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2018 DIGILAW 409 (ORI)

Orient Paper Mills v. State Of Orissa

2018-04-13

BISWANATH RATH

body2018
JUDGMENT Biswanath Rath, J —This writ petition has been filed by the petitioners challenging the action of opposite party no.2 (Orissa Forest Development Corporation Limited) in the matter of forfeiting the working cost / harvesting cost / conversion cost/charges for 8517.75 sale units of Industrial bamboo for 1997-98 crop year communicated to the petitioner no.1-Paper Mill on 15.03.2001 vide Annexure-10 and on 08.02.2002 vide Annexure-15. Petitioners have also sought for a declaration from this Court to the extent holding the petitioners are entitled to the expenditure incurred for working/harvesting/conversion or extraction of 8517.75 sale units of Industrial bamboo for 1997-98 crop year. 2. Short background involved in this case is that the petitioner no.1, a paper Industry set-up in the State of Orissa, filed this writ petition through its Vice-President and a Unit of Orient Paper & Industries Limited, a Company within the meaning of the Companies Act, 1956. The Company carries on its business of manufacturing paper and paper board in its factory situated at Brajrajnagar. For the purpose of obtaining raw materials, the petitioner no.1-Paper Mill has been given grant by the State of Orissa an exclusive right and licence to fell, cut and remove bamboos from different Forest Divisions in the State of Orissa. To have continuous and uninterrupted supply as the bamboo is the main raw materials for functioning of the factory involving the production therein. The State Government has also granted the petitioner no.1-Paper Mill long term forest leases. The Government of Orissa intended to nationalize the bamboo trade in the State of Orissa with effect from 01.10.1988. In the process, by notification dated 21.09.1988 the State Government sought to apply the provisions of Orissa Forest Produce (Control of Trade) Act, 1981 in relation to bamboo on and from 01.10.1988. In the process, by another notification dated 21.09.1988 the State Government appointed opposite party no.2 as the agent for extraction of all species from Government Forests & Trade thereof, resulting rescinding / termination of all lease agreements existing then, even before its maturity. But, when the Orissa Forest Development Corporation, the opposite party no.2 faced difficulty in extraction / production / procurement of bamboo from forests for shortage of skill and manpower with it, the opposite party no.2 sent a proposal to State Government to accord approval for appointment of different paper mills as "Labour Contractors". The State Government approved such proposal. But, when the Orissa Forest Development Corporation, the opposite party no.2 faced difficulty in extraction / production / procurement of bamboo from forests for shortage of skill and manpower with it, the opposite party no.2 sent a proposal to State Government to accord approval for appointment of different paper mills as "Labour Contractors". The State Government approved such proposal. In the result, the petitioner no.1-Paper Mill was appointed as a "Labour Contractor" and thereafter as a "Raw Material Procurer" (for short "RMP") to carry out bamboo working on behalf of the Orissa Forest Development Corporation Limited (for short "OFDC") in the Forest Divisions, namely, Angul, Sambalpur, Deogarh, Ghumsur North, Bolangir, Khariar, Donai, Bamra and Sundergarh. It is as a result, petitioner no.1-Paper Mill carried out the above assignment from 1993-94 crop year except 1994-1995 crop year in accordance with the terms and conditions mentioned in the letters dated 08.10.1993 and 16.10.1993 appearing at Annexures-3 and 4 respectively. It is contended by the petitioners that following the terms and conditions on engagement as RMP is to cut bamboo as per prescription, transport the same and handover the same to the OFDC depots situated at various places. During 1997-98 working season / crop year the production / harvesting of industrial bamboo and handing over the stock of OFDC depots claimed to be production / harvesting of industrial bamboo become 42672.84 sale units and bamboo burnt in forest is 59.09 sale units and balance stock transported and handed over to OFDC depots become 42613.75 sale units. Considering the petitioner no.1-Paper Mill to be user of bamboo, OFDC allotted and delivered 34096 sale units of industrial bamboo in favour of petitioner no.1-Paper Mill at the rate of Rs.1468/- per sale unit as determined by the State Government and balance stock of 8517.75 sale units remained un-allotted and undelivered against the stock worked out by petitioner no.1-Paper Mill as RMP. Petitioners also claimed that taking into account the price fixed as cost of harvesting by RMP, the State Government decided the RMP to get Rs.622/- per sale unit for 1997-98 crop year towards extractions / working / conversion expenses including commission and establishment expenses until the bamboo reaches the depots. Petitioners also claimed that taking into account the price fixed as cost of harvesting by RMP, the State Government decided the RMP to get Rs.622/- per sale unit for 1997-98 crop year towards extractions / working / conversion expenses including commission and establishment expenses until the bamboo reaches the depots. It is, therefore, since the OFDC was to pay Rs.622/- per sale unit of industrial bamboo to petitioner no.1- Paper Mill as RMP, the OFDC after deducting the payment to be made to the RMP to the extent of release of particular sale units of Industrial bamboo accepted Rs.846/- towards balance sale price per sale unit from petitioner no.1-Paper Mill and handed over 34096 sale units of Industrial bamboo for 1997-98 crop year appearing at Annexure-6. Petitioners claimed that for the aforesaid dealing the OFDC was required to pay the petitioners towards working and conversion cost of Rs.8517.75 sale units of bamboo @ Rs.622/- per sale unit making it to be Rs.52, 98, 040.50 paise. The petitioners approached the OFDC for release of the same, but the OFDC went on intimating the petitioners that the matter is under consideration. Petitioners' repeated request involving such demand was not paid any heed and in the meantime the petitioners were also communicated that the matter is pending before the High Power Committee and the decision is taking some time. From the subsequent action of the opposite party no.2, it appeared, the opposite party no.2 was attempting to deny the petitioners' entitlement towards working cost in respect of the balance sale units. While the matter stood thus, vide letter dated 08.02.2002 petitioner no.1-Paper Mill was intimated that the claim / request for reimbursement of working cost of 8533 sale units of industrial bamboo produced during 1997-98 crop year has been forfeited for the decision of the Government. 3. Assailing the impugned action / demand vide Annexures-10 and 15, Shri G.N. Rout, learned counsel appearing on behalf of Shri S.R. Mishra filed power in respect of the petitioners, contended that for the terms and conditions in the matter of payment and receipt involving the RMP and the OFDC, there is no term of forfeiture. 3. Assailing the impugned action / demand vide Annexures-10 and 15, Shri G.N. Rout, learned counsel appearing on behalf of Shri S.R. Mishra filed power in respect of the petitioners, contended that for the terms and conditions in the matter of payment and receipt involving the RMP and the OFDC, there is no term of forfeiture. Further, for the petitioners working out the collection / harvesting of the whole harvested sale units and for permitting the petitioners to take out 34096 sale units, the petitioners are admittedly entitled to the cost of harvesting following the terms and conditions in the agreement to the extent of 8517.75 sale units. petitioner no.1-Paper Mill in spite of all its attempts to lift the balance sale units and seeking thereby a permission of the OFDC to transport the same to the petitioner no.1-Paper Mill unit outside the State and for being denying such a permission, Shri Rout, learned counsel appearing for the petitioners contended that the petitioners cannot be found to be at fault for un-utilization of the balance sale units and thus contended that the action in forfeiture of the deposit of the petitioners and further claim of compensation and penalty vide Annexure-15 are all, therefore, bad in law. Taking this Court to the documents, such as, appointment of petitioner no.1-Paper Mill as Labour Contractor vide Annexures-3 and 4 and the decision of the Empowered Committee to assign the job to the RMP vide Annexure-5, further the terms and conditions contained in Annexure-3 for working of bamboo in the State of Orissa issued on 08.10.1993 and for the conditions therein that all the bamboo produced by the Labour Contractor will be allotted to petitioner no.1-Paper Mill and for the petitioners' asking for permission to take out the remaining bamboo stock to outside the State having been declined, the petitioners cannot be found to be at fault. Shri Rout, learned counsel appearing for the petitioners further taking this Court to a communication to the petitioner no.2 vide Annexure-8, contended that the request of the petitioners to transfer the balance bamboo sale units to Madhya Pradesh was under active consideration of the Government and the petitioners are surprised to know that in absence of any communication to the petitioners and further for the disclosures in Annexure -9, a communication dated 26.12.1999, particularly to the effect that un-allotted bamboo for a decision therein to have an offer to M/s. J.K. Corporation and petitioner no.1-Paper Mill for allotment of the same at a fixed price, Shri Rout, learned counsel appearing for the petitioners contended that the impugned actions remain bad for being contrary to the fixation of terms and conditions in between the parties. It is in the above premises, Shri Rout, learned counsel appearing for the petitioners prayed this Court for interfering in the impugned order and thereby seeing aside both the demands under Annexures-10 and 15. 4. Shri S.K. Pattnaik, learned senior counsel appearing for opposite party no.2-OFDC Limited while not disputing the contract between petitioner no.1-Paper Mill and opposite party no.2 in the matter of engagement as a Labour Contractor as well as RMP and also not disputing the conditions set there in the matter of all the bamboo produced by Labour Contractors from the Forest Division allotted them will be taken by Labour Contractors and the decision of the Empowered Committee under Annexure-5 deciding the RMP's job is to harvest bamboo, bring bamboo bundles to the OFDC depots and the allotment of the bamboo stock to individual paper mill from and out of 1997-98 production as appearing at Table-2 at page-25 of the brief, submitted that petitioner no.1-Paper Mill was to get 80, 300 sale units from and out of 1997-98 production. Taking this Court to the agreement vide Annexure-D between the OFDC and petitioner no.1-Paper Mill dated 07.04.1998 commencing from 07.04.1998 to 30.09.1998 and also taking this Court to the conditions therein, submitted that following the terms and conditions therein, not only the petitioner no.1-Paper Mill was duty bound to lift certain quantity of sale unit Industrial bamboo, at the same time petitioner no.1-Paper Mill has also agreed to be liable to pay the Corporation any loss sustained by the Corporation till the final disposal of the bamboo in addition to a penalty to the extent of 25% of the value of the bamboo not paid for and not taken by petitioner no.1-Paper Mill with the discretion of the Corporation. Shri Pattnaik, learned senior counsel appearing for the OFDC taking this Court to the conditions therein, also contended that as per the agreement the bamboo involved were to be used only at the Mills of the Company situated at Brajarajnagar in the Jharsuguda district of Orissa. Shri Pattnaik, learned senior counsel further taking this Court to the provision for litigation clause contained in the agreement referred to herein, submitted that for the condition contained in Clause-19, the difference between the parties was to be shorted out by referring the matter to Arbitration Tribunal. It is in the above circumstances, Shri Pattnaik, learned senior counsel appearing for the OFDC while justifying the action of the Corporation for not allowing the petitioner no.1-Paper Mill to take out the bamboo outside the State, for the conditions attached in the agreement, contended that for not only there is no infirmity in the charging involving Annexures-10 and 15, but for the agreed conditions in the agreement at Annexure-D appearing at page-90 of the brief submitted that for the specific clause contained therein providing for the dispute redressal mechanism the writ petition is not maintainable. It is in the circumstances, Shri Pattnaik, learned senior counsel appearing for the OFDC prayed for dismissal of the writ petition. 5. It is in the circumstances, Shri Pattnaik, learned senior counsel appearing for the OFDC prayed for dismissal of the writ petition. 5. Considering the rival contentions of the parties, this Court finds, following the decision of the Government of Orissa vide Annexure-3 dated 08.10.1993, the State Government in its appropriate level intimated the OFDC as well as the Principal, Chief Conservator of Forests its approval on the proposal to engage Paper Industries as Labour Contractors under the OFDC with further condition that all the bamboos produced by the Labour Contractors from the Forest Divisions allotted to them will be taken by the Labour Contractors. It is on the basis of the above, the opposite party no.2-OFDC wrote back to the Secretary, Forest & Environment Department, Government of Orissa intimating therein its decision on imposition of conditions on the Labour Contractors. The conditions imposed therein in Annexure - 4 at condition no.(c) ensures that the expenditure on the staff entertained by labour contractor will be borne by the Paper Mills engaged as labour contractor. As per condition no.(d) , the staff under the paper mills will work as Agent of the OFDC in the coupe. As per condition no.(e) , the Labour Contractor would try to harvest the maximum potential of the coupe. The work will have to be done as per the prescriptions of the Working Plan / Working Scheme strictly according to the Silvicultural Principles. Any fine assessed by the Territorial Division for bad / poor working will be borne fully by the Labour Contractor. As per condition no.(f) , Normally the entire harvested produce will be allotted to the Paper Mill engaged as Labour Contractor. But, in exceptional cases, some of the produce may be diverted to others since the owner of the produce is Government and O.F.D.C. is working as an Agent under the Government. The matter was next placed before the Empowered Committee on 22.09.1997 in the Chamber of the Chief Secretary, Orissa. While the Commissioner-cum-Secretary, Forest Department informed the Committee that Paper Industries of the State have been appointed as RMPS on behalf of OFDC RMPS' job is to harvest bamboo and bring bamboo bundles to OFDC depots and allocation of bamboo will be made by Empowered Committee out of the depots' stock. While the Commissioner-cum-Secretary, Forest Department informed the Committee that Paper Industries of the State have been appointed as RMPS on behalf of OFDC RMPS' job is to harvest bamboo and bring bamboo bundles to OFDC depots and allocation of bamboo will be made by Empowered Committee out of the depots' stock. The Committee taking note of the allotment of bamboo made by the Empowered Committee during the previous year and the paper production achieved by the individual paper industries in the year 1996-97, production estimate of bamboos from the depots from the ensuing year and the requirement of maintaining equity in allocation of bamboo among the paper industries in column no.2 decided to distribute the production during 1997-98 crop year in the manner indicated therein and from the disclosures therein in condition no.2 at page-25 of the brief, it appears, the production of bamboo estimated in the crop year 1997-98 in respect of the petitioner no.1-Paper Mill to be 54, 640 sale units and the stock to be allotted in favour of the petitioner no.1-Paper Mill to be 70, 350 sale units. It is, therefore, there is no doubt that petitioner no.1- Paper Mill was to take 70, 350 sale units for 1997-98 crop year. It is hear taking into account the admission of the petitioners that petitioner no.1-Paper Mill could be able to lift stock to the extent of 34, 096 sale units from and out of total availability sale units of 42, 613.75 sale units and, therefore, petitioner no.1-Paper Mill could not be in a position to take out the balance stock of 8517.75 sale units. There being no dispute with regard to payment received by the petitioners on their lifting 34096 sale units, the only question remain as to whether the petitioners are entitled to receive the cost of harvesting / production in respect of 8517.75 sale units ? or for the conditions between the parties the OFDC is justified in forfeiting the deposits of the petitioners for their nondeposit of the compensation and other liabilities ? or for the conditions between the parties the OFDC is justified in forfeiting the deposits of the petitioners for their nondeposit of the compensation and other liabilities ? It is at this stage, on perusal of the documents filed by the rival parties, this Court though finds, particularly in absence of production of agreement on appointment of the petitioner no.1-Paper Mill as RMP or the Labour contractor by either side, this Court concentrating on the documents produced by the respective parties, finds, there is no dispute involving the role of the petitioner no.1-Paper Mill as a labour contractor as well as RMP and that the petitioner no.1-Paper Mill was to get allotment of 70, 350 sale units while it was required to lift the production to the extent of 54, 640 sale units. From perusal of the communication dated 26.12.1999 at Annexure-9 while taking into account the working and allocation of industrial bamboo during the year 1999-2000 crop year, the authorities have observed in the previous year, even though petitioner no.1-Paper Mill was allotted 7, 520 sale units, but petitioner no.1-Paper Mill has not lifted the same and, therefore, there appears, there was some decision for offering the old stocks to the J.K. Corporation, BLIT and petitioner no.1-Paper Mill at the price fixed following the year of production and if the concerned RMP does not agree to lift the bamboo as per the offer, the aforesaid old stock of bamboo will be disposed through National tender. There is no material forthcoming nor there is any submission by the OFDC as to whether there is any step for selling out the balance sale units either by offering the petitioner no.1-Paper Mill at the price fixed ? or whether there is any attempt by the OFDC to dispose the balance stock through national tender ? Be that as it may, from the proceeding of the Empowered Committee meeting dated 27.09.1999 starts at page-48 of the brief, considering that there is balance stock of 47, 385 sale units of industrial bamboo, the Managing Director of the Corporation clarified in the said meeting that there was balance stock of 22, 061 sale units of the OFDC was there, from out of which 8576 sale units belong to petitioner no.1-Paper Mill's harvesting. There appears, there is an information to the Committee by the Commissioner-cumSecretary, Forest and Environment Department considering the RMP's difficulty to lift the stock at the price fixed for the reduction in the paper price. A decision was taken by the Committee members to allot and surplus old stock of bamboo in favour of the concerned RMPs at the rate prevalent in the next year following the year of production as fixed by the Empowered Committee and in the said meeting, the Managing Director of the OFDC was authorized to sell the un-allotted surplus stock through the national tender-cum-negotiation after due approval of the Government. In the said meeting, the request of the petitioner no.1-Paper Mill to divert the stock to their Mill at Madhya Pradesh appears to have been rejected, but however, with a direction to petitioner no.1-Paper Mill to participate in the national tendercum-negotiation whenever it takes place. It is at this point of time, this Court makes it clear that there is absolutely no statement coming through the OFDC as to whether they have gone for any national tender involving the surplus sale units or not ? This Court here taking into account the submission of Shri Pattnaik, learned senior counsel appearing for the OFDC that for the clause contained in the agreement dated 07.04.1998 finds place at Annexure-D and justifying the action of the Corporation for the reason of the conditions therein in satisfaction of the demands under Annexures-10 and 15 and further that the writ petition is not maintainable for a clause having a clear dispute redressal mechanism, this Court going through the agreement at Annexure - D between petitioner no.1-Paper Mill and the OFDC, opposite party no.2, finds the agreement involves OFDC willing to provide industrial bamboo (Salia & Daba) for manufacturing papers to the petitioner no.1-Company, this Court, therefore, finds, the conditions attached therein for its limited purpose has nothing to do with the engagement of petitioner no.1-Paper Mill as Labour contractor or as RMP. Here, it appears, both parties are not bringing the actual agreement in vogue. There may not be any agreement between the parties either involving the engagement of petitioner no.1-Paper Mill as Labour Contractor or RMP. Here, it appears, both parties are not bringing the actual agreement in vogue. There may not be any agreement between the parties either involving the engagement of petitioner no.1-Paper Mill as Labour Contractor or RMP. When the case involves regarding performance or non-performance of the contract labour as well as RMP involving the harvesting in the year 1997-98, in absence of any contract involving the engagement of the petitioner no.1-Paper Mill as labour contractor or the RMP and particularly keeping in view the conditions in the matter of production, the allotment by the Labour contractor as well as RMP particularly for the crop year 1997-98 as available through availability documents discussed hereinabove and the Committee decision finding that there are surplus and the RMP is not in a position to lift may be on any account including a cost factor as indicated therein and for the decision of the Committee to sell the surplus bamboo sale units either by giving an offer to the RMPs at fixed price or through sale by way of national tender, particularly in absence of no information in the above regard by the OFDC, this Court finds, the demands under Annexures-10 and 15 appears to be mechanical and in non-consideration of the developments taken place involving such matters from time to time. This Court also observes, the demands vide Annexures-10 and 15 become arbitrary and for not giving a scope for explanation to the party aggrieved, the demands cannot be also enforced. In the circumstances, this Court interfering in the impugned actions / demands at Annexures-10 and 15, setting aside the same, remits the matter back to the OFDC Limited, opposite party no.2 to reconsider the matter, but however, after affording opportunity of show-cause and giving a scope of hearing to petitioners. Since a heavy amount of public money is involved and the matter is dragging on since 2001, the interference in the impugned action and direction for fresh adjudication of the issue involved is, however, made subject to a condition that petitioner no.1-Paper Mill will be depositing 25% of the demand involving Annexure-15 on the date of appearance before the OFDC Limited and the deposit made by the petitioner no.1-Paper Mill will be without prejudice to the rights and contentions of the parties in the fresh adjudication process. This Court directs the petitioners to appear before Managing Director of the OFDC Limited on 30th of April, 2018 with its further response, if any, and also with a certified copy of this judgment to enable the Managing Director to re-adjudicate the issue involved herein. 6. The writ petition succeeds, but however with an order of remand. In the circumstances, there is no order as to costs.