Case: Badri Prasad Vs. The State of Madhya Pradesh and Anr

On December 27, 1950, a contract was entered into between Kumar Bharat Shah, minor, though his 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 itof agreement executed by Shri Kumar Bharat Shah minor, guardian Shrimati Rani Umarkuar Sahiba, Jagirdar of Mouza Sunderpani.Conditions of contract, area, forest, Mouza Sunderpani.1. Out of the area of 1704.46 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 upon 12 inches is given to contractor Badri Prasad Moolchand firm of Timarni for a sum of Rs. 17,000/- seventeen thousand rupees on payment of the amount in a lump sum.2. In respect of the teak trees mentioned in paragraph No. 1 contractor Shri Badri Prasad deposited with me the total amount of Rs. 17,000/- seventeen thousand rupees, as under :-Rs. 6,000/-, six thousand rupees on 27-12-50.Rs. 11,000/- eleven thousand rupees on 21-1-51.Receipts have been passed for depositing the above amount.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.4. 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 upon the girth of 12 inches the cutting of those teak trees which are above that girth shall have to be serially done.5. 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 pairing can be done. The coupe guard shall make a hammer mark of passing on the stump and end of the paired wood.6. 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 licence book and submit other monthly accounts. Without licence no goods shall be transported out of the forest.7. 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.8. The contractor can appoint an agent with permission.9. The contractor shall have to deposit Rs. 100/-, one hundred rupees for 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.10. 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.11. The period of the contract shall be 3 years, i.e., from 27-12-50 to 27-12-1953.Hence the agreement in execution and the same is genuine. The contractor and the owner of the forest shall be bound byJanuary 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 January 26, 1951. The plaintiff started working under the contract in March, 1951. In 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 asSubject :- Contract of big trees of Sunderpani village of Makrai State.Reference: - Memo No. 5424-4339-11, dated 21-10-54 of the Forest Department of Madhya Pradesh Government.Kindly inform whether you are ready to pay further Rs. 17,000 (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.2. 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.3. On receipt of your reply the State Government will beis this letter which the plaintiff contends was an offer and which he accepted by the following letter dated February 5,Contract of sale of teak-trees in Sunderpani Forest in Makrai Range.Reference: - Your letter No. 180 dated 1-2-1955.Dear Sir,I am ready to pay Rs. 17,00 provided my claim to have the refund of Rs. 17,000 already paid, from Shri Bharatshah, 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 those conditions I shall pay Rs. 17,000 as required in your above referredmemorandum dated October 24, 1956, the Government wrote to the plaintiff as- Your application dated 12-9-56, addressed to the Minister for Forest, Madhya Pradesh.Government regret that the request made in your application under reference made in your application under reference cannot be acceded to. Your application has, therefore, beenapplication 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 States 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. 50,000 damages be awarded against the State.

Court's reasoning:
4. The Act and the rights of persons holding contracts to cut and take away timber and fruits of the trees have been the subject-matter 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.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 Sale of Goods Act. But before they cease to be " proprietary" right or interest in proprietary rights within the meaning of Sections 3 and 4 (a) of the Act they must be felled under the contract. It will be noticed that under Clause 1 of the contract 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 Sale of Goods Act. 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 trees are felled. But before that happened the trees had vested in the State.12. This brings us to 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 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. 17,000. According to the letter of the Divisional Forest Officer, dated February 1, 1955, the plaintiff had to give up his claim to Rs. 17,000 which he had already paid and had to pay a further sum of Rupees. 17,000. The High Court in our opinion, rightly held that the alleged acceptance of the offer made on February 1, 1955, was conditional and qualified.