{"id":53671,"date":"1989-05-12T00:00:00","date_gmt":"1989-05-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vij-resins-pvt-ltd-anr-etc-vs-state-of-jammu-kashmir-ors-on-12-may-1989"},"modified":"2018-04-13T01:54:55","modified_gmt":"2018-04-12T20:24:55","slug":"vij-resins-pvt-ltd-anr-etc-vs-state-of-jammu-kashmir-ors-on-12-may-1989","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vij-resins-pvt-ltd-anr-etc-vs-state-of-jammu-kashmir-ors-on-12-may-1989","title":{"rendered":"Vij Resins Pvt. Ltd. & Anr. Etc vs State Of Jammu & Kashmir & Ors on 12 May, 1989"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Vij Resins Pvt. Ltd. & Anr. Etc vs State Of Jammu & Kashmir & Ors on 12 May, 1989<\/div>\n
Equivalent citations: 1989 AIR 1629, \t\t 1989 SCR (3) 257<\/div>\n
Author: R Pathak<\/div>\n
Bench: Pathak, R.S. (Cj)<\/div>\n
           PETITIONER:\nVIJ RESINS PVT. LTD. & ANR. ETC.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF JAMMU & KASHMIR & ORS.\n\nDATE OF JUDGMENT12\/05\/1989\n\nBENCH:\nPATHAK, R.S. (CJ)\nBENCH:\nPATHAK, R.S. (CJ)\nMISRA RANGNATH\n\nCITATION:\n 1989 AIR 1629\t\t  1989 SCR  (3) 257\n 1989 SCC  (3) 115\t  JT 1989  Supl.    214\n 1989 SCALE  (1)1303\n\n\nACT:\n    Articles  19(1)(f),\t 31(2)\tand   31(2A)--Constitutional\nvalidity  of Jammu & Kashmir Extraction of Resin Act,  1986:\nJammu & Kashmir Extraction of Resin Act, 1986--Sections 3, 4\nand 5--Whether constitutionally valid--Resin--Ban on extrac-\ntion  by Private persons--Right to appropriate\tusufruct  of\ntrees--Held  right to property--Compensation payable  before\nproperty could be taken.\n\n\n\nHEADNOTE:\n    These  three  Writ Petitions have been  filed  by  three\ndifferent Private Limited Companies and their  share-holders\nchallenging  the vires of the Jammu & Kashmir Extraction  of\nResin  Act  (7 of 1986). The circumstances that led  to\t the\nfiling of these Writ Petitions may be stated thus:\n    The\t State of Jammu & Kashmir with a view to  industria-\nlise the under-developed State formulated schemes and invit-\ned  outsiders  to set up industries in the State  and  as  a\nstimulus  the Government offered land and other\t facilities.\nThe Petitioner-Companies, in response to the said invitation\nwent  to  the State of Jammu & Kashmir\tand  negotiated\t the\narrangements, as a result of which each Company had obtained\na right to collect resin gum to process the same for  indus-\ntrial purposes.\n    The Petitioner Company in Writ Petition No. 751 of\t1986\nhad obtained under Government order dated 27.4.79  allotment\nof 10 to 12 lacs of blazes annually for extraction of  resin\nfrom the forests in Poonch and Rambam Divisions for a period\nof 10 years. Government order granting rights had been\tmade\nin favour of the Petitioner Company in W.P. No. 794 of 1986.\nThe Petitioner-Company in W.P. No. 798 of 1986 was a proces-\nsor only and had undertaken to work as a tapper. The  orders\npassed\tin favour of these Companies referred to above\twere\nchallenged before this Court as being violative of Arts.  14\nand  19\t of  the Constitution on the ground  that  grant  of\nforest\trights to the Petitioners were arbitrary, mala\tfide\nand  not  in public interest. It was  contended\t that  State\nlargesse  had been created in favour of the  Petitioners  at\nthe cost of State Exchequer and the grant created  monopoly.\nThis  Court dismissed the Writ Petitions holding that  there\nwas no substance\n258\nin any of the contentions advanced by the Petitioners.\n    Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir  &\nAnr.,<\/a> [1980] 3 SCR 1336.\n    The\t order made in favour of the Petitioner in W.P.\t No.\n794  of\t 1986  and  incorporated  in  the  agreement   dated\n6.11.1978  was also challenged but this Court  rejected\t the\nPetition.\n    Brij Bhushan & Ors. v. State of Jammu & Kashmir &  Ors.,<\/a>\n[1986] 2 SCC 354.\n    While the Petitioners were carrying on with the business\ncontracted for, Governor's Act of 1986 came into force.\t The\nprovisions of the said Act particularly ss. 3, 4 and 5\thave\nbeen impugned in these Petitions.\n    It\tis contended on behalf of the Petitioners that\tGov-\nernment\t orders and contracts under which they have got\t the\nright  to exploit or utilize the particular  forest  product\namounts\t to \"property\" and they are entitled  to  protection\nthereof\t against expropriation and in case  no\tcompensation\nwas provided, the provisions of the Act are hit for  contra-\nvening\tthe  fundamental right guaranteed by  Art.  19(1)(g)\nwhich  confers upon them the right to carry on\tany  occupa-\ntion,  trade  or business. On the other hand  the  case\t put\nforward\t by  the State is that the benefits  and  privileges\nconferred on the three Petitioners either under contract  or\nunder  Government orders did not constitute property and  by\nthe  provisions of the Act no transfer of such property\t has\ntaken place.\nAllowing the Writ Petition, this Court,\n    HELD: The statutory scheme of Jammu & Kashmir Extraction\nof  Resin Act, 1986 is to extinguish private rights both  in\nrespect\t of Government owned trees as also trees in  private\nownership and to vest those1 rights in the State  Government\nor the Government Company. [271A-B]\n    The Executive grant or the contract created interest  in\nthe  Petitioners and there is no room to doubt that by\tsuch\nprocess in favour of the Petitioners property right had been\ncreated.  The  interests which are in  dispute\tbefore\tthis\nCourt  do constitute property entitled to  protection  under\nArt. 19(1)(1) and are covered by Art. 31(2). [267G; 268A-B]\n259\n    Ramana  Dayaram  Shetty  v.\t The  International  Airport\nAuthority of India & Ors.,<\/a> [1979] 3 SCR 1014 and Kasturi Lal\nLakshmi\t Reddy v. State of Jammu & Kashmir & Anr.,<\/a> [1979]  3\nSCR 1014.\n    The\t ownership vested in the private persons, by  opera-\ntion  of s. 3 of the Act, the right to appropriate the\tusu-\nfruct of the trees is taken away from the private owner\t and\nis vested in the State. Sub-Art. (2A) of Art. 31, therefore,\ndoes  not  apply.  Consequently, sub-Art.  (2)\tapplies\t and\ncompensation,  therefore,  was payable before  the  property\ncould be taken over by the State. Provisions of ss. 3 and  4\nof  the\t Act are ultra vires of the Constitution  and  since\nthese  provisions contain the soul of the Act, without\tthem\nthe  Act  cannot  operate, the entire  Act  has\t to  suffer.\n[271C-D; 272B-C]\n    Subodh  Gopal  Bose's  case [1954]\tSCR  587;  Dwarkadas\nShrinivas  of Bombay v. The Sholapur Spinning & Weaving\t Co.\nLtd. & Ors.,<\/a> [1954] SCR 674; R.C. Cooper v. Union of  India,<\/a>\n[1970]\t3  SCR 530; Madan Mohan Pathak v. Union of  India  &\nOrs.,<\/a>  [1978]  3 SCR 334 and Tara Prasad Singh v.  Union  of\nIndia & Ors., [1980] 3 SCR 1042, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL ORIGINAL JURISDICTION: Writ Petition Nos. 751, 794
\nand 798 of 1986.\n<\/p>\n
(Under Article 32 of the Constitution of India.)
\n    Dr.\t Y.S.  Chitale, Soli J. Sorabiee, A.B.\tDiwan,\tB.V.
\nDesai,\tMs.  Madavi Gupta, Bharat Sangal, Harish  N.  Salve,
\nT.V.S.N. Chari, Ms. Sunita Modigunda, Ms. Vrinda Grover\t and
\nS.K. Bhattacharya for the Petitioners.\n<\/p>\n
    G.\tRamaswamy,  Additional Solicitor  General  Anil\t Dev
\nSingh,\tP.S.  Shroff, S.S. Shroff, R. Karanjawala,  Mrs.  M.
\nKaranjawala, Ejaz Maqbool, Mrs. Shobha Dikshit, E.C.  Aggar-
\nwal,  B.V. Desai, Ms. Madhavi Gupta, C.S.  Vaidyanathan\t and
\nS.V. Deshpande for the Respondents.\n<\/p>\n
The Judgment of the Court was delivered by
\n    RANGANATH MISRA, J. These are three petitions under Art.
\n32  of the Constitution by three different groups  of  peti-
\ntioners. In each of these writ petitions petitioner No. 1 is
\na  private  limited company and the second petitioner  is  a
\nshareholder thereof. The petitionercompany in each of  these
\ncases obtained the right to collect oleo resin
\n260<\/span>
\ngum or to process the same for industrial purposes from\t the
\nState of Jammu & Kashmir and each of them seeks to challenge
\nthe  vires of the provisions of the Jammu & Kashmir  Extrac-
\ntion  of Resin Act (7 of 1986) (hereinafter referred  to  as
\nthe ‘Act’).\n<\/p>\n
    Though  there are some variations of facts\trelevant  to
\neach of the writ petitions, the allegations are more or less
\nsimilar in regard to the relevant contentions–both  factual
\nand  legal. When rule was issued the  respondent-State\tcame
\nwith  almost  the same plea, traversing common\tgrounds\t and
\nrevealing a common stand in its returns to the Court.  These
\nthree writ petitions were heard at a time and are now  being
\ndisposed of by a common judgment.\n<\/p>\n
    Resin is the secretion extracted by tapping or otherwise
\nfrom chir, chil and kail trees wildly growing in the forests
\nof  Jammu & Kashmir. It is an exudate and when subjected  to
\nchemical  treatment and distillation with the aid  of  steam
\nyields\t70% resin, 15% turpentine and the remaining  15%  of
\nwaste material. The down-stream products which are  manufac-
\ntured  from this raw material are varnish,  camphor,  paints
\nand turpene chemicals.\n<\/p>\n
    The\t petitioner-company  in\t writ  petition\t No.  751\/86
\nobtained under Government order dated 27.4.1979 allotment of
\n10  to\t12 lacs of blazes annually for extraction  of  resin
\nfrom  the inaccessible forests in Poonch, Reasi\t and  Ramban
\nDivisions of the State for a period of 10 years on terms and
\nconditions set out in the said Government order.  Government
\norder  had also been made granting rights in favour  of\t the
\npetitioner-company in writ petition No. 794\/86. The petitio-
\nnercompany in writ petition No. 798\/86 was a processor\tonly
\nand  had  not undertaken to work as a  tapper.\tApplications
\nunder  Art. 32 of the Constitution were filed in this  Court
\nat  that  point of time on the ground  that  the  Government
\norders\tand\/or contracts were hit by Arts. 14 and 19 of\t the
\nConstitution and the grant of forest rights in favour of the
\npresent\t petitioners  was arbitrary, mala fide\tand  not  in
\npublic\tinterest. It was further contended that\t State\tlar-
\ngesse  had been conferred on the petitioners at the cost  of
\nthe  State exchequer. The petitioners therein  also  pleaded
\nthat  a monopoly had been created in favour of\tthe  private
\ngrantees  and was not protected under Art. 19(1)(g)  of\t the
\nConstitution. According to Kasturilal, the petitioner before
\nthis  Court then, the benefits should have been thrown\topen
\nand opportunity should have been provided to all  interested
\npersons\t to  compete for the obtaining of  the\tcontract.  A
\nthree-Judge  Bench consisting one of us (the  learned  Chief
\nJustice) dealt with the matter at length and ulti-\n<\/p>\n
261<\/span><\/p>\n
mately\tdismissed  the petition holding that  there  was  no
\nsubstance  in any of the contentions advanced on  behalf  of
\nKasturilal.  (Kasturi Lal Lakshmi Reddy v. State of Jammu  &
\nKashmir & Anr.,<\/a> [1980] 3 SCR 1336). The order made in favour
\nof  the petitioner-company in writ petition No.\t 794\/86\t and
\nincorporated in the agreement dated 6.11. 1978 had also been
\nchallenged in a separate writ petition before this Court and
\nthe  reasoned  order for rejection of the writ\tpetition  is
\nfound  in Brij Bhushan & Ors. v. State of Jammu & Kashmir  &
\nOrs.,<\/a> [1986] 2 SCC 354.\n<\/p>\n
    While the petitioner-company in writ petition No. 751\/86
\nhad  agreed to work as tapper and processor on the  stipula-
\ntion  that  25% of the annual collection of gum\t subject  to
\nminimum\t of  1500 metric tonnes would be made  over  to\t the
\nGovernment company (J & K Industries Limited) and out of the
\nrest not exceeding the limit of 3500 metric tonnes would  be
\nused  by them, the petitioner-company in writ  petition\t No.
\n794\/86\twho had been operating from before as  tappers\tonly
\nentered\t into a formal agreement with the State claiming  to
\nprocess\t and manufacture down-stream goods. The\t writ  peti-
\ntioner-company\tin  writ petition No. 798\/86 had  agreed  to
\nwork as processor only.\n<\/p>\n
    In\tthe seventies, the State of Jammu & Kashmir  decided
\nto industrialise the hitherto under-developed State and with
\nthat  end  in view came forward with scheme and\t threw\topen
\ninvitation  to outsiders to set up industries at  convenient
\nplaces within the State. As stimulus Government offered land
\nand  other facilities. The petitioners in these\t three\twrit
\npetitions  and\tanother\t who has since\twithdrawn  the\twrit
\npetition, went into the State of Jammu & Kashmir in response
\nand negotiated the arrangements we have already adverted to.\n<\/p>\n
     While  the petitioners were carrying on their  business
\nactivities, Governor’s Act 7 of 1986, the provisions whereof
\nare impugned in these petitions by which all their  existing
\nrights\tcame to terminate, came into force with effect\tfrom
\n23.4.1986.  The Act sought to create a monopoly with  refer-
\nence  to resin in favour of J & K Industries Limited,  which
\nis a respondent to these petitions.\n<\/p>\n
     The Act has seven sections in all. Section 1 gives\t the
\nshort title, extent and the date of commencement while s.  2
\ndefines\t four terms, namely, ‘prescribed’,  ‘resin’,  ‘resin
\ndepot’\tand ‘resin products’. Section 3 bans extraction\t and
\nother dealings of resin by private persons while s, 4  makes
\nprovision  for\tdisposal of resin. Section  5  provides\t the
\nmanner of fixation of price. Section 6 provides for  penalty
\nfor offences
\n262<\/span>
\nand  s.\t 7 clothes the State Government with power  to\tmake
\nrules for carrying out the purposes of the Act. Challenge in
\nthe  writ petitions has been to the provisions contained  in
\nss.  3,\t 4  and 5 of the Act. We propose  to  excerpt  these
\nprovisions for convenience:\n<\/p>\n
\t      “3. Ban on extraction by private persons
\n\t      Notwithstanding\tanything  to  the   contrary
\n\t      contained in any law, rule, order, instrument,
\n\t      agreement\t or  contract or  in  any  judgment,
\n\t      decree or order of any Court or Authority,  no
\n\t      person,  other  than the Government  shall  as
\n\t      from the commencement of this Act ,–\n<\/p><\/blockquote>\n
\t\t       (a)  extract  resin  by\ttapping\t  or
\n\t      otherwise from Chit\/ Chil or Kail trees in the
\n\t      State  whether such trees belong to the  State
\n\t      or not;\n<\/p><\/blockquote>\n
\t\t       (b) transport resin from one place to
\n\t      other in the State except under and in accord-
\n\t      ance with the permit granted under this Act;\n<\/p><\/blockquote>\n
\t\t       (c) acquire, possess, store,  dispose
\n\t      of or otherwise deal with any resin  extracted
\n\t      and manufactured in the State.\n<\/p><\/blockquote>\n
\t      4. Disposal of resin
\n\t\t       (1) All resin extracted under section
\n\t      3 shall be stored at resin depots and thereaf-
\n\t      ter  shall  be sold by the Government  to\t the
\n\t      Jammu  & Kashmir Industries Limited for  proc-
\n\t      essing.\n<\/p><\/blockquote>\n
\t\t       (2) After processing it by the  Jammu
\n\t      &\t  Kashmir  Industries  Limited,\t the   resin
\n\t      products, if any surplus, shall be sold by  it
\n\t      to  the  small scale units  and  medium  scale
\n\t      units  in the State in such manner as  may  be
\n\t      provided\tfor,  and at such price\t as  may  be
\n\t      fixed by the Jammu & Kashmir Industries Limit-
\n\t      ed in consultation with the Government.\n<\/p><\/blockquote>\n
\t      5. Fixation of price–\n<\/p><\/blockquote>\n
\t\t       (1) The Government shall, having\t due
\n\t      regard  to the following facts, fix the  price
\n\t      at  which resin shall be sold by it  during  a
\n\t      year, namely
\n\t      263<\/span>\n<\/p><\/blockquote>\n
\t\t       (a) the sale price of resin, if\tany,
\n\t      fixed  under  this Act  during  the  preceding
\n\t      three years;\n<\/p><\/blockquote>\n
\t      (b) the cost of transport;\n<\/p><\/blockquote>\n
\t      (c) the cost of extraction of resin;\n<\/p><\/blockquote>\n
\t\t       (d)  the\t cost of  packing  of  resin
\n\t      including the cost of container in which resin
\n\t      is delivered;\n<\/p><\/blockquote>\n
\t\t       (e) the prevalent sale price at which
\n\t      resin  is being sold in other resin  producing
\n\t      States;\n<\/p><\/blockquote>\n
\t\t       (f)  any other factor which the\tGov-
\n\t      ernment considers relevant.\n<\/p><\/blockquote>\n
\t\t       (2)  The\t price\tso  fixed  shall  be
\n\t      published\t in the Official Gazette  and  shall
\n\t      not  be  altered during the year to  which  it
\n\t      relates.”\n<\/p><\/blockquote>\n
In  exercise of the rule-making power, the State  Government
\nhas  brought into force a set of rules known as the Jammu  &
\nKashmir\t Extraction  of Resin Rules, 1986 with\teffect\tfrom
\n27.9.1986.\n<\/p>\n
    It is not in dispute that by the provisions of this\t Act
\nall the existing contracts between parties and the State and
\nexisting grants in respect of collection, transport, storage
\nand  otherwise\tdealing with resin have\t come  to  forthwith
\nterminate  and\ta monopoly situation has  been\tcreated\t qua
\nthese operations in resin in favour of the Government compa-
\nny.  The Act does not provide for any compensation  and\t the
\npetitioners  maintain  that  the existing  rights  in  their
\nfavour amounted to ‘property’ and could not have been expro-
\npriated in contravention of the guarantee in Part III of the
\nConstitution. It is the stand of the State that the benefits
\nand  privileges\t conferred on the three\t petitioners  either
\nunder contract or under Government orders did not constitute
\nproperty  and  by the provisions of the Act no\ttransfer  of
\nsuch property has taken place.\n<\/p>\n
    It\tis  relevant to point out at this  stage  that\tsub-
\nclause\t(f) was deleted from Art. 19(1) of the\tConstitution
\nby the Forty-fourth Amendment with effect from 20th of June,
\n1979  and acquisition, holding and\/or disposal\tof  property
\nceased\tto be a fundamental right. The\tsame  constitutional
\namendment deleted Art. 31 but so far as the State
\n264<\/span>
\nof  Jammu & Kashmir is concerned the Forty-fourth  Amendment
\ndid not bring about any change and right to property, there-
\nfore, continues to be fundamental and law enunciated by this
\nCourt  treating\t property be one of the\t fundamental  rights
\nstill  applies\tto Jammu & Kashmir. That is  why,  sumptuous
\nreference has been made by counsel for the petitioners to  a
\ncatena\tof precedents touching upon right to property  as  a
\nfundamental one.\n<\/p>\n
    The\t petitioners maintained that the  Government  orders
\nand contracts under which they have got the right to exploit
\nor  utilise  the particular forest product  does  amount  to
\n‘property’  and the petitioners were entitled to  protection
\nthereof\t against expropriation and in case  no\tcompensation
\nwas  provided  the  relevant provisions of  the\t Act  became
\nexposed to challenge. They have similarly contended that the
\nimpugned  provisions  of s. 3 are hit for  contravening\t the
\nfundamental right guaranteed by Art. 19(1)(g) which  confers
\nupon  them  the right to carry on any occupation,  trade  or
\nbusiness.\n<\/p>\n
    The Government orders made in 1979 did confer the  right
\nto exploit the forest and appropriate a part of the  collec-
\ntion  of the gums for purposes of business. The\t concept  of
\n‘property’  known  to  jurisprudence  has  expanded  through
\nseveral pronouncements of this Court. Ramana Dayaram  Shetty
\nv.  The\t International Airport Authority of  India  &  Ors.,<\/a>
\n[1979]\t3  SCR 1014, to which one of us (the  learned  Chief
\nJustice) was party held:\n<\/p>\n
\t      “Today  the Government in a welfare  State  is
\n\t      the  regulator and dispenser of special  serv-
\n\t      ices  and provider of a large number of  bene-
\n\t      fits,  including\tjobs,  contracts,  licences,
\n\t      quotas,  mineral\trights etc.  The  Government
\n\t      pours forth wealth, money, benefits, services,
\n\t      contracts, quotas and licences. The  valuables
\n\t      dispensed\t by Government take many forms,\t but
\n\t      they  all share one characteristic.  They\t are
\n\t      steadily taking the place of traditional forms
\n\t      of  wealth. These valuables which derive\tfrom
\n\t      relationships to Government are of many kinds.
\n\t      They  comprise social security benefits,\tcash
\n\t      grants  for political sufferers and the  whole
\n\t      scheme  of State and the local  welfare.\tThen
\n\t      again, thousands of people are employed in the
\n\t      State  and the Central Governments  and  local
\n\t      authorities. Licences are required before\t one
\n\t      can engage in many kinds of business or  work.
\n\t      The  power of giving licences means  power  to
\n\t      withhold\tthem and this gives control  to\t the
\n\t      Government or to
\n\t      265<\/span>
\n\t      the agents of Government on the lives of\tmany
\n\t      people ……..  It is virtually impossible to
\n\t      lose  money on them and many  enterprises\t are
\n\t      set  up primarily to do business with  Govern-
\n\t      ment. Government owns and controls hundreds of
\n\t      acres  of public land valuable for mining\t and
\n\t      other purposes. These resources are  available
\n\t      for  utilisation by private  corporations\t and
\n\t      individuals  by way of lease or  licence.\t All
\n\t      these  mean growth in the\t Government  largess
\n\t      and with the increasing magnitude and range of
\n\t      governmental functions as we move closer to  a
\n\t      welfare  State,  more and more of\t our  wealth
\n\t      consists\tof  these new forms. Some  of  these
\n\t      forms of wealth may be in the nature of  legal
\n\t      rights  but the large majority of them are  in
\n\t      the nature of privileges. But on that account,
\n\t      can  it  be said that they do  not  enjoy\t any
\n\t      legal  protection?  Can they  be\tregarded  as
\n\t      gratuity\tfurnished by the State so  that\t the
\n\t      State  may withhold grant or revoke it at\t its
\n\t      pleasure\t…..  The law has not been slow  to
\n\t      recognise\t the importance of this new kind  of
\n\t      wealth  and  the need  to\t protect  individual
\n\t      interest\tin it and with that end in view,  it
\n\t      has  developed new forms of  protection.\tSome
\n\t      interests\t in  Government\t largess,   formerly
\n\t      regarded\tas privileges, have been  recognised
\n\t      as  rights while others have been given  legal
\n\t      protection  not  only  by\t forging  procedural
\n\t      safeguards  but also by  confining\/structuring
\n\t      and  checking  Government\t discretion  in\t the
\n\t      matter of grant of such largers  …..  It  is
\n\t      insisted, as pointed out or’ Prof. Reich in an
\n\t      especially  stimulating  article\ton  The\t New
\n\t      Property’\t in 73 Yale Law Journal\t 733,  ‘that
\n\t      Government  action be based on standards\tthat
\n\t      are not arbitrary or unauthorised.”<\/p><\/blockquote>\n
    In Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir
\n&  Anr.,<\/a>  (supra),  the interest created in  favour  of\t the
\npetitioners in the forest assets of the State (which has now
\nbeen fatally hit by section 3) was considered to be  proper-
\nty. At page 1354 of the Reports this Court stated:\n<\/p>\n
\t      “It  was pointed out by this Court  in  Ramana
\n\t      Dayaram  Shetty v. The  International  Airport
\n\t      Authority\t of India & Ors.,<\/a> (supra) that\twith
\n\t      the growth of the welfare state, new forms  of
\n\t      property\tin the shape of\t Government  largess
\n\t      are  developing, since the Government  is\t in-
\n\t      creasingly assuming the role of regulator\t and
\n\t      dispenser of social services and provider of a
\n\t      large number of benefits including jobs, con-\n<\/p><\/blockquote>\n
\t      266<\/span><\/p>\n
\t      tracts,  licences,  quotas,  minerals   rights
\n\t      etc.”\n<\/p><\/blockquote>\n
\t\t  In  Subodh  Gopal Bose’s case\t [1954]\t SCR
\n\t      587, this Court had pointed out:\n<\/p><\/blockquote>\n
\t      “The word ‘property’ in the context of Article
\n\t      31  (the\tsame  should be\t the  meaning  under
\n\t      Article 19(1)(f) which is designed to  protect
\n\t      private  property\t in all its forms,  must  be
\n\t      understood both in a corporeal sense as having
\n\t      reference\t to all those specific\tthings\tthat
\n\t      are  susceptible of private appropriation\t and
\n\t      enjoyment as well as in its juridical or legal
\n\t      sense  of a bundle of rights which  the  owner
\n\t      can  exercise  under the\tmunicipal  law\twith
\n\t      respect  to  the user and enjoyment  of  those
\n\t      things to the exclusion of all others.”
\n\t      Again, in Dwarkadas Shrinivas of Bombay v. The
\n\t      Sholapur\tSpinning & Weaving Co. Ltd. &  Ors.,<\/a>
\n\t      [1954] SCR 674, this Court held:\n<\/p><\/blockquote>\n
\t      “A  contract or agreement which a\t person\t may
\n\t      have  with the company and which may  be\tcan-
\n\t      celled by the Directors in exercise of  powers
\n\t      under  ordinance will undoubtedly be  property
\n\t      within the meaning of the two articles.”
\n\t      In R.C. Cooper v. Union of India,<\/a> [1970] 3 SCR
\n\t      530  an eleven-Judge Bench at page 567 of\t the
\n\t      Reports, stated:\n<\/p><\/blockquote>\n
\t      “By Entry 42 in the Concurrent List power\t was
\n\t      conferred\t upon the Parliament and  the  State
\n\t      Legislatures  to\tlegislate  with\t respect  to
\n\t      ‘Principles on which compensation for property
\n\t      acquired\tor requisitioned for the purpose  of
\n\t      the  Union or for any other public purpose  is
\n\t      to  be determined, and the form in which\tsuch
\n\t      compensation is to be given’. Power to  legis-
\n\t      late for acquisition of property is  exercisa-
\n\t      ble  only under Entry 42 of List III, and\t not
\n\t      as  an incident of the power to  legislate  in
\n\t      respect  of a specific head of legislation  in
\n\t      any  of  the  three lists.  Under\t that  Entry
\n\t      property can be compulsorily acquired.
\n\t      In  its normal connotation property means\t the
\n\t      ‘highest\tright a man can to  anything,  being
\n\t      that  right  which one has to lands  or  tene-
\n\t      ments, goods or chatties which does not depend
\n\t      on another’s courtesy; it includes  ownership,
\n\t      estates
\n\t      267<\/span>
\n\t      and  interests in corporeal things,  and\talso
\n\t      rights  such as trade-marks, copyrights,\tpat-
\n\t      ents  and even rights in personam\t capable  of
\n\t      transfer\tor transmission, such as debts;\t and
\n\t      signifies\t a  beneficial right to or  a  thing
\n\t      considered as having a money value, especially
\n\t      with reference to transfer or succession,\t and
\n\t      to their capacity of being injured.”<\/p><\/blockquote>\n
    In Madan Mohan Pathak v. Union of India & Ors.,<\/a> [1978] 3
\nSCR  334 this Court was examining the validity of  the\tLife
\nInsurance  Corporation (Modification of Settlement)  Act  of
\n1976. The settlement had created a right to bonus in  favour
\nof  the Class 111 and Class IV employees of the\t Corporation
\nand  the Act adversely interfered with that settlement.\t The
\nquestion  for  consideration of the  seven-Judge  Bench\t was
\nwhether\t bonus payable under the settlement  was  ‘property’
\nwithin\tthe meaning of Art. 31(2) and whether stopping\tpay-
\nment of bonus amounted to compulsory acquisition of property
\nwithout\t payment of compensation. The Court ultimately\theld
\nthat  bonus was property and the legislation was bad. At  p.
\n358 of the Reports, this Court said:\n<\/p>\n
\t      “It  is clear from’ the scheme of\t fundamental
\n\t      rights  embodied in Part III of the  Constitu-
\n\t      tion  that  the  guarantee  of  the  right  to
\n\t      property is contained in Article 19(1)(f)\t and
\n\t      clauses  (1) and (2) of Article 31. It  stands
\n\t      to  reason  that ‘property’  cannot  have\t one
\n\t      meaning in Article 19(1)(f), another in  Arti-
\n\t      cle 31 clause (1) and still another in Article
\n\t      31, clause (2). ‘Property’ must have the\tsame
\n\t      connotation  in  all the\tthree  Articles\t and
\n\t      since  these  are\t constitutional\t  provisions
\n\t      intended\tto secure a fundamental right,\tthey
\n\t      must  receive  the widest\t interpretation\t and
\n\t      must  be\theld to refer to property  of  every
\n\t      kind.”\n<\/p><\/blockquote>\n
At p. 360 of the Reports, the Court again stated that  every
\nform  of property, tangible or intangible,  including  debts
\nand choses in action constituted property, In this group  of
\ncases before us the executive grant or the contract  created
\ninterest  in the petitioners and there is no room  to  doubt
\nthat  by such process in favour of the petitioners  property
\nright had been created.\n<\/p>\n
    Learned  Additional Solicitor General appearing for\t the
\nState  had  contended that the contractual interest  or\t the
\ninterest in terms of the Government order did not constitute
\nproperty  and relied upon certain precedents of this  Court.
\nThe  Coal Nationalisation case on which reliance was  mainly
\nplaced is clearly distinguishable on facts.\n<\/p>\n
268<\/span><\/p>\n
We  do not think it necessary to refer to other\t authorities
\nas  the\t ones referred to above are binding  precedents\t and
\nunequivocally  indicate\t that  the interests  which  are  in
\ndispute before us do constitute property entitled to protec-
\ntion  under Art. 19(1)(f) and are covered by Art.  31(2)  of
\nthe Constitution.\n<\/p>\n
    Reliance has been placed by learned Additional Solicitor
\nGeneral\t on the restrictive provision contained in  sub-Art.
\n(5) whereby reasonable restrictions in public interest could
\nbe  imposed on the exercise of right to property. There\t are
\nsituations,  the learned counsel has argued, where  the\t re-
\nstrictions  could go to the point of almost wiping  out\t the
\nright.\tHe  relied upon some precedents in support  of\tthis
\nproposition.  Section 3 is a total annihilation of  existing
\nrights and nothing of the interest created either under\t the
\nexecutive  orders or contract is allowed to survive.  We  do
\nnot  think there is room within the legal frame\t to  sustain
\nsuch a situation under sub-Art. (5).\n<\/p>\n
    Sub-Art.  (6), like sub-Art. (5),  protects\t restrictive
\nlaw in public interest. What we have said in regard to\tsub-
\nArt. (5) perhaps equally applies to sub-Art. (6).
\nArticle 31(2) provided:\n<\/p>\n
\t      “No property shall be compulsorily acquired or
\n\t      requisitioned  save for a public\tpurpose\t and
\n\t      save by authority of a law which provides\t for
\n\t      acquisition or requisitioning of the  property
\n\t      for  an amount which may be fixed by such\t law
\n\t      or which may be determined in accordance\twith
\n\t      such  principles and given in such  manner  as
\n\t      may be specified in such law; and no such\t law
\n\t      shall  be called in question in any  court  on
\n\t      the ground that the amount so fixed or  deter-
\n\t      mined is not adequate or that the whole or any
\n\t      part  of such amount is to be given  otherwise
\n\t      than in cash:”<\/p><\/blockquote>\n
    It has already been stated that the Act does not provide
\nfor  any compensation. Section 3 has an overriding  applica-
\ntion. It provides that it shall not only apply to the  clas-
\nsified trees belonging to the State but it shall also  apply
\nto  such  trees belonging to private persons and  rights  of
\nsuch  private  owners  to carry on  the\t various  operations
\ndescribed  in s. 3 are completely taken away without  provi-
\nsion of any compensation. It cannot be contended in view  of
\nwhat  we  have\tstated above that the  right  of  beneficial
\nenjoyment  of the trees by carrying out the processes  named
\nin s. 3 do not constitute ‘property’. Unless the position is
\n269<\/span>
\ncovered by clause (2A) of Art. 31, in view of our conclusion
\nthat  the  interest created under the  contract,  Government
\norder  or  the right of beneficial enjoyment vested  in\t the
\nprivate\t owner\tof the trees amount to ‘property’,  the\t Act
\nwould be hit by Art. 31(2). Sub-Art. (2A) provides:\n<\/p>\n
\t      “Where a law does not provide for the transfer
\n\t      of the ownership or right to possession of any
\n\t      property\tto  the State or  to  a\t corporation
\n\t      owned or controlled by the State, it shall not
\n\t      be deemed to provide for the compulsory acqui-
\n\t      sition or requisitioning of property, notwith-
\n\t      standing\tthat it deprives any person  of\t his
\n\t      property.”<\/p><\/blockquote>\n
    Learned  Additional Solicitor General’s  contention\t has
\nbeen that under the provisions of s. 3 of the Act the rights
\nthat  vested  in the petitioners stand wiped out  or  extin-
\nguished but those rights have not been vested in either\t the
\nState  or the Government company. This contention  overlooks
\nthe resultant outcome of the provisions of the Act.  Section
\n3 which takes away private fights and authorises  Government
\nalone  to  extract,  transport it and  acquire,\t possess  or
\ndispose\t of or otherwise deal with the resin  extracted\t and
\nmanufactured within the State and s. 4 authorises Government
\nto  sell the same to the Government company for\t processing.
\nWhat  is  taken away under s. 3 from the  hands\t of  private
\nparties\t is undoubtedly given by the same provision to\tGov-
\nernment.  In Madan Mohan Pathak’s case (supra),\t this  Court
\nhad pointed out:\n<\/p>\n
\t      “The verbal veil constructed by employing\t the
\n\t      device  of  extinguishment of debt  cannot  be
\n\t      permitted\t to conceal or hide the real  nature
\n\t      of the transaction. It is necessary to  remem-
\n\t      ber that we are dealing here with a case where
\n\t      a constitutionally guaranteed right is  sought
\n\t      to  be  enforced and the\tprotection  of\tsuch
\n\t      right should not be allowed to be defeated  or
\n\t      rendered\tillusory by legislative\t stratagems.
\n\t      The  courts should be ready to rip  open\tsuch
\n\t      stratagems and devices and find out whether in
\n\t      effect and substance the legislation  trenches
\n\t      upon any fundamental rights. The encroachments
\n\t      on  fundamental  rights are often\t subtle\t and
\n\t      sophisticated  and they are disguised in\tlan-
\n\t      guage which apparently seems to steer clear of
\n\t      the constitutional inhibitions.”\n<\/p><\/blockquote>\n
It  is\tnot  necessary to multiply precedents,\tAs  we\thave
\nalready pointed
\n270<\/span>
\nout, s. 3 of the Act extinguishes private rights and confers
\nthe right to deal with the subject matter of such rights  on
\nthe State.\n<\/p>\n
    An attempt was made to distinguish the rule in  Pathak’s
\ncase  by relying upon the decision in Tara Prasad  Singh  v.
\nUnion  of India & Ors., [1980] 3 SCR 1042. That\t seven-Judge
\nBench  was  dealing  with  the\tCoal  Mines  Nationalisation
\n(Amendment)  Act  of  1976. The Court referred\tto  the\t two
\nprevious decisions in Ajit Singh v. State of Punjab,  [1967]
\n2 SCR 143 and Madan Mohan Pathak v. Union of India,<\/a> (supra),
\nand observed:\n<\/p>\n
\t      “These  decisions have no application  to\t the
\n\t      instant  case  because  the  interest  of\t the
\n\t      lessees  and sub-lessees which was brought  to
\n\t      termination by section 3(3)(b) of the  Nation-
\n\t      alisation\t Amendment Act does not come  to  be
\n\t      vested  in  the State. The Act  provides\tthat
\n\t      excepting\t a certain class of leases and\tsub-
\n\t      leases,  all other leases and subleases  shall
\n\t      stand  terminated in so far as they relate  to
\n\t      the  winning  or mining of coal. There  is  no
\n\t      provision in the Act by which the interest  so
\n\t      terminated  is vested in the State;  Nor\tdoes
\n\t      such  vesting flow as a necessary\t consequence
\n\t      of  any  of the provisions of  the  Act.\tSub-
\n\t      section  (4) of section 4 of the Act  provides
\n\t      that  where a mining lease  stands  terminated
\n\t      under sub-section (3), it shall be lawful\t for
\n\t      the Central Government or a Government Company
\n\t      or  a corporation owned or controlled  by\t the
\n\t      Central  Government  to obtain  a\t prospecting
\n\t      licence  or a mining lease in respect  of\t the
\n\t      whole  or\t part  of the land  covered  by\t the
\n\t      mining  lease which stands so terminated.\t The
\n\t      plain intendment of the Act, which, may it  be
\n\t      reiterated,  is neither a pretense nor  a\t fa-
\n\t      cade, is that once the outstanding leases\t and
\n\t      sub-leases are terminated, the Central Govern-
\n\t      ment and the other authorities will be free to
\n\t      apply  for  a  mining  lease.  Any  lease-hold
\n\t      interest\twhich  the Central  Government,\t for
\n\t      example, may thus obtain does not directly  or
\n\t      immediately flow from the termination  brought
\n\t      about by section 3(3)(b). Another event has to
\n\t      intervene between the termination of  existing
\n\t      leases and the creation of new interests.\t The
\n\t      Central Government, etc. have to take a  posi-
\n\t      tive step for obtaining a prospecting  licence
\n\t      or  a mining lease. Without it, the Act  would
\n\t      be ineffective to create of its own force\t any
\n\t      right  or\t interest in favour of\tthe  Central
\n\t      Government, a Government Company or a Corpora-
\n\t      tion
\n\t      271<\/span>
\n\t      owned,   managed\t or   controlled   by\t the
\n\t      Central Government.”<\/p><\/blockquote>\n
    The statutory scheme of the Act which we are considering
\nis  to extinguish private rights both in respect of  Govern-
\nment  owned trees as also trees in private ownership and  to
\nvest those rights in the State Government or the  Government
\ncompany. The facts in this group of cases, therefore, clear-
\nly  indicate  that there is a  direct  relationship  between
\nnullification of the private rights and vesting of those  in
\nthe  State or the Government company. In other words,  where
\nthe  contract was given by the Government in respect of\t the
\ntrees  belonging  to  the State, the  nullification  of\t the
\ncontract would result in the automatic transfer by reversion
\nof the property in the contract to the Government.  Similar-
\nly,  where  the ownership vested in the private\t persons  by
\noperation  of s. 3 of the Act, the right to appropriate\t the
\nusufruct  of the trees is taken away from the private  owner
\nand  is\t vested\t in the State. The rule\t in  Pathak’s  case,
\ntherefore,  is applicable. Sub-Art. (2A) of Art. 31,  there-
\nfore,  does  not  apply to the facts of\t the  present  case.
\nConsequently, sub-Art. (2) applies and compensation,  there-
\nfore, was payable before the property could be taken over by
\nthe State.\n<\/p>\n
    Petitioners in writ petition No. 794\/86 had claimed that
\npursuant  to the arrangement entered into between  them\t and
\nthe  State  following the invitation by the State  they\t had
\ninvested Rs. 1.68 crores in shape of plant and machinery and
\n63  lacs of rupees by way of land and buildings.  The  peti-
\ntioner\tin the other two cases stated that  investments\t had
\nbeen  made by them as well. The petitioners were invited  to
\nset up industries by assuring them supply of the raw materi-
\nal. They changed their position on the basis of\t representa-
\ntions  made by the State and when the factories\t were  ready
\nand they were in a position to utilise the raw material, the
\nimpugned Act came into force to obliterate their rights\t and
\nenabled\t the  State to get out of the  commitments.  We\t are
\ninclined to agree with the submissions made on behalf of the
\npetitioners  that  the\tcircumstances gave rise\t to  a\tfact
\nsituation of estoppel. It is true that there is no  estoppel
\nagainst\t the legislature and the vires of the Act cannot  be
\ntested by invoking the plea but so far as the State  Govern-
\nment  is concerned the rule of estoppel does apply  and\t the
\nprecedents of this Court are clear. It is unnecessary to  go
\ninto that aspect of the matter as in our considered  opinion
\nthe impugned Act suffers from the vice of taking away rights
\nto property without providing for compensation at all and is
\nhit by Art. 31(2) of the Constitution.\n<\/p>\n
Connected proceedings had been taken for interim arrangement
\n272<\/span>
\nregarding  provision of raw material to the petitioners\t and
\ncertain other parties. We do not propose to deal with  those
\naspects in this judgment but liberty is given to parties  to
\napply  for such directions as they consider appropriate\t and
\nsuch applications, when filed, will be dealt with  separate-
\nly.\n<\/p>\n
    In\tthe result, each of the writ petitions succeeds.  We
\ndeclare the provisions of ss. 3 and 4 of the Act to be ultra
\nvires  the Constitution and since these\t provisions  contain
\nthe  soul of the Act and without them, the Act cannot  oper-
\nate,  the  entire Act has to suffer. The  petitioners  shall
\nhave  their  costs  to these  proceedings.  Hearing  fee  of
\nRs.3,000 is awarded in each of the petitions.\n<\/p>\n
Y.L.\t\t\t\t\t\t    Petition\nallowed.\n273<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Vij Resins Pvt. Ltd. & Anr. Etc vs State Of Jammu & Kashmir & Ors on 12 May, 1989 Equivalent citations: 1989 AIR 1629, 1989 SCR (3) 257 Author: R Pathak Bench: Pathak, R.S. (Cj) PETITIONER: VIJ RESINS PVT. LTD. & ANR. ETC. Vs. RESPONDENT: STATE OF JAMMU & KASHMIR & […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-53671","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nVij Resins Pvt. Ltd. & Anr. Etc vs State Of Jammu & Kashmir & Ors on 12 May, 1989 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vij-resins-pvt-ltd-anr-etc-vs-state-of-jammu-kashmir-ors-on-12-may-1989\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Vij Resins Pvt. Ltd. & Anr. 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