IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Civil Suit No. 36 of 1998. Judgement reserved on: 29 .3. 2011. Date of decision: 27.4.2011. Mahendra Pal ….. Plaintiff. Vs. State of H.P. & others …. Defendants. Coram The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for reporting?1 No For the plaintiff : Mr. Ramakant Sharma, Advocate. For the defendants : Ms.Ruma Kaushik, Addl. Advocate General with Mr. J.S.Rana, Asstt. Advocate General, for defendants No.1 and 2. Mr. Neel Kamal Sood, Advocate for defendant No.3. Kuldip Singh, Judge. This is a suit for recovery of Rs.35,67,722/- alongwith future interest at the rate of 16.5% per annum from the date of institution of the suit till actual realization 2. The pleaded case of the plaintiff briefly is that the Kutlehar Forests are located in districts Una and Hamirpur in Himachal Pradesh. According to plaintiff, his forefathers managed Kutlehar Forests from generations to generations. The plaintiff inherited the rights in Kutlehar Forests from his forefathers. The Whether the reporters of the local papers may be allowed to see the Judgment? Yes …2… plaintiff was appointed as Forest Officer in his capacity as Superintendent of Kutlehar Forests under Section 2 (2) of the Indian Forest Act vide notification dated 1.10.1958 issued by the Government of Punjab. 3. The Kutlehar Forests were under the charge and management of the plaintiff. He was competent to maintain and preserve the said forests and was entitled to dispose of the forest produce such as resin, timber, bamboo, bhabbar grass in accordance with the working plan prepared by the Forest Department. 4. The management of these forests was taken over by the department of Forest Farming and Conservation under the Himachal Pradesh Kutlehar Forests (Acquisition of Management) Act, 1992 by the Divisional Forest Officer, Una as intimated vide telegram dated 6.2.1996 and copy by post dated 7.2.1996. 5. It is the case of the plaintiff that in accordance with the terms and conditions subject to which the management of Kutlehar Forests was entrusted to plaintiff and his forefathers, they were entitled to retain 3/4th share of the total income derived or derivable from the forests, whereas 1/4th share of the gross income was payable to the Government. The entire expenses on the management and exploitation of the forests had to be incurred by the plaintiff and his forefathers. 6. The Himachal Pradesh State Forest Corporation (for short ‘Corporation’) was incorporated under the Companies Act, 1956 in the year 1974. The Corporation is wholly owned and controlled by the Government of Himachal Pradesh. On 18.5.1974 Government of …3… Himachal Pradesh constituted a committee of officers to determine the price and terms and conditions for the supply of resin, resin blazes, standing trees and other forest produce to be handed over to the Corporation from time to time. The committee in its meeting held on 16.5.1988 decided to comply the decisions of the pricing committee to the Kutlehar Forests also. The notification dated 18.5.1974 was amended vide another notification dated 28.11.1988. After enforcement of Himachal Pradesh Resin and Resin Products (Regulation of Trade) Act, 1981, no person including plaintiff could sell resin to any person other than the Government or its authorized officer. 7. The pricing committee appointed by the Government of H.P. had taken decisions in respect of all issues which had a material bearing on the relationship between the plaintiff and forest department of Government of H.P. and the Corporation. The Kutlehar Forests were equated with the State Forests and the decisions taken in respect of said forests were made applicable to Kutlehar Forests also. 8. The resin tapping work is carried out as per technical order prepared by the Forest Department duly approved by the State Government. In the year 1995,the management of Kutlehar Forests remained with the plaintiff. The plaintiff offered 1,33,591 resin blazes to Divisional Manager of defendant No.3 at Una vide letter dated 3.2.1995 and letter dated 10.6.1995. The defendant No.3 took over these blazes soon thereafter. …4… 9. On 14.2.1995 a public notice was issued to the registered labour supply mates for tapping the blazes and they were asked to submit their tenders for this purpose on or before 1.3.1995 upto 2.p.m. The follow up action was also taken and the progress of the work on these blazes was confirmed by the Assistant Manager, Bangana of the Corporation vide letter dated 22.3.1995. As per decision of the pricing committee dated 25.4.1995, the price was fixed at Rs.24/- per blaze for 1994 season and Rs.26/- tentatively for 1995 tapping season. In this way a sum of Rs. 34,73,366/- was payable by Corporation to the plaintiff towards royalty of resin blazes relating to 1995 season. The plaintiff vide letter dated 1.9.1995 requested Divisional Manager of the Corporation at Una to pay Rs.17,36,683/- first installment out of Rs.34,73,366/- to plaintiff on or before 15.9.1995, due date. Out of total amount of royalty as and when received, the plaintiff was to pay 1/4th share of the said amount to the State Government and to retain 3/4th share as his personal income. 10. The amount of royalty was payable to the plaintiff by the Corporation immediately when the sale of resin blazes concluded by the acceptance of blazes. However, for the sake of convenience the payment of royalty was broken into two installments, one to be paid on or before 15.9.1995 and the second on or before 15.12.1995, but nothing was paid to the plaintiff. The plaintiff as per decision of the pricing committee dated 12.6.1991 was entitled and Corporation under obligation to pay interest at the rate of 16.5% per annum w.e.f. due dates till the date of actual payment in case of delayed payments …5… of royalty amount. The plaintiff had written several letters to the authorities for making payment but without any result. 11. The Divisional Manager of respondent No.3 at Una vide letter dated 6.11.1995 informed the plaintiff that verified lists of resin blazes had been sent to the Managing Director of the Corporation vide letter dated 6.9.1995 for releasing the payment of royalty. A reminder was also sent by the Divisional Manager, Una to the Director (North) on 22.12.1995, who recommended expeditious payment of royalty amount to the plaintiff but without any result. The defendants are liable to pay interest on delayed payment at the rate of 16.5% per annum with effect from due date. 12. The plaintiff filed CWP No. 1758 of 1995 against the illegal acts of defendants. The writ petition was dismissed on 28.10.1997 with liberty to the plaintiff to resort to appropriate proceedings before the appropriate forum for the relief sought in the writ petition. 13. The action of the defendants in denying the payment of the resin blazes taken over by them from the plaintiff in the year 1995 and duly tapped and extracted is not only unjust but is also unfair and arbitrary being against all canons of law. The defendants cannot be permitted to deny the benefit of decisions of the pricing committee to the plaintiff. The amount payable by the defendants to plaintiff on account of 3/4th share of royalty of 1,33,591 blazes alongwith interest at the rate of 16.5% per annum from the due dates comes to Rs.35,67,722/-. The plaintiff is also entitled to recover interest on this …6… amount at the rate of 16.5% per annum as per decision of the pricing committee from the date of institution of the suit till realization. 14. In case the plaintiff is not held entitled to interest at the rate of 16.5% per annum as per the decision of the pricing committee, then in alternative, the plaintiff is entitled to interest on the amount of royalty from 15.9.1995 and 15.12.1995 when the first and second installments of royalty became due for payment till institution of the suit at the rate of 16.5.% under the Interest Act. This rate of interest was the lending rate of Banks in trading accounts and also on the basis of custom and usage. The plaintiff is also entitled to interest at the rate of 16.5% per annum under the Interest Act read with Section 34 C.P.C. from the date of institution of the suit till actual payment. 15. It has been alleged that the plaintiff issued notice to defendants under Section 80 CPC on 24.11.1997 which was delivered to the defendants without any result, hence the plaintiff filed the suit. 16. The defendants No.1 and 2 contested the suit by filing joint written statement in which several preliminary objections have been taken. It has been stated that suit is the repetition of CWP No. 1758 of 1995 filed by the plaintiff which was dismissed on 28.10.1997. The H.P. Kutlehar Forests (Acquisition of Management) Act, 1992 (for short ‘Act’) came into force on 11.3.1995. The Government vide department of Forest Farming and Conservation notification dated 10.3.1995 authorized Divisional Forest Officer, Una to enter upon any land/premises vested in the State Government under Section 4 of the Act. The Divisional Forest Officer, Una …7… initiated necessary action which was evaded by the plaintiff by filing CWP No. 127 of 1995 on 14.3.1995 which was dismissed on 9.8.1995. It has been alleged that w.e.f. 11.3.1995 as per Section 4 of the Act, the grant stands extinguished and all rights, title and interest of the grantee vested in the Government free from all encumbrances. It took time to take over the management which was taken over on 7.2.1996. It has been pleaded that grant however stood extinguished w.e.f. 11.3.1995. 17. On merits, it has been stated that the plaintiff was simply acting as Manager under agreed terms and conditions of the management. The Government enforced the Act vide notification dated 10.3.1995. The plaintiff was directed to hand over complete charge vide Divisional Forest Officer, Una letter dated 11.3.1995. The plaintiff avoided the compliance of letter dated 11.3.1995. The plaintiff filed CWP No. 127 of 1995. On 16.3.1995 the High Court passed the order to the Manager to continue with the management as before. CWP No. 127 of 1995 was dismissed on 9.8.1995. 18. The plaintiff even after the dismissal of the CWP No. 127 of 1995 did not hand over the management and therefore, defendants had to take over the management on 7.2.1996 in absentia. The management vested in the Government on enforcement of the Act w.e.f. 11.3.1995, the entire resin was produced during the period the management was in the hands of the defendants, hence there is no question of distribution of royalty in the ratio 3:1 between erstwhile Superintendent Kutlehar Forests and the State Government. No royalty of resin blazes was payable to plaintiff …8… as the entire resin was produced when the management was in the hands of the State Government. 19. The filing of CWP No. 1758 of 1996 by the plaintiff and the judgment dated 28.10.1997 in CWP No. 1758 of 1996 has not been denied. On or after 11.3.1995 the plaintiff had no right, title or interest in the resin blazes or its royalty. The action of defendant No.3 in not releasing the royalty to plaintiff was due to extinguishment of grant and vesting of right, title and interest of grantee in the Government free from all encumbrances. The entire resin was produced when all rights, title and interest of the grantee stood vested in the hands of the State Government. The defendants have prayed for dismissal of the suit. 20. The defendant No.3 has also contested the suit by filing written statement in which preliminary objections of valuation, jurisdiction, verification have been taken, in addition plea has also been raised that the suit has not been instituted by a competent person. 21. On merits, it has been admitted that 1,33,591 resin blazes were handed over to the Corporation for tapping in the year 1995. The notification for taking over the Kutlehar Forests was issued by the Government on 10.3.1995, this notification was stayed by the High Court on 16.3.1995 in CWP No. 127 of 1995. The possession of the Kutlehar Forests with regard to its management pursuant to the notification and decision dated 9.8.1995 in CWP No. 127 of 1995 when the stay granted by the High Court was vacated was with the Govt. …9… 22. It has been admitted that tentative royalty for resin blazes was fixed at Rs.26/- per blaze. It has been stated that defendant No.3 was directed by the Chief Principal Conservator of Forest, H.P. vide letter dated 21.12.1995 not to release any payment to plaintiff till further orders. 23. It has been stated that according to the decision of the pricing committee constituted by the H.P. Government for the purpose, interest at the rate of 16.5% is payable on delayed payment of royalty. The Corporation has not withheld the payment, but the same was not released on the instructions of the Principal Chief Conservator of Forests. The plaintiff is not entitled to any kind of interest. The defendant No.3 has prayed for dismissal of the suit. 24. The plaintiff filed replication to the written statement of defendants No.1 and 2 and reiterated his stand taken in the plaint while denying the case put forward by defendants No.1 and 2. The plaintiff has also filed replication to the written statement of defendant No.3 and re-asserted his case while denying the defence of defendant No.3. 25. On the pleadings of the parties, the following issues were framed:- 1. Whether the suit is properly valued for the purpose of court fee and jurisdiction? OPP 2. Whether the plaint is not properly verified ?OPD-3. 3. Whether the suit has been instituted by competent person? OPD-3. 4. Whether the plaintiff is entitled to the suit amount or any other amount? If so, from whom? OPP 5. Whether the plaintiff is entitled to claim interest on the amount of the royalty? If so, on what rate? OPP. …10… 6. Whether the plaintiff has no cause of action as alleged? OPD 7. Whether the plaintiff is guilty of acts of suppressio-veri- suggestio falsi? OPD 8. Relief. In order to complete the facts, it is relevant to point that the suit was dismissed by the learned Single Judge on 2.7.2002 and the judgment of the learned Single Judge was upheld by Division Bench on 12.8.2008 in OSA No. 13 of 2002. The Supreme Court in Civil Appeal No. 9353 of 2010 on 26.10.2010 set-aside the judgments passed by the learned Single Judge and Division Bench and remanded the suit to this Court. The judgment dated 26.10.2010 in Civil Appeal No. 9353 of 2010 is reported as Mahendra Pal vs. State of H.P.& Ors. JT 2010 (11) SC 550. 26. I have heard the learned counsel for the parties and have also gone through the record. The issue-wise findings are as follows. ISSUE NO. 1: 27. The plaintiff has assessed the suit for the purposes of court fee and jurisdiction at Rs. 35,67,722/- the claim raised by him in the plaint and has affixed Rs. 37,188/- court fee. It has not been pointed out by the defendants how the suit for the purposes of court fee and jurisdiction has been wrongly valued by the plaintiff. The suit is properly valued for the purposes of court fee and jurisdiction. Accordingly, issue No.1 is decided in favour of the plaintiff and against the defendants. …11… ISSUES NO. 2, 3 & 7: 28. The defendants have not pointed out any defect in the verification nor it has been shown how the suit has not been instituted by competent person. It has also not been established by the defendants on what basis the plaintiff is guilty of acts of suppressio- veri and suggestio-falsi. The defendants have led no evidence for recording a finding in their favour on issues No.2, 3 and 7. Accordingly, issues No. 2, 3 and 7 are decided against the defendants. ISSUES NO. 4 & 5: 29. The issues No.4 and 5 are inter-connected and, therefore, both of them are taken up together for decision. It has been submitted on behalf of the plaintiff that the plaintiff was appointed as Superintendent of Kutlehar Forests vide notification dated 1.10.1958, the plaintiff had been managing the Kutlehar Forests. The entire expenses on the management and exploitation of the forests were incurred by the plaintiff in view of terms and conditions subject to which the management of the Kutlehar Forests was entrusted to plaintiff, he was entitled to retain 3/4th share of the total income derived or derivable from the Kutlehar Forests, 1/4th share of the gross income was payable to the Government. 30. In view of the legislations passed in the State of H.P. the plaintiff could not entrust the resin blazes to any agency other than the agency nominated by the Government namely defendant No.3. During the currency of the management of Kutlehar Forests, the plaintiff offered 1,33,591 resin blazes to Divisional Manager of …12… defendant No.3 at Una on 3.2.1995. The pricing committee on 25.4.1995 fixed the price of resin per blaze at Rs.24/- for 1994 season and Rs.26/- tentatively for 1995 tapping season. In this way, a sum of Rs.34,73,366/- ( 1,33,591 x 26) was payable by defendant No.3 to plaintiff, out of this 3/4th amount was to be retained by the plaintiff and 1/4th amount was to be given to the Government by the plaintiff. 31. The defendants did not pay the aforesaid amount to the plaintiff despite repeated demands, therefore, the plaintiff is entitled to 16.5% interest per annum on due amount from defendants as per decision of the pricing committee dated 12.6.1991. In alternative, the plaintiff is entitled to 16.5% interest per annum on due amount under the Interest Act from defendants for unnecessarily withholding due and payable amount to the plaintiff. It has been submitted that in view of the judgment of remand dated 26.10.2010 of the Supreme Court the controversy is very limited. The plaintiff is entitled to the suit amount. 32. On behalf of the defendants, it has been contended that the plaintiff has no claim in view of the earlier litigation which went up to the Supreme Court titled as State of H.P. vs. Raja Mahendra Pal and others (1999) 4 SCC 43. The Act has come into force on 11.3.1995 vide notification published in gazette on 10.3.1995. Section 4 of the Act provides that notwithstanding anything contained in any law for the time being in force, with effect from the appointed day, the grant shall stand extinguished and any service or obligation attached to such land shall stand abolished; and the grantee shall …13… have no liability to perform any condition or obligation to render any service attached to such grant. All rights, title and interest of the grantee in the forests or waste lands held by him, shall vest in the Government free from all encumbrances. 33. The Supreme Court in JT 2010 (11) SC 550 after noticing judgment dated 31.3.1999 in Civil Appeal No. 9353 of 2010 titled State of H.P. vs. Raja Mahendra Pal and others (1999) 4 SCC 43 has held as follows: “Hence, it is clear that Kutlehar Forests were under the charge and management of the appellant and he was competent not only to maintain and preserve the said forests but was also entitled to his share in accordance with the working plans prepared by the Forest Department. It is also his claim that he took adequate steps for the protection of Fauna and Flora available in the forests in question. It is also his claim that according to the terms and conditions subject to which management of the said forests was entrusted to the appellant and his forefathers, they were entitled to retain 3/4th share of the total income derived or derivable from the forests whereas 1/4th share of the gross income was payable to the Government.” The Supreme Court continued that : “The learned Single Judge and the Division Bench of the High Court basing reliance on Section 4 of the Act held that the right, title and interest of the plaintiff/appellant herein grantee/superintendent of Kutlehar Forests stood extinguished on the appointed day, i.e. 11.03.1995, therefore, he was under no obligation to continue with the management of the forests nor has any right to share in income arising out of the produce of the said forests on and after 11.03.1995. It is true that after 11.03.1995, the appellant cannot have any right over the forest produce. However, in view of the earlier order of this Court clarifying the position and his entitlement, there is no need to go into the vesting right etc. as claimed by the State Government. Admittedly, the appellant was asked to look after the forest …14… produce as Superintendent of Forests and in lieu of salary he was assured grant of 3/4th of the price of resin blaze. It is specifically pleaded and the materials were also placed by the appellant about the work done such as maintenance, manuring protecting the trees etc. It is also specifically pleaded that before the appointed day, 1.e. 11.03.1995, he was still in the management of Kutlehar Forests, offered 1,33,591 resin blazes to the Divisional Manager of the State Corporation at Una for resin tapping during 1995 vide letter dated 03.02.1995. It is also seen that the State Corporation-respondent No.3 herein took over the resin blazes so offered and invited tenders for undertaking the work of tapping on 14.02.1995 and the tenders were opened on 01.03.1995 at 2.30 p.m. All these details are available in the letter of the State Corporation dated 22.03.1995. Inasmuch as the appellant was continuing as Superintendent of Forests without a specific salary but with an assurance of 3/4th price of forest produce such as resin blazes etc. till the appointment day, i.e. 11.03.1995, we are of the view that the appellant is entitled for his legitimate dues till such date. Those aspects were not being correctly adverted to and appreciated by the learned Single Judge as well as by the Division Bench of the High Court and mainly concentrated on the “vesting” of forests on or after 11.03.1995 in favour of the State Corporation by holding that the appellant was not entitled to claim anything thereafter. Even though the appellant placed relevant materials including the assertion and statement of PW-3 who is none else than the Divisional Manager for the State Corporation, Una, those aspects have not been properly appreciated. In those circumstances, we are of the view that ends of justice would be met by remitting the matter to the learned Single Judge for fresh disposal and quantifying the eligible amount.” The Supreme Court further held that: “Under these circumstances, we set aside the orders passed by the learned Single Judge as well as the Division Bench of the High Court and remit the matter to the learned Single Judge for fresh consideration with the available materials. Except pointing out the claim of the appellant, …15… we have not expressed anything on the merits and it is for the learned Single Judge to determine the quantum of the amount till the appointed day, i.e. 11.03.1995 as per the materials placed by both parties in the form of oral and documentary evidence. Inasmuch as the matter is pending from 1999, we request the learned Single Judge to restore the suit to its original number i.e. Civil Suit No. 36 of 1998 and dispose of the same within a period of six months from the date of receipt of this judgment.” 34. The Section 4 of the Act is as follows:- “Vesting of rights of grantee in Government and extinction of rights in grant.- Notwithstanding anything contained in any law for the time being in force, or in any contract or in any judgment, decree or order of any Court, with effect from the appointed day,- (i) The grant shall stand extinguished and any service or obligation attached to such land shall stand abolished; and the grantee shall have no liability to perform any condition or obligation to render any service attached