M/S Mahaveer Trading Company vs. State Of Karnataka

This petition is filed by the petitioner-company which claims to be carrying on the business in spices from December 2018, being aggrieved by the order dated 02.07.2025 produced at Annexure-K. In terms of which, respondent No.3 -Marketing Committee has called upon the petitioner to pay within 7 days an aggregate sum of Rs.1,18,05,776/- (Rs.29,51,444/- + Rs.88,54,332/-) HC-KAR NC: 2026:KHC:36058 being market fee and the fine thereon as provided under Sections 65 and 70 of the Karnataka Agricultural Produce Marketing (Regulation & Development) Act, 1966 (for short 'the Act').

Case of the petitioner is that;

Being aggrieved, the petitioner is before this Court.

Learned counsel to the petitioner, reiterating the facts and the ground's urged and taking this Court through the Provisions of Section 65 and 65A of the Act submits, that HC-KAR NC: 2026:KHC:36058 the petitioner has already paid the market fee in respect of the transaction done for the years 2020 onwards. The demand is however in respect of the transaction allegedly made by the petitioner for the year 2018 to 2021. She submits that the petitioner was not carrying on the business within the market yard, yet the petitioner was ready and willing to pay the market fee even for the years 2018-19, 2019-20 and 2020-2021 provided respondent No.3-Market Committee permitted the petitioner to pay the reasonable penalty as contemplated under Section 65A which provides for penalty not exceeding 30% but not less than 12%. She submits petitioner is ready and willing to pay the amount even till date. But the respondent authorities are refusing to accept the same. Therefore she seeks for allowing of the petition.

Learned counsel for the respondents on the other hand submits that the statute does not permit the respondent No.3- Market Committee to provide such a concession, particularly when the petitioner has failed to prove that he had paid the market fee within the time as HC-KAR NC: 2026:KHC:36058 contemplated under the Bye-laws of the APMC Act, namely, Bye-law No.11(4)(1)(C). He refers to the said Bye-law produced at page No. 31 of the Statement of Objections.

Therefore, his submits in view of the said Bye-laws, and the non-compliance of the same by the petitioner would not give room for respondent No.3-Market Committee to grant any concession. Failure to adhere to the payment schedule as contemplated Bye-laws would have the consequences of the nature of cancellation of the trade license. Besides, initiating the criminal prosecution and if found guilty, recover three times of the penalty amount. He submits that the Resolution produced along with the Statement of Objections is strictly in accordance with the provisions of the law and the Bye-laws. Therefore, nothing can be found fault with it.

Heard and perused the records.

Necessary before proceeding further to note that this Court had provided opportunity to the petitioner to furnish the records in justification of its contention that HC-KAR NC: 2026:KHC:36058 during the years 2018-19, 2019-20 and 2020-21, it was carrying on the trade outside and not within the market yard. That it is only on and after 2021-2022, it carried business within the market yard. Though petitioner claimed to have admittedly carried on the business within the market yard after 2021-2022, and had paid the service tax in respect to the business carried on by him for the said period, petitioner has not furnished the address of his trading place. Further, though GST returns for the said period are furnished, address of the petitioner for the relevant years is not forthcoming.

Nonetheless, the petitioner has now come forward to pay the market fee even in respect of the transaction carried on for the said period namely 2018-19, 2019-20 and 2020-21. 10. The basis for the payment of the market fee is the GST returns filed by the petitioner, which is undisputed. The question for consideration is whether the petitioner is entitled for the concession as sought for, namely payment of the penalty as contemplated Section 65A alone, HC-KAR NC: 2026:KHC:36058 without being saddled with the liability to pay the penalty as contemplated Section 70 and the consequences of non-compliance resulting in cancellation of trade license and avoidance of criminal prosecution.

Section 65A and 70 of the Act read as under:

Whether the petitioner is guilty of violation of the provisions drawing upon himself the harshness of Section 70 resulting in payment of penalty is yet to be decided in proceedings to be launched by the respondent authorities. For now the petitioner is ready and willing to pay the amount for the period referred to above.

Though the counsel to the petitioner has referred to the order of the Co-Ordinate Bench of this Court dated 16.07.2002 passed in W.P.No.16372/2002 in justification of her contention of the respondent authority not being entitled to recover the penalty without determination of the guilt of the petitioner, the said issue need not be gone into at this juncture inasmuch as the respondent authorities at present are not insisting for payment of the HC-KAR NC: 2026:KHC:36058 amount without criminal prosecution being launched, which fact is emanating from the notice and the resolution produced by the respondent authorities. Therefore, the petition lacks merit.

However, from the submissions made, it is clear that the petitioner though had initially disputed liability to pay the market fee for the years 2018-19, 2019-20 and 2020-21 is now ready and willing to make the payment even for the said period. The petitioner who had admittedly been issued license for the period 2021, 2022 and 2023 is also required to pay the market fee as per the law. In other words, the petitioner is required to pay the market fee for the period between 2018-19 to 2022-23. In terms of the interim order dated 29.07.2025, the petitioner is stated to have made certain payment.

Accordingly, the following: ORDER