Case: Durgi Devi &amp; Ors Vs. State Of U.P

and (ii), comes to Rs. 77, 794/-. If this fig ure is divided by 2, the average annual income under clause (e) would come to Rs. 38, 897/-. The High Court rounded off and raised this figure to Rs. 40, 000/-. We do not want to disturb that approximation because the sale of a coupe of the forest for the year immediately following the vesting, showed that the appraised yield of the forest on the date of vesting could be around Rs. 50, 000/-.The last question that remains to be considered is, whether the High Court was right in holding that the Compensation Officer was not competent to deduct under clause (c) of Section 44, 15% from the estimated income of the forest, for management expenses. 12. Mr. Dikshit contends that the word "and" in clause (e) of Section 44 should be read dis- conjunctively so as to convey the sense of "or". If it is so construed proceeds the argument-15% for management cost has got to be deducted from the "gross assets" calculated under Section 39(1) from each of the sources indicated therein, including the income from forests assessed under clause (e) of that Section. 13. We are unable to accept this argument. 14. There is no warrant for reading "and" in clause (c) of Section 44 as "or". The Legislature appears to have advisedly used the expression "cost of management" in conjunction with the expression "irrecoverable arrears of rent". The former takes its colour from the latter in association with which it occurs. From the context, it appears that the expression "cost of management" is confined to the, cost of management in the collection of rents. 15. The scheme of Section 44 also supports this construction. Under the scheme of Section 44, a particular deduction is authorised with reference to income from a particular source. A comparative study of Sections 39(1) and 44 would show that there is no clause in the latter Section which specifically authorises deduction of 15% from the income referable to clause (e) of the former. To elaborate the point, deduction under clause (d) of Section 44 is relatable to income coming under clause (b) of Section 39. Sub-clause (iii) of clause (d) of Section 44 specifically imports and applies the deduction under the preceding clause (c), to the income from the land in the personal cultivation of the intermediary. Clause (e) of Section 44 specifically refers to clause (f) of Section 39 and makes the cost of collection of income from royalties deductible at such rates as may be prescribed. Again, the deduction under clause (g) of Section 44, has by specific reference, been made applicable to the income from the source under clause (g) of Section 39(1). Had Mr. Dikshits argument, that clause (c) of Section 44 contemplates an omnibus deduction which encompasses all the sources of income assessed under clauses (a) to (g) of Section 39(1) been correct, there was no necessity to specify the quantum and nature of deductions separately in clauses (e) and (f) of Sect ion 44 and then relate them by specific reference to sources of income under clauses (f) and (g) of Section 39(1). If clause (c) of Section 44 were applicable proprio vigore to income from Khudkasht land, there was no necessity to incorporate it by specific reference in clause (d)(iii) of the same Section. In other words, the deduction mentioned in clause (c) of Section 44 could have no application to the income assessed from the source under clause (b) of Section 39, but for the special provision made in sub-clause (iii) of clause (d) of Section 44. Construed consistently with the context and scheme of Section 44, it appears that the deduction mentioned in clause (c) of Section 44 was not intended to apply to the income from forest assessed under clause (e) of Section 39(1). The deduction under clause (e) of Section 44 appears to be confined to the rental income assessed under clause (a) of Section 39(1), or the income from Khudkasht lands assessed under clause (b ) of Section 39(1) to which it has been notionally applied by specific incorporation in sub-clause (iii) of clause (d) of Section 44.The High Court was, therefore, right in holding that 15% towards the cost of management could not be deducted by the Compensation Officer in respect of the income from forest calculated under clause (e) of Section 39(1). 16. Nor could the words "gross assets" occurring at the close of clause (c) in Section 44, be divorced from the context of rents and construed in the spacious sense in which they have been used in Section 39. Their meaning and scope in the context is confined to the income from rents. If these words are torn out of the context and interpreted in the comprehensive sense in which they are used in Section 39, this will lead to wholly unreasonable oppressive and absurd results. This was demonstrated by the learned Judges of the High Court, with reference to the income from mines worked directly by an intermediary, calculated under clause (g) of Section 39(1). Clause (f) of Section 44 provides that 95 per centum of the gross income determined under clause (g) of Section 39 would be deductible for the purpose of computing the net assets of the intermediary from this source. If the contention of Mr. Dikshit, that 15% deduct on under clause (c) of Section 44 is applicable to all sources of income, including from the mines under clause (g) of Section 39(1) is correct, then the income from mines directly worked by the intermediary Will suffer a double deduction 95% plus 15% under clauses (f) and (c) of Section 44. This means, instead-of paying any compensation to the intermediary, an exaction of 10 per cent will be made from him. Such could never be the intention of the Legislature. We have therefore no hesitation in repelling this contention of Mr. Dikshit. No other point has been argued before us. 17.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The first is a mixed question of law and fact; while the last two turn on an interpretation of Sections 39 and 44 of the Act and the Rules framed thereunder. It will, therefore be appropriate to notice here the provisions material for our purposeWe find no merit in this contention. This is a concurrent finding of fact and we see no reason to disturb it. There is no dispute with regard to the remaining four items of income from sales in0 and. The total of these four items comes to Rs. 6, 35,. I t is further common ground that out of these items, Rs. 22, 000/The issue before the Compensation Officer was: What should be t he number of years by which this figure of the total income, was to be divided to ascertain the average annual income of the forest in Village Sorna ? The contention of the intermediary was that for this purpose it should be divided by the n umber ofs only. This contention wasd we thinky the Compensation Officer But he wrongly fixed this number at 35Clause (1) (i) of Section 39(1) (e) gives a discretion to the Compensation Officer to take any figure from 20 to 40 agricultural years for the purpose of calculating the average annual income from the forests. The words "considered reasonable" insubclause(i) enjoin a duty on the Compensation Officer to exercise this discretion reasonably and not arbitrarily. Rule 34, extracted above, gives guidelines for determining the period for which average income shall be taken under the aforesaidsubclause(i). For determining such period, the Compensation Officer has to take into consideration several factors, namely, the class of the forest, the periodical fellings made therein during the 40 years preceding the vesting, the income received year after year during the 40 years preceding the vesting, the species of the trees in the forest and their age and class, the condition of forest, etcWe are afraid this argument is not based on any evidence, whatever. Mr. Dikshit referred to the evidence of Babu Singh (D.W.4.) to show that the trees left in this forest at the date of vesting were hardly 3" in diameterWe have gone through the evidence of Babu Singh (D.W.4). Far from supporting Mr. Dikshits contention, it knocks the bottom out of it. Babu Singh was a forest contractor. Babu Singh testified that be had purchased one coupe of the forest in Village Sorna for Rs. 53, 000/from the Forest Department of the State for the year ending March 1953. This means he purchased this coupe after the date of vesting. He stated that the trees purchased by him were of diameters varying from 4" to 12". The forest had a larger number of Kokath trees and less of Sal. The very fact that soon after the vesting, sale of one coupe of the forest fetched Rs. 53,, shows that it had not been mercilessly exploited. This fact of sale of one coupe of this forest by the State soon after the vesting, rather lends great strength to the finding of the High Court that its average annual income, estimated under clause (e) of Section 39(1) would not be less than Rs. 40,. By no stretch of imagination, Babu Singhs evidence could be read as showing that the annual yield from the forest on the date of vesting, was negligible.For fixing the number of years at 35 undersubclause(i) of Section 39(1)(e), the Compensation Officer had not given any reason whatever related to the criteria in Rule 34(1). On the other hand. the High Court took due note of the factors in clauses (i), (ii), (iv) and (v) of Rule 34(1), in determining the period at 20 years for calculating the average annual income. In determining this period at 20 years, the High Court rightly gave due weight to the f act that its exploitation had been scientific and prudent, and it had started yielding income from sale of trees only during 10 or 11 years preceding the date of vesting and even on the date of vesting its condition was good. Since the first fellings were within 20 years of the vesting, it was reasonable to determine the period at 20, the same being the minimum fixed in the statute. Thus, the determination of such period as 20 years by the High Court, in the facts of the case, comports best with the guidelines indicated in Rule 34(1)The Compensation Officer, as mentioned earlier, did not appraise the annual yield of the forest on the date of vesting. A plain reading of clause (e) of Section 39(1) shows that itss (i) and (ii) do not provide for two alternative methods of calculating the average annual income of the forest. The conjunction "and" at the end ofsubclause(i) cannot be read as "or". It conjoins the two sub clauses, and in effect, read in the context of "shall" in the opening part of clause (e), mandates the Compensation Officer to take both the factors into consideration in assessing the average annual income from the forest. The reason why the Legislature has made compliance with the requirement of thissubclause(ii), also, obligatory, appears to be to ensure that the compensation assessed has a reasonable nexus and proportion to the actual and potential value of the forest as on the date of vesting. If a forest has been repeatedly, wholly and indiscriminately exploited within forty years or less immediately before the vesting, its actual and potential value as a forest on the date of the vesting might be far less than the one calculated on the bas is of its average annual income of the p receding 20 to 40 years as the case may be. In such a case, average annual income calculated merely on the basis of the income for a period of 20 to 40 years preceding the vesting, may cause fortuitous inflation in the assessment of compensation, conversely, if a forest has been very little exploited in the preceding forty years and isd and welldeveloped on the date of vesting, then calculation of its average annual income on the basis ofsubclause(i) alone, without taking into account itspotential yield on the date of the vesting, will make the compensation assessed wholly illusory, having no relation whatever to the value of the forest as at the date of vesting. Ent ry of the appraised annual yield of the forest on the date of vesting, into computation under clause (e), operates as a counterpoise against fortuitous inflation or deflation in the assessment. in the view we take we are fortified by a decision of this Court in Ganga Devi v. State of Uttar Pradesh, where it was pointed out that in computing the average annual income under clause (e) of Section 39(1), the Compensation Officer has to refer to both theses (i) and (ii). He can not adopt either of these. It was also pointed out that undersubclause(ii) the annual yield on the date of vesting is to be appraised by taking into consideration, inter alia, the number and age of the trees, the area under forest and the produce. The High Court in the instant case, while determining the yield under subclause (ii) has relied upon the evidence of Mr. Chopra, a retired Forest Officer, who took all the relevant factors into consideration. The High Court also accepted the evidence of Chaudhri Babu Singh, Forest Contractor, which was to the effect that for the year ending March 1953, the sale of one coupe of this forest by the Forest Department of the State, fetched Rs. 53,. No fault therefore, can be found with the High Courts finding that on the date of vesting, the annual yield of the forest, appraised undersubclause(ii) of clause (e) was not less than Rs. 47,128/. Thefigure worked out by the High Court undersubclause(i) by dividing the total income of sales during the preceding 10 or 11 years, i.e. Rs. 6, 13,3 by 20, was Rs. 30,. The total of these figures thus worked out unders (i) and (ii), comes to Rs. 77,. If this fig ure is divided by 2, the average annual income under clause (e) would come to Rs. 38,. The High Court rounded off and raised this figure to Rs. 40,. We do not want to disturb that approximation because the sale of a coupe of the forest for the year immediately following the vesting, showed that the appraised yield of the forest on the date of vesting could be around Rs. 50,e last question that remains to be considered is, whether the High Court was right in holding that the Compensation Officer was not competent to deduct under clause (c) of Section 44, 15% from the estimated income of the forest, for management expensesWe are unable to accept this argumentThere is no warrant for reading "and" in clause (c) of Section 44 as "or". The Legislature appears to have advisedly used the expression "cost of management" in conjunction with the expression "irrecoverable arrears of rent". The former takes its colour from the latter in association with which it occurs. From the context, it appears that the expression "cost of management" is confined to the, cost of management in the collection of rentsThe scheme of Section 44 also supports this construction. Under the scheme of Section 44, a particular deduction is authorised with reference to income from a particular source. A comparative study of Sections 39(1) and 44 would show that there is no clause in the latter Section which specifically authorises deduction of 15% from the income referable to clause (e) of the former. To elaborate the point, deduction under clause (d) of Section 44 is relatable to income coming under clause (b) of Section 39.e (iii) of clause (d) of Section 44 specifically imports and applies the deduction under the preceding clause (c), to the income from the land in the personal cultivation of the intermediary. Clause (e) of Section 44 specifically refers to clause (f) of Section 39 and makes the cost of collection of income from royalties deductible at such rates as may be prescribed. Again, the deduction under clause (g) of Section 44, has by specific reference, been made applicable to the income from the source under clause (g) of Section 39(1). Had Mr. Dikshits argument, that clause (c) of Section 44 contemplates an omnibus deduction which encompasses all the sources of income assessed under clauses (a) to (g) of Section 39(1) been correct, there was no necessity to specify the quantum and nature of deductions separately in clauses (e) and (f) of Sect ion 44 and then relate them by specific reference to sources of income under clauses (f) and (g) of Section 39(1). If clause (c) of Section 44 were applicable proprio vigore to income from Khudkasht land, there was no necessity to incorporate it by specific reference in clause (d)(iii) of the same Section. In other words, the deduction mentioned in clause (c) of Section 44 could have no application to the income assessed from the source under clause (b) of Section 39, but for the special provision made insubclause(iii) of clause (d) of Section 44. Construed consistently with the context and scheme of Section 44, it appears that the deduction mentioned in clause (c) of Section 44 was not intended to apply to the income from forest assessed under clause (e) of Section 39(1). The deduction under clause (e) of Section 44 appears to be confined to the rental income assessed under clause (a) of Section 39(1), or the income from Khudkasht lands assessed under clause (b ) of Section 39(1) to which it has been notionally applied by specific incorporation insubclause(iii) of clause (d) of Section 44.The High Court was, therefore, right in holding that 15% towards the cost of management could not be deducted by the Compensation Officer in respect of the income from forest calculated under clause (e) of Section 39(1)Nor could the words "gross assets" occurring at the close of clause (c) in Section 44, be divorced from the context of rents and construed in the spacious sense in which they have been used in Section 39. Their meaning and scope in the context is confined to the income from rents. If these words are torn out of the context and interpreted in the comprehensive sense in which they are used in Section 39, this will lead to wholly unreasonable oppressive and absurd results. This was demonstrated by the learned Judges of the High Court, with reference to the income from mines worked directly by an intermediary, calculated under clause (g) of Section 39(1). Clause (f) of Section 44 provides that 95 per centum of the gross income determined under clause (g) of Section 39 would be deductible for the purpose of computing the net assets of the intermediary from this source. If the contention of Mr. Dikshit, that 15% deduct on under clause (c) of Section 44 is applicable to all sources of income, including from the mines under clause (g) of Section 39(1) is correct, then the income from mines directly worked by the intermediary Will suffer a double deduction 95% plus 15% under clauses (f) and (c) of Section 44. This means,f paying any compensation to the intermediary, an exaction of 10 per cent will be made from him. Such could never be the intention of the Legislature. We have therefore no hesitation in repelling this contention of Mr. Dikshit. No other point has been argued before us.