State Of Jammu And Kashmir And Others v. M/S. Goodwill Forest Lessees And Another

Ali, C J.:-

1. These two appeals under the Letters Patent are directed against the decision of Bhatia sitting singly deciding two applications under S. 20 of the Arbitration Act, one filediy the Goodwill Forest Co and the other by Messrs Farida Timber Co, by his order dated 9-12-71, the learned Judge dismissed both the applications filed by the respondents before him for making a reference of the dispute to the arbitrator. As the facts of the two cases were more or less identical, the learned judge disposed of both these applications by one common judgment and we also propose to decide the appeals by one judgment.

2. The facts giving rise to the two appeals may be summarized as follows. In the year 1964 the Conservator of forests Jammu Circle invited tenders for leasing out compartments of various forests. In response to the Notification issued by the Conservator the respondents, Goodwill Forest Co and Farida Timber Co. submitted the tenders. Goodwill Forest Co. submitted its tender for compartments No. 7 and 8 (a) of the Regeneration Deodar Kail working Circle; Dudu Range and the Farida Timber Co. submitted its tender for compartment No. 292 in Mendhar Range, Poonch Division. The tenders of both the respondents were accepted by the Gov­ernment. In the case of Goodwill Forest Co. the royally was Rs. 23,00,101.00 and in the case of Farida Timber Co. the royalty was Rs. 14,11,111.11. In consequence of the acceptance of the tender an agreement was executed between the respondent, Goodwill Forest Co, and the Government on 15-5-64 and between the Government and Farida Timber Co. on 19-5-64. These two agreements appear to have been signed by the Conservator of Forests Jammu Circle on behalf of the Sadar-i-Riyasat (as he then was). It appears that the lessees began to work out the leases, but a large number of disputes arose during the course of the leases which culminated in the filing of the applications by the respondents under S. 20 of the Arbitration Act before the learned Single Judge. We might further mention here that under cl. (44) of the agreement, the arbitration clause clearly provided that in case of dispute the matter will be referred to arbitration as provided in the agreement. In pursuance of the arbitration clause the two respondents filed applications under S. 20 of the Arbitra­tion Act. Notices were issued on these applications and the appellants appeared to file their objections. Before the applications could be heard on merits, the respon­dents filed additional applications praying that the applications under S. 20 may be dismissed because the agreements were void as they were not executed in accor­dance with the provisions of S. 122 (1) of the State Constitution. The Goodwill Forest Co. had filed the additional application on 21-5-71 whereas the Farida Timber Co. filed the application on 27-4-71. The appellants were asked to file their objections on the two amended applications and after considering the same, the learned judge accepted the contention of the respondents and held that the agreements being void, the arbitration clause also fell with the agreements and therefore no application under S. 20 of the Arbitration Act was maintainable.

3. The two appeals were heard by a Division Bench of this court, but as the learned counsel for the respondents wanted to challenge the correctness of a Division Bench decision of this court in Con of Forests V M/s Kashmir Timber, 1972 J&K LR III 549 which was the sheet anchor of the argument of the appellants, the cases were referred to a Full Bench and that is how the matter has come up before us.

4. The facts are more or less admitted in the two cases, but it may be necessary to categorize the admitted circumstances which spell out certain points of law.

(1) That there was an agreement between the parties which was executed by the respondents on their behalf and by the Conservator of Forests Jammu on behalf of the Sadar-i-Riyasat.

(2) That during the working of the lease some disputes arose as a result of which applications were filed by the respondents under S. 20 of the Arbi­tration Act before this Court.

(3) That the applicants had filed objections to these applications and in fact conceded in their objections that the matter may be referred to the arbitrator as prayed for by the respondents.

(4) That an additional plea was taken by virtue of an amendment in the subsequent applications filed by the respondents alleging that the agree­ments executed by the Conservator of Forests were void as being in contravention of S. 122(1) of the State Constitution, and as the agreements were void, the arbitration clause fell through and the applications should therefore be dismissed.

(5) That the applicants filed objections to these amended applications also and contended that the agreements were valid and that at any rate the respondents having themselves invoked the jurisdiction of the Court under S. 20(4) of the Arbitration Act could not plead that the court should dismiss the applications and thus resile from the agreement contained in the arbitration clause.

(6) That the leases in the instant cases were sanctioned by the Government.

5. Two main contentions were put forward before us as also before the learned Single Judge. In the first place it was contended that the respondents could not be allowed to take two inconsistent pleas at the same time and were estopped from challenging the jurisdiction of the court having invoked the same under S.20(4) of the Act on the ground that the agreements were void. Secondly it was contended that the Conservator of Forests Jammu was duly authorised by the Govt. to execute the contracts on the basis of certain Notifications issued by the Government from time to time. The learned single Judge, after considering both the contentions in great detail, accepted the plea of the respondents and dismissed the applications. Hence these appeals.

6. Before us the learned counsel for the appellants has put forward two main arguments. In the first place it was argued that the respondents having themselves moved the court under S. 20(4) of the Act for making a reference to the arbitrator could not be permitted to resale from their stand by pleading that the agreements were void. Secondly it was argued that the agreements could not become void merely because the Conservator of Forests was not authorized to sign the agree­ments at the time when the same were filed, particularly when the act of the Conservator of Forests was regularized by subsequent Notifications and fell within the purview of Order No. 3 of 1957 which had given complete authority to the Conservator of Forests to sign the agreements. Similar arguments were addressed before a Division Bench of this court in 1972 J & K L.R III 549 to which I was a party, and the points were decided by the Division Bench in favour of the appellant on the materials and the facts of the case. We might mention here that in the case before the Division Bench the lease related to the agreements executed before 1963 and were clearly governed by order No. 3 of 1957. In the instant cases the agreements have been executed after 1963, that is to say, in May 1964 and would therefore be covered by a specific Government Order (No. 187 of 1963 dated 7-3-63) which prescribes that agreements for leases sanctioned by the Council of Ministers or the Minister for Forests will be signed by the CCF and law Minister (Forests) will be the arbitrator, and in the case of agreements in respect of any lease sanctioned by the CCF., the Conservator of Forests concerned would execute the agreement and the CCF would be the arbitrator. The agreements in the instant cases were therefore clearly governed by this order, and as the leases were sanctioned by the Govern­ment, the only person authorized to sign them was the Chief Conservator of Forests (for the sake of brevity referred to as the CCF) and not the Conservator of Forests. In order to understand the purport of the Conservator Order it may be necessary to quote the same in extenso:

"It is ordered that the following procedure will hereafter be followed for signing of agreements in respect of forest Leases/Contractors: -

(a) The agreements for leases/contracts sanctioned by the council of Ministers or the Minister for Forest will be signed by the CCF and the Law Minister (Forests) will be the arbitrator in case of any dispute.

(b) The agreements in respect of any lease sanctioned by CCF may be signed by Conservators within whose jurisdiction such a lease falls and CCF will be the arbitrator for such leases.

(c) Leases which are sanctioned by Conservators may be signed by DFOs and Conservators of Forests will be the arbitrator in such cases.

By order of the Government of Jammu and Kashmir.

Sd/- R. S. Nag, Secretary to Government.

7. The Government appears to have become wiser and by virtue of Govern­ment order No. FST/31/65 of 1965 dated 14-4-65 the mode of execution of the agreements was further altered and the Conservator of Forests was authorised to sign agreements relating to all cases of forest leases. This order runs thus: -

"In supersession of previous orders regarding signing of lease agreements, it is ordered that the Conservator of Forests will sign agreements relating to all cases of Forest leases and appropriation of forest products and the CCF will act as the arbitrator as provided under cl. 44 of the agreement. By order of the Government of Jammu and Kashmir.

Sd/- Secretary to Government, Forest Department."

8. On a plain interpretation of this Government Order the conclusion is inescapable that this order will apply only to agreements which were executed on or after 14-4-65 and would have no application to the agreements executed before this date. In other words this order in terms does not apply to the agreements executed in favour of the respondents with which we are concerned at present. This lacuna appears to have been noticed by the Government and an attempt was made to ratify the contracts which had become void due to contravention of Government order of 1963 (Supra) by providing that Government Order of 1965 would apply even to leases executed before that date. In other words the Government seems to have given a retrospective operation to Government order of 1965.

9. This was done by Government Order No. 444-Agri of 1971 dated 29-4-71 which runs thus: -

"Government Order No. FST-31/65 of 1965 dated 14-4-65 shall be deemed to have taken effect from 29-1-1963 and all actions taken by the Conserva­tors of Forests in executing the lease agreements from 29-1-63 by virtue of the said order are hereby regularized. By order of the Government of Jammu and Kashmir.

Sd/- R. C Bhargava, Secretary to Govt.

Agricultural Department, (Forests)

10. The learned single judge noticed both these orders and was of the view that if the agreements in question which had been executed in 1964 were in direct contravention of the Government Order of 1963, they could not be ratified or validated by subsequent orders passed by the Government on the principle that there could be waiver or estoppel against the statutory orders. This brings me to a consideration of the second argument put forward by the learned counsel for the appellants. I might mention here that the Division Bench case in 1972 J&K LR III 540 would have no application to the present leases because the Bench was con­cerned with the leases executed before 1964 which were governed by Order No. 3 of 1957. Mr. Nariman appearing for the appellants made a two-fold submission on this aspect of the matter. In the first place he submitted that the Government Order No. 3 of 1957 was passed by the then Sadar-i-Riyasat and it could not be modified or superseded by any subsequent order passed by the Government, particularly when Government Order of 1963 (Supra) does not make any mention of the particular provisions of law under which it was passed. I am, however, unable to agree with this argument. S. 122(1) of the State Constitution runs thus: -

"All contracts made in the exercise of the executive power of the State shall be expressed to be made by the Government and all such contracts and all assurances of properly made in the exercise of that power shall be executed on behalf of the Governor by such persons and in such manner as he may direct or authorize."

11. A perusal of this sub-section clearly shows that the Constitution merely lays down the mode in which contracts and assurances of property are to be executed and gives power to the Governor to authorize any person in any manner he directs. S. 45 of the State Constitution runs thus: -

(1) All executive action of the Government shall be expressed to be taken in the name of the Governor or of the Government of Jammu and Kashmir.

(2) Orders and other instruments made and executed in the name of the Governor or of the Government of Jammu and Kashmir shall be authenti­cated in such manner as may be specified in the rules to be made by the Governor and the validity of an order or instrument which is authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the Governor or, as the case may be, by the Government of Jammu and Kashmir."

12. A perusal of the two clauses of S. 45 (Supra) would show that the Governor or the Government of Jammu and Kashmir are equivalent terms and no order can be questioned on the ground that the said order was made by one or the other authority. In these circumstances, therefore, the irresistible inference is that the Government Order of 1963 (Supra) was also passed under S. 122(1) of the State Constitution and since the Government and the Governor were the same authori­ties, any of them could supersede or over-rule the order passed by one or the other. It is true that the Government Order of 1963 does not indicate the particular provision of law under which it was passed, but reading the contents of the order, it is manifest that the intention was to regulate the execution of the contracts as referred to in S. 122(1) of the State Constitution and in fact this is the only provision under which either the Governor or the Government could act in such matters. In these circumstances I must treat Government Order of 1963 as superseding Gov­ernment Order No. 3 of 1957 dated 23-2-1957 in so far as the person who was authorized to execute the agreements in certain circumstances was concerned.

13. At the fagend of the arguments it was faintly suggested by the counsel for the appellants that the Government order of 1963 (Supra) has no legal force because it was not published in the Government Gazette as required by the Gazette Act. I am unable to allow the appellants to raise this point at such a late stage, because the point was neither taken before the learned single Judge nor in the Memo, of Appeal before the Division Bench. The question whether or not the order of 1963 is gazetted is essentially a question of fact and if it had been taken at the earlier stages, it would have afforded an opportunity to the respondents to rebut this plea by producing the gazette concerned. For these reasons this argument is also rejected.

14. We might now refer to the relevant part of Government Order No. 3 of 1957 dated 23-2-57 which runs as follows:-

'In exercise of the powers conferred by Sub. S. (1) of S. 122 of the Constitu­tion, the Sadar-i-Riyasat is pleased to direct that the under-mentioned contracts and assurances of property made in the exercise of the executive powers of the State may be executed on his behalf by various officers subject to any limit fixed by Government rules and orders as follows: -

x x x x x

VI. In the department of Development:

(1) Agreements relating to Forest leases and appropriation of forest prod­ucts: By the Secretary to Government, Chief Conservator, Conservator of Forests and Div. Forest Officers."

15. The Governor by virtue of the order of 1957 (Supra) had authorized four persons to execute agreements relating to forest leases and these persons were the Secretary to the Government, the CCF, the Conservator of Forests and the Div. Forest Officers. The order of 1963 (Supra) however, seems to have made a departure from this particular provision made in Order No. 3 of 1957 by providing that where the lease is sanctioned by the Government, it should be signed by the CCF and where the agreement was sanctioned by CCF, only, in that case it could be signed by the Conservator of Forests. I have already referred to the fact that there is no dispute in the present cases that the two leases which are the subject matter of these appeals were sanctioned by the Government and therefore under the terms of Government Order No. 187 of 1963 (Supra) only the CCF could have signed the leases, but the present leases were signed not by the CCF at all but by the Conser­vator of Forests. There was therefore undoubtedly a serious contravention and violation of the first part of Government Order of 1963 (Supra). Since the Govern­ment Order was passed under S. 122(1) of the State Constitution, this violation would also be considered to be violation of S. 122(1) of the State Constitution so as to render the agreement absolutely null and void.

16. In the Division Bench decision of this Court in Cons, of Forests Jammu Circle v. M/s Kashmir Timber (Supra) my brother Mufti Baha-ud-Din J. was of the opinion that where a lease is sanctioned by the Government, even if there was an irregularity in the name & designation of the person who executed the agreement, that would be sufficient compliance with the provisions of S. 122(1) of the State Constitution. This argument, however, would have no application to the present cases because the Government itself chose to prescribe a particular procedure regarding the persons who were to sign the contracts in certain contingencies. It is true that I had specifically agreed with my learned brother Mufti J. but the cases before the Division Bench, in my opinion, rested on the interpretation of Govern­ment Order No. 3 of 1957, and since the agreements in those cases were governed by the order of 1957,1 agreed with the view taken by Mufti J, and infact gave my separate judgment reinforcing the reasons given by him. In this connection I observed as follows: -

"The first part of the Government Order clearly lays down and specifies the authorities who have been empowered under S. 122 of the State Con­stitution to execute contracts on behalf of the Government. It is true that the order in its preamble uses the words 'Subject to any limit fixed by Government rules and orders' which have been interpreted by the counsel for the respondents to mean that the previous limit fixed by rule 5-13 of the Book of Financial Powers was kept in tact by virtue of the Government Order. I am, however, unable to agree with this interpretation. In fact, read as a whole, the sentence runs thus: -

"Subject to any limit fixed by Government rule and orders as follows" The words 'as follows' have an important bearing on the question. Para­graph VI dealing with the agreements relating to of rest leases contains the names of authorities who are authorized by the Government to execute leases and we find that both the Conservator of Forests and the Divisional Forest Officers are mentioned therein without the limits imposed on them by the previous rule, namely, rule 5-13. It is true that the order did keep the limit fixed by the previous Government rules and orders alive but that was only in so far as it was not inconsistent with this Government Order.

xxxxx

"The Government must have realized that in the changed special condi­tions and the practical difficulties in which the Govt. had to work, it would be extremely arduous and difficult to put limitations on the powers of the officers, therefore the limit imposed by the previous Government rule 5-13 was abolished by necessary intendment when the Sadar-i-Riyasat passed Government Order No. 3 of 1957. It is well-settled that whenever a subse­quent legislation comes into force which is inconsistent with the previous legislation, the previous legislation must be deemed to have been over­ruled by subsequent legislation. Applying this principle, therefore, the position is manifest that by virtue of Government Order No. 3 of 1957 the limit of Rs. 7000, 3000, and 1000 in the case of the CCF, the Conservator of Forests and the Div. Forest Officers respectively was abolished and these officers were authorized to enter into leases of any value whatsoever."

17. For these reasons, therefore, I fully agree with the view expressed by the learned Single Judge that the agreements being in contravention of Government Order of 1963 (Supra) and therefore of the provisions of S. 122(1) of the State Constitution, were null and void and if the agreements became void, their the arbitration clause fell to the ground with them. In these circumstances there was no alternative for the Court but to reject the application made by the respondents, under S. 20 of the Act because when the agreement became void, then there was no arbitration clause left which would give jurisdiction to the court to make a reference to the arbitrator.

18. I am fortified in my view by a decision of the Supreme Court in Mulam Chand v. State of MP. AIR. 1968 SC 1218, which has been noticed by the learned single judge and wherein their Lordships of the Supreme Court observed as follows:-

"It is now well established that where a contract between the Dominion of India and a private individual is not in the form required by S. 175(3) of the Government of India Act, 1935, it was void and could not be enforced and therefore the Dominion of India cannot be sued by a private individual for breach of such a contract.

XXXXX

"The principle is that the provisions of S. 175(3) of the Government of India Act, 1935 or the corresponding provisions of Art. 299(1) of the Constitution of India are mandatory in character and the contravention of these provis­ions nullified the contracts and makes them void. There is no question of estoppel or ratification in such a case. The reason is that the provisions of S. 175 (3) of the Government of India Act and the corresponding provisions of Art. 299(1) of the Constitution have not been enacted for the sake of mere form but they have been enacted for safeguarding the Government against unauthorized contracts. The provisions are embodied in S. 175(3) of the Government of India Act and Art 299 (1) of the Constitution on the ground of protection of general public and these formalities cannot be waived or dispensed with. If the plea of the respondents regarding estoppel or ratifi­cation is admitted, that would mean in effect the repeal of an important constitutional provision intended for the protection of the general public. That is why the plea of estoppel or ratification cannot be permitted in such a case.

19. The observations of the Supreme Court (Supra) thus emphasize two aspects of the matter. In the first place, any contract which was in contravention or violation of S. 299(1) of the Constitution or S. 175(3) of the Government of India Act which are the same as S. 122(1) of the State Constitution is void. Secondly that such a contract cannot be ratified by any subsequent act. Thirdly that even though the contract may be void, it will not render the provisions of S. 70 inapplicable because S. 70 would be attracted from the voidness of the contract. Emphasizing this aspect, their Lordships observed as follows: -

"But if money is deposited and goods are supplied or if services are rendered in terms of the void contract, the provisions of S. 70 of the Indian Contract Act may be applicable. In other words if the conditions imposed by S. 70 of the Indian Contract Act are satisfied then the provisions of that section can be invoked by the aggrieved party to the void contract."

20. The same view was taken by a previous decision of the Supreme Court in AIR 1962 SC 779 regarding the application of the provisions of S. 70 of the Contract Act. We are, however, not concerned with this particular aspect in the instant case.

21. It is therefore manifest that if it is once held that the agreements in the instant cases were directly in contravention of the order of 1963, then the agreements being void could not be ratified or validated by any subsequent order passed by the Government. It is well settled that there can be no ratification of a void contract because ratification is made of something which exists and not of something which has no legal existence or which is completely destitute of any legal effect. In the Division Bench case (Supra) I had adverted to this aspect of the matter and pointed out that the subsequent orders passed by the Government could not have ratified void contracts. In this connection I had observed as follows: -

"By virtue of this order the Government sought to validate the contracts which were void according to them before 1963. The order, however, appears to have been passed during the pendency of the present proceed­ings and does not carry any weight because if the contract was void in 1963 it could not be ratified by any Government order subsequently and it continued to be void for all purposes."

22. In these circumstances I am clearly of the opinion that the applications filed by the respondents were rightly dismissed by the learned single judge under S. 20 of the Arbitration Act.

23. In the view that I take in the present cases, it is manifest that the Division Bench decision in 1972 J&K LR III 549 must be held to have been correctly decided with respect to the forest leases executed between 23-2-57 to 6-3-63 but will have no application to leases executed between the period 7-3-63 to 13-4-65.

24. This brings me to a consideration of the first argument which was advanced before us by the learned counsel for the appellants. Mr. Nariman who was followed by the Advocate General submitted before us that the respondents themselves filed an application under S. 20 (4) of the Act relying on the agreements in question and, therefore, they could not be heard to say that the agreements were void, nor could the court be allowed to go into this question in a proceeding under S. 20 of the Arbitration Act. This argument no doubt found favour with my learned brother Mufti Baha-ud-Din J. in the Division Bench case (Supra), but that case was not decided on the basis of this argument alone but the judgment rested clearly, as I have already said, on other points namely the fact that lease was sanctioned by the Government Order No. 3 of 1957 had authorised the Conservator of Forests to sign the agreement and his attention was not drawn to Government Order No. 187 of 1963 dated 7-3-63 presumably because the agreement in that case related to a period prior to this order. As, however, this argument has been vehemently pressed before us, it becomes necessary to give a finding thereon. There is nothing in the provisions of S. 20 of the Arbitration Act to preclude a party from raising the plea that the agreement is void. On the other hand S. 20 (4) of the Arbitration Act reads thus: -

"Where no sufficient cause is shown, the court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties, cannot agree upon an arbitrator, to an arbitrator appointed by the Court."

25. The words 'Sufficient cause' are wide enough to convey that the court shall make an order of reference to the arbitrator only if no sufficient cause is shown. In other words if the court is satisfied that the agreement is void or that there is no arbitration clause then no order of reference to the arbitrator can be made to the court even on the plain language of S. 20 (4) of the Arbitration Act. Furthermore there is no provision in the Civil P. C. or in the Arbitration Act which may prevent a party from taking two inconsistent or alternative pleas and asking the court to grant relief on one or the other of them. It was not a case where the point was not pleaded and raised for the first time in appeal, but the plea was taken by way of amendment even before the single judge and the appellants were given full oppor­tunity to rebut this plea and they did file their objections to this amended plea. In these circumstances therefore on the rule of broad construction of pleadings I do not see any reason why the respondents should be estopped from raising this plea. I am fortified in my view by a decision of the Supreme Court in Firm Sriniwas Ram Kumar v. Mahbir Prasad, AIR 1951 SC177,179 wherein their Lordships made the following observations: -

"But it was certainly open to the plff. to make an alternative case to that effect and make a prayer in the alternative for a decree for money even if the allegations of the money being paid in pursuance of a contract of sale could not be established by evidence. The fact that such a prayer would have been inconsistent with the other prayer is not really material. The plff. may rely upon different rights alternatively and there is nothing in the Civil PC. to prevent a party from making two or more inconsistent sets of allegations and claiming relief thereunder in the alternative."

In Kedar Lal v. Hari Lal, AIR 1952 SC 47, 52 their Lordships observed as follows: -

"I would be slow to throw out a claim on the mere technicality of pleading when the substance of the thing is there and no prejudice is caused to the other side, however clumsily or inartistically the plaint may be worded. In any event, it is always open to a Court to give a plaintiff such general or other relief as it deems just to the same extent as if it had been asked for, provided that occasions no prejudice to the other side beyond what can be compensated for in costs."

26. In the instant cases, therefore, there can be no question of any prejudice having been caused to the appellants because of the plea taken by the respondents before the learned single judge, for they were given full and complete opportunity to rebut the plea and the appellants have already taken shelter behind the fact that the agreements were valid or were validated by subsequent orders I am, therefore, clearly of the opinion that the respondents case could not be thrown out merely on the ground that they had taken a plea which was inconsistent with the one which was the basis of their application. When the court was apprised of the fact that an agreement was void and, therefore, the arbitration clause contained in the agree­ments was also void, it could not shut its eyes to this hard fact, but it is the duty of the court to give effect to this plea if it was found to be correct. For these reasons the first argument advanced before us must be over-ruled, and I hold that merely because the respondents filed an application under S. 20, they could not be pre­cluded from raising an objection to the validity of the agreements on which they relied and which would entail a dismissal of their own application. I must therefore, express my respectful dissent from the view taken by my learned brother, Mufti Baha-ud-Din J. in 1972 J&K LR 549 (Supra).

27. The result is that the contentions raised by the learned counsel for the appellant fail and I would direct that the appeal be dismissed, but in the circum­stances without any order as to costs.

S. Wasiuddin, J.

I agree. Per Jaswant Singh, J.

1. I have had the advantage of going through the judgment proposed to be delivered by my Lord, the Hon'ble Chief Justice in these appeals which succinctly spells out the points arising for determination. While I respectfully agree with the conclusions arrived at by his Lordship in regard to the present appeals, I wish to say a few words regarding the decision rendered by their Lordships of the Division Bench in Civil Appeals Nos. 46,47 and 48 of 1972, reported in 1972(3) J.K.L.R. 549, as the said appeals were directed against the common judgment given by me in arbitration applications Nos. 18,19 and 20 of 1970.

2. In regard to the inconsistency of the pleas allowed to be raised by me in the aforesaid applications on behalf of the petitioners and the competence of the court to go into the validity of the Arbitration agreements, as the Hon'ble Chief Justice has lusidly and elaborately dealt with it, I need not dilate on it. Suffice it to add that as attempted to be shown by me in the aforesaid judgment by reference to the decision of the Supreme Court in Mulam Chand v. State of Madhya Pradesh, AIR 1968 SC 1218, there could be no question of waiver on the part of or estoppel against the petitioner and the plea could not but be entertained in view of certain provisions of the Arbitration Act. Section 20 of the Act occurs in the Chapter which deals with arbitration with intervention of a court where there is no suit pending. Under sub-section (2) of this section an application has to be numbered and registered as a suit and under sub-section (3) thereof a notice has to be issued to the opposite party as to why the agreement should not be filed. Sub-section (4) lays down that where no sufficient cause is shown the court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties. The important words occurring in this sub-section are "where no sufficient cause is shown". It means, therefore, that the court before passing an order on an application filed before it under section 20 has to determine whether sufficient cause has been made out. As to what is 'sufficient cause' depends on the individual facts and circumstances of each case and no hard and fast rule can be laid down in this behalf. In the aforesaid applications before me the new plea raised on behalf of the petitioner being one which went to the very root of the case and touched the very source of the power and authority of the arbitrator to adjudicate the matter in controversy could not be overlooked and had to be gone into under Section 33 of the Arbitration Act, which applied to the applications by virtue of section 26 of the Act.

3. As regards the second observation in the leading judgment of the Division Bench that the other side had no notice of the plea of voidness of the agreements containing the arbitration clause on account of non-compliance with the provisions of Section 122 (2) of the Constitution, it seems that the attention of their Lordships was not drawn to the minutes of the proceedings of the aforesaid applications. From a perusal of the minutes it is evident that on the aforesaid plea of voidness of the agreements for non compliance with the requirements of Section 122 (2) of the Constitution being raised on behalf of the petitioner on the 17th of August 1971, the learned Addl. Advocate General did not take any objection to the plea being raised but took time to file some government orders bearing on the point which he did on the 17th and the 20th of September 1971. It was then after three months that the said applications came up for further arguments on the 20th of December, 1971. Which concluded on the 22nd December, 1971. It is, therefore, manifest that the other side had full opportunity to meet and refute the plea and it did actually avail of the same.

4. Regarding the sanction accorded to the grant of the said leases by the Government vide Order No. FST/167-62 of 1963 dated February 7,1963 which was taken as substantial compliance with the requirements of Section 122 (2) of the Constitution. I like to say with utmost respect that sanction to the grant of the leases and execution of the contracts in pursuance thereof are two distinct things and the mere fact that the leases were sanctioned by the Government would not be enough to satisfy the requirements of Section 122(2) of the Constitution which is mandatory and enjoins strict compliance with its provisions. In this connection, I may be pardoned to refer to the decision of the Supreme Court in Union Of India v. A.L Rallia Ram., AIR 1963 SC 1685, where it was held: -

"In order to constitute an arbitration agreement within the meaning of S. 2 (a) Arbitration Act, there must be a valid agreement to submit present or future differences to arbitration and the agreement must be in writing and must be accepted by the parties. It is, however, not a condition of an effective arbitration agreement that it must be incorporated in a formal agreement executed by both the parties thereto, nor it is required to be signed by the parties. But where the Dominion of India was a party to the arbitration agreement, which is a contract within the meaning of S. 175(3) of the Government of India Act, 1935, it must to bind the Dominion of India, be made in the form prescribed by that Section."

5. Lastly the Government order No. 3 of 1957 dated February 23,1957, on which reliance was placed by their Lordships of the Division Bench did not confer blanket powers on the Conservator of Forests. On the other hand, as is clear from the preamble of the order, it kept alive the limit already fixed by the Government by its previous Rules and orders including the delegation of powers as contained in item No. 5. 13 of the Book of Pinancial Powers which authorised the Conservator of Forests to execute the agreements only upto the value of Rs. 3,000/-. In these circumstances, the Conservator of Forests was not, in my opinion, authorised to execute the agreements which were consequently invalid. It is because of these reasons that I find myself unable to agree with the views expressed in 1972 JKLR (iii) 549.

Per M. Jalal-ud-Din, J.

1. I have had the benefit of going through lucid and well reasoned judgment prepared by my Lord the Hon'ble Chief Justice and I agree with him in regard to the order proposed to be passed in these two appeals. I would, however, like to add a few words of my own.

2. The question whether it is open to a petitioner making an application under section 20 of the Arbitration Act seeking arbitration of the disputes and differences arising out of or in respect of a deed of agreement to challenge the very validity of the agreement in these proceedings was debated before us. The appellant has contended that it is not open to a petitioner who himself invokes the jurisdiction of the court and seeks reference to the arbitrator to turn round afterwards and repudiate the very agreement on the ground of its being void in law. He cannot approbate and reprobate. The petitioner, if he so chooses, can in a separate proceed­ing by invoking the help of Section 33 of the Act do so. But surely he cannot be heard so in an application under section 20 of the Act. On going through the various provisions of the Arbitration Act, I am of the firm view that there is no bar to the raising of such a plea by any party to the proceedings including the petitioner before the court. This can very well be illustrated by referring to the provisions of section 26 of the j&k arbitration act which makes all the provisions of Chapter V including Section 33 applicable to all arbitrations. Thus read with Section 26 the petitioner can challenge the legality of the Arbitration Agreement even in proceedings under section 20 of the Act. Not only can this plea be raised by the petitioner and it is the duty of the court to go into this question, but even in the absence of such a plea raised the court is not absolved of its duty to find out and determine the validity of the agreement. Should the court be of the opinion that the arbitration agreement is invalid and void, then surely it will refuse to enforce the arbitration clause in the agreement.

The Supreme Court has in AIR 1963 SC 1686 observed that if in law there is no valid arbitration the proceedings of the arbitrator would be unauthorised. It is from the terms of the arbitration agreement that the arbitrator derives his authority to arbitrate. Their Lordships went on to the extent of observing that the view that a party had agreed to refer differences to arbitration and having taken part in the proceedings before the arbitrator had waived the objection as to the illegality of the contract and Could not, therefore, raise any such objection in an application for setting aside the award could not be accepted as correct. The Supreme Court has taken consistent view of the matter that the jurisdiction of the court to refer disputes to arbitration is founded upon a valid agreement.

3. In AIR 1962 SC 1810 the view laid down is that a dispute that the contract of which the arbitration clause forms an integral part is illegal and void is not one which the arbitrator is competent to decide. In consequence a party to the contract is entitled to maintain an application for declaration that the contract is illegal and that in consequent proceedings taken thereunder and before the Arbitrator and the award in which they resulted were all void. The party is not estopped by its conduct for by appearing before the Arbitrators and taking part in proceedings before them from questioning the validity of the award. What confers jurisdiction to arbitrators is to hear and decide disputes to the agreement and where there is no such agreement there is an initial want of jurisdiction.

4. In AIR 1972 Delhi 110, a similar question came up for consideration before Delhi High Court. In that cases agreement with the President of india was not properly concluded and terms of formal agreement were objected to by the contrac­tor. There was an arbitration clause providing for arbitration of disputes between the parties. It was held that the arbitration clause which was not an independent agreement but contained in the contract also failed and hence refence to arbitrator was illegal. The argument that it was open wholly to the respondent and not to the petitioner to dispute the validity of the agreement as he affirms the agreement could bring up the contention of the opposite party with regard to the non-existence or invalidity of the agreement before the court for determination. It would not make any difference whether the party denying or affirming the execution of the agree­ment was a petitioner or a respondent. Section 33 of the Arbitration Act could not be treated as exhaustive of all cases where an application could be made for challenging the validity of the agreement. The court has got inherent powers to entertain applications made by the parties affirming the existence of arbitration agreement. It is not material as to what label the application bears and whether it has been preferred under sections 31 or 33 or any other provision of the Arbitration Act.

5. I am, therefore, of the view that the learned Single Judge had properly entertained the application challenging the validity of the agreement and he was legally competent to do so.

6. The other argument of the appellant relates to the inapplicability of the Government order No. 187 of 1963 to the lease agreement in question. Under the said Government order it is proved that Forest leases sanctioned by the Council of Ministers will be signed by the Chief Conservator of Forests will be signed by the conservator of forests and leases of agreement sanctioned by the Chief Conservator of Forests and the D.F.O. It has been argued that this order does not supersede the SRO. of 1957 as it merely lays down the procedure only. In the instant case the lease has already been sanctioned by the Government. The concurrence of the Finance Department has been obtained. There are no limits prescribed by the order for the execution of the contract. The limit as prescribed by SRO of 1957 is only with regard to the sanction of the lease. As the Government itself sanctioned the leases therefore there was no question of exceeding the authority in the case.

7. In my opinion this argument is devoid of force in-as-much-as SRO 3/1957 itself says that the officers competent to execute the agreements on behalf of the State will do so subject to the limits fixed by under rules and orders of the Government. After this SRO was passed did the Government make Order 187 of 1963. This order clearly puts fetters on the powers of the Conservator of Forests to execute agreements on behalf of the State where the lease has been sanctioned by the Council of Ministers. It cannot be said that limits mean only financial limits. It includes all limits which are put by the Government under its orders or rules from time to time nor can it be said that this order is inapplicable because it does not override the previous order on the subject. The expression 'hereafter' used in the Government order of 1963 is clear indication of the fact that it impliedly superseded the old order. In the present case it is an admitted fact that the forest lease has been sanctioned by the Government, therefore the Conservator of Forests was not competent to sign the contract under section 122 of the State Constitution. The provisions of Section 122 are not directory but mandatory. This section expressly provides the mode and manner of execution of all contracts and assurances on behalf of the Government. It is not an empty formality to be observed. In view of this contract not having been signed by the competent person is void and does not create any rights and obligations between the parties.

8. For the foregoing reasons, I would, therefore, agree that the appeals be dismissed.

Per Mufti, J.:-

1. I have had the advantage of going through the judgment proposed to be delivered by my Lord, the Chief Justice. I concur in the order proposed by his Lordship, but I have my own reasons to support it which will appear in the lines that follows.

2. The first question that arises for determination in this case is whether it was open to the respondent-firms herein to plead that the agreement deeds were void and ineffectual when they themselves had sought these deeds to be enforced in proceedings under section 20 of the Arbitration Act initiated on the applications made by them. A similar question arose in a Division Bench case of this court "Conservator of Forests, Jammu v. M/s Kashmir Timber" (1972 JKLR, 549) to which I was a party. The facts of that case were that M/s Kashmir Timber and its sister concerns obtained three leases for the extraction of timber from the forests which were covered by three agreement deeds, each one of which was signed on behalf of the Sadar-i-Riyasat, as the head of the State was then called, by the concerned Conservator of Forests on one side and by the Managing Director of the respective firm on the other. The agreement deeds contained an arbitration clause common to all of them which provided that every dispute arising between the parties in respect of the agreement or the subject matter thereof shall be referred to the arbitration of the Chief Conservator of Forests. Relying on this clause the said firms filed three separate applications under section 20 of the Arbitration Act. At the hearing the applicant firms pleaded that the agreement deeds were void and unenforceable under section 122(1) of the Constitution of Jammu and Kashmir as each one of these agreement deeds was signed by Conservator of Forests without having the necessary authority to do so. The plea found favour with the learned single Judge trying the case who, therefore, dismissed the applications. In appeal it was argued that the learned Single Judge should not have allowed this plea to be raised. Dealing with this objection I observed:

"On the pleadings of the parties the only question that arose in this case was whether the arbitration agreement should be filed in its original form and a reference made to the Chief Conservator of Forests as the arbitrator nominated therein or in a modified form in which a substitute was ap­pointed and reference made to him. Any other question fell outside the scope of the pleadings. At the hearing before the learned Single Judge, therefore, the respondent-firms, who were petitioners before him, could not raise the plea that the agreements were void and unenforceable. The plea so raised had not only no basis in the pleadings but was also wholly inconsistent therewith. The firms claimed to have performance of the agreement on one hand and impeached it on the other. This was most unfair on the part of the firms and equally so for the reason that the plea was raised at the stage of hearing when the other side had no notice of it and could not therefore produce relevant evidence having bearing on the matter. The firms could not approbate and reprobate. The legitimate course for them to adopt was to withdraw the applications and take alternate proceedings to nullify the agreements. In fact the learned Single Judge should not also have allowed this plea to be raised. Since, however, he has allowed it to be raised and eventually also upheld it we feel constrained to examine it on merits."

3. Without expressly saying so, these observations were based on the consid­eration of various provisions of the Jammu and Kashmir Arbitration Act, 2002, (hereinafter called 'the Act') and of the Code of Civil Procedure, Section 20 of the Act reads:-

20. "Application to file in Court arbitration agreement:

(1) Where any persons have entered into an arbitration agreement before the institution of any suit with respect to the subject-matter of the agree­ment or any part of it and where difference has arisen to which the agreement applies, they or any of them, instead of proceeding under Chapter II, may apply to a court having jurisdiction in the matter to which the agreement relates, that the agreement be filed in Court.

(2) The application shall be in writing and shall be numbered and registered as a suit between one or more of the parties interested or claiming to be interested as plaintiffs and the remainder as defendant or defendants, if the application has been presented by all the parties, or, if otherwise, between the applicant as plaintiff and the other parties as defendants.

(3) On such application being made, the court shall direct notice thereof to be given to all parties to the agreement other than the applicants requiring them to show cause within the time specified in the notice why the agree­ment should not be filed.

(4) Where no sufficient cause is shown, the court shall order the agreement to be filed, and shall make an order of reference to the arbitrator appointed by the parties, whether in the agreement or otherwise, or, where the parties cannot agree upon an arbitrator, to an arbitrator appointed by the court.

(5) Thereafter the arbitrator shall proceed in accordance with, and shall be governed by, the other provisions of this Act, so far as they can be made applicable."

4. Sub-Section (1) sets out the conditions which an application, praying that the arbitration agreement be filed in court, must fulfil. One of these conditions clearly is that there is a valid and subsisting arbitration agreement between the parties. Accordingly there can be no occasion for any person to apply under this sub-section unless there is a valid and subsisting arbitration agreement between him and the opposite party. Where, therefore, he sets up an arbitration agreement, which he seeks to enforce under sub-section (1), he must be presumed to plead that the agreement is valid and subsisting even if he does not expressly say so, although, in my opinion, that is more desirable to do when the jurisdiction of a court is invoked in the matter. That being so, an application which is founded on the plea that arbitration agreement is invalid does not clearly conform to sub-section (1) and is exfacie not maintainable and merits summary rejection. As a corollary it follows that in proceedings under section 20 the plea, as aforesaid, cannot also be raised by the applicant by way of amendment of the application or otherwise because what cannot be done directly cannot also be done indirectly. This becomes all the more clear when we consider the provisions of sub-section (3) and sub-section (4).

Sub-Section (3) provides that where an application is made under sub-section (1), notice shall be given to the other side to show cause why the agreement should not be filed and sub-section (4) lays down that where sufficient cause is not shown by the other side, the court shall order that the agreement be filed. In other words the application can be dismissed on merits only if the opposite party shows a sufficient cause against granting it. The cause shown may be that the agreement is not valid and enforceable. Thus the objection based upon the invalidity of the agreement may be open to the opposite party but not so to the applicant who can at best withdraw the application if he feels that it is no longer advantageous for him to proceed with it. In terms, therefore, section 20 precludes the applicant from setting up the invalidity of an arbitration agreement as a ground of relief under the said section either originally or by amendment or otherwise. Equally so is the case under O. 6 R. 17 C.P.C. which governs the agreement of pleadings. The law is well settled that no amendment can be allowed which changes the nature of a suit or of an application or displaces it or converts it into one of a totally different character. On this principle, in an application under section 20 where the grant of relief of the applicant is clearly dependent on his showing that there is a valid and subsisting agreement between him and the opposite party, he cannot be allowed to amend the application so as to raise a plea that the agreement is not valid. Such an amendment can characterised as one necessary for determining the real question in controversy. On the other hand it can be justifiably characterised as one implying the abandon­ment of the real issue and cannot, therefore, be permitted. On general principles too the plea cannot be allowed to be raised by the applicant because what can be a ground for rejecting the application cannot be justifiably put forth as a ground for granting it. In these circumstances I am firmly of the opinion that in proceedings under section 20 it is not open to the applicant to plead either originally or by amendment or otherwise that the arbitration agreement is invalid and unenforce­able.

5. The question that inevitably follows is whether a person applying for enforcement of an arbitration agreement under section 20 can subsequently im­peach the agreement and seek its nullification by an independent proceeding. In order to determine this question it will be necessary to notice the provisions of section 33 of the Act which reads:

33.

"Arbitration agreement or award to be contested by application. Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit."

6. Clearly an application can be made under this section by any party to an arbitration agreement desiring to challenge the existence or validity of an arbitration agreement or to have the effect thereof determined. There is nothing in the section to suggest that the pendency of an application under section 20 will stand as a bar to an application made there under. Accordingly the right to apply under this section must be found even in favour of a party to an arbitration agreement under section 20 and claimed enforcement of the agreement, but the right must be read subject to the limitation that such party withdraw the earlier application under section 20 unless the court trying the same chooses to stay proceedings thereon pending disposal of the subsequent application under section 33. The reason plainly is that the party cannot be allowed to follow two inconsistent reliefs: one for the enforcement of the agreement and the other for its nullification. In this view an application under section 33 is not excluded where the applicant has already filed an application under section 20 provided he withdraws the latter application or also gets the proceedings thereon stayed by the court trying the same.

7. The combined effect of sections 20 and 33 of the Act, therefore is that in any proceedings under section 20 it is not open to the applicant to raise the plea that the agreement is void and non-enforceable, be that he raises such plea in the original application or by way of amendment thereof or at the hearing thereof. He can, however, file an independent application under section 33 to nullify the agreement provided that he withdraws the application already made by him under section 20 or else gets the proceedings thereon stayed by the court trying the same. In this view, considering the fact that in the case of M/s Kashmir Timbers the plea about the invalidity of the agreement was raised by the applicant at the time of hearing of his application under section 20 of the Act, the observations made therein by me are as good now as they were when that case was decided.

8. The question really is whether those observations should apply to the present case. That makes it necessary to know when and how the plea about invalidity of the agreement was raised by the applicant-firms. Perusal of the trial court file reveals that M/s Farida Timber Company raised this question by an application dated 27-4-1971. The application stated that the agreement was violative of section 122(1) of the Constitution of Jammu and Kashmir as it was signed on behalf of the Sadar-i-Riyasat by the Conservator of Forests who was not competent to do so. It further stated that assuming that the agreement was validly executed by the Conservator of Forests, it was highly suspicious as it appeared to have been signed somewhere in 1970 and as such it was necessary for the court to determine the legal effect thereof. In the end it was prayed

"that arguments may be heard on the points mentioned in the application before taking up the main case."

M/s Goodwill Forest Company filed a similar application pleading that the agreement was violative of section 122 of the Constitution of Jammu and Kashmir. The application did not however make a specific prayer like the one made in the application filed by Farida Timber. In any case none of these applications purported to seek an amendment of the already pending applications under section 20. On the other hand the application made by Farida Timber Company contained a specific prayer that the points raised in this application may be decided and the main case taken up thereafter. A similar request was implied in the application made by M/s Goodwill Forest Company in which a question was raised about the validity of the agreement. The applications therefore clearly purported to be under Section 33 of the Arbitration Act, as rightly pointed out by the learned counsel for the respondent firms. In that view the question about the validity of the agreement deeds must be held to have been raised by the respondent-firms independently of their applica­tions under section 20. That way this case is clearly distinguishable on facts from the case of M/s Timber Ltd. (Supra) and the observations made therein cannot be held to be applicable to it. The learned Single Judge could justifiably, decide the matter arising under section 33 in the two cases before him and then follow up the proceedings under section 20 which were also before him and which he had impliedly stayed pending consideration of the question of the validity of the agreements. In this view the plea of inconsistency pressed into service by the learned counsel for the State on the basis of my observations in M/s Timber Ltd. cannot be allowed to prevail.

9. The question to be considered next is; whether the Conservator of Forests was competent to sign the agreement deeds on behalf of the Sadar-i-Riyasat, as the head of the State as then called. A like question arose in the case of M/s Kashmir Timber (Supra). Dealing with this question it was observed by me as follows: -

"To appreciate and determine the objection, it will be necessary to consider the provisions bearing on the matter which were in force from time to time upto the material time. The earliest provisions may be found in what is known as the 'Book of Financial Powers.' Item No. 3-9 thereof provides as under: -

'No Department shall without previous consultation with the Finance Department authorise any order (other than orders pursuant to any general delegation made by the Finance Department) which either immediately or by their repercussions will affect the finances of the State or which in particular:

(a) involve any grant of land or assignment of revenue or concession, grant, lease or licence of mineral or forest rights or a right to water power or any easement or privilege in respect of such concession;

(b) relate to the number or grading or cadre or the emoluments of posts or to any other conditions of service of posts ;

(c) in any way involve any relinquishment of revenue. Note: - Finance Department may prescribe cases in which its consent to the exercise of any power under these rules by the authorities specified may be considered to have been given.'

Thereafter in the subsequent chapters the book proceeded to enumerate the delegations. At item 5-13, omitting portions not relevant, it provides:

5.13. The power to sanction or cancel the terms of instruments, leases, agreements is delegated in the following cases:

S.No. Nature of power To whom delegated Extent

1. 2. 3. 4.

X X X X

X X X X

9. To sell forest produce and to enter into contract for the same Chief Conservator of Forests. Upto Rs. 7,000 in value in each case provided the highest tender is accepted.

Conservators of Forests. Upto Rs. 3,000 in each case provided that highest tender is accepted.

Divisional Forest Officers. Upto 1,000 in each case provided the highest tender is accepted.'

10. These were pre-constitution provisions. On the coming into force of the Constitution the Sadar-i-Riyasat, in exercise of his powers under section 122(1) of the Constitution of Jammu and Kashmir, issued a notification investing various officers with power to execute contracts and assurances of property made in exercise of executive powers of the State. The notification was styled as Government order No. 3 of 1957 dated 23-2-1957. This order so far as relevant, reads:

In exercise of the powers conferred by sub-section (1) of section 122 of the Constitution, the Sadar-i-Riyasat is pleased to direct that the under-men­tioned contracts and assurances of property made in the exercise of the executive powers of the State may be executed on his behalf by various officers subject to any limit fixed by Government rules and orders as follows: -XXXXX

IV. In the Department of Development:

(1) Agreements relating to Forest leases and appropriation of forest prod­ucts: By the Secretary to Government, Chief Conservator, Conservators of Forests and Divisional Forest Officers.'

11. On the construction of the provisions cited above turns the question whether the concerned Conservators of Forests were competent to sign the im­pugned agreements.

12. The provisions contained in the book of Financial Powers cited above make it amply clear that a Divisional Forest Officer could on his own orders enter into a contract for the sale of forest produce if the value thereof did not exceed Rs. l,000/-and so also a Conservator of Forests if the value did not exceed Rs. 3,000/-and likewise the Chief Conservator of Forests if the value did not exceed Rs. 7,000 and where the value exceeded Rs. 7,000 anyone of them could do so provided the sale was approved by the administrative department in consultation with the Finance Department. This is what a combined reading of the provisions at items 29 and 5.13 of the book of Financial Powers does irresistibly suggest. So the only limitation placed by these provisions on the power of a Conservator of Forest or even that of a Divisional Forest Officer and the Chief Conservator of Forests to enter into a contract for the sale of Forest produce, if the value thereof exceeded Rs. 7,000/-was that the sale was approved by the concerned administrative Department in consultation with the Finance Department. It is this limitation alone which, as respects contracts valuing more than Rs. 7,000/- has to be read in the consequent notification issued under section 122(1) of the Constitution authorising execution of "agreements relating to forest leases and appropriation of forest products" by the Chief Conservator of Forests, Conservators of Forests and Divisional Forest Officers when it says that the power shall be exercisable by them "subject to any limit by Government rules and orders." Even here the learned counsel for the appellants would like us to hold that the limitation was on sale of forest produce and not on forest leases but I am unable to accept this contention because a forest lease is nothing but a sale of forest produce like timber in the instant cases. In the altered constitutional position, however, reference to administrative Department in the earlier provisions must be construed as reference to the Government in that department. Accordingly, in my opinion, the notification as aforesaid, expressly authorised the Chief Conservator of Forests, Conservators of Forests and Divisional Forest Officers to sign an agreement relating to a forest lease of the value of more than Rs. 7,000/- provided the Government in the concerned Department had sanctioned the lease in consultation with the Finance Department."

13. The agreement deeds in that case were dated February 27,1963: February 28, 1963 and March 19, 1963. In the instant case the agreement deed executed by M/s Goodwill is dated 15-5-1964 while that executed by M/s Farida Timber bears the date 19-5-1964. On 7-3-1963, it appears the Government issued an order styled as Govt. order No. 187 of 1963. The order is reproduced in the judgment of my lord, the Chief Justice, and need not be reproduced here again. It interalia provided "that the agreement for leases/contracts sanctioned by the Council of Ministers or the Minister for Forest will be signed by the Chief Conservator of Forests and the Law Minister (Forests) will be the arbitrator in case of any dispute." In this the order modified the provisions of the Financial Code noticed in the case of M/s Kashmir Timber (Supra) to the extent that whereas under the said provisions an agreement relating to the forest lease sanctioned by the Government could be signed by the Chief Conservator of Forests or by the Conservator of Forests concerned or even by the Divisional Forest Officers concerned, the order vested this power in the Chief Conservator of Forests alone. The result was that from 7-3-1963, the date of issue of the order, the power to sign an agreement relating to a forest lease of the value of more than Rs. 7,000/- vested in the Chief Conservator of Forests while the power to sanction such lease continued to remain with the Government as before. The limitation so imposed has its source in the Sadar-i-Riyasat's order No. 3 of 1957 dated 23-2-1957 noticed in the case of M/s Kashmir Timber (Supra) which, while providing that the agreements relating to forest leases and appropriation of forest products shall be executed by the Secretary to the Govt, Chief Conservator, Con­servators of Forests and Divisional Forest Officers, laid down that the powers shall be exerciseable by them "subject to any limit fixed by Government rules and orders" implying thereby that the limitations already imposed and those imposed subse­quent to the issue of the said order. The limitation must therefore be treated as one flowing from the order of the Sadar-i-Riyasat which in turn was issued under section 122(1) of the Constitution of Jammu and Kashmir and so construed the limitation must be read as one imposed by section 122(1) itself. In this view I am unable to agree with the contention raised by Mr. Nariman on behalf of the State that the Government was not competent to issue the order.

Undoubtedly section 122(1) of the Constitution of Jammu and Kashmir does not, by itself, empower the Government to issue any order nor does Govt. order No. 187 of 1963 purport to be one issued thereunder, as Mr. Nariman put it, but that would not render the order invalid considering the fact that it purports to be one issued by the Government in pursuance of Sadar-i-Riyasat's order No. 3 of 1957 dated 23-2-1957 providing for their power to fix limits subject to which the power to execute various contracts on behalf of the Sadar-i-Riyasat, shall be exercisable by various officers specified therein. The order must therefore be held to have been validly issued on 7-3-1963. This order, it seems remained operative until it was superseded by that was styled as Govt. order No. FST/31/65 of 1965 dated 14-4-1965. Accordingly it must be held that between 7-3-1963 and 14-4-1965 the Conser­vators of Forests had no authority to sign agreement deeds respecting leases sanctioned by the Government and that such power vested in the Chief Conservator of Forests. That being so, the agreement deeds in the instant case, which were executed in May, 1964, were unauthorisedly signed on behalf of the Sadar-i-Riyasat by the concerned Conservators of Forests. The result is that these agreement deeds are violative of section 122(1) of the Constitution of Jammu and Kashmir and as such void and unenforceable by or against the Government.

14. The result cannot be evaded on the ground relied on by the counsel for the State that the Government subsequently issued an order styled as Govt. order No. 444-Agri of 1971 dated 29-4-1971 whereby it regularised the action taken by the Conservator of Forests in executing agreement deeds pertaining to leases sanc­tioned by the Government. That is so for the reason that the execution of such agreement deeds by the Conservators of Forests between 7-3-1963 and 14-4-1965 was unauthorised and as such constituted an infraction of section 122(1) of the Constitution of Jammu and Kashmir which could not be validated by an executive order. The Govt. order, as aforesaid, if I may say so, was completely mis-conceived and ill-advised.

15. The result cannot also be avoided on the ground of substantial compliance urged on behalf of the State because the question of substantial compliance could arise only if the power to sign the agreement deeds respecting leases sanctioned by the Govt. were not found to have been expressly conferred on the Chief Conservator of Forests.

16. Towards the end it was argued on behalf of the State that even if the agreement deeds were ignored, the contracts could be spelt out in the instant case on the basis of the tender and the acceptance thereof. In my opinion it is not necessary to determine whether in the circumstances of the present case such a course would be permissible under law but, assuming that it was permissible to do so, it does not advance the case of the State in the matter before us. The reason is that here we are concerned With the arbitration agreement alone while no such agreement can be spelt out from the tender and the acceptance thereof, subject, as they were, to the tender notice which did not contain any arbitration clause.