ivil Appeal No 18 of 1966
Appeal by special leave from the judgment and decree dated October 9 1962 of the Madhya Pradesh High Court in First Appeal No 94 of 1959
GL Sanghi and AG Ratnaparkhi for the appellant
I N Shroff for respondent No 1
The Judgment of the Court was delivered by Sikri J
This appeal by special leave is directed against the judgment and decree of the Madhya Pradesh High Court allowing tile appeal of the State of Madhya Pradesh and dismissing the suit brought by the appellant Badri Prasad hereinafter referred to as the plaintiff
 The relevant facts for determining the points raised before us are these
On December 27 1950 a contract was entered into between Kumar Bharat Shah minor through iris guardian and the plaintiff in respect of forests in Mouza Sunderpani Jagir
The terms were reduced to writing and an agreement was signed on January 21 1951
It is necessary to reproduce the agreement in extenso as it would be necessary to interpret it carefully
Deed of agreement executed by Shri Kumar Bharat Shah minor guardian Shrimati Rani Umakuar Sahiba Jagirdar of Mouza Sunderpani
Conditions of contract area forest Mouza Sunderpani 1
Out of the area of 170446 acres of Mouza Sunderpani Jagir contract of all the teak trees of more than 12 inches girth standing in the 1000 acres of the forest of big trees and excluding those teak trees which have girth upto 12 inches is given to contractor Badri Prasad Moolchand firm of Timarni for a sum of Rs 17006 seventeen thousand rupees on payment of the amount in a lump sum
In respect of the teak trees mentioned in paragraph No 1 contractor Shri Badri Prasad deposited with me the total mount of Rs 17000 seventeen thousand rupees as under  Rs 6000 Six thousand rupees on 27 12 1950
Rs 11000 Eleven thousand rupees on 21 1 1951
Receipts have been passed for depositing the above amount
382 3
The transfer of the forest shall not be done without consent of the owner
The contractor shall have to pay Rs 100 One hundred rupees for transfer
For the proper execution of work of the forest the felling of the forest shall have to be done from one side
Excluding the teak trees upto the girth of 12 inches the cutting of those teak trees which are above that girth shall have to be serially done
After felling the stumps of teak trees should be 3 inches high from the ground and slanting so as to
drain the water off
It shall be necessary to prepare the stumps within a week
Till the stumps are passed the wood cannot be removed
Only the paring can be done
The coupe guard shall make a hammer mark of passing on the stump and end of the pared wood
The contractor shall have to get the transit of goods done by the coupe guard
The contractor shall have to do
the transit of goods through the license book and submit the monthly accounts
Without licence no goods shall be transported out of the forest
The contractor shall have to take care of the teak trees of 12 inches girth standing in the forest
If damage is caused proper penalty shall be charged
The contractor can appoint an agent with permission
The contractor shall have to deposit Rs 100 One hundred rupeesfor properly preparing the stumps of the teak trees of the forest before starting the work
This amount shall be returned on completion of the work if the stumps are properly prepared otherwise the expenses which may be incurred shall be deducted
The contractor shall be responsible for any damage caused to the forest by the contractor or his agent and he shall have to pay the penalty
The period of the contract shall be 3 years ie from 27 12 1950 to 27 12 1953
Hence the agreement in execution and the same is The contractor and the owner of the forest On January 22 1951 the Abolition of Proprietary Rights Estates Mahals Alienated Lands Act 1950 Madhya Pradesh Act 1 of 1951  hereinafter referred to as the Act received the assent of the President and was published in the Gazette on 383 January 26 1951
The plaintiff started working under the contract in March 1951
On March 31 1951 a notification was issued vesting the estates in the State and the State Government prohibited the plaintiff from cutting timber in exercise of the rights under the contract
Apparently negotiations took place between the State Government and the plaintiff and on February 1 1955  the Divisional Forest Officer wrote to the plaintiff as follows Subject  Contract of big trees of Sunderpani village of Makrai State
Reference  Memo No 5424 4339 11 dated 21st October 1954 of the Forest Department of Madhya Pradesh Government
Kindly inform whether you are ready to any further Rs 17000 seventeen thousand rupees for the contract of big trees of Sunderpani village of Makrai Circle which contract is under dispute at present
This contract can be given to you on this compromise only
If you do not wish to pay this amount you may in future take any action you deem fit
You may express your desire within seven days of the receipt of this letter
If you fail to do
this it will be presumed that you are not inclined to make a mutual compromise
On receipt of your reply the State Government will be informed
 It is this letter which the plaintiff contends was an offer and which he accepted by the following letter dated February 5 1955 Subject Contract of sale of teak trees in Sunderpani Forest in Makrai Range
Reference  Your letter No 180 dated 1st Feb 1955 
Dear Sir I am ready to pay Rs 17000 provided my claim to have the refund of Rs 17000 already paid from Shri Bharat Shah the owner of the village or any other relief consequential to the judgment of that case remains unaffected
I reserve my right to claim the said or like amount
Subject to these conditions I shall pay Rs17000 as required in your above referred letter
 By memorandum dated October 24 1956 the Government wrote to the plaintiff as follows 384 Reference  Your application dated 12th September 1956 addressed to the Minister for Forests Madhya Pradesh
Government regret that the request made in your application under reference cannot be acceded to
Your application has therefore been rejected
 The application dated September 12 1956 is not included in the printed record but the plaintiff states that it is by this memorandum that the Government finally repudiated its obligations under the contract
Thereupon the plaintiff filed the suit praying for a declaration that the rights granted to the plaintiff under the licence dated January 21 1951 had not been affected by the vesting of the estates in the State under the Act
In the alternative he prayed that he was entitled to specific performance and delivery of the contract which was completed on February 5 1955
He further prayed that in case he was not entitled to these reliefs Rs 50000 damages be awarded against the State
Three points have been raised before us 1 that the forest and trees did not vest in the State under the Act 2 that even if they vested the standing timber having been sold to the plaintiff did not vest in the State under the Act 3 that a new contract was completed on February 5 1955 and the plaintiff was entitled to specific performance of the contract
The Act and the rights of persons holding contracts to cut and take away timber and fruits of the trees have been the subjectmatter of consideration by this Court on several occasions
But the learned counsel for the plaintiff contends that none of those cases cover the case of the plaintiff because according to him none of those cases dealt with standing timber
He says that the plaintiffs contract is a contract for the sale of goods and the property in the goods had vested in him and therefore it stands on a different basis from the contracts construed in the earlier cases
The learned counsel for the respondents on the other hand maintains that the plaintiffs case is covered by the earlier decisions and all the arguments which he has advanced have been rejected by this Court in those cases
The relevant statutory provisions of the Act are these Section 3
Vesting of proprietary rights in the State  1  Save as otherwise provided in this Act on 385 and from a date to be specified by a notification by the State Government in this behalf all proprietary rights in an estate mahal alienated village or alienated land as the case may be in the area specified in the notification vesting in a proprietor of such estate mahal alienated village alienated land or in a person having interest in such proprietary right through the proprietor shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances
2 After the issue of a notification under sub section 1 no right shall be acquired in or over the land to which the said notification relates except by succession or under a grant or contract in writing made or entered into by or on behalf of the State and no fresh clearing for cultivation or for any other purpose shall be made in such land except in accordance with such rules as may be made by the State Government in this behalf Section 4
Consequences of the vesting  1  When the notification under sec
3 in respect of any area has been published in the Gazette then notwithstanding anything contained in any contract grant or document or in any other law for the time being in force and save as otherwise provided in this Act the consequences as hereinafter setforth shall from the beginning of the date specified in such notification hereinafter referred to as the date of vesting ensue namely  a all rights
title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land  cultivable or barren grass land shrub jungle forest trees fisheries wells tanks ponds water channels ferries pathways village sites hats bazars and melas and in all sub soil including rights if any in mines and minerals whether being worked or not shall cease and be vested in the State for purposes of the State free
of all encumbrances and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act  
Section 5
Certain properties to continue in possession of proprietor or other person
Subject to the provisions in Sections 47 and 63 a all open enclosures used for agricultural or domestic purposes and in continuous possession for twelve  386 years immediately before 1948 49 all open house sites purchased for consideration all buildings places of worship wells situated in and trees standing on lands included in such enclosures or house sites or land appertaining to such buildings or places of ownership within the limits of a village site belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person as the case may be and the land thereof with the areas  appurtenant thereto
shall be settled with him by the State Government on such terms and conditions as it may determine b all private wells and buildings on occupied land belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person c all trees standing on land comprised in a homefarm or homestead and belonging to or held by the outgoing proprietor or any other person shall continue to belong to or held by such proprietor or other person d all trees standing on occupied land other than land comprised in home farm or homestead and belonging to or held by a person other than the outgoing proprietor shall continue to belong to or be held by such person e all tanks situate on occupied land and belonging to or held by the outgoing proprietor or any other person shah continue to belong to or held by such proprietor or other person f all tanks belonging to or held by the outgoing proprietor which are situate on land other than village site or occup ied land and in which no person other than such proprietor has any rights of irrigation shall belong
to or be held by such proprietor
g all tanks and embankments bandhans belonging to or held by the outgoing proprietor or any other person which are situate on land other than village site occupied land and the beds of which are under cultivation of such proprietor or such other person shah belong to or be held by such proprietor or such other person and the land under such tanks and embankments shall be settled with such proprietor or such other person on such terms and conditions as the State Government may determine h all groves wherever situate and recorded in village papers in the name of the outgoing proprietor or any other person shall continue to belong to or be held 387 by such proprietor or such other person and the land under such groves shall be settled with such proprietor or such other person by the State Government on such terms and conditions as it may determine
Section 6
Certain transfers to be void
1 Except as provided in sub section 2 the transfer of any right in the property which is liable to vest in the State under this Act made by the proprietor at any time after the 16th March 1950 shall as from the date
of vesting be void
 Let us now look at the decisions of thiS Court and see what has been laid down therein
In Chhotabhai jethabai Patel vs The State of Madhya Pradesh1 which we may mention has since been overruled the contract was in respect of the right to pluck collect and carry away tendu leaves to cultivate culture and acquire lac and to cut and carry away teak and timber and other species of tree and bamboos
The Court observed It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the specified date  
The scheme of the Act as can be gathered from the proviSions referred to above makes it reasonably clear that whatever was done before 16th March 1950 by the proprietors by way of transfer of rights is not to be disturbed or affected and that what vests in the State iS what the proprietors had on the vesting date
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee those rights would no doubt vest in the State
In all these petitions the several contracts and agreements were before the date of vesting and many of them were prior even to the 16th March 1950
The petitioners had taken possession of the subject matter of the contracts namely tendu leaves lac palsadies teak timber and hardwood bamboos and miscellaneous forest produce
 The Court construed the contracts in that case thus The contracts and agreements appear to be in essence and effect licences granted to the transferees to cut gather and carry away the produce in the shape of tendu leaves or lac or timber or wood The Court further held that the rights of the petitioners were not encumbrances within the meaning of the expression free from encumbrances in section 3  1  of the Act
The Court accordingly issued a writ prohibiting the State from interfering in any manner with 1   479 481483
388 the enjoyment of those rights by the petitioner
It may be mentioned that in that case the Court was dealing with an application under article 32 of the Constitution
Chhotabhai s1 case was distinguished in Ananda Behera vs The State of Orissa2 which again dealt with a petition under article 32 of the Constitution
In Anand Behara vs The State of Orissa2 the subject matter of licence was fishery rights and the Act which was construed was the Orissa Estates Abolition Act 1951
The Court held that the right sought to be acquired by the petitioners by their several purchases was not in respect of any future goods as claimed by them but was a license to enter on the land coupled with a grant to catch and carry away the fish in other words a profit a prendre which is immovable property within the meaning of the Transfer of Property Act read with section 325 of the General Clauses Act
The Court further held that as it was an oral licence it contravened section 54 of the Transfer of Property Act and therefore no title or interest therein passed to the petitioners in that case
The Court distinguished Chhotabhai s1 case on the following grounds It is necessary to advert to Firm Chhotabhai jethabai Patel  Co vs The State of Madhya Pradesh1 and explain it because it was held there that a right to pluck collect and carry away  tendu leaves does not give the owner of the right any proprietary interest in the land and so that sort of right was not an encumbrance  within the meaning of the Madhya Pradesh Abolition of Proprietary Rights Act
But the contract there was to pluck collect and carry away  the leaves
The only kind of leaves that can be plucked  are those that are growing on trees and it is evident that there must be a fresh crop of leaves at periodic intervals
That would make it a growing crop and a growing crop is expressly exempted from the definition of immovable property  in the Transfer of Property Act
That case is distinguishable and does not apply here In Mahadeo vs The State of Bombaya which was again a petition under article 32 of the Constitution Chhotabhai s1 case was not followed
In flus case some of the proprietors had granted to the several petitioners rights to take forest produce mainly tendu leaves from the forests included in the Zamindaris belonging to the proprietors
The agreements conveyed to the petitioners in addition to the tendu leaves other forest produce like timber bamboos etc the soil for making bricks and the right to build on and occupy land for the purpose of their business
These rights 1  2  3 1959 Supp 2 SCR 339
389 were spread over many years but in the case of a few the period during which the agreements were to operate expired in 1955
This Court held that the agreements required registration and pointed out that some aspects had not been brought to the notice of the Court in Chhotabhai s1 case
Hidayatullah J as he then was speaking for the Court observed But what was the nature of those rights of the petitioners  It is plain that if they were merely contractual right then as pointed out in the two later decisions in Ananda Behera vs The State of Orissa2 Shantabai s casea the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not aparty
If on the other hand the petitioners were mere hcensees then also as pointed out in the second of the two cases cited the licences came to an end on the extinction of the title of the licensers
In either case there was no question of the breach of any fundamental rights of the petitioners which could support the petitions which were presented under article 32 of the Constitution
 The Court then construed the agreements in question and came co the conclusion that the agreements could not be said to be contracts of sale of goods simply
Then the Court examined the provisions of the Central Provinces I and Revenue Act and came to the following conclusion From this it is quite clear that forests and trees belonged to the proprietors and they were items of proprietary rights
The first of the two questions posed by us therefore admits of none but an affirmative answer
If then the forest and the trees belonged to the proprietors as items in their proprietary fights  it is quite clear that these items of proprietary rights have been transferred to the petitioners
The answer to the second question is also in the affirmative
Being a proprietary right  it vests in the State under sections 3 and 4 of the Act
The decision in Chhotabhai s1 treated these rights as bare licences and it was apparently given per incuriam and cannot therefore be followed
 It seems to us that this decision concludes the controversy before us
This decision was followed in State of Madhya Pradesh vs
Yakinuddin4 Various agreements were construed in that case one agreement was to propagate lac another agreement was to 1  2  3  4  390 collect tendu leaves and another agreement was with respect to a right to collect fruits and flowers of Mahua leaves
It was contended that these rights were saved in view of the provisions of the Act but this contention was negatived
Sinha CJ speaking for the Court observed that the distinction between a bare licence and a licence coupled with grant or profit a prendre was irrelevant because whatever may have been the nature of the grant by the outgoing proprietors in favour of the respondents those grants had no legal effect as against the State except in so
far as the State may have recognised them
But the provisions of the Act leave no manner of doubt that the rights claimed by the respondents could not have been enforced against the State if tiao latter was not prepared to respect those rights and the rights created by the transactions between the respondents and their grantors did not come within any of the saving clauses of section 5
 Earlier he had observed that any person claiming some interest as a proprietor or as holding through a proprietor in respect of any proprietary interest in an estate has got to bring his interest within section 5 because on the date of vesting of the estate the Deputy Commissioner takes charge of all lands other than occupied lands and homestead and of all interests vesting in the State under section 3
Upon such taking over of possession the State becomes liable to pay the compensation provided for in section 8 andthe succeeding sections
The respondents have not been able to show that their interest comes under any of the clauses aforesaid of section 5 The last case in which this Act was construed was Mulamchand vs State of Madhya Pradesh1
In that case Mulamchand had purchased a right to pluck collect and remove forest produce like lac tendu leaves etc from the proprietors of the different Malguzari jungles
This Court followed State of Madhya Pradesh vs Yakinuddin2 and negatived the claim of Mulamchand to exercise his rights under the agreement
In view of these cases it is too late in the day to contend that the forest and the trees did not vest in the State under the Act
There is no force in the contention of the learned counsel that under the contract the plaintiff had become owner of trees as goods
It is true that trees which are agreed to be severed before sale or under the contract of sale are goods for the purposes of the 
But before they cease to be proprietary rights or interest in proprietary rights within the meaning of sections 3 and 4a of the Act they must be felled under 1 the contract
It will be noticed that under cl 1 of the contract 1 Civil Appeal No 393 of 1965 dated February 20 1968
2  391 the plaintiff was entitled to cut teak trees of more than 12 inches girth
It had to be ascertained which trees fell within that description
Till this was
ascertained they were not ascertained goods within section 19 of the 
Clause 5 of the contract contemplated that stumps of trees after cutting had to be 3 inches high
In other words the contract was not to sell the whole of the trees
In these circumstances property in the cut timber would only pass to the plaintiff under the contract at the earliest when the trees are felled
But before that happened the trees had vested in the State
This brings usto the last point namely whether a new contract was concluded between the Government and the plaintiff
It is extremely doubtful whether the letter dated February 1 1955 is an offer
It seems to be an invitation to the plaintiff to make an offer
Be that as it may even if it is treated as an offer there was no unconditional acceptance by the letter dated February 5 1955
The plaintiff expressly reserved his right to claim a refund of Rs 17000
According to the letter of the Divisional Forest Officer dated February 1 1955 the plaintiff had to give up his claim to Rs 17000 which he had already paid and had to pay a further sum of Rs 17000
The High Court in our opinion rightly held that the alleged acceptance of the offer made on February 1 1955 was conditional and qualified
In the result the appeal fails and is dismissed with costs
VPS Appeal dismissed


Summary:
The appellant entered into a contract in respect of certain forests in a Jagir in Madhya Pradesh
Under el 1 of the contract he was entitled to cut teak trees of more than 12 inches girth
Under cl 5 the stumps of trees after cutting had to be 3 inches high
After the passing of the Abolition of Proprietary Rights Estates Mahals
Alienated Lands Act 1950 a notification was issued vesting the estate in the State
and the appellant was prohibited from cutting timber in exercise of his rights under the contract
After some negotiations a letter was written on February 1 1955 to the appellant on behalf of the State that the appellant s claim to cut trees under the contract would be considered only if he gave up his claim to a sum of Rs 17000 which he had already paid under the contract and was willing to pay a further sum of Rs 17000
The appellant by his letter dated February 5 1955 expressed his willingness to pay the additional sum but reserved his right to claim a refund of the first sum
The State Government rejected the appellant s right to cut trees
He then filed a Suit claiming specific performance of the contract on the grounds 1 The forest and trees did not vest in the State under the Act 2 Even if they vested the standing timber having been sold to the appellant did not vest in the State and 3 In any event a new contract was completed on February 5 1955 and the appellant was entitled to its specific performance
In appeal to this Court HELD 1 The forest and trees vested in the State under the Act360 F G Mahadeo vs State of Bombay 1959 Supp
2 SCR 339 State of MPv
Yakinuddin  and Mulamchand vs State of MP CA No 393 of 1965 dated February 20 1968 followed
2 Under the contract the appellant had not become the owner of the trees as goods
The property in the timber could pass to the appellant only when the trees are felled but before they were felled the trees had vested in the State
391 B Under el
5 of the contract there was no sale of the whole of the trees and under cl 1 it had to be ascertained which trees fell within the description of trees which the appellant was entitled to cut
Till that was done they were not ascertained goods  within section 19 of the 
391 A B 3 Even if the letter of ist February could be treated as an offer there was no unconditional acceptance of the offer because there was 381 a reservation by the appellant of his right to claim refund in his letter dated 5th February and hence there was no concluded contract
391 C D