1965 (10) TMI 79 - SC - Indian Laws

Supreme Court rules contractual rights not property rights under new law.

The Supreme Court dismissed the petition, ruling that the petitioner's rights under the agreement with the Raja were superseded by the Madhya Pradesh ... - Issues Involved:1. Validity of the petitioner's right under the agreement with the Raja.2. Impact of the Madhya Pradesh Abolition of Proprietary Rights Act on the petitioner's rights.3. Effect of the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964, on the petitioner's rights.4. Applicability of the doctrine of res judicata in this context.5. Validity of the petition under Article 32 of the Constitution.Detailed Analysis:1. Validity of the petitioner's right under the agreement with the Raja:The petitioner, a partnership firm, entered into an agreement in 1948 with Raja Raghuraj Singh to pluck and carry away tendu leaves from plants in ninety-nine villages for a term of 25 years. The agreement was not registered and stipulated a consideration of Rs. 9,000 per year. The Supreme Court previously issued a 'writ of prohibition' preventing the State from interfering with the petitioner's rights under this agreement.2. Impact of the Madhya Pradesh Abolition of Proprietary Rights Act on the petitioner's rights:The Madhya Pradesh Abolition of Proprietary Rights Act (No. 1 of 1951) vested all rights, title, and interest of the proprietors, including forest produce, in the State. The Supreme Court in an earlier judgment (Chhotabhai Jethabhai v. State of Madhya Pradesh) held that contracts like the petitioner's were 'licenses' and not extinguished by the Abolition Act, thus, the State could not interfere with the petitioner's rights under the agreement.3. Effect of the Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964, on the petitioner's rights:The Adhiniyam created a State monopoly over the trade of tendu leaves, restricting the purchase and transport of tendu leaves to the State Government, its officers, and agents. Section 5 of the Adhiniyam explicitly prohibited any person other than the State or its agents from purchasing or transporting tendu leaves. The petitioner's agreement with the Raja was rendered ineffective under this new law, as it did not involve a purchase from the State.4. Applicability of the doctrine of res judicata in this context:The petitioner argued that the earlier Supreme Court decision operated as res judicata, preventing the State from interfering with its rights under the agreement. However, the Court noted that the earlier decision did not explicitly recognize a fundamental right to property in the contracts but rather focused on the right to collect forest produce. The new circumstances created by the Adhiniyam necessitated a fresh appraisal of the legal position, making the earlier decision inapplicable.5. Validity of the petition under Article 32 of the Constitution:The petitioner claimed a fundamental right to property based on the earlier Supreme Court decision. However, the Court clarified that contractual rights do not equate to property rights. The Adhiniyam, by creating a State monopoly, altered the legal landscape, and the petitioner's contractual rights were not protected under Article 32. The Court held that the petitioner must comply with the Adhiniyam and purchase tendu leaves from the State like any other person.Conclusion:The Supreme Court dismissed the petition, stating that the petitioner's rights under the agreement with the Raja were no longer available due to the Adhiniyam. The petitioner must adhere to the new law and purchase tendu leaves from the State. The petition was dismissed without any order as to costs.