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Orissa Minor Oil (P.) Ltd. and ors. Vs. State of Orissa and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtOrissa High Court
Decided On
Case NumberOriginal Jurn. Case Nos. 46 and 237 of 1983
Judge
Reported inAIR1983Ori265
ActsOrissa Forest Produce (Control of Trade) Act, 1981 - Sections 1(3), 5, 5(1) and 5(3); Constitution of India - Articles 14 and 19(1)
AppellantOrissa Minor Oil (P.) Ltd. and ors.
RespondentState of Orissa and ors.
Appellant AdvocateR. Mohanty, ;Bijoy Mohanty and ;A. Patnaik, Advs.
Respondent AdvocateAdvocate General
DispositionPetition dismissed
Cases ReferredRai Sahib Ram Jawaya Kapur v. State of Punjab
Excerpt:
- motor vehicles act, 1988 [c.a. no. 59/1988]section 173(1) proviso; [d. biswas, amitava roy & i.a.ansari, jj] appeal without statutory deposit but within limitation/or extended period of limitation maintainability - held, if the provision of a statute speaks of entertainment of appeal, it denotes that the appeal cannot be admitted to consideration unless other requirements are complied with. the provision of sub-section (1) of section 173 permits filing of an appeal against an award within 90 days with a rider in the first proviso that such appeal filed cannot be entertained unless the statutory deposit is made. the period of limitation is applicable only to the filing of the appeal and not to the deposit to be made. it, therefore, appears that an appeal filed under section 173 cannot.....patnaik, j.1. in o. j. c. no. 46 of 1983, the petitioners seek a declaration that the orissa forest produce (control of trade) act, 1981 (orissa act 22 of 1981) (hereinafter referred to as 'the act') and the rules framed thereunder and the notification d/- 9-12-1982 bringing the act into force in the whole of the state of orissa in relation to sal seeds with effect from the date of notification do not apply to or affect the subsisting contracts d/- may 17, 1979 entered into between the state of orissa and the petitioner no. 1 company in respect of three forest divisions of jeypore, nowrangpur and rayagada and a mandamus commanding the opposite parties to forebear from interfering with the rights of the petitioners under the said contracts to collect, purchase and remove sal seeds from the.....
Judgment:

Patnaik, J.

1. In O. J. C. No. 46 of 1983, the petitioners seek a declaration that the Orissa Forest Produce (Control of Trade) Act, 1981 (Orissa Act 22 of 1981) (hereinafter referred to as 'the Act') and the rules framed thereunder and the notification D/- 9-12-1982 bringing the Act into force in the whole of the State of Orissa in relation to Sal seeds with effect from the date of notification do not apply to or affect the subsisting contracts D/- May 17, 1979 entered into between the State of Orissa and the petitioner No. 1 company in respect of three forest divisions of Jeypore, Nowrangpur and Rayagada and a mandamus commanding the opposite parties to forebear from interfering with the rights of the petitioners under the said contracts to collect, purchase and remove Sal seeds from the aforesaid forest divisions.

2. Petitioner 1 is a private limited company incorporated under the Companies Act, 1956. and deals in Sal seeds including the purchase, collection, chemical treatment and supply thereof to petitioner 2-company promoted, inter alia, by petitioner 1-company for the purpose of extraction and manufacture of Sal seed oil and de-oiled cakes at its factory premises at Ambaguda in the district of .Koraput. Petitioner 3 is a director of the companies, petitioners 1 and 2.

3. The petitioners have alleged that with a view to encouraging the forest based industries in the State and to discuss problems facing entrepreneurs, a meeting with the minister of the department at the chair was held on 24-5-1978. The minister gave assurance to make available raw materials on long term basis at reasonable and suitable price. The minutes of the proceeding have been filed as Annexure 3. The Government thereafter passed a policy resolution on 8-1-1979 regarding lease of minor forest produce for promotion of solvent extraction and other forest based industries. The Chief elements, inter alia, were that long term leases of minor forest produce ordinarily not exceeding five years at a time would be granted to local industries; advance assurance for grant of long term lease of forest produce would be given to entrepreneurs intending to set up oil extraction plant and other minor forest based industries; the earmarked forest areas would be leased out to the selected industrial units at least one year before the commissioning of the unit in order to enable them to organise and collect at least one season's produce for use as raw material. Pursuant to the aforesaid policy three contracts were entered into on 7-5-1979 between petitioner t and opposite party 1 in respect of Jeypore, Nowrangpur and Ruyagada forest divisions for collection, purchase and sale of Sal seeds for a period of five years from the crop year 1979 up to 30-9-1983. It was stipulated that petitioner 1 would instal a Sal seed extraction plant somewhere in the district of Koraput. The terms and conditions of the aforesaid contracts were modified by supplemental contracts whereunder it was agreed that petitioner 1 was to promote a separate public limited company to crush the Sal seeds collected by it and would in no circumstances trade in Sal seeds but sell the entire collection to M/s. Utkal Oil Limited-petitioner 2. Duration of the contracts was enhanced from five years to ten years ending on 30-9-1988.

4. The essential terms and conditions of the three contracts are identical. The contract begins with a preface that the company was desirous of obtaining a licence of the right to collect Sal seeds and the opposite party 1 agreed to grant the said license. The contracts conferred on petitioner 1 a right to collect Sal seeds falling on the ground in the forests of the specified forest divisions in the State of Orissa and to purchase such Sal seeds collected by it on payment of royalty in the manner specified in Schedule 2.

5. The petitioners have alleged that under the contracts petitioner 1 is entitled to purchase and remove Sal seeds from the contract area until 30-9-1988, and also is entitled to a renewal as per option in Clause 5. The contract is terminable only in accordance with the provisions contained in Orissa Forest Contract Rules or for violation of any condition of the contract. Acting on the aforesaid policy resolution and the contracts entered into, the petitioners set up at a huge cost a solvent extraction plant at Ambaguda in the district of Koraput. Even after the Act received the assent of the President on 21-8-1981, long term agreements were entered into by opposite party 1 with other entrepreneurs for collection, purchase and removal of Sal seeds. In July, 1982, the Government invited entrepreneurs including the petitioners who had entered into long term contracts, for discussion and negotiation for revision of quantum of royalty payable under their respective contracts. However, on 9-12-1982, the State Government issued a notification that 'the Act shall come into force at once in the whole of the State of Orissa in relation to Sal seeds'. On 28-12-1982, petitioner 1 tendered advance royalty for Sal seeds, but opposite party 3 refused to take.

6. The petitioners have urged that having regard to the objects and reasons, the Preamble, the scheme and the provisions contained in the Act and the Rules, the contracts entered into between petitioner 1 and the State Government for collection, purchase and removal of Sal seeds from the area specified in the contracts do not come within the purview of and are not affected by the Act. The contracts subsist and are enforceable.

7. Mr. R. Mohanty, the learned counsel for the petitioner, submitted that the Statement of Objects and Reasons disclosed that the legislative intent was to control trade in forest produce grown in forest other than Government forest so that smuggling of similar forest produce from Government forest would be prevented. The entire operation and activities of the petitioners were controlled by and subject to the provisions contained in the Orissa Forest Act, 1972, the rules framed thereunder and the Orissa Forest Contract Rules, 1966, as well as the terms and conditions contained in the contracts. Effective remedy being available under the aforesaid provisions, there was no necessity to make further legislation for control and regulation of trade carried on by the State in the produce from its own forest. He further urged that the Preamble indicated that the monopoly was of trade in forest produce grown in forest other than Government forest. It was not necessary to clothe the State with monopoly in regard to the produce from its own lands. The executive power of the State under Article 298 of the Constitution was sufficiently wide to prevent smuggling. He submitted that Section 5 (1) (a) did not affect the contracts for purchase, sale, gathering or collection of specified forest produce grown or found in the forest belonging to the Government. Such contracts continued to subsist. The core of the submissions of the learned counsel for the petitioners was that collection and disposal of specified forest produce from Government forest did not come within the ambit of the provisions. The learned counsel contended that Section 4 which provided for appointment of agents and defined the scope of their work did not authorise him to collect forest produce from Government forest. Detailed provisions had been made under Sections 6, 7, 8, 9, 10 and 12 for collection, fixation of price and purchase of specified forest produce from growers. No provision had been made regarding specified forest produce grown on Government land or forest. He further submitted that inasmuch as the Act did not deal with collection and disposal of produce grown on State forest, no rule could be framed under the Act regarding collection of produce grown on State forest and sale thereof by agents appointed under Section 4 of the Act. The rules to the extent they provided for collection and disposal of specified forest produce grown on State land or forest were ultra vires the Act and could not be used as aid to the interpretation of the provisions contained in the Act. He submitted that certain of the rules, namely, Rules 2 (h), 3, 9 and 10 on the contrary indicated that the Act did not apply to specified forest produce grown on Government forest.

8. It was also submitted that clauses (a) and (b) of Section 5 (1) of the Act were to be read conjunctively. So read, contracts for purchase, sale, gathering or collection of specified forest produce grown or fallen on land or forest other than Government land or forest came within the purview of Section 5 (1) (a). Explanation II appearing in Section 5 (1), according to the learned counsel for the petitioner, was an explanation to Section 5 (1) (a) and made it clear that purchase of specified forest produce from the State Government would not be deemed to be a purchase in contravention of the provisions of the Act. Because of the said exception, the contracts between petitioner No. 1 and the State Government were not affected by Section 5 (1) (a) Section 5 (1) (a), according to him, was to be interpreted not in isolation but having regard to the objects, scheme, setting and other provisions of the Act. If Section 5 (1) (a) was held to annul also contracts of the nature held by petitioner 1 there was nothing within the four corners of the Act which precluded the State from entering into similar contract in future. Furthermore, Section 5 (1) (a) was a subsidiary and incidental provision in the legislation enacting State monopoly and should satisfy the test of reasonableness contained in Articles 14 and 19(1)(g) of the Constitution. So he pleaded for reading down the provision so that Section 5 (1) (a) might stand the test of reasonableness.

9. The learned Advocate-General appearing for the opposite parties repelled the contentions advanced by the learned counsel for-the petitioners thus:

The language of Section 5 (1) (a) was clear and unambiguous. Recourse to the Objects and Reasons or the Preamble was not permissible. Section 5 (1) (a) was, however, in keeping with the legislative intent indicated in the Objects and Reasons and the Preamble. The scheme and the provisions of the Act clearly disclosed that the legislation eliminated all contracts for purchase, sale, gathering and collection of specified forest produce grown or found in the area notified by the Slate Government under Sub-section (3) of Section 1 whether the area belonged to the State or to a private person. Explanation II was an explanation only to clause (b) of Section 5 (1). The scheme and the provisions of the Act did not countenance the plea that contracts for purchase, sale, gathering or collection of specified forest produce grown or fallen on Government land or forest continued to subsist. Upon issue of notification under subsection (3) of S. 1, collection, gathering, sale or purchase of specified forest produce could be done only in accordance with the provisions of the Act and the Rules. The contracts of the type as of petitioner 1, which were essentially collection contracts, could not subsist or be entered into. The subject 'contract' was Entry 7 and the subject 'forest' was Entry 17-A in the Concurrent List. The Act had, moreover, received the assent of the President. There was no constitutional infirmity in the legislation. Hence, there was no need to read down the provision contained in Section 5 (1) (a).

10. The Preamble reads as follows: 'An Act to provide for control and regulation of trade in certain forest produce by creation of State monopoly in such trade.' Section 1 (3) provides that the Act shall come into force in such area or areas and in relation to such forest produce and on such date or dates as the State Government may, from time to time, by notification, specify in this behalf. By notification dated 9-12-I982, the State Government notified that the Act would come into force with effect from the said date in whole of the State of Orissa in relation to Sal seeds. Section 2 (c) defines 'forest produce' as produces mentioned therein and such other produce as may be notified by the State Government from time to time. Clause (d) of Section 2 defines 'grower of forest produce' to mean:

'(i) in respect of forest produce grown on land owned by any person, the owner of such land, and

(ii) in all other cases the State Government.'

Section 4 provides for appointment of agents by the State Government for the purchase of and trade in specified forest produce. Sub-section (3) of Section 4 lays down that Ihe terms, conditions and procedure for appointment of agents shall be such as may be prescribed by rules. Section 5 contains the vital provisions over which the forensic controversy has raged. It reads as under:

'5. Restriction on purchase and transport and rescission of subsisting contracts--(1) On the issue of a notification under subsection (3) of S. 1 in respect of any area,--

(a) all contracts for the purchase, sale, gathering or collection of specified forest produce grown or found in the said area shall stand rescinded, and

(b) no person other than-

(i) the State Government,

(ii) an officer of the State Government authorised in writing in that behalf, or

(iii) an agent in respect of the unit in which the specified forest produce is grown or found, shall purchase or transport any specified forest produce in the said area.

Explanation I--'Purchase' shall include purchase by barter.

Explanation II--Purchase of specified forest produce from the State Government or the aforesaid Government Officer or agent or a licensed vendor shall not be deemed to be a purchase in contravention of the provisions of this Act.

Explanation III--A person having no interest of the holding who has acquired the right to collect the specified forest produce grown or found on such holding shall be deemed to have purchased such produce in contravention of the provisions of this Act.

(2) Notwithstanding anything contained in Sub-section (1),--

(a) a grower of forest produce other than Mohua may transport his produce from any place within the unit wherein such produce is grown or found to any other place in that unit, and a grower of Mohua may transport the Mohua grown by him from any place within the district wherein such Mohua is grown or found to any place within that district;

(b) any person may transport any specified forest produce not exceeding such quantity as may be prescribed from the place of purchase of any such produce to the place where such produce is required for bona fide use or for consumption;

(c) any specified forest produce purchased from the State Government or any officer or agent specified in the said Sub-section by any person for manufacture of goods within the State in which such specified forest produce is used as raw material or by any person for sale outside the State or by a licensed vendor may be transported by such person or vendor in accordance with the terms and conditions of a permit to be issued in that behalf by such authority and in such manner as may be prescribed; and

(d) any person having the right to that effect over any forest in respect of any specified forest produce under any law for the time being in force, may transport such produce for his domestic use or consumption in such quantity and subject to such terms and conditions as may be prescribed.

3. Any person desiring to sell any specified forest produce may sell them to the aforesaid Government Officer or agent at any depot situated within the unit wherein such produce was grown or found :

Provided that the State Government, the Government Officer or the agent shall not be bound to repurchase specified forest produce once sold. 4. Any person who has paid any amount as an advance in respect of any such contract as is rescinded under Sub-section (1) shall on an application made to the prescribed authority within six months from the date of issue of the notification referred to in the said sub-section, be entitled to the refund of such portion of the amount of advance as is proportionate to the unexpired portion of the period for which the contract was entered into.'

Section 6 provides for constitution of Advisory Committees to advise the State Government at what fair and reasonable price the produce may be purchased by the State Government or its authorised officer, or agent. Section 7 requires the State Government to fix the price at which the specified forest produce shall be purchased from growers Section 8 provides for opening of depots, hours of business and display of price list, etc. Section 9 obliges the State Government or their authorised officer or agent to purchase at the price fixed under Section 7, any specified forest produce offered for sale at the depots during the hours of business. The proviso to Sub-section (1) of Section 9 lays down when the State or its officer or agent may refuse to purchase and the remedy available to the grower. Sub-section (4) of Section 9 authorises the State Government or their authorised officer or agent to appropriate the produce offered for sale on payment of collection charges only if there is reason to believe that the produce appertains to forest or land belonging to the State Government. The proviso to Sub-section (4) makes provision for adjudication of dispute. Section 10 requires every grower of specified forest produce if the quantity of such produce grown by him during a year is likely to exceed the prescribed quantity to get himself registered. Section 11 requires the manufacturers, traders and consumers to register themselves if their use, requirement or consumption, as the case may be, exceeds the prescribed limit and to submit such declaration, accounts and returns, as may be prescribed under the rules. Section 12 leaves it entirely to the discretion of the State Government as to how it shall sell or dispose of the specified forest produce purchased by it. Section 13 prohibits persons from engaging themselves in retail sale of any specified forest produce except under licence. Section 15 confers power of entry, search and seizure. Section 16 prescribes the penalty for contravention of the provisions of the Act and the Rules. The next relevant section for our present purpose is Section 21 which authorises the State Government to make rules.

11. In exercise of the said powers, Orissa Forest Produce (Control of Trade) Rules, 1983, were made and published in the Orissa Gazette on April 8, 1983. Rule 2 (h) defines 'purchaser' as a person or party to whom specified forest produce has been sold OB otherwise disposed of in such manner as the State Government may direct under Section 12. Rule 3 prescribes the terms and conditions of and procedure for appointment of agents and the nature and scope of their work. Rule 3 (10), (11) and (12) prescribes that the agents shall purchase from private growers and also collect from Government land such specified forest produce as is fit for the purpose of consumption or use as raw materials for manufacture or for trade. He shall be responsible for the safe custody and storage, etc., of such purchased and collected produce. He shall pay the price in cash, at the rate notified by Government, to private growers and collection charges, at rates determined by Government, to collectors from Government forest. Rule 4 prescribes the quantity of the specified forest produce that any person may individually transport at a time from the place of purchase of such produce to the place where the produce is required for his bona fide use or consumption under clause (b) of Sub-section (2) of Section 5. The limit prescribed in the table in Sub-rule (1) is also applicable to persons having any right in any forest in respect of any specified forest produce under Clause (d) of Sub-section (2) of Section 5. Rule 5 regulates transport permits. Rule 6 makes provision for registration of growers of specified forest produce. Rule 7 contains the procedure for hearing complaint under Sub-section (2) of Sec. 9. Rule 8 enumerates the circumstances in which a manufacturer, a trader or a consumer shall get himself registered for each specified forest produce. Rule 9 provides for grant of certificate of sale to the purchaser of specified forest produce etc. Rule 10 lays down the procedure for application and grant of licence for retail sale of specified forest produce and Rule 11 deals with conduct of business of the Advisory Committee.

12. The cardinal rule for the construction of Acts of Parliament is that they should be construed according to the intent expressed in the Acts themselves. If the words of the statute are themselves precise and unambiguous, then no more can be necessary than to expound those words in their ordinary natural sense. The words themselves alone do in such a case best declare that intention of the law giver. The Tribunal that has to construe an Act of a legislature, or indeed any other document, has to determine the intention as expressed by the words used. And in order to understand these words it is natural to inquire what is the subject-matter with respect to which they are used and the object in view--Craies on Statute Law, 17th Edn., page 64.

In Warburton v. Loveland, (1832) 2 D & Clause 480 (H. L.), it was stated :

'Where the language of an Act is clear and explicit, we must give effect to it, whatever may be the consequences, for in that case the words of the statute speak the intention of the legislature.'

Where, however, the enactment is obscure or where the interpretation principally by the words of the statute itself read in the ordinary sense results in some manifest absurdity or incongruity, other rules are restored to, namely, the rules in Heydon's case (1584-3 Co-Rep 7a) and the rule which is spoken of as construction ex visceribus actus--(within the four corners of the Act) i.e., the construction of all parts together and not of one part only by itself and the rule of construction by implication etc.

13. Section 5 declares that on the issue of a notification under Sub-section (3) of S. 1 in respect of any area, all contracts for the purchase, sale, gathering or collection of specified forest produce grown or found on the said area shall stand rescinded. On the wordings of the provision it is indisputable that all contracts for the purchase, sale, gathering or collection of specified forest produce grown or found in the State of Orissa shall stand rescinded. The language used is of wide amplitude. It says all contracts. It does not say a specified type of contract, a contract of particular description. There is no indication that the expression 'all contracts' and 'grown or found in the said area' shall receive a restricted meaning. If Section 5 (1) (a) was intended to apply to contracts for purchase, sale, gathering or collection of specified forest produce grown or found only on land owned by any person other than the Government, nothing prevented the legislature from using the expression 'on land owned by any person other than the Government' in place of the expression 'in the said area' in Clause (a) of Section 5 (1). It seems to us that no such restricted application was intended. In the said area means the entire land comprised in the area notified under Sub-section (3) of S. 1.

Do the other provisions and/or the scheme of the Act indicate that the otherwise wide amplitude of Section 5 (1) (a) should be cut down ?

Clause (b) of Sub-section (1) of Section 5 precludes any person other than the State Government or an officer of the State Government authorised in that behalf or an agent in respect of the unit in which the specified forest produce is grown or found, from purchasing or transporting any specified forest produce in the said area. Explanation I clarifies that purchase shall also include purchase by barter. Explanation II is in the nature of an exception. It says that purchase of specified forest produce from the State Government or the aforesaid Government Officer or agent or a licensed vendor shall not be deemed to be a purchase in contravention of the provisions of this Act. Clause (b) of Section 5 (1) places an embargo oa persons other than those specified therein to purchase or transport any specified forest produce in the said area. Explanation II excludes purchase specified in the Explanation from the mischief of clause (b).

It was contended by Mr. Mohanty that the contracts of petitioner 1 were for purchase of Sal seeds from the State Government and thus were saved by Explanation II which was really an Explanation to Section 5 (I) (a). Accordingly, he argued that the contracts of the type entered into by the petitioners with the State Government were unaffected by Section 5 (1) (a). Annexure-4, the contract, indicates that petitioner 1 was desirous of obtaining a licence of the right to collect Sal seeds falling on the ground in the forest belonging to the State of Orissa. Consider also the following in the supplemental agreement:

'....... Whereas in the principal deed the grantor granted licence to the company to collect Sal seeds ........ Whereas the parties have now agreed to extend the term of licence and to incorporate a new clause regarding the manner of disposal of Sal seeds collected by the Company ........

2. The Company shall promote a separate Public Limited Company in the name and style of 'Utkal Oils Ltd.' to crush the Sal seeds collected by the Company from the contract urea. The Company undertakes that they would in no circumstances trade on Sal seeds except selling the entire collection of Sal seeds to the said Public Limited Company. The latter company would also be under obligation to purchase the entire Sal seeds collected by Orissa Minor Oils Pvt. Ltd. ......'

The contracts arc, in our opinion, essentiallyfor collection of Sal Purchase or disposal thereof are consequential. We find itdifficult to accept the contention of the counsel for the petitioners that Explanation IIwas an explanation to Section 5 (1) (a) and excluded the contracts of the type in questionfrom the mischief of Section 5 (1) (a). Explanation III clarifies that a person who has nointerest in the holding but has acquired theright to collect the specified forest producegrown or found on such holding, shall bedeemed to have purchased such produce andshall thereby be deemed to have contravenedthe provisions of this Act. namely, clause (b)of Section 5 (1). The object behind this Explanation is to recognise collection by privategrowers from their own land and to prohibitcollection otherwise than in the manner prescribed under the Act and the Rules. Subsection (2) of Section 5 carves out exceptions tothe prohibitions contained in clause (b) thatno person other than the person specified inclause (b) of Section 5 (1) shall transport any specified forest produce in the notified area.

14. Section 5 (1) (b) and Section 5 (2) together prohibit within the notified area (a) purchase of specified forest produce other than the purchase excluded by Explanation II, (b) collection of specified forest produce by a person who has acquired the right to collect but has no interest in the holding, and (c) transport of specified forest produce by persons other than those excepted by Sub-section (2).

15. The counsel for the petitioners contended that the Statement of Objects and Reasons and the Preamble militated against the construction put by the opposite parties. . The Objects and Reasons for the legislation are stated thus :

'Smuggling of various forest produce are increasing day by day. The present provisions of the Orissa Forest Act, 1972, for checking, hoarding and transport of forest produce are not adequate to bring the culprits to book. The said Act is not adequate for imposition of any restrictions or control on trade in forest produce by framing rules thereunder. Barring few items like Sal seeds, most of the important items of minor forest produce such as Mahua flowers, Tamarind, Charmaji, Karanja and the like are grown in private holdings as well as in the forest areas owned by Government. Unscrupulous traders take advantage of this situation and evade law under the cover that the produce relates to private land and not to forests under the control of Government. Instances of smuggling in such cases are too many and the smugglers are escaping with impunity because of absence of any legislation providing for State monopoly in forest produce. Enactment of a separate legislation for the purpose is, therefore, absolutely necessary.'

The Preamble which we have quoted in an earlier paragraph shows the same purview of the Act.

16. The primary objects of the enactment was to control and regulate trade in specific forest produce by creating State monopoly in such trade. The object and purpose of the legislation would be frustrated unless the entire trade was taken over by eliminating private traders from the field. In our opinion, Section 5 (1) (a) should be given the meaning it ordinarily bears without cutting down its amplitude. There is nothing obscure or incongruous in the provision which would persuade us to exclude contracts for purchase, sale, gathering or collection of specified forest produce grown or found on Government land from the purview of Section 5 (1) (a).

So, we are unable to accept the contention of the learned counsel for the petitioners that the Objects and Reasons and the Preamble indicate that a restricted meaning should be given to Section 5 (1) (a).

17. It was contended by the counsel for the petitioners that whereas detailed provisions had been made in Ss. 6, 7, 8 and 9 regarding fixation of price, purchase depots etc. of specified forest produce grown on land owned by private persons, regarding produce grown or found on Government land or forests there was no similar provision, which indicated that the Act had no application to produce grown or found on Government land or forest. We fail to appreciate this argument. Legislation is necessary to regulate the price at which the State Government would purchase the specified forest produce through its agents or officers from the private growers, the places where such produce shall be offered for sale. The object is to protect the growers from harassment and pay fair and reasonable price for their produce. Broadly Sections 6 to 9 contain provisions laying down the manner in which the ownership in the specified forest produce shall reach the State Government. No such provision is necessary regarding forest produce which belong to the State. Section 10 provides for registration of private grower if the quantity expected to be grown by him during a year is likely to exceed the prescribed quantity. This provision enables the State to anticipate in advance the quantity that it is likely to purchase during the year so that its agents and officers remain prepared to make the purchase when the growers offer for sale. Section 9 obliges the State Government, its officer or agent to purchase at the price fixed, any specified forest produce offered for sale at the depots. Refusal to purchase without valid grounds would be a contravention of the Act.

18. Mr. Mohanty referred us to Section 12 which contained the provision relating to disposal of specified forest produce purchased by the State Government or by its officer or agents. He urged that the Act contained no provision providing for disposal of forest produce grown or found on Government forest. In our opinion, Section 13 is by way of abundant caution. It is an enabling provision. It says that specified forest produce purchased shall be sold or otherwise disposed of in such manner as the State Government may direct. The State Government are in no need of such authority. They have the authority under Art. 298 of the Constitution. Section 13 which contains the provision regarding retail sale is applicable to produce purchased, as well as to produce grown or found on Government forest.

19. While at it, we should draw attention to the definition given in Section 2 (d) which defines the expression 'grower of forest produce' to mean in respect of forest produce grown on land owned by any person, the owner of such land and in all other cases, the State Government. If the Act dealt with specified forest produce grown or found on land owned by any person other than the State Government, as the counsel for the petitioners contended, the definition 'grower of forest produce' would not have included the words 'in all other cases the State Government', The inclusion is not inadvertent. It gives a clue to reach at the intention of the legislature. We may refer here to Section 4 which authorises the State Government to appoint agents for the purchase of and trade in specified forest produce. The expression 'trade' had wide connotation, covers the entire gamut of activity including collection of specified forest produce from Government land or forest.

20. We have been referred to the rules, as aid to the construction of the enactment.

In Ex. Wier (1871) 6 Ch. App. 875 it was said:

'Recourse may (also) be had to rules which have been made under the authority of the Act if the construction of the Act is ambiguous and doubtful on any point; and if we find that under the rules any particular construction has been put on the Act, it is our duty to adopt and follow that construction.'

It has also been said that 'too much stress cannot be rested upon rules, inasmuch as they may be questioned on being in excess of the powers of the subordinate body to which Parliament has delegated authority to make them'.

We agree with what Upjohn L. J. said in Stephens v. Cockfield R. D. C, (1960) 2 QB 373:

'We doubt very much whether it is right to construe the words of the section by reference to regulations made under powers therein contained.'

Counsel for both the sides relied on them. So we refer to same.

Sub-rules (10), (11) and (12) of Rule 3 prescribes collection of specified forest produce from Government land by the agent at the depots. The learned counsel for the petitioners relied on Rule 9 to show that a sale certificate granted in Form 'J' is in respect of sale of specified forest produce purchased from private growers under S. 12. The rule reads as follows:--

'9. The Government or its officer or an agent who sells or delivers the specified forest produce to the purchaser shall grant him a certificate of sale in Form J. Any person who claims to have purchased the specified forest produce from the Government under Section. 12, shall on demand by a police or forest officer, produce such certificate of sale in support of his claim, failing which his claim shall not be accepted and such stock which he claims to have purchased from the Government if not supported by a certificate of sate shall be deemed to be the property of the Government and may be taken possession of by a Police or Forest Officer;

Provided that if such person produces within fifteen days of the taking of possession of such forest produce by a Police or Forest Officer before the Divisional Forest Officer any evidence to the satisfaction of the said Divisional Forest Officer in support cf his having purchased such stock from the Government the forest produce so taken possession of by the Police or Forest Officer shall be released by the Divisional Forest Officer.'

The first sentence does not indicate that a certificate of sale would be granted only to purchasers of specified forest produce purchased from Government under Section 12. The certificate shall be granted to the purchaser whether the specified forest produce sold is grown or found on Government forest, or purchased from private growers. The Act is in need of no aid from the rules for its construction. There is no ambiguity or obscurity.

21. Though the petitioners did not challenge the vires of the statute, their counsel contended that if the legislation was construed to annul the existing contracts either expressly OF by necessary implication, the legislation would offend Articles 14 and 19(1)(g) and be ultra vires the Constitution. So, Section 5 (1) (a) should be read down. We were referred to a passage in the decision of the Supreme Court in AH Saints High School v. Government of Andhra Pradesh, AIR 1980 SC 1042. and persuaded to read down the provision so that the legislation did not suffer from constitutional infirmity. The Supreme Court observed (at pp. 1083-84):

'......... In the State of West Bengal v. Subodh Gopal Bose, 1954 SCR 587 : (AIR 1954 SC 92), it was held that the Statement of Objects and Reasons could be referred to for the limited purpose of ascertaining the conditions prevalent at the time which actuated the sponsor of the bill to introduce the same and the extent of urgency and the evil which he sought to remedy since these matters were relevant for deciding whether the restrictions were reasonable within the meaning of Art. 19 (2) to (6) ........ The Preamble is also an aid in construing the provisions of the Act. The House of Lords in Att Gen. v. Prince Earnest Augustus of Hanover, (1957) AC 436, held that when there is a preamble it is generally in its recitals that the mischief to be remedied and the scope of the Act are described. It is, therefore, permissible to have recourse to it as an aid to construing the enacting provision .........'

It is well settled rule that in interpreting the provisions of a statute the Court will presume that the legislation was intended to be intra vires and also reasonable. The rule followed is that the section ought to be interpreted consistent with the presumption which imputes to the legislature an intention of limiting the direct operation of its enactment to the extent that is permissible. Maxwel on Interpretation of Statutes, Twelfth Edn., page 109 under the caption : 'Restriction of operation' stales :--

'Something to keep the Act within the limits of its scope, and not to disturb the existing law beyond what the object requires, it is construed as operative between certain persons, or in certain circumstances, or for certain purpose only, even though the language expresses no such circumscription of the field of operation.'

The following passage in Bidie v. General Accident, Fire and Life Assurance Corpn,, (1948) 2 All ER 995 at p. 998 was cited with approval in Kesavananda Bharti v. State of Kerala, (1973) Supp SCR 1 at p, 101 : (AIR 1973 SC 1461 at p. 1497).

'The first thing one has to do, I venture to think, in construing words in a section of an Act of Parliament is not to take those words in vacuo, so to speak, and attribute to them what is sometimes called their natural or ordinary meaning. Few words in the English language have a natural of ordinary meaning in the sense that they must be so read that their meaning is entirely independent of their context. The method of construing statutes that I prefer is not to take particular words and attribute to them a sort of prima facie meaning which you may have lo displace or modify. It is to read the statute as a whole and ask oneself the question : 'In this state, in this context relating to this subject-matter what is the true meaning of that word?'.

According to Holmes, J. in Towne v. Eisner, (1917) 245 U 418 : 62 L Ed 372, 376 a word is not crystal transparent and unchanged : it is the skin of living though and may vary greatly in colour and content according to the circumstances and the time in which it is used. Gwyer, J. in Central Provinces and Berar Act (1939 FCR 18 at p. 42) : (AIR 1939 FC 1 at p. 7) held:

'A grant of the power in general terms standing by itself, would no doubt be construed in the wider sense: but it may be qualified by other express provisions in the same enactment, by the implication of the context, and even by the considerations arising out of what appears to be the general scheme of the Act.'

To the same effect are the observations of this Court in Kedar Nath Singh v. State of Bihar. 1962 Supp (2) SCR 769 : (AIR 1962 SC 955):

It is well settled that in interpreting an enactment the Court should have regard not merely to the literal meaning of the words used, but also take into consideration the antecedents history of the legislation its purpose and the mischief it seeks to suppress, (Bengal Immunity Co. Ltd. v. State of Bihar, (1955) 2 SCR 603 : (AIR 1955 SC 661) and R. M. D. Chamarbaugwalla v. Union of India, 1957 SCR 930 : (AIR 1957 SC 628) cited with approval).

This Court has in several cases adopted the principle of reading down the provisions of the Statute. The reading down of a provision of a statute puts into operation the principle that so far as it is reasonably possible to do so the legislation should be construed as being within its power. It has the principle effect that where an Act is expressed in language of a generality which makes it capable, if read literally, or applying to matters beyond the relevant legislative power, the Court will construe it in a more limited sense so as to keep it within power.' In the All Saints' case (AIR 1980 SC 1042) certain provisions of the Andhra Pradesh Recognised Private Educational Institutions (Control) Act, 1975, were challenged as offending Article 30 of the Constitution. The Court held that in interpreting the provisions of a statute the Court would presume that the legislation was intended to be intra vires and also reasonable. The reading down of the provision of a statute put into operation the principle that so far as it was reasonably possible to do so, the legislation should be construed as being within its power. It had the principal effect that where an enactment was expressed in language of a generality which made it capable, if read literally of applying to matters beyond the relevant legislative power, the Court would construe it in a more limited sense so as to keep it within power. It was also said that where two interpretations were possible, the interpretation which rendered the provision intra vires should be accepted and preferred to that rendered the provision ultra vires.

The subject 'forest' is included in the Concurrent List as Entry 17-A. The subject 'contract' is included in the Concurrent List as Entry 7. Hence, there is no lack of legislative competence to make the legislation. Moreover, the Act has received the assent of the President. There cannot be any challenge on the ground of lack of legislative competence.

22. The next ground of attack was that Section 5 (i) (a) was a subsidiary and incidental provision and must satisfy the test of reasonableness. Reliance was placed upon Akadasi Pradhan v. State of Orissa, AIR 1963 SC 1047. In that case it was held that State monopoly in respect of a trade or business must be presumed to be reasonable and in the interest of general public so far as Article 19(1)(g) was concerned and it was not correct to say that the creation of a State monopoly must be justified by showing that the restriction imposed by it were reasonable and were in the interest of general public. But all the provisions in the legislation might not be basically and essentially necessary for creating the State monopoly. Those provisions which were basically and essentially necessary for creating State monopoly or were integrally and essentially connected with it, were protected. In our opinion, the provision contained in Section 5 (1) (a) providing for annulment of contracts is a provision which is integrally and essentially connected with creation of State monopoly. State monopoly of trade in a specified forest produce would not be effective if a substantial part of the trade, i. e., trade in specified forest produce grown or found on Government forest, continued to be operated by private person. Without annulment there can be no effective control and regulation of the trade. The operation of the private contracts would defeat the very object and purpose for which the legislation was made, la Akadasi Pradhan's case (AIR 1963 SC 1047) (supra), the Supreme Court upheld the State monopoly created by Section 3, Orissa Kendu Leaves (Control of Trade) Act, 1961, but held that the law would not be used by the State for the private benefit of the agents. Rule 7 (5) was held to be bad as it left it to the sweet will and pleasure of the officers to fix any terms and conditions on ad hoc basis.

23. The counsel for the petitioners relied upon Rasbihari Panda v. State of Orissa, AIR 1969 SC 1081 and contended that the statute violated Article 14 and Article 19(1)(g) of the Constitution in so far as the law infringed the trading rights of the petitioners, in Rasbihari Panda's case (supra), the scheme framed by the Government under Section 10 contining the trade in Kendu leaves to existing contractors was held to be violative of Article 14 inasmuch as persons similarly placed and prepared to trade with the Government were excluded from exercising the right. The scheme was also held to infringe Article 19(1)(g). The Court observed (paras 18, 19):

'.. .. ... Exclusion of all persons interested in the trade, who were not in the previous year licensees is ex facie arbitrary: it had no direct relation to the object of preventing exploitation of pluckers and growers of Kendu leaves, nor had it any just or reasonable relation to the securing of the full benefit from the trade, to the State.

Validity of the law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefrom is to enure to the State, and the monopoly is not used as a cloak for conferring private benefit upon a limited class of persons. The scheme adopted by the Government first of offering to enter into contracts with certain named licensees, and later inviting tenders from licensees who had in the previous year carried out their contracts satisfactorily is liable to be adjudged void on the ground that it unreasonably excludes traders in Kendu leaves from carrying on their business. The scheme of selling Kendu leaves to selected purchasers or of accepting tenders, only from a specified class of purchasers was not 'integrally and essentially connected with the creation of the monopoly and was not on the view taken by this Court min Akadasi Pradhan's case protected by Article 19(6)(ii): it had therefore to satisfy the requirement of reasonableness under the rirst part of Article 19(6).'

In our opinion, the Orissa Forest Produce (Control of Trade) Act, 1981, does not suffer from, any such vice. The Act does not create any special right in favour of any particular class. The Act aims at eliminating all private operators from the field for the exercise of State monopoly.

24. The counsel for the petitioners urged that the Act did not make any provision for Working out the monopoly in the specified forest produce after the annulment of the contracts under Section 5 (1) (a).

Learned Advocate-General submitted in reply that no legislative sanction was necessary for the State to carry on trade or business and referred us to Rai Sahib Ram Jawaya Kapur v. State of Punjab, AIR 1955 SC 549. Their Lordships observed (at page 557):

'.. ... ... Specific legislation may indeed be necessary if the Government require certain powers in addition to what they possess under ordinarily law in order to carry on the particular trade or business. Then when it is necessary to encroach upon private rights in order to enable the Government to carry on their business, a specific legislation sanctioning such course would have to be passed.

25. We have already observed that in view of Article 298 no further power was necessary to be conferred on the State Government by the Act to carry on trade in speckled forest produce. To annul the private contracts, specific legislation as contained in Section 5 (1) (a) was however, necessary. The learned Advocate-General drew our attention also to various provisions in the Act and the Rules regulating trade of specified forest produce grown or found on Government forest, especially the provisions contained in Section 4 relating to appointment of agents and in Rule 3, sub-rules (10), (11) and (12) prescribing procedure for collection of specified forest produce grown or found on Government land or forest, storage of such produce and for collection and payment to collectors of such forest produce. The provision relating to grant of licence for retail sale of specified forest produce equally applies to such produce.

26. The learned counsel for the petitioners faintly urged that the legislative debates might throw some light on the intention of the legislature in the making of the legislation and help us in construing the provisions. We called for a copy of the proceedings. On perusal, we find that the same are not helpful one way or the other. So, we have not referred to them.

We hold that the Act annuls all contracts (including contracts entered into with the Government) for purchase, sale, gathering or collection of specified forest produce grown or found in the area notified under Sub-section (3) of Section 1 (including Government land or forest).

27. All the contentions raised by the learned counsel for the petitioners thus fail and the writ application is liable to be dismissed without any order as to costs.

28. In O. J. C. No. 237 of 1983 identical contentions which have not found favour with us have been raised. For the self-same reasons, we negative the contentions and dismiss the writ application without any order as to costs.

P.K. Mohanti, J.

29. I agree.


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