I.K. Kotwal, J.
1. By means of this writ petition, the petitioners seek to challenge two Govt. Orders viz.: Govt. Order No. FST/15 of 1982 dated 29-1-1982 and Govt. Order no. FST/22 of 1982 dated 6-3-1982. These orders read as below:
'Government Order No. : FST/15 of 1982
dated 29th Jan., 1982
In supersession of all previous orders relating to grant of extension(s) to the forest leases, it is hereby ordered that henceforth no such extension whatsoever will be granted and powers already delegated in this behalf at various levels may be deemed to have been withdrawn. In special cases, however, where extension is justified by natural calamities, the cases should be submitted by the Chief Conservator of Forests through the Minister In charge Forests to the Cabinet for orders in individual cases.
By order of the Govt. of Jammu and Kashmir.
(Sd.) J.P. Kesar,
Secretary to Government,.. Forest Department.'
'Govt. Order No. : 22-FST of 1983
dated 6th March, 1982
In supersession of all previous orders relating to the grant of extension(s) to the forest lessees, henceforth no such extension whatsoever will be granted and powers already delegated in this behalf at various levels, may be deemed to have been with drawn. However, in respect of leases where period has already expired or will expire between December, 1981 to June 1982, extension of such leases, till end of December, 1982 is granted subject to the following conditions :--
(a) period, of extensions shall be fill end ofDecember, 1982, in reject of both Clauses (11)and (12).
(b) The lessees shall clear all royalty andinterest outstandings by end of June 1983 inaccordance with such time schedule as shallbe prescribed in this behalf by the Chief Conservator of Forests.
(c) No rebate on instalments shall be given on any payment made against deferred payments nor any such payments against deferred instalments will be considered as advance payments for grant of incentive rebate, even if such payments are made three months or more in advance.
(d) the lessees shall execute a supplementary agreement, as may be prescribed bythe Govt. for grant of extension till end ofDecember, 1982.
(e) All other terms and conditions, laiddown in the original and supplementaryagreements, shall be binding on the lessees.Surcharge if any payable, will be levied inaccordance with the prevailing practice.
By order of Govt. of Jammu and Kashmir
(Sd.) J.P. Kesar
Secretary to Government,
2. Put briefly, their case is that they are forest lessees and have been carrying on the business of extracting marked timber from demarcated forests in the State of Jammu and Kashmir for the last several decades. After the year 1940, the Government started the system of granting leases by inviting tenders, so that the lease could be sold for a maximum price. The period of extraction was restricted to summer months between June and November; but no Such restriction was placed on launching and floating of the timber extracted, as it could be floated through rivers, particularly Chenab and Jhelum, to be collected at various points downstream. In the wake of the partition of the country in the year 1947, however, the launching and floating of the timber at various places in the State of Jammu and Kashmir was restricted to the months of October, November and December, to obviate the risk of its being washed down to Pakistan on account of the apprehended rise in the water level of the aforesaid two rivers due to seasonal rains, floods and melting of snow after the month of March. Whereas before the year 1947, the leases were a few labour was available in plenty. The lessees did not experience .any difficulty in performing the contracts within the stipulated period. After 1947, however, the number of teases increased manifold, whereas the labour became less available due to developmental works started by the Government in rural areas, which tended to provide additional employment and opportunities of work to the labour class, comparatively much nearer, to the house of the workers. Extensions in the contract period were freely granted by the Government in early fifties, notwithstanding the fact that there was no such stipulation in the contract of lease. From 1953 onwards, granting of extension under Clauses 11 and 12 of the lease agreement was given a contractual recognition, and Clause 43 was added to the ease agreement which read as under :
'43. Extensions cannot be claimed as a matter of right but the CCF may grant extensions in the working periods mentioned in Clauses 4, 11 and 12 at his discretion on payment of suitable charge and such other conditions as he may like to impose on the lessee(s) '
3. This stale of affairs continued till 1961. In 1962, however, the Government by virtue of Govt. Order No. FST/7 of 1962 D/- 17-3-1962, amended Clause 43 and restricted the right of the Chief Conservator of Forests, for short CCF, to grant extension for one working season only, leaving grant of further extension to the Government itself: This clause after its amendment read as under:
'Extension of time in the working periods cannot be claimed as a matter of right, but the Chief Conservator of Forests may grant such extensions for one working session in the periods mentioned in Clauses 11 and 12 on payment of sufficient penalty specified by him or on such other conditions as he may think fit to impose in writing on the lessee/ lessees. Further extension will be for the Govt. to grant.'
4. By another order, viz. Govt. Order No.
FST/8 of 1962 dated 5-9-1962, the first three extensions were conditional on the payment of surcharge at the rate of 1%, 2% and 3% for the first, second and third extensions respectively. This policy was later on revised by the Government and a decision to that effect was taken by virtue of Govt. Order No. FST/77 of 1964 dated 27-3-1964, to do away with more than one year's extension. Clause (d) of the aforesaid order which dealt with this aspect read as under:
'(d) grant of extensions in leases may be stopped forthwith but such extension to the extent of one year may be granted only in cases where work has been held up for factors beyond the control of lessees. The CCF will be for the present the authority to grant such extensions in timber teases who shall impose suitable penalties in relation to the work held up. This partially modifies Govt. Order No. FST/88/62 of 1962 dated 5-9-1962. The CCF should also penalise heavily sluggish workers even taking back the forests and terminating the leases if any lessee does not or cannot conduct work in accordance with the terms of the agreement'
5. This policy underwent a further change and another Govt Older viz : FST/66/65 of 1965 came to be passed on 18-6-1965, which read as under :
'Govt. Order No. FST/66/65 of 1965
In partial modification of Govt. Order No. FST/77/64 dated 23-7-1964, it is ordered that the powers of granting extensions in the case of timber leases be exercised as follows:--
A. (i) Short term extensions up to 3 months may be given by the CCF discretion on such terms to be stated in writing that he considers suitable.
Note:--In computing the period of three months of loan, the months of Jan. to Mar. inclusive shall not be counted except in the ease of chit arid bamboo forests.
B. (i) Extensions for periods exceeding three months: Above 3 months but within one year, 1% of the royalty to be charged as outstanding on the date when the extension period commences in respect of the lease for which the extension is granted.
(ii) above one year and below two years 2% of the royalty to be charged as outstanding on the date when the extension period commence in respect of the lease for which the extension is granted.
(iii) above two years and below three years 3% of the royalty to be charged, as outstanding on the date when the extension period commences, in respect of the lease for which the extension is granted.
The above powers will be subject to conditions that where no royally is outstanding, the CCF may permit extension on such conditions to be recorded in writing as he considers appropriate in the circumstances of the lease. It is further ordered that :--
(i) Any extension proposed beyond theperiod of three years shall be referred toGovt for orders.
(ii) the CCF may in the case of the above extensions impose any other conditions which he considers suitable to the lease in question.
(iii) the above delegation will apply to all pending cases, on which decision has not been made on the date of orders.
By order of the Govt. of Jammu and Kashmir.'
6. By means of its subsequent order, viz. Govt. Order No. FST/121 dated 5-8-1968, the Government reverted back to its original policy of granting three regular extensions by the CCF, concomitantly enhancing the rate of surcharge to 2%, 3% and 5% for the first, second and the third extensions respectively, and modified Govt. order dated 18-6-1965 to that extent by inserting Clause (iv) in it, which read as under:
'(iv) Govt. Order No. FST/66/65 of 1965 dated 18-6-1965 be modified to the extent indicated below in respect of levy of surcharge of grant of extensions :--
1. 1st extension ... 2%2. 2nd extension ... 3%3. 3rd extension ... 5%By order of the Govt. of Jammu and Kashmir.'
7. In December 1968, the system of inviting sealed tenders was replaced by the system of open auctions and note (ii) was added to Clause 12 of the auction notice, which was issued for holding open auctions in December 1968. It read as under :--
'The period of extension and penalty therefor, chargeable shall be determined by the Chief Conservator of Forests in accordance with the Government orders in force at the time of granting such extensions.'
8. The bidders raised objection to this note, which left granting of extension and charging of penalty to the arbitrary decision of the Government, and pointed out to it that unless both these matters were determined to their satisfaction till at the most the execution of the contract agreement, they would not be in a position to make a workable offer. This grievance of theirs was met with favour by a High Power Committee constituted for the purpose, which eventually substituted note (ii) by another note which read as under :--
'The period of extensions and penalty therefor chargeable shall be determined by the Chief Conservator, of Forests in accordance with the Govt. Orders in force at present.'
9. The aforesaid decision taken by the Committee was also conveyed to the Government by the CCF vide his M. O. No. 7444-45-CCF-78/C dated 19-12-1968.
10. The Government later on restricted the right of the CCF to grant extensions to a maximum period of three years, or to the period fixed by the original lease, whichever was less, by issuing Order No. 350-Agri of 1970 dated 16-5-1980, which read as under:
'Govt. Order No. 350-Agri of 1970
In partial modification of Govt. Order No. FST/66/65 of 1965 dated 18-6-1965, it is hereby ordered that the extensions granted by the Chief Conservator of Forests shall be limited to three years or to the period of the original lease, whichever is less.
By order of the Govt, of Jammu and Kashmir.
(Sd.) R. C. Bhargava
Secretary to Government.'
11. Apart from the fact that this order was discriminatory in character, even the CCF did not consider it conducive to the working of the leases and conveyed his disapproval to the Secretary to Government, Forest Department, by means of his letter dated 19-10-1970, which contained the following observations :
'Extensions in the working periods are granted only after it is established that a lessee has not been able to complete his operations within the stipulated periods, due to some sound reasons and by empowering the CCF to sanction extensions to a limit of three in particular lease, the Govt. had recognised the difficulties that would otherwise be faced by the lessees by way of dislocation of their work by adopting the procedure of referring extensions to Govt. where 2nd extension in the case of one year lease and 3rd extension in case of two years lease is involved. The aspect of Forest working was again examined in great detail in 67-68 by Sehgal Committee and it recommended which Govt. accepted that the rate of surcharge of extension should be enhanced from 1, 2, 3% to 2, 3 and 5%. There is, therefore, no reasons now again to modify the procedure.'
12. The stand taken by the CCF stood vindicated, as in the meeting held on 26-5-1972 by the Forest Minister with forest lessees of Kashmir Province, order D/- 16-5-1970 was virtually withdrawn, even though granting of piecemeal extension by the CCF was looking upon with disfavour. The minutes of the aforesaid meeting read as under :
'In the matter of grant of extensions it was decided that at the time of grant of the first extension, the CCF should consider the total period which would be required for the finalization of the lease. The extension should be given for the totality of such a period, instead of the present practice of granting year to year extensions. Where work could not be completed within the three extensions, which the CCF sanctions, but it was considered that further extensions justifiable, the CCF would refer the case to the Govt. without giving extensions himself. It was also decided that applications for extension by the lessee would be made by lessee not less than six months before the expiry of the lease, and the CCF would communicate the final decision before the expiry of the lease.'
13. Extensions up to three years by the CCF, and beyond three years by the Government on payment of the stipulated surcharge, were being granted till recently pursuant to the declared policy of the Government. It was due to this assurance that the petitioners obtained fresh leases from the Government, some of which expired in Dec., 1981, and some of which were to expire in June 1982 i. e. after the writ petition came to be filed. Being assured that they would get extensions in case they were not able to finish the work within the period fixed by the contract for reasons beyond their control, the petitioners altered their position by investing crores of rupees in the business in the form of advances to labour, preservance of subsidised food stocks for the labour and installation of machinery etc., which, but for the said assurance they would not have done. Their work in the forests was thorough, earnest and diligent, which is evident from the fact that no notice was ever served upon them in terms of Clause 15 of the lease agreement, which empowered the CCF to terminate their contracts by serving upon them a pre-warning notice. Even the royalty that is still recoverable from them is only a small fraction of the value of the timber, extracted or unextracted, which they could not remove from their forests due to reasons beyond their control.
14. Not only that, while the work in their respective forests was still in progress, heavy damage was caused to the forests adjoining their lease compartments on account of unprecedented snow-fall in the months of February and March, 1979. They were approached by the Government to first of all salvage this damaged material in the interest of the State exchequer, with a further assurance that the time that they shall take in these operations, would be added to the period of their principal leases. This was vividly reflected, among others, in two clauses of the supplementary agreement for the purpose, which read as under:
'Whereas, parties hereto further hereby agree to suitably amend the PRINCIPAL AGREEMENT IN RESPECT OF working period under Clauses 11 and 12 thereof, and of the rephasing of the royalty instalment payment schedule therein, as a consequence of the inclusion of the price fixed, as aforesaid of the damage to be salvaged by virtue of these presents, and to the fixing of additional (supplementary) security and sinking and Development funds, amounts at the percentage agreed to in the PRINCIPAL AGREEMENT AND DEPOSITING THEREOF BY THE LESSEE(S) in the manner as already provided therein; and to the phasing of the mode of handing over of the salvage compartments to the LESSEE(S) BY THE LESSOR, as hereinafter provided.
(ii) That the parties hereto know and Understand that the current lease coupe under PRINCIPAL AGREEMENT has been enlarged by these presents only to carry out and complete (on exceptional grounds as afore-described) the salvage operations of the damaged SILVA, only marked and listed in the Schedule (appearing hereunder or annexed herewith) within ... ... ... years stipulated hereby, and reflected in the prescribed extension Agreement executed by the parties hereto, and accordingly incorporated by adding amendment slips in the principal agreement (Extension of time granted to be in proportion with the salvage requirements).'
15. Working period of a lease would be normally fixed according to the formula as to how many years would be required to extract all the timber from a forest, if 1,00,000 cft. of it were to be extracted in a year. But, this yard-stick could not be applied to salvage operations due to a variety of reasons, e.g. scattered position of the trees in the snow damaged forests, and absence of the possibility of employing mechanized means of extraction and transportation for it. The petitioners gave first preference to the salvage operation and diverted all their means to it, leaving the working in their principal leases suspended, which in the absence of these assurances and commitments, they would not have done at all, much less, when the margin of profit in their principal leases was comparatively much high, and the salvage work which they had undertaken to do was to be done on no profit no loss basis. The salvage work, which commenced in July 1979, is yet continuing, which entitles the petitioners to add at least three years period to their principal leases, but the Government arbitrarily and unrealistically extended the period of this work up to the end of December 1982 only by means of Govt. Order No. FST/16 dated 11-2-1982, which read as under :
'Govt. Order No. FST/16 of 1982
dated 11th Feb., 1982
In partial modification of the; GovernmentOrder No. 130-FST of 1980 dated 18-9-1980based on Cabinet decision No. 340 dated 5thAugust 1980 it is hereby ordered that theperiod of extraction of snow fallen materialincluding half broken and dry trees in respect of fresh cases received in the ForestDepartment till end of January 1982, will beending December, 1982 for extraction andtransportation of the stuff.
By order of the Government of Jammuand Kashmir.
(Sd.) J. P. Kesar
Secretary to Government,
16. In the meanwhile, the work in the principal leases too had been brought to a grinding halt due to Kishtwar agitation in which on the Government's own showing, timber worth rupees twenty five crores had been put in the risk of being washed down to Pakistan, due to the delay caused by the said agitation in its launching and floating. Keeping in view the unprecedented snow-fall in the months of February and March, 1979, heavy monsoon rains in 1979, early snow-fall in October 1979, shortage of diesel due to imposition of a ban on its storage by the Government in July 1979, and overall shortage of food grains in the State, the Government had promised to give one year's general extension in the current leases held by the petitioners between 1-1-1979 and 31-12-1980, but it fell back upon this promise as well. On these averments, the petitioners have assailed the impugned orders on the grounds : firstly, that they tend to violate the assurances held out to them by the Government that three years extension by the CCF, and beyond three years by the Government, shall be granted to them, acting whereupon, the petitioners have altered their position to their detriment, secondly, that they were entitled to claim extensions not only because they could not finish their work within the stipulated period due to reasons beyond their control, but also, because they were assured general extension of one year in respect of all such leases as were subsisting between 1-1-1979 and 31-12-1980, and could haye .further added, the period that they, spent on salvage operations to the period of their principal leases, and thirdly, that the impugned orders were confiscatory in natureand violated Articles 14, 19 and 31 of the Constitution.
17. While not denying the various Government orders, the excerpts in the letters written by various Govt. Officers, and the clauses in the tender notices and the lease agreements reproduced heretofore, the respondents have still resisted the writ petition on a number of grounds, factual as well as legal. In short, their case is that with a view to ameliorating the condition of poverty striken masses in the State of Jammu and Kashmir, a decision was taken by the Government a decade back to nationalise the exploitation of forests, as that would eliminate the middle-men, namely, forest lessees, and thereby increase the State revenue. This 'policy' remained under constant review. Finally, a decision was taken in September 1977 to nationalise the exploitation by 1982 so far as Kashmir Province was concerned, and. by 1984 so far as Jammu Province was concerned. The Government took various steps in this direction, e. g., complete stoppage of felling of chir trees to provide resin for the resin industry, refusal to grant fresh leases and setting up of the State Forest Corporation in the year 1979. It was with this Object in view that the Government decided not to grant extensions on any ground whatsoever. It was merely by way of a gesture of a good-will that it decided to extend the period of every lease till 31-12-1982, where it had either already expired, or was going to expire between December 1981 and June 1982. The Govt. has also taken various measures to protect and improve the forests. Exploitation work was never restricted to summer months and it has been going on round the year. The restriction of which the petitioners speak, is a self imposed restriction, which is not evidenced by any Government order. With the improvement in the means of communication and transport after the year 1947, the task of exploitation of forests has been considerably facilitated and labour is also freely available. Extension, whether pursuant to a clause in the agreement, or even otherwise, could never be claimed by the petitioners as a right, and nor were the same granted as a matter of course, but they were granted by the Government in its discretion for exceptional reasons. Clause 43 as quoted by the petitioners cannot be correct, as they have not mentioned the year of the lease agreement in which it had been incorporated. Extension clause for the year 1958 and for the period between 1969 and 1972, however, read as under: 'Extension clause for the year 1958.
'Extension in the working periods cannot be claimed as a matter of right but the Chief Conservator of Forests may with the previous permission of the Minister in charge grant extension up to a maximum of one year in the periods mentioned in Clause 11 and Clause 12 on payment of a suitable charge and on such other conditions as he may think fit to impose on the purchaser(s).' Extension clauses for the year 1969 to 1972:--'Extension in the working period of forest leases under Clauses 11 and 12 of the lease agreement shall not be claimed as a matter of right but may be granted by the CCF in deserving cases on such terms and conditions as he may think fit to impose. The period of extension and penalty chargeable shall be determined by the CCF in accordance with the Government orders in force at the time of granting such extensions.'
18. For the auctions held in December1968, no doubt the High Power Committeehad recommended recasting of Sub-clause (i)of Clause 12 of the tender notice, but theamended Sub-clause (ii) was not given anyeffect nor was it incorporated in thelease agreement It is true that the CCF hadraised certain contentions in regard to Govt.Order No. 350/Agri dated 16-5-1970, butthat did not mean that the Govt. had acknowledged the right of the lessees to claimthree extensions of one year each from theCCF, The CCF was no doubt authorised togrant extensions up to three years, but, hewas obliged to grant the same only once, according to the facts and circumstances of aparticular case, and not piecemeal. Grant ofextension was not a 'rule but merely an exception, which would be reflected even byClause 12 (2) of the lease agreement whichread:
'Time is the essence of this agreement and extension in the working period of forest lease under Clause (1) shall not be claimed as a matter of right but may be granted in deserving cases in accordance with the Government order on the subject in force from time to time including furnishing of additional security by way of Bank guarantee or shortage of property. All such extensions will be covered by supplementary agreement.' It was wrong to say that extensions when claimed by the lessees were never refused by the Govt. They were refused in a number of cases. Even sub-para (iii) of para 13 of the tender notice on the basis whereof the petitioners have participated in the auctions did not create any right in them to claim extensions, but it merely said :
'(iii) Extension in the working period of the forest lease under Clauses 11 and 12 of the agreement deed shall not be claimed as a matter of right but it may be granted in deserving, cases in accordance with the Govt. orders on the subject, in force from time to time including furnishing of additional security by way of Bank guarantee or mortgage of property. All such extensions shall be covered by supplementary agreements which can be seen in the office of the respective circles.'
Rights and liabilities of the parties to a contract in terms of Section 91, Evidence Act, are to be governed by the written terms of the contract, and no oral evidence can be led to show that they are different from the ones mentioned in it. The petitioners had to complete their work within the period fixed by the lease agreements, because time was the essence of the contract. They could not be heard to say that the same was different from the one mentioned in the agreement. The petitioners, who on their own showing, are in arrears of royalty, cannot claim extension even on the strength of the case set up by them. It is not a fact that the petitioners were compelled by the Government to undertake the salvage work which according to them, they had undertaken to execute on no profit no loss basis. On the other hand, they had made frantic efforts to get this work allotted in their favour, as the same was highly lucrative. This would be amply borne out from the fact that some of them had even gone to litigation to achieve this object. It was never the intention of the Government that extraction of timber out of the snow damaged trees would be done at the cost of the principal leases. Time to complete the work of extraction and transportation of snow damaged trees was fixed by Govt. Order No, 130-FST of 1980, dated 18-9-1980 the relevant clause whereof read as under:
(iii) Extraction and transportation of snow damaged timber under Clauses 11 and 12 of the agreement shall be completed by end of December, 1981 (nineteen eighty one) at the latest,' Action taken by the CCF in handing over of the snow fallen trees in favour of the working lessee before the issue of this Govt order is also regularised.'
19. The impugned Govt. Order dated 6-3-1982, did not create a new obligation of executing supplementary agreement on obtaining extension. Such an obligation was there even before the aforesaid order came to be issued. Clause 12 of the agreement clearly spoke of such a requirement. Not only that, the petitioners had even executed such agreements long before 6-3-1982, and undertaken therein not to claim any further extension on any ground whatsoever. It is not a fact that Kishtwar agitation had interfered with tine petitioners' work. The Government had no doubt promised to give one year's general extension to all the lessees, but this promise stood fully redeemed when Govt. Order No. FST-22 of 1982 dated 6-3-1982 came to be issued, which extended the lease period in each case till 31-12-1982. Neither the rule of promissory estoppel is attracted to the petitioners' case, nor do the impugned orders tend to violate Articles 14, 19 and 31 of the Constitution. Rights and liabilities of the parties being governed by written contracts, no writ lies to enforce of avoid such rights amid liabilities.
20. The petitioners' remedy, if any, is to invoke Clauses 44 and 50 of the lease agreement, which provide for arbitration and not to invoke the extraordinary writ jurisdiction of this Court.
21. Before coming to the merits of the writ petition, it is necessary to dispose of the twofold objections raised to its maintainability that it is not competent firstly because it deals with contractual rights and obligations, and secondly because the lease agreement provides an alternative remedy of arbitration. The facts narrated so far speak of only three kinds of agreements viz. (i) principal agreement, (ii) supplementary agreement relating to snow-damaged trees; and (iii) supplementary agreement executed after the grant of extension. There is another type of agreement which the petitioners-lessees have during the pendency of the writ petition executed pursuant to Govt. Order No. 33-FST of 1982 dated 24-3-1982, which also for the sale of ready reference is extracted as below:
'Govt. Order Mo. 33F-FST of 1982
Sanction is accorded to the substitution of Clause 3 of the supplementary agreement (form of agreement of extension in the period of leases) forming Annexure 'B' to Govt. Order No. 57/FST of 1973 dated 17-3-1973 with the following:--
'Notwithstanding anything contained in the principal agreement, the lessee hereby binds himself to the term's of the Govt. Order No. FST-22 of 1982 dated 6-3-1982 and undertakes that no claim for any further extension ranker the aforesaid principal agreement shall be made by him. Any claim for further extension if available under the terms of the principal agreement shall be deemed as having been relinquished.'
By order of the Govt. of Jammu & Kashmir
Secretary to Government,
22. Relying upon the authority of the Supreme Court decision in Ms. Radhakrishna Agarwal v. State of Bihar. AIR 1977 SC 1496, it was urged by Mr. Salaria that provision for the grant of extensions having been made in the lease agreements themselves, no writ lay to enforce that provision even if the two Government orders impugned in the writ petition had the effect of taking away, or even abridging the benefit conferred upon the petitioners by the said provision. In my opinion, the contention raised by Mr. Salaria is not well founded. In Radhakrishna Agarwal's case (supra) a provision had been made in the lease agreement itself that the Government shall have a right to revise after every three years royally rates fixed by the lease agreement and to terminate the contract for breach of certain conditions. In exercise of its powers under that provision, the Gem. had enhanced the rate of royalty payable under the contract and the petitioner Radhakrishna Agarwal had challenged the aforesaid action of the Government by filing a writ petition in Patna High Court. An objection had been taken on behalf of the State that right to enhance the rate of royalty being traceable to the contract of lease itself, no writ lay to challenge the Govt. action. The Division Bench which heard and disposed of the writ petition placed all such cases in three categories: one, where the petitioner made a grievance of breads of a term of a contract which did not fulfil the requirement of Article 299 of the Constitution two, where the contract was a statutory contract and the State had committed a breach of its terms and conditions, in exercise of its statutory powers; and three, where there was no question of exercising any statutory power and the action of the Government was dearly referable to any term or condition of the contract itself which otherwise was a valid contract satisfying the requirement of Article 299. The Bench held that the writ petition was maintainable to challenge the Government action if the petitioner's case fell in any of the first two categories, but it was not maintainable if it was covered by the third category. It, accordingly, dismissed the writ petition, holding that the petitioner's case fell under the third category. In the appeal before the Supreme Court, their Lordships did not express any opinion, one way or the other, on on the first two categories, but dismissed the petitioner's appeal upholding the third category with these observations (at p. 1501):
'It rightly held that the cases such as Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718 and Century Spinning and . v. Ulhasnagar Municipal Council, AIR 1971 SC 1021 and Robertson v. Minister of Pensions, (1949) 1 KB 227 belong to the first category where it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities. The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only. We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now. It is enough to observe that the cases before us do not belong to this category.
The Patna High Court also distinguished eases which belong to the second category, such as K.N. Guruswamy v. State of Mysore, AIR 1954 SC 592; D. F. O. South Kheri v. Ram Sanehi Singh, AIR 1973 SC 205 and Shree Krishna Gyanoday Sugar Ltd. v. State of Bihar, AIR 1975 Pat 123, where the breach complained of was of a statutory obligation. It correctly pointed out that the cases before us do not belong to this class either.
It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved. It held, upon the strength of Umakant Saran v. State of Bihar, AIR 1973 SC 964, and Lekhraj Sathram Das v. N.M. Shah, AIR 1966 SC 334 and B. K. Sinha v. State of Bihar, AIR 1974 Pat 230 that no writ or order can issue under Article 226 of the Constitution in such cases 'to compel the authorities to remedy a breach of contract pure and simple'.'
23. I find considerable force in Mr. Sen's argument that the petitioners' case does not fell in the third category. I, however, refrain from expressing any opinion on his other contention that the impugned orders are referable to the statutory power of the Government to manage and control the demarcated forests conferred on it by Section 4, Forest Act. In none of the four types of lease agreements a provision is to be found that the Government shall have a right to stop granting extensions, or to vary their period unilaterally at any time after the execution of the lease agreement. Consequently, the respondents cannot be heard to say that whatever has been done by it is under the terms of the lease contract, and no writ lies to challenge its action. The dis-qualification created by virtue of category three in Radhakrishna Agarwal's case (AIR 1977 SC 1496) (supra) cannot, therefore, be attached to the petitioners, and it cannot be urged that the lease agreements axe a bar to the maintainability of the writ petition at the very threshold. What the petitioners are challenging in the writ petition is not the Govt. action based upon any terms of the contract or contracts between them and the State, but, they are challenging two independent executive fiats of the Government which, according to them, violate the promises and assurances held out to them by it, acting whereupon, they have already altered their position, much to their detriment.
24. The same is true of the other objection regarding arbitration clause. In fact Clause 50 alone of the principal agreement contains a provision for arbitration. This clause reads as under :--
'50. Except where otherwise provided in the agreement if any question, difference of of objection, whatsoever, shall arise in any way connected with or arising out of or touching this instrument or the meaning or operation of any part thereof or the rights, duties or liabilities of either party, shall be referred to arbitration by any officer of the Government of Jammu and Kashmir to be nominated by the Minister-In-charge Forest Department, Jammu and Kashmir Government, in accordance with me Arbitration Act in force in the State. There will be an objection to any such appointment that the arbitrator so appointed is a Government servant and the decision of the arbitrator appointed under this clause shall be final and binding on both the parties.'
25. On its plain language, the dispute to be referred to the arbitration under this clause must arise out of the terms of one agreement. The orders impugned in the writ petition are not a part of the agreement, but axe in fact dehors the same. It if these orders, in regard to which certain disputes have been raised in the writ petition. Clearly, therefore, Clause 50 has no application to these disputes. Both the preliminary objections, therefore, fail.
26. At this stage, it becomes necessary to dispose of the other contention raised on behalf of the respondents in regard to the applicability of Sections 91 and 92 of the Evidence Act to Clause 3 of the supplementary agreements, executed by the petitioners after obtaining extensions, both before and after the filing of the writ petition. This clause, before the writ petition came to be filed, read as under :
'3. That no further extension shall be granted to the lessee under any circumstances whatsoever.'
27. Then came Govt. Order No. 33-FST of 1982 dated 24-3-1982 reproduced heretofore, substituting Clause 3 with a new clause which was incorporated in the agreements executed by the petitioners pursuant to this order after the writ petitions came to be filed. The new clause read as under:
'3. Notwithstanding anything contained in the principal agreement, the lessee hereby binds himself to the terms of the Govt. Order No. FST-22 of 1982 dated 6-3-1982 and undertakes that no claim for any further extension under the aforesaid principal agreement shall be made by him. Any claim for further extension if available under the terms of the principal agreement shall be deemed as having been relinquished.'
28. Mr. Salaria's contention was that in both these agreements the petitioners having voluntarily given up their claim to further extensions, assuming though not admitting, that they could have claimed them under the principal agreement read with various Govt. Orders, no relief could still be given to them, because the terms and conditions of the contract of lease having been reduced to writing, it is the written contract which is the basis of those terms and conditions as provided by Section 91, and in view of the bar created by Section 92, no evidence can be led for the purpose of contradicting, varying, adding to, or subtracting from its terms.
29. Let me first take up the earlier agreement i. e. the one executed before Govt. Order No. 33-FST of 1982 came to be issued. Mr. Sen raised two contentions in reply to the argument advanced by Mr. Salaria. His first contention was that Clause 3 governed the supplementary agreement alone and not the principal agreement, under which three extensions could be granted by the CCF on payment of surcharge at the rate of 2%, 3% and 5% for the first, second and third extensions, as the case might be. Even thereafter, argued the learned counsel, the Government had the power to grant further extension. No further extension could, according to him, have been claimed under the supplementary agreement pursuant to Clause 3, but this clause did not debar the CCF from granting more than one extension to the lessee, if he otherwise found him entitled to the same. This was clearly borne out from the subsequent conduct of the parties, in that, extensions had been granted even after the execution of the aforesaid supplementary agreement This was further established by the fact that: the Government had to amend Clause 3 vide Govt. Order No. 33-FST of 1982. His second contention was that in any case all the petitioners had not executed similar supplementary agreements, and in respect of all the leases held by them. Consequently, they were not deprived of their right to claim extensions in respect of those leases for which they had not executed such agreements.
Clause 5 of the supplementary agreement read as under :
'5. This agreement is supplemental to the principal deed dated .. ... ... and the said principal deed, save as herein modified and this deed shall remain in full force and effect and binding on the parties.'
30. Apart from the various relevant Government orders and clauses in tender notices reproduced heretofore, even Sub-clause (2) of Clause 12 of the principal agreement speaks of extensions and not of one extension only. This sub-clause for the sake of ready reference is reproduced as below:
'(2) Time is the essence of this agreement and extension in the working period of forest lease under Clause (1) shall not be claimed as a matter of right but may be granted in deserving cases in accordance with the Govt. orders on the subject in force from time to time including furnishing of additional security by way of Bank guarantee or mortgage of property. All such shall be covered by supplementary agreements.
Surcharge leviable on extensions shall be 2%, 3% and 5% for first, second and third extensions respectively on the royalty out-standings at the time of grant of such extensions at that time.'
Under clause 5 of the supplementary agreement, this agreement and the principal agreement have to be read together to make a complete agreement between the parties. Whereas Clause 12 (2) of the principal agreement speaks of more than one extension, Clause 3 of the supplementary agreement speaks of only one extension. To this extent, therefore, Clause 3 is a little vague. Without making any reference to Clause 12 (2) of the principal agreement, it simply says that the lessee will be entitled to only that extension which has been granted under the said agreement, and to no more. What was, therefore, the intention of the parties in incorporating Clause 3, is not very much clear from the language of the clause, In other words, whether it related to extensions under the supplementary agreement itself or to extensions under a principal agreement, cannot be said with reasonable certainty. To the extent, whether the lessee who has executed the supplementary agreement is entitled to only one or more than one extension, there is an apparent conflict between Clause 3 of the supplementary agreement and Clause 12 (2) of the principal agreement. The principle is well settled that words used in a document need not be construed in their ordinary popular sense, where it is necessary to avoid any absurdity or inconsistency between the various provisions of the document. Both these agreements, it has been already observed, constitute a single agreement, for the supplementary agreement is not an independent agreement, but is only supplemental to the principal agreement
31. In Raja Ram Jaiswal v. Ganesh Prasad, AIR 1959 All 29, by virtue of a letter dated 22-12-1941, the plaintiff had been promised by the defendants to be paid a sum of Rs. 2,000/- for arranging the sale of a cinema building. The promise held out to him when written in Roman words read as under:
'Ap Jawahar Palace Cinema building Rs. 54,000/- mai furniture machine ke ko bechainge to ap ko Rs. 2,000/- commission delavein gay, kharcha kul ap ka rahega magar Jawab laid ana chahiye.'
The plaintiff had to succeed in providing to the defendants a purchaser, but the sale had fallen through because the Directors of the Cinema company were found incompetent to execute the sale deed in her favour. The defendants had refused to pay him his commission whereupon the plaintiff had brought a suit against them for the recovery of Rs. 2,000/-. The suit was resisted on their behalf on the ground that since the assurance given to him on its plain language was that he would be entitled to his commission on the sale being accomplished, he was not en-titled to it, because no sale had taken place at all. This contention was repelled by the High Court and a decree was passed in favour of the, plaintiff. The test that a Court should apply in such circumstances was laid down by the Court in these words:
'The question depends on the construction which has to be put on the letter dated 22-12-41, For the correct interpretation of the document we have to look primarily to the document itself, but must also take into consideration the circumstances in which it was written the drafting ability of the parties, the intention which the writing was to convey and how the parties acted under it.'
To the same effect are the observations contained in a Bench decision of the Madras High Court in Mangalam v. C.S. Appavoo, AIR 1976 Mad 360, which read as under (at p. 363):
'As each case has to be decided on its own facts, it cannot be laid down with precision that the language deployed in an instrument should govern in all circumstances and for all times, notwithstanding the fact the parties who had occasion to refer to it intended that it should be understood in a specified way. If there is such evidence of supervising conduct by the parties, then notwithstanding the express nature of the words used in an instrument, such surrounding circumstances might be taken into consideration in order to understand the legal effect of the words used by the parties in the instrument.'
The same rule was applied by their Lordships in Delhi Development Authority v. Durga Chand Kaushish, AIR 1973 SC 2609, as would be clear from the following observations contained therein (at p. 2616):
'....... As indicated above, we have reached our conclusion, quite apart from the contents of the subsequent agreement or the conduct of the parties, by interpreting the lease deed of 17-9-31 on its own language and terms. We think that, on the language of the lease itself, the interpretation adopted by us is the only one which could give effect and meaning to all its parts read as a whole.'
32. From what has been stated heretofore, the following propositions of law clearly emerge:
1) When two documents are to be read together, they should not be read in such a manner that one nullifies the other, rather they should be read in such a manner that effect is given, as far as possible, to each and every provision of both the documents.
2) When the language of a document is not clear, it must be construed by taking into account the subsequent conduct of the parties and how they understood the document.
3) When the language of a document is not dear, it must be construed in favour of the grantee against the grantor.
33. Applying the above tests to the facts and circumstances of the present case, there appears to be some force in Mr. Sea's argument that by inserting Clause 3 in the supplementary agreement, the parties never meant that in no case shall the lessee be entitled to more than one extension. It is common ground that all the petitioners have not executed similar supplementary agreements. Even those who had executed them got further extensions even thereafter. Petitioner 9, for instance, got three more extensions and petitioner 16 got two more extensions after the execution of the supplementary agreement. That apart, had the intention of the parties been to override Clause 12 (2) of the principal agreement by incorporating Clause 3 in the supplementary agreement, then there would have been no need to amend the said clause by using the expression: 'notwithstanding anything contained in the principal agreement' in Govt. Order No. 33-FST of 1982, which in its amended form now finds place in all the supplementary agreements executed by the petitioners during the pendency of the writ petition. These facts and circumstances persuade me to hold that by incorporating Clause 3, the parties never intended to seal the fate of the petitioners forever and that they could have claimed further extensions even thereafter, provided they establish justification for that. This relieves me of going into the second contention as to how many of the petitioners had executed similar agreements and for how many leases they held.
34. This brings me to the second supplementary agreement executed after Govt. Order No. 33-FST dated 24-3-1982 came to be passed. This agreement, there can be no manner of doubt, nullifies Clause 12 (2) of the principal agreement, and viewed thus does not disentitle the petitioners from claiming further extensions. But, here again we cannot construe this agreement in total disregard to the factual background in which it came to be executed. As already noticed, it was executed during the pendency of the writ petition, which came to be filed on 18-3-1982. After its institution, four lessees from Kashmir Province, namely, Kashmir Forest Corporation, Standard Timbers Nazir Hussain Khan and Mushtaq and Co. had moved an application before the Forest Minister that they were prepared to execute supplementary agreements and withdraw their writ petition which they had filed along with others challenging the right of the Government to stop further extensions, provided they were assured that they would also be given the benefit of the judgment in that writ petition, as also of any other order that the Government might pass in the meantime To quote them in their own words:
'......... In case, your honour may feel any difficulty because of supplementary agreement, we assure that we are prepared to sign this agreement subject to condition that if the Government or the Hon'ble Court extends any relief to the contesting lessees, we must also be entitled to the same relief notwithstanding the proposed supplementary agreement binding us down to working till December, 1982.'
This assurance was extended to them by the Forest Minister in these words:
'CCF. Be permitted to sign the agreement subject to the condition that they would get also the benefit of any Court or Govt. order passed.
Sd/- Forest Minister.'
36. The petitioners herein had also moved a similar application before the Forest Minister on 16-6-1982. This application too is reproduced as below:
The Hon'ble Forest Minister,
Jammu & Kashmir Government,
Your honour that certain legal proceedings about extension clause interpretation of our lease agreements are pending with the Hon'ble High Court and the Supreme Court of India.
As far the working of the forests these are crucial months we request your honour to allow us to sign the supplementary agreements subject to the similar modifications as agreed to in the case of Kashmir Forest Corporation Standard timbers, Nazir Hussain Khan, Mashtaq & Co.: We would get the benefit of any Court order or Govt. order passed.
For M/s. R. B. Jodhamal Bishen Lal
and other petitioners.'
This application was forwarded by the CCF to the Conservator of Forests, East Circle, Jammu, with the following endorsement:
'No. 824-25 dt. 16-6-19S2
In original to CF Chenab, CF East Circle, Jammu for necessary action. The applicant be allowed to sign the agreements (it has been agreed that the firm will get the benefit of the Court order--Govt. order in the matter).
Sd/- Sohan Singh,
Chief Conservator of Forests,
Jammu & Kashmir Govt.
36. It is, therefore, abundantly clear that these supplementary agreements were executed by the petitioners subject to the condition that Order 3 of the agreement shall not come in their way and that they shall be entitled to its provision. Why did the Forest Minister grant the prayer of the lessees of the Kashmir Province, or for that matter of the petitioner herein, all of whom arc carrying on business in Jammu Province, is shrouded in mystery. Forest lessees of both the provinces had gone to the Court to challenge the orders impugned in this writ petition. Nothing could have prevented the Forest Minister from refusing to accede to their request, and had they still executed the supplementary agreements, they would have been surely out of the Court. In a way, therefore, the Forest Minister had come to their rescue and kept their lis alive, and had insisted on compliance with Govt. Orders Nos. FST/22 dated 6-3-1982 and 33-FST dated 24-3-1982 merely by way of an idle formality, reserving in them at the same time a right to wriggle out of the said agreement, if they wanted to do so. Proverbially speaking he had hunted with the bound and run with the hare. The petitioners have, therefore, every right to be heard when they say that they are not bound by Clause 3 of both the supplementary agreements, whether executed before or after the filing of the writ petition. Neither Section 91, nor Section 92 of the Evidence Act will be attracted to their case, firstly, because other evidence will be admissible to prove the subsequent conduct of the parties as to how they understood Order 3 of the first supplementary agreement (Abdulla Ahmed v. Animendra, AIR 1950 SC 15), secondly, because the evidence that is sought to be led is not oral but documentary evidence, and thirdly, because under proviso (3) to Section 92 even the existence of a separate oral agreement constituting a condition precedent to the attaching of any obligation under a contract can be proved by other evidence, ft, therefore, follows that Clause 3 of the Supplementary agreements will not disentitle the petitioners from getting the relief prayed for in the writ petition, in case they are otherwise found entitled to it.
37. This brings me to the main contention of the petitioners that the impugned orders are hit by the rule of promissory estoppel. The respondents defence here is twofold. Firstly, they say that time was the essence of the contract and no extension could have been claimed by the petitioners as a matter of right, irrespective of the fact that the various Govt. orders, or for that matter Clause 12 (2) of the principal agreement, said that the CCF could grant three extensions on payment of surcharge. Grant of extension being purely in his discretion, the CCF, or for that matter the Government, could still have refused to grant it even if the lessee was able to show that he could not complete the work within the stipulated period for reasons beyond his control. Secondly, they urge that having regard to the changed policy of the Government to nationalise timber extraction in public interest, it would be highly inequitable to hold the Government to the promise made by it. T now proceed to deal with these contentions one by one.
38. The rule of promissory estoppel was explained by their Lordships in Motilal Padampat Sugar Mills Co, Ltd. v. State of Uttar Pradesh, AIR 1979 SC 621, wherein it was observed (at p. 631):
'........ The true principle of promissory estoppel, therefore, seems to be that where one party has by Iris words or conduct made to the other a clear and unequivocal promise which it intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any pre-existing relationship between the parties or not.
X X X X X X X
(at p, 632) ..... It is, however, necessary to make it clear that though this doctrine has been called in various judgments and text books as promissory estoppel and it has been variously described as 'equitable estoppel' quasi estoppel and 'new estoppel' it is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice where a promise is made by a person knowing that it would be acted on by the person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it.
X X X XX X X....... The doctrine of promissory estoppel need not, therefore, be inhibited by the same limitation as estoppel in the strict sense of the term. It is an equitable principle evolved by the Courts for doing justice and there is no reason why it should be given only a limited application by way of defence.
X X X X X X X
When we turn to the Indian law on the subject it is heartening, to find that in India not only has the doctrine of promissory estoppel been adopted in its fulness but it has been recognised as affording a cause of action to the person to whom the promise is made. The requirement of consideration has not been allowed to stand in the way of enforcement of such promise. The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived.
x x x x x x x....... The law may, therefore, now be taken to be settled as a result of this decision, that where the Govt. makes a promise knowing or intending that it would be acted on by the promisee and, in fact, the promisee acting in reliance on it, alters his position, the Govt. would be held bound by the promise and the promise would be enforceable against the Govt. at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution. It is elementary that in a republic governed by the rule of law, no one howsoever high or low, is above the law. Every one is subject to the law as fully and completely as any other and the Government is no exception. . It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned, the former is equally bound as the latter ........'
39. As held by their Lordships, the rule of promissory estoppel is not founded upon any right, statutory or contractual. It is on the other hand founded upon equity, whether or not, therefore, the petitioners have any right to invoke it pursuant, to the terms of a contract or a statutory provision, cannot always be decisive of the matter. What is invariably material is whether or not they stood reasonably assured by the Government that they could be granted extension in case they proved that they were prevented from completing the work for reasons beyond their control, and acting upon this assurance they had altered their position. This assurance could emerge either from the terms of the contracts between them and the Government, or from the orders passed or representations made by it from time to time in this behalf. Once this assurance was there, they could have legitimately compelled the Government to stick to it. The assurance that they could be granted three extensions by the CCF, and beyond three by the Government on payment of surcharge, is clearly expressed in the various orders passed by the Government from time to time, as also in Clause 12 (2) of the principal agreement itself, all of which have been reproduced heretofore. The Government had further undertaken to add the period that the lessee would reasonably spend on salvage operations to be added to the period of their principal leases. That the petitioners had reason to entertain the belief that the time that they would reasonably spend in salvage operations would be added to the period of their principal leases, and that extensions would be granted in their favour in case they proved that they could not complete the work due to unavoidable reasons, is further fortified by the fact that such extensions were in fact granted from time to time in favour of most of them in the past as well. By and large, work in forests of higher altitude is dependent upon the vagaries of nature. The petitioners, there can be no manner of doubt, have invested huge amounts in their business, without which it cannot be successfully carried out, and have thereby altered their position. Keeping in view the nature of their work, it is doubtful whether they would have made such huge investments, had they not been made to believe that time to complete the work would be extended on sufficient cause being shown by them. It is again doubtful whether they would have diverted their resources to salvage operations, suspending the work in their principal leases, had they not been assured by the Government that the time they would reasonably spend in these salvage operations, would be added to the period fixed by their principal leases, I am, therefore, clearly of the opinion that the petitioners can invoke the rule of promissory estoppel to get rid of the impugned orders which violate the assurance held out by the Govt. that they would be entitled to three extensions at the hands of the CCF, and any further at the hands of the Government on payment of surcharge, provided they could show that they were unable to complete the work within the stipulated period for reasons beyond their control.
40. With equal success, they can invoke this rule on the ground that the Government had agreed to add to the period of their principal leases, the period spent by them in the salvage operations of snow damaged trees.
41. The other contention of the Govt.that it cannot be compelled to hold to itsaforesaid assurance because of the change inits policy is equally untenable. Mere allegation of change of policy will not be enoughto throw the petitioners out of the Court.The Government was further required toshow what exactly that policy was, what werethe reasons for bringing about the change,and how far was the change justified, so thatthe Court could be in a position to judge foritself which way the public interest lay andwhat the equity of the case demanded. Insaying so, I am following the law laid downby their Lordships in M, P. Sugar Mill'scase (AIR 1979 SC 621) (supra), where itwas held (at p. 644): . .
'....... If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability, and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability; the Govt, would have to show what precisely is the changed policy and also its reason and justification so the Court can judge for itself which way the public interest does and what the equity of the case demands. It is only if the Court is satisfied on proper and adequate material placed by the Government, that overriding public interest requires that the Govt. should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government. The Court would not act on the mere ipsi dixit of the Government, for it is the Court which