Holding

The Orissa Forest Produce (Control of Trade) Act, 1981 and the 1982 notification do not apply to forest produce grown in Government forests, so the contracts were not rescinded.

Summary

Utkal Contractors & Joinery Pvt. Ltd. and others had licences to collect, purchase and sell sal seeds from Government forests in Orissa, with a stipulation to set up solvent extraction units. The State of Orissa issued a notification under the Orissa Forest Produce (Control of Trade) Act, 1981 in 1982, claiming the Act rescinded the existing contracts and refused royalty payments. The appellants challenged this, arguing the Act did not apply to forest produce grown on Government lands. The Supreme Court examined the object, scheme and provisions of the Act, applying principles of statutory interpretation, and concluded that the Act was intended to create a State monopoly over produce from private holdings, not Government forests. Consequently, the Act and the 1982 notification were held inapplicable to sal seeds from Government forests, and the contracts were not rescinded. The Court allowed the appeals, declared the contracts valid, and awarded costs, but declined to extend the lease period.

Issues considered

The Orissa Forest Produce (Control of Trade) Act, 1981, whether it applies to forest produce grown in Government forests.
Whether the notification issued on 9 December 1982 rescinded the existing contracts for collection and purchase of sal seeds from Government forests.

Legislation cited

Orissa Forest Act, 1972s. 22(1)
Orissa Forest Produce (Control of Trade) Act, 1981s. 12, s. 1(3), s. 22(1), s. 2(c), s. 2(d), s. 5(1)(a), s. 5(1)(b), s. 5(2), s. 5(3), s. 7, s. 8, s. 9

Subjects

statutory interpretationforest producegovernment contractrescissionOrissa Forest Produce (Control of Trade) Actsal seedsnotificationcontract validity

Judgment

-
UTKAL CONTRACTORS & JOINERY PRIVAIB LIMITED & A
ORS. ETC.
v.
STAIB OF ORISSA & ORS.

MAY 7, 1987 B
[O. CHINNAPPA REDDY AND V. KHALID JJ.]

Orissa Forest Produce (Control of Trade) Act, 1981: ss. 5(l)(a)
and 5(1)(b)-Whether applicable to forest produce grown in Govern-
ment lands-Existing contracts for collection, purchase and sale of sal

- seeds in respect of Government forests-Whether rescinded.

Statutory interpretation: Wide words not to be given literal
meaning-To be construed contextually restricting scope of pro-
C

vision in consonance with the object, reasons and scheme of the
Act. D

Sub-section (1) of s. 5 of the Orissa Forest Produce (Control of
I -\r Trade) Act, 1981 provides that on the issue of a notification under
sub-s. (3) of s. 1 in respect of an area (a) all contracts for the purchase,
) sale, gathering or collection of specified forest produce shall stand resci- E
nded, ilnd (b) no person other than the State Government or its officers
or agents shall purchase or transport any specified forest produce in the
said area. Explanation II thereto provides that purchase of specified
forest produce from the State Government or its officers or agents is not
to be deemed to be a purchase in contravention of the provisions of the
Act. F
The appellant-company was granted a licence for collection, sale
and purchase of sal seeds from Government forests on the stipulation
that it would establish solvent extraction units in backward areas. The
appellant-company was to supply sal seeds to these extraction plants.
The agreement was renewed for a further period of ten years from G
October 1, 1979. The State Government by a notification dated
December 9, 1982 issued under sub-s. (3) of s. 1 brought the Act Into
~ force immediately in the whole of the State in relation to sal seeds.
Thereafter it refused to accept royalty from the appellant on the ground
that the notification had the effect of rescinding the contract between
the company and the Government. H

317
318 SUPREME COURT REPORTS [1987) 3.S.C.R.

A A writ petition filed by the company for a declaration that the
abovesaid notification did not have the effect of rescinding their con-
tract with the State Government, was dismissed by tbe High Conrt.

In the appeals to this Court it was contended for the appellants
that the Act had no application to the produce grown in Government
B forests, that the Act was aimed at creating a monopoly in forest produce 1.
in the Government by vesting in it the exclusive right to purchase forest
produce grown in private holdings, and that even otherwise Explana- _,.
tion II to s. 5(1) saved such contracts for the purchase of specified forest "
produce from Government lands at.... On behalf of the respondents it
was contended that the very wide language of s. 5(1)(a) made it appli-
C cable to all forest produce whether grown in private holdings or
Government forests, and that the contract being for collection and not _,,
for purchase of forest produce it was not saved by the Explanation II to \
s. 5(1).

Allowing the appeals, the Court,
D
HELD: 1. The Orissa Forest Produce (Control of Trade) Act, 'j- '
1981 and the notification issued under it do not apply to the forest '
produce grown in Government forests. It was not, therefore, open
to the Government to treat the contracts with the appellants as res-
cinded. [333C)
E
2. The scheme of the Act is fully in tune with the object set out in
the Statement of Objects and Reasons and in the Preamble, namely,
that of creating a monopoly in forest produce by making the Govern-
ment the exclusive purchaser of forest produce grown in private hold-
ings. Sections 4, 5(1)(b), 5(3), 7, 8 and 9 deal with purchase of forest
F produce by the State Government. This can only be of forest produce
grown in private holdings and not in Government forests since there
can be no question of or providing for the purchase by the Government
of forest produce grown on Government lands. The only provision in
the Act which expressly deals with sale of forest produce by the State
Government is s. 12, and that again is confined to the sale of specified
G forest produce purchased by the State Government. The Act, therefore,
cannot to said to have any application to produce grown in Government
forests. [331H-332A, 331FG, EF, CD, F, 323E)

3.1 The safest guide to the interpretation of a statute is the reason
for it, which can be discovered through external and internal aids. The
H external aids are Statement of Objects and Reasons when the Bill is
UTKAL CONTRACTORS v. STATE OF ORISSA 319

presented to Parliament, the reports of Committees which preceded the A
Bill and the reports of Parliamentary Committees. Occasional excur·
sions into the debates of Parliament are permitted. Internal aids are the
Preamble, the scheme and the provisions of the Act. [328EF]

3.2. No provision in the statute and no word of the statute may be
construed in Isolation. Every provision and every word must be looked B

'
-)
at generally before any provision or word is attempted to be construed.
The setting and pattern are important. Parliament does not waste its
breath unnecessarily. It is neither expected to use unnecessary expressions,
nor to express itself unnecessarily. While the words of an enactment are

- important, the context is no less important. The fact that general words
are used in a statute is not in itself a conclusive reason why every case
c
.\ falling literally within them should be governed by that statute. The
context of an Act may well indicate that wide or general words should
be given a restrictive meaning. [328F·329B]

Attorney General v. H.R.H. Prince Augustus, [1957] I All ER
49; Chertsey, U.D.C. v. Mixnam's Properties, [1964] 2 All ER 627; D
Empress Mills v. Municipal Committee, Wardha, AIR 1958 SC 341 and
·~ Maunsellv. Olinf, [1975] I All ER 16, referred to.

4. I It is not permissible to the Court to construe the wide and
general words of s. 5(1)(a) in their literal sense as that would not be in
consonance with the scheme of the Act. The proper way to construe that E
provision is to give a restricted meaning to the wide language there used
--~ so as to fit into the general scheme of the Act. [332B·D]

4.2 Section 5(1)(a) and 5(1)(b) are connected by the conjunction
'and', and having regard to the circumstances leading to the enactment
and the policy and design of the Act, cls.(a) and (b) must be construed F
in such a way as to reflect each other. Viewing s. 5(1)(a) and 5(1)(b)
together and in the light of the Preamble and the Statement of Objects
and Reasons and against the decor of the remaining provisions of the
Act, it is apparent that s. 5(1), like the rest of the provisions, applied to
forest produce grown in private,holdings and not to forest produce
grown in Government lands. [3320, F·G] G
'-)--
-
5. The contracts relating to specified forest produce which, there·
fore, stood rescinded were contracts in relation to forest produce grown
in private holdings only. Since the very object to the Act was to create
a monopoly in forest produce in the Government so as to enable the
Government, among other things, to enter into contracts and since H
-
320 SUPREME COURT REPORTS [ 1987] 3.S.C.R.

A s. 5(1) does not bar any future contracts by the Government in
respect of the forest produce, there was no justification in rescinding
contracts solemnly entered into by the Government for the avowed
purpose of encouraging the setting up of certain industries in the
State. [332E, 334A]

B 6. The object of the Act was to prevent smuggling of those
varieties of forest produce as were grown both in Government forests and
private lands. It was expressly mentioned in the Statement of Objects
and Reasons that such varieties of forest produce were unlike sal seeds

c
which were grown only in Government forests. Even so the only notifi-
cation ever issued under the Act was in respect of sal seeds and no other
forest produce. The mere inclusion of 'sal seeds' in the definition of
'forest produce' cannot in the teeth of the several provisions of the Act
-
lead to the inference that forest produce grown in Government lands
was also meant to be dealt with by the Act. Several species of forest
produce were included in the definition of forest produce and among
them 'sal seeds' were also included so as to eliminate even the remote
D possibility of the existence of some stray private holdings in which sal
seeds may have been grown. [324G-325A, 333AB)

7. The circumstance that 'grower of forest produce' is defined so
as to include the Government is of no eonsequence in determining
whether the Act is applicable to forest produce grown on Government
E lands. The expression 'grower of forest produce' is not found in any
other provision except s. 5(2)(a) and s. 10. Section 5(2)(a) provides for
the transport of forest produce by the grower from a place within one
unit to another place within the unit. Section 10 requires every grower
of specified forest produce to get himself registered in the prescribed
manner. Neither s. 5(2)(a) nor s. 10 has, therefore, any application to
F the Government lands. [331B, A]

8. It is not necessary to consider the submission that Explanation
II to s. 5(1) saves the present contract or that Explanation II is an
explanation only to s. S(l)(a) and not to s. S(l)(b). [333B)

G [It is not permissible for the Court to extend the period of lease of ~
the appellants by way of relief for the business lost. The parties to work
out their rights in the light of the various interim orders and the decla-
ration granted by the Court.] [333E]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 6230
H and 6231 of 1983.
-
UTKAL CONTRACTORS v. STATE OF ORISSA [REDDY, J.] 321

'"-A From the Judgmeni and Order dated 20.6.1983 of the Orissa A
High Court in 0.J.C. Nos. 237 and 46 of 1983.

F.S. Nariman, A.K. Ganguli, S.N. Kacker, R.F. Nariman, A.
Patnaik and M.M. Kshatriya for the Appellants.

'
rJ, G. Ramaswamy, Additional Solicitor General and R.K. Meht"
for the Respondents.
0

\ The Judgment of the Court was delivered by

-,.
~
CHINNAPPA REDDY, J. On December 12, 1967, the State of
Orissa granted 'a license for collection of Sal Seeds' from eleven Forest
Divisions to M/s. Utkal Contractors and Joinery Private Limited. The
c
agreement provided for the sale and purchase of Sal Seeds falling on
the ground naturally in the forests. There was a stipulation that the
company should establish solvent extraction units in the backward
areas of Mayurbhanj and Sambalpur. There was also an option for
renewal of the lease for a further period of ten years. It was later D
agreed that the period from October 1, 1967 to September 30, 1969
't should be treated as experimental period and the lease should be
deemed to have commenced from October 1, 1969 and to last for a
period of ten years. The Orissa Oil Industries Limited, a public limited
company, was floated by the Utkal Contractors and Joinery Private
Limited and it was agreed that the State Government should also E
.--- ~- contribute to the share capital of the company. It was agreed that the
I Utkal Contractors and Joinery Private Limited should supply Sal
I
Seeds to the two solvent extraction plants of the Orissa Oil Industries
,; Limited, one set up at Bairangpur in Mayurbhanj District with a
--"( capacity to crush 21,000 M.T. Sal Seeds and the other at Sasan in
Sambalpur District with a capacity to crush 21,000 M. T. sal seeds. F
Thereafter on May 25, 1979, agreements renewing the leases for the
purchase and removal of sal seeds from the eleven Forest Divisions for
a further period of ten years from October I, 1979 to September 30,
1989 were entered into by the Utkal Contractors and Joinery Private
Limited and the Government of Orissa. This was followed up by an
G
"'-'r agreement between the Utkal Contractors and Joinery Private Limited
and the Orissa Oil Industries Limited for the supply of the entire
collection of sal seeds from the eleven Forest Divisions by the Utkal
Contractors to the Orissa Oil Industries. While so the Orissa Forest
Produce (Control of Trade) Bill 1981 was introduced in the Legisiative
Assembly ofOrissa State. The Statement of Objects and Reasons was
as follows:- H

- _.. 1- -----------~---
-
322 SUPREME COURT REPORTS {1987] 3. S. C.R.

A "Smuggling of various forest produces is increasing
day by day. The present provisions of the Orissa Forest
Act, 1972 for checking, hoarding and transport of forest
produce are not adequate to bring the culprits to book. The
said Act is not adequate for imposition of any restrictions
of control on trade in forest produce by framing rules
B thereunder. Barring few items like sal seeds, most of the
important items of minor forest produce such as Mahua
flowers, Tamarind, Charmaji, Karanja and the like are
grown in private holdings as well as in the forest areas
owned by Government. Unscrupulous traders take advan-

c
tage of this situation and evade the law under the cover that
the produce relates to private land and not to forests under
the control of Government. Instances of smuggling in such
-
cases are too many and the smugglers are escaping with
impunity because of absence of any legislation providing
for State monopoly in forest produce. Enactment of a sepa-
rate legislation for the purpose is, therefore, absolutely
D necessary.

The Bill seeks to achieve the above purpose."
t'
It appears from a perusal of the Statement of Objects and Reasons
that the object of the proposed Act was to prevent smuggling of forest
E produce like Mahua flowers, Tamarind, Charmaji, Karanja, etc.
which were grown both in private holdings and Government forests.
The object of the legislation was to prevent smuggling in such forest
produce and to provide for State monopoly therein. It is seen that the
·f ~
Statement of Objects and Reasons expressly mentions sal seeds as
a forest produce which is grown in Government Forests and not in
\_
F private holdings.

The Orissa Forest Produce (Control of Trade) Act, 1981 re-
ceived the assent of the President of India on August 21, 1981. Under
s. 1(3) of the Act, the State Government is empowered from time to
time to issue a notification specifying the area or areas, the forest
G produce in relation to which and the date with effect from which the
Act shall come into force. Purporting to act under this provision, a
notification was issued by the Government of Orissa on December 9,
1982 directing that the Act shall come into force at once in the whole of
the State of Orissa in relation to sal seeds. We are told that this is the
only notification issued so far under s. 1(3) of the Act, despite the fact
H that in the very Statement of Objects and Reasons it was expressly

,, _____________ - ·- ~
UTKAL CONTRACTORS v. STATE OF ORISSA (REDDY, J.] 323

recited that sal seeds was not a forest produce grown in Government A
forests. In fact, we find that even aftenhe commencement of the Act
and before the issue of the Notification, there were negotiations bet-
ween the Utkal Contractors and Joinery Private Limited and the State
Government for long term agreements for purchase .and sale of sal
seeds in Athagarh and Puri Forest Divisions. Such agreements were in
fact entered into in relation to Parlakhemundi Forest Division bet- B
ween the State of Orissa and Jndo East Extraction Limited. On
December 24, 1982, the Government refused to accept royalty from
Utkal Contractors and Joinery Private . Limited in respect of
Dhenkanal and Sambalpur Forest Division on the ground that the
Notification dated December 9, 1982 had the effect of rescinding the
contract between the company and the Government. Thereupon Utkal
Contractors and Joinery Private Limited and Orissa Oil Industries
c
'·~ Limited filed a writ petition in the Orissa High Court for a declaration
that the Notification dated December 9, 1982 did not have the effect of
rescinding the contracts which they had with the State Government.
The Writ Petition was dismissed by the Orissa High Court. The Utkal
Contractors and Joinery Private Limited and Orissa Oil Industries D
{ Limited have filed Civil Appeal No. 6230 of 1983. In another case, on
similar facts the Orissa Minor Oil Private Limited have filed Civil

' Appeal No. 6231of1983.

l
On behalf of the appellants, it was submitted by Shri F.S. Nari-
man in Civil Appeal No. 6230 of 1983 and Shri S.N. Kacker in Civil E
Appeal No. 6231 of 1983 that the Orissa Forest Produce (Control of
· Trade) Act, 1981 had no application to forest produce grown in
Government forests. The Act was aimed at creating a p:tonopoly in
forest produce in the Government. Since the Governmen! was already
the owner of forest produce in Government forests all that was neces-
sary to create a monopoly in all forest produce in the Government was F
to vest in the Government the exclusive right to purchase forest pro-
duce grown in private holdings. That was precisely what was done by
the Orissa Forest Produce (Control of Trade) Act, 1981 according to
the learned counsel. It was further argued that ev<:n otherwise Expla-
nation II to s. 5(1) saved such contracts for the purchase of specified
...._'r forest produce from Government forests also. It was also brought to G
our notice that such contracts were entered into in pursuance of the
avowed Industrial Policy of the Government of Orissa. Shri G.
Ramaswamy, learned Additional Solicitor General argued that Orissa
Forest Produce (Control of Trade) Act, 1981 was a comprehensive Act
intended to control and regulate trade in forest produce whether
grown in Government forest or land held by private owners. He urged H
324 SUPREME COURT REPORTS [1987] 3.S.C.R.

A that the language of s. 5(1)(a) was so wide as to be incapable of any
construction other than to say that all contracts relating to trade in
forest produce shall stand rescinded irrespective of whether the con-
tract related to forest produce grown in Government forests or forest
produce grown on private lands. He urged that Explanation II. pro-
perly viewed, W!IS an explanation to s. 5(1)(b) only and not to s. 5(l)(a)
B He argued that in any event the contract was for the collection and not
for the purchase of forest produce and therefore, not saved by the
explanation. He further urged that the agents contemplated by s. 4 of
the Act were not agents to act on behalf of the Government. They !'
were "public agents"; named as such, to carry on the activity of
purchasing and trading in specified forest produce. They could pur-
e chase from and sell to the Government. We may straightaway say that
it was never the case of the Government in the High Court that the
character of the agents was as suggested by the learned Additional
Solicitor General. We do not, therefore, propose to consider the sub-
mission of learned Additional Solicitor General whatever justification
there may be for the submission on the-language of section 4. The
D learned Additional Solicitor General further submitted that even if the
agreement which Utkal Contractors and Joinery Private Limited had
with the Government was saved by Explanation II, the further agree-
ment by which the Utkal Contractors and Joinery Private Limited was
required to supply sal seeds to Orissa Oil Industries Limited and the
latter was required to purchase from the former was not saved by
E Explanation II and therefore, no relief could be granted to the appel-
lants. This submission again is a new point raised for the first time in
this Court. We do not think we will be justified in yermitting the
Additional Solicitor General to raise the question at this stage. Such a
question was not raised in the High Court probably because the con-
tract between Utkal Contractors and Joinery Private Limited and
F Orissa Oil Industries Limited appears to have been entered into at the
behest of the Government. The questions for consideration, therefore,
are whether purchase of sal seeds grown in Government forests is
outside the purview of the Orissa Forest Produce (Control of Trade)
Act, 1981 and whether, in any event, a contract such as the one with
which we are concerned is saved by Explanation II to s. 5(1).
G ~J.
We have already referred to the Statement of Objects and
Reasons of the Orissa Forest Produce (Control of Trade) Act. We
have noticed thar the object was to prevent smuggling of those
varieties of forest produce as were grown both in Government forests
and private lands. We also notice that it was expressly mentioned in
H the Statement of Objects and Reasons that such varieties of forest
UTKAL CONTRACTORS v. STATE OF ORISSA (REDDY, J.] 325

produce were unlike sal seeds which were grown only in Government A
forests. Even so we notice that the only notification ever issued under
the Act was in respect of sal seeds and no other forest produce. We can
only comment that curious indeed are the ways of the powers that be.

Section 1(3) of the Act declares that the Act shall come into 8
force in such area or areas and in relation to such forest produce and
on such date or dates as the State Government may, from time to time,
by notification, specify in that behalf. Section 2(c) defines 'forest pro-
duce' and enumerates various items of forest produce. One of them is
sal seeds. Section 2(d) defines "growers of forest produce" to mean
"(i) in respect of forest produce grown on land owned by any person,
the owner of such land, and (ii) in all other cases the State Govern- C
ment." Section 2(h) and 2(i) define 'specified area' and 'specified
forest produce' in the following terms:

"(h) "specified area" in relation to a specified forest pro-
duce means the area specified in the notification
0
under sub-section (3) of section 1 for such specified
forest produce;"

"(i) "specified forest produce" in relation to a specified
area means the forest produce specified in the notifi-
cation issued under sub-section (3) of section 1 for E
such specified area."

Section 4 authorises the Government to appoint one or more agents for
the purchase of and trade in specified forest produce in respect of one
or more subdivisions of a specified area. It is also provided that any
person including a Gram Panchayat, a Cooperative Society or the
Slate Tribal Development Corporation may be appointed as an agent. F
Section 5 is important and we are particularly concerned with sub-
sections (I) and (3) of section 5 which may be fully extracted here. They
are as follows:-

"5. Restriction on purchase and transport and rescission of G
subsisting contracts---( 1) On the issue of a notification
under sub-section (3) of section 1 in respect of any area-

(a) all contracts for the purchase, sale, gathering or collec-
tion <Jf specified forest produce grown or found in the said
area shall stand rescinded, and
H
326 SUPREME COURT REPORTS [1987) 3.S.C.R.

A (b) no person other than- .k·
(i) the State Government,

(ii) an officer of the State Government authorised in writ-
ing in that behalf, or
B
(iii) an agent in respect of the unit in which the specified
forest produce is grown or found.

shall purchase or transport any specified forest produce in
the said area.
c Explanation 1-"purch..se" shall include purchase by
barter.

Explanation II-Purchase of specified forest produce from
the State Government or the afc1resaid Government
D Officer or agent or a licensed vendor shall not be deemed
to be a purchase in contravention of the provisions of this
Act.

Explanation III-A person having no interest in the hold-
ing who has acquired the right to collect the specified forest
E produce grown or found on such holding shall be deemed
to have purchased such produce in contravention of the
provisions of this Act.

(2)

F
(3) Any person desiring to sell any specified forest produce
may sell them to the aforesaid Government Officer or
agent at any depot situated within the unit wherein such
produce was grown or found:

Provided that State Government, the Government ~ _.,,
Officer or the agent shall not be bound to repurchase specified
forest produce once sold.

(4) ············-············-······--··-···-·····-"
H We notice that though s. S(l)(a) is in general terms and declares that
UTKAL CONTRACTORS v. STATE OF ORISSA [REDDY, J.] 327

',A all contracts for the purchase and sale of forest produce shall stand
A
rescinded and clause (b) bans purchase and transport of forest produce
by any person other than the State Government or its officers or
agents. Explanation II is clear that purchase of specified forest pro-
duce from the State Government or its officers or agents is not to be
deemed to be a purchase in contravention of the provisions of the Act.
Explanation III, we see, declares that a person having no interesi in B
~ the holding but acquires the right to collect the specified forest pro-
duce grown or found on such holding shall be deemed to have pur-

-
• chased such produce in contravention of the provisions of the Act. It is
obvious that the reference to holding here is to land held )>y a person
other than the Government and not to land owned by the Govern-
ment. We are primarily concerned in this case with the effect of
s. 5(l)(a) and (b) in the light of Explanation II. Sub-section (3) of
c
>~ section 5 also, we further notice, refers to sale to the officers, or agents
of the Government by individuals and not sale by the Government or
its officers or agents to individuals.

Section 5(2), which we have not extracted, is an exception to the D
I -y- ban imposed bys. 5(1)(b) on transport of specified forest produce.
Section 5(2)(b) provides that notwithstanding anything contained in
sub-s. (1), any person may transport any specified forest produce
within the prescribed limits from the place of purchase of any such
produce to the place where such produce is required for bona-fide use
or for consumption. It is further provided that any specified forest E
produce purchased from the State Government or any Officer or agent
---).- or any person for manufacture of goods within the State in which such
specified forest produce is used as raw material or by any person for
sale outside the State may be transported in accordance with the terms
~ and conditions of a permit issued by the prescribed authority.
F
Section 6 provides for the constitution of an Advisory Commit-
tee in respect of each specified forest produce for each Revenue Divi-
sion. The object of the Committee is to advise the Government "in the
matter of fixation of fair and reasonable price of each specified forest
produce at which such produce may be purchased by the State Govern-
.__ ment or its authorised officers or agents when they are offered for sale G
'r in such division in accordance with the provisions of this Act." Section
7 enables the State Government, after consultation with the Advisory
Committee to fix the price at which specified forest produce may be
purchased by it or by its officers or agents. Again we see that the price
to be fixed is in regard to authorised produce that may be purchased by
the State Government and not forest produce that may be sold by the H
-
328 SUPREME COURT REPORTS [1987) 3.S.C.R.

A State Government. Section & enables the State Government to open
depots for the convenience of the growers of specified forest produce
and s. 9 obliges the State Government to purchase at the price fixed
under s. 7 any specified forest produce offered for sale at the depot.
Section 10 enables growers of forest produce to get themselves
registered. Section 11 enables every manufacturer who uses any
B specified forest produce as a raw-material and every trader or con-
sumer to get himself registered. Section 12 enables the State Govern-
ment to dispose of specified forest produce purchased by the State
Government or its officers or agents by sale or otherwise as the State
Government may direct. Section 13 bans any person from engaging
himself in retail sale of any specified forest produce except under a
C licence granted under this section. Section 15 provides for searches -
and seizures. Section 16 provides for penalties. Section 22(1) provides,
"Nothing contained in the Orissa Forest Act, 14 of 1972 shall apply to
specified forest produce in respect of matters for which provisions are
made under this Act."

D In considering the rival submissions of the learned counsel and in
defining and construing the area and the content of the Act and its 't \
provisions, it is necessary to make certain general observations regard-
ing the interpretation of statutes. A statute is best understood if we
know the reason for it. The reason for a statute is the safest guide to its
interpretation. The words of a statute take their colour from the
E reason for it. How do we discover the reason for a statute? There are
external and internal aids. The external aids are Statement of Objects .L-
and Reasons when the Bill is presented to Parliament, the reports of ,-
Committees which preceded the Bill and the reports of Parliamentary
Committees. Occasional excursions into the debates of Parliament are
permitted. Internal aids are the preamble, the scheme and the provi- )-·
F sions of the Act. Having discovered the reason for the statute and so
having set the sail to the wind, the interpreter may proceed ahead. No
provision in the statute and no word of the statute may be construed in
isolation. Every provision and every word must be looked at generally
before any provision or word is attempted to be construed. The setting
and the pattern are important. It is again important to remember that
G Parliament does not waste its breath unnecessarily. Just as Parliament~__,.
is not expected to use unnecessary expressions, Parliament is also not
expected to express itself unnecessarily. Even as Parliament does not
use any word without meaning something, Parliament does not legis-
late where no legislation is called for. Parliament cannot be assumed to
legislate for the sake of legislation, nor can it be assumed to make
H pointless legislation. Parliament does not indulge in legislation merely
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UTKAL CONTRACTORS v. STATE OF ORISSA (REDDY, J.] 329
'.~
to state what it is unnecessary to state or to do what is already validly
A
done. Parliament may not be assumed to legislate unnecessarily.
Again, while the words of an enactment are important, the context is
no less important. For instance, "the fact that general words are used
in a statute is not in itself a conclusive reason why every case falling
literally within them should be governed by that statute, and the con-
text of an Act may well indicate that wide or general words should be B
given a restrictive meaning" (see Halsbury, 4th edn. Vol. 44 para 874).

In Attorney General v. H.R.H. Prince Augustus, [1957] l All ER
49, Viscount Simonds said,

"My Lords, the contention of the Attorney-General C
was, in the first place, met by the bald, general proposition
that, where the enacting part of a statute is clear and unam-
biguous, it cannot be cut down by the preamble, an.d a large
part of the time which the hearing of this case occupied was
spent in discussing authorities which were said to support
., y that proposition. I wish, at the outset, to express my dissent / D
from it, if it means that I cannot obtain assistance from the
preamble in ascertaining the meaning of the relevant enact-
ing part. For words, and particularly general words, cannot
be read in isolation; their colour and content are derived
from their context. So it is that I conceive it to be my right
and duty to examine every word of a statute in its context, E
and I use context in its widest sense which I have already
indicated as including not only other enacting provisions of
the same statute, but its preamble, the existing state of the
law, other statutes in pari materia, and the mischief which I
can, by those and other legitimate means, discern that the
statute was intended to remedy." F

In Chertsey, U.D.C. v. Mixnam's Properties, [1964] 2 All ER
627, Lord Reid said that the general effect of the authorities was
properly stated in Maxwell's Interpretation of Statutes as follows:- ·

"General words and phrases•therefore, however wide and G
comprehensive they may be in their literal sense, must usu-
ally be construed as being limited to the actual objects of
the Act."

Though no reference was made to Maxwell this Court in Empress Mills
v. Municipal Committee, Wardha, AIR 1958 SC 341 stated the same H
proposition:
-
330 SUPREME COURT REPORTS [1987] 3.S.C.R.

"It is also a recognised principle of construction that
A
general woTds and phrases however wide and comprehen-
sive they may be in their literal sense, must usually be
contrued as being limited to the actual objects of the Act."

In Maunsell v. O/ins, [ 1975] 1 All ER 16, Lord Wilberforce
B observed,

" ........ I am not, myself, able to solve the problem by a
simple resort to plain meaning. Most language, and parti-
cularly all languages used in rent legislation, is opaque: all

c
general words are open to inspection, many general words
demand inspection, to see whether they really bear their
-
widest possible meaning."

But we think that when we rely upon rules of construction we
must always bear in mind· Lord Reid's admonition in Maunsell v.
Olins (supra) to the following effect:
D
"Then rules of constructiOn are relied on. They are not Y- '\
rules in the ordinary sense of .having some binding force.
They are our servants not our masters. They are aids to
constructions, presumptions or pointers. Not infrequently
one 'rule' points in one direction, another in a different
E direction. In each case we must look at all relevant circum-
stances and decide as a matter of judgrl.ent w)lat weight to
aUach to any particular 'rule'."
+._
Bearing these broad rules in mind, we may now examine the Act )--•-
and the argument. The reason for the Act is not far to seek. Earlier we
F have set out the Statement of Objects and Reasons. The Statement of
Objects and Reasons is .explicit that the Act was proposed to be enac-
ted to prevent smuggling'of forest produce grown in Government lands
under the guise of produce grown on private lands. This was sought to
be achieved, as stated in the preamble by the creation of a State
monopoly. Since the State was already the owner of the forest produce ,
G grown in Government land, what was necessary and sufficient to be--/ --'
done by .the proposed legislation was to vest in the Government the
exclusive right to purchase forest produce grown on private land. We
may now proceed to examine the scheme and the provisions of the Act
to find out whether this was not precisely what was done.

H At the outset, we notice that 'grower of forest produce' is
-
UTKAL CONTRACTORS v. STATE OF ORISSA [REDDY, J.J 331

defined to include the State Government but on an examination of the A
remaining provisions of the Act we find that the expression 'grower of
forest produce' is not found in any other provision except sec. 5(2)(a)
ands. 10. Section 5(2)(a) provides for the transport of produce by the
grower of forest produce from a place within one unit to another place
within the unit. Section 10 requires every grower of specified forest
produce to get himself registered in the prescribed manner. Obviously B
neither s. 5(2)(a) nor s. 10 has any application to the Government.
Therefore, the circumstance that grower of forest produce is defined
so as to include the Government appears to us to be of no consequence

- in determining whether the Act is applicable to forest produce grown
on Government lands. On the other hand, from the extracts and sum-
mary of the other provisions of the Act that we have given earlier, we C
find that section after section deals with purchase of forest produce
which, in the circumstances, can only refer to purchase of forest pro-
duce grown on private holdings since there can be no question of or
providing for the purchase by the Government of forest produce
grown on Government lands. Section 4 enables the appointment by
the State Government of agents for the purchase of and trade is D
.. y specified forest produce. Section 5( l)(b) refers to purchase or trans-
port of specified forest produce by the State Government, its officers
and agents. Section 5(3) r~fers to sale of forest produce to the Govern-
ment, its officers or agents. Section 7 refers to the fixation of price at
which the Government, its officers or agents may purchase forest pro-
duce. Section 8 enables the opening of depots for the purchase of E
forest produce by the Government, its officers and agents. Section 9
deals with the obligation of the State Government, its agents and
officers to purchase specified forest produce. All these provisions, we
see, deal with purchase of forest produce by the State Government. As
-'--i. stated by us earlier, this can only be of forest produce grown in private
holdings and not in Government forests. The only provision which F
deals with sale of forest produce by the State Government is section 12
and that again is confined to the sale of specified forest produce
purchased by the State Government, its officers or agents. Thus,
s. 4, s. 5(1)(b), s. 5(3), s. 7, s. 8, s. 9, s. 10 ands. 12, all deal with the
forest produce grown in private holdings and all these provisions
except sections 10 and 12 deal with purchase of forest produce by the G
Government, its officers or agents. Section 10, as we have already
seen, deals with registration of growers of forest produce and section
12 with sale of forest produce purchased by the Government. Thus
none of these provisions deals with forest produce grown in Govern-
ment lands nor is there any other provision in the Act which expressly
deals with forest produce grown in Government lands. The scheme of H
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332 SUPREME COURT REPORTS [1987) 3.S.C.R.

A the Act is, therefore, fully in tune with the object set out in the State-
ment of Objects and Reasons and in the Preamble, namely, that of
creating a monopoly in forest produce by making the Government the
exclusive purchaser of forest produce grown in private holdings. It was
argued by the learned Additional Solicitor General thats. S(l)(a) was
totally out of tune with the rest of the provisions and, while the rest of
B the provisions dealt with forest produce grown in private holdings, the
very wide language of s. S(l)(a) made it applicable to all forest pro-
duce whether grown in private holdings or Government forests. We do
not think that it is permissible for us to construes. S(l)(a) in the very
wide terms in which we are asked to construe it by the learned Addi-
tional Solicitor General because of its wide language, as that would
C merely introduce needless confusion into the scheme of the Act.
-
Having scanned the object and the scheme of the Act, having examined
each of the provisions of the Act textually and contextually, we do not
think that it is proper for us to construe the words of s. S(l)(a) in their
literal sense; we think that the proper way to construes. S(l)(a) is to
give a restricted meaning to the wide and general words there used so
D as to fit into the general scheme of the Act. Section S(l)(a) and S(l)(b)
are connected by the conjunction 'and', and having regard to the y ....
circumstances leading to the enactment and the policy and design of
the Act, we think that clauses (a) and (b) must be construed in such a
way as to reflect each other. We have no doubt that the contracts
relating to specified forest produce which stand rescinded are contracts
E in relation to forest produce grown in private holdings only. If the very
object of the Act is to create a monopoly in forest produce in the
Government so as to enable the Government, among other things, to
enter into contracts, there was no point in rescinding contracts already
validly entered into by the Government. Again s. 5(1) does not bar any
future contracts by the Government in respect of forest produce; if so,
F what is the justification for construing s. S(l)(a) in such a way as to
put an end to contracts already entered into by the Government.
Viewings. S(l)(a) and S(l)(b) together and in the light of the pream-
ble and the Statement of Objects and Reasons and against the decor of
the remaining provisions of the Act, we have no doubt that s. 5( I), like
the rest of the provisions, applies to forest produce grown in private
0 holdings and not to forest produce grown in Government lands.

One of the submissions of the learned Additional Solicitor
General was that despite noticing in the Statement of Objects and
Reasons that 'sal seeds' were grown in Government lands only yet 'sal
seeds' were included in the definition of forest produce and this was a
·tt clear indication that forest produce grown in Government lands was
-
UTKAL CONTRACTORS v. STATE OF OR!SSA (REDDY. J.) 333

also meant to be dealt with by the Act. We do not think that the .mere A
inclusion of 'sal seeds' in the definition of forest produce can lead to
such consequences in the teeth of the several provisions of the Act.
Several species of forest produce were included in the definition of
forest produce and among them 'sal seeds' were also included so as to
eliminate even the remote possibility of the existence of some stray
private holdings in which sal seeds may have been grown. B

In the view that we have taken it is unnecessary for us to consider
the further submission that Explanation II to s. 5( 1) saves the present
contract or that Explanation II is an explanation only to s. S(l)(a) and

- not to s. 5(1)(b). We declare that the Act and the notification issued
under the Act do not apply to forest produce grown in Government C
forests and that it was not therefore, open to the Government to treat
the contract dated May 25, 1979 as rescinded. As a r~sult of the
attitude of the Government in treating the contract as rescinded from
the date of the notification the appellants were not able to collect and
purchase the sal seeds from the Government forests which they have
taken on lease for a period of about four years. The question arises D
whether any further relief in addition to declaration may be granted by
us. lt was suggested on behalf of the appellants that their lease should be
extended by another period of four years. We do not think that it is
permissible for us to extend the lease for a further period of four years
in that fashion. We can only leave it open to the parties to work out
their rights in the light of the declaration granted by us. We find that E
various interim orders were made from time to time. The rights of the
parties will naturally have to be worked out after taking into account
the interim orders.

·'--i. Civil Appeal No. 6231 is an appeal by other persons similarly
placed as the appellants in Civil Appeal No. 6230 of 1983 in respect of F
a different contract. Both the appeals are allowed with costs in the
manner indicated above. We mentioned at the outset that although
several species of forest produce were included in the definition of
forest produce under the Act, the only notification issued under the
Act in respect of any specie of forest produce was in respect of sal
seeds, an item in respect of which no notification whatsoever was G
necessary if what was stated in the Statement of Objects and Reasons
was correct. We are not a little surprised that the only occasion for
using the machinery of Orissa Forest Produce (Control of Trade) Act,
1981 was to issue a notification in respect of sal seeds and not in
respect of other forest produce, leaving an uneasy feeling with us that
the notification was issued only with the object of putting an end to H
-
334 SUPREME COURT REPORTS [1987) 3.S.C.R.

A these contracts solemnly entered into by the Orissa Government for
the avowed purpose of encouraging the setting up of certain industries
in the State of Orissa. The allegation of the appellants is that this has
been done with a view to help certain industrialists outside the State.
We desire to express no opinion on this allegation.

B P.S.S. Appeals allowed. ~-

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