LAKHAN LAL AND OTHERS ETC. versus THE STATE OF BIHAR AND OTHERS ETC.

Citation: [1968] 3 S.C.R. 534 · Decided: 26-03-1968 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Dismissed
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Judgment (excerpt)

LAKHAN LAL AND OTIIERS ETC. 
v. 
THE STATE OF BffiAR AND OTHERS ETC. 
March 26, 1968 
{M. HIDAYATULLAH, C.J., R. S. BACHAWAT, C. A. VAIDIALINGAM, 
K. S._ HEGDE AND A. N. GROVER, JJ.] 
Bihar Agricultural Produce Markets Act (16 of 1960), ss. 2(h), 4(1), 
5(2), IS(i/) and Bihar Agricultural Market Produce Rules, 1962 r. 59-
Power of declaring market crea under s. 
4( I )-Scope of-:..:/Jarktt, if 
should have well defined site,- niarket equip1nent and facilitie1-Licence 
fees-If in nature of tax-Settinz up 1narket in one area of SttJte-tf 
ofjerrds Art. 14 of Constitution. 
The State Government of Bihar followed the procedure prescribed by 
:the Bihar Agricultural Produce Markets Act, 1960, and the Bihar Agricul· 
tural Produce Market Rules, 1962, before issuing the necessary notifica· 
tions for regula,in~ the purchase and sale of certain items of agricultural 
produce and for establishing a market for them in the Gaya area of the 
State. 
Under s. IB(ii) of the Act no person can do business as a trader 
or other operator in the notified agricultural produce in a market except 
:uhder a licence granted by the market committee on payment of the 
prescribed licence fees. 
The validity of the notifications declaring the market area and 
•establishing the market for the notified agricultural produce and the lega· 
lity of the levy of market fees and licence fees were questioned on the 
following grounds. 
( 1) the area declared lo be the market area was too 
wide; (2) the market committee had not established any market Y.ithin 
.a well-defined site with market equipment and facilities; (3) the fees levied 
by the market c~mmittee were in the nature of taxes as the committee did 
not render any services to the users of the market and therefore the levy 
was illegal; ( 4) the setting up of a market in Gaya was discriminatory 
.and violative of Art. 14 as the Act and Rules had not been implemented 
in all parts of Bihar. 
HELD: (I) The power of the State Government under s. 4(1) of 
declaring an area or. part of it to be a market area in respect of a notified 
agricultural produce, after considering any objections 
and 
suggestions 
:received by it, should no doubt be exel'cised reasonably; But, there is 
nothing to show that the Government acted unreasonably or that the 
market was so wide that the sale and purchase of agricultu'ral produce 
within it eould not be effectively controlled by the market committee or 
that the growers within the area could not conveniently bring their pro-
·duce lo the market yards. [539 D-EJ 
(2) For establishing a market it is sufficient to issue a notification 
11nder s. 5(2) fixing the boundaries of the 'market proper• and tho 'market 
·yards' on the recommendation of the market committee made under r. 
59(2). 
The definition of 'market' does not require a well-defined site 
·with market equipment and facilities. 
Under s. 18(1). the market !'Om· 
mittee must provide ·such facilities as the State Government may direct, 
'but it was not shown that the market committee refused to ca\Ty out any 
·such direction. 
Under ss. 28(2) and 30(i) the market committee may 
acquire and own lands and buildings for the market, but it is not obliged 
~o do so. [539 F-H) 
A 
B 
c 
D 
E 
F 
G 
H 
LAKHAN LAL v. BIHAR (Bachawat, !.) 
530. 
A 
(3) The fees collected by the market committee were not excessive 
and formed part of the market committee fund which was set apart and. 
ear-marked f<ir the purposes of the Act such as elimination of unhealthy 
market practices, ensuring correct weighment and grading, quick settle-
ment of disputes, dissemination of information Ngarding prices of agri-
cultural produce etc. 
There is tbefefore, sufficient quid pro quo for the 
levies and they satisfy the test of 'fees'. (540 A-El 
B 
Commissioner, Hindu Religious Endowments Madras v. Sri Lakshmin-
dra Thirtha Swamiar of Sri Shirur Mutt, (1954] S.C.R. 1005, referred to. 
(4) The State Government is not bouhd .to implement the .Act and 
the Rules in all parts of Bihar at the same time. It may establish markets 
regulating the sale and purchase of agricultural produce in different parts 
of Bihar gradually and from time to time. (540 F-0] 
C 
OluGINAL/CI,VIL/CRIM\NAL 
APPELLATE 
JURISDICTlON: 
D 
Writ Petition Nos. 103 and 199 of 1967. 
Petition under Art. 32 of the Constitution' of India for the· 
enforcement of fundamental rights. 
AND 
Civil Appeal No. 1971 of 1966. 
Appeal from the judgment and order dated December 2, 19
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