Trace Your Case

UTKAL CONTRACTORS AND JOINERY PVT LTD V. STATE OF ORISSA

Utkal Contractors & Joinery (P) Ltd. v. State of Orissa, 1987 AIR SC 2310

ISSUE:

  • Whether the contract of the petitioner with the Government stands rescinded from the date of notification issued to enforce the Orissa Forest Produce (Control of Trade) Act, 1981?

RULE:

  • General words and phrases, however wide and comprehensive they may be in literal sense, must be usually construed as being limited to actual objects of the Act.

FACTS:

  • The Petitioners are holders of long-term license from the Government of Orissa for collection of Sal seeds from certain specified forest divisions on payment of royalty.
  • The State of Orissa enacted the Orissa Forest Produce (Control of Trade) Act in 1981 objective to prevent the smuggling of forest and to provide a State monopoly in such forest produce.
  • On December 9, 1982, the State Government issued a notification bringing the Act into force at once in the whole of the State of Orissa in relation to Sal seeds
  • Thereafter, the Government refused to accept royalty from the petitioners in respect of certain forest divisions on the ground that the notification had the effect of rescinding the existing contracts between the Government and the petitioners.
  • The petitioners filed Writ Petitions in Orissa High Court, seeking a declaration that the said notification was void and did not have the effect of rescinding their contracts in relation to Sal seeds.
  • The Orissa High Court dismissed the Writ Petitions. The matter was brought before the Supreme Court in Civil Appeal.

HELD:

  • The Court held that none of the provisions of the Orissa Forest Produce (Control of Trade) Act, 1981 deals with forest produce grown on Government lands.
  • The scheme of the Act is fully aligned with the Statement of Objects and Reasons and the Preamble, which aims to establish a monopoly by making the Government the exclusive purchaser of forest produce from private holdings.
  • The Court further held that section 5(1)(a) cannot be interpreted as broadly as argued by the Additional Solicitor General, as that would create confusion into the scheme of the Act. After considering the object and the scheme of the Act, the court found that section 5(1)(a) should not be interpreted in its literal sense.
  • Instead, the Court held that section 5(1)(a) should be given a restricted meaning that fits within the overall scheme of the Act. The conjunction ‘and’ between Section 5 (1)(a) and Section 5(1)(b) indicates that these clauses must be interpreted together to complement the Act’s intent.
  • The Court concluded that the contracts relating to specified forest produce grown in private holdings only are rescinded under the Act.
  • The Court reasoned that since the purpose of the Act is to create a monopoly in forest produce to enable the Government to enter into contracts, there was no point in rescinding contracts already validly entered into by the Government.