'Ghee' A 'Product Of Livestock' : Supreme Court Dismisses Challenge To 1994 Andhra Pradesh Notification

“The argument that “ghee” is not a product of livestock is baseless, and bereft of any logic…Livestock has been defined under Section 2(v) of the Andhra Pradesh (Agricultural Produce and Livestock) Markets Act, 1966, where Cows and buffalos are the livestock. Undisputedly, “ghee” is a product of milk which is a product of the livestock”, said the Bench of Justices Sudhanshu Dhulia and SVN Bhatti.

The genesis of the case lay in a 1994 government notification, which inter-alia notified “ghee” as one of the products of livestock, for the purpose of regulation of its purchase and sale in the notified market areas of AP.

This notification was challenged by the appellants (producers of livestock products) before the AP High Court on two grounds. First, that “ghee” was not a “product of livestock” and therefore could not be regulated and notified; second, that the notification was bad in law as procedure laid down under Section 3 of the Act (involving publishing of a draft notification and calling of objections) was not followed.

A Full Bench of the AP High Court ruled against the appellants and upheld the notification. It opined that all animal husbandry products fall within the meaning of 'products of livestock' as defined under Section 2 (xv) of the Act.

The majority decision of the High Court further held that the inclusion of “ghee” as a livestock product could not be faulted merely because it was derived from another dairy product. It also noted that prior publication of draft 1994 notification was not required, as the same was under Section 4 of the Act and not Section 3.

In appeal, the matter came before the Supreme Court, which framed and dealt with the following two questions:

(i) whether “ghee” is a “product of livestock” under the provisions of the 1966 Act, and

(ii) whether the 1994 notification complied with the provisions of the Act.

On the first issue, the Court concurred with the High Court's reasoning that even though 'Ghee' is derived out of 'milk' by undergoing a process, it remains a product of livestock for the purposes of the Act and payment of “market fee”.

On the second issue, it declared that there was nothing wrong in the 1994 notification, as it was issued under Section 4 and not Section 3.

“What has to be done under Section 3 is a onetime measure where the Government notifies an area where purchase and sale of agricultural produce, livestock and products of livestock can be made. This is a one-time exercise. What happens under Section 4 of the Act is that the Govt. declares the 'notified market area' in respect of any notified product (products which have already been notified under section 3 of the Act). A perusal of Sections 3 and 4 of the Act clearly shows that whereas a draft notification is mandatory under Section 3 and so is the hearing of objections to the draft notification, there is no similar provision under Section 4 of the Act.”

In this view of the matter, the appeals were dismissed. In closing, the court vacated the interim orders passed earlier, whereby respondent-Market Committees were restrained from collecting fees payable by appellants for the period prior to the date of the High Court judgment. It observed that the appellants availed facility given by the respondent-Committees and as such, they were liable to pay the fee.

However, considering that the amount payable towards fee had accumulated for over 14 years, and paying it now could cause hardship to the appellants, it was directed that the deposits be permitted to be made within two years in four equal instalments.

Case Title: Sangam Milk Producer Company Ltd. v. Sangam Milk Producer Company Ltd., CIVIL APPEAL NO.6493 OF 2014 (and connected matters)

Citation : 2024 LiveLaw (SC) 204