Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997 Equivalent citations: 1997 (5) SCC 141, AIR 1997 SUPREME COURT 2264, 1997 AIR SCW 2134, (1997) 3 SCR 404 (SC), 1997 (3) SCR 404, (1997) 4 JT 629 (SC), (1997) 2 JAB LJ 179, (1997) 5 SUPREME 117 Author: K. Ramaswamy Bench: K. Ramaswamy PETITIONER: MADANLAL SETHI & ORS. ETC. Vs. RESPONDENT: STATE OF M.P & ORS. ETC. DATE OF JUDGMENT: 27/03/1997 BENCH: K. RAMASWAMY, G.B. PATTANAIK ACT: HEADNOTE: JUDGMENT: WITH CIVIL APPEAL NO.2740 OF1997 (Arising out of SLP (C) No. 2104 of 1993) O R D E R Leave granted in SLP (C)No. 2104/93. We have heard learnedcounselfor theparties. These appeals by special leave arise fromthe judgment of theHigh Court of Madhya Pradesh, made on 29.1.1986 and 14.11.1992 in M.P No. 2107 and M.P No. 3764/92. The primary question inthis case relates to the validity of the Madhya Pradesh Kashtha Chiram (Viniyaman) Adhiniyam, 1984 (for short, the `Act') and Rule 27 of the M.P. (Transit (forest Produce) Rules,1961 (for short, the `Rules'). The appellants have challenged the valiity of the Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  1 aboveprovisions of the Actand the Rules on the ground that they require them to maintain proper records andduly enter in the registercertainspecifications of the forest wood purchased by them under public auction from the Governemnt timber depots. After sawingand cutting thewood into differentsizes, they appellantsare required tomake proper entriesinto the relevant register. When consumers take out the wood from the timber depot, they arealso required to submit a transit permit. Thereby, they havebeen made accountable to give particulars ofthe forest woodthey purchase from the respective Governmentdepots.It is stated that the licensees of the saw mills are being unnecessarily harassed by being askedto makenumerous needless entries in the relevant register , like Forms D-1 and D-2 and thereby gettingsubjected to confiscation of the wood lawfully purchased by them. Itis stated that cumbersome process hinderstheir business. The prescription ofthe details required of them alsoimpinges upon and restricts their business. Thus, it isclaimedthat the Act and the Rules are arbitrary and unreasonable as they offend their fundamental right of fredom to carryon thebusiness and trade under Article 19(1)(g) of the Constitution. The Division Bench, it is argued, has not correctly appreciated the grievance of the appellants. When the matter had come up for consideration before us inthe first instance, by order dated December 19, 1996, we observed asunder: "Shri S.S. Ray, the learned senior counsel appearing in this batch has concentrated on one aspect, namely, that theForestofficers, by a written undertaking haveabsolved themselvesof their liability to deliver the logs withspecific measurements but will be delivered only in the lots as they are, When they entered in the Form-D under Rule 6(1) Extract from M.P. Kashtha Chiran (Viniyaman) Adhiniyam,1984 read with section 8 of the Adhiniyam, it enumerates entry on open stock of thespecies, its Cmt..Sawan Cme., date, T.P. No. , Name of species Depot from which it was purchased logs, Nos, Omt. SawnCmt. received from Cmt. the Forest Department and other than Forest Department. Various grounds have been raised in the SLP (C) No. 2104/93 arising out of the order dated November 14, 1992 made inM.P. No. 3764/92 stating that it would be impracticable for the saw mill owners or merchantto make necessary entrieswhen they were not delivered with the above specifications and the non- compliancerenders them forfeited their stock and liable to prosecution. Shri Gulabe Gupta, the learned senior counsel appearing for the respondents states that in each depot various types of the logs would be stocked instore of different sizes atdifferent places separately. Intending purchasers were kept on notice of Various sizes. A willing purchaser in the open auction fromthe above lots each lot contains not onlyspecies, the length of the timber, it contains etc. thedetails will be available on verification and satisfaction. On theirpurchase once theytake possession of the logs, they require to enter these details in Form-D1. Similarly, after taking overto the saw mill, they require to fill in detail in Form-D2. He further explains Form- D2with referenceto Rule 6(2) of the rulesrelate to the owner of the saw mill whoreceives it into the Saw Mill andopening balance received during the dayand the quantum sawn during the day, delivered to the owners (purchasers the balance on the date require to the entered. Similarly, Form-D3 relates to monthly abstract of the receipt and disposal of the wood purchasedor brought Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  2 for sawing during that monthand disposed of. Accordingly, there is no in actual practice. Unfortunately, the Government havenot filed any counter not produced anymaterial in support of the contentions learned counsel seeks to impress upon us. It is necessary in the circumstances that acounter- affidavit by a competent officer requires to be filed andalso the materialin support thereof requires to be produced before the Court. Learned counsel seeks for and granted onemonth time for filing the counter-affidavit and producingthe record. One week thereafter for rejoinder is granted. List after five weeks". Pursuant thereto,Dr. M.SRana, Conservator of Forest, Government of Madhya Pradesh,Sagar has filed a counter- affidavit explaining in detail the position rightfrom identification of theworking plan,demarcation of the coupe-wise felling of the trees, stacking of the trees, numbering of the trees, putting of hammer marks and their aligning for measurement at the timber depotsfor auction. It is stated that the logs arestackeddepending upon their length,girth etc. atrelevant places in the depot. The intending purchasers are given liberty to inspect thelogs of thelength , girthand measurement in cubic meters, speciesetc. Thereafter, on their purchase in auctions, possession of the purchased logs is given possession to the successful bidders. Necessary entriesare bemade in the certificate ofpossession as given in Annexure XI to the said counter-affidavit finding place ofpage 98of the paper books; the details thereof being not materialare omitted. Once they take possession of the timber, they are given necessary transit permits fortransportation thereofwith truck number etc. as specified in AnnexureXIV to the counter-affidavit and the officer who gives delivery thereof enters the factum of the delivery, of the quantum of the wood with all specifications enumerated therein. After carriage of thelogs from the various depots tothe premises of saw-mills or saw-pits, they are required to enter the specifications in FromD-1 as per Rule 6(1). Whenthey disposeof thewoods,they are required to make necessary entriesin Form D-2 read with Rule 6(2) of the Rules. In addition, theyare also required to submit monthly returns in FormD-3 read with Rule 8 of the Rules. Thus, it is the case of the respondents that everycare is taken to ensure that the licensee or personin charge of the Sawmill orsaw pit is given possessionof thewood purchased fromthe Governmentdepots and arerequired to enter the specified details ofthe wood in Form No. D-1 and of thefinished product in Form D-2 so that at every point of time the officer on duty of inspection would bein a position to verify whether the wood in possession hasbeen purchased by the licensee from lawful source; is properly accounted for;is in their lawful possession; and to see that the disposal of the same is done in accordance with the Rules. Shri D.D Thakur, learnedsenior counseland Mr.A.K. Sanghi, learned counsel appearing for the appellants, contendthat though theRules require that specifications of the forest woodkept insaw-mill and saw-pit berecorded, in realitywhen the woodis taken to the saw-mill and is cut into logs of different sizes,there would beconsiderable wastageand the finished woodrealised by sawing thelogs would be less than the originallength and girth etc. It is really impossible forthe licensee to enter all those specifications in the relevantentriesin FormD-1, D-2 and D-3 etc. and to account for the wood they purchased. Therefore, it hinders their peaceful conduct of the business. As one of Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  3 theillustrations, it is stated that one of theDivision Forest Officers even meticulously measured zero point of the differential wood in the possession of the saw mill and on failure to account for it, Look action by confiscating the entire wood. That would show that by operation of the Act, licensees are being arbitrarily prevented fromexercising theright of freedom to carry on trade and business and are being subjectedto needless harassment. Shri D.D. Thakur has also stated that necessary guidelines are lacking in this case. Therefore,observations may bemade bythis Court to stop arbitrary exercise of the power or unlawful hinderance in carrying outthe trade by the licensees;and topermit High rank officers to inspect the premises. Shri G.C.Gupta, learnedsenior counsel appearing for the respondents, contends that the contentions raised by the appellants areimaginary. Every minute procedure hasbeen provided in detail, viz. the cuttingof the trees; the markingof thetrees;the delivery of the wood purchased from the Government depots; and transportingthem, which would indicatethat the object of theAct andthe Rules is only toensure that thelicensee is inlawful possession of the wood obtained from the Government depots to prevent illicitfelling of the trees and unlawful purchase of the forest wood . The Act and the Rules provide that the licensee should account for the wood purchased and the finished wood;that cuts pieces are appropriately accounted for, as specified in Form D-1,D-2 andD-3 respectively. As an illustration, he has placed beforeus the record of the appointment ofan Expert Committee on the basis of the returns received andspecifications of the grading of the wood, their lengths, girth and the marginal variations in that behalf; and categorisation of the respective woods in that behalf. Asa result , evenif there is anyfaulty entry in thetransitRules,they can be easily identifiedwith reference to the length, girth and the quantum of thewood purchased by the licensee. Ifthere is any further defect, it is always open to them to bring the same to the notice of the Government wouldalwayssolve the problem of the parties. Inview of the respective contentions, the question arises:whether the High Court has committedany manifest error of law warranting interference;It is seen that the Act deals withvarious steps involved starting rightfrom the cutting ofthe trees upto the delivery of the logs to the purchasers. Thereafter it deals with the requirement of being in lawful possession of the woodso purchased and the necessity to account for the same. Section 8deals with furnishingof returns by the licensee. It postulates that every licensee shall submit such return relating tothe business ofthe saw-mill orsaw- pit, as the case may be, in such form,to suchofficer, and on such dates,as maybe prescribed. Sections9 dealswith maintenance of account of stockof woodin saw-mill andsaw- pit. Itpostulates thus: "All wood whether sawn or not found in or brought to the saw mill or saw pit orat the site of sawing at any time or during any period by any person in anymanner or by any means forpurposeof sawing or for any otherpurposeshall always be properly accounted forand all relevant evidence documents, receipts, order and certification asare necessary to showthat the wood is legally obtainedshall be maintainedand made available at time of inspection. It shall be presumed in respect of thestock of Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  4 wood which is not account for satisfactorily that the same has been obtained unlawfullyand the stock of wood shall be liable for confiscation." The object of Section 9 is to ensure that thewood obtained by the licensee and found insaw mill or saw pit is theone obtained from a lawful source and the person in possession of the wood or in control of the saw-mill is to accountfor and is required to maintain the details of the wood obtained,the source andmanner in whichhe has dealt with the wood.It postulates that it shall bepresumed, in respect of stock ofwood which is not accounted for satisfactorily,that the samehas been obtained unlawfully and such stockof wood shallbe liable for confiscation. Section7 givespower to the authorisedofficerto enter and inspectany saw-mill and saw-pit andexaminethe records relating to stock of wood etc. for that purpose. He is empowered to call upon the licensee orperson in control of or management of the business, or employedtherein, to producethe required documents, books,registers or records in thepossession. They are also entitled to search the premises. Vehicles, machine, tools and equipments used or intended to be used in contravention ofany of the provisions of the Actand the Rules made thereunder.When they are satisfied that any such contravention has taken place, they are entitled to seize any wood etc. andtake appropriate action as has been laidunder the Act for confiscation etc. The rules have beenmade inthat behalf, Section13 prescribes the penalties for contravention; the detailsthereof are not material forthe purpose ofthis case. Rule 6 of the Rules provides that thelicensee is required to submit the returns in Form D-1,of thewood purchased by the licensee for sawing and for disposal thereof, and rule 6(2) postulates the maintenance of a register meant for recording the arrival, sawing and disposal of the wood received for sawing in FormD-2. Thereafter, under Rule6(3), the licensee isrequired to submit the monthly returns of these accounts in Form D-3 to the concerned Range officer, and to thelicensing officer by a date not later than 10th of the following month. Wehave perused the relevant forms submitted by the parties. Afterperusing the same, we are satisfied that the details, as have beenprovided for, are required onlywith the object of ensuring that the licensees who are the personsin thecontrol of the Saw-mill and Saw-pit or employee etc. are in lawful possession of the wood and of furtherensuring that the wood in their possession was obtained from a lawful sourceand they have duly accounted for such a wood. Otherwise,unaccounted wood would be presumed to have beenobtained from unlawful source and therebythey are liable to account for, and on failure to accountfor the same,they should face theconsequences ensuing thereunder, viz., confiscation, cancellation of licenceor prosecution. It isalso seen that an Expert Committee cameto be constituted to lay down modalities for identificationsof logs and wood purchased from the auction depots in the forest area etc. it is true that these are the administrative instructions andthey donot have the flavour of statutory rules. Itis stated by Mr. G.C. Gupta that the Government would issue necessary orders making those instructions as a part of the Rules so thatit will be operative as acontinuous process of the identification of the woods rightfrom the stage of purchase tillthe stage of accounting for in Form D-3. Itis true, as shown byMr. Sanghi, that one of the conditions of the auction is that the authorities are absolved of their liability for any deficiency in the quantity and quality of the timber and of themeasurements when the intending bidder purchases the logs in the forest timber depots. That is one of the conditions ofthe auction, i.e. ,qualityand quantity of wood is notassured. The government Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  5 is absolvedof the liability for any shortcoming in thequalityand quantity of the wood the appellants purchase from the Government. Thereafter, there are provisions that the empoweredofficer wouldinspect the premises and verify thewood purchased to satisfy himself of the source of the woodfound in the depot and also purchase of thelogs either inauction and the mode of disposal of the wood according to the Rules. However, that does notmean that the licensees are kept in dark as to the details of the wood purchased by them. As seen earlier, the detail procedure has been prescribed in the relevant forms inthat behalf from the time of felling of the trees till the entrustment ofthe purchased logs to the auction purchaser. The transit permit issued to the purchaser does contain the same details with the number ofthe truck carrying the wood. The meticulousdetailsis required to be mentioned in the required Forms.Thus, at the time of entrustment of thelogs purchased by the auction purchaser, details aregiven to him before the transit ofthe wood withthe transit permit issued by the competent officer. When the logs reach the destination, namely, saw-mill or saw-pit , the necessary entriesof theforestwood are required to bemade inForm D-1, of finished goods in Form D-2 and monthly returns in Form D-3. Thus, Rulesare consistentwith the meticulous detailsand there is no gap.The Rules cannot be declared ultra vires the Constitution as offending Article 19(1)(g) or Article 14 simply because some shortfall or discripancy is noticed by the officer in the quantity or quality of the wood. Equally,when officers take action for the violation of thestatutory provisions, an individual case is required to be considered on the fact-situation. The Act and Rules cannot be declared ultra vires on account thereof. Thus considered, we do not find any illegality committed by the HighCourt in itsjudgment warranting interference. The appeals are accordingly dismissed. No costs. Madanlal Sethi & Ors. Etc vs State Of M.P & Ors. Etc on 27 March, 1997  6