STATE OF MADHYA PRADESH & ORS. versus GALLA TILHAN VYAPARI SANGH & ORS.

Citation: [1977] 2 S.C.R. 619 · Decided: 17-01-1977 · Supreme Court of India · Bench: S. MURTAZA FAZAL ALI · Disposal: Appeal(s) allowed

Judgment (excerpt)

619 
STATE OF MADHYA PRADESH & ORS. 
v. 
GALLA TILHAN VY AP ARI SANGH & ORS. 
January 17, 1977 
[S. MuRTAZA FAZAL Au AND P. S. KArLASAM, JJ.] 
Madhya Pradesh· Krishi Upaj Mandi Adhiniyam, 1972, S. 37(5)(a), co1t<1-
titutiona/ validity of-Whether unreasonable to commission agents. 
The respondents challenged the constitutional validity of s. 37(5)(a) of the 
Madhya Pradesh Krishi Upaj Mandi Adhiniyam, 1972, before the High Court 
on the ground that it places unreasonable restriction on the commission agent 
and puts a great burden on him for storing the goods given to him by his 
principal, without charging the commission for its safe custody. The plea was 
accepted and the High Court struck down the impugned provision as unconsti-
tutional. 
Allowing the appeal by Special Leave, the Court, 
HELD : Section 3 7 ( 5 )(a) is constitutionally valid and there is no hardship 
A 
c 
or unreasonableness in it. The provision prevents the commission agent from 
D 
levying any additional charges from the farmer or the principal for safe custody 
of the goods, but s. 37(4) of. the Act compensates him by authorising him to 
charge not. only his commis:!io"n from th~ principal trader, but also the expenses 
incurred by him for the purpose of storing the produce, 
and .the 
services 
rendered by him. 
[620 D, E, G] 
· 
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1912-1914 
of 1976. 
E 
(Appeal by special Leave from 
the Judgment and order dated 
7-2-1975 of the Madhya Pradesh High Court in Misc. 
Petition No. 
231174 and 685 and 732173 respectively.) 
I. N. Shroff and H. S. Parihar, for the appellants.· 
S. K. Gambhir, for respondents Nos. 1 and 2. 
The Judgment of the Court was delivered by 
FA~AL Au, J. 
In this appeal by special leave, on an app~ication 
filed by the respondents before the High Court of Madhya Pradesh, 
the High Court struck down the constitutional "."alidity of sub-s. (5)(a) 
of s. 37 of the Madhya Pradesh Krislti Upaj Mandi Adhiniyam, 1?72 
-hereinafter· referred to as 'the Act'-(No. 24 of 1973). 
The im-
pugned sub-section runs as follows : 
' 
' 
... 
" ( 5) Every commission agep.t shall be liable-:-; 
to keep the go~ds' of' his. pr_inc;ipal 'in ·. s~fe: custody . 
without any charge other than the comm1s~1on pay-
able to him; and" 
F 
H 
A 
c 
D 
E 
F 
G 
H 
620. 
SUPREME COURT REPORTS 
[1977] 2 s.c.R. 
The High. C:ourt thought that this statutory provision places unreason-
a~le res.tnct~on on the co~mission agent and pu!B great burden on 
~1m for storm~ 'f!he good.s given to him by the principal without charg-
rng. the. comm1ss1on for its safe custody. The Act is a social piece of 
leg1slat~on and should have been liberally construed so as' to advance 
the. obiect of the Act and fulfil the aims to be achieved thereby. 
The 
mam purpose of the Act is to secure a scientific method of storage, 
sale, distribution and marketing of agricultural produce and cut out 
a~ far. as possible middle-man's profit. 
The Act, therefore, contains 
prov!S!ons of a beneficial nature preventing profiteering tendencies. It 
is not, however, the hardship that can be termed unreasonable so as 
to make a statute unconstitutional. 
Moreover, the High Court does 
not appear to have looked to the scheme of the Act and has in fact 
completely overlooked the ptovisions of s. 3 7 ( 4) 
which runs as 
follows : 
. 
" ( 4) The commission agent shall recover his commis-
sion only from his principal trader at such rates as may be 
specified in the bye-laws including all such expenses as may 
be incurred by him in storage of the produce and other 
services rendered by him." 
This section clearly empowers the commission agent to charge such 
rates as may be specified by the bye-laws even for the storage of the 
Produce and other services rendered by him. 
This provision 
also 
does not prevent the commission agent from levying reasonable charges 
for the storage over and above his commission. 
All that the Act 
prevenffi is that the commission agent is prohibited from levying any 
charges for safe custody from the farmer or the principal. 
This is 
done in order to attract and lure the farmers to place their goods 
with commission agents without additional payment of charges for 
~afe custody. 
Section 37 ( 4), however, compensates the commission 
agent by authorising him to charge his commission and all expenses 
which may be incurred by the commission agent in connection with 
the storage of the produce and the services rendered by hi

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