1985 (5) TMI 214 - SC - Indian Laws

High Court Invalidates Sections of Karnataka Agricultural Act, Upholds Market Fee Increase

ITC. LIMITED & ORS. Versus STATE OF KARNATAKA & ORS.

ITC. LIMITED & ORS. Versus STATE OF KARNATAKA & ORS. - 1985 (0) Suppl. SCC 476, 1985 (1) Suppl. SCR 145 Issues Involved:1. Validity of Section 65(1) and Section 42 of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1980.2. Quid pro quo for the enhancement of market fees from 1% to 2%.3. Repugnancy between the Karnataka Act and the Tobacco Board Act, 1975.4. Validity of the amendment of bye-laws under Section 148 of the Act.5. Refund of market fees collected under Section 65(1) and excess fees under Section 65(2).Summary:1. Validity of Section 65(1) and Section 42 of the Karnataka Agricultural Produce Marketing (Regulation) Act, 1980:The High Court struck down Section 65(1) and Section 42 of the Karnataka Act as unconstitutional. The Court found that the construction of rural roads did not qualify as a special service to the class of persons paying the fee, and the funds collected had been spent on public roads, which did not provide a direct benefit to the fee payers. The Court held that the amendments did not cure the constitutional defects identified in the Rajasekhariah case.2. Quid pro quo for the enhancement of market fees from 1% to 2%:The High Court examined the financial projections and estimates provided by the market committees and found that there was a broad and substantial correlation between the fees collected and the services rendered. The Court held that the enhancement of market fees from 1% to 2% was justified based on the projected developmental works and services. However, the Court directed the Chief Marketing Officer to re-examine the estimates and financial projections for certain market committees to ensure the correlation between fees and services.3. Repugnancy between the Karnataka Act and the Tobacco Board Act, 1975:The High Court held that the provisions of the Karnataka Act were not repugnant to the Tobacco Board Act, 1975. The Court found that the Central Act primarily dealt with the control and development of the tobacco industry, while the State Act regulated the marketing of agricultural produce, including tobacco. The Court noted that the two legislations could co-exist and operate cumulatively, provided the market committees obtained the necessary licenses under the Tobacco Board Act.4. Validity of the amendment of bye-laws under Section 148 of the Act:The High Court upheld the validity of the amendment of the bye-laws for enhancing the market fee from 1% to 2%. The Court found that the amendment was made in accordance with the procedure laid down in Section 148 of the Act, and the deletion of the requirement for previous publication and hearing of affected interests by the Karnataka Ordinance 22 of 1981 was valid. The Court noted that the Chief Marketing Officer's direction to amend the bye-laws could be regarded as his previous approval.5. Refund of market fees collected under Section 65(1) and excess fees under Section 65(2):The High Court directed the refund of market fees collected under Section 65(1) to the petitioners who had approached the Court and obtained writs of mandamus. However, the Court denied the refund of excess fees collected under Section 65(2), as the fees were found to be justified based on the services rendered. The Court also noted that the fees collected had been spent for the purposes envisaged by the Act and any refund would result in unjust enrichment of the petitioners.