# C. V. K. RAO v. DENTU BHASKARA RAO

- **Citation:** [1964] 8 S.C.R. 152
- **Court:** Supreme Court of India
- **Decided:** 1964-05-04
- **Case number:** Civil Appeal No. 1072 of 1963
- **Bench:** P. B. Gajendragadkar, M. Hidayatuli.Ah, K. c. DAS GUPTA, J. C. Shah, Raghubar Dayal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/c-v-k-rao-v-dentu-bhaskara-rao-3243
- **Pages:** 7

## Headnote

Representation of the People Act (XLlll of 1951), s. 1(d)-Scope of-
"ln tla1 cour1e of trade or businesl'',
Mea1ting of-Mining lca.YtRight of Government to pre-emption of minerals-If a contract for
1upply of good• ~1 leuee.
The respondent obtained a mining lca.se from the State Government.
Clause 21 of the lease reserved to the Government the right to prior
purchase of the minerals raised by the lessee. While the lease
was
subsisting, the respondent
stood for election to the State Legislative
Assembly and was elected. The appellant, his closest competitor, challenged the election by an election petition on the ground, inter alia, that
the respon'dent was disqualified under section 7(d) of the Representation
of People Act (XI.Ill ot 1951), because he had a contract with the
Government for 1upply of goocla.
8 S.C.R.
SUPREME COURT REPORTS
153
HELD: the petition must be dismissed.
The disqualifi:ation which rcsulta from the section b conditioned by
three circumstance.. First, there must be a subsisting contract betwocn
the appropriate Government and the candidate. Then the contract must
be in the course of the trade or busineso of the candidate and, finally
it n•ust be int<r alia for the supply of goods to such Government. Held
in the case th8.t as the mining lease was subsisting. the contract if any,
was also subsisting. Further that the mining lease, if it wa.s a contract,
wu in the course of the business of the respondent It was not necessary
that a course of business based upon other transactiom must have lint
existed hr.fore .the offending contract could be sa:d to be in the course of
business.
fhe contract itself could be the start of the business.
Held
therefore that the mining leas<i WM not a contract to supply &oods to
the Government. There was only a right in the Government to pre.empt
the minerals and iessee could not begin delivery to
the Government
until Governm~nt served a notice on him stating the quantity pre-empted
and the time within which the supply should be made. This was only
a reservation of a right of pre-emption which did not amount to a contract for the supply of goods which could be said to subsist between tho
partieo.

## Text

1'64
Mualtl
"·
Stat• of U.P.
Ga1endragadkar
c. J.
1964
May, 4
152
SUPREME COURT REPORTS
young men must have joined the unlawful assembly under
pressure and influence of the elders of their respective
families. The list of accused persons shows that the unlawful assembly was constituted by members of different families
and having regard to the manner in which these factions
ordinarily conduct themselves in villages, it ~ould not be
unreasonable to hold that these three young men must have
been compelled to join the unlawful assembly that morning
by their elders, and so, we think that the ends of justice
would be met if the sentences of death imposed on them
are modified into sentences of life imprisonment. Accordingly, we confirm the orders of convictio:i and sentence passed against all the appellants except accused Nos. 9, 11 and
16 in whose cases the sentences are altered to those of imprisonment for life. In the result, the appeals are dismissed,
subj.:ct to the said modification.
Appeals dismissed.
C. V. K. RAO
v.
DENTU BHASKARA RAO
(P. B. GAJENDRAGADKAR, c. J., M. HIDAYATULI.AH, K. c.
DAS GUPTA, J. C. SHAH AND RAGHUBAR DAYAL, JJ.)
Representation of the People Act (XLlll of 1951), s. 1(d)-Scope of-
"ln tla1 cour1e of trade or businesl'',
Mea1ting of-Mining lca.YtRight of Government to pre-emption of minerals-If a contract for
1upply of good• ~1 leuee.
The respondent obtained a mining lca.se from the State Government.
Clause 21 of the lease reserved to the Government the right to prior
purchase of the minerals raised by the lessee. While the lease
was
subsisting, the respondent
stood for election to the State Legislative
Assembly and was elected. The appellant, his closest competitor, challenged the election by an election petition on the ground, inter alia, that
the respon'dent was disqualified under section 7(d) of the Representation
of People Act (XI.Ill ot 1951), because he had a contract with the
Government for 1upply of goocla.
8 S.C.R.
SUPREME COURT REPORTS
153
HELD: the petition must be dismissed.
The disqualifi:ation which rcsulta from the section b conditioned by
three circumstance.. First, there must be a subsisting contract betwocn
the appropriate Government and the candidate. Then the contract must
be in the course of the trade or busineso of the candidate and, finally
it n•ust be int<r alia for the supply of goods to such Government. Held
in the case th8.t as the mining lease was subsisting. the contract if any,
was also subsisting. Further that the mining lease, if it wa.s a contract,
wu in the course of the business of the respondent It was not necessary
that a course of business based upon other transactiom must have lint
existed hr.fore .the offending contract could be sa:d to be in the course of
business.
fhe contract itself could be the start of the business.
Held
therefore that the mining leas<i WM not a contract to supply &oods to
the Government. There was only a right in the Government to pre.empt
the minerals and iessee could not begin delivery to
the Government
until Governm~nt served a notice on him stating the quantity pre-empted
and the time within which the supply should be made. This was only
a reservation of a right of pre-emption which did not amount to a contract for the supply of goods which could be said to subsist between tho
partieo.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1072
of 1963.
Appeal from the judgment and order dated April
l 0.
1963 of the Andhra Pradesh High Court in Special Appeal
No. 52 of 1962.
K. R. Chaudhuri, for the appellant.
A. V. Viswanatha Sastri and T. V. R. Tatachari,
for
the respondent.
May 4,
1964. The Judgment of the Court was
delivered by
19"
c. v. K. • .....
Y.
Dent• B~
Rao
HIDAYATULLAH, J.-The respondent
Dentu Bhaskara HidaJat11l1"" I
Rao was returned to the Andhra Pradesh Legislative
Assembly from Kakinada constituency at the last general
election. The appellant C. V. K. Rao was his closest
competitor. There were two other candidates but they
obtained very few votes and they have not shown any
further interest. The appellant filed an election petition to
question the election of the respondent on many grounds:
one ·such ground was that the respondent was disqualified
1964
-.:. V. K. Rao
v.
O>entu Bhaskara
Rao
Sfidayatullah J.
154
SUPREME COURT REPORTS
[1g64l
under s. 7 ( d) of the Representation of the People Act,
1951 (43 of 1951). The respondent had obtained a
mining lease from the State of Andhra Pradesh on Apri, 13,
1960, though on the date he filed his nomination paper he
had not begun operations under that lease. The appellant
took objection to the nomination of the respondent on the
ground that he held a contract from the Andhra Pradesh
Government within the prohibition of s. 7 ( d) of the Act,
but the Returning Officer
over-ruled his objection.
The
Election Tribunal later _held that he was disqualifkd J,mder
s. 7 ( d) of Act 43 of 1951 and declared the election void.
On appeal, the High Court of Andhra Pradesh reversed the
decision and the present appeal has been filed on a certilicate granted by the High Court.
Section 7(d) reads as fol!ows:--
"7. A person shall be disqualified for being chosen
as, and for being, a member of either House of
Parliament or the Legislative Assembly or
Legislative Council of a State--
(a)
(b)
(c)
•
•
•
•
•
•
•
•
•
(d) if there subsists a contract entere<l into in
the course of his tradi: or business by him
with
the appropriate Government for the
supply of goods to, or for the executi(ln of
any works undertaken by, that Government;"
The mining lease was in the standard form and after secting
out the consideration for the lease, it described in Pai ts I
tc III, the area of the lease, the description of lile area,
liberties, powers and privileges to be exercised and enjoyed
by the lessee and the restrictions and conditions as to their
exercise. In Part IV it described the liberties, powers and
privileges reserved to the. State Government and in Parts V
and VI the rents and royalties reserved by the lease and
certain other provisions relating tg them.
Part VII then
dealt with the covenants of the lessee in respect of payment
8 S.C.R.
SUPREME COURT REPORTS
155
of rents, royalties, taxes etc. One such covenant was in
clause 21 and was headed "Right of Pre-emption" and it
conferred on the State Government a right of pre-emption
of the minerals lying in or upon the land dei;nised or elsewhere under the control of the lessee. ThJlt clause was
interpreted by the Tribunal as a contract entered in the
course ot' trade or business by the respondent with the State
Government for the supply of goods to that Government.
The High Court held that there was no such contract.
The disqualification which results from s. 7 ( d) is conditioned by a number of circumstances. First, there must be
a subsisting contract (this is
to say in actual existence)
between the appropriate Government
and the candidate.
Then the contract must \>e
in the course of the trade or
business of the candidate and, finally, it must be inter alia
for the supply of goods to such Government
The appropriate Government according to the definition of the
expression is t~e Government of Andhra Pradesh.
The
High Court in reaching its conclusion interpreted cl. 21 of
Part VII of the lease and held that the mining lease was
not a contract, that clause 21 did not amount to a contract
and that cl. 21 even if a contract was not a contract for
the supply of goods to the Government.
This conclusion
is assailed by the appellant. It is convenient to quote the
clause at this stage:
"21. (a) The State Government shall from time to
time and at all times du~ing the said term have
the right (to be exercised by notice in writing
to the lessee)
of pre-emption of the
said
minerals (and all products thereof) lying
in
or upon the said lands he!eby demised or elsewhere under the control of the lessee and
the lessee shall with
all possible expedition
deliver all minerals or products or minerals
purchased by the State Government under the
power conferred by this provision in the quantities, at the times in the manner and at the
place specified in the notice exercisin11 the said
right.
'
1964
C. V. K. Rao
v.
Dtntu Bhaskaro·
Rizo
Hidayatullah 1.
1964
oC. V. K. Rao
v.
ofJ•ntu Blaaskaro
Rao
·Hidayatullah I.
156
SUPREME COURT REPORTS
(1g64]
(b) Should tile Jight to pre-emption conferred by
this present provision be exercised and a vessel
chartered to carry the minerals or products
thereof procured on behalf of the State Gov·
ernment or the Central Government be detained on demurrage at the port oCloading the
lessee shall pay the amount due for demurrage
according to the terms of the charter party of
such vessel unless the State Government shall
be satisfied that the delay is due to causes
beyond the control of the lessee.
( c) The price to be paid for all minerals or products of minerals taken in pre-emption by the
State Government in exerci~e of the right hereby conferred shall be the fair market price
prevailing at the time of pre-emption provided
that in order to assist in arriving at the said
fair market price the lessee shall, if so required, furnish to the State Government for the
confidential information of the Government
particulars
of quantities,
desqiptions and
prices of the said minerals or producu for
carriage oI the same and shall produce to such
officer or officers
as may be directed by the
State Government original
or authenticated
copies of contracts and charter parties entered
into for the sale of freightage of such minerals
or products.
(d)
•
•
•
.,,
Mr. K.' R. Chaudhury contended that under this clause
there was a standing contract for the supply of goods and
all that Government had to do was to send !1 notice to the
respondent and he was compelled to supply the goods to
Government. He pointed out that from the time the lease
was granted Government was asking the respondent to
commence operations to raise the minerals but the
respondent avoided working the mine probably to save himself
from the disqualification. According to Mr. Chaudhury, it
mattered not whether the mine was worked or not, but
'
8 S.C.R.
SUPREME COURT REPORTS
157
what mattered was that there was a subsisting contract for
the supply of minerals to the appropriate Government.
Mr. A. Vishwanatha Sastri, in reply, contended that the
mining lease could not be regarded as a contract and further
that it was not 'in the course of' the trade or business of the
respondent, and finally that, in any event, it was not a
contract for the supply of goods.
That it was in the course
of business of the respo.ndent almost goes without saying.
It is not necessary, as Mr. Sastri suggested, that a course of
business ba,ed upon other transactions must first exist
before the offending contract can be said to be in the course
of business. That contract may itself be the start of the
business and the words 'in the course of the business' would
still be apt. As the mining lease ;as subsisting, the contract, if any there be, was also subsisting and there is no
doubt on that aspect of the matter. The question is whether
the provisions of cl. 21 bring about a contrJct for
the.
supply of goods.
This question can be broken into two
which are: (a) whether cl. 21 can be regarded as a contract
and (b) whether it can be regarded as a coatract for supply
of goods. Clause 21 is invariably inserte.d in every mining
lease. It reserves to the Government the right to the
minerals which vest in Government bu( which are allowed
to be raised by the lessee holding the lease.
The lease is,
in one sense, a contract be!v:ccn the Government and the
Jessee because there is consideration on both sides and
an
offer and acceptance. There are obligations created by it.
some of which are contractual even though some may
be
regarded as arising from the conditions of the grant.
The
mining lease without cl. 21 cannot possibly be described as
a contract for the supply of goods.
Without
that clause
there would neither be a mention of goods
nor of their
supply. If the lease is to be read as satisfying the disqualification ins. 7(d), cl. 21 alone can satisfy it. Clause 21
speaks of a right of the Government to pre-empt
the
minerals and all products thereof lying in or around the
land demised or elsewhere under the control of the lessee.
There is, however, no concluded contract in respect of any
goods because it hardly needs to be said that relying upon
this clause the lessee cannot begin delivery of the ore to
the Gove~nt. He can do so only if the Government
1964
C. V. K. Rao
Y.
Dentu Bhiukara
Rao
Hidayatullah J.
1964
C. V. K. Rao
v.
Dtntu Bhaskara
Rao
Bidayatullah J.
1964
May 5
158
SUPREME COURT REPORTS
serves a notice on him stating the quantity pre-empted and
the time within which the supply is to be made. The clause,
however, does not make it obligatory on Government to
prC-empt any quantity of mineral or at all.
There is no
obligation to buy nor is there any compulsion ·on the pan
ot the lessee to sell unless asked.
In these circumstances,
the clause does no -more than to keep intact a right of the
Government to obtain the minerals or their products as
and when Government requires
in preference
to others.
Till Government makes up its mind and serves a notice
there is no obligation to make any deliveries and even
though the word 'subsists' is a word of wide import, it
cannot be said that a contract for the sale of goods subsists
because a contract requires an offer and its acceptance and
is not a mere reservation of a right.
Taking the most liberal view of the matter it is clear that
cl. 21 did not bring into being a contract for the supply of
goods. All that it did was to reserve to the Government
the right to prior purchase of the minerals raised by the
respondent.
The rese11;ation of such rights docs not
amount to a contract for the supply of goods which can be
said to subsist between the parties. The High Court was,
therefore, right in reversing the decision of the Election
Tribunal. The appeal fails and is dismissed with costs.
Appeal dismissed.
UNION OF INDIA
v.
ABDUL JALIL AND ORS.
(M. HIDAYATULLAH AND N. RAJAGOPALA AYYANGAR, JJ.)
Forest Act-"Reserved forest"-Tripura Act replaced by Indian Forest
Act-No preliminaries prescribed under Tripura
Act-Notification
under it whether can he deemed to be under Indian Forest ArtTripura Act and Indian Forest Act, object and purpose-Corresponding provisions-Indian Forest Act, 1927
(Act 16 of 19271,