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Synopsis

The Supreme Court has said it is not uncommon for different statutes, concerning similar area of law, to have convergence of interests to some degree. However, this would not imply that benefits extended to one statute will be presumed to flow to the other statute as well, the court has added.

A bench of Justices Vikram Nath and Prashant Kumar Mishra held that the market fees and rural development fees are distinct and, there being no exemption from rural development fees mentioned in the 2003 Industrial Policy of the Punjab government, it only encompasses exemption from market fees in its ambit. 

"The 2003 Policy does not specifically exempt rural development fees and therefore, such an argument by the respondent is highly presumptive, far fetched and a clear attempt at over-reaching the scope of the 2003 Policy," the court said.

The bench opined that if such an assumption is allowed, it would considerably broaden the canvas of the incentives available under the 2003 Policy, which was never intended. In fact, such a loose interpretation of the State policies would lead to an ambiguity to the State’s intent and render it opposite to the public policy, it said.

The two fees under the two different statutory frameworks cannot be equated as one and it cannot be assumed that exemption from “Market fees” would subsume in itself “Rural Development fees” also, the court said.

The court allowed an appeal filed by the Punjab government against the High Court's orders of 2010.

The HC had recorded a statement from the state counsel that the market fee will also cover rural development fee and further action as per above decision will be taken within one month in a writ petition filed by respondent M/s Punjab Spintex Ltd.

The respondent, which set up a spinning unit at Bathinda, was engaged in manufacturing cotton yarn out of raw cotton. It applied to the appellant for grant of exemption from paying market fee and rural development fee in terms of the Industrial Policy, 2003.

In its submission, the state government stated market fee was collected under the provisions of Punjab Agricultural Produce Markets Act, 1961 whereas the rural development fee is collected under the Punjab Rural Development Act, 1987. Therefore, both the fees being separate, decision on exemption from market fee did not automatically apply to rural development fee.

The respondent, on the other hand, submitted that even according to the agriculture department of the Government of Punjab, exemption from market fee automatically covered rural development fee.

The state government contended the market fees under the 1961 Act and rural development fees under the 1987 Act are two different “fees” levied under two different Acts having different objects and purpose. That the 2003 Policy does not specifically exempt rural development fees and therefore, such an assumption cannot be made by the respondent. 

It also submitted that there are various industries that are exempted from market fees and not exempted from rural development fees.

The respondent extensively argued that there is a clear convergence of interests of both the 1961 Act and 1987 Act and that the 2003 Policy exempts the recovery of the fees under both laws as incentives for the development of Agro and Food Processing Industries. 

In the case, the bench noted whether the 2003 Policy only grants exemption from the market fees as levied under the 1961 Act and does not grant exemption from the rural development fees under the 1987 Act, has not been adjudicated by the High Court on merits. 

It said the state government correctly pointed out that the two Acts have different objects. 

The court noted the preamble of 1961 Act clearly stipulates that it is a statute to provide for law relating to better regulation of purchase, sale, storage and processing of agricultural produce and for establishment of markets in the State. Whereas, the 1987 Act, on the other hand, is enacted for providing relief for the loss of agricultural produce, accelerating rural development, improve facilities for purchasers of agricultural produce and augment agricultural production, the court said.

The Rural Development Fund is admittedly collected by the Market Committees, but forms part of the Rural Development Fund constituted under Section 6 of 1987 Act, it added.

Therefore, the bench held holding that the exemption from market fees is inclusive of rural development fees would be contrary to the statutory provisions and objective behind both the Acts as well as the 2003 Policy. Thereby, the two fees cannot be equated or assumed to be same or similar for the purposes of exemption, it added.

Examining various communications, the bench said it was apparent that no unit, other than those approved as Mega Project, has been allowed exemption from the payment of rural development fee, unless explicitly provided by the authorities. 

The respondent herein, M/s Punjab Spintex Limited, has admittedly not been approved as a mega project and, therefore, not eligible for such exemption from rural development fee.