BASHEER HUSAIN Vs. GOVERNMERT OF ANDHRA PRADESH

JUDGEMENT

(1.) The six petitioners were admittedly granted leases in Warangal Division to extract Abnus leaves in terms of the A.P.Minor Forest Produce (Regulation of Trade) Act, 1971 (for short 'the Act) and the A.P. Minor Forest Produce (Regulation of Trade in Abnus Leaves) Rules, 1970 (hereinafter referred to as 'the Rules'). They entered into statutory contracts with the Divisional Forest Officer and deposited certain amounts as security deposits. For one reason or the other, their contracts were terminated. They sought for adjustment of the security deposits towards the amounts due to the Government. Instructions were sought for from the Government in that regard. The Government in the impugned Memorandum No. 48830/For.III/81-8 dated October 4, 1982 clarified that under Rule 31 of the A.P. Forest Contract (Disposal of Forest Produce) Rules, 1977 (hereinafter referred to as the 'Forest Rules') power is only to forfeit the security deposit. That power was given under the provisions of the A.P. Forest Ac t, 1967 (hereinafter referred to as 'the Forest Act') and that the Rules are also consistent with the aforesaid rules. Therefore, the security deposits cannot be adjusted but they should be forfeited. Assailing the legality thereof, the writ petition has been filed.

(2.) The contention of Sri T. Dhanurbhanudu, the learned counsel for the petitioners is that the petitioners though having entered into statutory contracts, they have an unequal bargaining power, and hence the respondents cannot impose any unreasonable conditions in a unilateral way as such ostensibly, unilateral terms offend the public policy enshrined in Section 23 of the Indian Contract Act. It is contended that such arbitrary clause also offends the right to justness and rightness as enshrined under Article 14 of the Constitution. In support thereof, he placed reliance on a decision of this Court in V. Raghunadha Rao v. State of A.P. and Ors., 1988 (1) ALT 561.

(3.) He further contends that the power given to the Government under Rule 31 of the Forest Rules to forfeit the security deposit is only a term in terrorem for compliance of the conditions in the contract. Unless the Government proves that it suffered damage in a particular quantum, the security deposits made by the petitioners cannot be forfeited to the total extent. Section 70(3) of the Forest Act enjoins to pay back the amount found surplus in the sale-proceeds realised from the forest produce under Sub-section (2), and thereby the legislative intent is manifest that the entire sum is not liable to be forfeited. Rule 31 of the Forest Rules runs contrary to, and beyond the purpose underlying Section 70 of the Forest Act. In support thereof, he places reliance on a decision in Maula Bux v. Union of India,, [1970]1SCR928 .