HIGH COURT OF HIMACHAL PRADESH AT SHIMLA OSA No. : 14 of 2008 Reserved on: 6.1.2010. Decided on: 2.3.2010 State of H.P. and another …… Appellants. Versus M/s Friends and Company ………Respondent. Coram: The Hon’ble Mr.Justice Deepak Gupta, Judge. The Hon’ble Mr.Justice V.K. Ahuja, Judge. Whether approved for reporting? No. For the appellants: Mr.R.K. Bawa, Advocate General, with Mr. Rajesh Mandhotra and Mr. R.M. Bisht, Deputy Advocate Generals. For the respondent: Mr.Shrawan Dogra, Advocate. Per V.K. Ahuja, J.: This is an appeal filed by the appellant/State of H.P. under Section 96 of the Code of Civil Procedure against the judgment and decree passed by the learned Single Judge, dated 8.9.2008, vide which the suit of the respondent was decreed for recovery of Rs.7,15,376/-, alongwith interest at the rate of 6% per annum. Briefly stated the facts of the case are that the respondent (hereinafter also referred to as the plaintiff) filed a suit for accounts and for recovery of Rs.18,05,000/- with future interest at the rate of 18% per annum as against the appellants (hereinafter also referred ___________ 1.Whether reporters of Local papers may be allowed to see the judgment? Yes. to as the defendants). The plaintiff firm had been working as forest lessee and had purchased in an open auction forest lot No.6/81-83 in Chamba Circle for a consideration of Rs.11,01,000/-. The plaintiff had deposited an amount of Rs.1,10,100/- as security for exploitation and conversion of standing trees into scants/logs. An agreement was executed in between the parties on 13.8.1981 and the plaintiff converted the marked trees into scants/logs. The period of lease was two years upto 31.3.1983 but it was extended upto 31.1.1984. The plaintiff allegedly converted the trees into 25600 scants of different sizes/species, which were floated into two Ghals. Only 25055 scants of different sizes and species were caught at catching point and taken into possession and stacked at boom head. The remaining scants were allegedly lost during Ghal operation as river loss. On payment of proportionate royalty, the plaintiff was permitted to lift 14520 scants for which the export permit was issued. According to the plaintiff, after sending the scants, which were permitted to be taken away by the plaintiff under export permit, balance 10536 scants remained stacked at the boom head. It was alleged that 10536 scants remained in possession of defendant No.1 and they were liable to account for these scants. The plaintiff firm alleged that it learnt that instead of 10536 scants, only 5005 scants were available at the boom head and the remaining scants were either misappropriated or stolen with the connivance of the Forest Department. The price of 10536 scants was assessed at Rs.19,80,605/- and after adjusting the amounts, the plaintiff claimed a sum of Rs.18,05,000/- from the defendants. Defendants admitted the fact that the plaintiff had purchased the lot in an open auction, that the agreement was executed in between the parties and the lessee paid a sum of Rs.6,68,873.23 towards royalty. The extension was also granted to the plaintiff upto 31.1.1984. It was admitted that 25600 scants of different variety were extracted by the lessee and launched in two Ghals and 25055 scants were caught by the lessee at rafting points, which were never taken in possession by the Forest Department and they remained in possession of the lessee. The river loss comes to 545 scants. It was also pleaded that the export permits of 14520 scants were issued and the balance timber remained in possession of the plaintiff, who was responsible for shortage or pilferage. On verification, only 5005 scants were found on the spot by the field staff, which were taken in possession in a criminal case registered and these were sold by the order of the court. The defendants also pleaded that the security amount is lying with the Forest Department, which is to be adjusted against the balance due. It was also pleaded that a sum of Rs.7,19,633.46 is payable by the plaintiff to the defendants and accordingly the suit is liable to be dismissed. On the pleadings of the parties, the following issues were framed: 1. Whether 10536 scants were lying in the custody, care and possession of the Forest Department at boom heads and were lost for which the Forest Department is responsible to account for? OPP 2. If issue No.1 is proved, whether the plaintiffs are entitled to recover Rs.18,05,000/- or any other amount from the defendants. 3. Relief. The learned Single Judge, after taking the evidence and hearing the parties, decided both the issues in favour of the plaintiff and against the defendants and decreed the suit of the plaintiff for recovery of Rs.7,15,376/- alongwith interest at the rate of 6% w.e.f. 15.9.1987 till realisation of the amount. We have heard the learned counsel for the parties and have gone through the record of the case. The submissions made by the learned Advocate General for the appellants were that there was nothing on the record to show that the timber was handed over to Forest Department. It was submitted that it was the plaintiff, who had kept a Chowkidar for the care of the timber and there was only control of the Forest Department and that the actual possession of the timber was never handed over to the defendants and in case there was any loss, it was for the plaintiff to account for it and not for the defendants. It was submitted that there is sufficient evidence on the record to show that the possession of the timber remained with the lessee and the lessee never handed over the said timber to the defendants after the cancellation of the agreement. As such, the plaintiff firm was not entitled to the amount claimed by it. On the other hand, the submissions made by the learned counsel for the respondent were that the permission of the Department is required at every stage i.e. at the stage of conversion, for carrying of Ghal and since the permission was not granted due to the fault of the Forest Department, the plaintiff was not able to transport the timber and some of the scants were recovered by the Vigilance Department. It was submitted that it was the property of the Forest Department all along and in case there was any loss during this period, since the possession was under the control of the Forest Department, the plaintiff was not liable to account for the same. On hearing the submissions of the learned counsel for the parties, it is clear that the main dispute to be considered and decided by this Court is as to in whose possession 10536 scants remained, either in the possession of the plaintiff or in the possession of defendant No.1. The defendants were liable to account for the same in case the possession was with them. For that a reference has to be made to the evidence led by both the parties in this regard. The plaintiff had alleged itself that instead of 10536 scants, which remained at the boom head, only 5005 scants were available and the remaining scants were either misappropriated or stolen with the connivance of Forest Department i.e. of defendant No.1. It has to be seen as to in whose possession these scants were there when they were allegedly misappropriated or stolen. According to the terms and conditions of the agreement entered in between the parties, a timber depot was to be established by the lessee. As per Clause 18(F), the timber brought to Dhanotu Depot will remain there at the risk of forest lessee concerned. According to Clause 18(D), the timber at Mantaruwala Depot will also remain at the risk of the forest lessee. It had been held by the learned Single Judge in para 11 of the judgment that the plaintiff was the owner of the scants of the lot when those were caught at the catching point. These findings have not been challenged to be incorrect. The next question, which was determined by the learned Single Judge, was whether 10536 scants were in custody, care and possession of the Forest Department at the catching point and were lost for which the Forest Department is responsible. The fact that the plaintiff extracted 25600 scants of different species has been proved by Ext.PC, letter dated 31.10.1984 of Divisional Forest Officer to the Conservator of Forests. Thus, it was concluded by the learned Single Judge that 10535 scants should have remained on the spot but on physical verification, these were found to be only 5005. 5415 scants were sold as per the orders passed by the Hon’ble Court in the criminal case. The plaintiffs had examined PW-10 Balak Ramson, the Manager of the plaintiff firm. He has stated that he worked as Manager on behalf of the plaintiff firm in respect of the lot in dispute and had been submitting progress reports to the Range Officer. He stated that the timber was collected at the boom head at Kalsuin. He admitted that on behalf of the plaintiff firm, there was one Chowkidar. He further stated that about 10000 odd scants were collected at the boom head at Kalsuin. The deficiency was due to river loss. He stated that the timber only remains under the watch and ward of the Department, which does not lead to the inference that it was in the possession of the Forest Department. In case it was in the possession of the Forest Department, there was no necessity of the plaintiff to engage a Chowkidar, as has been stated by this witness. The only supervisory nature of the Forest Department was to keep a watch that the same is not exported without export permits or so. He admitted that the timber was exported against the export permits issued by the Forest Department from the depot at Kalsuin. He admitted that at the Depot at Kalsuin, only the timber of the plaintiff firm was stacked, which depot was established by the plaintiff firm. He denied his knowledge about the Forest Guard and other officials deputed by the Forest Department at Kalsuin Depot. In reply to a specific question, this witness admitted that before launching, during the floating, at the boom head or at the depot, if scants are stolen or there is any shortage due to any reason, it is the responsibility of the forest lessee. This witness has clearly admitted the fact that the scants were in possession of the plaintiff firm and that it was responsible for the loss. The statement of this witness is relevant since he was the Manager of the plaintiff firm dealing with this work. The mere fact that the lessee could not remove the timber without the express permission of the Forest Department, as stated by DW-5 R.A. Singh, the then Divisional Forest Officer, does not lead to the inference that the possession was of the Department and it only refers to the supervision of the Forest Department since they have to see that it is not removed without the export permit. The lease was cancelled vide order dated 24.4.1985 Ext.PO. Therefore, the balance timber of the lot was to stand confiscated to the Government and could be sold in an open auction. The learned Single Judge had concluded in para 14 of its judgment that on cancellation of the lease agreement, the scants left on the date of cancellation of the agreement of the lot came in possession of the defendants and the defendants are answerable to account for those scants to the plaintiff. We are not in agreement with these observations since the lease might have been cancelled and the timber was liable to be confiscated to the State who was entitled to sell it in an open auction but that could have been possible if the timber collected at the spot was handed over by the plaintiff firm to the defendants for which there is no specific evidence. The witnesses examined by the plaintiff including PW-10 Balak Ramson have nowhere stated that the possession of the timber was handed over to the Forest Department by way of any letter or physically or in any other such manner so as to hold that the timber was in possession of the Forest Department at the time it was allegedly misappropriated from the depot. The learned Single Judge had assessed the market value of these scants on the basis of average rates of deodar, kail etc. on the basis of the agreement Ext.DW-4/A. However, the question of valuation will arise in case it is held that these scants were lying in possessions of the defendants and not in possession of the plaintiff. Once it has been found that these scants were lying in the possession of the plaintiff firm and not in the possession of the defendants, it cannot be held that the plaintiff was entitled to the price of these timber as assessed by the learned Single Judge. The evidence of the plaintiff does not establish that the Forest Department was in control of the depot where the timber was collected and when the loss occurred. We have already mentioned above that there is no evidence in regard to the handing over of the said timber to the Forest Department at any stage. The witnesses examined by the defendants, as mentioned above, have stated that the possession was that of the lessee, which fact has not been considered by the learned Single Judge and since the timber was never handed over to the Forest Department, the presumption drawn by the learned Single Judge that it was in the possession of the defendants cannot be said to be correct and is contrary to the evidence. In view of the above discussion, we are not in agreement with the findings recorded by the learned Single Judge that the plaintiff was entitled to the suit amount after assessing the value of the timber lost from the forest depot for which the defendants are not liable. The defendants have not claimed any amount as set off though they had pleaded that still an amount of Rs.7,19,633.46 is payable by the plaintiff to the defendants after adjustment of amounts. In view of the above discussion, we accordingly hold that the findings of the learned Single Judge under issues No.1 and 2 are liable to be set aside and the same are set aside. The plaintiff firm is not entitled to any amount, as claimed by it. Therefore, the appeal filed by the appellants is accepted and the suit filed by the plaintiff stands dismissed. However, the parties are left to bear their own costs. (Deepak Gupta), Judge. March 2, 2010. (V.K. Ahuja), (TILAK) Judge.