FAUJI SUGAR MILLS Versus MARKET COMMITTEE, TANDO MUHAMMAD KHAN.

1. NASIM HASAN SHAH, J. --These three appeals, by leave, numbering Civil Appeal K-27 of 1973, Civil Appeal K-65 of 1982 and Civil Appeal K-5 of 1983, have been heard together as they involved common questions of law and are accordingly being disposed of by a common judgment.

2. It will suffice for our purposes to consider the facts of the case of one of the said appeals i.e. Fauji Sugar Mills v. Market Committee, Tando Muhammad Khan and another (Civil Appeal No. K-27 of 1973) as the questions of law raised therein are the same as fall for decision in the other two appeals (Civil Appeal K-65 of 1982 and Civil Appeal K-5 of 1983).

3. The facts forming the background in Fauji Sugar Mills v. Market Committee, Tando Muhammad Khan and another (Civil Appeal No. K-27 of 1973) are that the aforesaid appellant is an undertaking of the Fauji Foundation and was engaged in the manufacture of 'sugar' from 'sugarcane' at its mill premises at Tando Muhammad Khan, District Hyderabad Sind.

4. By Ordinance XXII of 1964 promulgated on 1-12-1964 the Punjab Agricultural Produce Markets Act the Punjab Agricultural Produce Markets Act V of 1939 (hereinafter called the Act) was extended to the whole of the Province of West Pakistan. This Act, inter alia, provided for the regulation of the purchase and sale of "agricultural produce" and the establishment of markets for the same.

5. In exercise of the powers conferred by section 3 of the Act, the Governor of the Punjab issued a Notification No. 3(5)S.O. (F and G)/65-Market, dated 15-8-1966 declaring his intention of exercising control over the sale and purchase of certain agricultural produce items in certain areas of the Hyderabad District to be declared as "Market Areas" including the entire Tando Muhammad Khan Taluka. These items included "sugarcane and its products viz. gur, shakar, desi sugar and refined sugar".

6. By another Notification No. 1(I)S.O.(F&G)/67-Market dated 9-2-1967, the Governor of West Pakistan, in purported exercise of powers under sections 7, 8 and 10 of the Act, established the "Market Committee" of Tando Muhammad Khan and appointed certain persons as members of the Market Committee.

7. Through another Notification No. 3(5)O.S.O. (F&G)/65-Market dated 18-12-1967, the Governor of West Pakistan, in purported exercise of powers under section 4 of the Act took control over the sale and purchase of items of agriculture produce in certain Markets of the Hyderabad District including the entire Tando Muhammad Khan Taluka. The items again included "sugarcane and its products viz. gur, shakar, desi sugar and refined sugar".

8. In the meantime certain persons challenged the legality of the establishment and constitution of similar Market Committees at Hyderabad and Matli in Hyderabad District by the aforesaid Notifications by filing writ petitions in the High Court of West Pakistan at Karachi. These writ petitions were ultimately accepted and the impugned Notifications were declared to be without lawful authority and of no legal effect by the judgment of a Division Bench of the High Court on 23-2-1968 (See Inayat Ali and another v. Government of West Pakistan and another P L D 1968 Kar. 552)].

9. The Governor of West Pakistan thereafter, on 16-1-1969, as a result of this decision, issued another Notification No. 3(II)SO (F&M)/68-Market, published in the Gazette of West Pakistan, Part I, Lahore, dated 21-2-1969, whereby he rescinded his earlier Notification dated 9-2-1967 issued under section 7 etc. whereunder the Market Committee was established at Tando Muhammad Khan.

10. On the same day (i.e. 16-1-1969), through another Notification No. 3(II)S(F&M)/ 68-Market published in the Gazette of West Pakistan, Part I, Lahore, dated 21-2-1.969, the Governor of West Pakistan, in the purported exercise of powers under section 25-A of the Act, declared that pending the constitution of Market Committee at Tando Muhammad Khan, the Extra-Assistant Director of Agriculture (Economics and Marketing), Hyderabad Region, Hyderabad, shall exercise all the functions of the Market Committee.

11. It may be mentioned that on 10-2-1969, through a Circular Letter No. 2(12)SO(S&G/65) Market, the Government of West Pakistan directed all the Commissioners of the Divisions of West Pakistan to delete sugarcane from the schedule of controlled items notified in respect of the existing Market Areas.

12. However, in June 1969, the Market Committee Tando Muhammad Khan notified its draft of Model Bye-laws for the levy and collection of market fee at the rate of 6 paisas per maund on the purchase and sale of sugarcane and its products and called for objections. The appellant whereupon, on 24-6-1969, filed its objections to the above draft Bye-laws framed by the Market Committee. The objections, however, were rejected by the Officer Incharge of the Market Committee by order, dated 27-6-1969 and the Bye-laws of the Market Committee were approved by the Governor of West Pakistan by Notification No. 2(7)SO(F&M)/67-M-III, dated 20-11-1969, published in the Gazette of West Pakistan Lahore, dated 27-11-1969.

13. In the meanwhile on 5-11-1969, the Governor of West Pakistan through its Letter No. 2(12)S.O.(F&M)/65-Market, notified all the Commissioners of the Divisions of West Pakistan that it had been decided to withdraw the decision conveyed in their circular Letter dated 10-2-1969, concerning the deletion of sugarcane from the schedule of controlled items.

14. On 23-1-1970, the Market Committee asked the appellant herein, to furnish returns of the purchase and sale of sugarcane and sugar etc. from 20-11-1969 onwards and demanded payment of market fee at 6 paisas per maund thereon.

15. On 2-2-1970, the Market Committee demanded payment of Rs.1,32,305.76 as market fee (Rs.1,26,077.04 on the purchase of sugarcane and Rs.6,228.72 on the sale of sugar) for the period from 20-11-1969 to 31-12-1969. The appellant was further directed to file returns of purchase and sale of subsequent periods and to pay the market fee thereon.

16. Again on 14-2-1970, the Market Committee by its notice demanded the appellant to pay up dues within 7 days of the notice failing which the appellant was threatened proceedings under Rule 51 of the Rules for recovery of the dues as arrears of land revenue.

17. Feeling aggrieved by these demands the appellant moved a Constitution Petition (No. 133 of 1970) in the High Court to challenge the levy, collection and demand of the aforesaid market fee contending that all the aforesaid measures were without lawful authority and of no legal effect. It also filed an application for stay /injunction. An ad interim stay was granted by the Court which was confirmed on the 7th October, 1970 and the appellant thereunder furnished a bank guarantee for Rs.1,32,305. Ultimately the High Court partly allowed .the Constitution Petition in so far it related to the fee on sugar vide judgment dated 20-11-1972 but rejected it so far as the fee relating to the purchase of sugarcane is concerned. Leave was granted on 22-3-1973 to examine, inter alia, the following questions:--

18. Firstly:

19. That in the absence of the notified areas for the purpose of the Act having been declared under the Act neither any Market Committee nor any administrator could be appointed under the law to exercise the functions of the Market Committee as already held in the case entitled "Inayat Ali v. Government of West Pakistan" P L D 1968 Kar. 552.

20. Secondly:

21. As there was no prior existence of any Market Committee, the Government was not competent to declare that the functions of Market Committee should be exercised by a specified officer.

22. We have heard all the learned counsel appearing for the appellants as also the learned Additional Advocate-General Sind on behalf of the respondents and we consider that there is force in these contentions.

23. The first provision of law which is pertinent in the' context is S.25-A of the Act. This, to extent relevant, provides:--

24. "25-A. (1) If at any time Government are satisfied that a situation has arisen in which the purposes of this Act cannot be carried out in accordance with the provision thereof, Government may by notification--

(a) declare that the functions of the Market Committee shall, to such extent as may be specified in the notification, be exercised by Government or such person or persons as they may direct;

(b) assume to themselves all or any of the powers vested in or exerciseable by any market committee;

25. --- and such notification may contain such incidental and consequential provisions as may appear to Government to be necessary or desirable for giving effect to the objects of the notification. "

26. A perusal of the above provisions shows that it empowers the Government to declare that the functions of the Market Committee may be exercisable by any person who may be directed in this behalf.

27. A close look at subsection (1) of section 25-A shows that it confers two separate powers on the Government.

(a) It may declare that the functions of the Market Committee shall, to the specified extent, be exercised either by the Government or by such person as may be designated.

(b) The Government may assume to itself all or any of the powers vested in or exercisable by a Market Committee.

28. The opening part of section 25-A also lays down that the powers conferred under section 25-A can be exercised only by means of a notification.

29. It is not disputed that no notification has been issued under clause (b) of Section 25-A taking over the powers of the Market Committee and the notification which has been issued confines itself to providing that the functions of the Market Committee are to be exercised by the designated officers. It is also manifest that the levy of a fee can only be in exercise of a power and not in exercise of functions; therefore, the powers vested in a Market Committee under the Act to levy a fee cannot be exercised by the Government in the absence of any notification conferring to it the powers of the Market Committee, merely in exercise of the functions of the said Committee. Hence in all the cases where Market Committees do not exist the powers conferred on them to levy a fee cannot be exercised by any one, in purported exercise of the functions of the said Committees.

30. In fact under the Act the statutory power to make all kinds of bye-laws is conferred not on the Government but upon the Market Committees and no power is vested in the Government to make any bye-law itself. This is apparent from the provisions of section 28 of the Act, which reads:--

31. "28.(1) Subject to any rules made by the Government under section 27, the Market Committee may, in respect of the notified market area under its management, make bye-laws for--

(i) the regulation of business;

(ii) the conditions of trading;

(iii) the appointment and punishment of its employees;

(iv) the payment of salaries, gratuities, and leave allowances to such employees; and

(v) the delegation of powers, duties, and functions of the sub-committee, if any, provided by section 15, and may provide that contravention thereof shall be punishable on conviction, by a competent magistrate, with a fine which may extend to fifty rupees.

(2) No bye-law shall take effect until it has been published for information, subsequently confirmed by Government and notified in the official gazette."

32. It is clear from the above provisions that the power of making bye-laws is conferred not on the Government but on the Market Committee [vide subsection (1)]. It is true that under subsection (2) the confirmation of the Government is required. But this does not enable the Government to itself make any bye-law. The exact position is that before any bye-law can become legally enforceable it is necessary that two conditions must be satisfied; first that the bye-law is made by the Market Committee and second that the Government has confirmed the said bye-law.

33. In the instant case neither the Market Committee was in existence nor did the Government assume to itself the powers of the Market Committee by issuing the appropriate notification under section 25-A. In so far as the power to make bye-laws, inclusive of the levy of a bye-law imposing a fee, was not capable of being exercised by the Government itself the result is that the impugned levy has not been imposed in accordance with the law.

34. The upshot is that these appeals must succeed and we hold accordingly. The demand of market fee on the purchase of sugarcane is found to be without lawful authority and of no legal. effect. Since the same question arises in all the three appeals they are all allowed, with costs.

35. M.I./F-22/5 Appeals allowed.