Krishnapada Coomar and Co. Ltd. vs State of Assam and Others

Sarjoo Prosad, C.J.—The Petitioner, Krlshnapada Coomar and Co. Ltd. a Joint stock company incorporated in this State, has presented this application under Article 226 of the Constitution of India praying for a writ of mandamus or any other appropriate writ on the Respondents, directing them to forbear from giving effect to their proposal for settlement of cane mahal No. III of Darrang Division with M/S. Singapore Cane Manufacturing Co. of 137 Canning Street, Calcutta (Respondent No. 6)

The Petitioner claims that it is a private limited company, having its registered office at Naojan in the district of Sibsagar, Assam, and flit it has been currying on busine of extracting cane in Assam over sinew Tint The settlement of exclusive rights to cut and collect cane from the forest areas of the State, which have been divided into different mahals, Is, in procflce. made by auction, and bids are invited from intending lessees for settlement in accordance with the terms contained in the notices for sale.

In pursuance of a sale notice, dated, Tezpur, the 21st May, 1954, issued by the Divisional Forest Officer, Darrang Division, advertising for sale the exclusive right to cut and collect cases from Mahal No. Ill of Daring Division by public auction for a period of three years, the Petitioner bid at the said auction sale and offered the highest bid of Rs. 41,000/-. There were other bidders at that sale in addition to Respondent No. 7, M''s. Assam Canes Ltd., whose bid went up to Rs. 37,000/-only. The Government, however, celled upon the Petitioner to produce proof of its domicile in Assam, and eventually refused to ratify the sale in favour of the Petitioner in spite of its highest bid.

It appears that having refused to confirm the settlement .with the Petitioner, the Government directed that the settlement should be made with Respondent No. 7, whose bid was for Rs. 37,000/-only This Respondent, however, failed to deposit the security and to pay any kist of the royalty under the terms of the sale notice, and consequently the Government readvertised the mahal for sale. This was held at the risk of Respondent No. 7 on 25-6-55 for the period from 15th July, 1955 to"''31st August 1957, under notification dated 23-5-55. At-, this re-sale again, the Petitioner''s bid happened to be the highest.

It is .stated by the Petitioner that the Respondent No. 6. Singapore'' Cane Manufacturing Company, was not allowed to bid at this auction sale because it could not submit any income-fax assessment certificate as required under CI. 12 of the sale, notice. This time again, the Government refused to settle the can cutting and collecting right in the mahal with the Petitioner. The Petitioner tried its best to induce the Government to accept its offer, but could not sueced and in the end. It appears that the Government i''gain directed the mahal to be put up to sale under notification dated 29-7-55, for a period of two years from 1-9,-55 to 31-8-57, again at the risk of Respondent '' The sale was accordingly held on 18-8-55, and this Time again the Petitioner, who bid at the auction sale, gave the highest bid at Rs. 18,101/-, while''the Respondent No. 6 was the second highest bidder ''at Rs. 18,025/. only. It appears that the auction was finally closed with the acceptance of,/J the highest bid of the Petitioner. The Petitioner alleges that: it also signed and executed a declaration in the specified form, as required by C1 14 ''-of tire relevant sale notice. The highest bid lit , this instance being below Rs. 25,000/- under the terms of the sale notice, the sale had to be approved by the Conservator of Forests.

The Petitioner appears to have fared as un-1 favourably on this occasion as it did on previous occasions, and received no orders of confirmation of the sale in its favour by the Conservator of Forests until it learnt from a telegram that the cane mahal was sought to be settled by the Government with Respondent No. 6. It appears that the Government have sent a proposal to Respondent No. 6 suggesting that subject to its acceptance of certain terms, the cane mahal might settled with the latter. The said order reads as, follows:

Government orders settling cane mahal their or DIUTIUIK Division with you at rupees eighteen thousand one hundred and one, subject to no claim made by you for delayed settlement and subject to sale notice conditions. Confirm. your acceptance.

The Petitioner also preferred an appeal against the above order of settlement to the Conservator1 of Forests. Assam, as contemplated by CI. 7 of the sale-notice, dated 29-7-55, but its appeal was'' dismissed by an order, dated 8-10-55.

The argument of the Petitioner is that the Government had acted arbitrarily in refusing to grant the settlement to the Petitioner of the'' cane mahal in question in spite of the Petitioner''s'' giving the highest bid at the time of sale and in spite of the fact that its bid had been accepted by the .officer conducting the sale. The contention of the Petitioner in the first place is that the reasons for making a discrimination between the Petitioner and the other bidders, namely, Respondents Nos. 6 and 7, were constitutionally invalid and not well founded even, on facts.

It further contends that under the sale notice the Government had no right to interfere With the sale and that the only authority who was authorised to confirm the sale was the Conservator'' of Forests, Assam; and. that, therefore, the order passed by .the Government is entirely unjustified and illegal. It is further, urged that in substance] the Conservator of Forests had confirmed the sale,'' in favour of the Petitioner, its bid being the highest: but he erroneously referred the matter to'' the'' Government without proceeding to act on his own, discretion which, according to the sale notice, ho. was bound to do. .

It is undisputed that the Petitioner''s bid was the highest bid in the sale, and it is not alleged that, in any other respect the Petitioner had failed to conform to the terms of the sale notice. The rules on the point do not show that the Government reserved any right to refuse to make, a, settlement in favour of the hiss bidder, and the learned Counsel for the parties are agreed that they have to depend almost entirely upon the terms of the sale notice for the validity or otherwise of the step taken by the Government. Paragraph 7 of the sale notice dated 29-7-55 runs as follows:

The acceptance of the bids is subject to the approval of the Deputy Commissioner, Darrang, and in the case of any bid in excess of Rs 5000/-Rs. 25,000/- being accepted by the officer holding the sale, the sale will be subject to confirmation by the Conservator/Government, as the case may be., and that any person: wishing to represent against the sale, must file an appeal to the conservator. through the Divisional Forest Officer Darrang, within'' 14 days from the date of communication of the acceptance of the bid of the successful bidder. The contract exceeding the above sums will be executed by the Conservator/ government as the case may be.

It his Rightly urged by Mr. Ghose en behalf of the. Petitioner that in this case, the bid being below Rs. . 25,000/-, the author by compost to confirm, the sale was the Con enator of Forests, Assam This position is conceded by the learned Government Advocate appearing on behalf of the State, That being so, there can be no does that, on the terms of the sale notice, it was the Conservator of Forests, Assam, who was the by authority competent to confirm or to reefs the confirm the sale. A point has arisen as to wife it was open to the authority to refuse to confirm -the sale in. favour of the highest bidder

In the rules or even in the terms the ale notice there is no indication whatsoever that any such right was reserved, and I am inclined to think that the confirmation was almost in the nature of a formal confirmation of the highest bid, subject) to the terms of the sale notice having been otherwise fulfilled by the bidder, or true the that .sale having been held according to the terms mentioned therein. Whenever the Government have reserved a right to accept or not to accept the highest bid, relevant rules have been prescribed as such; for instance, in the case of settlement by auction of fisheries, or in the case of certain settlements by auction under the Settlement Manual. Clause 7 here speaks merely of confirmation of sale, and not of the highest bid which means, in other words, that if the sale is otherwise valid, it will have to be confirmed.

In the absence of any such reservation, ordinarily there is no reason why the highest be once the auction sale is closed, should not be accented by the authority holding the sole. am, therefore, of the opinion that subject to all of terms filed fulfilled, the acceptance of the bid the Conservator of Forts won aorist a formal matter. But in any case, it is contended on behalf Of the State by Mr. Midi titular way no such confirmation of the sale by the Conservator of Forests in the present case. B. rla''m-5 that by dismissing the apocal, the Cutis or of Forests did, in substance, reluse to confirm the sale.

The Petitioner, however, relies upon a letter sent by the Conservator of Forests, Asam, to the Secretary to the Government of Assam, Forest Department, dated 3-9-55. In paragraph 3 of the said letter, it Is observed that in the opinion of. the Sen or Conservator of Forests, in the of any keen competition, the price was not likely to RO up any more, specially which a complete year from the (mahal) period of three acre had already expired, and the officer felt that the mahal might be settled with the highest bidder. Mr Ghose contends that it is queer from this observation in the letter in quest on that the Officer was inclined to accept the bid of the Petitioner and to make settlement in its favour, but being under the erroneous impression that the matter had to be approved by the Government, the officer sent this letter to the Secretary to the Government'' of Assam, Forest Department.

it is'' suggested that so far as the officer was concerned, he had communicated his approval of the acceptance of the bid of the Petitioner. Mr. Medhi. however, argues that: this letter .had that been sent. by the Senior Conservator of Fare himself, but-appears to have been signed by. anew Mr. M, C. Bhatt charge, who was not the Senior Conservator of Forests and, therefore there nothing to indicate that the officer had his. approval to the settlement with the Petitioner.

It is difficult to accept the connation of Mr: Medhi because in the usual course, a though the letter may have been signed by Mr. M. C, Bhatta-charjee, it appears to have been signed on female of the Senior Conservator of Forests, and it is stated in the petition filed before us by the Petitioner ; that when the bid list was forwarded to the Conservator of Forests, Assam, for contraption. Mr. M. C. Bhattacharjee, Deputy Conservator of Forests, Assam, acting on behalf of the Conservator of Forests, Assign, recommended the settlement of the mahal with the petition rule.

It is not clear from the record whether -Mr. Bhattacharjee was actually acting on his own behalf-or in behalf of the Conservator of Forests. In any case, the position has become somewhat doubtful-in'' view of the dismissal of the appeal filed by Petitioner. Under the rules given in the sale'' notice, it was really the duty of the Conservator of Forests to confirm the sale and accept the bid offered by the Petitioner, because in the case, the. bid was for an amount above Rs. 5000/. but below Rs 25.000/-. The officer concerned having failed'' to exercise his duty, we think that the matter, should go back to him to enable him to exercise, his own discretion in the matter in the light of.'' the observations which I have already made, earlier.

The case falls within the principle of the de, cession given by the Supreme Court in Commissioner of Police, Bombay Vs. Gordhandas Bhanji, In that case under the rules framed u/s 22 of the City of Bombry Police Act. 1902. it was held that the only person vested with authority to grant or refure to grant a ''licence for the erection of a building to be used for purposes of public amusement, was the Commissioner of Police, and that it was also clear, that under the. rules, the said officer had been vested with the absolute discretion at any time to; cancel or suspend any licence which had been granted.

It was further held that the plover to do so was vested in him, and not in the State Government, and. as such, could only exercised ''by him at his discretion, and inasmuch as the cruder, in question in that case was an order of cancellation not made by the Corrmisionr of Police himself, but merely an intimation sent by him of an order passed by Anr. authority, namely, the Government of Bombay, the order could not t" upheld. In this case also, as we .have seen there'' is no rule on the point except the rules mentioned in the sale notice, and under those rules, the discretion to approve or not to approve of ,the sale law the Conservator of Forests, and not with the Government, and the order of Government, .therefore, proposing to make a settlement, in favour of Respondent No. 6. in derogation7-pl-'' the sale, has to be set aside and a direction given," to the Conservator of Forests to exercise''s pr''" per discretion in the matter.

We are unable to entertain the contention of the learned'' counsel on behalf by Respondents that it was open to the Government under the law, to settle the collecting cane in the said mahal in any manlier'' they liked. We have not discovered anything, the pertinent rules or in the sale notices capering

to Justify such an action. In undertaking com-jmprcial. ''transactions, the Government are in no Btteroositlon than any other individual, providledlihey have some statutory provisions or rules on the point to guide them, and subject to which the transactions are to be conducted. In such ''" ''''cases, the Government can take advantage of those provisions; but even in those cases, the Government are as much bound by the provisions 88 the persons dealing with them.

The person, so dealing, is then'' aware of the position in which'' he stands with the Government, and is not left to the tender mercies of the authorities who transact business for the Government, so that in case of any violation of the relevant rules and provisions, he is entitled to seek his appropriate remedies.. In this case, we have "notitound anything in the rules, except Clause 7 in me sale notice. As I pointed out, the only 1 ciception provided was that under this clause, the sale was to be confirmed by the Conservator of ''/ Forests, and that in case where the bid was; his ther than Rs. 25.000/-, the authority to confirm was the'' Government; otherwise, after the close Of the auction and the fall of the hammer, the deal in favour of the Petitioner would have been final.

In the view Which we have taken of the matter, it is unnecessary for us to go into the other question as to whether the alleged discrimination against the Petitioner made by the authorities concerned was in violation of Article 14 of the Constitution. There may bo something in the contention of the Petitioner that it was necessary and undesirable to rake up the question of its domicile when it was admittedly already a lessee under the Government in respect of other mahals, and its suitability, as sucb, could not be auestioned. The Petitioner further contends that it has been for a long time a resident of Sibcagar.

Be that as it may, the result of the discrimination in this case, whether right or wrong, has been obviously quite unfortunate on the public excheauer. The Government have not only losb the advantage of the highest bid of Rs. 41,000/-offered by the Petitioner, but even the person in Whose favour they wanted to discriminate, was unable to pay any portion of the royalty so much so that within a short time they were compelled again to put up to sale the mahal in question, at !the risk of the Respondent No. 7. They may now have to embark upon further litigation in order to recover, if possible, the Government dues, against -the person concerned, and they were even "compelled to resort to the expense and inconvenience of holding sales from time to time in ''.order to settle the mahal, although the period for which the settlement was to be made was fast running out; and all this because the Government would not see their way to accept the bid offered- by the Petitioner, which admittedly was the highest bid at every successive sale.

The mahal, also has been out of use during all this period as no cane could be extracted. In .dealing with the application, we are conscious of the fact that only about three months of the period for which the settlement could operate now ''remains to expire; but we find it necessary to set .aside the order petitioned against because the Conservator of Forests, Assam, has failed to per tarn his obligation, under which it was entirely In his discretion to affirm or not to affirm the Bale, ''Subject to the rules or terms mentioned in resale notice. It is not for us to point out that "the policy of discrimination, if carried the detriment of public interest and in the (Dec.) 1957 Assam D.F./12 manner disclosed'' by the facts of this case,'''' Is likely to prove destructive of indigenous enterprise and economics.

With the above observations, the rule" is) made absolute. We do not propose to make any order for costs.

I may add that it would be also open to the Conservator of Forests)-Assam, in view of the fact that the original period of three years for which the settlement was contemplated is now about to expire, to hold a fresh sale, if necessary.

Deka, J.

8a. This petition is under Articles 226 and 227 of the Constitution of India by Krishnapada'' Coomar and Co., Ltd., against certain Government orders purporting to be passed in connection with; the settlement of a cane mahal, designated as Mahal No. Ill of Darrang Division,. with responddent No. 6. M/s. Singapore Cane Manufacturing Co and a writ is prayed for quashing -the,, settlement with Respondent No. 6, and for directing that, the sale in favour of the Petitioner'' should beheld as completed.

There is much in the petition which, inKmyH estimation. is purely unnecessary except to raise '' some suspicion and prejudice against the provincial Government against whom it is alleged, inter alia, that it was out of mala fides that the settlement of the cane mahal with the Petitioner was utilised. My Lord the Chief Justice has dealt at length with the facts of this case and I need not ''recapitulate them, except to say that the earlier settlement of the mahal or the cancellation thereof is nobody''s concern. The Petitioner has not come to this Court against the order of refusing settlement of the mahal or of re-sales which were held on earlier occasions.

The only order that is challenged was subsequent to 18-8-55 on which date the third auction was held, when the. Petitioner offered a bid for Rs. 18.101/- as against the bid of Respondent No. 6 for Rs. 18,025/-, for settlement of the cane mahal for a period of two years from 1-9-55 to 31-8-57. The order of settlement of the mahal in favour of anybody does not seem to have been approved by the Conservator of Forests, . Assert though there is a contention on behalf of the Petitioner to the effect that the sale was confirmed by Mr. M. C. Bhattacharjee purporting to act on behalf of the Conservator.

Clearly, the difficulty is not because there is mala fide on the part of the Government or of any body as such, but that the rules framed for the purpose of settling the forest mahals are yory inadequate. The only rule to which our attention has Been drawn by the learned Counsel for .the Petitioner is Rule No. 10, which is stated to have the force of law, and it runs as follows:

No lease for. any fixed period giving the right of removing India rubber, cane, kutcha or cutch. laager, ivory, or any other forest produce shall be given otherwise than in accordance with the general or special orders of the Conservator who is empowered to authorise sales in respect of such leases, by auction, tender or any other method at such rates as he may decide in his discretion.

The rule lays down that no lease for any fixed'' period, even With regard to the canemahals. could be given otherwise than in accordance- with the general or special orders of the Conservator of Forests who is empowered to authorise sales in respect of such leases by auction, tender or any other method, at such rates as he may decide sin the discretion. There is no allegation that this rule iris been violated. The Government or the Conservator of Forests perforce had to supplement the conditions of sale-which they did by a notice dated 29-7-55. The authorities concerned felt that the conditions could not be sufficiently advertised by the notice alone, and that is why they inserted paragraph 8 in the notice itself. It says:

Particulars of the conditions of the agreementand any further particulars required, can be seen-at the Divisional Forest Office, Tezpur, durinK office hours.

Therefore, the sale normally would be held under the conditions notified by the notice of 29-7-55 alow? with the subsidiary rules of procedure as might be available in the Divisional For-'' est Office. There is no much dispute as to has relevancy of the conditions of sale, and the only point that> is pertinent is stated in paragraph 7 of the notice, to which my Lord the Chief Justice has referred in his judgment. It, is agreed by both parties that in cases of sales in between Rs. 5.000/- and Rs. 25,000/-. the same will have to be confirmed by the Conservator of Forests, Assam, and that any bid for a sum exceeding Rs. 25,000/-will have to be confirmed by the State Government.

Here the earlier sale was for a sum of Rs. 41.000/- and at that stage the sale or the lease had to be approved by the State Government, which they refused to do in favour of the Petitioner for reasons best known to them,-which we can hardly dissect. I see no materials, nor am I prepared to accept the suggestion that the confirmation, of the sale had been refused on the ground Of the Petitioner not being a bona Me resident of this province or for not having a domicile certificate. There might have been some enquiry on that point, but I do not consider that that amounts to discrimination under Article 14 of the Constitution, nor has that point been actually canvassed before us by the learned advocate for the Petitioner in the instant case. It is clear that even Respondent No. 6 does not claim to be a resident of this province, and the discrimination in the Dresent case, as alleged, does not seem to be on the ground of domicile, which has been sought to be insinuated on.

To me, it appears that the confusion was at a certain official level and particularly with the Forest Department. The letter of Mr. M. C, Bhattacharjee purported to have been written for the Senior Conservator of Forests, dated 3-9-55, '' does nowhere say that the matter received the consideration of tlie Conservator of Forests, Assam Who was rather'' against the confirmation of the ''sale in favour of the Petitioner, as appears from the appellate order passed by him. The letter deals, inter alia, with the earlier sale or settlement in favour of M/s. Assam Canes Ltd., which subsequently failed, and the concern of the Department was to realise the deficit from the Company.

The Deputy Conservator of Forests, Assam, Mr. M C. Bhattacharjee, was in favour of accepting the Petitioner''s bid for Rs. 18,101/- in the circumstances of the case. That the Conservator of Forests, Assam, had not accepted this proposal-or confirmed it, is clear from the order passed, by him at the appellate stage. There are .several letters in the file before us to show that Mr, Bhattacharjee, the Deputy Conservator of Forests, Assam, used to write his letters to the Government as "from the Conservator of Forests pa the'' lop of each letter. I am, therefore, very reluctant to accept the contention of Mr, Ghbse that this letter of 3-9-55 by Mr. Bhattacharjee for the Senior Conservator of Forests actually amounted to an opinion of the Conservator of Forests himself.

In these circumstances, I cannot uphold the contention on behalf of the Petitioner that at any time the Conservator of Forests confirmed the sale in favour of the Petitioner on the strength, .i of the bid that was given by him on 18-JN55. What, as a matter of fact, appears to be the state 4 of things is that there has been no settlement in. favour of anybody with regard to the cane rnahal in question. The telegram (copy) that has been produced before us indicates that the Government wanted to make the settlement of the mahal in favour of Respondent No. 6 for the identical amount for which the Petitioner gave a bid for myself, would like to say that this sort, of offering settlement to persons who have not actually given the bid on which the settlement is sought to" be made, is not supported by the rules. of procedure.

The Forest Department seem to have suppose ed that since the original bid was for a sum exceeding Rs. 25,000/-, that is, for a sum of Rs. 41,000/-, subsequent approval to the acceptance of the bid for Rs. 18,101/- of 18-8-55 also had to be given by the Government. There, they were, of course, wrong because, according to the conditions of sale, as admitted, it would be for the Conservator to approve of the present bid. and'' not the State Government. The offer of settlement by the Government could not be supported by the rules as they exist, or by the conditions of sale as advertised by the Conservator of Forests. Therefore, the only alternative would be that the-matter should go back to the Conservator of Forests. Assam, for consideration as to whether the sale in favour of the Petitioner deserves approval or not.

Though it has been argued, with" some vehemence, that there was mala fides in the matter of settlement of the mahal, there Js no fact or circumstance to substantiate the same except that a cloud has been tried to be raised as to discrimination on the ground of domicile, which has no support from the record or from the conduct of either party. The Petitioner company itself did not- really come against the earlier order, which it alleged or sought to allege, was based on the ground of discrimination.

Much reliance has been placed on the decision of the Supreme Court in the case K.N. Guruswamy Vs. The State of Mysore and Others, where really there were specific rules for settlement with regard to Excise shops. Here, in the conditions of sale as advertised, there has been no illegality, but there have been some irregularities in the matter of approval of the sale, J since the Conservator did not express his mind as to the approval of the sale, as contained in parmesan

graph 7 of the sale notice.

In view, however, of the fact that the Petitioner of settlement has practically terminated, and in view of the observations made by his Lordship | Bose. J., in the Supreme Court decision aforesaid it will be open to the Conservator of For Assam, either to exercise his discretion as posit proval of the sale or to consider whether the mahal should or should not be re-sold, since the settlement had not been finalized so long, and the priced for settlement is going to expire by September next.

The Rule is made absolute to the above extent. I agree that there should be no order as to costs. M.K.S. Order accordingly.