Dismissing Britannia's appeal, the Supreme Court upheld the Bombay High Court ruling that "edible oil", "Vanaspati" and "sugar" are 'agricultural produce' within the meaning of Section 2(1) (a) of the Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963.
The company had approached the Apex court against the the Bombay High Court judgment dismissing their contention that the Marketing Regulation Act is not applicable to sugar, cashew nuts, refined oil, vanaspati and dry fruits purchased by it.
The bench comprising Justice R. Banumathi and Justice R. Subhash Reddy agreed with the High Court view that sugar is a produce of agriculture coming into being in a processed form from sugarcane and the absence of the word "manufacture" in the definition of "agricultural produce" under Section 2(1)(a) of the Act would not in any way affect the status of sugar as being an agricultural produce under the Act.
"We fully agree with the conclusion of the High Court that "edible oil", "Vanaspati" and "sugar" would fall within the meaning of Section 2(1)(a) of the Marketing Act – agricultural produce. We do not find any good ground warranting interference with the findings of the High Court that "edible oil", "Vanaspati" and "sugar" are agricultural produce within the meaning of Section 2(1) (a) of the Marketing Act.", said the bench.
The bench approvingly quoted from the High Court judgment to hold that these products are agricultural produce. It said:
"So far as "Vanaspati" is concerned, the High Court referred to entire process as to how "Vanaspati" is produced from "edible oils" and that "edible oils" are subject to various processes and the end product of all these processes is "Vanaspati". The High Court held that the production of dalda or Vanaspati from edible oils is thus the result of the edible oils undergoing all these processes which convert edible oils to a new entity called "Vanaspati". Thus, the High Court concluded that "Vanaspati" is nothing but Hydro Generated Refined Edible Oil and is an agricultural produce within the meaning of Section 2(1)(a) of the Marketing Act."
Another contention raised was that the bulk sugar was purchased directly from the Sugar mills located outside the market area of the Bombay Agricultural Produce Marketing Committee and thus not covered by the provisions of the Act. The bench said that this aspect shall be considered by the committee expeditiously taking note of the bills and other documents filed by Britannia.