ORIENT PAPER AND INDUSTRIES LTD. AND ANR. ETC. ETC. versus STATE OF ORISSA AND ORS. ETC.

Citation: [1990] SUPP. 2 S.C.R. 480 · Decided: 30-10-1990 · Supreme Court of India · Bench: L.M. SHARMA · Disposal: Dismissed

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Judgment (excerpt)

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ORIENT PAPER AND INDUSTRIES LTD. AND 
ANR. ETC. ETC. 
v. 
STATE OF ORISSA AND ORS. ETC. 
OCTOBER 30, 1990 
[L.M. SHARMA, T.K. THOMMEN AND K.N. SAIKJA, JJ.] 
Orissa Forest Produce (Control of Trade) Act, 1981: Section 1(3) 
and 3 Amendment and Validation Acts 1987 and 1989 and Notifications 
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dated September 21, 1988-Whether nu// and void-Rescindement of 
contracts-Permissibility of 
The appellants/petitioners in each of the two Appeals Writ Peti· 
tions are contractors. They had entered Into agreements with the State 
of Orissa in terms of which they bad obtained exclusive rights and 
D licences to fell, cot and remove bamboos from certain specified areas 
for the purpose of connrtlng them into pulp. The agreements were doe 
to expire on 30th September 1989. There contracts were rescinded by 
the Orissa Forest Produce (Control of Trade) Act, 1981(Act22of1981) 
which, in respect of bamboos, came into force w.e.r. 1.10.1988, when 
Orissa Forest Produce (Control of Trade) Amendment Act, 1989 (Act · 
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4of1989) came into force. By virtue of the provisions of the Act and the 
notifications issued thereunder, the contractors were divested of all their 
contractual rights. 
Being aggrieved the appellants in both the appeals tiled writ peti-
tions in the High Court praying for a declaration that the Act 22 of 1981 
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and the notification of 21.9.1988 issued under Section 1(3) of the said 
Act have no application to the contracts entered into between the 
appellants and the State of Orissa and for a direction that the State be 
prohibited from enforcing the provisions of the said Act and to allow the 
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appellants to cot and remove the bamboos from areas covered by the 
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contracts. It was urged by the appellants that their rights in respect of 
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bamboos are not annulled or affected by reason of Act 22 of 1981 as 
their rights are in the nature of profit a prendre, and thus not suscepti-
ble of repudiation by statutory rescission of contracts. They relied on a 
decision of this Court in State of Orissa and Others v. The Titaghur 
Paper Mills Co. Ltd. and Anr .. [1985] 3 SCR 26. The High Court 
rejecting their contention that the rescission of their contracts did not 
H affect their pre-existing l"ights which allegedly originated in grant inde-
480 
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ORIENT PAPER v. STATE OF ORJSSA 
481 
pendent of any agreement of parties, held that the contractors were 
replaced by the agents and that the decision in Titaghur's case did not 
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deal with the question arising in the present case. The High Court 
accordingly dismissed the writ petitions. Hence these two appeals by the 
contractors. 
The appeUants Straw Products Ltd. med in this Court a writ 
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petition under Art. 32 of the Constitution praying inter alia for &decla-
ration that Act 4 of 1989 and the notification dated 21.9.1988 (S.R.O. 
No. 666 of 1988) and (S.R.O. 667 of 1988) are null and void. Orient 
Paper and Industries Ltd., the appeUants in the other appeals also med 
a writ petition for a declaration that Act 16 of 1987 and Act 15 of 1987 
(lst and 2nd Amendment Acts) and Notification dated 21.9.1988 
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(S.R.O. No. 667 of 1988) are null and void. 
Before this Court besides the arguments advanced before the 
High Court by the appellants/petitioners it was further urged that the 
Act suffers from the vice of excessive delegation of powers to the 
Government and separate notification should have been issued to bring D 
the amended provisions into the principal Act. The respondent-State 
controverted the arguments of the appellants and asserted that the .Acts 
in question are constitutionally valid. 
Dismissing the appeals and writ petitions, this Court, 
HELD: Any right or interest granted or recognised under such 
agreement was not an independent or pre-existing right or interest to 
survive the statutory rescission of the contract. Legislation has supu• 
seded all inconsistent and contrary rights. No right or interest or grant, 
whether contractual or prerogative in character in origin, whatever be 
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its nature, source and scope, can survive a superseding valid legislation. 
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-·-- The decision in Titaghur is consistent with the proposition that all rights 
derived by the contractors, including profit a prendre were granted in 
te_rms of the agreements. All such rights are conditioned by and totally 
dependent on the agreements. Whatever mutual rights or obligations 
accrued or arose between the parties· to those agreements are ·purely 
contractual

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