Supreme Court Resolves Allotment of Market Gala: Hande Wavare & Co. vs. Ramchandra Vitthal Dongre (2019)

Date of the Judgment: July 10, 2019

Citation: (2019) INSC 701

Judges: R. Banumathi, J., R. Subhash Reddy, J.

Can a market authority allot a shop to someone who didn’t originally book it, based on a transfer of booking amount? The Supreme Court of India recently tackled this issue, along with the correct procedure for allotting shops when multiple people are eligible. This case involved a dispute over a shop in the Mumbai Agricultural Produce Market, where several traders claimed the right to the same space. The Supreme Court, in this judgment, clarified the eligibility criteria and the process for such allotments. The judgment was authored by Justice R. Banumathi, with Justice R. Subhash Reddy concurring.

Case Background

The case revolves around the allotment of Gala No. F-158, a large shop in the Mumbai Agricultural Produce Market Committee (APMC) at Vashi. The Maharashtra government decided to move the wholesale fruit and vegetable market from Crawford Market to Vashi to ease congestion. To manage this, APMC constructed both small (300 sq. ft.) and large (450 sq. ft.) shops. In 1998, the High Court of Bombay appointed Justice S.M. Daud as a Court Commissioner to set norms for allotting these shops. Justice Daud submitted reports that were accepted by the High Court, establishing eligibility criteria for traders. In 2012, the Supreme Court cancelled the allotment of Gala No. F-158 to one Hanumant Murlidhar Gavade, making it vacant. Several traders then claimed the right to this shop, leading to the current dispute.

Timeline:

Course of Proceedings

Initially, after the Supreme Court cancelled the allotment of Gala No. F-158 to Hanumant Murlidhar Gavade, several traders claimed the shop. The High Court directed APMC to review all eligible claims. APMC decided to conduct a lottery among five claimants. M/s Hande Wavare & Co. won the lottery and deposited the required amount. However, the Director of Agricultural Marketing set aside this allotment, directing APMC to invite bids from the five claimants instead. The Minister for Co-operation, Marketing and Textile then reversed this decision, upholding the lottery and allotment to M/s Hande Wavare & Co. The High Court, in its final judgment, overturned the Minister’s order, finding that Habibullah Farhatullah was the only eligible claimant and should be allotted the shop.

Legal Framework

The core of this case lies in the norms established by the Daud Committee for the allotment of shops in the Vashi market. These norms specified two time frames for eligibility: 1985-86 to 1994-95 and 1991-92 to 1994-95. The norms also detailed the amount of market fee (cess) required for different sizes of shops. The High Court of Bombay, in its order dated 07.05.1999 in Writ Petition No. 2556 of 1999, directed APMC to strictly adhere to these norms. It further stated that if any shops remained vacant after allotment according to norms, APMC could allot them to those who “marginally fall short of the norms.”

The relevant recommendations of the Daud Committee are as follows:

“Time frame 1985-86 to 1994-95. Booking effected. The claimant has to establish doing of five years business as reflected in payment of market fee irrespective of quantum thereof. He must further show that he held an APMC licence for at least two years in the above ten years period as also that he did business in one of the years 1995-96 or 1996-97 – this again to be established by proof of cess paid. The cess – space nexus will be as under:-

Total Cess Paid Entitlement

1. Rs.1,500/- to Rs.5,000/- Half small gala

2. Rs.5,001/- to Rs.10,000/- 1 small gala

3. Rs.10,001/- to Rs.15,000/- Half large gala

4. Rs.15,001/- to Rs.90,000/- 1 large gala

5. Rs.90,001/- to Rs.3,00,000/- 2 large galas

6. Above Rs.3,00,000/- 3 large galas

No one to get more than three large galas and for retaining the third, the person retaining, will have to pay the market price within ninety days of the acceptance of the norm by the High Court.”

“The next category is of those who have booked galas up to 31.12.1993 and have come into the business from 1991-92 to 1994-95. For them the time frame will be 1991-92 to 1994-95. The eligible in this category will be those who have held APMC licences for at least three years, have done business for three years as reflected in the payment of market fee irrespective of quantum and also show that they were doing business in 1995-96 or 1996-97 by proof of having paid market fee about having done business either in 1995-96 or 1996-97. The cess-space nexus will be thus:-

Total Cess Paid Entitlement

1. Rs.2,500/- to Rs.7,500/- Half small gala

2. Rs.7,501/- to Rs.25,000/- 1 small gala

3. Above Rs.25,000/- 1 large gala”

Arguments

M/s Hande Wavare & Co. (Appellant):

• Argued that APMC correctly decided to conduct a lottery among eligible claimants, as per the High Court’s order dated 07.05.1999.
• Stated that they fulfilled most of the Daud Committee’s guidelines, falling “marginally short” of the norms.
• Contended that Habibullah Farhatullah did not book the gala in his name or pay the required amount and is therefore not entitled to a large gala.

Ramchandra Vitthal Dongre (Respondent No. 1):

• Maintained that their firm’s eligibility was never an issue and they were always fighting for allotment of a second large gala.
• Argued that the Daud Committee’s norms do not expressly prohibit their firm’s claim.

Habibullah Farhatullah (Respondent No. 2):

• Claimed that the Director of Agricultural Marketing’s order dated 24.09.2002, which allowed the transfer of his father’s booking amount to his name, entitled him to a large gala.
• Asserted that this order was binding on APMC and that he was the only eligible claimant.
• Argued that APMC could not consider other claimants who were “marginally falling short” of the norms.

Ganpat Sabaji Shinde (Appellant):

• Claimed to have deposited more than the required amount with APMC for a large gala between 1987 and 1991.
• Argued that he satisfied the Daud Committee’s norms and should not have been excluded from claiming Gala No. F-158.

APMC (Respondent No. 5):

• Argued that Habibullah Farhatullah did not pay any booking amount and that the transfer of booking amount was not permissible under the Daud Committee’s norms.
• Contended that the Director of Agricultural Marketing’s order dated 24.09.2002 was contrary to the norms and the orders of the High Court and Supreme Court.
• Maintained that the decision to conduct a lottery was correct, given multiple claimants who “marginally fell short” of the norms.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for determination:

1. When respondent No.2 – Habibullah Farhatullah himself has not booked the large gala before the cut-off date nor paid the booking amount, whether the High Court was right in saying that only second respondent is entitled for allotment of large gala by getting the transfer of the booking amount from his father to his name?
2. Dehors the norms fixed by Daud Committee, whether the High Court was right in placing reliance only upon the order of Director, Marketing dated 24.09.2002 to hold that the second respondent is entitled for allotment of large gala?
3. Whether the High Court was right in saying that APMC could not have considered the case of other claimants under the category of “marginally fall short of the norms” and that drawing of lottery was without jurisdiction?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Cases:

• Hanumant Murlidhar Gavade v. Mumbai Agricultural Produce Market and Others (2012) 1 SCC 729 – Supreme Court: The Supreme Court had previously cancelled the allotment of the same large gala (No. F-158) to Hanumant Murlidhar Gavade, as he was not eligible for it. The Court had directed APMC to allot only a small gala to him.
• State of Bihar v. Upendra Narayan Singh and others (2009) 5 SCC 65 – Supreme Court: The Supreme Court held that Article 14 of the Constitution of India is a positive concept and cannot be enforced in a negative manner. If any illegality or irregularity has been committed, it cannot be perpetuated on the ground of discrimination or hardship.
• M. Meenakshi and Others v. Metadin Agarwal (Dead) by Lrs. and Others (2006) 7 SCC 470 – Supreme Court: The Supreme Court held that even a void order must be set aside by a competent court, as it is not necessarily non est. An order cannot be declared void in a collateral proceeding.
• Anita International v. Tungabadra Sugar Works Mazdoor Sangh and Others (2016) 9 SCC 44 – Supreme Court: The Supreme Court held that an order passed by a competent court/quasi-judicial authority has the force of law until it is set aside by a court of competent jurisdiction.
• Shantaram Y. Bhagat v. The Mumbai Agricultural Produce Market Committee and another – High Court of Bombay: This case was referenced in the High Court’s order, which the Supreme Court discussed in relation to the permissibility of conducting a lottery.

Legal Provisions:

• Section 52B of the Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963: This section was mentioned in the context of appeals filed against the decisions of APMC.
• Section 43 of the Maharashtra Agricultural Produce Marketing (Development and Regulation) Act, 1963: This section was mentioned in the context of revision applications filed before the State Government.
• Article 14 of the Constitution of India: This article was discussed in relation to the principle of equality and non-discrimination.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

✓ Hanumant Murlidhar Gavade v. Mumbai Agricultural Produce Market and Others [(2012) 1 SCC 729]: The Court acknowledged this case as the basis for the vacancy of Gala No. F-158.

✓ State of Bihar v. Upendra Narayan Singh and others [(2009) 5 SCC 65]: The Court used this case to argue against perpetuating irregularities based on claims of discrimination.

✓ M. Meenakshi and Others v. Metadin Agarwal (Dead) by Lrs. and Others [(2006) 7 SCC 470]: The Court cited this case to support the argument that even void orders must be set aside by a competent court, but clarified that this principle does not validate the Director’s order in this case.

✓ Anita International v. Tungabadra Sugar Works Mazdoor Sangh and Others [(2016) 9 SCC 44]: The Court cited this case to emphasize the force of law behind orders passed by competent authorities, but clarified that this does not validate the Director’s order in this case.

✓ Shantaram Y. Bhagat v. The Mumbai Agricultural Produce Market Committee and another: The Court discussed this case in relation to the High Court’s order about allotment of galas and the permissibility of conducting a lottery.

The Supreme Court held that Habibullah Farhatullah was not eligible for allotment of a large gala because he did not book the gala himself or pay the required amount. The Court emphasized that the transfer of a booking amount from one person to another was not permissible under the Daud Committee norms. The Court also rejected the High Court’s reliance on the Director of Agricultural Marketing’s order dated 24.09.2002, stating that it was contrary to the norms and previous orders of the High Court. The Court further clarified that while APMC could consider claimants who were “marginally short” of the norms, the lottery method was not the most appropriate way to allot the shop. Instead, the Court directed APMC to invite sealed tenders from eligible claimants.

The Court noted that M/s Hande Wavare & Co. and Ganpat Sabaji Shinde were both “marginally short” of the norms and were eligible to claim the large gala, along with two other claimants. The Court also affirmed the High Court’s finding that the firm M/s Ramchandra Vitthal Dongre was not eligible for a separate allotment of a large gala.

The Supreme Court emphasized that the norms fixed by the Daud Committee should be strictly followed, and that deviations from these norms cannot be justified based on irregularities committed in other cases. The Court also underscored that the order of the Director of Agricultural Marketing could not prevail over the High Court’s direction to adhere to the Daud Committee norms.

“Merely because, in other cases, gala booked in the name of one person is transferred in the name of another person, it cannot be the reason to adopt the same irregularity in the case of the second respondent also.”

“The High Court, in our view, did not keep in view that respondent No.2 had neither booked the gala before the cut-off date nor paid the amount and the High Court proceeded hold as to the entitlement of respondent No.2 mainly on the basis of the order dated 24.09.2002.”

“In the absence of specific norms for the partnership firms, the norms framed for individual traders are applicable for the partnership firms.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to uphold the integrity of the norms set by the Daud Committee and the previous orders of the High Court. The Court emphasized that these norms should be strictly followed to ensure fairness and transparency in the allotment process. The Court was also concerned about preventing irregularities and ensuring that the allotment process was not influenced by extraneous factors. The Court’s reasoning focused on the legal principles of equality and non-discrimination, but clarified that these principles cannot be used to perpetuate illegalities.

The Court’s reasoning was also influenced by the need to ensure that the allotment process was fair to all eligible claimants. The Court noted that both M/s Hande Wavare & Co. and Ganpat Sabaji Shinde were “marginally short” of the norms and were therefore eligible to claim the large gala. The Court also recognized that there were other eligible claimants and that the lottery system was not the best way to allot the shop. The Court’s decision to direct APMC to invite sealed tenders was aimed at ensuring that the shop was allotted to the highest bidder, thereby maximizing revenue for APMC.

The Court’s decision was also driven by a concern for the proper administration of justice and the need to ensure that the orders of the High Court were respected. The Court noted that the High Court’s previous orders had directed APMC to strictly adhere to the Daud Committee norms, and that the Director of Agricultural Marketing’s order was contrary to these norms. The Court’s decision to set aside the High Court’s judgment was aimed at ensuring that the rule of law was upheld.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

Logical Reasoning:

Key Takeaways

• Strict Adherence to Norms: Market authorities must strictly adhere to the norms set by committees or courts for allotment of shops or galas.
• No Transfer of Booking Amounts: Transfer of booking amounts from one person to another is not permissible unless explicitly allowed by the norms.
• Sealed Tender Process: When multiple claimants are eligible, a sealed tender process is preferred over a lottery system to ensure fairness and maximize revenue.
• Eligibility of Claimants: Claimants who are “marginally short” of the norms can be considered for allotment of shops, but their claims must be evaluated based on the established norms.
• Partnership Firms: Partnership firms must independently meet the eligibility criteria for allotment of shops and cannot rely on the individual eligibility of their partners.

Directions

The Supreme Court gave the following directions:

• The possession of small Gala No. M-821 shall be restored to M/s Hande Wavare & Co.
• M/s Hande Wavare & Co. shallbe entitled to the refund of the amount deposited by them for Gala No. F-158.
• APMC shall invite sealed tenders from the five eligible claimants, including M/s Hande Wavare & Co. and Ganpat Sabaji Shinde, for the allotment of Gala No. F-158.
• The allotment of Gala No. F-158 shall be made to the highest bidder among the eligible claimants.
• The order of the High Court was set aside.