Supreme Court upholds Orissa Kendu Leaves Act amendments, dismisses petitions challenging government control.

The Supreme Court dismissed the petitions challenging the Orissa Kendu Leaves (Control of Trade) Act amendments and rules, finding them necessary for effective control over Kendu leaves business. The Court upheld the appointment of agents and purchasers, noting the government's right to enter contracts and manage tenders. It ruled that the amendments did not violate fundamental rights or involve arbitrary or discriminatory actions. The petitions were dismissed with costs, affirming the legitimacy of the State's actions in administering the Kendu leaves monopoly.

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Issues Involved:
1. Violation of Fundamental Rights under Articles 14, 15, and 19(1) of the Constitution.
2. Arbitrary, discriminatory, and mala fide implementation of the Orissa Kendu Leaves (Control of Trade) Amendment Act, 1969.
3. Legitimacy of the appointment of agents and purchasers.
4. Validity of amendments to the Orissa Kendu Leaves (Control of Trade) Act, 1961 and the rules framed thereunder.
5. Discrimination in the acceptance of tenders.

Detailed Analysis:

1. Violation of Fundamental Rights under Articles 14, 15, and 19(1) of the Constitution:
The petitioners contended that Sections 3(2)(a), 8(1), Rule 5-B (6), (7), (8), (9), (16), Rule 6(3), and Rule 7(1) of the Orissa Kendu Leaves (Control of Trade) Act, 1961, as amended, violated their fundamental rights guaranteed under Articles 14, 15, and 19(1) of the Constitution. They argued that the revised policy was arbitrary, discriminatory, and mala fide, and sought a writ of mandamus to quash the appointment of respondents 2 to 108 as purchasers.

2. Arbitrary, discriminatory, and mala fide implementation of the Orissa Kendu Leaves (Control of Trade) Amendment Act, 1969:
The petitioners argued that the State of Orissa's actions in implementing the amended Act and rules were aimed at conferring benefits on a chosen few for political and selfish financial ends. They alleged that the amendments allowed the Government to appoint additional agents and purchasers arbitrarily, and that the scheme was a subterfuge to circumvent the Supreme Court's decision in Rasbihari Panda v. State of Orissa, which mandated that the State monopoly be administered for the benefit of the general public.

3. Legitimacy of the appointment of agents and purchasers:
The petitioners contended that agents should be independent contractors and not nominees of purchasers. They claimed that the provision for appointing additional agents under the proviso to Section 8 and Rule 7(1) was unreasonable and arbitrary. They also argued that the appointment of purchasers who were not the highest tenderers was arbitrary and mala fide, and that Rule 5-B(7), which allowed the Government to accept or reject tenders without assigning any reason, permitted discrimination and extraction of money for party funds.

4. Validity of amendments to the Orissa Kendu Leaves (Control of Trade) Act, 1961 and the rules framed thereunder:
The Supreme Court found no legitimate grievance against the amendments to the Act and the new rules. The Court held that the amendments were necessary for the Government to control the business in Kendu leaves effectively. The provisions for appointing additional agents and purchasers were not per se bad, and the exigency of business might require such appointments. The Court also noted that the agents had to purchase Kendu leaves from growers at prices fixed by the Government and deliver processed leaves as directed by the Forest Officers.

5. Discrimination in the acceptance of tenders:
The petitioners alleged that the Government ignored the highest bidders to accommodate favorites and that appointments were made to persons who had not submitted tenders or at lower prices. The Supreme Court, however, found that the Government had the right to enter into contracts with persons known to it and that it was not bound to accept the highest tender. The Court noted that in many cases, persons who made lower bids were asked to raise their bids to the highest offered before acceptance, ensuring no loss to the Government. The counter affidavit showed that the units were disposed of in a manner that did not suggest fraudulent preference.

Conclusion:
The Supreme Court dismissed the petitions, finding no evidence that the amendments to the Act or the rules were against the exercise of a monopoly in the business of Kendu leaves by the Government of Orissa. The Court also found no case of arbitrary or mala fide action by the State authorities. The petitions were dismissed with costs.

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