Case: Divisional Forest Officer Vs. Bishwanath Tea Co. Ltd

2. Respondent Bishwanath Tea Co. Ltd. (company for short), took on lease land dmeasuring 1107.26 acres from the government. The lease was executed between the Company and the Secretary of State for India. The lease in the first instance was for a period of 15 years commencing from April 1, 1932. The lease was to be exploited for cultivation and raising tea-garden. The lease was subject to conditions set out therein and generally to Assam Land and Revenue Regulation and the rules made thereunder. On February 15, 1966, manager of the company approached the appellant seeking permission to cut 7000 cubic feet of timber from grant N.C. Tezalpatty 1 of Nagshankar Mouza, for utilising the same for building of staff and labourers houses. By the reply dated April 4, 1966, the appellant noted that the timber was to be cut for constructing houses in Partabghur and Dekorai Tea Estates and that it was necessary to ascertain whether any of the aforementioned two tea estates was situated within the grant evidenced by lease of N.C. Tezalpatty 1. It was made clear that if it was not so, full royalty will be payable by the company for cutting, felling and removing timber. The manager by his letter dated April 23, 1966, informed the appellant that as the lessee is Bishwanath Tea Co. Ltd., it can cut and fell timber from any of its leased area to be utilised for its purposes in any other division. Therefore, the manager suggested that the permit must be issued without insisting on payment of royalty. The appellant by his letter dated May 12, 1966, informed the manager that as the timber was required for use in Partabghur and Dekorai Tea Estates which were not within N.C. Tezalpatty Grant 1 of Nagshankar Mouza from which timber was to be felled and cut, full royalty will be payable on timber so cut and removed because it was to be utilised for the purpose unconnected with the grant. For this assertion the appellant relied upon a portion of Clause 2 of Part IV of the lease deed dated September 27, 1932. Correspondence further ensued between the parties and ultimately the respondent-company paid an amount of Rs. 7069.37 as and by was of royalty under protest and then filed a petition under Article 226 of the Constitution in the High Court alleging that upon a true construction of the relevant clause of the grant as also proviso of Rule 37 of the Settlement Rules as the timber was required for the purpose connected with the exploitation of the grant, the company as lessee was entitled to cut and remove timber without payment of royalty and, therefore, the recovery of royalty being unsupported by law, the appellant was liable to refund the same. The company also prayed for a mandamus directing the present appellant who was respondent in the High Court for issuing permits without insisting on payment of royalty whenever timber was to be cut from the leased area for the purposes connected with the exploitation of the grant2. Theappellant filed his return to the rule issued by the High Court. A preliminary objection was raised that the right claimed by the respondent flowed from the contract of lease and such contractual rights and obligations can only be enforced in civil court. It was contended that apart from the fact that interpretation of the contract of lease is generally not undertaken by the High Court in exercise of its extraordinary jurisdiction under Article 226, it was further contended that even if interpretation of the relevant clause of the lease as alleged on behalf of the respondent finds favour with the court, yet facts will have to be investigated before any refund could be ordered or a blanket injunction could be granted for all times to come against the appellant from performing his duty, namely, of granting permit and recovering royalty4. The High Court overruled the preliminary objection observing that the court was not called upon to decide any complicated question of fact and the question for decision before the court was whether the company was entitled to enforcement of its legal right under the proviso to Rule 37 of the Settlement Rules. The court further observed that even though part of the proviso of Rule 37 of the Settlement Rules was incorporated in the lease itself, nonetheless what the court had to consider was the interpretation of a statutory rule and that is the function of the court under Article 226. On merits the High Court held that as the grant N.C. Tezalpatty 1 was in favour of M/s. Bishwanath Tea. Co. Ltd., the company was entitled to cut and fell timber from N.C. Tezalpatty grant area for its use in other tea-gardens, namely, Partabghur and Dekorai and even if the letter two gardens were outside N.C. Tezalpatty Grant 1, yet they being under the ownership and management of the company, felling of trees from the area of one grant for utilisation at other places would fall within the second part of the proviso to Rule 37 in that the felling and removal of timber was for use not unconnected with the exploitation of the grant and, therefore, the company was entitled to fell and remove timber in the aforesaid situation without payment of royalty. In accordance with this finding the High Court made the rule absolute, directed refund of the amount paid under protest and issued a mandamus directing the appellant to issue permits to the respondent-company without payment of royalty for removal of timber for Tezalpatty Grant 1 for use in tea-garden of Dekorai Division for exploitation of tea plantation. Hence this appeal by special leave

Reasoning:
5. Unquestionably, the rights and obligations between the parties to this appeal are governed by the terms of the lease dated September 27, 1932. Specifically, the respondent who was a petitioner in the High Court claimed the right to relief under Clause 2 of Part IV of the indenture of lease which reads as under :A bare perusal of Clause 2 of Part IV of the indenture of lease extracted hereinbefore and the proviso to Rule 37 would at a glance show that the proviso enables a grantee to take benefit of it by fulfilling certain conditions namely by paying a reduced valuation representing only the profit which it is likely to derive from the use of timber for purposes connected with the exploitation of the grant. It is thus an enabling provision and the grantor of the lease may permit this option to be enjoyed by the grantee. But whether that has been done or not is always a question of fact. If the pre-condition is satisfied, the benefit can be taken. That again is a matter to be worked out by the parties to the indenture of lease. In fact, Clause 2 of the indenture of lease would show that the respondent grantee paid Rs. 12472/7 being timber valuation at reduced rates. The respondent having made the payment, whereupon the grantor of the lease agreed that the grantee will have to pay timber valuation at full rates on all timber sold or removed for sale and on all timber removed for use unconnected with exploitation of the grant during the period of his lease or renewed lease but the grantee will not have to pay royalty for timber felled and removed for purpose connected with the grant. It thus can be demonstrably established that the respondent was trying to enforce through the writ petition the right to remove timber without the liability to pay royalty not under the proviso to Rule 37 which was merely an enabling provision, but the specific term of lease agreed to between the parties. Proviso to Rule 37 may not be incorporated in an indenture of lease. If incorporated after fulfilling pre-condition it becomes a term of lease. The High Court, in our opinion, therefore, was in error in posing a question to itself as to whether the applicant (respondent herein) was entitled to the enforcement of legal right under the proviso to Rule 37 of the Settlement Rules. The camouflage successfully worked, but once this cloak is removed, it unmistakably transpires that the respondent was trying to claim benefit of Clause 2 of the lease having fulfilled its pre-condition and obtaining the inclusion of its latter part in the contract of lease. The question, therefore, really is whether such contractual obligation can be enforced by the writ jurisdiction ? How dangerous it is, can be demonstrably established in this case8. It is undoubtedly true that High Court can entertain in its extraordinary jurisdiction a petition to issue any of the prerogative writs for any other purpose. But such writ can be issued where there is executive action unsupported by law or even in respect of a corporation there is a denial of equality before law or equal protection of law. The Corporation can also file a writ petition for enforcement of a right under a statute. As pointed out earlier, the respondent (company) was merely trying to enforce a contractual obligation. To clear the ground let it be stated that obligation to pay royalty for timber cut and felled and removed is prescribed by the relevant regulation. The validity of regulations is not challenged. Therefore, the demand for royalty is unsupported by law. What the respondent claims is an exception that in view of a certain term in the indenture of lease, to wit, Clause 2, the appellant is not entitled to demand and collect royalty from the respondent. This is nothing but enforcement of a term of a contract of lease. Hence, the question whether such contractual obligation can be enforced by the High Court in its writ jurisdiction. The High Court found as a fact that the timber was sought to be removed for the purpose of constructing quarters for the workmen employed in Partabghur Garden is not situated in Tezalpatty Village. At any rate, Partabghur Garden where the houses for the workmen were to be constructed was situated outside the area covered by the grant, as also outside the Revenue Division in which the leased area is located. The High Court got over this difficulty by observing that the grant being in favour of an incorporated company, it can cut and remove timber from leased area for use at any place which is owned, managed or controlled by the company and it is immaterial whether one is directly connected with the other or not. If the timber is being felled from the area of one grant to be used at some other place where the company is carrying on its operation, the benefit of the removal of timber without payment of royalty would be available to the company anywhere in the world. To stretch this logic a little further, it would mean that if the respondent (company) is to set up a tea-garden outside India, it can as well cut and remove timber from N.C. Tezalpatty Grant 1 in Assam to the place outside India without the obligation to pay royalty. The fallacy underlying the approach of the High Court becomes self-evident. It is immaterial that the grantee was the company. The specific provision is that the grant is for a purpose of cultivation and raising tea-garden and that from the area covered by the grant, if timber is felled for purpose connected with the grant itself, namely, cultivation and raising tea garden in that area, then alone the benefit of removal of timber without payment of royalty can be availed of. It is admitted that Partabghur Tea Garden is outside the area covered by the grant, in fact in an altogether different division. In such a situation upon a true construction of Clause 2, Part IV of indenture of lease, the respondent-company was not entitled to remove timber without payment of royalty. Therefore, even on merits, the High Court was in error in granting reliefTrue it is that if the timber is felled and removed for purpose connected with the exploitation of the grant, there would be no liability to pay the royalty. Such a positive right is claimed from a negative covenant in the lease. Clause 2 provides that the lessee had paid timber valuation at the reduced rate at Rs. 12472/7 on February 24, 1932 and March 3,1932.Thelessee according to the respondent would be liable to pay timber valuation at full rates on all timber sold or removed for sale, on all timber removed for use unconnected with exploitation of the grant during the period of the lease or renewed lease.Theimplication of the negative covenant would be that if timber is removed from the leased area connected with the exploitation of grant, there would be no liability to pay royalty on such timberaverments in the petition would show that the respondent claimed the right to remove timber without the obligation to pay royalty as flowing from the grant evidenced by the leaseThis camouflage of contending that the levy of royalty was not supported by law and that this was an unreasonable restriction on the fundamental right to carry on trade successfully persuaded the High Court to entertain the petitionShorn of all embellishment the relief claimed by the respondent was referable to nothing else but the term of the lease viz. Clause 2, Part IV. Maybe, that this term is a mere reproduction of proviso to Rule 37 of Assam Land and Revenue and Local Rates Regulations, but that by itself is not sufficient to contend that what the respondent was doing was enforcing a statutory provision.