The present case is an appeal filed by the Mumbai Agricultural Produce Market Committee (hereinafter referred to as the Petitioner) against the decision of the Hon’ble Minister for Marketing, Maharashtra State ( hereinafter referred to as Respondent 1) with regards to the contract of sale between The Mineral & Metals Trading Co. Ltd ( hereinafter referred to as Respondent 2) and The State of Maharashtra ( hereinafter referred to as Respondent 3). The respondents 2 and 3 had an agreement wherein respondent 2 would import palmolein oil which would be bought by Respondent 3 for an agreed price. The petitioner after making several requests to Respondent 2, filed a writ petition requesting an order from Respondent 1 to Respondent 2 to pay market fee for the sale of the palmolein oil in the market area of the petitioner. This writ was initially issued but then quashed on appeal. The petitioner, being dissatisfied with the judgement of the appeal has presented it in this honourable Court.
the sale between respondents 2 and 3 results in marketing the oil, thereby
making the respondents liable to pay market fee.
there is an agent-principal relationship between respondent 2 and 3, when the
facts state that respondent 2 has imported the oil on behalf of the government.
should be made liable to pay the market fee in case the liability is affirmed.
Section 182- Indian Contract Act 1872
Section 4 – Sale of Goods Act 1930
Sections 31(1) – Maharashtra Agricultural
Produce Marketing Committee Act,1963
Section 182 of the Indian Contract Act,
1872, gives the definition of agency. It states that an agent is a person employed to do any act for
another or to represent another in dealings with third persons.
It is the principal who, in law, is answerable
to the third person for the acts done by his agent as long as the acts so
performed fall within the scope of employment or authority of the agent. 1It
can also be said that an agent is merely the extended hand of the principal and
hence cannot claim independent rights.2
Every person who acts for another is not an agent. It is only when he acts as a
representative of the other in business negotiations, in creation, modification
or termination of contractual obligations, between that other and the third party,
that he is an agent.3
In concurrence with the opinions of His
Lordship Vivian Bose J, who had devised a twin test for the agency, the
contract of agency can be determined on the basis of two questions-a) whether
the commission agent when he sells have authority to sell in his own name and
whether he has authority in his own right to pass a valid title.4
present case, the relationship between respondent 2 and 3 cannot be determined
to be a contract of agency solely based on the fact that there is a service
charge that is negotiated between the two respondents or the fact that the
import was initially made for the sake of the government. On analysis of the
rest of the contract, it is found that the clauses of the contract state the
Ø That respondent no. 3 is to deposit an amount at the
rate of Rs.1, 000/-per metric ton as a security for completion of the contract,
which was refundable on fulfillment of the obligations under the contract.
Ø That in the event of non-payment and non -lifting of
full or part contracted quantity by the buyer, the seller would be free to
effect sale of the un-lifted quantity at buyer’s cost, risk and expenses and
shall claim all consequential losses/damages, if incurred by the seller
the seller has the authority to sell the goods at his discretion to any other
buyer upon failure of the buyer to take delivery within the time agreed between
above mentioned clauses make it clear that although the palmolein oil was
bought for Respondent 3, it does not establish a contract of agency in this
case. Section 4 of the Sale of Goods Act, 1930, indicates that a contract of
sale lies in a transfer of property of goods from the seller to the buyer. The
abovementioned clauses make it clear that there is a transfer of property
between Respondent 2 and 3. It can be concluded that since the absolute
ownership of the goods is not of respondent 3 or that Respondent 3 does not
take responsibility or liability for the actions of respondents 2, there is no
contract of agency in this case.
reference to whether there should be a market fee imposed, it is important to understand the meaning of marketing
in this case. Since the Act itself does not make a mention of a definition of
marketing. Marketing’ includes buying and selling, shipping for sale or storage
and offering for sale: and in respect of a natural product includes its
transportation in any manner by any person. ‘Natural product’ means any product
of agriculture or of the forest, sea, lake or river and any article of food or
drink wholly or partly manufactured or derived from any such product.5 Marketing
is not mere sale of a commodity but all that which goes into it and which
finally enables the sale to take place. There is an invitation to all intending
buyers to come and buy the product. It always happens before the actual sale,
for after the sale of a product, there remains nothing to promote the product
for its sale. So, the term “marketing”, is distinct from the legal
concept of ‘sale’ and it always proceeds the latter and enables the latter to
The commodity must be displayed for sale and by a seller and that commodity is
purchased by purchaser. These acts constitute marketing of a commodity7.
the present case, palmolein oil was never displayed for sale by the seller and
there was no offer for its sale by the seller. There was never an intention to
market the goods in the market area. This was a pre-meditated contract entered
into to help the weaker part of the society. It was not borne out of
advertising, offering and selling to one among various buyers. What happened
was only a sale and purchase transaction captively made between respondent no.
2 and respondent no. 3. There was no activity of advertising or presenting of
palmolein oil to prospective buyers.8
One party bought the oil from the other at the agreed rate. Additionally, the
responsibility of lifting the goods on arrival was of the buyers and all the
sellers had to do was to issue a delivery order. The contract was a contract of
sale which was a prior agreement. The packaging that was done was carried out
for convenience and was not intended to market the goods for sale and hence
cannot be considered as marketing.
it is established that there has been no marketing of the oil, it is clear that
neither of the respondents are liable to pay a market fee.
This case has highlighted the subtle difference that demarcates a
contract of agency from a contract of sale of goods. It explains how agency is
dependent on the ownership of goods and the authority of the parties in the
case. It has also gave a careful analysis of the meaning of ‘marketing’ and
notes that a mere sale of goods in a public area cannot be considered as a
marketing activity. Since the act of selling the goods was only an action
towards fulfilling a preexisting contract, it was held that the sale did not
amount to marketing. It was held that there was no contract of agency between
the respondents 2 and 3. It was also held that the order issued by the
petitioner committee and the Director of marketing were illegal and were rightly
set aside. Hence neither of the respondents were liable to pay market fee to
the petitioner. The court upheld the decision of the Director of Marketing.
1 Mumbai Agricultural Marketing
Committee v Hon’ble Minister of Marketing
2 National Textile Corporation Ltd. v.
Nareshkumar Badrikumar Jagad & ors
3 P. Krishna Bhatta v Mundila
4 Kalyanji Kuwarji v. Tirkaram Sheolal
Walkem Shannon and others vs. Lower Mainland Dairy Products Board and another
6 Mumbai Agricultural Marketing
Committee v Hon’ble Minister of Marketing
7 Devendra Trading Co. v. State of
Maharashtra & ors
S.B.Shukre, J. – Mumbai agricultural produce market committee v Hon’ble
minister for marketing , 2015