Supreme Court of India
Orient Paper And Industries Ltd. ... vs State Of Orissa And Ors. Etc on 30 October, 1990
Equivalent citations: 1991 AIR 672, 1990 SCR SUPL. (2) 480, AIR 1991 SUPREME COURT 672, 1991 (1) SCC(SUPP) 81, 1991 (1) UJ (SC) 75, 1991 UJ(SC) 1 75, (1990) 4 JT 267 (SC), 1991 SCC (SUPP) 1 81
PETITIONER:
ORIENT PAPER AND INDUSTRIES LTD. ANDANR. ETC. ETC.
Vs.
RESPONDENT:
STATE OF ORISSA AND ORS. ETC.
DATE OF JUDGMENT30/10/1990
BENCH:
THOMMEN, T.K. (J)
BENCH:
THOMMEN, T.K. (J)
SHARMA, L.M. (J)
SAIKIA, K.N. (J)
CITATION:
1991 AIR 672 1990 SCR Supl. (2) 480
1991 SCC Supl. (1) 81 JT 1990 (4) 267
1990 SCALE (2)907
ACT:
Orissa Forest Produce (Control of Trade) Act, 1981:
Section 1(3) and 3 Amendment and Validation Acts 1987 and
1989 and Notifications dated September 21, 1988--Whether
null and void--Rescindement Of contracts--Permissibility of.
HEADNOTE:
The appellants/petitioners in each of the two Appeals
Writ Petitions are contractors. They had entered into agree-
ments with the State of Orissa in terms of which they had
obtained exclusive rights and licences to fell, cut and
remove bamboos from certain specified areas for the purpose
of converting them into pulp. The agreements were due to
expire on 30th September 1989. There contracts were rescind-
ed by the Orissa Forest Produce (Control of Trade) Act, 1981
(Act 22 of 1981) which, in respect of bamboos, came into
force w.e.f. 1.10.1988, when Orissa Forest Produce (Control
of Trade) Amendment Act, 1989 (Act 4 of 1989) came into
force. By virtue of the provisions of the Act and the noti-
fications issued thereunder, the contractors were divested
of all their contractual rights.
Being aggrieved the appellants in both the appeals filed
writ petitions in the High Court praying for a declaration
that the Act 22 of 1981 and the notification of 21.9.1988
issued under Section 1(3) of the said Act have no applica-
tion to the contracts entered into between the appellants
and the State of Orissa and for a direction that the State
be prohibited from enforcing the provisions of the said Act
and to allow the appellants to cut and remove the bamboos
from areas covered by the contracts. It was urged by the
appellants that their rights in respect of bamboos are not
annulled or affected by reason of Act 22 of 1981 as their
rights are in the nature of profit a prendre, and thus not
susceptible of repudiation by statutory rescission of con-
tracts. They relied on a decision of this Court in State of
Orissa and Others v. The Titaghur Paper Mills Co. Ltd. and
Anr., [1985] 3 SCR 26. The High Court rejecting their con-
tention that the rescission of their contracts did not
affect their pre-existing rights which allegedly originated
in grant inde-
481
pendent of any agreement of parties, held that the contrac-
tors were replaced by the agents and that the decision in
Titaghur's case did not deal with the question arising in
the present case. The High Court accordingly dismissed the
writ petitions. Hence these two appeals by the contractors.
The appellants Straw Products Ltd. Filed in this Court
a writ petition under Art. 32 of the Constitution praying
inter alia for a declaration that Act 4 of 1989 and the
notification dated 21.9.1988 (S.R.O. No. 666 of 1988) and
(S.R.O. 667 of 1988) are null and void. Orient Paper and
Industries Ltd., the appellants in the other appeals also
filed a writ petition for a declaration that Act 16 of 1987
and Act 15 of 1987 (1st and 2nd Amendment Acts) and Notifi-
cation dated 21.9.1988 (S .R.O. No. 667 of 1988) are null
and void.
Before this Court besides the arguments advanced before
the High Court by the appellants/petitioners it was further
urged that the Act suffers from the vice of excessive dele-
gation of powers to the Government and separate notification
should have been issued to bring the amended provisions into
the principal Act. The respondent-State controverted the
arguments of the appellants and asserted that the .Acts in
question are constitutionally valid.
Dismissing the appeals and writ petitions, this Court,
HELD: Any right or interest granted or recognised under
such agreement was not an independent or pre-existing right
or interest to survive the statutory rescission of the
contract. Legislation has superseded all inconsistent and
contrary rights. No right or interest or grant, whether
contractual or prerogative in character in origin, whatever
be its nature, source and scope, can survive a superseding
valid legislation.The decision in Titaghur is consistent
with the proposition that all rights derived by the contrac-
tors, including profit a prendre were granted in terms of
the agreements. All such rights are conditioned by and
totally dependent on the agreements. Whatever mutual rights
or obligations accrued or arose between the parties to those
agreements are purely contractual in character and inci-
dence. [495E-F & D]
All rights recognised under the bamboo contracts thus
perished as from the date on which Act 22 of 1981 came into
force in respect of bamboos in the areas in question, i.e.
as from 1.10.1988 being the date specified in terms of
section 1(3). [498B]
482
While the protection and management of the forests, 22
of 1981, as its title and preamble indicate, are meant to
control and regulate. trade in forest produce by creating a
State monopoly, the later statute has rescinded all con-
tracts for the purchase, sale, gathering or collection of
forest produce and has repudiated all rights created under
such contracts and all grants of profit a prendre. The
bamboo contractors, are, therefore, not entitled to claim
any independent right inconsistent with the statute as from
the date specified under Section 1(3) namely 1.10.1988.
[500A-B]
Smuggling in forest produce has been a serious threat to
national economy. No society can tolerate activities endan-
gering the morale and economy of the people. This substan-
tive evil with its corrupting and debilitating influence is
sought to he remedied by legislative control of trade in
forest produce through State monopoly. These measures are
undoubtedly well within the province of the legislature and
reasonable and rationally adapted to the end sought. [501F-
G]
The legislative findings and the subject-matter of the
legislation, the area of its operation; its purpose and
intent; its legislative history; the objects and reasons for
the amendment made consequent on judicial decisions, the
vice that is sought to he remedied, the legislative response
to compelling necessities; all this lends support to the
presumption in favour of reasonableness, legality and con-
stitutionality of the legislative actions in question.
[501G-H]
All rights and interests contrary to and inconsistent
with the statute accordingly stands' rescinded. There is no
excessive delegation in such statutory grant of power.
[502A-B]
M/s. Utkal Contractors and Joinery (P) Ltd. and Ors. v.
State of Orissa, [1987] Supp. SCC 751 & [1987] 3 SCC 279;
The State of Orissa v. Sudhansu Sekhar Misra and Ors.,
[1968] 2 SCR 155, 162; Krishna Kumar v. Union of India, JT
(1988) 3 SC 173, 187, 192; Gangabai w/o Rambilas Gilda v.
Chhabubai w/o Pukharajji Gandhi, [1982] 1 SCR 1176, 1182;
Prakash Amichand Shah v. State of Gujarat and Ors'., [1985]
Supp. 3 SCR 1025, 1052, Sreenivasa General Traders and
Others v. State of Andhra Pradesh and Others' etc., AIR 1983
SC 1246; Attorney General v. De Kevser's Royal Hotel Ltd.,
[1920] AC 508; Thakur Jagannath Baksh Singh v. The United
Provinces, AIR 1946 PC 127, para 17; East End Dwelling Co.
Ltd. v. Finsbury Borough Council. 1952 Ac 109, Shamrao V.
Parulekar v. The District Magistrate, Thana, Bombay, [1952]
SCR 683; Sardar Inder Singh v. The State of
483
Rajasthan, [1957] SCR 605; Her Majesty the Queen v. Burah,
[1877-78] 5 IA 178, 194-95; Gwalior Rayon Silk Mfg. (Wvg.)
Co. Ltd. v. The Asstt. Commissioner of Sales Tax and Ors.,
[1974] 2 SCR 879; Harishanker Bagla v. The State of M.P.,
[1955] 1 SCR 380, 388; Akadasi Padhan v. State of Orissa,
[1963] Supp. 2 SCR 691; Hamdard Dawakhana (Wakf) Lal Kuan,
Delhi and Anr. v. Union of India and Ors., [1960] 2 SCR 671,
678-79; Mahant Motidas v.S.P. Sahi, AIR (1959) SC 942, 948,
referred to.
JUDGMENT:
