G.T Nanavati, C.J:— In this group of petitions, the proviso to sub-section (1) of section 4 of the Orissa Saw Mills and Saw Pits (Control) Act, 1990 (for short the Act) and rule 3(g)(i) of the Orissa Saw Mills and Saw Pite (Control) Rules, 1993 (hereinafter referred to as the Rules) are challenged as ultra vires Article 14 of the Constitution, if they are interpreted to mean that no sawmill or saw pit can be permitted to be established or operated within a reserved forest, protected forest or any forest area within 10 kilometres from the boundary of any such forest or forest area from the date the Act came into force. The petitioners also challenge the directions given by the Divisional Forest Officers that saw mills and saw pits within 10 kilometres of the forest area should not function and that they should attend the office of the Divisional Forest Officers to give an undertaking as provided in the Rules and to comply with other formalities. In some of the petitions, where the applications of the petitioners for licence have been rejected, or licence have been given only for a limited period, that action is also challenged.
2. As a common question of law arises in all these petitions, they were heard together and are disposed of by this common judgment.
3. In order to appreciate the background in which the question has arisen for our consideration, we set out briefly the facts of O.J.C No. 1826 of 1994. The petitioner therein, a partnership firm, is operating a saw mill since 1975 and is holding a valid licence for that purpose since 14-4-1981. Its saw mill is situated in Chandikhol Mahabinayak reserve forest. It received a communication dated 29-12-1993 from the Divisional Forest Officer, Athgarh, wherein it is stated that in view of the Saw Mill & Saw Pit Rules, 1993, saw mills and saw pits within 10 kilometres of the forest area as provided in the Rules of 1993 should not function, and that it should attend the office of the Divisional Forest Officer on 15-1-1994 to give an undertaking as provided under the Rules and to comply with other formalities.
4. As the petitioner's saw mill is situated within the said area, it apprehends that its licence will not be renewed. Even though its licence is valid upto 13-4-1996, it will have to close down its business as the forest authorities are of the view that no licence can be granted either to establish or to operate a saw mill or saw pit within the said area. The contention of the petitioner is that the forest authorities are wrongly interpreting the relevant provisions of the Act and the Rules and are thus acting in an illegal and arbitrary manner. Their further actions are also, therefore, illegal and arbitrary.
5. The Orissa Saw Mills and Saw Pits (Control) Act, 1990 came into force on 23-3-1992. It is an Act to provide for the regulation of establishment and operation of saw mills and saw pits and trade of sawing for the protection and conservation; of forests and the environment and for matters incidental thereto or connected therewith. Forest area, is defined to mean all lands notified as forest under any law or administered as forest, whether State owned or private and whether wooded or maintained as a potential forest land. Section 4 of the Act, which is material for our purpose, reads as under:—
“4. Establishment and operation of saw mill and saw pit.
(1) On and after the appointed day, no person shall establish or operate a saw mill or saw pit except under the authority and subject to the conditions of a licence granted under this Act:
Provided that no person shall establish or operate any saw mill or saw pit within a reserved forest, protected forest or any forest area within ten kilometers from the boundary of any such forest or forest area.
(2) Notwithstanding anything contained in subsection (1)—
(i) a saw mill or saw pit, established by the Orissa Forest Development Corporation Limited or by any other agency of the Government prior to the appointed day, may continue to be operated by such Corporation or agency, as the case may be, and in such a case, the Corporation or agency, as the case may be, shall be deemed to be a licensee for the purposes of the Act;
(ii) a saw mill or saw pit other than one referred to in clause (i) and established prior to the appointed day may continue to be operated and shall be deemed to be a saw mill or saw pit, as the case may be, licenced under this Act:
(a) for a period of three months from the appointed day:or
(b) if an application made in accordance with section 6 for a licence is pending on the expiry of the period specified is clause (a), till the disposal of such application under sub-section (2) of section 7”.
6. Section 5 empowers the State Government to declare any area to be a prohibited area for such period as it deems fit It further provides that during the period the area is declared to be a prohibited area, no new licence can be granted nor can the old licences be renewed and the saw mills or saw pits situated in that area shall cease to operate and keep their sawing operation closed. Section 6 provides for making an application for licence and section 7 provides for grant, renewal, revocation or suspension of licence. The other provisions of the Act are not relevant for our purpose.
7. In exercise of its powers under section 23 of the Act, the State Government has framed Rules known as the Orissa Saw Mills and Saw Pits (Control) Rules, 1993, and they came into force on and from November 18, 1993. Rule 3 provides for an application for licence. Sub-rules (6) and (7), which are material for our purpose, are quoted below:
3. Application for licence.
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(6) The Licensing Officer while considering the application to grant the licence shall, apart from any other consideration which in his opinion justifies his action, consider the following:—
(i) Whether the site of the saw mill or saw pit is within such limits from fine boundaries of any reserve forest, protected forest or other forest block in area
(ii) Whether establishment, renewal or continuance of saw mill or saw pit in the area is justified on the basis of the quantum of the timber output available for sawing in the area?
(iii) Whether the number of saw mills or saw pit both existing and proposed can be viably run in the area with reference to the quantum of wood that may be available for sawing;
(iv) Whether establishment of saw mill or saw pit has already led to or will lead to illicit felling of trees and be against the protection and conservation of forest and environment
(v) Whether the applicant has been found guilty of any forest offence of grave nature;
(7) The Licensing Officer may after consideration grant or refuse to grant the licence after recording reasons therefor.
8. Rule 4 provides for grant of licence and sub-rule (4) thereof requires acceptance by the applicant to sign the terms and conditions on which the licence is granted.
9. As can be noticed from sub-section (1) of section 4 of the Act, on and after the appointed day no person can establish or operate a saw mill or saw pit except under the authority and subject to the conditions laid down in the Act. The petitioner has no grievance against this provision. The proviso to sub-section (1) of section 4 prohibits any person from establishing or operating any saw mill or saw pit within a reserved forest, protected forest or any forest area within 10 kms. from the boundary of such forest or forest area. The learned Government Advocate heavily relied upon this proviso and submitted that in view of this prohibition, no person can be permitted either to establish or operate a saw mill or saw pit within the said specified area. It was submitted that it was because of this provision that the Divisional Forest Officers have called upon the licensees of the existing saw mills or saw pits to stop their operations and either refused their applications for licence or reduced the period of the licences. The said provision, on the way it is worded, supports the contention raised on behalf of the State. But the said provision does not stand apart but is a part of the which is unfolded not only by subsection (2) of section 4 but by sections 5, 6 and 7 of the Act. That is why sub-section (2) of that section starts with the words (n) to with standing anything contained in sub-section (1). Even though the ban contained in the proviso to sub-section (1) is in absolute terms, if it is considered in isolation, that does not appear to be the intention of the Legislature, as can be seen from clause (i) of sub-section (2) which permits a saw mill or saw pit established by the Orissa Forest Development Corporation Limited or by any other agency of the Government prior to the appointed day to continue to be operated by such Corporation or agency, which would be deemed to be a licensee under the Act. Clause (ii) of sub-section (2) is also indicative of the same intention. If the prohibition was to be absolute, then what was the necessity of providing in sub-clause (b) of clause (ii) of sub-section (2) that an application if made in accordance with section 6 for licence was pending on the expiry of three months from the appointed day, then the existing saw mill or saw pit should be treated as a licensee till such application is disposed of? On the basis of this provision, it can be said that it was within the contemplation of the Legislature that a person can apply under the Act for licence to continue operation of his saw mill or saw pit, even though situated within said area.
10. Section 5 empowers the State Government to notify any area as prohibited area. When any area is declared as a prohibited area, then no licence could be granted or renewed for establishment of a saw mill or saw pit in that area, nor can operation of the existing saw mill or saw pit be continued. If there was to be complete ban in respect of the areas specified in the proviso to section 4(1), then the Legislature would have used the words any other area instead of any area in section 5 of the Act. In our opinion, that is also indicative of the intention of the Legislature. Thus, though the Legislature has declared as its policy that no saw mill or saw pit should be permitted to be established or operated within the said specified area, it would be open to the Government to grant such permission, if so thought fit. Section 6(1) provides for making an application for licence by a person who continues to operate on the appointed day a saw mill or saw pit if he intends to continue the said activity. If the Legislature had intended that there should be a complete ban, in respect of the said specified area, then either it would not haveprovided for making an application by the existing units for licence to continue their activity or it would have fixed a maximum time limit for which licence could be granted to such units. Section 7 then provides that if an application is made by the existing unit, then the licensing officer may, if he deemes fit, grant the licence or, by an order in writing, tor reasons to be stated therein, refuse to grant licence. If there was to be a complete prohibition within the said specified area, then such a discretion would not have been given to the licensing officer by the Act. It may be stated that sub-rule (3) of rule 4 provides that a licence, when granted shall be valid for two years from the date of its issue. Section 13(1)(b) provides that where a saw mill or saw pit is established or operated, save as provided in sub-section (2) of section 4, without a valid licence, the licensing officer may order confiscation of the whole or the portion of the plants and machinery, impliments and equipments which have been used in the commission of the offence. This provision also contemplates continued operation of a saw mill or saw pit within the said specified area.
11. The learned Government Advocate, however, heavily relied upon clause (i) of sub-rule (g) of rule 3, which provides that whether the site of the saw mill or saw pit is within such limits from the boundaries of any reserve forest, protected forest or other forest block in area shall be a relevant consideration while considering an application for licence. He submitted that the said provision indicates that if the answer to the question is in the affirmative, then the application has to be rejected. Delying upon the other clauses of that sub-rule, the learned Government Advocate submitted that they indicate that if the answer is either in the affirmative or in the negative, then the application has to be either granted or rejected. We do not think that if the correct way of reading the said rule. Whether the site of the saw mill or saw pit is within the said specified area or not will obviously be a relevant and important consideration while considering an application for licence, had the Government may, in its direction, either by way of policy or for good reasons, refuse to grant an application for licence to continue sawing operation within the said specified area. But it, cannot be read to mean that if the saw mill or saw pit is situated within the said a specified area, then no licence can be granted at all to the existing saw mill or saw pit to continue its operation. A combined reading of all the relevant provisions leads us to hold that though ordinarily establishment or continuance of a saw mill or saw pit in the said specified area is not to be permitted, a discretion is given to the State Government to grant licence for establishing or continuing sawing operation even within that area if it so thinks fit. It can reject an application for establishing a saw mill or saw pit in the said area or even for continuing its operation therein.
12. We are, therefore, of the opinion that the proviso to sub-section (i) of section 4 of the Act is not invalid or ultra vires as contended by the learned advocates for the petitioners. But in view of what we have held as regards the correct interpretation of the said proviso and sub-rule (6) of Rule 3 of the rules, the direction given by the Divisional Forest Officers that the existing saw mills and saw pits should stop their operations within the said specified area is held as bad and, therefore, will have to be quashed. To this limited extent, all these petitions are allowed and the direction given by the Divisional Forest Officers to the petitioners to stop their operations in the said specified area is quashed and set aside. As the applications made by the petitioners in O.J Cs. Nos. 5316 and 5418 of 1994 have been rejected only on the ground that their saw mills and saw pits are situated within the said specified area, therefore, the said orders of rejection are quashed and set aside. In O.J Cs. Nos. 2211 to 2128, 4253 to 4158, 4277 to 4283 and 4795 of 1994, the show cause notices given to the petitioners by the licensing authority are also quashed. The licensing authority in all these cases are directed to consider the applications of the petitioners on their own merits and dispose of the same in accordance with law. There shall be no order as to cost.
D.M Patnaik, J.:— I agree.
13. Partly allowed.