Case: M/S. Anwar Khan Mehboob &amp; Co Vs. State Of Madhya Pradesh And Others

1. The petitioner is a partnership firm which manufactures and sells bidis, under the name and style of Anwarkhan Mehboob and Co., Jabalpur. In 1948 the petitioner, firm, with a view to securing a supply of tendu leaves over the years acquired for a term of 25 years, the right to pluck and carry away tendu leaves from plants invillages in the former Imlai Estate from the Mulguzar Raja Raghuraj Singh. The period of 25 years was to run from 1948 to 1973. The document, which was not registered (Annexure I), was executed by the Raja on August 22, 1948. It is a very brief document and all that it says is that tendu leaves in 99 villages have been "sold for 25 years for a consideration of Rs. 9,000 per year which must be paid after each tendu leaf crop is over but before the expiry of three months, that only the leaves should be plucked and that no bushes should be cut down.2. In 1950 the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals and Alienated Lands) Act (No. 1 of 1951) was passed. Under that Act (which may be briefly called the Abolition Act) all rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor, in an area to which the Abolition Act was extended, including land (cultivable or barren), grass landforest, trees, etc., ceased and vested in the State for purposes of State, free from all encumbrances. The Government of Madhya Pradesh obstructed the persons who held contracts for tendu leaves, lac, wood, timber or other forest produce, including the petitioner firm. The petitioner firm and many other petitioned to this Court under Art. 32 of the Constitution to enforce what they described as "fundamental rights to property, and asked for writs or orders to restrain the State Government from enforcing the Abolition Act generally and in particular so as to interfere with the right of the petitioner firm to pick, gather and carry away the kind of forest produce for which they held agreements. A dozen such petitions were heard together, that of the petitioner being W. P. No. 309 of 1951 (Firm Anwar Khan Mehboob and Co. v. State of Madhya Pradesh), and were decided on December 23, 1952. The main judgment of this Court was pronounced in petition filed by the Chootabhai Jethahai and is reported in Chhotabhai Jethabhai v. State of Madhya Pradesh, 1953 SCR 476  : (AIR 1953 SC 108  ). A Divisional Bench of this Court held that contracts and agreements, such as the one held by the petitioner firm, were "in essence and effect licences granted to the transferees to cut, gather and carry away, the produce in the shape of tendu leaves, lac, or timber or wood. Holding further that there was nothing in the Abolition Act to affect their validity or to extinguish such rights in favour of the State, the Divisional Bench ruled that the State had no right to interfere with the right under the contracts and agreements. A "writ of prohibition was issued, prohibiting the State "from interfering in any manner whatsoever with the enjoyment of those rights. In cases where the periods under the contracts had expired or where the proprietors had still to recover anything from transferees after the date of vesting, the State was held entitled "to assert and enforce its rights standing in the shoes of the proprietors.3. The petitioner firm, in common with the other petitioners on that occasion obtained a "writ of prohibition also. It would have enjoyed the fruits of its agreement with the Raja till the year 1973 but other events followed. In 1964 the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 (29 of 1964), (conveniently called the Adhiniyam) was passed as the preamble openly professes to make provision for regulating in the public interest the trade of Tendu leaves by creation of State monopoly in such trade. The Adhiniyam conferred power on the State Government to divide specified areas into units, to appoint its own agents for purchase and trade in tendu leaves, to set up advisory committees especially for the fixation of prices at which Government would purchase tendu leaves from growers of tendu leaves other than Government, to open depots and to purchase their tendu leaves at prices in the lists exhibited there. The Adhiniyam also required growers of tendu leaves, the manufacturers of bidis and exporters of tendu leaves to register. With a view to creating monopoly in favour of Government S. 5 of the Adhiniyam imposed a complete restriction on purchase and transport of tendu leaves contrary to the provisions of the Adhiniyam and contravention of any provision was made punishable with imprisonment or fine and power was also given to forfeit the whole or any part of tendu leaves in respect of which there was contravention. A power of entry, search and seizure was conferred on police officers of the rank of Assistant

Court's reasoning:
5. We shall analyse the provisions of this section later. For the present we must follow up the narrative of events. By notification the State of Madhya Pradesh, declared the areas to which the Adhiniyam extended and subdivided the area into units. The Imlai Estate, in respect of which the petitioner firm held its agreement, was divided upThe State Government then invited tenders for the areas including the three units but the remarks column showed that these units were leased by the Malguzar to the petitioner firm up to the year 1973. No tenders were received for units 5 and 11 but there was a tender for unit 3. On March 20, 1965 the Minister for Forests in a meeting, informed the representatives of the petitioner firm that their lease stood extinguished by reason of the Adhiniyam and that time was extended for submission of fresh tenders in respect of the units left out.On March 23, 1965 tenders made by two persons in respect of unit 3 (Baghraji) and unit 11 (Umaria) were accepted and the next day the petitioner firm was informed, by letter from the Divisional Forest Officer, Jabalpur Division, that the right to collect tendu leaves in all the 99 villages of Imlai Estate was abrogated by the State Government under the Adhiniyam. The present petition was then filed.We may begin by considering the correctness of the contention that the earlier decision operates as res judicata in this case. The history of the ruling in Chhotabhai Jethabhais case, 1953 SCR 476  : (AIR 1953 SC 108  ) isThat case has now no binding force as a precedent. In Shantabai v. State of Bombay, 1959 SCR 265  : (AIR 1958 SC 532  ) petitions similar to those in Chhotahai Jethabhais case met a different fate. Shantabai who claimed the benefit of Art. 19 (1) (f) and (g) had been given a right by her husband to take and appropriate all kinds of wood from his Zamindari forests. The document was unregistered. After the Abolition Act came into force the right was interfered with. A petition under Art. 32 of the Constitution was moved in this Court but it failed. Chhotabhai Jethabhais case, 1953 SCR 476  : (AIR 1953 SC 108  ) was cited in support of the petition but it was not followed. Many circumstances not noticed in Chhotabhai Jethabhais case, 1953 SCR 476  : (AIR 1953 SC 108  ) were pointed out. As they have been summarized once before in Mahadeo v. State of Bombay, 1959 Supp (2) SCR 339 at p. 343: (AIR 1959 SC 735   at p. 738) we may quote from that case. Speaking of the unregisteredwas therefore, laid down that the decision in Chhotabhai Jethabhais case, 1953 SCR 476   : (AIR 1958 SC 108), which treated the agreement as bare licences and yet considered that a fundamental right to property was conferred by them, "was apparently given per incuriam" and could not therefore be followed.In Chhotabhai Jethabhais case, 1953 SCR 476   : (AIR 1953 SC 108  ) reliance was placed on a passage from the judgment of the Judicial Committee in Mohanlal Hargovind v. Commr. of7 ITR 473 : (AIR 1949 PC 311  ) to find out the nature of the agreements. The Judicial Committee was discussing the matter to find out whether the amounts spent in buying tendu leaves, which were the raw materials for manufacture of bidis, became capital expenditure simply because crops of a number of years were presently purchased. So long as crops were purchased and no interest in anything else was obtained, it was held the payment was on revenue and not capital account. The observations were, therefore, made in a very different context. Similarly, reliance on a passage from Baden Powells book on the Land Systems of British India was not helpful because Baden Powell was merely discussing the division of proprietary rights between different layers created byNor was the reference to Benjamin on Sale quite happy because the author was referring to mediaeval law and had discussed the modern law on the succeeding pages.It was for this reason that in a succession of cases. Chhotabhai Jethabhais case, 1953 SCR 476   : (AIR 1953 SC 108  ) was not relied upon. That ruling must be held notis not claiming a right to property but to the continued acceptance of a contract.Mr. Pathak, however, argued that the earlier decision of this Court involved the assumption of the fundamental fact that petitioner firms right to property was invaded. He argued on the authority of Hoystead v. Commissioner of Taxation, 1926 AC 155, that such a fundamental fact cannot, in a fresh litigation be allowed to be ignored. He submitted that it was open to the Government to have demurred to the claim on the ground that no right of property was invaded, but it did not. This may be right but it does not solve our problem. If the Adhiniyam had not been passed and the rights recognised by this Court were again interfered with, it would have been impossible for Government to ask that Chhotabhai Jethabhais case, 1953 SCR 476   : (AIR 1953 SC 108  ) be recognised from the point of view whether a fundamental right to property was involved or not. The fresh litigation would in such a case have been on an identical or similar cause of action and because of the decision in favour of the petitioner firm Government would have been bound by the rule of res judicata. The situation today is not the same as existed in 1952. The cause of action then was based upon the invasion of the rights of the petitioner firm by and under the authority of the Abolition Act. Today the invasion is by and under the authority of the Adhiniyam and manifestly the two causes of action are not alike.It is worth mentioning that Hoysteadscase, 1926 AC 155was often before theHouse of Lords in Society of Medical Officers of Health v. Hope, 1960 AC551 but was not followed. It may also be mentioned that in the volume which contains Hoysteadscase, 1926 AC 155there is to be found another case of JudicialCommittee Broken Hill Proprietary Co. Ltd., v. Municipal Council of Broken Hill, 1926 AC94 which seems to be in conflict with Hoysteads case. It was argued before the House of Lords that Hoysteadscase, 1926 AC 155was wrongly decided. The House did not pronounce their opinion on this submission but noted the fact that there was this conflict. They did point out that a decision of the Judicial Committee was not binding on the House of Lords. Lord Radcliffe distinguished Hoysteadscase, 1926 AC 155and stated that it was useless to illuminate the only point which was before the House of Lords, namely the effect of a succeeding valuation list on a decision given with regard to an earlier valuation list. The same reason obtains here also. The earlier case of this Court is useless to illuminate the only point which arises before us, namely whether by the provisions of the Adhiniyam any right to property as such is being offended. On this question we cannot get any guidance from the earlier decision partly because it did not in express terms decide even on the facts existing in 1952 that right to property was in jeopardy and mainly because the effect of the new law upon the rights such as they are today must be worked out afresh. The cause of action is entirely distinct. For this reason we do not think that the earlier decision operates as res judicata, even if it might have been assumed in that case that a right to property was involved.We have explained above that the Divisional Bench did not refer to right to property although it is possible that it thought in terms of property in leaves, timber etc. On their being severed from earth as existing even before leaves, timber etc. were so severed. This was not the true position in law because the agreements then considered betokened a licence coupled with a grant but no right in any property movable or immovable of any kind. The petitioner firm like the others had a licence to go to the forests to pick and carry away tandu leaves but had no other right. The attention of the Divisional Bench was not directed to this difference.Such a decision cannot constitute a bar on the principle of res judicata when new circumstances have come to exist which require a reappraisal of the true legalis however, not correct to say that a decision may be evaded only by the use of these words or some such words. If a statuate creates new circumstances which render the earlier decision inapplicable, the effect must be to evade the earlier decision of the court. The earlier decision then cannot operate because the new statute alters the circumstances to which the old decision applied, and as the cause of action is different, the earlier decision ceases to play a part. The earlier decision of this Court does not play any part even indirectly as was suggested by Mr. Pathak.The core of the problem thus is : what is the effect of the Adhiniyam upon the rights of the petitioner firm under the agreement it had obtained from Raja? From this purpose, we have to go to the terms of S. 5 of the Adhiniyam already set out. The operative provision is to be found in the firstwhich says that after a notification is issued under(3) of S. 1 (which extends the Adhiniyam to any area) no person shall purchase or transport tendu leaves except the State Government or officer authorised in writing in this behalf or an agent of that Government in respect of any unit in which the leaves are grown. The expression "no person" is wide enough to exclude any person whatsoever unless the rights of any party have been expressly saved.(1) intended to be understood with the aid of two Explanations, each providing for a differentBy the first Explanation purchase of tendu leaves from any of the three persons mentioned in(1) is not to be deemed to be a purchase in contravention of this Adhiniyam. Government or its officers and agents in this way become the sole sellers of tendu leaves, and theconfers on the Government exclusively the monopoly of sale of tendu leaves from an area to which the Adhiniyam is extended. The second Explanation says that a person having no interest in a holding but who has acquired the right to collect tendu leaves grown on such holding shall be deemed to have purchased such leaves in contravention of the Adhiniyam. This Explanation states in the negative form that a person having an interest in the holding may himself collect the leaves but no person can obtain from the person having an interest in the holding, a right to collect tendu leaves form his holding. The right to collect tendu leaves from the areas to which the Adhiniyam extends belongs to the State Government, its officers and its agents or under the second Explanation to a person having interest in a holding. No purchase of tendu leaves, except from Government, its officers and agents, is legal by reason of the firstread with the first Explanation. The seconddeals with transport. It allows a grower of tendu leaves to transport his leaves from any place within the unit wherein such leaves are grown to any other place in that unit, and tendu leaves purchased from the State Government or its officers or agents by any person for manufacture of bidis within the State or by any person for sale outside the State may be transported outside the unit. No other person can at all transport tendu leaves. The secondhas the effect of keeping the tendu leaves within" the unit until they have been purchased by or from Government. On purchase they can be transported either to a place within the State for the manufacture of bidis or exported outside the unit. Under the third subsection any person who desires to sell tendu leaves, may sell them to a Government officer or agent at any depot situated within his unit. By reason of these provisions growers of tendu leaves, other than Government, are compelled to sell them to Government, its officers and agents, at the various depots at the prices settled by the Advisory Committee under the Niyam. The Niyamavali lays down the procedure to be followed. Once all tendu leaves have come into the possession of Government purchase of tendu leaves must be from the Government and its officers and agents because only such purchase is not an offence under the Adhiniyam.The position of the petitioner firm is this : it does not seek to justify its acquisition of tendu leaves by reason of a purchase from Government. It says that it has already purchased the tendu leaves from the Raja by an agreement made with the Raja in 1948 and that that agreement is binding upon Government because of a decision of this Court. But the decision of this Court merely decided that there was nothing in the Abolition Act by which the agreement could be said to be affected. That decision had nothing to say about those rights of the petitioner firm, viewed in the light of the Adhiniyam. The Adhiniyam is challenged only on the ground that it cannot operate against the petitioner firm which holds a decree of this Court. The decree of this Court only said that Government must not interfere with the petitioner firm by reason of anything contained in the Abolition Act. To the Abolition Act must now be added the Adhiniyam and we must see what is the joint effect of the two Acts. The Abolition Act vested the forests and tendu plants in Government and they become the property of Government. This was decided a long time ago and there is no quarrel on this account. By the Adhiniyam Government gets the sole right to purchase tendu leaves from any area to which the Adhiniyam extends and no person can buy tendu leaves except from Government, its officers and agents. Government obtains the monopoly of trade in tendu leaves in those areas of the State to which the Adhiniyam applies. The purchase of tendu leaves must now be in according with the Adhiniyam. Since there is no right to property before the leaves are plucked, no such right can be said to be invaded by the Adhiniyam. It cannot be said either by reason of any of res judicata or on analogy that the petitioner firm is entitled to invoke Art. 32 of the Constitution when it possesses no right of property in the leaves. It has only a contract in its favour and that is not, a right of property.No doubt the Adhiniyam indirectly overreaches the decision of this Court but that, in any event, is open to the State Legislature provided it passes a valid law to that effect. The law is not challenged as invalid and it must therefore apply to the petitioner firm, as to any other person. The petitioner firm cannot take shelter of Explanation I till it buys leaves form Government under the Adhiniyam and the Niyamavali.