Supreme Court clarifies the definition of “Agricultural Produce” under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963: Britannia Industries Ltd. vs. Bombay Agricultural Produce Marketing Committee & Anr. (24 January 2019)

Date of the Judgment: 24 January 2019
Citation: (2019) INSC 59
Judges: R. Banumathi, J. and R. Subhash Reddy, J.
Can processed items like edible oil, vanaspati, and sugar be considered “agricultural produce” under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963? The Supreme Court addressed this question in a case concerning market fees levied on these items. The court clarified the scope of the term “agricultural produce” and its implications for businesses dealing with these commodities.

Case Background

Britannia Industries Ltd. (the appellant) filed a writ petition challenging the applicability of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 (the Marketing Act) to certain products they purchased. Initially, they contested the inclusion of sugar, cashew nuts, refined oil, vanaspati, and dry fruits under the Act. However, during the proceedings before the High Court, they withdrew their challenge regarding cashew nuts and other dry fruits. The core dispute revolved around whether edible oil, vanaspati, and sugar could be classified as “agricultural produce” under the Act.

Timeline

Course of Proceedings

The appellant filed a writ petition in the High Court challenging the inclusion of sugar, edible oil, and vanaspati under the definition of “agricultural produce” in the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. The High Court rejected the appellant’s contentions, holding that these items fall within the ambit of “agricultural produce” as defined in the Act. The High Court also addressed the issue of market fees on sugar procured from outside the market area, directing the Market Committee to verify the appellant’s records. Aggrieved by the High Court’s decision, the appellant appealed to the Supreme Court.

Legal Framework

The core of the dispute lies in the interpretation of Section 2(1)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963, which defines “agricultural produce” as:

“agricultural produce” means all produce (whether processed or not) of agriculture, horticulture, animal husbandry, apiculture, pisciculture and forest specified in the Schedule.

The Supreme Court noted that for any produce to be considered “agricultural produce” under the Act, it must be explicitly listed in the Schedule. The Act also specifies the market area and the powers of the Market Committee to levy fees on agricultural produce bought or sold within that area.

Arguments

The appellant argued that sugar, edible oil, and vanaspati are not “agricultural produce” because they are processed or manufactured goods, not raw agricultural products. They contended that the term “agricultural produce” should only include raw, unprocessed items directly derived from agriculture. Furthermore, they argued that sugar procured from outside the market area should not be subject to market fees.

The respondent, the Agricultural Market Committee, argued that the definition of “agricultural produce” in Section 2(1)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 includes processed items if they are derived from agricultural sources and are listed in the Schedule. They contended that sugar, edible oil, and vanaspati are all derived from agricultural products and are therefore correctly classified as “agricultural produce”.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the provisions of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 are applicable to the products “edible oil”, “Vanaspati” and “sugar”?

Treatment of the Issue by the Court

Authorities

The following authorities were considered by the Court:

The following legal provisions were considered by the Court:

• Section 2(1)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963: Definition of “agricultural produce”.
• Section 13(1A)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963: Defines the market area.
• Section 31 of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963: Power to levy market fees.

Judgment

The Court relied on the decision in Champak Lal H. Thakkar v. State of Gujarat (1980) 4 SCC 329* to determine that oil remains oil even after processing unless its essential characteristics change.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the explicit language of Section 2(1)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963, which includes processed agricultural products in its definition of “agricultural produce” if they are listed in the Schedule. The Court also considered the fact that “sugarcane” is listed in the Schedule along with “gul” and “sugar,” indicating the legislature’s intent to treat sugar as an agricultural produce derived from sugarcane.

The court emphasized that the presence of “sugarcane” along with “gul” and “sugar” in the schedule indicates the legislative intent to treat sugar as an agricultural produce. The court also noted that the definition of “agricultural produce” in Section 2(1)(a) includes processed items, provided they are derived from agriculture and are specified in the Schedule.

The Court’s reasoning was based on the plain reading of the statute and the legislative intent behind it. The court noted that:

“Section 2(1)(a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 unambiguously shows that the agricultural produce which are to be covered by the sweep of the Act necessarily has to be specified in the Schedule.”

The Court also observed:

“the intention of the Legislature is to treat sugar as a produce of sugarcane, which is a separate agricultural produce.”

Further, the Court held:

“We fully agree with the conclusion of the High Court that “edible oil”, “Vanaspati” and “sugar” would fall within the meaning of Section 2(1)(a) of the Marketing Act – agricultural produce.”

The Court also addressed the issue of market fees on sugar procured from outside the market area. The Court directed the Market Committee to verify the appellant’s records and not levy fees on sugar procured from outside the market area as per the direction of the High Court.

Key Takeaways

• ✓ Processed items derived from agricultural sources can be classified as “agricultural produce” under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 if they are listed in the Schedule.
• ✓ Sugar, edible oil, and vanaspati are considered “agricultural produce” under the Act.
• ✓ Market fees cannot be levied on agricultural produce procured from outside the market area.

Directions

The Supreme Court directed the Market Committee to verify the appellant’s records to ascertain the quantity of sugar procured from outside the market area and not to levy market fees on that quantity.

Development of Law

The Supreme Court upheld the High Court’s interpretation of “agricultural produce” under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963, clarifying that processed items derived from agriculture and listed in the Schedule are included in the definition. The ratio decidendi is that the definition of “agricultural produce” includes processed items if they are derived from agriculture and are specified in the schedule. This reinforces the literal interpretation of the statute and reinforces the legislative intent behind the Act.

Conclusion

The Supreme Court dismissed the appeals, affirming the High Court’s decision that edible oil, vanaspati, and sugar are “agricultural produce” under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. The Court also directed the Market Committee to verify the appellant’s records to ensure that market fees are not levied on sugar procured from outside the market area.

Category

Parent Category: Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963
Child Category: Section 2(1)(a), Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963
Child Category: Agricultural Produce
Child Category: Market Fees

FAQ

Q: What does “agricultural produce” mean under the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963?
A: Under the Act, “agricultural produce” includes all produce, whether processed or not, from agriculture, horticulture, animal husbandry, etc., that are specified in the Schedule of the Act. This includes items like sugar, edible oil, and vanaspati.

Q: Can market fees be levied on sugar purchased from outside the market area?
A: No, market fees cannot be levied on sugar that is purchased from outside the market area. The Market Committee is required to verify the records to ascertain the source of purchase.

Q: Does the definition of “agricultural produce” include processed items?
A: Yes, the definition includes processed items as long as they are derived from agricultural sources and are listed in the Schedule of the Act.