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Issues Involved:
1. Violation of Articles 14 and 19 of the Constitution. 2. Creation of Monopoly and Public Interest. 3. Expropriation of Property without Compensation. 4. Applicability of Estoppel against the State Government. Issue-Wise Detailed Analysis: 1. Violation of Articles 14 and 19 of the Constitution: The petitioners contended that the Government orders and contracts were arbitrary, mala fide, and not in public interest, thus violating Articles 14 and 19 of the Constitution. They argued that the grant of forest rights was arbitrary and created a monopoly in favor of private grantees, which was not protected under Article 19(1)(g). The Court referenced previous cases such as Kasturi Lal Lakshmi Reddy v. State of Jammu & Kashmir and Brij Bhushan v. State of Jammu & Kashmir, where similar contentions were dismissed, indicating no substance in the arguments advanced. 2. Creation of Monopoly and Public Interest: The Act aimed to create a monopoly in favor of J & K Industries Limited by banning private extraction and dealings of resin. The petitioners argued that the monopoly was not in public interest and that the benefits should have been open to all interested parties. The Court examined the provisions of the Act, particularly Sections 3, 4, and 5, which banned private extraction, mandated government-controlled storage and sale, and fixed prices, respectively. The Court found that these provisions created a monopoly that was not justified under the constitutional framework. 3. Expropriation of Property without Compensation: The petitioners argued that their existing rights amounted to 'property' and could not be expropriated without compensation, violating Article 31(2) of the Constitution. The Court referenced several precedents, including Ramana Dayaram Shetty v. The International Airport Authority of India, Subodh Gopal Bose's case, and Madan Mohan Pathak v. Union of India, to establish that the interests created in favor of the petitioners constituted property. The Court concluded that the Act's provisions, which terminated existing contracts and created a monopoly without providing compensation, were unconstitutional. 4. Applicability of Estoppel against the State Government: The petitioners argued that they had invested substantial amounts based on the State's invitation and assurances, creating a situation of estoppel. The Court acknowledged that while estoppel cannot be invoked against the legislature, it does apply to the State Government. The Court agreed with the petitioners' submissions, noting that the State's actions gave rise to a fact situation of estoppel, further supporting the petitioners' case. Conclusion: The Court declared the provisions of Sections 3 and 4 of the Act to be ultra vires the Constitution, as they violated Article 31(2) by taking away property rights without compensation. Since these provisions were central to the Act, the entire Act was rendered inoperative. The petitions were allowed, and the petitioners were awarded costs for the proceedings.
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