judgement:
ivil Appeal Nos.
6245 46 of 1983.
From the Judgment and order dated 9.1.1981 of the orissa High 256 Court in Miscellaneous Appeal Nos. 285 and 286 of 1980.
G.L. Sanghi, D.P. Mohanty, R.K. Mehta, Inderjit Roy, P.N. Misra and R.N. Poddar for the Petitioners.
Probir Patil, Y.S. Chitale, Sankar Ghosh, Jitender Sharma, Vinoo Bhagat, Arun Madan, P.N. Misra, D.N. Mukherjee, M.M. Kashtriya P.K. Banerjee, P.K. Mukherjee, Ms. Lily Thomes, Bagga Mrs. S.K. Bagga, B.P. Meheshwari, J.R. Das, Parijat Sinha, and M.A. Firoz for the Respondents.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
This group of appeals raises the question of award of interest by an arbitrator to whom a reference is made without the intervention of the court.
Special leave to appeal was granted under article 136 of the Constitution limited to the question of award of interest during the period prior to the reference and during 1:) the pendency of the arbitration proceedings.
Special leave was not granted in regard to the award of interest subsequent to the date of the arbitrator 's award.
This question, therefore, does not concern us in these appeals.
The various references to arbitration in these cases were in regard to work done by different contractors in excess of what was stipulated under the several contracts.
The contracts generally contained a clause to the following effect: "Clause 11 The Engineer in charge shall have power to make any alterations in or additions to the original specifications, drawings, designs, and instructions that may appear to him to be necessary or advisable during the progress of the work, and the contractor shall be bound to carry but the work in accordance with any instructions which may be given to him in writing signed by the Engineer in charge, and such alteration shall not invalidate the contract; and any additional work which the contractor may be directed to do in the manner above specified as part of the work shall be carried out by the contractor on the same conditions in all respects on which he agreed to do the main work, and at the same rates as are specified in the tender for the main work.
The time for the completion of the work shall be extended in the proportion that the addi 257 tional work bears to the original work bears to the original contract work and the certificate of the Engineer in charge shall be conclusive as to such proportion.
And if the additional work includes any class of work, for which no rate is specified in this contract, then such class of work shall be carried out at the rates entered in the sanctioned schedule of rates of the locality during the period when the work is being carried on and if such last mentioned class of work is not entered in the schedule of rates of the district then the contractor shall within seven days of the date of his receipt of the order to carry out the work inform the Engineer in charge of the rate which it is his intention to charge for such class of work, and if the Engineer in charge does not agree to this rate he shall by notice in writing be at liberty to cancel his order to carry out such class of work and arrange to carry it out in such manner as he may consider advisable, provided always that if the contractor shall commence work order of any expenditure in regard thereof before the rates shall have been determined as lastly herinbefore mentioned, then and in such case he shall only be entitled to be paid in respect of the work carried out or expenditure incurred by him prior to the date of the determination of the rate as aforesaid according to such rate or rates as shall be fixed by the Engineer in charge.
In the event of a dispute, the decision of the Superintending Engineer of the circle will be final: Provided always that the contractor shall not be entitled to any payment or any additional work done unless he has received an order in writing from the Engineer in charge for the additional work that the contractor shall be bound to submit his claim for any additional work done during any month on or before the 15th day of the following month accompanied by a copy of the order in writing of the Engineer in charge for the additional work, and that the contractor shall not be entitled to any payment in respect of such additional work if he fails to submit his claim within the aforesaid period.
" All the contracts also contained a provision for a reference to arbitration in case of disputes.
The clause of the contract enabling the reference was as follows: 258 "Clause 23 Except where otherwise provided in the contract all questions and disputes relating to the meaning of the specifications, designs, drawings, and instructions herinbefore mentioned and as to the quality of workmanship, or materials used on the work, or as to any other question, claim, right matter, or thing whatsoever, in any way arising out of, or relating to the contract, designs, drawings, specifications, estimates instructions, orders, or these conditions, or otherwise concerning the work or the execution, or failure to execute the same, where arising during the progress of the work, or after the completion or abandonment thereof shall be referred to the sole arbitration of a Superintending Engineer of the State Public Works Department unconnected with the work at any stage nominated by the concerned Chief Engineer.
If there be no such Superintending Engineer it should be referred to the sole arbitration of the Chief Engineer concerned.
If will be no objection to any such appointment that the arbitrator so appointed is a Government servant.
The award of the arbitrator so appointed shall be final, conclusive and binding on all parties to these contracts.
" Pursuant to the clause in the contracts enabling the Chief Engineer to refer disputes to an arbitrator, references were made.
For the purposes of our decision, we are proceeding on the basis that in the notices of demand made by the contractors before the disputes were referred to arbitration interest on the amounts said to be payable was claimed.
The general statutory provisions in regard to the award of interest by a court are contained in the Interest Act and the Civil Procedure Code.
The Interest Act of 1839 contained only one section and it was as follows: " 1.
It is, therefore, hereby enacted that, upon all debts or sums certain payable at a certain time or otherwise, the Court before which such debts or sums may be recovered may, if it shall think fit, allow interest to the creditor at a rate not exceeding the current rate of interest from the time when such debts or sums certain were payable, if such debts or sums be payable by virtue of some written instrument at a certain time; or if payable otherwise, then from the time when demand of payment shall have been made in writing so as such demand shall give notice pay the debtor that 259 interest will be claimed from the date of such demand until the term of payment; provided that interest shall be payable in all cases in which it is now payable by law.
" In 1978, the Interest Act of 1839 was repealed and a new Interest Act was enacted.
The Statement of objects and Reasons of the new Act recited, "The Law Commission of India in its sixty third report had recommended the revision of the existing Interest Act, 1839.
This Act is a very short one; besides a preamble, it contains only one section and a proviso.
However, it is a statute of importance, since it prescribes the general law of interest which becomes applicable in the absence of any contractual or statutory provisions specifically dealing with the subject.
According to the Commission, almost every phrase used in the Act has given rise to problems of interpretation and judicial decisions have disclosed divergence of views in respect of the same.
The Commission has revised the Act comprehensively so as to make its provisions more precise, specific, unambiguous and juristically satisfactory.
It is proposed to replace the existing Act by a new Act based on the recommendations of the Law Commission.
" The new Act has made some important changes.
One of the important changes is that the expression 'court ' is defined to include a tribunal and an arbitrator.
Debt is defined as meaning any liability for an ascertained sum of money, including a debt payable in kind, but not including a judgment debt.
Section 3(1) enables the court, if it so thinks fit, to award interest, in any proceeding for the recovery of any debt or damages or in any proceeding in which a claim for interest in respect of any debt or damages already paid is made, to the person entitled to the debt or damages or to the person making such claim, for the whole or part of the following period; (a) if the proceeding relates to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings; (b) if the proceeding does not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of institution of the proceeding.
Section 3(3) provides that 260 nothing in the section shall apply in relation to (i) any debt or damages upon which interest is payable as of right, by virtue of any agreement; or (ii) any debt or damages upon which payment of interest is barred by virtue of an express agreement.
Section 3(3)(c) provides that nothing in the section shall empower the court to award interest upon interest.
Section 4(1) provides, "notwithstanding anything contained in section 3, interest shall be payable in all cases in which it is payable by virtue of any enactment or other rule of law or usage having the force of law." Section 4(2) further provides notwithstanding anything as section 4, the court shall allow interest in the class of cases specified in section 4(2) from the dates stipulated to the dates stipulated in the provision.
Section 5 provides that nothing in the Act shall affect the provisions of section 34 of the Code of Civil Procedure, 1908.
It is important to notice at this stage that both the Interest Act of 1839 and the Interest Act of 1978 provide for the award of interest upto the date of the institution of the proceedings Neither the Interest Act of 1839 nor the Interest Act of 1978 provides for the award of pendente lite interest.
We must look elsewhere for the law relating to the award of interest pendente lite.
This, we find, provided for in section 34 of the Civil Procedure Code in the case of courts.
Section 34, however, applies to arbitrations in suits for the simple reason that where a matter is referred to arbitration in a suit, the arbitrator will have all the powers of the court in deciding the dispute, Section 34 does not otherwise apply to arbitrations as arbitrators are not courts within the meaning of section 34 Civil Procedure Code.
Again, we must look elsewhere to discover the right of the arbitrator to award interest before the institution of the proceedings, in cases where the proceedings had concluded before the commencement of the Interest Act of 1978.
While under the Interest Act of 1978 the expression 'court ' was defined to include an arbitrator, under the Interest Act of 1839 it was not so defined.
The result is that while in cases arising after the commencement of the Interest Act of 1978 an arbitrator has the same power as the court to award interest upto the date of institution of the proceedings, in cases which arose prior to the commencement of the 1978 Act the arbitrator has no such power under the Interest Act of 1839.
It is, therefore necessary, as we said, to look elsewhere for the power of the arbitrator to award interest upto the date of institution of the proceedings.
Since the arbitrator is required to conduct himself and make the award in accordance with law we must look to the substan 261 tive law for the power of the arbitrator to award interest before the commencement of the proceedings.
If the agreement between the parties entitles the arbitrator to award interest no further question arises and the arbitrator may award interest.
Similarly if there is a usage of trade having the force of law the arbitrator may award interest.
Again if there are any other provisions of the substantive law enabling the award of interest the arbitrator may award interest.
By way of an illustration, we may mention section 80 of the Negotiable Instruments Act as a provision of the substantive law under which the court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange.
We may also refer section 61(2) of the Sale of Goods Act which provided for the award of interest to the seller or the buyer as the case may be under certain circumstances in suits filed by them.
We may further cite the instance of the nonperformance of a contract of which equity could give specific performance and to award interest.
We may also cite a case where one of the parties is forced to pay interest to a third party, say on an overdraft, consequent on the failure of the other party to the contract not fulfilling the obligation of paying the amount due to them.
In such a case also equity may compel the payment of interest.
Loss of interest in the place of the right to remain in possession may be rightfully claimed in equity by the owner of a property who has been dispossessed from it.
We may now refer to the case law.
We may start the discussion of the topic with the case of Bengal Nagpur Raiiway Company Limited vs Ruttanji Ramji (65 Indian Appeals 66).
There certain rates of payment under an agreement for the construction of a railway line were abandoned by mutual consent of the parties and the contractor was required to be paid at rates which were fair and reasonable for the work done.
The question arose whether the contractor was entitled to be paid interest on the amount which the Railway Company was liable to pay.
The Privy Council found that the railway was liable to pay to the plaintiff an amount of Rs.66,980 10 6 on July 26, 1925.
The suit for recovery of the amount was filed on November 29, 1927.
The Privy Council held that award of interest from the date of the institution of the suit was governed by section 34 of the Code of Civil Procedure and went on to observe that the crucial question was whether the court had authority to allow interest for the period prior to the institution of the suit.
They observed that the solution of the question depended not upon the Code of Civil Procedure out upon substantive law.
Interest for the period prior to the date of suit may be awarded if there was an agreement for the payment of interest at a fixed rate or it was payable by the usage of trade having the force of law or under the provision of H 262 any substantive law entitling the plaintiff to recover interest.
Section 80 of the Negotiable Instruments Act was cited as a provision of the substantive law under which the court may award interest when no rate of interest is specified in the promissory note or bill of exchange.
In the case before them however, they observed there was neither usage nor any contract, express or implied, to justify the award of interest.
Interest was not payable by virtue of any provision of the law governing the case.
Under the interest Act of 1839, the court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument.
But it was conceded that the amount claimed in the case was not a sum certain.
Referring to the provisions of section 1 of the Interest Act which stated that interest shall be payable in all cases in which interest was then payable by law, the Privy Council observed that the proviso applied to cases in which the court of equity exercised the jurisdiction to allow interest.
But then they said that the case before them did not attract the jurisdiction of the court.
An example of cases which attract the equitable jurisdiction of the court to award interest was given as the nonperformance of a contract of which equity could give specific performance.
Considering next the question whether interest could be awarded by way of damages, it was held that it could not be so done.
It was categorically stated that interest could not be allowed by way of damages.
It was also pointed out that in England, the law had been amended by the Law Reform Miscellaneous Provisions Act which empowered a court of record to award interest on whole or any part of damages.
But there was no such amendment of the law in India (at that time).
Seth Thawardas Pherumal vs The Union of India, [1985] 2 SCR 48 was a case which arose out of a decision of the Patna High Court, which is reported in Union of India vs Prem Chand Satnam Das, AIR 1951 Patna 201.
Of the facts have been taken by us from the judgment of the Patna High Court as those facts were not evident from the judgment of this court.
Pursuant to clause 14 of the contract between the Dominion of India and the contractor which provided that all disputes arising out of or relating to the contract should be referred to the Superintending Engineer, a reference was made on January 21, 1949 and an award followed on May 8, 1949.
Before the arbitrator the contractor submitted a claim under 17 heads.
Item No. 17 as mentioned in the Statement of claim before the arbitrator was "interest on the amount of money involved in this claim at the rate of six per cent Rs.27,665.
This work was finished in May 1946 and it was proper for the Department to have decided all our claims at least by 263 31st December, 1947 .
But this was not done.
Due to this, a heavy amount remained blocked and we were compelled to take money from our bankers on interest.
We pray, therefore, for interest for 15 months from January 1, 1948 to March 31, 1949.
" The arbitrator held: "The contract 's contention that his claims should have been settled by January 1948 is, in my opinion, reasonable.
I, therefore, award interest at six per cent for sixteen months on the total amount of the awards given, that is, Rs.17,363".
The question arose whether the arbitrator could award the interest? The Patna High Court noticed that the contractor did not include any claim for interest for the period March 3 1, 1947 to April 20, 1949 in the bill originally submitted by him to the Chief Engineer and that the claim was made for the first time before the arbitrator during the progress of the arbitration proceedings.
The High Court also noticed that the Executive Engineer who appeared on behalf of the Union of India before the arbitrator did not seem to have submitted to the jurisdiction of the arbitrator to decide the question of interest.
In those circumstances, the High Court held that it could not be said that the claim for interest was one of the matters referred to arbitration.
The arbitrator, it was, therefore, held, had no jurisdiction to entertain the claim and award interest.
In the appeal by the contractor, the Supreme Court noticed that the claim under each head on which interest was awarded was for an unliquidated sum and observed that in that kind of case, interest was not payable by law otherwise than by the application of the Interest Act.
Reference was made to the Bengal Nagpur Rly.
Co. vs Ruttanji Ramji, 65 I.A. 66 as an authority for that proposition.
The Court then proceeded to say that even if an arbitrator could be assumed to be a court within the meaning of the Act, which he did not appear to be, none of the four conditions, which required to be fulfilled, was present in the case before them.
It was then said that the arbitrator erred in thinking he had the power to allow interest simply because he thought the demand was reasonable.
A further argument that interest could be awarded at least from the date of the suit on the analogy of sec.
34 of the Civil Procedure Code was repelled with the following observations: "It was suggested that at least interest from the date of suit could be awarded on the analogy of sec.
34 of the Civil Procedure Code, 1908.
But sec.
34 does not apply because an arbitrator is not a court within the meaning of the Code nor does the Code apply to arbitrator, and, but for sec.
34 even a court would not have the power to give interest after the suit.
This was, therefore, also rightly struck out from the award." These observations of Bose, J. gave rise to considerable difficulty in later cases, but in the series of cases, Nachiappa Chettier vs Subramaniam Chettier, ; ; Setinder Singh vs Amrao Singh, [1961] 3 264 SCR 676; Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd., [1967] 1 SCR lO5; Union of India vs Bungo Steel Furniture Pvt. Ltd., [ ; and State of Madhya Pradesh vs M/s. Saith & Skelton Pvt. Ltd., ; , these observations have been explained and it was held that the observations never intended to lay down the broad and unqualified proposition that they appeared to lay down on a first impression.
We will presently refer to these cases.
At this juncture, it is necessary to note that in Seth Thawardas Pherumal 's case the question of payment of interest was not the subject matter of reference to the arbitrator and that the interest claimed before the arbitrator and awarded by the arbitrator related to the period prior to the reference to arbitration and the period during the pendency of the arbitration.
It is also to be noted that the reference was not in the course of a suit.
Nachiappa Chettier vs Subramaniam Chettier, (supra) was a case of arbitration in a suit.
The arbitrator made an interim award on August 1, 1944 and December 6, 1944.
He awarded interest pendente lite as well as future interest until the date of payment.
Relying on the observations in Seth Thawardas Pherumal vs Union of India, the award of interest was questioned.
The court doubted whether the observations in Seth Thawardas Pherumal 's case were intended to lay down such a broad and unqualified proposition, but did not pursue the matter further as that contention was not urged before the High Court.
E Satinder Singh vs Amrao Singh (supra) was a case which arose under the East Punjab Acquisition and Requisition of Immovable Property (Temporary) Powers Act, 1948.
The Act containd no provision for payment of interest.
It was argued that in the absence of a provision providing for interest could be awarded.
The court approved the observation of the Privy Council in that where the owner is deprived of his property "the right to receive the interest takes the place of the right to retain possession and is within the rules.
" The court then observed, "it would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession." and held that this general rule was not excluded by the 1948 Act.
Referring then to the observations in Seth Thawardas Pherumal vs Union of India, (supra) what was said in Nachiappa Chettier vs Subramaniam Chether, (supra) was reitereated that no broad and unqualified proposition was intended to be laid down in Seth Thawards Pherumal vs The Union of India.
Referring to the Interest Act and the power of the Court to allow 265 interest, it was expressly noticed that the proviso to sec.
1 of the Interest Act, 1939 made it clear that interest shall be payable in all cases in which it was now payable by law.
The power to award interest on equitable grounds or under any provisions of the law was held to be expressly saved by the proviso.
The award of interest by the arbitrator was upheld on the ground that the right to receive interest in lieu of possession of immovable property taken away either by private treaty or by compulsory acquisition was generally regarded by judicial decisions as an equitable right.
In Union of India vs Watkins & Co. (AIR , the question arose when interest could be awarded for the period prior to the date of the institution of the suit.
The suit there was for compensation for storage of over 600 tonnes of iron sheets for a period of about five years.
It was held that interest could not be awarded for the period prior to the suit as there was no agreement for the payment of interest nor was their any usage of trade having the force of law or any provision of the substantive law which entitle the plaintiff to recover interest.
Under the Interest Act, 1839, the court could allow interest if the amount claimed was a sum certain, payable at a certain time, by virtue of a written instrument.
The compensation for an unliquidated amount was not a sum certain.
Interest prior to the institution of the suit was not awardable.
In Union of India vs West Punjab Factories, [ , it was held, that in a suit, interest by way of damages could not be awarded in the absence of any usage or contract, express or implied, or of any provision of law.
Bengal Nagpur Railway Co. vs Ruttanji Ramji, (supra) and Seth Thawardas Pherumal vs Union of India, (supra) were relied on Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd. (supra) was a case where the arbitration was in a suit.
Before the arbitrator, no claim was made for interest prior to the institution of the suit, but interest was claimed from the date of institution of the suit till recovery of the amount.
The arbitrator awarded interest on the sum determined by him from the date of the award till the date of payment.
The award was then filed in the court.
One of the objections was to the grant of interest during the pendency of the suit relying on the observations of Seth Thawardas Pherumal vs Union of India, (supra) that sec.
34 CPC did not apply to arbitration proceedings.
The court observed that the observations lent colour to the argument that the arbitrator had no power to award pendente lite interest, but the obser 266 vations were not intended to lay down such a broad and unqualified proposition.
A reference was made to Nachiappa Chettier vs Subramaniam Chettier, (supra) and Satinder Singh vs Amrao Singh, (supra).
It was further observed "In the present case, all the disputes in the suit were referred to the arbitrator for his decision.
One of the disputes in the suit was whether the respondent was entitled to pendente lite interest.
The arbitrator could decide the dispute and we could award pendente lite interest just as a court could do so under sec.
34 of the Civil Procedure Code.
Though, in terms, section 34 of the Code of Civil Procedure does not apply to arbitrations, it was an implied term of the reference in the suit that the arbitrator would decide the dispute according to law and would give such relief with regard to pendente lite interest as the court could give if it decided the dispute.
This power of the arbitrator was not fettered either by the arbitration agreement or by the .
The condention that in an arbitration in a suit the arbitrator had no power to award pendente lite interest must be rejected.
" Thus while the court did not dispute the proposition that the arbitrator was not a court, it held that in a case where the reference was made to arbitration in a suit, the arbitrator would have the same power as the court to award interest.
In Union of India vs Bungo Steel Furniture Private Limited, , certain disputes between the Union of India and a contractor in respect of certain contracts for the supply of bedsteads were referred to arbitration.
The question arose whether the arbitrator had jurisdiction to award interest on the amount found due by the arbitrator from the date of the award till the date of the decree.
This of course is not the question before us.
But even so we must say that the observations made therein appear prima facie to justify the view that interest may be awarded by the arbitrator pendente lite.
Ramaswamy, J. who spoke for the court, observed that the observations of Bose, B. in Seth Thawardas Pherumal 's case (supra) were not intended to lay down any broad and unqualified proposition and that though sec.
34 of the Code of Civil Procedure did not apply in terms to arbitration proceedings, the principle of that section would be applied by the arbitrator for awarding interest in the classes of cases where the court having jurisdiction in a suit over the subject matter or the proceeding would be competent to award interest.
It was said "In the present case, all the disputes in the suit, including the question of interest were referred to the arbitrator for his decision.
In our opinion, the arbitrator had jurisdiction, in the present case, to grant interest on the amount of the award from the date of the award till the date of the decree.
" The words emphasised by us clearly show that in this case 267 too, the arbitration was in a suit and it was therefore, held that the arbitrator had the same power to award interest as the court would h ave .
In M/s. Ashok Construction Company vs Union of India, , there was an arbitration on the intervention of the Court (Deputy Commissioner).
Before the arbitrator, a total claim for Rs.4,41,440.20p was made consisting of a claim of Rs.64,006.71 for works done, a claim for Rs. l,83,393.77p for damages at 13 per cent per annum and a claim for Rs.1,91,097.88p for depreciation of the value of money.
The arbitrator made an award for a sum of Rs.1,79,843,80p.
He gave no reasons for his award.
The last item of the claim was wholly unjustified, but there was nothing to show that the arbitrator had taken that claim of account in making the award.
Considering the question of award of interest by way of damages, the court referred to the arbitration agreement and on its interpretation held that the terms of the arbitration agreement did not exclude the jurisdiction of the arbitrator, to entertain a claim for interest, award amount due under the contract In State of Madhya Pradesh vs M/s. Saith & Skelton P. Limited; , , with the consent of the parties, the Court appointed an arbitrator and referred all the disputes to him.
The arbitrator awarded interest from the date when the amount became payable till the date of the decree.
The question arose whether the arbitrator had the power to do so.
It was held that, in the case before them, interest prior to the suit could be awarded under sec.
61(2) of the which expressly provides for the award of interest to the seller in any suit by him for the amount of the price from the date of the tender of the goods or from the date on which the price was payable and to the buyer in a suit by him for the refund of the price in a case of the breach of contract on the part of the seller from the date on which the payment was made.
In view of the provision of substantive law which enabled the award of interest it was held that interest prior to the suit could be awarded by the arbitrator.
In regard to pendente lite interest, it was held that since all the disputes were referred to arbitration by the court, the arbitrator had the same power as the court to award the pendente lite interest.
As a result of the discussion of the various cases, we see that Bengal Nagpur Railway Company Ltd. vs Ruttanji Ramji, (supra), Union of India vs West Punjab Factories, (supra) and Union of India vs Watkins & Co. (supra) were cases of award of interest not by an 268 arbitrator, but by the court.
It was laid down in these three cases that interest could not.be awarded for the period prior to the suit in the absence of an agreement for the payment of interest or any usage of trade having the force of law or any provision of the substantive law entitling the plaintiff to recover interest.
Interest could also be awarded by the court under the Interest Act if the amount claimed was a sum certain payable at a certain time by virtue of a written instrument.
In regard to pendente lite interest, the provisions of the Civil Procedure Code governed the same.
The question of award of interest by an arbitrator was considered in the remaining cases to which we have referred earlier.
Nachiappa Chettier vs Subramanian Chettier, (supra) Sattinder Singh vs Amrao Singh (supra), Firm Madanlal Roshanlal Mahajan vs Hukum Chand Mills Ltd. (supra) Union of India vs Bungo Steel Furniture Private Limited (supra), Ashok Construction Company vs Union of India, (supra) and State of Madhya Pradesh vs M/s. Saith & Skelton Private Limited were all cases in which the reference to arbitration was made by the court, of all the disputes in the suit.
It was held that the arbitrator must be assumed in these circumstances to have the same power to award interest as the court.
It was on that basis that the award of pendente lite interest was made on the principle of section 34 Civil Procedure Code in Nachiappa Chettier vs Subramaniam Chettier (supra), Firm Madanlal Roshanlal Mahanan vs Hukamchand Mills Limited, (supra), Union of India vs Bungo Furniture Private Limited, (supra) and State of Madhya Pradesh vs M/s. Saith & Skelton Private Limited, (supra).
In regard to interest prior to the suit, it was held in these cases that since the Interest Act, 1839 was not applicable, interest could be awarded if there was an agreement to pay interest or a usage of trade having the force of law or any other provision of substantive law entitling the claimant to recover interest.
Illustrations of the provisions of substantive law under which the arbitrator could award interest were also given in some of the cases.
It was said, for instance, where an owner was deprived of his property, the right to receive interest took the place of the right to retain possession, and the owner of immovable property who lost possession of it was, therefore, entitled to claim interest in the place of right to retain possession.
It was further said that it would be so whether possession of immovable property was taken away by private treaty or by compulsory acquisition.
Another instance where interest could be awarded was under section 61(2) of the which provided for the award of interest to the seller or the buyer, as the case may be, under the circumstances specified in that section.
of the Negotiable Instruments Act was mentioned as an instance of a provision of the substantive law under which interest prior to the institution of the proceedings could be awarded.
Interest could also be awarded in cases of non performance of a contract of which equity could give specific performance.
Seth Thawardas Pherumal was a case of direct reference to arbitration without the intervention of a court.
Neither the Interest Act, 1839 nor the Civil Procedure Code applied as an arbitrator was not a court.
Interest could, therefore, be awarded only if there was an agreement to pay interest or a usage of trade having the force of law or some other provision of the substantive law which entitled to plaintiff to receive interest.
In that case, interest had been awarded on the ground that it was reasonable to award interest and the court, therefore, held that the arbitrator was wrong in awarding the interest.
While this is the position in cases which arose prior to the coming into force of the , in cases arising after the coming into force of the Act, the position now is that though the award of pendente lite interest is still governed by the same principles, the award of interest prior to the suit is now governed by the .
Under the , an arbitrator is, by definition, a court and may now award interest in all the cases to which the applies.
We were referred to certain English cases: London Chatham and Dover Rly.
Co. vs South Eastern Ply.
Co., , Chandris vs Isbrandtsen Mollar Co., , Timber Shipping Co. vs London & overseas Freighters Ltd., and President of lndia vs La Pintada Cia Navegacion, [1984] 2 All Eng.
Law Reports.
Passages from Halsbury 's Laws of England and Russell 's Arbitration were also read out.
We have read them out we refrain from referring to those cases and passages because of the abundance of authoritative pronouncements of the Supreme Court of India.
Coming to the cases before us, we find that in Civil Appeal Nos. 120 and 12 1 of 1981 before the arbitrator, there was no answer to the claim for interest and we see no justification for us at this stage to go into the question whether interest was rightly awarded or not.
Out of the remaining cases we find that in all cases except two (Civil Appeal Nos. 6019 22 of 1983 and Civil Appeal No. 2257 of 1984, the references to arbitration were made prior to the commencement of the new Act which was on August 19, 1981.
In the cases to which the applied, it was argued by Dr. Chitale, learned counsel for H 270 the respondents, that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument and, therefore, interest was payable under the for the period before the commencement of the proceedings.
In support of his contention that the amount claimed was a sum certain payable at a certain time by virtue of a written instrument, the learned counsel relied upon the decision of this court in State of Rajasthan vs Raghubir Singh, [ 19791 3 SCR 6.
The case certainly supports him and in the cases to which the 1978.
applies the award of interest prior to the proceeding is not open to question.
In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a court within the meaning of sec.
34 of the CPC, nor were the references to arbitration made in the course of suits.
In the remaining cases which arose before the commencement of the , the respondents are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration.
They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1839 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest.
They are not entitled to claim pendente lite interest as the arbitrator is not a court nor were the references to arbitration made in suits.
One of the submissions made on behalf of the respondents was that in every case, all disputes were referred to arbitration and the jurisdiction of the arbitrator to award interest under certain circumstances was undeniable.
The award not being a speaking award, it was not permissible to speculate on the reasons for the award of interest and the court was not entitled to go behind the award and disallow the interest.
It is difficult to agree with this submission.
The arbitrator is bound to make his award in accordance with law.
If the arbitrator could not possibly have awarded interest on any permissible ground because such ground did not exist, it would be open to the court to set aside the award relating to the award of interest on the ground of an error apparent on the record.
On the other hand, if there was the slightest possibility of the entitlement of the claimant to interest on one or other of the legally permissible grounds, it may not be open to the court to go behind the award and decide whether the award of interest was justifiable.
We do not want to enter into a discussion on the legality or properiety of a non speaking award as we understand the question is now awaiting the decision of a Seven Judge Bench.
In the light of what we have said above, Civil Appeal Nos.
120 271 and 121 of 1981 are dismissed, Civil Appeal Nos.
6019 22 of 1983 and A Civil Appeal No. 2257 of 1984 are allowed to this extent that interest during the pendency of the arbitration proceedings is disallowed and the rest of the civil appeals are allowed to the extent that both interest prior to the proceedings and interest during the pendency of the proceedings are disallowed.
There will be no order as to costs.
S.L.P.8640/81 is disposed of on the same lines.

summary:
In the appeals by Special Leave to this Court the question for consideration was: whether an arbitrator to whom a reference was made without the intervention of the Court could award interest during the period prior to the reference and during the pendency of the arbitration: ^ HELD: 1.
The general statutory provisions in regard to the award of interest by the Court are contained in the Interest Act and the Civil Procedure Code.
[258F] 2.
The Interest Act of 1839 was repealed and a new Interest Act incorporated in 1978.
Both these Acts provide for the award of interest upto the date of the institution of the proceedings.
Neither the Interest Act of 1839 nor the Interest Act of 1978 provides for the award of pendente lite interest.
[260D] 3.
The award of pendente lite interest is provided for in Section 34 of the Civil Procedure Code.
Section 34 however, applies to arbitrations in suits for the simple reason that where a matter is referred to arbitration in a suit, the arbitrator will have all the powers of the Court in deciding the dispute.
Section 34 does not otherwise apply to arbitrations as arbitrators are not courts within the meaning of section 34 Civil Procedure Code.
[260E] 254 4.
While under the Interest Act of 1978 the expression 'court ' was defined to exclude an arbitrator, under the Interest Act of 1839 it was not so defined.
The result is that while in cases arising after the commencement of the Interest Act of 1978 an arbitrator has the same power to award interest upto the date of institution of proceedings, in cases which arose prior to commencement of the 1978 Act the arbitrator has no such power under the Interest Act of 1839.
[260G] 5.
Since the arbitrator is required to conduct himself and make the award in accordance with law, the substantive law has to be looked into for the power of the arbitrator to award interest before the commencement of the proceedings.
[260H 261A] 6.
If the agreement between the parties entitles the arbitrator to award interest no further question arises and the arbitrator may award interest.
Similarly, if there is a usage of trade having the force of law the arbitrator must award interest.
[261B] 7.
Again, there are other provisions of the substantive law enabling the award of interest by the arbitrator.
Section 80 of the Negotiable Instruments Act under which the court may award interest even in a case where no rate of interest is specified in the promissory note or bill of exchange, and Section 61(2) of the Sale of Goods Act which provides for the award of interest to the seller or the buyer under certain circumstances in suits filed by them.
[261C] 8.
There is also the instance of non performance of a contract of which equity could give specific performance and to award interest.
[261C] 9.
Where one of the parties is forced to pay interest to a third party say on an overdraft, consequent on the failure of the other party to the contract not fulfilling the obligation of paying the amount due to them, equity may compel the payment of interest.
[261C] 10.
Loss of interest in the place of the right to remain in possession may be rightfully claimed in equity by the owner of a property who has been dispossessed from it.
[261D] 11.
In the instant appeals, in those cases in which the references to arbitration were made prior to the commencement of the new Act which was on August 19, 1981 and the amount claimed was a certain sum payable at a certain time by virtue of a written instrument, interest is payable under the Interest Act for the period before the commencement of the proceeding.
[269H 270A] 255 12.
In regard to pendente lite interest, that is, interest from the date of reference to the date of the award, the claimants would not be entitled to the same for the simple reason that the arbitrator is not a court within the meaning of section 34 of the CPC, nor were the references to arbitration made in the course of suits.[1270C] 13.
In the remaining cases which arose before the commencement of the , the respondents are not entitled to claim interest either before the commencement of the proceedings or during the pendency of the arbitration.
They are not entitled to claim interest for the period prior to the commencement of the arbitration proceedings for the reason that the Interest Act, 1839 does not apply to their cases and there is no agreement to pay interest or any usage of trade having the force of law or any other provision of law under which the claimants were entitled to recover interest.
They are not entitled to claim pendente lite interest as the arbitrator is not a court nor were the references to arbitration made in suits.
[270D E] 14.
The arbitrator is bound to make his award in accordance with law.
If the arbitrator could not possibly have awarded interest on any permissible ground because such ground did not exist, it would be open to the court to set aside the award relating to the award of interest on the ground of an error apparition the record.
On the other hand, if there was the slightest possibility of the entitlement of the claimant to interest on one or other of the legally permissible grounds, it may not be open to the court to go behind the award and decide whether the award of interest was justifiable.
[270F G] Bengal Nagpur Railway Company Limited vs Ruttanji Ramji 6S Indian Appeals 66; Thawardas Pherumal vs The Union of India, ; Union of India vs Prem Chand Satnam Das, AIR 1951 Patna 20l; Nachiappa Chettiar vs Subramaniam Chettiar, ; ; Satinder Singh vs Amrao Singh, ; ; Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd., [1967] 1 SCR lO5; Union of India vs Bungo Steel Furniture Pvt. Ltd., ; and State of Madhya Pradesh vs M/s. Saith & Skelton Pvt. Ltd., ; , referred to.


judgement:
tition Nos 7597 99 of 1983.
And Writ Petition Nos.
7606 09 of 1983.
(Under Article 32 of the Constitution of India).
A.K. Sen, F.S. Nariman, S.N. Kacker, A.K. Ganguli, R.F. Nariman, A. Patnaik and M.M. Kshatriya for the Petitioners.
F Shanti Bhushan, S.N. Chatterjee, G.L. Sanghi, Dr. Y.S. Chitale, G. Rath, Advocate General, R.K. Patra, R.K. Mehta and H. K .
Puri for the Respondents.
The Judgment of the Court was delivered by G JAGANNATHA SHETTY, J.
"Sal seed" which is a minor forest produce at Orissa has again become the major subject of litigation between commercial users and the State of orissa.
The petitioners herein are holders of long term license from the 318 Government of orissa for collection of sal seeds from certain A specified forest divisions on payment of royalty.
The State of orissa enacted Orissa Forest.
Produce (Control of Trade) Act, 1981 (The "Act").
It received the assent of President on August 21, 1981.
The object of the Act was to prevent smuggling forest and also to provide State monopoly in such forest produce.
Under Section 1(3) }3 of the Act the State is empowered from time to time to issue a notification specifying the area or areas the forest produce in relation to which and the date from which the Act shall come into force.
Purporting to act under this provision a notification dated December 9.
1982 was issued by the State Government directing that the Act shall come into force at once in the whole of the State of Orissa in relation to sal seeds.
Thereafter, the Government refused to accept royalty from the petitioners in respect of certain forest divisions on the ground that the notification had the effect of rescinding the existing contracts between the Government and the petitioners.
The petitioners thereupon moved the orissa High Court with Writ Petitions for declaration that the said notification was void and did not have the effect of rescinding their contracts in relation to sal seeds.
The orissa High Court dismissed the Writ Petitions.
The matter was brought before this Court in Civil Appeal Nos.
6230 31 of 1983.
This Court allowed the appeals by judgment dated May 5, 1987.
which has been since reported in Utkal Contractors & Joinery Pvt. Ltd. and ors.
vs State of orissa and ors.
, AIR 1987 SC 1455 = ; The nub of the arguments in those appeals was that the Act was not concerned with the sal seeds grown in the Government lands or Government Forests, and in any event, the petitioners ' contract remained untouched by the notification dated December 9, 1982.
It was also contended that since the Government was already the owner of forest produce in Government lands, all that was necessary to create a State monopoly in any forest produce, was to vest in the Government the exclusive right to such forest produce grown in private holding.
After dealing with the object of the Act and relevant provisions, a bench of this Court consisting one of us (o. Chinnappa Reddy, J.) said: "Thus none of these provisions deals with forest produce grown in Government lands nor is there any other provision in the Act which expressly deals with forest produce grown in Government lands.
The scheme of the Act is, 319 therefore, fully in tune with the object set out in the Statement of objects and Reasons and in the Preamble, namely that of creating a monopoly in forest produce by making the Government the exclusive purchaser of forest produce grown in private holdings.
It as argued by the learned Additional Solicitor General that section 5(1)(1) was totally out of tune with the rest of the provisions and, while the rest of the provisions dealt with forest produce grown in private holdings the very wide language of section S(1)(a) made it applicable to all forest produce whether grown in private holdings or Government forests.
We do not think that it is permissible for us to construe section 5(1)(a) in the very wide terms in which we are asked to construe it by the learned Additional Solicitor General because of its wide language, as that would merely introduce needless confusion into the scheme of the Act.
Having scanned the object and the scheme of the Act, having examined each of the provisions of the Act textually and contextually, we do not think it is proper for us to construe the words of section S(1)(a) in their literal sense; we think that the proper way to construe.
section 5(1)(a) is to give a restricted meaning to the wide and general words there used so as to fit into the general scheme of the Act and section 5(1)(b) are concerned by the conjunction 'and ', and having regard to the circumstances leading to the enactment and the policy and design of the Act, we think that clauses (a) and (b) must be construed in such a way as to reflect each other.
We have no doubt that the contracts relating to specified forest produce which stand rescinded are contracts in relation to forest produce grown in private holdings only.
If the very object of the Act is to create a monopoly in forest produce in the Government so as enable the Government, among other things, to enter into contracts, there was no point in rescinding contracts already validly entered into by the Government.
Again section 5(1) does not bar any future contracts by the Government in respect of forest produce; if so, what is the justification for construing section 5(1) in such a way as to put an end to contracts already entered into by the Government.
Viewing section 5(1)(a) and 5(1)(b) together and in the light of the preamble and the Statement of objects and Reasons and against the decor of the remaining provisions of the Act, we have no doubt that section 5(1) like the rest of the provisions applied to forest produce grown in private hold 320 ings and not to forest produce grown in Government landS. " Then the conclusion was expressed in the following terms: "We declare that the Act and the notification issued under the Act do not apply to forest produce grown in Government forests and that it was not, therefore, open to the Government to treat the contract dated May 25, 1979, as rescinded.
" On May 29, 1987, the Governor of (Orissa promulgated orissa Forest Produce (Control of Trade) (Amendment and Validation) ordinance, 1987, (The "ordinance").
The ordinance shall be deemed to have come into force with effect from September 5, 1981 when the principal Act was notified in the Orissa Gazette.
The ordinance purports to render the aforesaid decision ineffective.
The petitioners have again approached this Court challenging the validity of the ordinance.
Before we examine the contentions raised in these petitions, lt will be useful to set out the provisions of ordinance: "(2) It shall be deemed to have come into force on the date on which the Orissa Forest Produce (Control of Trade) Act 1981 (hereinafter referred to as the principal Act) had come into force, i.e. 5.9.1981 when the principal Act was notified in the orissa Gazette.
2. 3 In clause (c) section 2 of the principal Act, the full stop at the end of the clause shall be substituted by a comma and thereafter the following shall be added at the end, namely: "Whether grown or found on land owned by private persons or on land owned by the State Government (j, or in Government forests.
In Section 5 of the principal Act, in sub section (1) (1) "(i) for clause (a) the following clause shall be substituted, namely: 321 "(a) all contracts for the purchase, sale, gathering or collection of specified forest produce grown or found in the said area shall stand rescinded, whether such forest produce is grown or found on land owned by private persons or on land owned by the State Government or in Government forests.
" (ii) After Explanation III, the following Explanation shall be added, namely: "Explanation IV The Explanations I to III shall be deemed to be explanations to clause (b) of this sub section only and shall not be deemed as in any manner qualifying or detracting from clause (a) of this sub section or saving any contracts referred to in clause (a) from the operation of the provision for recission of contracts contained in the said clause (a)".
In section 9 of the principal Act for sub section (4) the following sub section shall be substituted namely: "(4) The State Government or its authorised officer or agent shall be entitled to take delivery of any specified forest produce collected by any person from land owned by the State Government or Government Forests on payment of only such collection charges as may be determined by the State Government from time to time.
Provided that it shall be open to the State Government or the authorised officer or agent to refuse to take delivery of any such forest produce which is not fit for consumption or use as raw material for manufacture or for trade: Provided further that in the case of any dispute, the Divisional Forest officer or such other officer who may be specifically empowered in this behalf, as specified in sub section (2), shall hear and dispose of the same in the manner provided in this Act and the Rules made thereunder. " 5.Notwithstanding any judgment, decree or order of any Court to the contrary, the Notification dated the 9th 322 December, 1982, issued by the State Government under sub section (3) of section 1 of the principal Act in respect of sal seeds shall be deemed to have been issued in respect of sal seeds whether grown or found on land owned by private persons or on land owned by the State Government or in Government forests and shall be as valid and effectual as if it were issued under sub section (3) of section 1 of the principal Act as amended by this ordinance and all instructions and orders issued or made and all actions taken or things done pursuant to the said Notification in respect of sale, purchase and collection of sal seeds shall be deemed to have been validly made, taken or done under the principal Act as amended by this ordinance." Section 2(c) of the Act has now been enlarged to include forest produce whether grown or found on land owned by private persons or on land owned by the State Government or in Government forests Section 5 of the Act has been amended to nullify all existing private contracts in relation to specified forest produce.
It reads: "5.
Restriction on the purchase and transport and rescission of subsisting contracts.
(1) on the issue of a notification under sub section (3) of section 1 in respect of any area (a) All contracts for purchase, sale gathering or collection of specified forest produce grown or found in the said area shall stand rescinded, whether such forest produce is grown or found on land owned by the State Government or in Government forests, (b) No person, other than (i) the State Government, (ii) an officer of the State Government authorised in writing in that behalf; or (iii) an agent in respect of the unit in which the specified forest produce is grown or found shall purchase or transport any specified forest produce in the said area.
323 Section 5 would come into effect only upon the notification issued by the Government under Section 1(3) of the Act.
The Government has not issued a fresh notification under Section (3) so far as sal seeds are concerned.
But the ordinance itself by Section 5 purports to validate the notification issued by the Government on December 9, 1982 the legality of which we will presently consider.
Mr. Nariman, learned Counsel for the petitioners, contended that the object and drift of the Act was to provide state monopoly in specified forest produce only to prevent smuggling and the notification dated December 9, 1982 was extraneous to the purpose of the Act.
In support of the contention, the Counsel relied upon the Statement of objects and Roasons of the Act, the ordinance and Industrial Policy of the State Government.
We do not think that the purpose of the Act or the ordinance was to provide State monopoloy only to prevent smuggling.
Even in the previous decision of this Court, it was observed that the object of the Act was to prevent smuggling and to provide for State monopoly in the specified forest produce.
The Preamble of the Act which is a key to the enactment is also clear on the object.
It reads: "An Act to provide for control and regulation of trade in certain forest produce by creation of State monopoly in such trade " Secondly, the validity of the statutory notification cannot be judged merely on the basis of statement of objects and reasons accompanying the Bill.
Nor it could be tested by the Government policy taken from time to time.
The executive policy of the Government, or the Statement of objects and reasons of the Act or ordinance cannot control the actual words used in the legislation.
In the Central Bank of India vs Their Workmen, [ ; section K., Das.
J. said: "The statement of objects and reasons is not admissible, however, for construing the section; far less can it control the actual words used." In State of West Bengal vs Union of India, [ 1964] 1 SCR 371 at p. 382.
Sinha, C.J. Observed: "It is however well settled that the Statement of objects and reasons accompanying a bill, when introduced in Parliament cannot be used to determine the true meaning and effect of substantive provisions of the statute.
They 324 cannot be used except for the limited purpose of understanding the background and the antecedent state of affairs leading up to the legislation.
But we cannot use this statement as an aid to the construction of the enactment or to how that the legislature did not intend to acquire the proprietary rights vested in the State or in any way to affect the State Governments ' rights as owner of minerals.
A statute, as passed by Parliament, is the expression of the collective intention of the legislature as a whole, and any statement made by an individual, albeita a Minister, of the intention and objects of the Act cannot be used to cut down the generality of the words used in the Statute.
" The petitioners cannot also contend that the annulment of their contracts and the restrictions brought about on their rights to trade are unreasonable or arbitrary.
Such restrictions must be presumed to be reasonable and in the interest of general public.
It is open to the State to make laws for creating State monopolies either partially or complete in respect of any trade or business or industry or service.
The State may enter into trade like any other person either for administrative reasons or with the object of mitigating the evils in the trade, or even for the purpose of making profits in order to enrich the State exchequer.
The law relating to such trading activities must be presumed to be reasonable and in the interest of general public.
That was the view taken by this Court in Akadasi Padhan vs State of Orissa, [1963] 2 Supp.
SCR 691 where it was observed that the law relating to such state monopoly should be presumed to be reasonable and in the interest of general public within the scope of Article 19(6)(ii) of the Constitution.
As to the contention of Mr. Nariman, that the provisions of the Act and the Rules made thereunder do not bar future contracts the like of which the petitioners are having, we may say that it would be impermissible for the State to enter into such contracts hereafterwards.
The parties or Agents employed by the State cannot work for their own benefits.
They must work on behalf of the State.
That is what has been stated in Akadasi Padhan vs State of orissa, (Supra).
"It seems to us that when the State carries on any trade, business or industry it must inevitably carry it on either departmentally or through its officers appointed in that be half.
In the very nature of things, the States as such, cannot function without the help of its servants or employees and 325 that inevitably introduce the concept.
Of agency in a narrow and limited sense.
If the State cannot act without the aid and assistance of its employees or servants, it would be difficult to exclude the concept of agency altogether.
Just as the State can appoint a public officer to carry on the trade or its business so can it appoint an agent to carry on the trade on its behalf.
Normally and ordinarily, the trade should be carried on departmentally or with the assistance of public servants appointed in that behalf.
But there may be some trade or business in which it would be inexpendient to undertake the work of trade or business department or with the assistance of State servants.
In such cases, it would be open to the State to employ the services of agents, provided the agents work on behalf of the State and not for themselves.
" The next question to be considered is whether the State while purporting to amend the Act has encroached upon the judicial power and set aside the binding judgment of this Court.
We do not think that Mr. Nariman was justified in contending so.
The principles have been well established in a string of decisions of this Court, and we may briefly summarise as follows: The legsilature may, at any time, in exercise of the plenary power conferred on it by Articles 245 and 246 of the Constitution render a judicial decision ineffective by enacting a valid law.
There is no prohibition against retrospective legislation.
The power of the legislature to pass a law postulates the power to pass it prospectively as well as retrospectively.
That of course, is subject to the legislative competence and subject to other constitutional limitation.
The rendering ineffective of judgments or orders of competent Courts by changing their basis by legislative enactment is a well known pattern of all validating acts.
Such validating legislation which removes the causes of ineffectiveness or invalidity of action or proceedings cannot be considered as encroachment on judicial power.
The legislature, however, cannot by a bare declaration, without more, directly overrule, reverse or set aside any judicial decision.
[Hari Singh & ors.
vs The Military Estate officer & Anr., [ 19731 1 SCR 515; Government of Andhra Pradesh & Anr.
vs Hindustan Tools Ltd., 11975] Supp.
SCR 394; V.N. Saxena vs State of M.P.; , 326 and Misri Lal Jain Etc.
vs State of Orissa & Anr.
, [ ] In the instant case having regard to the then existing provisions of the Act, this Court declare.
that the Act and notification issued thereunder in relation to sal seeds did not apply to sal seeds grown in Government forests.
The Act has been suitably amended by the impugned ordinance by removing the cause of ineffectiveness pointed out by this Court.
The new provisions would now cover specified forest produce whether grown or found on land owned by private persons or on land owned by the State Government or in Government forests and the contracts relating thereto.
Such contracts shall stand rescinded when a notification under Section 1(3) of the Act is issued.
What remains to be considered is, whether it is necessary for the Government to issue a fresh notification under Section 1(3) of the Act.
Mr. Nariman contended that the notification issued on December 9, 1982 was held to be applicable only to sal seeds grown in the private holdings, and in the absence of amendment to section 1(3), the validation of such a notification would not be effective to nullify the con tracts which the petitioners are having.
It was also urged that the notification was "still born" and could not have been validated.
We are unable to accept this contention also.
The definition of "forest produce" under Section 2(c) has been enlarged to include among others, sal seeds, grown or found on Government lands or in Government forests.
Clause (a) of Sub section (1) of Section 5 has been substituted covering all contracts for the purchase, sale, gathering or collection or 'specified forest produce ' grown or found.
in the area specified in the notification issued under Section 1(3) of the Act.
Both these provisions shall be deemed to have come into force with effect from September S, 1981 the date on which the Act had come into F; force.
The notification dated December 9, 1982 issued under Section 1(3) of the Act reads: "SRO No. 852/82 In exercise of the powers conferred by sub section(3) of Section 1 of the Orissa Forest Produce (Control of Trade) Act, 1981 (orissa Act 22 of 1981), the State Government do hereby direct that the Act shall come into force at once in the whole of the State of Orissa in relation to sal seeds. " This notification has been validated under Section 5 of the ordinance not withstanding any judgment, decree or order of any Court to the contrary.
It shall be deemed to have been issued in respect of sal 327 seeds also grown or found in Government forests.
It shall be valid and effectual as if it were issued under Section 1(3) of the Act as amended by the ordinance.
This validation, in our opinion is more than sufficient to make it operative to cover the contracts of the petitioners.
It does not suffer from any infirmity.
The impugned ordinance is, therefore, valid and cannot be challenged on any ground.
In the result, these petitions fail and are dismissed, but we make to order as to costs.
N.P.V. Petitions dismissed.

dataset_name: IN-Abs

summary:
The Orissa Forest Produce (Control of Trade) Act, 1981 was enacted to prevent smuggling forest produce and also to provide State monopoly in such forest produce.
The State was empowered under section 1(3) of the Act, from time to time to issue a notification specifying the area or areas, the forest produce in relation to which and the date from which the Act shall come into force.
The State Government issued a notification dated December 9, 1982 directing that the Act shall come into force at once in the whole of the State of Orrisa in relation to sal seeds The petitioners were holders of long term license from the Government for collection of sal seeds from certain specified forest 315 divisions on payment of royalty.
Consequent upon the issue of the above notification, the Government refused to accept royalty from the petitioners in respect of certain forest divisions on the ground that the notification had the effect of rescinding the existing contracts between the Government and the petitioners.
The petitioners thereupon filed writ petitions before the High Court for a declaration that the above notification was void, and did not have the effect of rescinding their contracts in relation to sal seeds.
The High Court dismissed the writ petitions.
The Supreme Court, allowing the appeals of the petitioners, held that the Act and the notification issued thereunder did not apply to forest produce grown in Government forests and that it was not, therefore, open to the Government to treat the contract dated May 25,1979.
as rescinded.
On May 29, 1987, the Governor of Orissa promulgated orissa Forest Produce (Control of Trade) (Amendment and Validation) ordinance 1987 deeming it to have come into force with effect from September 5,1981, when the principal Act was notified in the Gazette, rendering the aforesaid decision ineffective.
The petitioners challenged the validity of this ordinance in this Court.
Dismissing the writ petitions, this Court, ^ HELD: 1.1.
The impugned ordinance is valid and cannot be challenged on any ground.
[327B] 1.2 The object to the Act was to prevent smuggling and to provide for State monopoly in the specified forest produce and not to provide State monopoly only to prevent smuggling.
The validity of the statutory notification cannot be judged merely on the basis of statement of objects and reasons accompanying the Bill.
Nor could it be tested by the Government policy from time to time.
[318B] The executive policy of the Government or the statement of objects and reasons of the Act or ordinances cannot control the words used in the legislation.
[323F] Central Bank of India vs Their Workmen, ; and State of West Bengal vs Union of India, [1964] 1 SCR 371 at p. 382, relied on.
316 1.3 It is open to the State to make laws for creating State monopolies either partially or complete in respect of any trade or business or industry or service.
The State may enter into trade like any other person either for administrative reasons or with the object of mitigating the evils in the trade, or even for the purpose of making profits in order to enrich the State exchequer.
The law relating to such trading activities must be presumed to be reasonable and in the interest of general public.
[324D E] Akadasi Padhan vs State of Orissa, [19631 2 Supp.
SCR 691, relied on.
1.4 The legislature may, at any time, in exercise of the plenary power conferred on it by Articles 245 and 246 of the Constitution render a judicial decision ineffective by enacting a valid law.
There is no prohibition against retrospective legislation.
The power of the legislature to pass a law postulates the power to pass it prospectively as well as retrospectively, subject, of course, to the legislative competence and other constitutional limitation.
[325E F] 1.5 The rendering ineffective of judgments or orders of competent Courts by changing their basis by legislative enactment is a wellknown pattern of all validating acts.
Such validating legislation which removes the cause of ineffectiveness or invalidity of action or proceedings cannot be considered as encroachment on judicial power.
The legislature, however, cannot by a bare declaration, without more, directly overrule, reverse or set aside any judicial decision.
[325F G] In the instant case, having regard to the then existing provisions of the Act, this Court declared that the Act and notification issued thereunder in relation to sal seeds did not apply to sal seeds grown in Government forests.
The Act has been suitably amended by the impugned ordinance by removing the cause of ineffectiveness pointed out by this Court.
The definition of "forest produce" under section 2(c) has been enlarged to include, among others, sal seeds, grown or found on Government lands or in Government forests.
Clause (a) of subsection (1) of section 5 has been substituted covering all contracts for the purchase, sale, gathering or collection of 'specified forest produce ' grown or found in the area specified in the notification issued under section 1(3) of the Act.
Such contracts shall stand rescinded when a notification under section 1(3) of the Act is issued.
Both these provisions shall be deemed to have come into force with effect from September 5, 1981, the date on which the Act had come into force.
[326A B, E F] 317 The notification dated December 9, 1982 has been validated under A section 5 of the ordinance notwithstanding any judgment, decree or order of any Court to the contrary.
It shall be deemed to have been issued in respect of sal seeds also grown or found in Government forests.
lt shall be valid and effectual as if it were issued under section 1(3) of the Act as amended by the ordinance.
This validation is more than sufficient to make it operative to cover the contracts of the petitioners.
It does not suffer from any infirmity.
[326H; 327A B] 1.6 It would be impermissible for the State to enter into such contracts in future.
The parties or Agents employed by the State cannot work for their own benefits.
They must work on behalf of the State.
[324F G ] Utkal Contractors & Joinery Pvt. Ltd. and Ors.
vs State of Orrisa & ors.
, AIR 1987 SC 1455 [1987] 3 SCC 279; Hari Singh & ors.
vs The Military Estate officer & Anr., [19731 1 SCR 515;Government of Andhra Pradesh & Anr.
vs Hindustan Tools Ltd., 119751 Supp.
SCR 394; V.N. Saxena vs State of M.P., ; and Misri Lal Jain Etc.
vs State of Orissa & Anr.
, ; , referred to.


judgement:
Civil Appeal No. 2468 of 1987 From the Judgment and order dated 13.5.1987 of the Allahabad High Court in W.P. No. 1822 of 1987.
359 R.K. Jain and R.P. Gupta for the Appellant.
S.N. Kacker, Dileep Tandon, R.B. Mehrotra, P.N. Bhatta and R.A. Gupta for the Respondents The Judgment of the Court was delivered by DUTT, J.
Both the parties have made elaborate submissions at the preliminary hearing of the special leave petition filed by the appellant Dr. Smt.
Kuntesh Gupta.
The special leave is granted and we proceed to dispose of the appeal on merit.
The appeal is directed against the judgment of the Allahabad High Court dismissing the writ petition of the appellant on the ground of existence of an alternative remedy under section 68 of the U.P. State Universities Act, 1973.
The appellant, Dr. Smt.
Kuntesh Gupta, was appointed the Principal of Hindu Kanya Mahavidyalaya, Sitapur, U.P., on June 4, 1984 and was confirmed in the said post on May 4, 1985.
In view of existence of two unrecognised rival Committees of Management the State Government, in exercise of its power under section 58 of the U.P. State Universities Act, appointed one of the Additional District Magistrates of the District the Authorised Controller of the Institution.
The Authorised Controller was entitled to exercise all the powers of the Committee of Management.
It appears that the appellant, as the Principal of the Institution, and the Authorised Controller could not see eye to eye with each other and there were disputes and differences between them in regard to the management of the Institution.
The differences between them reached to such a degree that the Authorised Controller by his order dated January 27, 1986 suspended the appellant.
The order of suspension was, however, stayed by the Vice Chancellor of the University on January 29, 1986.
After hearing the appellant and the Authorised Controller, the Vice Chancellor maintained the stay order.
Thereafter, the Authorised Controller held an ex parte enquiry and by his order dated April 21, 1986 dismissed the appellant from service in exercise of the powers of the Managing Committee vested in him by Statute 17.06 of the Statutes of the University.
Statute 17.06 provides for the giving of an opportunity of being heard to the teacher concerned and prescribes a procedure for enquiry which, according to the appellant, was not followed by the Authorised Controller.
A copy of 360 the said order of dismissal was sent to the Director of Education and to the Vice Chancellor for approval, as required under Statute 17.06(3).
The Vice Chancellor after hearing the parties, by her order dated January 24, 1987 disapproved the order of dismissal of the appellant on the ground that the charges against the appellant did not warrant her dismissal from service and directed that the appellant should be allowed to function as Principal of the College forthwith.
After the said order was passed by the Vice Chancellor reinstating the appellant and granting liberty to the Authorised Controller to impose lesser punishment on the appellant, if deemed necessary, the Authorised Controller without passing any lesser punishment, by his order dated January 27, 1987 allowed the appellant to function as the Principal, but put various restraints and constraints on her powers and duties as Principal and directed her to vacate the quarters in which she was residing.
Feeling aggrieved, the appellant moved the High Court under Article 226 of the Constitution of India against the imposition of such restraints and constraints on her powers and duties as the Principal of the College.
The High Court, after considering the fact and circumstances of the case, by its judgment dated March 10, 1987 quashed the said order dated January 27, 1987 of the Authorised Controller and directed him to allow the appellant to function as the full fledged Principal of the Institution in accordance with law.
The High Court further granted liberty to the Authorised Controller to go ahead with the imposition of minor penalty on the appellant in accordance with law and as provided in the said order of the Vice Chancellor.
It appears that while the matter was pending before the High Court, at the instance of the appellant, the Vice Chancellor passed an order dated March 7, 1987, that is to say, three days before the date of the judgment of the High Court, reviewing her earlier order disapproving the dismissal of the appellant from service.
By the order dated March 7, 1987 passed on review, the Vice Chancellor approved the order of the Authorised Controller dismissing the appellant from service on the basis of two reports of the Joint Director of Higher Education, U.P., one dated August 1, 1986 and the other dated July 18, 1986, alleging great financial irregularities committed by the appellant.
Although the said order dated March 7, 1987 was passed by the Vice Chancellor on review three days before the delivery of the judgment by the High Court, no steps were taken by the Authorised Controller, who was a party in the writ petition, to bring to the notice of the High Court the said order of the Vice Chancellor dated March 7, 1987 361 It is alleged by the appellant that the said order was passed by the Vice Chancellor in collusion with the Authorised Controller with a view to rendering the writ petition of the appellant and also the judgment of the High Court infructuous.
While we reject the allegation of the appellant that the said order was passed by the Vice Chancellor in collusion with the Authorised Controller, for there is no material whatsoever in support of that allegation, we are of the view that the Authorised Controller should have brought to the notice of the High Court the order of the Vice Chancellor passed on review.
Be that as it may, the appellant again filed a writ petition under Article 226 of the Constitution of India against the said order dated March 7, 1987 of the Vice Chancellor passed on review.
The High Court, however, took the view that the impugned order could be challenged on a reference to the Chancellor of University under section 68 of the U.P. State Universities Act, 1973 and, accordingly, dismissed the writ petition on the ground of existence of an alternative remedy.
Hence this appeal.
It has been strenuously urged by Mr. Jain, learned.
Counsel appearing on behalf of the appellant, that the Vice chancellor had no power of review under the Statutes of the University or under the U.P. State Universities Act, 1973 and, as such, the Vice Chancellor acted wholly without jurisdiction in entertaining an application for review filed by the Authorised Controller.
On the other hand, it is submitted by Mr. Kacker, learned Counsel appearing on behalf of the Vice Chancellor, that as the two reports dated August 1, 1986 and July 18, 1986 of the Joint Director of Higher Education, U.P., alleging certain grave financial irregularities, were not before the Vice Chancellor, the Vice Chancellor was entitled to review her order and after considering the said reports reviewed her order and approved the order of dismissal of the appellant from service.
Further, it is submitted by the learned Counsel that the High Court was justified in not entertaining the writ petition of the appellant, as there was an alternative remedy under section 68 of the U.P. State Universities Act and the impugned order could be challenged before the Chancellor of the University on a reference of the question to the Chancellor under the provision of section 68.
It is now well established that a quasi judicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction.
The Vice Chancellor in considering the question of approval of an order of 362 dismissal of the Principal, acts as a quasi judicial authority.
It is not disputed that the provisions of the U.P. State Universities Act, 1973 or of the Statutes of the University do not confer any power of review on the Vice Chancellor.
In the circumstances, it must be held that the Vice Chancellor acted wholly without jurisdiction in reviewing her order dated January 24, 1987 by her order dated March 7, 1987.
The R said order of the Vice Chancellor dated March 7, 1987 was a nullity.
The next question that falls for our consideration is whether the High Court was justified in dismissing the writ petition of the appellant on the ground of availability of an alternative remedy.
It is true that there was an alternative remedy for challenging the impugned order by referring the question to the Chancellor under section 68 of the U.P. State Universities Act.
It is well established that an alternative remedy is not an absolute bar to the maintainability of a writ petition.
When an authority has acted wholly without jurisdiction, the High Court should not refuse to exercise its jurisdiction under Article 226 of the Constitution on the ground of existence of an alternative remedy.
In the instant case., the Vice Chancellor had no power of review and the exercise of such a power by her was absolutely without jurisdiction.
Indeed, the order passed by the Vice Chancellor on review was a nullity; such an order could surely be challenged before the High Court by a petition under Article 226 of the Constitution and, in our opinion, the High Court was not justified in dismissing the writ petition on the ground that an alternative remedy was available to the appellant under section 68 of the U.P. State Universities Act.
As the impugned order of the Vice Chancellor is a nullity, it would be a useless formality to send the matter back to the High Court for disposal of the writ petition on merits.
We would, accordingly, quash the impugned order of the Vice Chancellor dated March 7, 1987 and direct the reinstatement of the appellant forthwith to the post of Principal of the Institution.
The judgment of the High Court is set aside and the appeal is allowed.
There will, however, be no order as to costs.
We, however, make it clear that the respondents will be at liberty to initiate a departmental proceeding against the appellant, if they so think fit and proper, on the basis of the allegations as made in the said reports of the Joint Director of Higher Education, U.P. H.L.C. Appeal allowed.

summary:
The appellant was the principal of an institution, the management of which had been entrusted to an Authorised Controller under section 58 of the U.P. State Universities Act, 1973.
Following upon certain disputes and differences with regard to the management of the institution, the appellant was suspended by the Controller but the order of suspension was stayed by the Vice Chancellor.
The Controller, after holding an ex parte inquiry, dismissed the appellant from service in exercise of the power vested in him by the University Statute 17.06 which provided the giving of an opportunity of being heard to the teacher concerned and prescribed a procedure for inquiry.
The Vice Chancellor, on the ground that the charges against the appellant did not warrant her dismissal, disapproved the order of dismissal and directed reinstatement of the appellant, granting liberty to the Controller to impose a lesser punishment on her.
The Controller passed an order allowing the appellant to function as the Principal but at the same time imposing various restraints and constraints on her powers and duties, which was challenged by her in a petition filed under article 226.
The High Court quashed the said order with liberty to the Controller to impose a minor penalty on the appellant in accordance with the order of the Vice Chancellor.
Three days before the High Court delivered its judgment, the Vice Chancellor had reviewed her earlier order at the instance of H 358 the appellant, and, on the basis of two reports of the Joint Director of Higher Education alleging that the appellant had committed grave financial irregularities, had approved the order of dismissal passed earlier by the Controller; but the Controller, who was a party to the writ petition did not bring it to the notice of the High Court.
The appellant challenged the aforesaid order of the Vice Chancellor passed in review by a petition under article 226 which was dismissed by the High Court on the around of existence of an alternative remedy under section 68 of the U.P. State lUniversities Act.
Allowing the appeal, ^ HELD: It is well established that an alternative remedy is not an absolute bar to the maintainability of a writ petition.
When an authority has acted wholly without jurisdiction, the High Court should not refuse to exercise its jurisdiction under article 226 on the ground of existence of an alternative remedy.
[362C D] In the instant case, the Vice Chancellor had no power of review and the exercise of such a power by her was absolutely without jurisdiction.
Indeed, the order passed by the Vice Chancellor on review was a nullity; such an order could surely be challenged before the High Court by a petition under article 226 and, in our opinion, the High Court was not justified in dismissing the writ petition on the ground that an alternative remedy was available to the appellant under section 68 of the U.P. State Universities Act.
[362D E] 2.
It is now well established that a quasi judicial authority cannot review its own order unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction.
The Vice Chancellor in considering the question of approval of an order of dismissal of the Principal, acts as a quasi judicial authority.
It is not disputed that the provisions of the U.P. State Universities Act, 1973 or of the Statutes of the University do not confer any power of review on the Vice Chancellor.
In the circumstances, it must be held that the Vice Chancellor acted wholly without jurisdiction in reviewing her order dated January 24, 1987 by her order dated March 7, 1987.
[361H; 362A B]


judgement:
Petition No. 7667 of 1987.
In Writ Petition Nos.
348 352 of 1985.
(Under Article 32 of the Constitution of India).
Madan Lokur for the Petitioners.
G. Viswanatha Iyer, P.K. Pillai, M.K.D. Namboodary for the State of Kerala J.R. Das and D.K. Sinha for the State of West Bengal.
A.K. Ganguli, Mariapputham for the State of Himachal Pradesh.
A.M. Khanwilkar and A.S. Bhasme for the State of Maharashtra.
353 K.H. Nobin Singh for the State of Karnataka.
B.R. Aggarwala, and Ms. section Manchanda for Medical Council of India.
D.N. Devedi, R.P. Srivastava, Mrs. Halida Khatun and Ms. A. Subhashini for the Union of India.
P.H. Parekh, E.K. Jose, B.D. Sharma, M.I. Khan, D.N. Devedi, R.P. Srivastava, P, Parmeshwaran, Mrs. section Dikshit, A.V. Rangam, R. Bana, M. Veerappa, B.R. Aggarwal, B.D. Sharma, R.C. Verma, C.V. Subba Rao, D.K. Sinha, J.R. Dass, M.E. Sardhana, S.K. Nandy, A.S. Bhasme, A.M. Khanwilkar, P.P. Singh, R.K. Mehta, T.V.S. Chari, A.K. Sanghi, M.N. Shroff, D. Goburdhan, Suryakant, H.K. Puri, M.K.D. Namboodary, B.P. Singh, K. Ramkumar, E.M.S. Anam T.V. Ratnam, L.R. Singh, D.R. Agarwal, R.S. Sodhi Mrs. Sushma Suri, A. Subba Rao, Prabir Choudhary, D.N. Mukherjee, S.K. Mehta, M.K. Garg, P. Parmeshwarn M. Karanjawala, L.K. Pandey, K. Rajindera Choudhary, P.C. Kapur, Pramod Swarup, T. Sridharan, Rajesh, N.M. Ghatate, Ravi P. Wadhvani, S.K. Gambhir, D.N. Mishra for the other appearing parties.
The following order of the Court was delivered: ORDER By the main judgment of this Court delivered on 22nd June, 1984 in Dr. Pradeep Jain etc.
vs Union of India & Ors.
, ; this Court decided that admission for a fixed percentage of seats in different courses of study in the Medical Faculties should be on an All India basis.
Dealing with Post Graduate Courses such as MDS and MS and the like and taking into consideration broader aspects of equality of opportunity and institutional continuity in education which as its own value and relevance, this Court took the view that though residential requirement within the State should not be a ground for reservation in admissions to Post Graduate Courses, a certain percentage of seats may be reserved on the basis of institutional preference in the sense that a student who has passed MBBS course from a Medical College may be given preference for admission to Post Graduate Course in the same Medical College or University, but such reservation on the basis of institutional preference should not in any event exceed 50 per cent of the total number of seats available for admissions to the Post Graduate course.
By a subsequent order made on 21st of 354 July, 1986 it has been directed that the total number of seats for admission to Post Graduate courses in each Medical College or institution on the basis All India Entrance Examination shall be limited to 25 per cent.
Thereafter we had given direction in regard to finalising the courses of study and holding of All India Entrance Examination both for the MBBS as also the Post Graduate Courses.
So far as the Bachelor 's counsel is concerned, by order dated August, 1987, we have finalised the matter.
The question of finalising the scheme in regard to Post Graduate courses had been left to be dealt with separately.
We have heard counsel for the Union of India, the Medical Council of India and such of the other parties as chose to appear when the matter came up on 18th September, 1987, and we have perused the papers relevant to the matter.
Three aspects of the matter require consideration of this Court apart from the question of finalising the schedule relating to holding of the selection examination and those are: (1) structuring the Post Graduate courses (2) the question of diploma being a qualification for n admission in Post Graduate course as prevailing in the State of Tamil Nadu and (3) Provision in regard to super specialities like MD and other higher degrees.
It appears that in some States at present the Post Graduate course is for a term of two years with housemanship of one year while in other States it is a full term of three years.
We find that many of the States are of the view that this situation should continue.
If a common pattern is directed to be adopted immediately there may be some difficulty.
A uniform practice has to be evolved so that the discipline would be introduced.
We accordingly allow the present arrangement to continue for a period of five years i.e. upto 1992 inclusive.
For admission beginning from 1993 there would be only one pattern, namely, a three year course without any housemanship.
All Universities and institutions shall take timely steps to bring about such amendments as may be necessary to bring statutes, regulations, and rules obtaining in their respective institutions in accord with this direction before the end of 199 1 so that there may be no scope for raising of any dispute in regard to the matter.
The uniform pattern has to be implemented for 1993.
It is proper that one uniform system is brought into vogue throughout the country.
The justification for such a course has been appropriately emphasised both in the main judgment as also in the intermediate order made by us and there is no necessity to reiterate the reasoning now.
We, however, allow the system now prevailing in 355 the State of Tamil Nadu regarding the diploma until 1992.
From 1993 there would be no necessity for the diploma to be a qualification for A admission to Post Graduate courses.
We do not intend to make any provision in our order in regard to super specialities and other higher degrees.
The number of such seats are not many.
We are of the view that there is no necessity to make any directions in regard to admissions therefor at present and until necessity arises it is not appropriate that the Court should consider that question.
What remains now to be dealt with is the finalisation of the programme relating to the selection examination.
As already decided the selection examination shall be conducted by the All India Institute of Medical Sciences, New Delhi.
The announcement for holding of the selection examination shall be made on the 1st of October of every year and a full four weeks ' time would be made available to candidates for making their applications.
After the applications are received not later than six weeks from October, the some would be scrutinised and duly processed and admit cards would be issued.
Examination shall be held on the second Sunday of January.
The results of examination shall be announced within four weeks from holding of the examination.
Admission shall commence two weeks after the declaration of results.
The last date for taking admission shall be six weeks from the date of the announcement of results but the Head of every institution shall be entitled to condone delay upto seven days for reasons shown and grounds recorded in special cases.
The courses of study shall commence in every institution providing such study throughout the country from Second May. Notification Announcing Examination publication of result and allotment of place of admission (keeping preferences in view and our directions regarding preference of lady candidates in places of proximity to residence) shall be published in two successive issues of one national paper in English having large circulation in every State and at least in two local papers in the language of the State as quickly as possible.
We have already directed that the scheme for post Graduate course shall be operative in 1988, we accordingly direct that for the selection of 1988, the announcement for holding of examination be made on 1st of October, 1987.
All directions necessary for the Post Graduate courses are now complete.
We direct the Union of India, the Medical Council of India, H 356 the State Governments, Universities, Medical Institutions and all other authorities that may be involved in implementation of the scheme to give full effect to the orders and direction made by this Court in the proper spirit so that the scheme may become operative as directed.
We make it clear that no application for any modification of matters already covered by our order henceforth shall ordinarily be entertained.
A copy of this order shall be communicated forthwith to the Chief Secretary of every State and Union Territory for compliance.
A copy of it be also sent to the Director General, All India Radio and Doordarshan for appropriate publicity of the order in general interest.

summary:
Sequel to the main judgment delivered on June 22, 1984 by this Court in Dr. Pradeep Jain, etc., etc.
vs Union of India and others, [198413 SCR 942 regarding admission for fixed percentage of seats in different courses of study in the medical faculties on an All India basis, the question of finalising the scheme for holding the All India Examination to fill up 25% seats reserved on the basis of institutional preference for admission to the post graduate courses like MDS, MS etc. came up before this Court.
Laying down a detailed programme relating to selection examination, the Court, ^ HELD: Apart from finalising the schedule for holding of the selection examination, three aspects of the matter, viz. (1) structuring the Post Graduate courses, (2) the question of diploma being a qualification for admission to such courses as in Tamil Nadu, and (3) provision in regard to super specialities, like M.D. and other higher degrees require consideration.
[354D] In some States at present the post graduate course is for a term of two years with housemanship of one year while in other States it is a full term of three years.
If a common pattern is directed to be adopted immediately there may be some difficulty.
A uniform practice has to be evolved so that the discipline would be introduced.
The present arrangement will, therefore, continue for a period of five years.
i.e., upto 1992.
[354E F] For admission beginning from 1993, there would be only one pattern, namely, a three year course without any housemanship.
All 352 Universities and institutions shall take timely steps to bring about such A amendments as may be necessary in accord with this direction before the end of 1991 so that there may be no scope for raising of any dispute.
The uniform pattern has to be implemented for 1993.
[354F G] It is proper that one uniform system is brought into operation throughout the country.
The system now prevailing in the State of Tamil Nadu regarding the diploma shall continue until 1992 from 1993 there would be no necessity for the diploma to be a qualification for admission to post graduate courses.
[354G H; 355A] In regard to super specialities and other higher degrees, the number of such seats are not many and, therefore, there is no necessity to make any directions in regard to admissions therefor at present and until necessity arises it is not appropriate that the Court should consider that question.
[355B] The announcement for holding of examination for the selection of 1988 shall be made on October 1, 1987.
As already decided, the examination shall be conducted by the All India Institute of Medical Sciences, New Delhi.
[355G ]