PATNAIK, J.

( 1 ) IN O. J. C. No. 46 of 1983, the petitioners seek a declaration that the Orissa Forest Produce (Control of Trade) Act, 1981 (Orissa Act 22 of 1981) (hereinafter referred to as 'the Act') and the rules framed thereunder and the notification D/- 9-12-1982 bringing the Act into force in the whole of the State of Orissa in relation to Sal seeds with effect from the date of notification do not apply to or affect the subsisting contracts D/-May 17, 1979 entered into between the State of Orissa and the petitioner No. 1 company in respect of three forest divisions of Jeypore, Nowrangpur and Rayagada and a mandamus commanding the opposite parties to forebear from interfering with the rights of the petitioners under the said contracts to collect, purchase and remove Sal seeds from the aforesaid forest divisions.

( 2 ) PETITIONER 1 is a private limited company incorporated under the Companies Act, 1956. and deals in Sal seeds including the purchase, collection, chemical treatment and supply thereof to petitioner 2-company promoted, inter alia, by petitioner 1-company for the purpose of extraction and manufacture of Sal seed oil and de-oiled cakes at its factory premises at Ambaguda in the district of. Koraput. Petitioner 3 is a director of the companies, petitioners 1 and 2.

( 3 ) THE petitioners have alleged that with a view to encouraging the forest based industries in the State and to discuss problems facing entrepreneurs, a meeting with the minister of the department at the chair was held on 24-5-1978. The minister gave assurance to make available raw materials on long term basis at reasonable and suitable price. The minutes of the proceeding have been filed as Annexure 3. The Government thereafter passed a policy resolution on 8-1-1979 regarding lease of minor forest produce for promotion of solvent extraction and other forest based industries. The Chief elements, inter alia, were that long term leases of minor forest produce ordinarily not exceeding five years at a time would be granted to local industries; advance assurance for grant of long term lease of forest produce would be given to entrepreneurs intending to set up oil extraction plant and other minor forest based industries; the earmarked forest areas would be leased out to the selected industrial units at least one year before the commissioning of the unit in order to enable them to organise and collect at least one season's produce for use as raw material. Pursuant to the aforesaid policy three contracts were entered into on 7-5-1979 between petitioner t and opposite party 1 in respect of Jeypore, Nowrangpur and Ruyagada forest divisions for collection, purchase and sale of Sal seeds for a period of five years from the crop year 1979 up to 30-9-1983. It was stipulated that petitioner 1 would instal a Sal seed extraction plant somewhere in the district of Koraput. The terms and conditions of the aforesaid contracts were modified by supplemental contracts whereunder it was agreed that petitioner 1 was to promote a separate public limited company to crush the Sal seeds collected by it and would in no circumstances trade in Sal seeds but sell the entire collection to M/s. Utkal Oil Limited-petitioner 2. Duration of the contracts was enhanced from five years to ten years ending on 30-9-1988.

( 4 ) THE essential terms and conditions of the three contracts are identical. The contract begins with a preface that the company was desirous of obtaining a licence of the right to collect Sal seeds and the opposite party 1 agreed to grant the said license. The contracts conferred on petitioner 1 a right to collect Sal seeds falling on the ground in the forests of the specified forest divisions in the State of Orissa and to purchase such Sal seeds collected by it on payment of royalty in the manner specified in Schedule 2.

( 5 ) THE petitioners have alleged that under the contracts petitioner 1 is entitled to purchase and remove Sal seeds from the contract area unti