitioner is not engaged either in sale or in purchase of potatoes but merely renders a service by storing its customers'' goods. No sale or purchase transaction takes place within the premises of the petitioner. Potatoes stored with the petitioner are delivered to its owner who had kept the same for storage and the petitioner is never involved in any sale or purchase transaction. Learned Counsel for the petitioner urged that the respondent has saddled the petitioner with a huge pecuniary liability labouring under an erroneous impression both on the question of fact as well as on law, and without affording any opportunity to the petitioner to prove or show that it was not connected with the transaction of loan which was only between the hirers and the Bank. It is also contended that the impugned order is devoid of reasons and does not meet the objections filed by the petitioner and it has been passed in a cursory manner without even adverting to the facts and the case taken up in the counter affidavit. It was urged that the respondent has come out with a new case in the counter affidavit with which the petitioner was never confronted, and, therefore the impugned order was not liable to be sustained.

It cannot be disputed that in absence of any transaction of purchase or sale within the market area no mandi fee could either be charged or levied. If a dispute arises, then in the first instance the market committee itself or any subcommittee appointed by it can give its findings which will be subject to challenge in any court of law when steps are taken for enforcement of the provisions for realisation of the market fee (See Ram Chandra Kailash Kumar & Company Versus State of U. P (AIR 1980 SC 1123at page 1133).

A perusal of the impugned order would show that it merely sets out the conclusions without any discussion whatsoever on the facts on which those conclusions are based. It has been assumed in the order that the petitioner had advanced the disputed amount as loan on the quantity of storage of potatoes mentioned therein. In our opinion, in discharging the functions enjoined upon the authority to levy market fee under Section 17 (iii) (b), there is an implied legal obligation upon that authority charged with the duty of reaching the decision to consider and weigh the submission and argument and to act on evidence in arriving at its conclusions in one way or the other The statutory authority under those provisions is required to apply its mind to the case, and its decision must prima facie demonst rate that the authority has considered the matter according to law and that its order may be subject to judicial review. The necessity to give sufficient reasons which discloses proper appreciation of the problem to be solved and the mental process by which the conclusion is reached is therefore, obvious. In the instant case, the impugned order is completely a nonspeaking order made in a cryptic manner. In the counter affidavit, while stating the case of the respondent, an attempt has been made to justify the impugned order. The case taken up by the respondent in paragraph 4 of the counter affidavit is to the following effect :

" The petitioner receives potato from the purchasers/traders and arranges for advancement of loan against them through financial agencies such as Bank after furnishing them a guarantee that the potato so received would be kept by it as security till the amount of loan advanced against the potato is paid off by the person taking the loan. Thus, the potatoes are stored by the petitioner on barter. When the amount advanced by the Bank to a particular purchaser/trader against the security of the potatoes kept and given to the Bank by the petitioner is paid back and the purchaser/trader demands the potatoes back, the petitioner releases the same to him, of course after realising his charges for storage etc The said transaction is, therefore, covered under the definition of sale provided under Section 2 (r) of the U. P. Krishi Utpadan Mandi Adhiniyam, 1964. "

In paragraph 6 of the counter affidavit, it is further averred that in fact, the total amount of loan to be advanced against the potatoes so pledged by the petitioner who had distributed it to the various persons depositing the potatoes, and further in any case the loan had been advanced on the security furnished by the Cold Storage.

The learned Counsel for the petitioner contended that the petitioner was never confronted with the case now disclosed in the counter affidavit, and thus, there was a violation of the principles of natural justice. The question whether the petitioner is liable to pay the market fee would largely depend on the determination as to what is the true and factual position with regard to the loans or advances said to have been made to the agriculturists who were the constituents of the petitioner and had stored their produce with it. The liability of the petitioner cannot be decided unless there is a proper finding by a competent authority as to the true factual position which is to be ascertained on the appreciation of evidence. Unfortunately there is no discussion worth the name in the impugned order with regard to the transactions of loan etc. and the manner in which loans were advanced to the constituents of the petitioner.

The assertions made in the counter affidavit cannot be taken notice of particularly when the petitioner had not been confronted with those allegations as it shall be shown hereinafter. We have already stated that the main grievance of the petitioner was that it was denied what it regarded as "an adequate opportunity" to have its say before the respondent Mandi Samiti to adduce its material etc. which it thinks were necessary for the advancement and protection of its case and to correct the wrong impression of the respondent which it might have framed against the petitioner. The rules of natural justice are fundamentals and fundamental law is now well settled that the principles of natural justice are part of concepts and legal and judicial procedure and are also applicable to the administrative bodies in its decision making process having civil consequences. To act in accordance with the principles of natural justice is the most fundamental principle of administration of justice. Although the law of evidence and the procedural laws ensure it, the principles of natural justice are invoked wherever there are gaps in the statutory laws. Over the years by process of judicial interpretations, two rules have been evolved as representing the principles of natural justice in judicial process, including therein quasi judicial and administrative process. They constitute the basic elements of hearing, having their roots in the innate sense of man, fair play and justice, which is not the preserve of any particular race, but is shared in common by all men. The first rule is that no one can be judge in his own cause. The second rule is "audi alteram partem" i. e., ''hear the other side". In other words, the judicial or quasi judicial authority, for that matter even an administrative authority ought not and should not condemn any person unheard. The second rule in its fullest amplitude means that a person against whom an order to his prejudice may be passed, should be informed of the allegations and charges against him, be given an opportunity of submitting his explanation thereto, should have the right to know the evidence by which the matter is proposed to be decided against him and should be allowed to lead his own evidence in his defence To put it in short, the two basic requirements are, (a) notice of the case and (b) opportunity to explain. There is a violation in the present case of the above two facets of the "audi alterm partem rule". There is nothing to show that in the present case these Rules were observed.

In paragraph 9 (wrongly typed 8) of the counter affidavit, it has been asserted that despite an ample opportunity to submit the documents necessary for the assessment of the market fee, the petitioner deliberately kept back the evidence with the intention to defraud the respondent of its fees payable under the Act and under these circumstances the respondent was compelled to serve the impugned order as contained in Annexure3 to the writ petition, which is valid, just and equitable, and in accordance with the Acts and Rules. We may observe that there is nothing in the counter affidavit to show that prior to the passing of the impugned order dated 10th December, 1980 the respondent had given any notice to the petitioner for production of any document etc. in support of its plea that it was not liable to pay mandi fee in respect of the disputed transactions. However, from the averments in paragraph 8 of the counter affidavit, it does appear that the respondent had written certain letters etc. demanding production of original pronotes executed by its constituents, so that the responsibility of the petitioner for paying the market fee may be properly assessed, but this demand was made much after the impugned order was passed as would be evident from Annexures 3 A and 4 which are dated 8th March, 1981 and 2nd May, 1981 respectively. Likewise, certain other notices and correspondence between the respondent and the petitioner and the Bank have been referred to in paragraph 8 of the counter affidavit contained in Annexures C.A.5 to C.A 9. All these notices and letters contained in Annexures C.A.5 to C.A.9 are of a date subsequent to the passing of the impugned order dated 10th December, 1980. Thus, it is difficult to accept the plea of the respondent that the petitioner had been afforded the necessary opportunity of being heard before the impugned order was made, and the petitioner has no cause of grievance on that score. The opportunity, if any, afforded to the petitioner, in the circumstances stated above, was a pretence and an idle formality for the opportunity should be given before the aggrieved person is fastened with the liability under the Act. In these matters, the concerned authority must be guided by the principles of equity, justice and good conscience. The person proceeded against and whose interests are likely to be jeopardized because of the material proposed to be used against him, must be put to notice to enable him to have his full say in the matter. In other words, reasonableness and fair play which in essence emanates from the doctrine of natural justice must be observed and a prior notice and an adequate opportunity is, therefore, an inevitable and indispensable requirement of a valid order, unless the given situation may otherwise warrant the dispensing of these rules. From the sequence of the events set out in the counter affidavit, it further appears to us that the enquiry as to whether the petitioner was liable in respect of the market fee or not was still under progress when the impugned order was made and that enquiry had yet to be completed on the respondent''s own showing for otherwise there was no occasion for the respondent to have issued notices seeking production of documents and other information from the petitioner subsequent to the impugned order.

For all these reasons, in our opinion, the entire matter requires a fresh consideration at the hands of the respondent Mandi Samiti after affording a due opportunity to the petitioner of being heard and permitting it to file its explanation, if any, before the respondent Mandi Samiti. Accordingly, we set aside the order and remand the matter to the respondent Mandi Samiti to decide it afresh, in the light of the observations made above and in accordance with law. The Bank guarantee furnished by the petitioner in pursuance of the interim order passed by this Court in order to secure the interest of the respondent, shall remain in force and shall be subject to the decision that the respondent may take on the liability of the petitioner in the remand proceedings in consequence of this order.

In the result, the writ petition succeeds in part and is allowed accordingly. There shall be no order as to costs.

(Petition allowed)