Case: Utkal Contractors &amp; Joinery Private Limited &amp;Ors. Etc Vs. State Of Orissa &amp; Ors

On December 12, 1967, the State of Orissa granted a license for collection of sal seeds from eleven Forest Divisions to M/s Utkal Contractors and Joinery Private Limited. The agreement provided for the sale and purchase of sal seeds falling on ground naturally in the forests. There was a stipulation that the company should establish solvent extraction units in the backward areas of Mayurbhanj and Sambalpur. There was also an option for renewal of the lease for a further period of ten years. It was later agreed that the period from October 1, 1967 to September 30, 1969 should be treated as experimental period and the lease should be deemed to have commenced from October 1, 1969 and to last for a period of ten years. The Orissa Oil Industries Limited, a public limited company, was floated by the Utkal Contractors and Joinery Private Limited and it was agreed that the State Government should also contribute to the share capital of the company. It was agreed that the Utkal Contractors and Joinery Private Limited should supply sal seeds to the two solvent extraction plants of the Orissa Oil Industries Limited, one set up at Bairangpur in Mayurbhanj District with a capacity to crush 21, 000 M.T. Sal Seeds and the other at Sasan in Sambalpur District with a capacity to crush 21, 000 M.T. Sal Seeds. Thereafter on May 25, 1979, agreements renewing the leases for the purchase and removal of sal seeds from the eleven Forest Divisions for a further period of ten years from October 1, 1979 to September 30, 1989 were entered into by the Utkal Contractors and Joinery Private Limited and the Government of Orissa. This was followed up by an agreement between the Utkal Contractors and Joinery Private Limited and the Orissa Oil Industries Limited for the supply of the entire collection of sal seeds from the eleven Forest Divisions by the Utkal Contractors to the Orissa Oil Industries. While so the Orissa Forest Produce (Control of Trade) Bill, 1981 was introduced in the Legislative Assembly of Orissa State. The Statement of Objects and Reasons was as followsSmuggling of various forest produces are increasing day by day. The present provisions of the Orissa Forest Act, 1972 for checking, hoarding and transport of forest produce are not adequate to bring the culprits to book. The said Act is not adequate for imposition of any restrictions or control on trade in forest produce by framing rules thereunder. Barring few items like sal seeds, most of the important items of minor forest produce such as Mahua flowers, Tamarind, Charmaji, Karanja and the like are grown in private holdings as well as in the forest areas owned by government. Unscrupulous traders take advantage of this situation and evade the law under the cover that the produce relates to private land and not to forests under the control of government. Instances of smuggling in such cases are too many and the smugglers are escaping with impunity because of absence of any legislation providing for State monopoly in forest produce. Enactment of a separate legislation for the purpose is, therefore, absolutelyBill seeks to achieve the aboveIt appears from a perusal of the Statement of Objects and Reasons that the object of the proposed Act was to prevent smuggling of forest produce like Mahua flowers, Tamarind, Charmaji, Karanja, etc. which were grown both in private holdings and government forests. The object of the legislation was to prevent smuggling in such forest produce and to provide for State monopoly therein. It is seen that the Statement of Objects and Reasons expressly mentions sal seeds as a forest produce which is grown in government forests and not in privateThe Orissa Forest Produce (Control of Trade) Act, 1981 received the assent of the President of India on August 21, 1981. Under Section 1(3) of the Act, the State Government is empowered from time to time to issue a notification specifying the area or areas, the forest produce in relation to which and the date with effect from which the Act shall come into force. Purporting to act under this provision, a notification was issued by the Government of Orissa on December 9, 1982 directing that the Act shall come into force at once in the whole of the State of Orissa in relation to sal seeds. We are told that this is the only notification issued so far under Section 1(3) of the Act, despite the fact that in the very Statement of Objects and Reasons it was expressly recited that sal seeds was not a forest produce grown in government forests. In fact, we find that even after the commencement of the Act and before the issue of the notification, there were negotiations between the Utkal Contractor and Joinery Private Limited and the State Government for long term agreements for purchase and sale of sal seeds in Athagarh and Puri Forest Divisions. Such agreements were in fact entered into in relation to Parlakhemundi Forest Division between the State of Orissa and Indo East Extraction Limited. On December 24, 1982, the government refused to accept royalty from Utkal contractors and Joinery Private Limited in respect of Dhenkanal and Sambalpur Forest Divisions on the ground that the Notification date December 9, 1982 had the effect of rescinding the contract between the company and the government. Thereupon Utkal Contractors and Joinery Private Limited and Orissa Oil Industries Limited filed a writ petition in the Orissa High Court for a declaration that the Notification dated December 9, 1982 did not have the effect of rescinding the contracts which they had with the State Government. The writ petition was dismissed by the Orissa High Court. The Utkal Contractors and Joinery Private Limited and Orissa Oil Industries Limited have filed Civil Appeal No. 6230 of 1983. In another case, on similar facts the Orissa Minor Oil Private Limited have filed Civil Appeal No. 6231 of 1983

Court's reasoning:
15. At the outset, we notice that grower of forest produce is defined to include the State Government but on an examination of the remaining provisions of the Act we find that the expression grower of forest produce is not found in any other provision except Section 5(2)(a) and Section 10. Section 5(2)(a) provides for the transport of produce by the grower of forest produce from a place within one unit to another place within the unit. Section 10 requires every grower of forest produce to get himself registered in prescribed manner. Obviously neither Section 5(2)(a) nor Section 10 has any application to the government. Therefore, the circumstance that grower of forest produce is defined so as to include the government appears to us to be of no consequence in determining whether the Act is applicable to forest produce grown on government lands. On the other hand, from the extracts and summary of the other provisions of the Act that we have given earlier, we find that section after section deals with purchase of forest produce which, in the circumstances, can only refer to purchase of forest produce grown on private holdings since there can be no question of or providing for the purchase by the government of forest produce grown on government lands. Section 4 enables the appointment by the State Government of agents for the purchase of and trade in specified forest produce. Section 5(1)(b) refers to purchase or transport of specified forest produce by the State Government, its officers and agents. Section 5(3) refers to sale of forest produce to the government, its officers or agents. Section 7 refers to the fixation of price at which the government, its officers or agents may preaches forest produce. Section 8 enables the opening of depots for the purchase of forest produce by the government, its officers and agents. Section 9 deals with the obligation of the State Government, its agents and officers to purchase specified forest produce. All these provisions, we see, deal with purchase of forest produce by the State Government. As stated earlier, this can only be of forest produce grown in private holdings and not in government forests. The only provision which deals with sale of forest produce by the State Government is Section 12 and that again is confined to the sale of specified forest produce purchased by the State Government, its officers or agents. Thus, Section 4, Section 5(1)(b), Section 5(3), Section 7, Section 8, Section 9, Section 10 and Section 12, all deal with the forest produce grown in private holdings and all those provisions except Sections 10 and 12 deal with purchase of forest produce by the government, its officers or agents. Section 10, as we have already seen, deals with registration of growers of forest produce and Section 12 with sale of forest produce purchased by the government. Thus none of these provisions deals with forest produce grown in government lands nor is there any other provision in the Act which expressly deals with forest produce grown in government lands. The scheme of the Act is, therefore, fully in tune with the object set out in the Statement of Objects and Reasons and in the preamble, namely, that of creating a monopoly in forest produce by making the government the exclusive purchaser of forest produce grown in private holdings. It was argued by the learned Additional Solicitor General that Section 5(1)(a) was totally out of tune with forest produce grown rest of the provisions and, while the rest of the provision dealt with forest produce grown in private holdings, the very wide language of Section 5(1)(a) made it applicable to all forest produce whether grown in private holdings or government forests. We do not think that it is permissible for us to construe Section 5(1)(a) in the very wide terms in which we are asked to construe it by the learned Additional Solicitor General because of its wide language, as that would merely introduce needless confusion into the scheme of the Act. Having scanned the object and the scheme of the Act, having examined each of the provisions of the Act textually and contextually, we do not think that it is proper for us to construe the words of Section 5(1)(a) in their literal sense; we think that the proper way to construe Section 5(1)(a) is to give a restricted meaning to the wide and general words there used so as to fit into the general scheme of the Act. Section 5(1)(a) and 5(1)(b) are connected by the conjunction and, and having regard to the circumstances leading to the enactment and the policy and design of the Act, we think that the clauses (a) and (b) must be construed in such a way as to reflect each other. We have no doubt that the contracts relating to specified forest produce which stand rescinded are contracts in relation to forest produce grown in private holdings only. If the very object of the Act is to create a monopoly in forest produce in the government so as to enable the government, among other things, to enter into contracts, there was no point in rescinding contracts already validly entered into by the government. Again Section 5(1) does not bar any future Contracts by the government in respect of forest produce; if so, what is the justification for constrain Section 5(1)(a) in such a way as to put and end to contracts already entered into by the government. Viewing Sections 5(1)(a) and 5(1)(b) together and in the light of the preamble and the Statement of Objects and Reasons and against the decor of the remaining provisions of the Act, we have no doubt that Section 5(1) like the rest of the provisions applies to forest produce grown in private holdings and not to forest produce grown on governmentIn the view that we have taken it is unnecessary for us to consider the further submission that Explanation II to Section 5(1) saves the present contract or that Explanation II is an explanation only to Section 5(1)(a) and not to Section 5(1)(b). We declare that the Act and the notification issued under the Act do not apply to forest produce grown in government forests and that it was not therefore, open to the government to treat the contract dated May 25, 1979 as rescinded. As a result of the attitude of the government in treating the contract as rescinded from the date of the notification the appellants were not able to collect and purchased the sal seeds from the government forests which they have taken on lease for a period of about four years. The question arises whether any further relief in addition to declaration may be granted by us. It was suggested on behalf of the appellants that their lease should be extended by another period of four years. We do not think that it is permissible for us to extend the lease for a further period of four years in that fashion. We can only leave it open to the parties to work out their rights in the light of the declaration granted by us. We find that various interim orders were made from time to time. The rights of the parties will naturally have to be worked out after taking into account the interim orders