Timber Kashmir Pvt. Ltd. Vs.
Conservator of Forests, Jammu & Ors  INSC 263 (26 October 1976)
BEG, M. HAMEEDULLAH BEG, M. HAMEEDULLAH RAY,
A.N. (CJ) SHINGAL, P.N.
CITATION: 1977 AIR 151 1977 SCR (1) 937 1976
SCC (4) 498
CITATOR INFO :
R 1988 SC2149 (13)
Delegation of Powers to officers for
execution of contracts under section 122 (1) of Jammu & Kashmir
Constitution--Contracts containing arbitration clause validly executed on
behalf of the Government cannot be questioned on the plea of violation of
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 holding 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
certificates the Court.
HELD : 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 Government, as it.could,
and, if some acts of the Government 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. [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,  3
S.C.R. 214, applied.
In this case the contracts were executed by
duly authorised officials under Government's orders.
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
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
The main-stay of the case of the appellant
company was an instruction or rule contained in "The book of the Financial
Powers" which reads as follows:
"'S. 13. The power to sanction or cancel
the terms of instruments, leases, agreements is delegated in the following
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 ConserUpto
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 execution 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
Government, as we think it could, and, if some acts of the Government 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 condition 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 Constitution, 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 Conservator,
Conservators of Forests and Divisional Forest Officers".
The three leases, containing the arbitration
clauses which the appellant wants to avoid, were executed on 27th February,
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 Government. 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 Forests 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 &
Sd/Bharat Bhushan Secretary to Govt. Forests
The order of 29th April, 1971, runs as follows:
"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 Conservators of Forests in executing the lease agreements by virtue of
the said order are hereby regularised.
By order of the Government of Jammu &
Sd/R.C. Bhargava, Secretary to Government,
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 unnecessary. If there had been any
question to be decided as to whether the Government had sanctioned the leases,
its actions, apart from the execution of leases, could be considered. 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
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)  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
Civil Miscellaneous Petition No. 8573 of 1975
for interim orders is also dismissed as infructuous.
S.R. Appeals dismissed.