- (1.) This is an appeal by the Union of India its officers against the judgment and order of P. K. Benerjee, J. dated July 7, 1970 making the C. R. No.1076(W) of 1969 absolute. The petitioner's case is as follows: The petitioner no.1, P. C. Ray & Co. India (P) Ltd., an existing company, (hereinafter referred to as the Company), where of the petitioner no.2 was its Managing Director and the principal shareholder (since deceased and substituted by his heirs and legal representatives) had been carrying on at all material times the business of extraction, export and import of timber and other forests products inter alia, in Andaman Islands and Indian ports. By an Agreement of license dated August 31, 1951, in writing and registered, the Company was given by the President of India the "sole right to cut, fell and extract all trees of the North Andaman Islands for a period of 25 years in accordance with the approved working plan" to be complied by the Union of India. The Company was to construct at its costs roads, bridges, buildings, house, staff quarters, sheds, tram lines for facilitating its works. Any such work, on termination or sooner determination of the Agreement, would vest in the Government on payment of due compensation free from encumbrances. Further, lands were to be allotted and leased to the Company at an annual rent of Re: 1/- per acre for depots, labour camps, etc., erection of machinery Lands were also to be allotted and leased to the Company for raising food crops for use of its workers and animals at the said rent. The Company was also to take steps to establish saw mills, plywood factory, seasonings kiln, and at its option a match factory. The Company was to put in security deposit of Rs.10 lacs with the Chief Commissioner, Andaman and Nichobar Islands for due fulfillment of its obligations under the Agreement. The Agreement further provided a minimum guaranteed quantity of extraction of timber in every financial year ranging from 10,000 tons per year from 1950-51 and rising progressively in course of six years in 1957-58 to 75,000 tons. It was further provided that normally there should be no arrears in felling and extraction of timber at the end of each financial year. The Company was to make its own arrangement for transport and the Chief Commissioner would render all assistance for chartering ships. The royalty payable by the Company would be levied at specified percentage on f. o. b. prices of matchwood, plywoods, hardwoods, ornamental woods, such price to be fixed by the Chief Commissioner in consultation with Inspector General of Forests of the Government of India. There was a provision for reference of any dispute, difference or question between the parties regarding the observance of the terms, covenants and conditions of the Agreement or relating to the construction, meaning and effect of those presents or rights or liabilities of parties to two arbitrators each to be appointed by each of the parties and in case of difference of opinion to an umpire to be appointed by the Chief Justice of India. These are the broad provisions of the Agreement of license relevant for our purpose.
(2.) The Company, it was stated, thereafter set up bridges, roads, buildings, houses, staff quarters in the North Andaman Islands at an investment of about Rupees Two crores. The Company also set up jetties, wharves for extraction and transport of timber, put to use teams of elephants, launches, boats as also stores of timber, food machinery etc. The Company set up in the area buildings, labour depots, houses, quarters valued at over Rs.25 lacs. The Company contended that in the premises it was to be deemed to acquire an interest in the land covered by the Agreement of license. Alternatively the Agreement of license should be deemed to be license coupled with grant of immoveable properties. No right of re-entry or forfeiture of the said license or lease was reserved and no right except under very special and specific contingencies, to cancel the Agreement provided therein. No working plan was forwarded to the Company as required and to show its bonafides the Company made substantial extraction of timber and pad Rs.25 lacs as royalty. As a result of absence of working plan there was deadlock in the work of the Company for which the officers of the Government of India were solely responsible.
(3.) On December 16, 1968 the Company received a letter from the Under-Secretary to the Government of India writing on behalf of the President of India alleging that the Company had totally abandoned contract since August, 1964 by its various acts referred to therein. It was alleged that it was evident from the above actions that the Company had no intention of performing the contract in future. It was further stated: Now, therefore, the Government of India hereby gives you notice that the Government treats the aforesaid breaches on your part as a repudiation of the contract by you and that the Government hereby revokes the said agreement of license dated 31st August, 1951 and accordingly takes possession of the areas covered by the license. The Company contended that the allegations therein were utterly frivolous and the Government and its officers had no right to interfere with the property rights of the Company by means of an executive fiat without recourse to due process of law. The Company lodged its protest by letter dated December 21, 1968 denying the allegations and the Government right to deprive the Company of its property and other rights under the Agreement. The Government had issued circulars in the meantime notifying that the Agreement of license with the Company had been revoked with effect from December 21, 1968 and that it had taken possession of the areas covered by the license all rights of the company under the license stood ceased and determined.;