HIMACHAL PRADESH MARKETING BOARD AND OTHERS versus SHANKAR TRADING COMPANY PVT. LTD. AND ORS.

Citation: [1996] SUPP. 5 S.C.R. 515 · Decided: 04-09-1996 · Supreme Court of India · Bench: G.N. RAY · Disposal: Appeal(s) allowed

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Judgment (excerpt)

HIMACHAL PRADESH MARKETING BOARD AND OTHERS 
A 
v. 
SHANKAR TRADING COMPANY PVT. LTD. AND ORS. 
SEPTEMBER 4, 1996 
[G.N. RAY AND G.T. NANAVATI, JJ.] 
Himachal Pradesh Agricultural Produce Marketing Act-Sections 2(a), 
2(4), (3), 21-0btaining licence and payment of market fe~Specified agricul-
tural produc~Subjected to physical and chemical processing-End product 
distinct identity-Held fine distinction between simple processing fit for con-
sumption and delicate manufacturing process completely separate end 
product-Not entitled to exemption from obtaining licence and payment of 
market fee. 
B 
c 
The respondent a Private Limited Company purchased "Khainvood" 
and processed it to convert the khainvood into "Katha". The appellant D 
committee requested the respondents to obtain licence and pay the requi-
site market fee on ~he sale of "Katha" on the ground that the respondents 
who produce "Katha" are manufacturers and those who act as dealers 
under the marketing act were required to obtain licence and pay the 
market fee for the trading activity. 
E 
The respondents challenged the appellant's demand in the High 
Court with the contention that the producers selling their manufactured 
products which is also an agricultural produce are not required to obtain 
a licence under the marketing act either for purpose of purchasing or for 
selling. 
F 
The High Court allowed the writ petition holding that Section 4(3) 
of the Himachal Pradesh Agricultural Marketing Act, was not attracted 
and the petitioners were not required to take any licence under the market-
ing Act. The High Court further held that the petitioners were not required G 
to pay market fee under the Act. 
In this appeal, it was contended by the appellant that the respon-
dents are not farmers or growers of agricultural products. The respon-
dents purchase khainvood which is an agricultural produce and then 
subject the~ to manufacturing process to obtain the end product katha. H 
515 
516 
SUPREME COURT REPORTS (1996] SUPP. 5 S.C.R. 
A The respondents are therefore not entitled to be exempted from the obliga-
tion of obtaining licence for the purpose of selling or paying marketing fee 
under the marketing Act. 
B 
c 
The respondents submitted that the Marketing Act exempts 
producer of the specified agricultural produce from the liability to obtain 
a licence an4 to pay market fee. Katha is a specified agricultural produce 
which they are producing from khairwood. He further submitted that 
manufacturing an item does not exclude the series of action contemplated 
in processin·g the same item before it is used as a raw material in manufac-
turing, and that manufacture includes any process incidental or ancillary 
to completion of manufacturing a product. 
Allowing the appeal, this Court 
HELD : 1. Respondent cannot claim exemption from obtaining 
•, 
licence for processing khainvood for production of katha. Under the 
D scheme of Himachal Pradesh Marketing Act it is only the actual producer 
of an agricultural produce indicated under Section 2(a) of the Act, who is 
exempted fr~m the requirement of obtaining licence and to pay market fee. 
The respondents even though were producing katha, a specified agricul-
tural produc~ by proce~sing khairwood, cannot claim exemption from the 
E requirement of obtaining a licence under Section 4(3) and payment under 
Section 21 because they themselves have not grown the khairwood but have 
purchased the agricultural produce from others and then subjected such 
khairwood to various physical and chemical process for obtaining the end 
product Katha. [527-H; 528-C-D; 529-E-F; 527-E] 
p 
2. The Marketing Act is primarily intended to benefit the actual 
growers of agricultural produce. The producer or grower even when 
required to undertake some processing whether simple or otherwise of the 
. ' 
natural agricultural produce to make it consumption worthy does not 
cease to be a· producer of the agricultural produce beca.use the natural 
produce even after proceeding remains agricultural produce within the 
G meaning of Section 2(a) of the Marketing Act. That apart the definition of 
producer under Section 2(h) has taken care of. such processing activity. 
Even though katha is a specified agricultural produce but it can be 
obtained by subjecting the natural produce khairwood to a series of 
delicate physical and chemical p·rocessing and the end product katha has 
H not only distinct identity but has also physical character a

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