Judgment

BEG. C.J.I. - These appeals are before us after certification of the cases, raising identical questions of law as fit for appeal to this Court, dealt with by one judgment and orders of a Division Bench of the Patna High Court on two writ petitions. The petitions were directed against orders of the State Government passed in 1974 revising the rate of royalty payable by the petitioners appellants under a lease of 1970, and, after that, cancelling the lease by a letter of 15th March, 1975. The petitioners case was that the revision of the rate of royaalty payable by the petitioners for the lease to collect and exploit sal seeds from forest area was illegal during the subsistence of the lease, and, thereafter, cancellation of the lease itself was illegal for various reasons.

2. Primarily, the case of the petitioners is that of a brach of contract for which the State would be liable ordinarily to pay damages if it had broken it. If the petitioners could establish some right, either contractual or equitable, to continue in possession, the State could be prevented by appropriate proceedings, from ousting the petitioners from the forest land from which the petitioners have been gathering sal seeds. The petitioners had also set up male fides on the part of the Conservator of Forests, in enhancing the royalty unreasonably and then canceling the lease, allegally acting under the influence of friends and associates of the Forest Ministry of Bihar.

3. The relevant clause relating to revision of royalty in the written contract reads as follows:-

"The rate of royalty will be revised every three years cycle in consolation with the lessee and the decision will be binding on the lessee."

4. Apparently, there is no restriction, under the terms of the contract, upon the amount by which the royalty could be increased by a revision after a three years cycle under this clause. The lessee is only entitled, under the contract, to be consulted before a revision. But, the decision of the governmental authorities to enhance is binding upon him after that. Hence, if this was the only term of the contract on this question, the petitioners could not complain of unreasonable enhancement in the revised rate of royalty.

5. Under Cl. 4 of the lease, the lessee had to establish a factory within the State of Bihar for processing of sal seeds and extraction oil therefrom within a period of five years from the date of the agreement, failing which the agreement itself was to terminate. The questions which apparently arose appertained to action alleged by the State to fall within the terms of the agreement between the parties regulated by the duly signed contract which was presumably executed in compliance with the provisions of Art. 299 of the Constitution. Prima Facie, therefore, the appellants can only get their remedies, if they can obtain any at all, through ordinary suits for damages or for injunctions to restrain breaches of contract provided they could show how the contracts were broken or were going to be broken.

6. The writ petitions, however, raise questions relating not only to action lying within the sphere regulated by the law of contract, but according to the petitioners, by constitutional provisions relating to the exercise of the executive powers of the State Government contained in Art. 298 which reads as follows:-

"298. The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose:

Provided that -

(a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and

(b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws, be subject to legilsatio