http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

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-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

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-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

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: