PETITIONER:
TIMBER KASHMIR PVT. LTD. ETC. ETC.
Vs.
RESPONDENT:
CONSERVATOR OF FORESTS, JAMMU & ORS. ETC.
DATE OF JUDGMENT26/10/1976
BENCH:
BEG, M. HAMEEDULLAH
RAY, A.N. (CJ)
SHINGAL, P.N.
CITATION:
1977 AIR 151 1977 SCR (1) 937
1976 SCC (4) 498
ACT
Delegation of Powers to officers for execution of contracts
under section 122 (1) of Jammu & Kashmir
Constitution--Contracts containing arbitration clause valid-
ly executed on behalf of the Government cannot be questioned
on the plea of violation of Section 122(1).
HEADNOTE
All the three applications filed by the respondent state
for a reference to an arbitrator under section 20 of the
Jammu & Kashmir Arbitration Act, 2002 were dismissed by a
single judge of the Jammu & Kashmir High Court on the ground
that the arbitration clause was, in each case, a part of an
agreement which was not duly exercised in accordance with
the provisions of action 122(1) of the J&K constitution
which correspond to those of Art. 299(1) of the Constitution
of India. But the Division Bench allowed the appeals hold-
ing that if contracts were signed by the Conservator of
Forests in compliance with an order of the Government, the
provisions of Section 122(1) of J&K constitution could not
be said to have been infringed."
Dismissing the appeals of the appellant company by certifi-
cates the Court.
HELD : It is true that the contract could not be execut-
ed without the sanction. Nevertheless, if the sanction
could be either expressly or impliedly given by or on behalf
of the Government, as it.could, and, if some acts of the
Government could fasten some obligations upon the Govern-
ment, the lessee could also be estopped from questioning the
terms of the grant of the sanction even where there is no
written contract executed to bind the lessee. [938 G-H, 939
A]
But, once there had been a valid execution of lessee by
duly authorised officers, the documents would be the best
evidence of sanction also. That was one of the objects of
prescribing a formal mode of execution of instruments on
behalf of the Government apart from the need to protect its
interest against mala fide and other unauthorised acts of
its servants or agents. [940 G-H]
Mulamchand v. State of Madhya Pradesh, [1968] 3 S.C.R. 214,
applied.
In this case the contracts were executed by duly autho-
rised officials under Government’s orders.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 313-315
1974.
From the Judgment and Order dated 8-8-1972 of the Jammu
and Kashmir High Court in Civil First Appeals Nos. 46 to 48
of 1972.
Naunit Lal, for the Appellant.
V.C. Mahajan and R.N. Sachthey, for the Respondent.
The Judgment of the Court was delivered by
BEG, J.--These are three appeals by certification
against the judgment of a Division Bench of the High Court
of Jammu & Kashmir, allowing appeals from the judgment of a
learned single Judge.
938
Jammu and Kashmir Government had filed three applications
under section 20 of .the Jammu & Kashmir Arbitration Act,
2002, to refer disputes arising out of three agreements
between it and the appellant Company to arbitration under
the arbitration clauses of agreements between the parties.
The applications had been dismissed by the learned
single Judge on the ground that the arbitration clause
was, in each case, a part of an agreement which was not duly
executed in accordance with the provisions of Section 122(1)
of the Constitution of Jammu & Kashmir which correspond to
those of Article 199(1) of the Constitution of India. The
Division Bench had allowed the appeals of the Conservator of
Forests, Jammu Circle, after holding that the provisions of
section 122(1) of the Constitution of Jammu & Kashmir
could not be said to have been infringed if contracts were
signed by the Conservator of Forests in compliance with an
order of the Government.
The main-stay of the case of the appellant company was
an instruction or rule contained in "The book of the Finan-
cial Powers" which reads as follows:
"’S. 13. The power to sanction or cancel the terms of
instruments, leases, agreements is delegated in the follow-
ing cases:
S. Nature of power To whom delgated. Extent
No.
1 2 3 4
X X X
X
X X
9. To sell forest produce Chief Conser- Upto Rs. 7000/-
and to enter into convator of forest in value in
tract for the same each case provided
the highest tender
conservators of upto Rs.3000/ in
forests each case provided
the highest tender
is accepted.
Divisional upto Rs.1000/in each
forest case provided the
officer highest tender is
accepted.
The Division Bench observed that this rule existed prior
to the coming into force of the Constitution of Jammu and
Kashmir. It may also be pointed out that this rule deals
with the power to "sanction or cancel" leases, agreements
and other instruments which was delegated to the officers
mentioned there with limitation on their powers specified
there. But, the Constitutional provision, relied upon on
behalf of the appellant, relates to the manner of the execu-
tion of the formal
939
document containing the contract after its sanction. It is
true that the contract could not be executed without the
sanction. Nevertheless, if the sanction could be either
expressly or impliedly given by or on behalf of the Govern-
ment, as we think it could, and, if some acts of the Govern-
ment could fasten some obligations upon the Government, the
lessee could also be estopped from questioning the terms
of the grant of the sanction even where there is no written
contract executed to bind the lessee.
In the case before us, we have agreements from which the
appellant company has derived benefits. And, there are
contracts validly executed on behalf of the Government of
Jammu & Kashmir by the Conservator of Forests. It is true
that, if the appellant could take up the legal plea that the
contracts were not duly executed, in accordance with section
122(1) of the Constitution of Jammu & Kashmir, it could urge
that they did not have any effect at all as contracts
whatever other legal consequences its acts or conduct may
have had. But, this does not mean that, if a party obtains
benefits on the understanding that it would abide by certain
conditions, as the appellant company had done, it could not
be compelled to observe those conditions, such as the condi-
tion to refer disputes to arbitration. However, in the
instant case, we need not go into that question because the
plea of a violation of Section 122(1) of the Jammu & Kashmir
Constitution is itself not sustainable for the reasons
indicated below.
As the Division Bench of the High Court had pointed out,
there was a Government order and notification of 23rd
February, 1957 which reads as follows:
In exercise of the powers conferred by
sub-section (1) of Section 122 of the Consti-
tution, the Sadar-i-Riyasat is pleased to
direct that the under-mentioned contracts and
assurances of property made in the exercise of
the executive powers of the State may be
executed on his behalf by various Officers
subject to any limit fixed by Government rules
and orders as follows:
VI. In the Department of Development:
(1) Agreements relating to Forest
Leases and appropriation of forest products:
By the secretary to Government, Chief Conser-
vator, Conservators of Forests and Divisional
Forest Officers".
The three leases, containing the arbitration clauses which
the appellant wants to avoid, were executed on 27th Febru-
ary, 1963, and 28th February, 1963, and 19th March, 1963,
after the notification mentioned above. The leases were
duly signed by Conservators of Forests, who were expressly
authorised, without any limits imposed on the valuation of
the leases, to sign and execute them on behalf of the Gov-
ernment. The delegation of power made prior to the Jammu
10 --1338SCI/76
940
and Kashmir Constitution related to grants of sanction and
their cancellation. It did not expressly refer to powers to
execute leases which is a separate matter. The notification
of 1957, however, is specifically related to the execution
of formal documents including leases. Hence, it will cover
the three leases before us even if the former rules relating
to the limits of the authority of Forest Officers to give
or cancel certain sanctions could be said to be in existence
at all after the enactment of the new Constitution of Jammu
& Kashmir and the notification of 23rd February, 1957, cited
above.
We may mention that, as has been indicated in the
separate judgment of the learned Chief Justice of the High
Court, the Jammu & Kashmir Government had tried to remove
the doubts it entertained about the validity of past leases
executed by the Conservator of Forests. It, therefore,
passed two orders: one of 14th April, 1965, and the other of
29th April, 1971. The order of 14th April, 1965, ran as
follows:
"In supersession of previous orders
regarding signing of lease agreement it is
ordered that the Conservator of Forests will
sign agreements relating to all cases of For-
ests leases and appropriation of forest
products and Chief Conservator of Forests will
act as the arbitrator as provided under C1. 44
of the Agreement.
By order of the Government of Jammu & Kashmir.
Sd/- Bharat Bhushan Secre-
tary to Govt. Forests Department".
The order of 29th April, 1971, runs as fol-
lows:
"Government Order No. FST-31 dated 14-4-65
shall bedeemed to have taken effect from
29-1-63 and all actions taken by the Conser-
vators of Forests in executing the lease
agreements by virtue of the said order are
hereby regularised.
By order of the Government of Jammu & Kashmir.
Sd/- R.C. Bhargava, Secretary to Government,
Agricultural
Department".
The learned Chief Justice had observed that these
orders, purporting to ratify the leases which were valid,
did not have any legal effect whatsoever and were unneces-
sary. If there had been any question to be decided as to
whether the Government had sanctioned the leases, its ac-
tions, apart from the execution of leases, could be consid-
ered. But, once there has been a valid execution of leases
by duly authorised officers, the documents would be the best
evidence of sanction also. That was one of the objects of.
prescribing a formal mode of execution of instruments on
behalf of the Government apart from the need to protect its
interests against mala-fide and other unauthorised acts of
its servants or agents as indicated by this Court in Mulam
Chand v. State of Madhya Pradesh(1)
1) [1968] 3S.C.R. 214.
941
In the cases before us the only question which needed
decision was whether formal execution of the leases by duly
authorised officers had been proved. We are of opinion that
the Conservator of Forests was, for the reasons given by us,
duly authorised to execute the leases. Accordingly, we
affirm the orders of the Division Bench so that matters
in dispute between the parties could be validly referred to
Arbitration under the appropriate clauses of the agreements.
These appeals are, therefore, dismissed with costs.
Civil Miscellaneous Petition No. 8573 of 1975 for interim
orders is also dismissed as infructuous.
S.R. Appeals
dismissed.
942