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PETITIONER: TIMBER KASHMIR PVT. LTD. ETC. ETC.

       Vs.

RESPONDENT: CONSERVATOR OF FORESTS, JAMMU & ORS. ETC.

DATE OF JUDGMENT26/10/1976

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH RAY, A.N. (CJ) SHINGAL, P.N.

CITATION:  1977 AIR  151            1977 SCR  (1) 937  1976 SCC  (4) 498  CITATOR INFO :  R          1988 SC2149  (13)

ACT:         Delegation of Powers to officers for execution of  contracts         under    section    122    (1)   of    Jammu    &    Kashmir         Constitution--Contracts containing arbitration clause valid-         ly executed on behalf of the Government cannot be questioned         on the plea of violation of Section 122(1).

HEADNOTE:             All the three applications filed by the respondent state         for  a  reference to an arbitrator under section 20  of  the         Jammu  & Kashmir Arbitration Act, 2002 were dismissed  by  a         single judge of the Jammu & Kashmir High Court on the ground         that the arbitration clause was, in each case, a part of  an         agreement  which was not duly exercised in  accordance  with         the  provisions of action 122(1)   of the  J&K  constitution         which correspond to those of Art. 299(1) of the Constitution         of India.  But the Division Bench allowed the appeals  hold-         ing  that  if contracts were signed by  the  Conservator  of         Forests  in compliance with an order of the Government,  the         provisions  of Section 122(1) of J&K constitution could  not         be said to have been infringed."         Dismissing the appeals of the appellant company by  certifi-         cates the Court.             HELD : It is true that the contract could not be execut-         ed  without  the sanction.  Nevertheless,  if  the  sanction         could be either expressly or impliedly given by or on behalf         of  the  Government, as it.could, and, if some acts  of  the         Government  could fasten some obligations upon  the  Govern-         ment, the lessee could also be estopped from questioning the         terms  of the grant of the sanction even where there  is  no         written contract executed to bind the lessee. [938 G-H,  939         A]             But, once there had been a valid execution of lessee  by         duly  authorised officers, the documents would be  the  best         evidence  of sanction also.  That was one of the objects  of         prescribing  a  formal mode of execution of  instruments  on         behalf of the Government apart from the need to protect  its         interest  against mala fide and other unauthorised  acts  of         its servants or agents. [940 G-H]

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       Mulamchand v. State of Madhya Pradesh, [1968] 3 S.C.R.  214,         applied.             In this case the contracts were executed by duly  autho-         rised officials under Government’s orders.

JUDGMENT:             CIVIL APPELLATE JURISDICTION: Civil  Appeal Nos. 313-315         1974.             From the Judgment and Order dated 8-8-1972 of the  Jammu         and Kashmir High Court in Civil First Appeals Nos. 46 to  48         of 1972.         Naunit Lal, for the Appellant.         V.C. Mahajan and R.N. Sachthey, for the Respondent.         The Judgment of the Court was delivered by             BEG,  J.--These  are  three  appeals   by  certification         against  the judgment of a Division Bench of the High  Court         of Jammu & Kashmir, allowing appeals from the judgment of  a         learned single Judge.         938         Jammu  and Kashmir Government had filed  three  applications         under  section 20 of .the Jammu & Kashmir  Arbitration  Act,         2002,  to  refer disputes arising out  of  three  agreements         between  it and the appellant Company to  arbitration  under         the  arbitration clauses of agreements between the  parties.         The  applications   had   been  dismissed   by  the  learned         single  Judge  on  the  ground that  the  arbitration clause         was, in each case, a part of an agreement which was not duly         executed in accordance with the provisions of Section 122(1)         of  the Constitution of Jammu & Kashmir which correspond  to         those  of Article 199(1) of the Constitution of India.   The         Division Bench had allowed the appeals of the Conservator of         Forests, Jammu  Circle, after holding that the provisions of         section  122(1)  of the Constitution    of Jammu  &  Kashmir         could  not be said to have been infringed if contracts  were         signed  by the Conservator of Forests in compliance with  an         order of the Government.             The  main-stay of the case of the appellant company  was         an instruction or rule contained in "The book of the  Finan-         cial  Powers" which reads as follows:             "’S.  13. The power to sanction or cancel the  terms  of         instruments, leases, agreements is delegated in the  follow-         ing cases:         S.        Nature of power     To whom delgated.       Extent         No.         1               2                     3                  4         X                                    X                     X         X          X                              X         9.  To sell forest produce  Chief Conser-   Upto Rs.  7000/-         and to enter into con-   vator of  forest   in value in            tract for the same                     each case provided                                                   the highest tender                               conservators of   upto Rs.3000/ in                               forests           each case provided                                                 the highest tender                                                 is accepted.                               Divisional        upto Rs.1000/in each                               forest            case provided the                               officer           highest tender is                                                 accepted.             The Division Bench observed that this rule existed prior         to  the coming into force of the Constitution of  Jammu  and         Kashmir.   It may also be pointed out that this  rule  deals

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       with  the power to "sanction or cancel"  leases,  agreements         and  other instruments which was delegated to  the  officers         mentioned  there with limitation on their  powers  specified         there.   But, the Constitutional provision, relied  upon  on         behalf of the appellant, relates to the manner of the execu-         tion of the formal         939         document  containing the contract after its sanction. It  is         true  that  the contract could not be executed  without  the         sanction.   Nevertheless,  if the sanction could  be  either         expressly or impliedly given by or on behalf of the  Govern-         ment, as we think it could, and, if some acts of the Govern-         ment could fasten some obligations upon the Government,  the         lessee  could also be estopped from questioning  the   terms         of the grant of the sanction even where there is no  written         contract executed to bind the lessee.             In the case before us, we have agreements from which the         appellant  company  has derived benefits.   And,  there  are         contracts  validly executed on behalf of the  Government  of         Jammu  & Kashmir by the Conservator of Forests.  It is  true         that, if the appellant could take up the legal plea that the         contracts were not duly executed, in accordance with section         122(1) of the Constitution of Jammu & Kashmir, it could urge         that  they  did  not have any effect at  all  as   contracts         whatever  other legal consequences its acts or  conduct  may         have had.  But, this does not mean that, if a party  obtains         benefits on the understanding that it would abide by certain         conditions, as the appellant company had done, it could  not         be compelled to observe those conditions, such as the condi-         tion  to  refer disputes to arbitration.   However,  in  the         instant case, we need not go into that question because  the         plea of a violation of Section 122(1) of the Jammu & Kashmir         Constitution   is  itself not sustainable  for  the  reasons         indicated below.             As the Division Bench of the High Court had pointed out,         there  was  a  Government order and  notification   of  23rd         February, 1957 which reads as follows:                             In  exercise of the powers conferred  by                       sub-section (1) of Section 122 of the  Consti-                       tution,  the  Sadar-i-Riyasat  is  pleased  to                       direct that the under-mentioned contracts  and                       assurances of property made in the exercise of                       the  executive  powers  of the  State  may  be                       executed  on  his behalf by  various  Officers                       subject to any limit fixed by Government rules                       and orders as follows:                       VI. In the Department of Development:                              (1)   Agreements  relating  to   Forest                       Leases and  appropriation of forest  products:                       By the secretary to Government, Chief  Conser-                       vator, Conservators of Forests and  Divisional                       Forest Officers".         The  three leases, containing the arbitration clauses  which         the  appellant wants to avoid, were executed on 27th  Febru-         ary,  1963,  and 28th February, 1963, and 19th March,  1963,         after  the  notification mentioned above.  The  leases  were         duly signed by  Conservators  of Forests, who were expressly         authorised,  without any limits imposed on the valuation  of         the  leases, to sign and execute them on behalf of the  Gov-         ernment.  The delegation of power made prior to the Jammu          10 --1338SCI/76         940         and  Kashmir Constitution related to grants of sanction  and         their cancellation. It did not expressly refer to powers  to         execute leases which is a separate matter.  The notification

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       of  1957, however, is specifically related to the  execution         of  formal documents including leases. Hence, it will  cover         the three leases before us even if the former rules relating         to  the limits of the authority of Forest  Officers to  give         or cancel certain sanctions could be said to be in existence         at all after the enactment of the new Constitution of  Jammu         & Kashmir and the notification of 23rd February, 1957, cited         above.             We  may  mention  that, as has  been  indicated  in  the         separate  judgment of the learned Chief Justice of the  High         Court,  the Jammu & Kashmir Government had tried  to  remove         the doubts it entertained about the validity of past  leases         executed  by the  Conservator  of Forests.   It,  therefore,         passed two orders: one of 14th April, 1965, and the other of         29th  April,  1971.  The order of 14th April, 1965,  ran  as         follows:                            "In   supersession  of  previous   orders                       regarding  signing  of lease agreement  it  is                       ordered  that the Conservator of Forests  will                       sign agreements relating to all cases of  For-                       ests   leases  and  appropriation  of   forest                       products and Chief Conservator of Forests will                       act as the arbitrator as provided under C1. 44                       of the Agreement.                       By order of the Government of Jammu & Kashmir.                                          Sd/- Bharat Bhushan  Secre-                       tary to Govt. Forests Department".                        The  order of 29th April, 1971, runs as  fol-                       lows:                        "Government  Order No. FST-31  dated  14-4-65                       shall  bedeemed  to  have  taken  effect  from                       29-1-63  and all actions taken by the  Conser-                       vators  of  Forests  in  executing  the  lease                       agreements  by  virtue of the said  order  are                       hereby regularised.                       By order of the Government of Jammu & Kashmir.                       Sd/-  R.C. Bhargava, Secretary to  Government,                       Agricultural                       Department".             The  learned  Chief  Justice  had  observed  that  these         orders,   purporting to ratify the leases which were  valid,         did  not have any legal effect whatsoever and were  unneces-         sary.   If there had been any question to be decided  as  to         whether  the Government had sanctioned the leases,  its  ac-         tions, apart from the execution of leases, could be  consid-         ered.  But, once there has been a valid execution of  leases         by duly authorised officers, the documents would be the best         evidence of sanction also.  That was one of the objects  of.         prescribing  a  formal mode of execution of  instruments  on         behalf of the Government apart from the need to protect  its         interests  against mala-fide and other unauthorised acts  of         its  servants or agents as indicated by this Court in  Mulam         Chand v. State of Madhya Pradesh(1)         1) [1968] 3S.C.R. 214.         941             In  the cases before us the only question which   needed         decision was whether formal execution of the leases by  duly         authorised officers had been proved.  We are of opinion that         the Conservator of Forests was, for the reasons given by us,         duly  authorised  to  execute the  leases.  Accordingly,  we         affirm the orders of the  Division  Bench  so  that  matters         in dispute between the parties could be validly referred  to         Arbitration under the appropriate clauses of the agreements.             These  appeals  are, therefore,  dismissed  with  costs.         Civil  Miscellaneous Petition No. 8573 of 1975  for  interim

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       orders is also dismissed as infructuous.         S.R.                                                 Appeals         dismissed.         942