w w w . L a w y e r S e r v i c e s . i n



Ballarpur Industries Limited & Another V/S The State of Maharashtra, through Secretary, Department of Forests, Mantralaya


Company & Directors' Information:- BALLARPUR INDUSTRIES LIMITED [Active] CIN = L21010MH1945PLC010337

Company & Directors' Information:- V I P INDUSTRIES LIMITED [Active] CIN = L25200MH1968PLC013914

Company & Directors' Information:- A L M INDUSTRIES LIMITED [Active] CIN = U14100DL1996PLC129067

Company & Directors' Information:- F E INDUSTRIES PRIVATE LIMITED [Active] CIN = U36100PB2003PTC026482

Company & Directors' Information:- H G I INDUSTRIES LIMITED [Active] CIN = L40200WB1944PLC011754

Company & Directors' Information:- A G INDUSTRIES PVT LTD [Active] CIN = U27300HR1991PTC031378

Company & Directors' Information:- U F M INDUSTRIES LIMITED [Active] CIN = L15311AS1986PLC002539

Company & Directors' Information:- V S P INDUSTRIES PRIVATE LIMITED [Active] CIN = U17111TZ2005PTC011820

Company & Directors' Information:- G I INDUSTRIES PRIVATE LIMITED [Active] CIN = U15312PB2010PTC033806

Company & Directors' Information:- P AND P INDUSTRIES LIMITED [Strike Off] CIN = U21010MH1992PLC068885

Company & Directors' Information:- S L INDUSTRIES P. LTD. [Active] CIN = U15331WB1989PTC047543

Company & Directors' Information:- B R INDUSTRIES LIMITED [Active] CIN = U74899DL1995PLC067120

Company & Directors' Information:- H. V. R. INDUSTRIES PRIVATE LIMITED [Active] CIN = U27100DL2010PTC200428

Company & Directors' Information:- N M INDUSTRIES PRIVATE LIMITED [Active] CIN = U74120DL2008PTC175664

Company & Directors' Information:- J V INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1994PTC057081

Company & Directors' Information:- A R INDUSTRIES PVT LTD [Active] CIN = U27101HR1995PTC032569

Company & Directors' Information:- D V S INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1992PTC049221

Company & Directors' Information:- C D INDUSTRIES LIMITED [Active] CIN = U27100MH1996PLC101277

Company & Directors' Information:- G V INDUSTRIES INDIA PRIVATE LIMITED [Active] CIN = U74900TG2014PTC096387

Company & Directors' Information:- G S M INDUSTRIES PRIVATE LIMITED [Active] CIN = U02001DL2002PTC117443

Company & Directors' Information:- B G INDUSTRIES LTD [Active] CIN = U26921ML1980PLC001830

Company & Directors' Information:- M D INDUSTRIES PRIVATE LIMITED [Active] CIN = U91110GJ1994PTC022025

Company & Directors' Information:- R M G INDUSTRIES PRIVATE LIMITED [Active] CIN = U18100TG1993PTC016220

Company & Directors' Information:- R. S. D. INDUSTRIES PRIVATE LIMITED [Active] CIN = U51909DL2008PTC177504

Company & Directors' Information:- G. A. INDUSTRIES PRIVATE LIMITED [Active] CIN = U15435MH2005PTC151817

Company & Directors' Information:- I W D W INDUSTRIES LTD. [Strike Off] CIN = U30099WB1990PLC050177

Company & Directors' Information:- P A S INDUSTRIES INDIA PRIVATE LIMITED [Active in Progress] CIN = U17121TZ2005PTC012171

Company & Directors' Information:- V AND S INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1990PTC039251

Company & Directors' Information:- S S F INDUSTRIES LIMITED [Active] CIN = U25190BR1988PLC003160

Company & Directors' Information:- R & M INDUSTRIES PRIVATE LIMITED [Active] CIN = U24297TN1972PTC006185

Company & Directors' Information:- A M INDUSTRIES LTD [Active] CIN = U21012WB1977PLC030854

Company & Directors' Information:- A AND S INDUSTRIES PRIVATE LIMITED [Active] CIN = U17117DL1995PTC064137

Company & Directors' Information:- D R INDUSTRIES PRIVATE LIMITED [Active] CIN = U24100WB2011PTC160058

Company & Directors' Information:- H S INDUSTRIES PRIVATE LIMITED [Active] CIN = U23209MH2020PTC348174

Company & Directors' Information:- U K INDUSTRIES PRIVATE LIMITED [Active] CIN = U24241WB1988PTC044355

Company & Directors' Information:- V J INDUSTRIES PRIVATE LIMITED [Active] CIN = U29253KA2009PTC050226

Company & Directors' Information:- V T INDUSTRIES PVT LIMITED [Active] CIN = U29150WB1985PLC039217

Company & Directors' Information:- V T INDUSTRIES PVT LIMITED [Active] CIN = U29150WB1985PTC039217

Company & Directors' Information:- M. K. INDUSTRIES PRIVATE LIMITED [Active] CIN = U15549WB2008PTC130116

Company & Directors' Information:- D K INDUSTRIES LIMITED [Active] CIN = U45202CH1994PLC014627

Company & Directors' Information:- D G INDUSTRIES PVT LTD [Active] CIN = U36942WB1946PTC013526

Company & Directors' Information:- R I L INDUSTRIES PRIVATE LIMITED [Active] CIN = U70101DL1993PTC052678

Company & Directors' Information:- I S INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U29100GJ2009PTC057308

Company & Directors' Information:- B M INDUSTRIES PRIVATE LIMITED [Active] CIN = U17000MH1997PTC109621

Company & Directors' Information:- K B R INDUSTRIES PRIVATE LIMITED [Active] CIN = U27107DL1996PTC079915

Company & Directors' Information:- A C T INDUSTRIES PRIVATE LIMITED [Active] CIN = U74899DL1984PTC018724

Company & Directors' Information:- M M INDUSTRIES PRIVATE LIMITED [Active] CIN = U31300CT2008PTC020916

Company & Directors' Information:- A C INDUSTRIES PVT LTD [Active] CIN = U29299WB2006PTC109474

Company & Directors' Information:- C J INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U25209MH1998PTC116707

Company & Directors' Information:- N P INDUSTRIES LTD [Strike Off] CIN = U15549PB1989PLC009426

Company & Directors' Information:- J. L. INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U29141MP2008PTC020731

Company & Directors' Information:- I K INDUSTRIES PRIVATE LIMITED [Active] CIN = U24100MH2010PTC199474

Company & Directors' Information:- H. D. INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U27310MH2011PTC216080

Company & Directors' Information:- H & H INDUSTRIES PRIVATE LIMITED [Active] CIN = U34100DL2010PTC204604

Company & Directors' Information:- M J INDUSTRIES PRIVATE LIMITED [Active] CIN = U15203KA2011PTC060675

Company & Directors' Information:- B R V INDUSTRIES PRIVATE LIMITED [Active] CIN = U32301UP1995PTC018704

Company & Directors' Information:- A. G. INDUSTRIES LIMITED [Strike Off] CIN = U25201UP1994PLC017291

Company & Directors' Information:- B R INDUSTRIES LIMITED [Strike Off] CIN = U15204AS1993PLC003930

Company & Directors' Information:- I P M INDUSTRIES LIMITED [Active] CIN = U25200DL1995PLC068554

Company & Directors' Information:- M R INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74900UP2008PTC036443

Company & Directors' Information:- J G INDUSTRIES LTD [Active] CIN = L15141WB1983PLC035931

Company & Directors' Information:- V G INDUSTRIES PRIVATE LIMITED [Active] CIN = U15139JK2015PTC004570

Company & Directors' Information:- S N INDUSTRIES PRIVATE LIMITED [Active] CIN = U29211UP1951PTC002319

Company & Directors' Information:- D U INDUSTRIES PRIVATE LIMITED [Active] CIN = U29230GJ2016PTC091588

Company & Directors' Information:- S R P INDUSTRIES LIMITED [Amalgamated] CIN = U00061BR1984PLC002023

Company & Directors' Information:- C P INDUSTRIES PVT LTD [Strike Off] CIN = U29303MP1949PTC000846

Company & Directors' Information:- J B INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74999MH2013PTC245506

Company & Directors' Information:- S J V INDUSTRIES LTD [Amalgamated] CIN = U15421WB1982PLC035521

Company & Directors' Information:- V V INDUSTRIES PVT LTD [Strike Off] CIN = U99999DL1980PTC010427

Company & Directors' Information:- K K INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U65100DL1982PTC013046

Company & Directors' Information:- L K INDUSTRIES PRIVATE LIMITED [Active] CIN = U17291MH2012PTC233546

Company & Directors' Information:- G S C INDUSTRIES PRIVATE LTD [Active] CIN = U92114DL1956PTC002616

Company & Directors' Information:- G G INDUSTRIES PRIVATE LIMITED [Active] CIN = U27320UP1969PTC003282

Company & Directors' Information:- K S INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U31909MH1960PTC011707

Company & Directors' Information:- P R INDUSTRIES PVT LTD [Active] CIN = U21014DL1971PTC005738

Company & Directors' Information:- B M K INDUSTRIES PRIVATE LIMITED [Active] CIN = U17100MH1948PTC006398

Company & Directors' Information:- K R INDUSTRIES INDIA PRIVATE LIMITED [Active] CIN = U25190KA2012PTC062367

Company & Directors' Information:- S. S. R. FORESTS LIMITED [Strike Off] CIN = U01122TG1997PLC028046

Company & Directors' Information:- E S INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74999TN2012PTC086119

Company & Directors' Information:- I B INDUSTRIES LTD. [Strike Off] CIN = U28992WB1990PLC050469

Company & Directors' Information:- V I INDUSTRIES LTD [Strike Off] CIN = U36934WB1951PLC019890

Company & Directors' Information:- J M INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U05002UP1952PTC002456

Company & Directors' Information:- A K S INDUSTRIES PVT LTD [Active] CIN = U27201WB1946PTC013433

Company & Directors' Information:- S K INDUSTRIES LIMITED [Under Process of Striking Off] CIN = U29248PN1948PLC001948

Company & Directors' Information:- H V FORESTS INDIA LIMITED [Strike Off] CIN = U01122PB1996PLC019072

Company & Directors' Information:- G I P INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U52605MH2015PTC263962

Company & Directors' Information:- C. L. INDUSTRIES PRIVATE LIMITED [Active] CIN = U27109RJ2014PTC045306

Company & Directors' Information:- S. B. INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U74900PN2012PTC144181

Company & Directors' Information:- A & P INDUSTRIES PRIVATE LIMITED [Active] CIN = U36935TG2014PTC095781

Company & Directors' Information:- C & N INDUSTRIES PRIVATE LIMITED [Strike Off] CIN = U40200TG2014PTC095187

Company & Directors' Information:- INDUSTRIES INDIA PRIVATE LIMITED [Strike Off] CIN = U00349KA1947PTC000501

Company & Directors' Information:- A V K INDUSTRIES INDIA PRIVATE LIMITED [Strike Off] CIN = U52100KA2012PTC066761

Company & Directors' Information:- S V INDUSTRIES PVT LTD [Strike Off] CIN = U27104WB1960PTC024715

Company & Directors' Information:- B M K INDUSTRIES PVT LTD [Active] CIN = U99999MH1948PTC006393

Company & Directors' Information:- V B C INDUSTRIES LTD. [Not available for efiling] CIN = U99999AP2000PTC910431

    Writ Petition Nos. 3659 of 2009, 1486 of 2014 & 3659 of 2009

    Decided On, 06 March 2020

    At, In the High Court of Bombay at Nagpur

    By, THE HONORABLE JUSTICE: R.K. DESHPANDE AND THE HONORABLE JUSTICE: AMIT B. BORKAR

    For the Petitioners: Sunil Manohar, Senior Advocate, assisted by Akshay Naik, Advocate And For the Respondent: Neeraj Patil, Assistant Government Pleader



Judgment Text


1. The petitioner in both these petitions is Ballapur Industries Ltd., a Company duly established and incorporated under the Companies Act, 1913, having its registered office at Ballarpur, District Chandrapur. It is engaged in the business of manufacturing pulp, paper, paper board and other paper products in the industry set up sometime in the year 1947. The industrial bamboo cut is the raw material which is used in the process of manufacturing. Since 1947, there has been an agreement entered into between the State Government and the petitioner-Company to harvest bamboo from the forest area on payment of royalty as per the agreement. The first agreement was dated 31-7-1947 with the then Government of the Central Provinces and Berar, and after 1960 with the State Government. The second agreement was entered into on 10-12-1962 for the period from 14-11-1962 to 30-6-1991.

2. The agreement with which these two petitions pertain, was entered into on 11-3-2004 for a period of ten years, commencing from 1-10-2004 and ending on 30-9-2014. It was for supply of 1,81,540 metric tonnes of bamboo from the Government forest areas in the Gadchiroli and Chandrapur districts, specified in Schedules A and B to the agreement. Clauses (7)(a) and (b) of this agreement being relevant, are reproduced below :

'(7) (a) The unit of measurement for the quantities of bamboo available under this Agreement shall be '‘Metric Tonne’ (Air Dry)'. The Company shall pay to the Government sale price at the rate of Rs.650/- per A.D.M.T. (Air Dry Metric Tonne) for the quantity of bamboo made available to it for cutting and removal in accordance with Clauses 6 hereinabove, for supplies during the period from 2004- 2005 to 2008-2009. For the subsequent supply years i.e. from 2009- 2010 to 2013-2014, the Company shall pay t he sale price to be fixed with an annual escalation of 5% or the Whole Sale price Index, whichever is higher over the sale price fixed for each preceding supply year in this manner.

(b) The sale price payable by the Company to the Government hereunder for respective supply years as calculated in the manner aforesaid shall be as follows:

Supply Year

Sale Price

2004-2005

Rs.650/- per A.D.M.T.

2005-2006

Rs.650/- per A.D.M.T.

2006-2007

Rs.650/- per A.D.M.T.

2007-2008

Rs.650/- per A.D.M.T.

2008-2009

Rs.650/- per A.D.M.T.

2009-2010

(Rs.650/- + 5% of Sale Price for 2008-2009 or the Whole Sale Price Index, whichever is higher) per A.D.M.T.

2010-2011

(Sale Price for 2009-2010 + 5% of Sale Price for 2009-2010 or the Whole Sale Price Index, whichever is higher) per A.D.M.T.

2011-2012

Sale Price for 2010-2011 + 5% of Sale Price for 2010-2011 or the Whole Sale Price Index, whichever is higher) per A.D.M.T.

2012-2013

Sale Price for 2011-2012 + 5% of Sale Price for 2011-2012 or the Whole Sale Price Index, whichever is higher) per A.D.M.T.

2013-2014

Sale Price for 2012-2013 + 5% of Sale Price for 2012-2013 or the Whole Sale Price Index, whichever is higher) per A.D.M.T.'


3. Clause (2)(a) of the agreement defines 'Bamboo' for the purposes of agreement as under :

''Bamboo' shall mean the bamboo extracted from Commercial Bamboo and Nistar Bamboo Felling Series of the concerned Forest Division which are to be used for the purpose of manufacturing pulp, paper, paper boards and other paper products.'

4. On 9-3-2009, a show cause notice was given to the petitioner regarding revision of agreement as per Rule 3(1) of the Maharashtra Supply of Forest Produce (Revision of Agreement) Rules, 1983 (for short, 'the Rules of 1983'). It was proposed to fix the rate of bamboo supply at Rs.1,495/- per metric tonne instead of Rs.650/- per metric tonne, contained in clause (7) of the agreement dated 11-3-2004, for the supply in the year 2005-06. As per Rule 3(2) of the Rules of 1983, a detailed note explaining the basis for determination of the market value under Section 4 of the Maharashtra Supply of Forest Produce by Government (Revision of Agreements) Act, 1982 (for short, 'the Act of 1982') was also supplied. The petitioner submitted the reply dated 8-4-2009 opposing the proposal. In the reply, it was the contention raised that the hike in the rate proposed was arbitrary and much more than the market rate of Rs.600/- per metric tonne. It was the stand taken that under the agreement dated 11-3-2004, the rate fixed was at Rs.650/- per metric tonne, which represented the market value.

5. After hearing the petitioner in response to the show cause notice, the Government Order was issued on 15-7-2009, which was published in the Official Gazette on 16-7-2009, revising the rate of Rs.650/- per metric tonne, contained in clause (7) of the agreement dated 11-3-2004 for supply of bamboo to Rs.1,495/- per metric tonne for the year 2005-06 and further stating that the rate shall be revised in accordance with the provisions of Section 3 of the Maharashtra Supply of Forest Produce by Government (Revision of Agreements) Act, 1982 and the rules framed thereunder after a period of five years, i.e. for the supply year 2010-11. On 10-1-2013 and 22-10-2013, again the State Government issued the resolution and the Government Order respectively revising the rate of bamboo for the year 2010-11 and the rate of Rs.2,822/- per A.D.M.T. for the years 2011-12 to 2013-14 and the petitioner was directed to pay an increase of 9% per year on the said rate.

6. In view of the aforesaid position, the petitioner has approached this Court challenging the show cause notice dated 9-3-2009 and the Government Order dated 15-7-2009 published in the Maharashtra Government Gazette on 16-7-2009 and also the Government Resolution dated 10-1-2013 by filing these two petitions.

7. Shri Sunil Manohar, the learned Senior Advocate, assisted by Advocate Shri Atharva Manohar, for the petitioner, has urged that in terms of the provision of Section 3(a) of the Act of 1982, unless the agreement is amended conferring power upon the State Government to change, alter or amend the rate and periodicity of the agreement, the rates prescribed under the agreement dated 11-3-2004 cannot be altered. According to him, the procedure under Rules 3 and 4 of the Rules of 1983 is required to be followed before conferring such power upon the State Government. It is urged that no reasonable opportunity of being heard, as contemplated in the proviso under sub-rule (3) of Rule 3 of the Rules of 1983, was given. It is also urged that at any rate there was no power to retrospectively amend the rates. He, therefore, submits that the impugned show cause notice dated 9-3-2009 along with the Government Order dated 15-7-2009 and the Government Resolution dated 10-1-2013 and the Government Order dated 22-10-2013 are required to be quashed and set aside on the ground of breach of the aforesaid provisions.

8. As against this, Shri Neeraj Patil, the learned Assistant Government Pleader, has urged that in view of the statutory provisions relied upon by the petitioner, it is not necessary to amend clause (7) of the agreement and the State Government is competent to alter the rates and periodicity under the agreement by following the procedure prescribed under Rule 3 of the Rules of 1983, which, in the present case, has been followed. The show cause notice dated 9-3-2009 was issued, to which the petitioner has replied, and the Government Order dated 15-7-2009 has been published in the Official Gazette revising the rates, which represent the market value of bamboo. It is pointed out that the reasonable opportunity of being heard in the matter is required to be given when the modification is more unfavourable to the purchaser than the amendment proposed is made. It is also submitted that the Government has power to retrospectively amend the rates.

9. In view of the rival contentions, the questions, which are required to be considered in the present case, is formulated as under :

(a) Was it necessary for the State Government, in the facts and circumstances of this case, to amend the agreement dated 11-3-2004 by conferring power upon the State Government to revise the rates and periodicity contained in clause 7 of the said agreement, by following the procedure prescribed under Rule 3 of the Rules of 1983?

(b) Whether the State Government was competent under Section 3 of the Act of 1982 to revise the rates and periodicity contained in clause (7) in the said agreement dated 15-7-2009 with retrospective effect?

10. The Act of 1982 was brought into force with effect from 23-3-1983 when the Government Order was published in the Maharashtra Government Gazette Extraordinary Part IV. The objects and reasons of the Act are reproduced below :

'Objects and Reasons

Government had made commitments in a number of cases for sale or supply of forest-produce to the purchasers on long-term basis, primarily for utilisation in industries based on forest-produce like paper mills. Normally, the agreements provided for periodical revision of price or rate for the forest-produce to be supplied to the purchasers. There were, however, some cases, in which there was no provision for revision of the price or rate. In some cases, a ceiling had been put on the increase in the price or rate at the time of revision. In the absence of these provisions, Government was deprived of a fair price legitimately payable to it for the forest-produce supplied to the purchasers.

To meet these difficulties, it is proposed by this Act to take power to Government to suitably revise such agreements whether existing or future, as and when necessary, where there was no provision for revision or for periodical revision or where there was a ceiling on the increase, which came in the way of Government fixing the price or rate based on the prevailing market value. It is also proposed to provide for termination of an agreement by Government for breach of any of the terms and conditions of the agreement as amended, after giving an opportunity to the purchaser to show cause and after giving him one month’s notice. Similarly, an option has been given to the purchaser to terminate the agreement after giving one month’s notice, within a period of six months from the date on which the amendment in the terms and conditions or the revision in the price or rate is communicated to him, if he does not find it convenient to abide by the terms and conditions of the agreement as revised under this Act.

The Act is intended to achieve the above objects.'

11. The provision of Section 3(a) under the Act of 1982 is material and the relevant portion thereof is reproduced below:

'3. Power of Government to revise agreements for sale or supply of forests-produce.

Notwithstanding anything contained in any law for the time being in force and in any agreement subsisting on the date of commencement of this Act, or in any agreement, which may be entered into by the State Government with any purchaser on or after the date of commencement of this Act, it shall be lawful for the State Government, from time to time, by order published in the Official Gazette, to add to substitute, delete or otherwise amend any of the terms and conditions of any such agreement, for one or more of the following purposes, namely:-

(a) to provide for a revision or a periodical revision of the price of rate for sale or supply of forest-produce to the purchaser, where such agreement does not provide for any such revision or periodical revision, as the case may be, and, where such periodical revision is provided in the agreement, to provide for reducing or enhancing the period of revision:

Provided that, the price or rate once fixed shall not be liable to be revised by the State Government for a period of at least twelve months from the date on which such price or rate has come into force.'

This provision of Section 3 begins with non obstante clause of 'Notwithstanding anything contained in any law for the time being in force and in any agreement subsisting on the date of commencement of this Act, or in any agreement, which may be entered into by the State Government with any purchaser on or after the date of commencement of this Act'. It has been given overriding effect even on the contrary provisions contained in any law for the time being in force and in any agreement subsisting on the date of commencement of the Act, or in any agreement, which may be entered into by the State Government with any purchaser on or after commencement of the Act. It empowers the State Government to add, substitute, delete or otherwise amend any of the terms and conditions of any such agreement from time to time by an order to be published in the Official Gazette, for one or more of the purposes mentioned in clauses (a) to (c) specified therein. We are concerned with the purpose mentioned in clause (a), i.e. to provide for a revision or a periodical revision of the price or rate for sale or supply of forest produce to the purchaser, where such agreement does not provide for any such revision or periodical revision, as the case may be, and where such periodical revision is provided in the agreement, to provide for reducing or enhancing the period of revision.

12. Section 4 of the Act of 1982 deals with the price or rate of forest produce sold or supplied to purchasers not to exceed market value. Sub-section (1) therein states that the price or rate for sale or supply of the forest produce, to be fixed at the time of any revision of the price or rate under Section 3, shall not exceed the market value of the forest produce at the time of such revision, as the case may be, determined by the State Government in the prescribed manner.

13. Section 6 deals with the option of the purchaser to terminate the agreement after giving one month’s notice. If any amendment made in the terms and conditions of an agreement under Section 3 or any revision made in the price or rate for sale or supply of forest produce under that Section, is not acceptable to the purchaser, he may, at his option, by giving to the State Government one month’s notice in writing, within a period of six months from the date on which the amendment in the terms and conditions or the revision in the price or rate, as the case may be, is communicated to him, terminate the agreement, and accordingly the agreement shall stand terminated at the end of the notice period.

14. Section 7 regarding power to make rules prescribed in sub-section (2) to the subjects/matters on which the rules can be framed. In clause (a), the matter is regarding giving of notice of the amendment proposed to be made in the agreement or of any revision of price or rate proposed to be made under Section 3 and for affording the purchaser an opportunity of showing cause against the proposal. In clause (b), it is the principle on which the manner in which and the authority by which the market value shall be determined for the purposes of Section 4 is included.

15. Rule 3 of the Rules of 1983 deals with the notice of amendment proposed in the agreement. Sub-rule (1) therein requires a written notice of the proposed amendment to the agreement to be given to the concerned purchaser calling upon him to show cause within thirty days from the date of receipt of notice against the proposed amendment. The notice has also to specify the proposed date for the commencement of the amendment. Sub-rule (2) therein states that where the amendment proposed to be made in the agreement relates to the revision of the price or rate for sale or supply of forest produce fixed in an agreement, a note explaining the basis of determination of the market value under Section 4 shall be sent to the purchaser along with the notice. Sub-rule (3) therein provides for consideration of the representation, if any, from the purchaser against the show cause notice and the decision whether the proposed amendment shall be effected with or without any modification. The proviso below this sub-rule states that no modification, which is more unfavourable to the purchaser than the amendment proposed under sub-rule (1), shall be made without giving him a reasonable opportunity of being heard. If the State Government decides to effect any amendment in the agreement, sub-rule (4) requires the decision to that effect to be declared by an order to be published in the Official Gazette and a copy thereof to be sent to the purchaser. Rule 4 deals with the determination of the market value under Section 4 and the factors to be taken into consideration for such determination are specified in Items (a) to (e) below sub-rule (1) therein.

16. From the objects and reasons, it seems that the Legislature was conscious of the fact that the agreements entered into prior to coming into force of the Act provided for periodical revision of price or rate for the forest produce to be supplied to the purchasers. It, however, took note of the fact that there were some cases in which there was no provision for revision of the price or rate. In the absence of these provisions under the agreements, the Government was deprived of a fair price legitimately payable to it for the forest produce supplied to the purchasers. To meet these difficulties, it was proposed under the Act to take power to Government to suitably revise such agreements whether existing or future, as and when necessary, where there was no provision for revision or for periodical revision, which came in the way of Government fixing the price or rate based on the prevailing market value. An option is also given to the purchaser to terminate the agreement after giving one month’s notice, within a period of six months from the date on which the amendment in the terms and conditions or the revision in the price or rate is communicated to him, if he does not find it convenient to abide by the terms and conditions of the agreement, as revised under the Act.

17. Section 62 of the Indian Contract Act deals with the effect of novation, rescission or alteration of the contract entered into between the parties, and it states that if the parties to a contract agree to substitute new contract for it, or to rescind or alter it, the original contract need not be performed. Thus, the novation, rescission or alteration of the contract can be done only with the agreement of both the parties to the contract and it cannot be unilateral (City Bank of N.A. v. Standard Chartered Bank and others, reported in (2004) 1 SCC 12). In view of the overriding effect given to Section 3 of the Act of 1982 on the provisions contained in any law for the time being in force, the principle of law contained in Section 62 of the Indian Contract Act would not be available by way of defence to urge that there cannot be unilateral change, amendment, substitution or alteration of the terms and conditions of the contract entered into between the parties.

18. The provision of Section 3 of the Act of 1982 to amend any of the terms and conditions of the agreement providing for a revision or a periodical revision of the price or the rate for sale or supply of the forest produce to the purchaser, in our view, applies to the agreements subsisting on the date of coming into force of the Act of 1982. The expression 'any such agreement', employed under Section 3, has to be understood in relation to such subsisting agreements and not in relation to the agreement entered into after the commencement of the Act of 1982. The reasons are three-fold - (i) that the objects and reasons of the Act of 1982 clearly depict that in the absence of the provision for revision of price or rate under the agreement, the Government was deprived of a fair price legitimately payable to it for the forest produce supplied to the purchaser and to meet this difficulty, it was proposed under the Act to take power to the Government to suitably revise such agreement, (ii) that the State Government has statutorily taken care of its right to unilaterally alter, amend or substitute the rate and periodicity by observing the restrictions under Section 4 of the Act of 1982 and following the procedure under Rules 3 and 4 of the Rules of 1983, and (iii) that the absence of requirement conferring power upon the Government to alter, amend or substitute the rate and periodicity under the agreement has lost its significance in relation to the agreement entered into on or after the commencement of the Act of 1982.

19. In the present case, the agreement fixing the rate for supply of bamboo and periodicity of revision in the rates was entered into between the State Government and the petitioner on 11-3-2004, i.e. after coming into force of the Act of 1982 and the Rules of 1983. In our view, in respect of the agreement in question, it was not necessary to first amend the terms and conditions of the agreement conferring power to alter or substitute the rates for supply of bamboo and periodicity of revision and thereafter to alter rates or periodicity of revision in clause (7) of the agreement. The reason being that there was already a statutory provision of Section 3 in subsistence when the agreement in question was entered into. The petitioner/purchaser cannot claim ignorance of such provisions under the Act of 1982 and the Rules of 1983 and estoppel cannot operate against the statute. The State Government was competent under Section 3(a) to unilaterally change, alter or substitute the rates for supply of bamboo and periodicity of revision under clause (7) of the agreement by observing the restrictions imposed under Section 4 and following the procedure prescribed under Rules 3 and 4 of the Rules of 1983. In our view, therefore, the contention raised by Shri Manohar that unless the power is conferred upon by the State Government by way of amendment to the agreement to alter the rates and periodicity, it was not permissible to issue the Government Order under Section 3 of the Act of 1982 to change the rates prescribed in clause (7) of the agreement dated 11-3-2004, is rejected. The question (a) is answered accordingly.

20. Shri Manohar, the learned Senior Advocate appearing for the petitioner, has relied upon the following decisions of the Apex Court :

(1) AIR 1976 SC 127

M/s. Bisra Stone Lime Co. Ltd. v. Orissa State Electricity Board and another.

(2) (2008) 17 SCC 645

Principal Chief Conservator of Forests and others v. Yamthong Haokip.

(3) (2017) 16 SCC 433

Suresh Kumar Wadhwa v. State of Madhya Pradesh and others.

It is urged that the agreement can only be altered bilaterally and not unilaterally. We have gone through all these decisions and we do not find that these decisions consider the provision, like Section 3(a) of the Act of 1982, which has been given overriding effect. If there had been no provision like Section 3(a) in the present case, we could have appreciated the decisions relied upon by the petitioner. We have already held that the estoppel cannot operate against the statute. In our view, therefore, the decisions cited supra are not applicable to the case of the petitioner.

21. In the landmark decision of the Apex Court in the case of Union of India and another v. Cynamide India Ltd. and another, reported in (1987) 2 SCC 720, one of the principal objectives of price fixation stated, is to fetter and curb profiteering in the scarce resources of the community keeping up to the directive in Article 39(b) of the Constitution. It is held that a price fixation measure does not concern itself with the interests of an individual manufacturer or producer. It is generally in relation to a particular commodity or class of commodities or transactions. It is a direction of a general character, not directed against a particular situation. It is intended to operate in the future. It is conceived in the interests of the general consumer public. The right of the citizen to obtain essential articles at fair prices and the duty of the State to so provide them are transformed into the power of the State to fix prices and the obligation of the producer to charge no more than the price fixed.

22. It is now well settled that the fixation of rates by issuing the Government Order in exercise of the statutory power conferred by the rules framed under the enactment is a quasi legislative function. In the decision of the Apex Court in the case of Cynamide India Ltd., cited supra, it is held that price fixation is neither the function nor the forte of the Court. The assembling of the data and the mechanics of price fixation are the concern of the executive. The Court is neither concerned with the policy nor with the rates. It will not revaluate the considerations to be taken into account even if the prices are demonstrably injurious to some manufacturers or producers. If the Legislature has decreed the pricing policy and prescribed the factors which should guide the determination of the price, the Court will, if necessary, enquire into the question whether the policy and the factors are present to the mind of the authorities specifying the price. But the Court’s examination will stop there. It will not deluge itself with more facts and figures.

23. The aforesaid decision also lays down the parameters to challenge the action, which is quasi legislative in nature. It holds that such decision can be questioned on the ground that the considerations stipulated by the order as relevant were not taken into account or that irrelevant considerations were not kept out of the determination of the price. It can be questioned on any ground on which a subordinate legislation may be questioned, such as, being contrary to constitutional or other statutory provisions. It may be questioned on the ground of denial of the right guaranteed by Article 14, if it is arbitrary, i.e., if either the guidelines prescribed for determination are arbitrary or if, even though the guidelines are not arbitrary, the guidelines are worked in an arbitrary fashion or leading to hostile discrimination. It is further held that the Court cannot act as a Court of appeal over the question of price fixation.

24. The issuance of the Government Order under Section 3 providing for revision or a periodical revision of the price or rate for supply of bamboo, is a quasi legislative function and t he condition precedent is to observe the restrictions imposed under Section 4 and to follow the procedure prescribed under Rules 3 and 4 of the Rules of 1983. In the present case, it is not in dispute that the show cause notice, as required by Rule 3(1) of the Rules of 1983, was issued on 9-3-2009 and along with it a detailed note explaining the basis for determination of the market value, as required under Section 4 of the Act of 1982, was given to the petitioner. The procedure prescribed for determination of the market value of the forest produce, i.e. bamboo, under Rule 4 of the Rules of 1983 was followed and the price or rate for sale or supply of bamboo was fixed by the Government Order issued under Section 3 of the Act of 1982 in the Official Gazette dated 15-7-2009. The Government Order itself recites that after taking into consideration the representation made by the petitioner in response to the show cause notice, it was decided to carry out the amendment in the said agreement.

25. We find that the representation of the petitioner against the show cause notice has been considered. A note appended to the show cause notice clearly indicates the assembled data of sale instances of bamboo taken into consideration. In a challenge to quasi legislative exercise, it is not the function of the Court to revaluate the consideration, as has been held in the case of Cynamide India Ltd., cited supra, even if the prices are found to be demonstrably injurious to some of the manufacturers or producers. It is not the function of the Court to deluge with more facts and figures or to sit in an appeal over the question of price fixation. The adequacy or sufficiency of material available with the respondent also cannot be the subject-matter of scrutiny. The test of judicial review of quasi judicial orders cannot be applied to the judicial review of quasi legislative orders. The contention that the fixation of price is arbitrary is not substantiated.

26. The proviso below sub-rule (3) of Rule 3 of the Rules of 1983 states that no modification, which is more unfavourable to the purchaser than the amendment proposed under sub-rule (1) of Rule 3, shall be made without giving a purchaser reasonable opportunity of being heard. As we see from the show cause notice as well from the final Government Order dated 15-7-2009 issued under Section 3 of the Act of 1982, there is no modification, which is more unfavourable to the petitioner/purchaser than the amendment proposed under the show cause notice. The revision of rate and periodicity proposed in the show cause notice is maintained in the final Government Order. We do not find any violation of the statutory provisions under Rules 3 and 4 of the Rules of 1983 and no insistence can be made to extend the principles of natural justice beyond what is provided under it, as has been laid down by the Apex Court in the case of Cynamide India Ltd., cited supra. In our view, therefore, it was not the requirement attracted in the present case regarding giving of reasonable opportunity of being heard in the matter to the petitioner. The contention that there was violation of the proviso below sub-rule (3) of Rule 3 is, therefore, rejected.

27. We have gone through the reply dated 8-4-2009 filed by the petitioner in response to the show cause notice to consider and find out whether the vast difference due to revision in the price is because of the nature and quality of bamboo, which is agreed to be supplied and in respect of which there is a revision. In the reply, we find that a statement is made that the requirement is only for industrial bamboo and not commercial bamboo and, therefore, the rates of commercial bamboo cannot be made applicable for determination and/or fixing the royalty while supplying the bamboo. 'Bamboo' is defined under clause (2)(a) of the agreement, which is already reproduced. 'Bamboo' means the bamboo extracted from Commercial Bamboo and Nistar Bamboo Felling Series of the concerned Forest Division, which are to be used for the purpose of manufacturing pulp, paper, paper boards and other paper products. It is not the case that the bamboo, in respect of which there is a revision in the price/royalty, cannot be used for such purpose. Though in the reply to the show cause notice the stand is taken that the requirement is only for industrial bamboo, the definition does not define such quality of bamboo. We, therefore, do not find that the fixation of price wa

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s vitiated on account of taking into consideration of any irrelevant factor or ignoring the relevant factor. 28. The Apex Court has held in the decision in the case of Cynamide India Ltd., cited supra, that the prices so fixed operate prospectively. The Government Orders dated 15-7-2009 and 22-10-2013 are issued in exercise of the power under Section 3 of the Act of 1982 and it cannot be given retrospective effect. We could not find the competence of the State Government under the said provision to give retrospective effect to the proposed amendment. Rule 3 of the Rules of 1983, also does not speak of giving retrospective effect to the proposed amendment. In our view, therefore, the Government Orders dated 15-7-2009 and 22-10-2013, to the extent they give retrospective effect to the revision of rates and periodicity, is beyond the competence and cannot be sustained. It will have to be quashed and set aside. The question (b) is answered accordingly. 29. Both the learned counsels have tendered a statement in respect of deposit of amount by the petitioner in this Court. According to the statement, the petitioner has deposited an amount of Rs.10,67,27,259/-, whereas the petitioner was required to deposit an amount of Rs.7,45,67,144/-. Thus, the petitioner has in fact deposited the amount in excess of what was required to be deposited. The petitioner has furnished the bank guarantee of Rs.17,80,00,000/-. 30. In view of above, both these petitions are partly allowed by passing the following order : (1) The Government Order dated 15-7-2009 published in the Official Gazette on 16-7-2009 and the another Government Order dated 22-10-2013 revising the rate at Rs.2,822.88 per Air Dry Metric Tonne, are quashed and set aside to the extent the same are given retrospective effect. (2) The respondent- State Government shall be entitled to recover the price/royalty for supply of bamboo at the rate of Rs.1,495/- per Air Dry Metric Tonne with effect from 16-7-2009 and at the rate of Rs.2,822.88 per Air Dry Metric Tonne with effect from 22-10-2013. (3) The respondent- State is permitted to withdraw an amount of Rs.7,45,67,144/- along with interest, if any, accrued thereon. The petitioner is permitted to withdraw the balance amount deposited in this Court along with interest, if any, accrued thereon. (4) The respondent- State Government is directed to workout the amount of price/royalty, if any remains to be recovered by ignoring the retrospective effect of the Government Orders and communicate proposed demand to the petitioner along with such workout within a period of one month from today. (5) The petitioner shall submit its reply within a period of one month raising dispute, if any, in respect of the proposed demand received from the State Government. (6) The State Government shall thereafter make final determination after taking into consideration the dispute raised by the petitioner and raise a demand accordingly against the petitioner. The petitioner shall be at liberty to challenge it, if so required in appropriate forum. (7) If it is found that the amount in excess is paid by the petitioner, the same shall be given credit in subsequent supply to the petitioner. (8) The bank guarantees furnished by the petitioner shall stand discharged upon recovery of the entire dues as per the calculation. 31. Rule is partly made absolute accordingly. No order as to costs.
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