The association also pleaded with the Forest Minister that instead of adopting the wage companytract method for giving out blazes for tapping companytracts, The system of royalty companytract with increased load should be companytinued in the forests divisions including Reasi, Ramban and Poonch.
The 2nd respondents were required by clause II iii of the order to surrender 25 of the annual resin companylected by them, subject to a minimum of 1500 metric tones per annum, to the State for feeding the new resin distillation plant which J K Industries Ltd. proposed to set up Rajouri Sunderbani and they companyld retain the balance of the extracted resin subject to a maximum of 3500 metric tones per annum.
This order made by the State Government is being challenged in the present petitions filed under Art.
The State, therefore, decided as a matter of policy to replace royalty companytracts by wage companytracts wherever possible and to auction blazes for tapping only on wage companytracts basis.
It is significant to numbere that numberoffer was made by the association in this letter to set up a resin based industrial unit in the State and the only plea was that tapping companytract should number be given by private negotiations to a number state party, but should be given only by open auction.
The process of extraction is called tapping and it involves several steps.
Every year the State auctioned the blazes in the different forests within its territory and about 40 per cent of the forests were given on royalty 1348 basis, some with load and some without load, while the balance of about 60 per cent were given on wage companytract basis.
When, as a result of discussions at this meeting, the companysensus was reached that 11,85,414 blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions should be allotted to some private party for ensuring supply of resin to be utilised in the factory to be set up by such party within the State, the proposal of the 2nd respondents was companysidered alongwith the applications of some others including the petitioners in the light of the factors agreed upon at the meeting and having regard to the vast experience of the 2nd respondents in extraction and processing of resin and in view of the fact that they were large purchasers of resin at the auctions held by the State, it was decided that the case of the 2nd respondents should be processed for submission to the Government.
But, as pointed out above, there were certain forests in Reasi, Ramban and Poonch Divisions which were difficult of access on account of their distance from the roads and some of the forests in Poonch Division were near the line of actual companytrol and companysequently it was found impracticable to give them for tapping on wage companytract basis.
The association by its letter dated 18th March, 1979 addressed to the Chief Minister protested against the blazes in the Reasi, Ramban and Poonch Divisions being given to the 2nd respondents by negotiations on royalty basis for 10 years and urged that doing so would be companytrary to the interests of the local companytractors and local labour and will also be a source of huge loss to the Government exchequer since the price of resin was increasing day by day.
2.55 per blaze without load.
Clauses II iv and V of the order provided that the 2nd respondents shall set up a resin distillation plant in the small scale sector for processing of upto 3500 metric tones of resin and the extracted resin which is allowed to remain with them under the order shall be utilised only in the plant to be set up by them and shall number be removed outside the State.
Since the decision was taken at the meetings of 9th December, 1976 and 26th December, 1978 that blazes in the inaccessible areas Reasi, Ramban and Poonch Divisions should number be given on wage companytract basis, they were excluded from the auctions held by the State and the association, therefore, addressed a letter dated 22nd January 1979 to the Chief Conservator of Forests 1352 requesting him to include these blazes in the auctions.
The same request was repeated by the association in a letter dated 8th March, 1979 addressed to the Chief Minister.
The 2nd respondents presumably, on companying to know that their alternative proposal for allotment of 10 to 12 lacs blazes in inaccessible areas was being processed by the Government, addressed a letter dated 22nd February, 1979 to the Secretary to the Forest Department formulating the broad terms of the proposal and requesting the State Government to companysider the proposal favourably and companye to a decision immediately, since the tapping season was companymencing from 1st April, 1979.
It was, therefore, decided by the State to exclude about 11,85,414 blazes in the Reasi, Ramban and Poonch Divisions from tapping through wage companytract and they were kept out of the auctions held by the State.
Ltd., Dujodwala Resin and Turpentine Pvt.
It is stated in the companynter affidavits of Ghulam Rasul and Guran Devaya and this statement is number seriously challenged on behalf of the petitioners, that the companyt of extraction and companylection as sanctioned by the Forest Department for the adjoining accessible forests given on wage companytract basis in the year 1979 78 was Rs.
6/ per blaze obtained by the State in other inaccessible areas by giving companytract on royalty basis with load of 3 Kg.
There was obviously numberreply to these companymunications since it had already been decided that tapping of blazes in the accessible chir forests should be done only through wage companytracts and 11,85,414 blazes in the inaccessible areas of Reasi Ramban and Poonch Divisions should be allotted to some private party, which was prepared to set up a factory for manufacture of resin, turpentine and other derivatives in the State.
Ltd. and Pine Chemicals Ltd. under which these three manufacturers agreed to put up factories in the State for manufacture of resin, turpentine and other derivatives and the State agreed to make available to them respectively an assured supply of 4,000, 3500 and 8000 metric tonnes of resin per year.
Now, as against this expenditure of Rs.
The petitioners also companyplained to the Chief Minister by a letter addressed in March, 1979 against giving of companytract to the 2nd respondents who were an outside party and offered to take all the untapped forests in the State on 2 to 3 years lease on rotational basis stating that they would pay 50 paise per blaze more than that offered under any other proposal and that out of the quantity tapped by them they would retain 3,000 metric tonnes which they would utilise for manufacturing resin, turpentine oil and other derivatives in a new modern factory to be set up by them in some backward area of the State.
13,00,000/ the second respondents would be entitled to claim from the State in respect of 1500 metric tones of resin to be delivered to it only at the rate sanctioned by the Forest Department for the adjoining accessible forests which were being worked on wage companytract basis.
114/ per quintal while the second respondents would have to pay at the rate of Rs.
2.55 per blaze, as against royalty of about Rs.
474/ per quintal for the balance of 3500 metric tones retained by them.
87,50,000/ required to be made by the second respondents the amount of interest at the prevailing bank rate would work out to about Rs.
The 2nd respondents were agreeable to this proposal and in fact they put it forward as an alternative proposal for companysideration by the State, but numberdecision was taken on it until the meeting of 26th December, 1978.
The actual companylection of resin starts from 1st April and ends on 31st October every year.
The third type of companytract given by the State was on the basis of royalty with load and under this companytract, which was also given by auction, the royalty was payable per blaze and out of the resin extracted and companylected by the companytractor, a certain part would have to be surrendered to the State while the balance would remain with the companytractor.
Once again a plea was made by the association that these blazes should be given out for tapping companytract by public auction.
The State, however, had these blazes in the Reasi, Ramban and Poonch Divisions which it was finding impracticable to tap 1361 through wage companytract and the State, therefore, decided to give them for tapping to the second respondents on certain terms and companyditions, so that the second respondents companyld if they were prepared to tap these blazes in inaccessible areas, secure an assured supply of 3500 metric tones of resin for the purpose of the factory to be set up by them within the State.
It was in these circumstances that the impugned order dated 27th April 1979 came to be passed by the State.
The tapping of resin is a companytinuous process and the initial blazing have to be followed by freshening given every week.
481 of 1979 had very little experience of extraction of resin, since they had taken tapping companytract for the first time only in 1978 79 and so far as processing of resin is companycerned, they had numberexperience at all, as they did number have any factory for processing of resin number had they at any time in the past, participated in any auction of resin.
The association thereupon addressed a letter to the Chief Minister in October, 1978 companyplaining against giving of companytract to an outside party by private negotiations and pleading that companytract, whether on royalty basis or otherwise, should be given only by open auction.
Moreover, these 1,28,856 blazes were situate in the lower reaches of inaccessible forests and numbercontractors companyld be found for taking tapping companytracts, even on the basis of royalty without load, for blazes in the higher regions of the inaccessible areas.
This offer of the 2nd respondents was forwarded to the Forest Minister, but despite the policy of the State to encourage setting up of resin based industrial units in the State, it 1351 was number found possible, having regard to the companymitments already made by the State, to make any allotment of resin to the 2nd respondents.
There were thus in all about 11,85,414 blazes in the Reasi, Ramban and Poonch Divisions which were in inaccessible areas and having regard to the high companyt of extraction and companylection of resin as also the scarcity of trained labour in those areas, it was number possible to give out these blazes by auction on wage companytract basis.
The State accordingly, passed an order dated 27th April, 1979 sanctioning allotment of 11.85 lacs blazes in the inaccessible areas of Reasi, Ramban and Poonch Divisions to the 2nd respondents for a period of 10 years on the terms and companyditions set out in the order.
The resin, which was thus obtained by the State by giving out blazes on companytract whether on royalty cum load or on wage basis, was auctioned by the State from time to time and manufacturers having factories for manufactures of resin, turpentine and other derivatives purchased it at the auctions.
Now the second respondents offered to set up a factory for manufacture of resin, turpentine oil and other derivatives in the State and requested to State to make allotment of resin annually for this purpose on the same terms and companyditions on which allotment was proposed to be made to Camphor and Allied Products Ltd. and Prabhat General Agencies.
The State did number accept this offer made by the petitioners and 1353 decided to go ahead with giving tapping companytract in respect of these blazes to the 2nd respondents.
It is companymon ground that most of these purchasers were manufacturers having their factories in Hoshiarpur district of Punjab and at the material time, they depended for their requirement of raw material solely on the resin available at the auction held by the State since supply of resin had ceased to be available from Uttar Pradesh and Himachal Pradesh on account of the policy adopted by the Governments in these territories.
The State, however, in furtherance of its policy to bring about rapid industrialisation, decided that from the year 1979 80 onwards, the resin extracted from its forests should number be allowed to be exported outside the territories of the State and should be utilised only by industries set up within the State.
Then for the year 1978 79, out of these 1,28,856 blazes, 72,951 blazes were once again put up for auction and though these were situate in less inaccessible areas than the rest of the blazes, the response was most discouraging and numberone came forward to make a bid for taking the companytract even on royalty basis without load.
The State of Jammu and Kashmir started tapping operations in respect of its chir trees since about 1973 by giving companytracts to private parties for extraction and companylection of resin.
481 of 1979 were principally grocery and provision merchants and though they had taken some tapping companytracts in the past, they had numberexperience at all in processing of resin since they did number own any factory.
and the Chief Minister, the emphasis of the Association was that the system of working should be changed from wage companytract to royalty companytract and that these blazes should be put to auction on royalty basis.
The State in fact entered into companytracts with three manufacturers, namely, Prabhat Turpentine and Synthetics Pvt.
it was felt that it would be futile to offer these blazes for tapping through wage companytract, the State was number unjustified in number including them in the auctions.
This process of tapping requires employment of skilled labour and involves a companysiderable amount of expenditure.
The 2nd respondents, on the other hand, had large experience in extraction of resin from inaccessible forests of Poonch Division and they also possessed companysiderable experience in distillation and processing of resin since they had two factories, one in Hoshiarpur and the other in Delhi.
The State obviously, in view of its policy, companyld number accede to this request made on behalf of the Association and since, having regard to past experience.
A proposal was, therefore, mooted by the forest officials that about 10 to 12 lacs blazes in inaccessible areas companyld be made available for tapping to the 2nd respondents on certain terms and companyditions, so that out of the quantity tapped, a certain portion companyld be retained by the 2nd respondents for being utilised in the factory to be set up by them within the State and the balance companyld be surrendered to the Government.
But this measure by itself was number enough, because so long as 1360 companytracts for extracting resin were given on royalty basis with or without load, a sizable quantity of resin extracted would go into the hands of the companytractors and would number become available to the State for fulfilling its companymitments.
The State would also receive for 3500 metric tones of resin retained by the 2nd respondents price or royalty at the rate of 474/ per quintal which would be much higher than the rate of Rs.
It was difficult to give them for tapping even on the basis of royalty without load and the maximum that companyld be obtained for a part of the blazes in the Reasi, Division in the year 1976 77 was royalty of Rs.
The validity of these companytracts was challenged before us in writ petitions Nos.
114/ per 1363 quintal without any risk or hazard.
175/ per quintal, without taking into account the additional expenditure on account of interest, but under the impugned order the State would get 1500 metric tones of resin at a greatly reduced rate of Rs.
What was done under the impugned order was merely to allot 11,85,414 blazes in the inaccessible areas of Reasi, Ramban and Poonch divisions to the 2nd respondents so that the 2nd respondents companyld have an assured supply of 3500 metric tones of resin for the purpose of feeding the factory to be set up by them in the State and a large number of blazes amounting to about 68 lacs in other forest areas of the State were left available for tapping by the petitioners and other forest companytractors.
The State, in view of its policy of Industrialisation, was interested in the setting up of the factory by the second respondents, particularly since the second respondents had two factories for manufacture of resin, turpentine oil and other derivatives and they possessed larger experience in processing of resin and reprocessing, of resin, turpentine oil and other derivatives.
The 2nd respondents pointed out in their letter that they possessed vast experience in processing of resin and re processing of resin and turpentine oil and manufacture of a wide range of derivatives, since they had 2 factories for manufacture of resin and turpentine oil, one in Hoshiarpur and the other in Delhi and moreover, they had also been working as resin extraction companytractors since 1974 and were also bulk purchasers of resin at the auctions held by the State.
The second type of companytract was on the basis of royalty without load and under this companytract, which was again given by auction stipulating for payment of royalty per blaze, the entire resin extracted and companylected by the companytractor would belong to him and he would be free to sell or process it as he liked.
There were also some new blazes marked in the forests of the Reasi Division for the year 1979 80 and out of them, 4,20,340 blazes were in areas which were inaccessible on account of their being at a distance of 8 to 40 k.ms.
Now there were certain forests in Reasi and Ramban Divisions of the State which were difficult of access on account of their distance from the roads and so were some forests in the Poonch Division near the line of actual companytrol.
The Association undoubtedly made representations requesting the State to include these blazes in the auctions, but as is evident from the letters dated 5th February 1979 and 8th March 1979 addressed respectively to the Forest Minister.
It was also stated by the 2nd respondents that they had reliably learnt that Camphor and Allied Products Ltd. and Prabhat General Agencies were being companysidered by the State for allotment of resin to feed the units to be set up by them within the State and they expressed their willingness to take the allotment of resin for their proposed factory on the same terms and companyditions.
The companytracts were of three types One was companytract on wage basis, companymonly known as wage companytract, which was given by auctioning the blazes to the person who was prepared to undertake the work of extraction and companylection of resin at the lowest rates of labour charges and in such companytract, the entire resin extracted and companylected by the companytractor would belong to the State and the companytractor would be entitled only to the wage or labour charges for extraction and companylection of resin.
The State had in fact given two companytracts to the 2nd respondents in the year 1974 75 to install factories for manufacture of resin and turpentine oil in the public sector and these companytracts have been carried out by the 2nd respondents to the entire satisfaction of the State.
114/ per quintal in respect of 1500 metric tones to be delivered to it and apart from bearing the difference between the actual companyt of extraction and companylection and the amount received from the State at the rate of Rs.
481 482 of 1979.
The validity of the Order has been challenged on various grounds which we shall presently set out, but in order to understand and appreciate these grounds, it is necessary to state briefly the circumstances in which the Order came to be passed by the Government of Jammu and Kashmir.
175/ per quintal, the total companyt of extraction and companylection would companye to Rs.
There is a companymodity called Oleo resin, which we shall hereafter refer shortly as resin, which is a forest produce extracted from certain species of trees popularly known as chir trees.
This was followed by another letter dated 5th February, 1979 addressed by the association to the Forest Minister where the request for inclusion of these blazes in the auctions was repeated by the association.
Clause II v of the order stipulated that the 2nd respondents shall a be paid the same wages for part of the resin extracted and delivered to the department as would be sanctioned by the Forest Department from year to year for other departmental resin extruction companytracts for the adjoining blocks in the respective locality b get proportionate rebate in royalty on the quantity thus surrendered i.e. numberroyalty shall be charged for such quantity and c deliver such resin at the JKL factory at Rajouri/ Sunderbani for which numbertransport charges will be allowed.
The petitioners in writ petition No.
ORIGINAL JURISDICTION Writ Petitions Nos.
The maximum flow of resin from blazes is during the months of May and June and in the subsequent months of the working season, namely, July to October, the flow gradually decreases due to the rainy season followed by fall in temperature.
So far as the forests in the Rea i Division were companycerned, there were 6,08,115 blazes which were attempted to be given for tapping in the year 1976 77 on royalty companytract basis without load but out of them only 1,28,856 blazes were taken by one Prem Kumar Sood and that too on a royalty of only Rs.
320/ per quintal at which it was allotting resin to small scale units within the State.
37 38 of 1979, but these writ petitions were dismissed by us by an Order made on 21 12 79.
Chir trees are annually given one or two 1347 wounds which are technically called blazes and cups and lips are fixed at the bottom of each blazes for companylection of resin.
87,50,000/ plus Rs.
C. Agarwal for Respondent No.
200 per quintal, but even if we take the companyt at the minimum figure of Rs.
The petitioners in writ petition 481 of 1979, in fact, obtained a wage companytract for extraction of resin from an easily accessible forest in Rajouri Division for the aggregate sum of Rs.
The same 1,28,856 blazes were again put up for auction for the year 1977 78, but numberbidders came forward to take a companytract even on royalty without load basis.
But, having regard to the companymitments already made by it, it was number possible for the State to make any definite allotment of resin to the second respondents.
The result would be that under the impugned order the State would get 1500 metric tones of resin at the rate of Rs.
114/ per quintal in respect of 1500 metric tones, the second respondents would have to pay the price of the remaining 3500 metric tones to be retained by them at the rate of Rs.
87,50,000/ and on this investment of Rs.
474/ per quintal.
Under Article 32 of the Constitution of India .
260/ per quintal at which the State was allotting resin to medium scale industrial units and the rate of Rs.
It is difficult to see how on these facts the impugned order companyld be said to be disadvantageous to the State or in any way favouring the second respondents at the companyt of the State.
114/ per quintal and the second respondents would, thus, be entitled to claim from the State numbermore than Rs.
The dispute in these writ petitions relates to the validity of an Order dated 27th April, 1979, passed by the Government of Jammu and Kashmir, allotting to the 2nd respondents 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and companyditions set out in the Order.
The result was that practically numbertapping was done from these 6,08,115 blazes in the forests of the Reasi Division upto 1979 80.
350/ per quintal.
Altaf Ahmed for Respondent No.
The petitioners in writ petition No.
482 of 1979 had number even got their registration renewed for the year 1979 80 and hence numbertapping companytract companyld possibly be given to them.On this reckoning, the companyt of 3500 metric tones to be retained by the second respondents would work out at Rs.
It appears that J K Resin Contractors Association hereinafter referred to as the association came to know sometime in October, 1978 that the 2nd respondents had approached the State Government and there was a proposal to allot to them certain resin companypes on royalty system of 10 years on the basis that they would install a factory for manufacture of resin and turpentine at Jammu with sizable investment.
N. Bhatt for the Petitioner.
The Judgment of the Court was delivered by, BHAGWATI, J. These two writ petitions under Art.
13,00,000/ .
It was decided at this meeting that the increased target of production companyld be achieved only through replacement of royalty companytracts by wage company 1349 tracts wherever possible and hence in future blaze should be auctioned for tapping only on wage companytract basis.
The State had also companymitments to supply resin to its own companycern, namely, J K Industries Ltd., which was running a factory for manufacture of resin and turpentine as also to various small scale units which were set up in the State.
