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Combined Traders by Its Managing Partner, T.J. Cherian Vs. State of Tamil Nadu Represented by the Secretary to Government, Agricultural Department and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution;Property
CourtChennai High Court
Decided On
Reported in(1975)2MLJ443
AppellantCombined Traders by Its Managing Partner, T.J. Cherian
RespondentState of Tamil Nadu Represented by the Secretary to Government, Agricultural Department and ors.
Cases ReferredC. V. Rojagopalachari v. State of Madras
Excerpt:
- orderm.m. ismail, j.1. these four writ petitions deal with the same controversy and the facts as can be gathered from the various affidavits filed in these writ petitions are as follows:2. the south india viscose limited, coimbatore, hereinafter referred to as viscose, is a company established in 1958. it has got its factory at sirumugai near mettupalayam, avanashi taluk, coimbatore district. the factory is engaged in the manufacture of wood pulp, rayon yarn and staple fibre. the most essential raw material for high grade rayon pulp manufacture is bluegum timbet-grown in the government reserve as well as private forests in the nilgiris district. for the purpose of obtaining this raw material from the forests in the nilgiris without any interruption to its work in the factory, the viscose.....
Judgment:
ORDER

M.M. Ismail, J.

1. These four writ petitions deal with the same controversy and the facts as can be gathered from the various affidavits filed in these writ petitions are as follows:

2. The South India Viscose Limited, Coimbatore, hereinafter referred to as Viscose, is a company established in 1958. It has got its factory at Sirumugai near Mettupalayam, Avanashi Taluk, Coimbatore District. The factory is engaged in the manufacture of wood pulp, rayon yarn and staple fibre. The most essential raw material for high grade rayon pulp manufacture is bluegum timbet-grown in the Government reserve as well as private forests in the Nilgiris District. For the purpose of obtaining this raw material from the forests in the Nilgiris without any interruption to its work in the factory, the Viscose had approached the Government on several occasions. The Government entered into an agreement with the said Viscose on 5th April, 1965 for the supply of bluegum wood over 7,800 acres from 1966 to 1975 at Rs. 450 per acre per annum for the first three years and at revised rates for the subsequent years. The following are the details of the bluegum areas allotted to the said Viscose for working from 1966 to 1973:

1966 .. 300 acres1967 .. 406.45 acres1968 .. 589.85 acres1969 .. 800.00 acres1970 .. 788.32 acres1971 .. 900.00 acres1972 .. 1140.25 acres1973 .. 1000.00 acres

The rate of Rs. 450 was subsequently revised at Rs. 650 per acre from 1st January, 1959 to 31st March, 1973 and as Rs. 750 per acre from 1st April, 1973. Since the Viscose was not able to get all its requirements of raw materials from these areas allotted by the Government, it had, approached the Government for allotment of all the Government forest lands to it for purposes of getting the necessary bluegum timber. In order to consider this request of the Viscose, a meeting was held on 9th May, 1966 at Ootacamund, attended by the Chief Minister of the State, the Minister for Co-operation, the Secretary of Government, Department of Agriculture, the Chief Conservator of Forests and a representative of the Viscose. As a result of the discussion, the Government arrived at certain conclusions, and those conclusions appear in the subsequent memorandum of the Government-Memorandum No. 48227/II/66-7 Agriculture Department, dated 7th June, 1966. The Government at that conference did not take a final decision on the request of the Viscose for allotment of all the reserved forests of the Government with bluegum plantation for its benefit and they had allotted the acreage as indicated above. This memorandum points out that during the discussion, it was brought to notice that the bulk of blugegum wood auctioned in the Nilgiris District was not teaching the civil population for use as firewood, that the coupes were taken in auction by various contractors and that the wood was then exported outside the State ; and that in view of this, the Government had decided that the bluegum wood sold out in auction in the Nilgiris District should be used only as fuel, posts etc., for the benefit of the civil population in the Nilgiris District and should not be allowed to go out of the District. Subsequent to this the Government passed G.O. Ms. No. 3440, Agricultural Department, dated 26th October, 1966 which dealt with the supply of bluegum and wattle to Viscose and considered its representations. The Government decided to allow upto 1000 acres to Viscose and that was to be done from 1972 to 1975 and the rate per acre was also revised. This Government order also pointed out that as bluegum was more suitable than debarked wattle for rayon and paper industry, the Government decided that in future all the bluegum raised in the departmental plantations in the Nilgiris Division should be supplied to the pulpwood industries and that the debarked wattle wood might be made available to the public for use as firewood instead of bluegum. Notwithstanding this, the Government by the very same order also pointed out that the ban on the export of the bluegum raised by the Forest Department in the reserved forests in the Nilgiris District outside the district would continue, but the restriction imposed by the Government would not apply to bluegum felled by the Viscose exclusively for rayon pulp manufacture. Pursuant to the decision taken by the Government in their memorandum, dated 7th June, 1966 the following condition was imposed as condition No. 25 in the auction notice for the sale of bluegum in the Government reserved forests by public auction.

25. Bluegum wood should not be transported outside the Nilgiris District.

Before I proceed further, it is necessary to refer to the quantity of bluegum area available for being sold in public auction. Paragraph 5 of the counter-affidavit filed by the Government in W.P. No. 351 of 1974 refers to a letter addressed by the Government to the Viscose wherein it is stated:

Bluegum wood is the main source of fuel for the local population in the Nilgiris and Kodai hills. It is therefore considered essential to continue to offer bluegum plantation to the public for consumption as fuel through public auction. Further, the extent of bluegum areas disposed of by public auction is negligible when compared to the areas allotted to the Company.

In paragraph 14 of the same counter-affidavit, it is pointed out that after meeting this requirement, namely, allotment to the Viscose, the remaining area, viz., about 80 hectares alone is offered for public sale to meet local requirements. In paragraph 16 of this affidavit, it is further pointed out that as firewood was available in excess of local requirements, as there was a large number of wind fallen trees due to a storm during 1973 and as Messrs. South India Viscose Limited were in need of more raw materials, the second respondent permitted the following six contractors to transport the bluegum wood to Messrs. South India Viscose Limited and that this permission, issued by the second respondent, was ratified by the Government in G.O. Ms. No. 310, Forests and Fisheries Department, dated 26th December, 1973.

(1) Nilgiris Traders.

(2) Combined Traders (Petitioners in all these writ petitions).

(3) Thiru V. V. Raman.

(4) Bhuvaneswari Depot.

(5) Thiru A. Subramauiaro ; and

(6) Thiru M. Mathan.

Thus, it is clear that during 1973 only the contractors who were supplying the blue-gum purchased by them at the auction conducted by the Government were permitted to remove the quantity of bluegum from the District which they were supplying to the Viscose. There is nothing on record to show that any such permission was granted in 1974.

3. There is yet another matter to which I must draw attention at this stage itself and that is, the price at which the bluegum wood was sold. The counter-affidavit filed on behalf of the Government points out that the price of bluegum fire wood Varies from Rs. 75 to Rs. 80 per tonne according to the prevailing local market rates, that Messrs. South India Viscose Limited are buying bluegum wood at Rs. 98 per tonne at their depot at Mettupalayam, that the transport charges per tonne are Rs. 25 and that if that is deducted, it comes to Rs. 73 per tonne. However, in the affidavits filed in support of the writ petitions, it is stated in paragraph 5 thereof that the current purchase price of South India Viscose Limited, is Rs. 98-50 per tonne, while the price of Gwalior Rayons Ltd., offered at Mettualayam depot is Rs. 92-75 per tonne and that if bluegum is sold as firewood, the rate will be Rs. 20 to Rs. 25 per tonne. But this controversy may not be relevant except to a limited extent to which I shall make reference later.

4. In W.P. No. 351 of 1974, the prayer is for the issue of a writ of mandamus to respondents 1 to 4, namely, the State of Tamil Nadu, the Chief Conservator of Forests, Madras Conservator of Forests, Coimbatore Circle and the District Forest Officer, Nilgiris South, Ootacamund, forbearing them from confirming the sale by auction of bluegum trees in 44 coupes held on 21st February, 1974 pursuant to the notice of the fourth respondent in Ref. No. 1587/74-L, dated 2nd February, 1974. In W.P. No. 352 of 1974, the prayer of the same petitioner is for the issue of a writ of mandamus forbearing respondents 1 to 4 from implementing or giving effect to the restriction on the movement of bluegum wood from Government reserved forests outside the Nilgiris District, pursuant to the executive Orders contained in this behalf in the memorandum, dated 7th June, 1966, G.O. Ms. No. 3440 : Agriculture, dated 26th October, 1966 and condition No. 35 of the sale notice of the fourth respondent, to all of which I have already made a reference. W.P. No. 2086 of 1974 has been filed by the petitioner, after it his participated in the auction held on 21st June, 1974, bid for a particular coupe for Rs. 3,500. Even in this writ petition, the prayer is the same as that contained in W.P. No. 352 of 1971. W.P. No. 2400 of 1974 has been filed on 30th August, 1074, with reference to a notice of auction, dated 12th June, 1974 for conducting an auction on 16th August, 1974. Since no interim orders were issued, the auction was held on 16th August, 1974. The petitioner claims that it has bid at that auction also. The prayer in the writ petition also is the same is that in W.P. No. 2086 of 1974. Thus, the complaint of the petitioner, in all the writ petitions is that condition No. 25 incorporated in the auction notice, pursuant to the memorandum of the Government, dated 7th June, 1966 is illegal and therefore ought not to be given effect to. Therefore, the real question for consideration is, whether the said condition is illegal and therefore respondents 1 to 4 should be prevented from giving effect to the same or not.

5. Mr. K.K. Venugopel, who, as usual addressed very elaborate arguments, put forward three contentions in support of these writ petitions. The first contention was that condition No 25 violated freedom of trade, commerce and intercourse guaranteed under Article 301 of the Constitution of India. The second contention was that by preventing the petitioner from bidding at the auction in competition with those who had entered into contracts with Viscose for supply of bluegum wood the fundamental right of the petitioner under Article 19 (1) (g) of the Constitution of India has been violated. The third contention was that inasmuch as the authorities had permitted the removal of the bluegum wood from the Nilgiris District for supply to Viscose and had not given any such permission to any other person, for instance, a person like the petitioner who would like to remove the bluegum wood outside the district for supply to a competitor, namely, Messrs. Gwalior Rayons Limited, who is prepared to pay a higher price and as a consequence the petitioner also would be prepared to offer a higher bid at the auction, the action of the authorities would constitute violation of Article 14 of the Constitution of India. I shall consider the validity of these submissions in the order in which I have mentioned them.

6. Article 301 of the Constitution of India states that subject to the other provisions of that Part, trade, commerce and intercourse throughout the territory of India shall be free. Only if Article 301 applies, the other Article will have relevancy Consequently, the first question for consideration is, whether Article 301 can ever be invoked, having regard to the facts and circumstances of this case. I repeat the writ petitions are confined only to bluegum trees grown in the reserved forests of the Government and sold in public auction and they are not directed against allotment of specific acres of reserved forests with bluegum plantation for the benefit of the Viscose. With regard to the auction sale, admittedly the forests are the properties of the Government and consequently the bluegum plantations grown there are also the properties of the Government. The Government, with reference to their property, can choose any method whatever for disposal of the same. In this case they have chosen the method of public auction. With reference to such a public auction, they have imposed condition No. 25. Therefore, the question for consideration is, whether that will attract Article 301 of the Constitution of India at all. Mr. K. K. Venugopal frankly conceded that he was not able to lay his hands on any authority which directly deals with a case where Article 301 of the Constitution of India has been held to apply to a case where the property belongs absolutely to the Government. However, he relied on certain other decisions to which I shall make a reference in the course of this judgment.

7. In my opinion, neither Article 301, nor Article 19 (1) (f) can have any application whatever to the property of the Government. When the Government are the owners of a property, they have a right to deal with the same in any manner as they like just like any other owner is competent to do. The fact that the owners in this case happened to be Government does not make any difference and the Government do not suffer from any disability which any other owner does not suffer from . The auction notice is merely an invitation to others to make an offer for the purchase of the Government property. Since this invitation contains condition No. 25, any offer that can be made to the Government by any tenderer can be only on the basis of his acceptance of that condition. Certainly it is not open to such a person to say, ' I am making an offer, but without the condition you have imposed '. Therefore, when any particular person makes an offer or tenders pursuant to such an invitation he does so, only on accepting the conditions imposed by the Government. As a matter of fact, no individual has got a right to say that the Government's invitation should be without such a condition or in other words, the invitation of the Government should be on terms which an intending offeror would prefer or like to have. When the owner of a property is entitled to sell his property on any terms, he likes, certainly an intending purchaser has no right to control that right of the owner to sell his property. It must be noticed at this stage itself that no statutoty provision dealing with the sale of such Government property was brought to my notice so as to contend that condition No. 25 is in violation or contravention of such statutory provision. When the Government are the absolute owners of the property, just like any other owner they can sell the property on any terms they like, and a person like the petitioner has no fundamental right to purchase the Government property. The question of fundamental rights, if any, will arise only after the petitioner becomes the absolute owner of the property. When the petitioner itself purchases the property subject to the condition, namely, that the very right it secures is subject to the limitation, it is not open to it thereafter to contend that such a condition violates its fundamental right under Article 19(1) (g) of the Constitution of India. As a matter of fact, the very tender notice contemplates the execution of an agreement by the highest bidder, whose bid has been confirmed, with the Government in respect of the sale as well as the work of the coupe which had been sold. It is admitted that condition No. 25 contained in the auction notice has been incorporated as condition No. 35 of the agreement. Thus, it is clear, that the very purchase of the property by the petitioner in W.P. No. 2086 of 1974 was subject to the condition that it had no right to remove the purchased goods from the Nilgiris. To that effect it had expressly agreed not only by making the offer and bidding at the auction, but also by subsequently entering into an agreement with the Government. Therefore, in my opinion, the question of freedom of trade, commerce and intercourse cannot have any relevancy in dealing with the property of the Government which the Government have right to deal with in any manner they please. When such a condition is imposed by the Government, subject to which alone the property is sold, nobody can contend that Article 301 of the Constitution of India had been violated. Similarly, as I have pointed out already, no citizen has any right to claim that he has got a fundamental right to purchase the property of the Government. In this case, the very purchase itself is subject to condition No. 25 and therefore once a person purchases a property subject to such a condition, it is not open to him thereafter to contend that the condition, which was in existence even before the purchase and subject to which alone he purchased, interfered with his fundamental right either under Article 19 (1) (f) or 19 (1) (g) of the Constitution of India. 8. Now, let me refer to a few decisions cited at the Bar with regard to the first two points. As far as this Court is concerned, there is the earliest decision of a Bench of this Court concerning Government property. That is C.V. Rajagopalachari v. The State of Madras represented by Secretary to Government Public Works Department, Madras C.M.P. No. 6187 of 1951. dated 6th September, 1951. In that case, the petitioner claiming to be the Secretary of the Peoples' 'Civil Liberties Union, Madras prayed for the issue of a writ of mandamus directing the State of Madras represented by the Secretary to Government Public Works Department, to allow the petitioner to hold the annual conference of the Peoples' Civil Liberties Union on any two consecutive days in May, 1951 in the Rajaji Hall. A Bench of this Court (Rajamannar, C.J., and Venkatarama Ayyav, J.) held:

The Government would be at liberty to let property belonging to them to any one whom they choose...If the position is that Rajaji Hall is a property belonging to the Government, then there can be no question of any citizen as such having a right to demand the use of the hall from the Government. If he has no such right, it follows that Article 14 of the Constitution is in no way infringed. The petitioner referred us to Article 298 of the Constitution; but it does not help him in any way. He was unable to point out any law made by the appropriate Legislature, i.e., the Legislature of this State concerning the grant or the disposition or mortgage of any property held by the Government for the purpose of the State. The petitioner's contention that the Government should not make a discrimination in letting any property by belonging to them is not sup ported by any authority or principle.

9. The next decision is that of the Supreme Court in C. K. Achuthan v. The State of Kerala and Ors. : AIR1959SC490 . The petitioner therein held contracts for the supply of milk to the Government Hospital at Gannanore ever since 1946. In 1957 the petitioner and a co-operative milk supply union submitted their respective tenders for the supply of milk and after scrutiny the tender of the petitioner was accepted. Later on, however, the District Medical Officer cancelled the petitioner's contract for the supply of milk and gave it to the co-operative milk supply union. The petitioner filed a writ petition under Article 32 of the Constitution of India before the Supreme Court. The Supreme Court held:

The gist of the present matter is the breach, if any, of the contract said to have been given to the petitioner which has been cancelled either for good or for bad reasons. There is no discrimination, because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, to fulfil contracts which they wish to be performed. When one person is chosen rather than another the aggrieved party cannot claim the protection of Article 14 because the choice of the person to fulfil a particular contract must be left to the Government. Similarly, a contract which is held from Government stands on no different footing from a contract held from a private party. The breach of the contract, if any, may entitle the person aggrieved to sue for damages or in appropriate cases, even specific performance, but he cannot complain that there has been a deprivation of the right to practice any profession or to carry on any occupation, trade or business, such as is contemplated by Article 19 (1) (g). Nor has it been shown how Article 31 of the Constitution may be invoked to prevent cancellation of a contract in exercise of powers conferred by one of the terms of the contract itself.

10. The next decision of the Supreme Court is Railway Board, New Delhi and Anr. v. Mranjan Singh : (1969)IILLJ743SC . There the Railway employees claimed a right to hold meetings and use the premises belonging to the Railway. They contended that the direction issued by the General Manager against holding of any such meeting violated Article 19 (1) (a), (b) and (c) of the Constitution of India. Dealing with that contention, the Supreme Court pointed out:

It was not disputed that the Northern Railway is the owner of the premises in question. The fact that the Indian Railways are State undertakings does not affect their right to enjoy their properties in the same manner as any private individual may do subject only to such restrictions as the law or the usage may place on them. Hence unless it is shown that either under law or because of some usage the railway servants have a right to hold their meetings in railway premises, we see no basis for objecting to the direction given by the General Manager. There is no fundamental right for any one to hold meetings in Government premises. If it is otherwise there is bound to be chaos in our offices. The fact that those who work in a public office can go there does not confer on them the right of holding a meeting at that office even if it be the most convenient place to do so.

It is true that the freedoms guaranteed under our Constitution are very valuable freedoms and this Court would resist abridging the ambit of those freedoms except to the extent permitted by the Constitution. The fact that the citizens of this country have freedom of speech, freedom to assemble peaceably and freedom to form associations or unions does not mean that they can exercise those freedoms in whatever place they please. The exercise of those freedoms will c( me to an end as soon as the right of someone else to hold his property intervenes. Such a limitation is inherent in the exercise of those rights. The validity of that limitation is not to be judged by the tests prescribed by sub-Articles (2) and (3) of Article 19.

11. There is yet another judgment of this Court dealing with tenders invited by the District Board, Coimbatore. That decision is Damodaroswamy Naidu v. President of District Board, Coimbatore and Anr. : AIR1957Mad149 The point that was urged in that case was that the acceptance of tender of another person was in breach of Rules 9 and 10 of the Rules for Tenders and Contracts framed by the Government under Section 199 (2) (') of the Madras District Boards Act, 1920. This Court held that the petitioner therein had no right to approach this Court invoking the jurisdiction of Article 226, because no right of the petitioner could be said to have been affected by the acceptance of the tender of another person. This Court elaborately considered the question and referred to the following observations of Street on Governmental Liability, 1953 Edn., at page 97:.the provisions are for the benefit of the United States as a whole rather than of the bidder, and they are designed to prevent fraud.

Thereafter, this Court referred to the decision in Perkins v. Lukens Steel Co. (1940) 84 Law Ed. 1108, and extracted the following passages:

Like private individuals and businesses, the Government enjoys the unrestricted power to produce its own supplies, to determine those with whom it will deal, and to fix the terms and conditions upon which it will make needed purchases. Acting through its agents as it must of necessity, the Government may for the purpose of keeping its own house in order lay down guide posts by which its agents are to proceed in the procurement of supplies, and which created duties to the Government alone.

It has done so in the Public Contracts Act. That Act does not depart from but instead embodies the traditional principle of leaving purchases necessary to the operation of our Government to administration by the executive branch of Government with adequate range of discretion free from vexatious and dilatory restraints...It was not intended to be a bestowal of litigable rights upon those desirous of selling to the Government ; it is a self-imposed restraint for violation of which the Government but not private litigants can complain..... prospective bidders for contracts derive no enforceable rights against the agent for an erroneous interpretation of the principal's authorisation. For erroneous construction of his instructions, given for the solid benefit of the principal, the agent is responsible to his principal alone because his misconstruction violates no duty he owes to any but his principal.

The Secretary's responsibility is to superior executive and legislative authority. Respondents have no standing in Court to enforce that responsibility or to represent the public's interest in the Secretary's compliance with the Act. That respondents sought to vindicate such a public right or interest is made apparent both by their prayer that the determination be suspended as to the entire steel industry and by the extent of the injunction granted....

Our decision that the complaining companies lack standing to sue does not rest upon a mere formality. We rest it upon reasons deeply rooted in the constitutional divisions of authority in our system of Government and the impropriety of judicial interpretations of law at the instance of those who show no more than a mere possible injury to the public.

12. The above decisions make it clear that the Government can own property, deal with it and dispose it of in any manner it pleases, just like any other private citizen and equally it can enter into contracts with others for obtaining its requirements and necessaries and for disposing of its property and possessions. In the exercise of such rights, the Government does not stand in a position different from that of any other private citizen and therefore no citizen can have or claim any enforceable or fundamental right with reference to such exercise by the Government of its rights, since admittedly he has no such a right with reference to a similar exercise by a private citizen.

13. As far as the present case is concerned, condition No. 5 of the auction notice itself states that the sale is subject to confirmation by the District Forest Officer, Nilgiris South Division, Ootacamand or the Conservator of Forests, Coimbatore Circle, Coimbatore, as the case may be, and the right to accept or reject any bid without assigning any reason is reserved. It is only with reference to this condition as well as condition No. 25 the petitioner can bid and has actually bid in one case. If that is so, I am unable to see what vested or enforceable right of the petitioner can be said to have been affected by the presence of condition No. 25, subject to which alone the petitioner bid and purchased the property in question.

14. Article 298 of the Constitution of India states that the executive power of the Union and of each State shall extend of the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose. There are two provisos to this Article, but they are not relevant for the purpose of this case. All that is relevant for the purpose of the present case is to note that this Article contemplates the executive power of the State extending to the acquisition, holding and disposal of property. If so, in the absence of any other provision restricting this power of acquisition, holding and disposal of property, the petitioner cannot contend that its fundamental right to purchase the property of the Government on its own terms is affected and that the imposition of condition No. 25 violates Article 301 of the Constitution of India.

15. Now, I shall refer to the decisions on which reliance was placed on behalf of the petitioner. I have already referred to the fact that Mr. K.K. Venugopal himself admitted that there was no direct decision dealing with Government property with reference to which it has been held that Article 301 or Article 19 (1) (g) has been violated. The first decision to which my attention was drawn is that of the Supreme Court in State of Mysore v. H. Sanjeeviah : 1967CriLJ1215 . In that case, in exercise of the powers conferred on the State Government by Section 37 (1) of the Mysore Forest Act, 1900, the Government had made certain rules and those rules contained two provisions enacted on two different occasions. One proviso was:

Provided that no such permit shall? authorise any person to transport forest produce between sun-set and, sun-rise in any of the areas specified in Schedule 'A'. The Second Proviso was:

Provided further that permission may be granted to timber merchants on their requisition to transport timber up to 10 p.m. (22 hrs.) under the following conditions:

(i) the party who wishes to avail of the concessions should pay a cash deposit of Rs. 1,000 as security for due compliance with the timber transit rules as in force.

(ii) that the deposit may be forfeited' to Government for breach of any of the conditions of the Timber Transit Rules.

The Supreme Court struck down these two provisos on two independent grounds. The first was that under Section 37 (1) the Government have power to make rules to regulate transit of forest produce but the provisos referred to above are not regulatory in character, bat restrictive, and prohibitive in character and that therefore they went beyond the power of the Government to make rules under Section 37. The second ground was that the provisos offended Article 301 itself. In my opinion, that decision has no-relevancy to the facts of the present case for the simple reason that that case dealt with the right of transport of every forest produce irrespective of to whom it belonged and how it was acquired by the person who wanted to transport the same. Consequently, trade in timber produce itself was generally affected. In view of this, that decision does not throw any light on the controversy raised in this case.

16. The next decision relied on by the learned Counsel for the petitioner is also that of the Supreme Court in the District Collector of Hyderabad and Ors. v. Ibrahim and Co., etc. : [1970]3SCR498 , and it dealt with the case of grant of monopoly by the State Government to the Greater Hyderabad Consumers Central Co-operative Stores Ltd ., Hyderabad, for distribution of sugar quota in the twin cities of Hyderabad and Secunderabad. The Supreme Court held that such executive power went beyond the statutory orders in that behalf and therefore such instructions were not valid. In that context reference was made to Article 301 of the Constitution of India also. In my opinion, this decision is also not of any avail for the simple reason that the sugar quota that was allotted was not the absolute property of the Government, but that was one obtained from the manufacturers of sugar on the basis of certain statutory provisions and statutory rights.

17. The next decision on which strong reliance was placed by Mr. K. K. Venugopal, and which, according to him, is the nearest he can think of, as far as the present case is concerned, is that of the Supreme Court in Rasbihari Panda etc. v. State of Orissa : [1969]3SCR374 . That case dealt with the construction of Section 10 of the Orissa Kendu Leaves (Control of Trade) Act, 1961. In that case what came up for consideration before the Court was the action of the Government with regard to the sale of Kendu leaves in which the State had the monopoly, under the very Act itself. The Government in that case decided to invite offers for advance purchase of Kendu leaves only from persons who purchased these leaves from individual units during the previous year and who acted as purchasers without default and to the satisfaction of Government and the method of sale by open competition was given up. It was this action which was adopted by the Government which was held illegal by the Supreme Court. The Supreme Court stated in paragraph 15 of its judgment:

Section 10 of the Act is a counter-part of Section 3 and authorises the Government to sell or otherwise dispose of Kendu leaves in such manner as the Government may direct. If the monopoly of purchasing Kendu leaves by Section 3 is valid, in so far as it is intended to be administered only for the benefit of the State, the sale or disposal of Kendu leaves by the Government must also be in the public interest and not to serve the private interests of any person or class of persons. It is true that it is for the Government having regard to all the circumstances, to act as a prudent businessman would, and to sell or otherwise dispose of Kendu leaves purchased under the monopoly acquired under Section 3, but the profit resulting from the sale must be for the public benefit and not for private gain. Section 11 which provides that out of the net profits derived by the Government from the trade in Kendu leaves an amount not less than one half is to be paid to the Samitis and Grama Panchayats emphasises the concept that the machinery of sale or disposal of Kendu leaves must also be geared to serve the public interest. If the scheme of disposal creates a class of middlemen who would purchase from the Government Kendu leaves at concessional rates and would earn large profits disproportionate to the nature of the service rendered or duty performed by them, it cannot claim the protection of Article 19 (6) (ii).

18. Thus, it will be seen that the right of the Government to sell Kendu leaves under Section 10 was correlated to the right of monopoly which was acquired under Section 3 to purchase Kendu leaves and the Supreme Court held that just like monopoly of purchase was to serve public interest, the sale must also be to serve public interest. In my opinion, this decision also does not help the petitioner from' two points of view. In the first place, this decision does not deal with a case where independent of any statute, the Government are the owners of the properties, and enjoy the same absolutely just like any other person. Secondly, it has not dealt with Article 301 of the Constitution of India, at all, but has dealt with Article 19 and therefore that has no bearing on the question in issue, as far as the present case is concerned.

19. Having regard to certain observations made in the above judgment, Mr. Venugopal contended that the action of respondents 1 to 4 in permitting the removal of the bluegum wood from the Nilgiris District only for the benefit of Viscose is for the benefit of a private individual or a company and it is not for the benefit of the State Exchequer and therefore the action of the Government is not that of a prudent businessman, as pointed out by the Supreme Court. In my opinion, this contention ignores several facts in the present case. The counter-affidavit filed on behalf of Viscose clearly points out that it requires for its uninterrupted work of the factory areas in the region of about 2400 acres, every acre yielding 25 tons bone dry or 40 tons air dry bluegum and that over and above what it obtained by way of allotment from the Government it had been purchasing bluegum from others also and that in 1973 it had purchased to the extent of nearly 60,000 tons. As a matter of fact, that Viscose is purchasing bluegum over and above that it obtairs from the acres allotted to it by the Government is admitted by the petitioner itself, when the petitioner contends that the contractors who are supplying to Viscose alone are permitted to take timber from the Nilghib District. In para. 4 of the counter-affidavit filed by Viscose, it is stated that Viscose is the only producer of rayon yarn and staple fibre in the State of Tamil Nadu, that its total fixed assets according to its balance-sheet as at 31st December, 1973 is Rs. 16,23,14,129 ; that the value of the fixed assets of its pulp plant is Rs. 8,32,95,334 and that it employs a labour force of we 11 over 2,000 persons. As already pointed out, the petitioner has contended in para. 5 of the affidavits filed in support of the writ petitions that the current purchase price of the Viscose is Rs. 98 50 per ton while the price of Gwalior Kayons Ltd., offered at Mettupalayam is Rs. 92.75 per ton. From this, it is clear that even if a person like the petitioner is permitted to remove bluegum from the Nilgiris District for the purpose of selling the same to M/s. Gwalior Rayons Ltd., at Mettupalayam, the price being not higher than that offered by Viscose, there is no question of a person like the petitioner bidding for a higher amount at the auction. Apart from this, assuming that the restriction was not present and if an auction was held without such a restriction, the Government were likely, to get more money, it was for the Government to decide whether they should prefer to get a few more rupees by way of removing the restriction or prefer to see that the only industry in the State manufacturing this particular product is not starved and over 2,000 workers who are employed therein are not thrown out of employment. This is a balancing consideration which the State alone will have to take into account and there cannot be an invariable and inflexible rule that in every case, where there is a possibility of getting more money to the State exchequer, the Government should follow that course only and no other course, whatever the other considerations may be.

20. Apart from this general consideration, the counter-affidavit filed on behalf of the Government also points out that there were several persons who bid at the auction and who were not contractors for supplying bluegum to Viscose. In para. 6 of the counter-affidavit filed on behalf of the Government in W.P. No. 2086 of 1974, it is pointed out that at the auction held on 21st June, 1974, 12 units of fuel coupes were sold and that out of the same one unit only was taken by the contractors who have undertaken to supply bluegum to Viscose and all the other 11 units were taken by other persons who have nothing to do with the supply to Viscose. Thus, the very contention of the petitioner that those persons who entered into contracts with Viscose for supply of bluegum stand on a better footing for the purpose of making offers at the auctions, while others do not have that advantage is belied by what had happened at the auction held on 21st June, 1974. Having regard to all these circumstances, I am clearly of the opinion that the argument of the learned Counsel for the petitioner based upon Article 301 as well as Article 19 (1) (g) of the Constitution of India fails and even the argument based upon the decision of the Supreme Court in Rasbihari Panda etc. v. State of Orissa : [1969]3SCR374 , wherein it was pointed out that the Government will have to act as a prudent businessman will not help the petitioner having regard to the facts of the present case, as explained by me already.

21. Then, there remains the last argument based upon Article 14 of the Constitution of India. I have already referred to the judgment of this Court in C. V. Rojagopalachari v. State of Madras, represented by Secretary to Government, Public Works Department, Madras C.M.P. No. 6187 of l951, dated 6th September, 1951, wherein it was held that the Government had a right to let their property to anybody they pleased and there was no question of violation of Article 14 of the Constitution of India. In this particular case also, the entire thing is in the region of contract. I have already referred to the fact that the notice calling for tenders is an invitation and tender is an offer and after the acceptance of the offer, a regular written contract is entered into between the parties. Therefore, indisputably, the whole transaction is in the region of contract and it cannot be held that Article 14 of the Constitution of India has any application to such a case. Even assuming that Article 14 can have application, I am clearly of the opinion that the classification as between the timber to be supplied to Viscose and other timber is a valid classification. As I have pointed out already, Viscose is the only factory in Tamil Nadu which is manufacturing this rayon yarn and the essential raw material for that manufacture is the bluegum. Therefore, in order to see that that industry is not starved and the persons working therein are not thrown out of employment, if the Government make an exemption in favour of the supply of bluegum to that industry, that will satisfy the requirement of classification on a reasonable basis, having nexus to the object sought to be achieved. Therefore, the argument of the learned Counsel for the petitioner, based upon Article 14 of the Constitution of India also fails.

22. There is only one matter to which I must draw attention. As I have pointed out already, there is a memorandum of the Government, dated 7th June, 1966 as well as an order of the Government dated 26th October, 1966. The learned Counsel points out that the very object of imposing restriction, as can be gathered from the memorandum, is to conserve bluegum for the civil population to be used as firewood. In the subsequent Government order, the Government had. taken a decision that bluegum need not be used, as firewood and. that it was enough if the debarked wattle wood was made available to the public for use as firewood. The argument is that once the Governments had taken that decision, the need for imposing a restriction against removal of the bluegum wood out of the Nilgiris District disappeared and therefore the condition in question need not have been continued. There are two answers to this submission. One is, the very same Government order which referred to the debarked wattle wood being made avail-able to the public as firewood instead of bluegum also provided for the continuation of the restriction already imposed. Secondly, the counter-affidavit filed on behalf of the Government has pointed out that the decision taken by the Government that the debarked wattle wood alone may be made available to the public for use as firewood has not yet been implemented. In view of these two factors, there is no substance in this contention of the learned Counsel for the petitioner.

23. There was some argument about the Timber Transit Rules. But I do not consider it necessary to refer to the same for the simple reason that the prayers in these writ petitions are only with reference to condition No. 25 in the auction notice and not with reference to anything contained in the Timber Transit Rules.

24. No other point was urged before me. Under these circumstances, all the four writ petitions fail and are dismissed. There will be no order as' to costs.


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