The Deputy Conservator Of Forests vs The Managing Director
2023 Latest Caselaw 2135 Kant

                                             -1-
                                                       RSA No. 338 of 2018




                        IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                            DATED THIS THE 10TH DAY OF APRIL, 2023

                                           BEFORE

                             THE HON'BLE MR JUSTICE H.P.SANDESH

                        REGULAR SECOND APPEAL NO.338 OF 2018 (MON)

                   BETWEEN:

                   1.    THE DEPUTY CONSERVATOR OF FORESTS
                         CHIKKAMAGALURU DIVISION
                         CHIKKAMAGALURU-575001

                   2.    THE GOVERNMENT OF KARNATAKA
                         REP. BY ITS CHIEF SECRETARY
                         VIDHANA SOUDHA
                         BENGALURU-560001
                                                            ...APPELLANTS
                   (BY SMT. ANITHA H R, HCGP)
                   AND:
Digitally signed
by SHARANYA T
                   THE MANAGING DIRECTOR
Location: HIGH
COURT OF           M/S CANARA WOOD AND PLAYWOOD
KARNATAKA
                   INDUSTREE (P) LTD., P.B.NO. 566, JEPPU
                   MANGALURU - 575 001
                                                            ...RESPONDENT

                   (BY SRI SHANKARANARAYANA BHAT N, ADVOCATE)

                          THIS R.S.A. IS FILED UNDER SECTION 100 OF CPC
                   AGAINST THE JUDGMENT AND DECREE DATED 07.01.2016
                              -2-
                                         RSA No. 338 of 2018




PASSED IN R.A.NO.158/2011 ON THE FILE OF THE I
ADDITIONAL DISTRICT COURT, CHIKMAGALUR AND ETC.


     THIS R.S.A. COMING ON FOR ADMISSION THIS DAY,
THE COURT DELIVERED THE FOLLOWING:


                    JUDGMENT

This matter is listed for admission. Heard the learned

counsel appearing for the respective parties.

2. This appeal is filed challenging the judgment

and decree dated 07.01.2016 passed in R.A.No.158/2011

on the file of the I Additional District Court, Chikmagalur.

3. The factual matrix of the case of the plaintiffs

before the Trial Court is that under different agreements

dated 07.11.1978, 28.09.1979, 30.11.1983 and

13.12.1984, the plaintiffs have supplied timber to the

defendants as per their requirements. In the first

agreement, the defendant had agreed to pay seigniorage

rate value for the soft wood of the conceded species to be

extracted and removed from the area as detailed in the

RSA No. 338 of 2018

agreement. In the second agreement, the defendant has

agreed to pay the value of the conceded species of timber

at the rate indicated against each species. In the third

agreement, the defendant has agreed to pay the

government value of timber at the conceded species and

the plaintiff has reserved their right to revise rates upward

in the said agreement. In the fourth agreement, certain

modification has been made and the defendant has agreed

to pay the rates prevailing and subject to government

policy, reviewed and revised the rates. In the last

agreement the defendant had agreed to pay seigniorage

rates prevailing from time to time. Since, the defendant

has extracted timber and transported, he is bound to pay

the difference of seigniorage rates along with accrued tax.

The Government through forest department vide order

No.A6.IND.76-80 dated 29.06.1982 had revised

seigniorage rates for various forest produce with effect

from 23.02.1981. Due to subsequent revision of rates,

the defendant is liable to pay sum of Rs.7,89,134.36 as on

31.03.1990. However, the Government vide its order

RSA No. 338 of 2018

dated 06.02.1986 has afforded 5 equal installments with

interest at the rate of 5% per annum from the date of

supply till 13.01.1984. If the defendant fails to pay the

said amount, he has to pay 10% interest on the above

said amount. Inspite of several requests, demands and

issuance of several notices, the defendant has paid only

two installments.

4. It is further contended that in the writ petition

filed by the defendant and others, this Court was pleased

to allow the said writ petition to the effect that the

government can recover the value of the tree supplied to

the industries at the agreed rates. Whereas a plea of the

association not to levy difference seigniorage rates

pertaining to the period from 23.02.1981 to subsequent

period is rejected. In view of the said verdict, the

defendant is liable to pay differences of seigniorage rates

value, tax and accrued interest. Even the Accountant

General insisted to charge penal interest at the rate of

Rs.111.49 per day in case difference of seigniorage is not

RSA No. 338 of 2018

paid beyond 01.06.1983. As per the said observation, the

defendant is liable to pay the penal interest to the tune of

Rs.3,00,295/- for the period from 01.04.1994 to

30.06.2001. The defendant has utilized the timber

supplied by the plaintiffs for the preparation of plywood

and had transaction and got profit. Despite that, the

defendant did not chose to reimburse the value as well as

the seigniorage rates and thereby the defendant caused

loss to the State Exchequer. Hence, the defendant is

liable to pay the suit claim along with interest at the rate

of 18% per annum from the date of the suit till realization.

5. In pursuance of the suit summons, the

defendant appeared and filed the written statement

admitting the execution of the agreements as they have

no relevancy with regard to the subject matter of the suit.

The extraction of the timber was done under the

supervision of the forest department as per the terms and

conditions of the said agreements. But Section 30 of the

Karnataka Forest Amendment Act and Rules validate any

RSA No. 338 of 2018

seigniorage rates fixed by the Chief Conservator of the

forest prior to the commencement of the amendment Act

as if they have been fixed under the provisions of Section

10A of Principal Act and Section 30(2) continues the

seigniorage rates value fixed prior to the date of

commencement of the amendment Act. Notification issued

by the forest department has no face of law to be relied on

as basis for claim. The reference to the last agreement is

not clear. Hence, he is not liable to pay total sum of

Rs.7,89,134.36. The fact of payment by installment is

admitted. But not for the claim. The correct sum due on

the basis of plaintiffs is Rs.2,30,124.30 but without

reckoning Rs.1,31,485.35 and adjustment amount of

Rs.76,390/-, the same does not bind this defendant

company. No penal interest as suggested by the auditor

can be claimed and the same is unreasonable. There is no

legal sanctity to the said audit observation. It was agreed

that revision on seigniorage rate would be paid only in

respect of produce covered at notification dated

23.02.1981 but there is a dispute regarding quantity of

RSA No. 338 of 2018

the materials lifted, held and covered by above notification

and for period concerned. The plaint does not give any

details of the materials supplied for the period in question.

The defendant does not admit that amounts under

different rates claimed comes to Rs.2,30,124/- or due in

installments claims as set out in plaint. He is liable to pay

tax or penal interest claimed by the plaintiffs. He has paid

Rs.1,31,485.35 out of Rs.2,30,124.30 by way of DD on

23.03.1987. After adjusting the said sum only

Rs.22,248.95 would be balance due. But unjustly

exorbitant sums are sought to be claimed. The plaintiff is

bound to account for above sums paid towards actual

liability due based on revised calculation. There is no

agreement for payment of interest either in the

representation or under any contract agreement. There is

no representation to pay the interest or to pay penal

interest. In the absence of any such contract, the

plaintiffs have no right to claim interest.

RSA No. 338 of 2018

6. It is also contended that this Court while

disposing the writ petition filed in W.P.No.15778-789/88

specifically directed the respondent/plaintiff to charge the

value of the trees cut prior to 23.02.1981 at the agreed

rate and not seigniorage rate in terms of the amended Act

and Rules. The respondent/plaintiff shall ascertain the

quantity of such trees which were fallen and cut and

removed prior to 23.02.1981 and notify on receipt of bills.

The plaintiff shall be liable to make payment of the

determined amount within the time as may be specified by

the government. In view of the above directions, the

plaintiffs are bound to ascertain the quantity of the trees

cut prior to 23.02.1981 and notify the same to the

defendant. But the plaintiff without following the direction

of this Court, has filed this suit. Hence, the plaintiff is not

entitled to claim seigniorage rates in favour of the trees

which have been fallen and not transported or transported

for the period prior to 23.02.1981. The observation of this

Court has also been confirmed by the Hon'ble Supreme

Court of India. Hence, the plaintiffs have no right to

RSA No. 338 of 2018

recover the suit claim. Even otherwise, the suit of the

plaintiffs is barred by limitation.

7. Based on the pleadings, the Trial Court has

framed the issues and additional issue No.1 and permitted

the parties to lead evidence. The plaintiffs in order to

prove their claim, the first plaintiff examined himself as

P.W.1 and got marked the documents as Exs.P1 to P10.

On the contrary, one of the directors of the Defendant's

Company got examined himself as D.W.1 and marked the

document as Ex.D1.

8. The Trial Court after considering both oral and

documentary evidence available on record answered all

the issues as negative and dismissed the suit and came to

the conclusion that the plaintiffs have not proved their

case. Being aggrieved by the judgment and decree of the

Trial Court, a regular appeal in R.A.No.158/2011 was filed

before the First Appellate Court. The First Appellate Court

on re-appreciation of both oral and documentary evidence

- 10 -

RSA No. 338 of 2018

placed on record dismissed the regular appeal. Hence, the

present second appeal is filed before this Court.

9. The main contention of the learned High Court

Government Pleader appearing for the appellants in the

present appeal is that both the Courts have committed an

error in not considering the material on record in proper

perspective. The learned High Court Government Pleader

would submit that the plaintiffs have proved that the

defendant has received the Timber. When such being the

case, both the Courts could have allowed the suit as

prayed. It is not in dispute that the respondent has

entered into an agreement with the appellants that they

have purchased the Timber. When there is no dispute with

regard to purchase of Timber ought not to have dismissed

the suit. Hence, the learned High Court Government

Pleader would submit that both the Courts have committed

an error and not justified in dismissing the suit and the

First Appellate Court has erroneously committed an error

in upholding the judgment of the Trial Court.

- 11 -

RSA No. 338 of 2018

10. The learned counsel appearing for the

respondent would vehemently contend that both the

Courts have considered the material available on record

and answered all the issues are negative. The plaintiffs

have not placed any material in support of their claim.

When they failed to produce any material before both the

Trial Court as well as the First Appellate Court, the First

Appellate Court on re-appreciation of the material

available on record, rightly uphold the judgment of the

Trial Court.

11. Having heard the respective counsel and on

perusal of the material available on record and also taking

into note of the judgment of the Trial Court and the Trial

Court in paragraph No.3 of the judgment, taken note of

the admitted sum of Rs.22,248.95 paise and there is a

clear admission in the written statement that after having

paid the amount of Rs.1,31,485.35 paise out of

Rs.2,30,124.30 paise and after adjusting a sum of

Rs.76,390/- was due to the defendant from the plaintiffs

- 12 -

RSA No. 338 of 2018

under Debit Note No.142 dated 28.03.1989, as per Bills of

Company due was Rs.22,248.95 paise but fails to consider

this admission on the part of the defendant in the written

statement in paragraph No.7. In paragraph No.7 also, it is

very clear that there was a due of Rs.22,248.95 paise.

When such admission is available, both the Courts ought

not to have dismissed the suit as well as the regular

appeal without considering the admitted amount of

Rs.22,248.95 paise. With regard to the other claim is

concerned, no material is placed before the Court and

substantiate their claim for the entire amount. When such

being the material available on record, both the Trial Court

as well as the First Appellate Court ought to have

considered the admission available in paragraph No.7 of

the written statement. With regard to the other ground is

concerned when the plaintiffs have not placed any material

before the Court with regard to their claim is concerned,

the same is not substantiated. Hence, I do not find any

error committed by the Trial Court as well as the First

Appellate Court except not considering the admitted

- 13 -

RSA No. 338 of 2018

amount of Rs.22,248.95 paise. The Judgment and Decree

of the Trial Court is modified with regard to liability of the

admitted amount.

12. In view of the discussions made above, I pass

the following:

ORDER

(i) The appeal is allowed-in-part.

(ii) The respondent is directed to pay an amount of Rs.22,248.95 paise with interest at the rate of 9% p.a. from the date of suit till realization.

Sd/-

JUDGE

SN/cp*