ORIENT PAPER AND INDUSTRIES LTD. AND ANR. ETC. ETC. v. STATE OF ORISSA AND ORS. ETC

Citation: [1990] SUPP. 2 S.C.R. 480

Court: Supreme Court of India

Bench: L.M. SHARMA, T.K. THOMMEN, K.N. SAIKIA

Case summary

Bamboo Contract is not and cannot be a contract of sale of goods, It confers upon the Respondent Company a benefit to arise out of land, namely, the right to cut and remove bamboos which would grow from the soil coupled with several ancillary rights and is thus a....

Judgment text

The Judgment of the Court was delivered by THOMMEN, J. These appeals by special leave arise from the judgments of the Orissa High Court in O. J. C: No. 3235 of 1988 and O. J . C. No. 3100 of 1988. The High Court dismissed the appellants' wtit petitions praying for a declaration that the Orissa Forest Produce (Control of Trade) Act, 1981 ('Act 22 of ! 981') and the Notification No. 6F- 10/88/21691/FFAH dated September 21, 1988 issued under section 1(3) of the said Act have no application to the contracts entered into between the appellants and the State of Orissa and for a direction to prohibit the respondent-State from enforcing the provisions of the said Act in pursuance of the said notification in respect of the said contracts and to allow the appellants to cut and remove bamboos from the areas covered by the contracts. One of the appellants in C. A. No. 4347 of 1988, namely, Straw Products Ltd. filed Writ Petition No.

474 of 1989 under Article 32 ·of the Constitution for a declaration that Ordinance No. I of 1989, the Orissa Forest Produce (Control of Trade) (Amendment) Act, 1989 ('Act 4 of 1989'). Notification No. 6F-10/88/21691/FFAH dated 21. 9. 1988 (S. R. 0. No. 666 of 1988) and Notification No. 6F- 10/88/21693/FFAH dated 21. 9. 1988 (S. R. O. No. 667 of 1988) are null and void and for certain other reliefs. The appellants in C. A. No. 4346 of 1988, namely, Orient Paper & Industries Ltd. and another filed Writ Petition No. 1132 of 1988 (as amended in 1989) under Article 32 of the Constitution praying for a declaration that the Orissa Forest Produce (Control of Trade) (Amendment and Validation) Act, 1987 ('Act 16 of 1987') and Orissa Forest Produce (Control of Trade) (Second Amendment) Act, 1987 {'Act 15 of 1987'); Ordinance No. 1 of 1989 and the Act which replaced. it (Act 4 of 1989); Notification No. 6F-10/88/21691/FFAH dated September 21, 1988 (S. R. O. No. 666 of 1988); and Notification No.

6F-10/88/21693/FFAH dated September 21, 1988 (S. R. O. No. 667 of 1988) are null and void, and for certain other reliefs. The parties in these appeals and writ petitions shall hereinafter be conveniently referred to as 'the contractors'. The contractors had entered into agreements 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 would have expired on. September 30, 1989. These agreements are generally referred to as the "bamboo contracts". These contracts were rescinded by Act 22 of 1981, which, in respect of bamboos, as we shall presently see, came into force as from I. 10. 1988. The contractors contend that their rights in respect of bamboos are not annulled or affected by reason of Act 22 of 1981.

Their rights, they say, are in the nature of profit a prendre, and are not susceptible of repudiation by statutory rescission of contracts. They rely upon a decision of this Court in State of Orissa and Others v. · The Titaghur Paper Mills Co. Ltd. & Another, [1985] 3 SCR 26. The bamboo contract was considered by this Court in Titaghur (supra) with reference to the question whether the amount payable· under the contract was exigible to purchase tax under the Orissa Sales Tax Act, 1947 (as amended in 1977). This Court held: " . . . . . . the. Bamboo Contract is not and cannot be a contract of sale of goods, It confers upon the Respondent Company a benefit to arise out of land, namely, the right to cut and remove bamboos which would grow from the soil coupled with several ancillary rights and is thus a. grant of a profitaprendre .... " ' ORIENT PAPER v. STATE OF ORISSA (THOMMEN, J. I 485 Being a benefit to arise out of land, the contractors had. an interest in immovable property.

So stating, this Court observed that the fact that the agreement under which this interest in immovable property was created was not evidenced by a registered document did not derogate from its character as a grant because section 90 of the Registration Act exempted it from registration. The question which arose in that decision was whether the amount payable under the bamboo contract was exigible to purchase tax. The answer depended on the basic question as to whether it was a contract of sale of goods or a contract conferring an interest in immovable property. It was in answering that question and in coming to the conclusion that it was not a contract of sale of goods, but a grant of an interest in immovable property, that the Court made an observation about the exemption from registration under section 90 of the Registration Act.

But whether the contract itself or any right or interest stipulated or granted or recognised under the contract was invalid for want of registration was not a question which was directly or substantially in issue in that case. Whether any right or interest was granted independently of or prior to contract was not directly or even indirectly considered. We refer to this aspect of the decision in Titaghur, (1985) 3 SCR 26 because much of the challenge against the validity of the impugned provisions turns on the question as to whether the right arising under the bamboo contract was a contractual right so as to be affected by Act 22 of 1981 arid the notifications issued thereunder. On this question, Titaghur (siipra) is neither res judicata nor precedent. We may at this stage refer to the reliefs sought in Writ Petition No. 1132 of 1988 (as amended in 1989). The writ petitioner in that case has challenged the validity of Act . J6 of 1987.

This challenge is no longer sustainable in view of the decision e. f this Court in M/s. Utkal Contractors and Joinery (P. ) Ltd. and Others v. State ofOrissa, (1987) Supp. SCC 751 upholding the validity of the Orissa Forest Produce (Control of Trade) (Amendment and Validation) Ordinance, 1987, which was repealed by· Act 16 of 1987. The writ petitioner has also • challenged the validity of Act 15 of 1987 by which clause (b) of subsection (2) of section 5 of Act 22 of 1981 was deleted and section 12 of the. said Act was substituted by a new provision. These amendments are, in our view, procedural changes and a valid exercise of legislative power to regulate and control trade in forest produce. Two forests Acts were in operation in the State of Orissa, i. e. , the Indian Forest Act, 1927 and the Madras Forest Act, 1882. These two enactments were repealed by the Orissa forest Act, 1972, which