Inclusive statutory definition of agricultural produce upheld for khandsari sugar, sustaining market regulation levies and rejecting Article 14 challenge.

Khandsari sugar manufactured by the open pan process was treated as falling within the inclusive statutory definition of agricultural produce, because the term was to be understood in its popular and commercial sense and the product was not shown to trade as something distinct. On that basis, licence fee and market fee under the market regulation law were held to be within the Act's scope and object. The differential treatment between khandsari and plantation white sugar was upheld as a rational classification tied to process, regulation, and market context, so no Article 14 violation was found.

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Issues: (i) whether khandsari sugar manufactured in factories by the open pan process was covered by the definition of agricultural produce in section 2(a) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964; (ii) whether the levy of licence fee and market fee on such product was outside the scope and object of the Act; and (iii) whether the inclusion of khandsari while excluding plantation white sugar offended Article 14 of the Constitution of India.

Issue (i): whether khandsari sugar manufactured in factories by the open pan process was covered by the definition of agricultural produce in section 2(a) of the U.P. Krishi Utpadan Mandi Adhiniyam, 1964.

Analysis: The inclusive definition of agricultural produce in section 2(a) expressly included khandsari. The term had to be understood in its popular and commercial sense as used in the market. The product manufactured in the petitioners' factories was not shown to be known in trade as something different from khandsari, and the statutory and commercial materials supported coverage of the product under the Act.

Conclusion: The product was held to fall within section 2(a) and was covered by the Act.

Issue (ii): whether the levy of licence fee and market fee on such product was outside the scope and object of the Act.

Analysis: The Act was treated as a wide market-regulation measure, not confined only to protection of agriculturists. Its scheme permitted regulation of sales in market areas and supported levy on the trade in notified produce. The product manufactured by the petitioners was regarded as a commercial article within that regulatory framework, and the levy was not treated as beyond the statutory object or as lacking authority.

Conclusion: The levy of licence fee and market fee was held to be validly attracted.

Issue (iii): whether the inclusion of khandsari while excluding plantation white sugar offended Article 14 of the Constitution of India.

Analysis: The classification between khandsari and plantation white sugar was accepted as based on differences in process, regulation, trade treatment, and market context. Legislative choice in regulating one commodity and not another was held to be within permissible classification, and the challenge based on hostile discrimination was rejected.

Conclusion: No violation of Article 14 was found.

Final Conclusion: The regulatory levy under the Act was sustained and the challenge to the applicability of the statute to the petitioners' product failed.

Ratio Decidendi: Where the legislature expressly includes a commodity in an inclusive statutory definition and the classification has a rational nexus with the regulatory object, courts will uphold the levy unless hostile discrimination or clear want of statutory authority is established.

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