Kerala & Anr Vs. Kanan Devan Hills
Produce Co. Ltd.  INSC 27 (7 February 1991)
Singh (J) Kuldip Singh (J) Kasliwal, N.M. (J)
1991 SCR (1) 261 1991 SCC (2) 272 JT 1991 (1) 330 1991 SCALE (1)145
Travancore Cochin Forest Act, 1951- Section 93(2)(d) (dd) & (e)-Rules
regulating the levy of Kuttikanam on trees in respect of Government lands-Kuttikanam-Govt.
share of the value of the trees-Ownership over the growth-Held Government has
right to levy and demand Kuttikanam under the 1951 rules saved by Section 85(3)
of the Kerala Forest Act, 1961.
dispute between the parties is regarding the ownership rights and right of
removal of timber clear- felled from 150 acres of jungle area in Kallar Valley in the erstwhile Travancore territory of Kerala State commonly called the Kanan Devan
Hills Concession area over which the Poonjar Raja held free-hold proprietary
rights under the suzerainty of Travancore State.
deed dated July 11,
1877 called the 'First
Concession' (Exhibit P-1) the Raja conveyed the concession area with all the
Hills and Forests to one J.D. Munro for a certain cash consideration and a
deferred perpetual annual payment from 1884 onwards. This was followed by
another deed (exhibit P-2) between the same parties reiterating all the
original terms. This grant to Munro was ratified by the Travancore Government
by a deed dated November
28, 1878 (Exhibit
P-62). Munro in turn assigned the area to the North Travan-core Land Planting
& Agricultural Society Ltd. Later an agreement was executed between the Travancore
Government and the Society in August 1886 (Exhibit P-64). In 1899 the entire
territory comprising the Kanan Devan Hills including the concession area was
declared part of Travancore State. After several transfers the concession area finally came
to be vested in the Respondent Company in virtue of a Deed dated July 16, 1900.
in 1963 the Respondent Company clear-felled about 150 acres in the concession
area for cultivation and sought permission from the State Government for grant
of free passes to carry the felled timber out of the concession area. The
Government by order dated 25.11.1966 informed the company that it could not
take out the timber 262 from the concession area without payment of Kuttikanamin
terms of the deeds of conveyance/ratification. Thereupon the company filed a
suit against the State praying inter alia for a declaration claiming full
ownership, title and right to remove the timber without payment of Kuttikanam,
a mandatory injunction directing the defendants to grant free passes for
removal of the timber and a prohibitory injunction to restrain it from taking
any further steps under its order dated 25.11.1966. On the interpretation of
Exhibits P-1, P-2, P-62 and P-64 the trial court came to the findings that the
company did not acquire absolute proprietary rights over the concession area or
the trees and timber. It also held that the Government was justified in
demanding Kuttikanam in terms of the Rules framed under the Travancore Cochin
Forest Act, 1951. Accordingly the suit was dismissed.
Company preferred an appeal to the High Court which was allowed and the decree
of the Trial Court set aside.
decision of the High Court has been challenged by the State in this appeal by
way of special leave. This court while allowing the appeal and setting aside
the judgment of the High Court,
The respondent-company did not acquire absolute proprietary rights over the
Concession Area or the trees and the timber therein. The company only acquired
the right to fell the trees and use the timber subject to the restrictions
imposed in clause 7 of the agreement Exhibit P-64. Since the respondent-
company has no right to remove the timber beyond the limits of the Concession
Area, the State Government was justified in refusing to permit free
transportation of timber from the said area. [269C] Clause 7 states that no unworked
timber or articles manufactured therefrom shall be carried outside the limits
of the grant except in conformity with the rules of the forest department for
the time being in force. [270D] The Government of Kerala, in exercise of its
rule making power under Section 93 of the Travancore- Cochin Forest Act, 1951
had by a notification dated July 9, 1958 framed rules regulating the levy of Kuttikanam
on trees standing on Government land. [270E] The rules were holding the field
at the relevant time and the Government was justified in demanding Kuttikanam
from the Company. [272A-B] 263
APPELLATE JURISDICTION: Civil Appeal No. 1277 of 1979.
the Judgment and Decree dated 4.8.1977 of the Kerala High Court in A. S. No.
640 of 1971.
lyer, F.S. Nariman, K. Parasaran, K.R. Nambiar, P. K. Pillai, S. Balakrishnan,
S. Ganesh, Joy Joseph, Mrs. A.K. Verma, S. Sukumaran for J.B.D. & Co., Baby Krishnan and V.J Francis for the
Judgment of the Court was delivered by KULDIP SINGH, J. The dispute before us
is regarding the ownership rights over the timber clear- felled from about 150
acres of jungle-area in Kallar Valley and the right to transport the timber so felled from the
The Kallar Valley area forms part of the tract of land originally known as Kanan
Devan Anchanatu Mala in the erstwhile Travancore territory of Kerala State. This area is generally
called the Kanan Devan Hills concession (hereinafter called the 'Concession
Area') ' The Poonjar Rajs, held free-hold proprietary rights in the Concession
Area. Originally the Raja was exercising sovereign rights but later on he came
under the suzerainty of Travancore State.
Rajsa, by a deed dated July
11, 1877 (hereinafter
called 'First Concession'), conveyed the concession area with all the hills and
forests therein to one J.D. Munro for cash consideration of Rs.5,000 and a
deferred perpetual annual payment of Rs-3,000 from 1884 onwards. Thereafter on July 26, 1879 a second document was executed
between the same parties (hereinafter called 'Second Concession'). The terms of
the first concession were reiterated enuring to Munro, his heirs, successors
and assigns absolute right for ever to make all kinds of cultivations and
improvements on the Concession Area.
grant of rights to Munro by the First Concession was ratified by the Travancore
Government by a deed of ratification dated November 28, 1878. Munro assigned the Concession Area
to The North Travancore Land Planting and Agricultural Society Limited by a
deed dated December 8,
1879. Thereafter an
agreement was executed between the Travancore Government and the Society on August 2, 1886.
virtue of the agreement dated September 18, 1889 between the Poonjar Raja and the Travancore Government and the
proclamation of the Maharaja of Travancore dated August 24, 1899 the territory comprising the Kanan Devan Hills including
the Concession Area was declared part of the Travancore State. There were various transfers in
respect of the Concession Area but finally by a deed dated July 16, 1900, the Concession Area came to be
vested in the Kanan Devan Hills Produce Company Limited, (hereinafter called 'the
around May 1963 the company clear-felled about 150 acres in the Concession Area
Company applied to the State Government for grant of free passes to transport
the timber from the Concession Area. The State Government by an order dated November 25, 1966 informed the company that it could
not take away timber outside the limits of the Concession Area except in
accordance with the Rules of the forest department and on payment of levy in
the shape of Kuttikanam. According to the Government in terms of the deeds of
conveyance/ratification the company was liable to pay Kuttikanam in respect of
the timber taken out of the Concession Area.
company filed a suit in the year 1968 in the Court of Subordinate Judge, Kottayam
against the State of Kerala and its officers. In the suit, the
company prayed for the following reliefs:
declaration that the plaintiff-company has full and unqualified ownership and
title over, and right of removal of the said timber from the Concession Area;
Declaration that the State has no right to claim seigniorage, Kuttikanam or any
other payment in respect of the said timber;
mandatory injunction directing the defendants to grant the necessary free
passes for the free transit of the timber outside the Concession Area;
Prohibitory injunction restraining the defendants from taking any steps under
the order dated 25.11.1966.
State Government resisted the suit and controverted the interpretation placed
by the company on the deeds of conveyance/ ratification. According to the State
the company was only a lessee of the Concession Area and in terms of the deeds
of conveyance/ratification the State Government had the absolute right over the
trees and 265 timber in the Concession Area. The company only acquired the
right to use and remove the timber subject to the restrictions imposed in the
said documents. It was further contended by the State Government that the title
and ownership in the trees and timber in the Concession area always remained
with the State Government and the company could only take the timber outside
the limits of the Concession Area in accordance with the rules framed by the
State Government and on payment of Kuttikanam.
Trial Court in a detailed and well reasoned judgment dismissed the suit of the
company. The Trial Court on the interpretation of First Concession (Exhibit P-
1), Second Concession (Exhibit P-2), deed of ratification (Exhibit P-62) and
the Government agreement with the Society dated August 2, 1866 (Exhibit P-64)
came to the conclusion that the company did not acquire absolute proprietary
rights over the Concession Area or the trees and timber in the said area. It
was held that the Poonjar Chief had only conveyed heritable and transferable possessory
rights over the Concession area to the grantee. It was also held that absolute
rights over the trees and timber in the Concession Area did not pass to the
grantee and it had only the right to use and remove timber subject to the
restrictions imposed in the deeds of conveyance/ratification. The Court further
held that the relevant rules framed under the Travancore Forest Act, 1952 for
levy of Kuttikanam were applicable to the timber transported from the Concession
Area. The contention of the company that it was entitled to free passes for
transportation of timber outside the Concession Area under the Transit Rules
suit of the company was thus dismissed with costs.
company went up in appeal before the High Court. It was contended that the
Trial Court misinterpreted the documents P- 1, P-2, P-62 and P-64. It was
contended that the Poonjar Raja had conveyed absolute possession to the grantee
to be enjoyed perpetually with heritable and transferable right and it ought to
have been held that the natural consequence of such a conveyance was to grant
the company absolute title to the trees standing on the area so conveyed. It
was argued before the High Court that the State Government had no right over
the trees and the timber within the Concession Area.
adverting to the various contentions raised by the parties before it the High
Court indicated the approach it adopted to the questions involved in the case
in the following words:
resolving the real controversy in the case we do not think there should be an
enquiry into the question whether the plaintiff-company is the absolute owner
of the Concession Area as alleged by them or the company is only a lessee as
contended by the defendants. Nor do we think any decision is necessary here as
to whether at the time, the agreement and proclamation of 1899 came into
existence, the Poonjar Chief had vested in him any proprietary rights over the
Concession Area which he could pass to the government. We also do not think we
should make a general enquiry as to the nature and extent of the rights
conveyed and secured by the First Poonjar Concession of 11.7.1877 and second Poonjar
Concession of 26.7.1879 (Exs. P 1 and P2). We can well proceed in the matter on
the basis, as stated by the court below, that absolute rights over the
Concession Area had not been conveyed under Exs. P-1 and P- 2, that by virtue
of the transactions the plaintiff had only absolute possession with heritable
and transferable interest and the right to enjoy the land subject to the terms
and conditions declared and defined in the Ratifica- tion Deed and agreement of
modification, namely Exs. P-62 and P-64. The question is what is the
plaintiff's right over the timber and tree-growth in the area on the basis of
the grant under Exs. P- 1 and P-2, wherein it gets wide rights in regard to the
jungles and forest in the Concession Area-unqualified rights to clear the land
and improve the source. It is no doubt true that the rights which the plaintiff
has acquired as per the grant of the Poonjar Raja are subject to the terms and
conditions imposed by the Sovereign power of the Maharaja under Ex. P-62 and
P-64. In short the question for a decision in the appeal will revolve round the
interpretation of the relevant clauses in these documents." The High Court
then considered the contents of the documents P-62 and P-64 and came to the
conclusion that the company had full rights over the timber clear-felled from
the Concession Area and it had right of removal of the timber with the
necessary free passes issued under the timber transit rules. It was further
held that the State of Kerala had no right or claim for the seigniorage
or Kuttikanam or any other payment in respect of the said timber. The High
Court allowed the appeal of the company and set aside the judgment and decree
of the Trial Court.
appeal via special leave petition is against the judgment of the High Court.
The High Court proceeded on the basis that absolute rights over the Concession
Area had not been conveyed under the documents of conveyance/ratification and
the right to enjoy the land was subject to the terms and conditions declared in
the ratification deed P-62 and the agreement of modification P-64. We agree with
the approach of the High Court. The question, therefore, is what are the
company's rights over the timber and the tree-growth in the Concession Area.
This takes us to clause 5 of P-62 and clause 7 of P-64 which are relevant.
fifth of the ratification dated November 28, 1878 Exhibit P-62 is as under:
The grantee can appropriate to his own use within the limits of the grant all
timber except the following and such as may hereafter be reserved, viz., Teak,
Coal-teak, Black-wood, Aboney, Karinthali Sandalwood.
he carry any timber without the limits of the grant it will be subject to the
payment of Kuttikanam or customs duty or both as the case may be in the same
way as timber ordinarily felled. In the case of the excepted timber the grantee
is required to pay seigniorage according to the undermentioned scale....... The
grantee is bound to deliver to the Poonjar Chief, to enable him to make over to
the Sirkar, all ivory, cardamoms and other royalties produced in the land and
all captured elephants and he will be paid by the said Chief according to
agreement with him the regulated price for the articles of produce and the
regulated reward for the elephants.
7 of the agreement dated August
2, 1886 Exhibit P-64
is as under:
The society, its successors and assigns may use and appropriate to its own use
within the limits of the said tract of land all timber except the following and
such as may hereafter be reserved, viz., Teak, Coak-teak, Black-wood, Aboney, Karinthali
such society, its successors and assigns shall not fell any timber beyond what
is necessary for clearing the ground for cultivation and for building,
furniture and machinery within the limits of the grant. No unworked timber or
articles manufactured therefrom shall be carried outside the limits of the
grant except in conformity with the rules of the forest and 268 customs
department for the time being in force. In the case of the excepted timber the
society for itself, its successors and assigns agrees to pay seigniorage
according to the undermentioned scale.............. The society for itself, its
successors and assigns agrees to deliver to the said Poonjar Raja or Chief to
enable him to make over the same to the government of Travancore, all ivory and
cardamoms and other royalties.......
learned counsel appearing for the respondent-company contended that in P-62 it
was provided that the grantee could not carry timber beyond the limits of the
grant without payment of Kuttikanam but by the time the agreement P-64 was
executed in the year 1886 Kuttikanam had been abolished and as such there was
no provision for the payment of Kuttikanam in the document P-64.
7 of P-64 reproduced above makes it clear that the respondent-company may use
and appropriate to its own use within the limits of the Concession Area all
timber except to the extent mentioned therein. It was further provided
that........... society, its successors and assigns shall not fell any timber
beyond what is necessary for clearing the ground for cultivation and for
building, furniture and machinery within the limits of the grant. No unworked
timber or articles manufactured therefrom shall be carried outside the limits
of the grant except in conformity with the rules of the forest and customs
department for the time being in force". It is thus clear that the company
has no right under the said clause to carry the unworked timber beyond the
limits of the grant. The company could not fell timber beyond what was
necessary for clearing the ground for cultivation and for building, furniture
and machinery within the limits of the grant. Clause 7 clearly indicates that
the grantee has no absolute right of ownership over the tree- growth and the timber
within the Concession Area. The ownership remains with the Government and the
grantee has been given the right to fell the trees for clearing the ground for
cultivation and to use the timber for specified purposes within the limits of
the grant. An identical clause in another grant entered into by the Travancore
Government came for consideration before a Full Bench of the Kerala High Court
in George A Leslie v. State of Kerala, [ 1969] K. L.T. 378. K. K. Mathew, J.
(as the learned Judge then was) interpreted the clause as under:
think that if title to the reserved trees passed to the grantees, a provision
of this nature would have been 269 quite unnecessary. There was no purpose in
stating that the grantees will be free to appropriate the reserved trees for
consumption within the limits of the grant, if title to the trees passed to the
grantees; the provision is a clear indication that the grantees were allowed to
cut and appropriate the reserved trees for consumption within the limits of the
grant as a matter of concession.
agree with the interpretation given to the clause by Mathew, J. and hold that
the respondent- company did not acquire absolute proprietary rights over the
Concession Area or the trees and the timber therein. The company acquired the
right to fell the trees and use the timber subject to the restrictions imposed
in clause 7 of P-64. Since the respondent- company has no right to remove the
timber beyond the limits of the Concession Area, the State Government was
justified in refusing to permit free transportation of timber from the said
not agree with Mr. Parasaran that Kuttikanam having been abolished in the year
1884 the respondent-company was not liable to pay Kuttikanam while transporting
the timber from within the Concession Area. In Leslie v. State of Kerala
(supra) the term "Kuttikanam" was explained as under:
the Malayalam and English Dictionary by Rev. H. Gundert D. Ph. page 278, 'Kuttikanam'
is defined as meaning 'the price of timber;
by the owner for every tree cut down by the renter'. In 'The Manual of Malabar
Law' by Kadaloor Ramachandra lyer, Chapter, VII, page 44, it is stated:
is a mortgage of forests by which the landlord assigns on mortgage a tract of
forest land receiving a stipulated fee for every trees felled by the mortgagee,
the entire number of the trees, to be cut down and the period within which they
are to be felled being expressly fixed in the karar entered into between the
Glossary attached to the Land Revenue Manual (1916) Vol. IV, at page 883, the
word 'Kutti kanam' is said to mean 'a fee paid to the Sirkar for felling trees
other than royal trees and tax-paying trees'. In the 270 Glossary of
Administrative Terms, English- Malayalam, by the Official Language Committee,
at page 302, 'seigniorage' is defined as meaning........
not think that 'Kuttikanam' is either a fee or tax. A tax or fee is levied in
the exercise of sovereign power. We think that in the context 'Kuttikanam' means
the Government's share of the value of the reserved trees." It was further
held by Mathew, J. that Kuttikanam being the Government's share of the value of
the trees owned by the Government it has the power to fix the value of the
trees. We agree with the reasoning and conclusions reached by Mathew J.
the ownership cover the tree-growth and timber in Concession area vests with
the Government it has a right to impose Kuttikanam on the removal of the trees
from within the Concession area.
examine the justification for levying Kuttikanam from another angle. Clause 7
of P-64 states that no unworked timber or articles manufactured therefrom shall
be carried outside the limits of the grant except in conformity with the rules
of the forest department for the time being in force.
Government of Kerala, in exercise of its rule making power under Section 93 of
the Travancore- Cochin Forest Act, 1951, framed rules regulating the levy of Kuttikanam
on trees, standing on Government land by a notification dated July 9, 1958. The
said rules are reproduced hereinafter.
FOREST ACT, 1951 (111 OF 1952)
REGULATING THE LEVY OF KUTTIKANAM ON TREES IN GOVERNMENT LANDS. (Section
93(2)(d)(dd) and (e) Notification No. 14824/58-3/Agri./F.(B) 3 dated 9th July
1958 published in the Gazette dated 15th July 1958 Part 1, Page 2189.
exercise of the powers conferred by sub- section (2)(d)(dd) and (e) of Section
93 of the Travancore-Cochin Forest Act, 1951 (Act Ill of 1952) the Government
of Kerala hereby make the following rules, regulating the levy of Kuttikanam on
trees, standing on Government lands, namely:
trees standing on land temporarily or permanently assigned, the right of
Government over which has been expressly reserved in the deed of grant or
assignment of such land, shall be the absolute property of Government.
shall not be lawful to fell, lop, cut or maim or otherwise maltreat any tree
which is the property of Government without proper sanction in writing granted
by an officer of the Forest Department not below the rank of an Assistant
that in cases where the holder of the land is allowed under the title deed to
lop or fell any such tree, such lopping or felling may be done by such holder
in the manner and subject to such conditions and payment as may be specified in
the title deed in that behalf. Any lopping or felling of such trees otherwise
than in accordance with the conditions and limitation specified in the deed of
grant shall be unlawful.
Government may, in the absence of any provision to the contrary in the title
deed, sanction the sale of timber which is the property of Government to the
holder of the land on which such timber is standing, on payment of Kuttikanam
or Seigniorage or such other rates as may be specified by Government in each
individual case. In cases where the title deed specified the rate at which the
timber will be sold to the holder of the land, such rates only will be levied.
'Kuttikanam' means the seigniorage rate that may be in force in the Forest
Department from time to time and notified by Government.
Collector of each District shall forward to the Chief Conservator of Forests a
statement showing the full details of the trees standing on such lands at the
disposal of Government as may hereafter be granted for permanent cultivation,
under the Land Assignment Act and the rules framed thereunder. On receipt of
such statement, the Chief Conservator of Forests will take appropriate action
for the disposal of such tree growth within the period allowed under Section 99
of the Forest Act.
The Travancore-Cochin Forest Act 1951 was repealed by the Kerala Forest Act, 1961 but Section 85(3)
of the said Act saves the rules framed under the repealed Act. It is thus
obvious that the rules reproduced above were holding the field at the relevant
time. The trial Judge primarily relied on these rules for holding that the
Government was justified in demanding Kuttikanam from the respondent- company.
The High Court, however, did not take into consideration these rules while
interpreting clause 7 of Exhibit P-64. We agree with the findings of the trial
court to the effect that the above quoted rules read with clause 7 of Exhibit
P-64 empowers the State Government to levy and demand Kuttikanam from the
respondent company in respect of timber taken out of the limits of the
invited our attention to a letter dated May 21, 1932 (Exhibit P-4) from Chief Secretary
to Government to the General Manager of the respondent-company.
letter reads as under:
reference to your letter dated the 25th January, 1928 regarding the payment of seigniorage
on reserved trees felled from the K.D.H.P- Company's Concession Area, I have
the honour to inform you that Government accept your view that no seigniorage
is due from the Company on trees other than the Royal Trees specifically
mentioned in Clause 7 of the Agreement and sanction accordingly." Mr. Parasan
contended that the State Government interpreted clause 7 of P-64 to mean that
no seigniorage (Kuttikanam) was due from the company on trees other than the
Royal Trees specified in the said clause. He argued that in the face of the
Government decision in the above letter the Government could not demand Kuttikanam
from the respondent-company in respect of the non-Royal Trees removed from
within the limits of the Concession Area. We do not agree with the contention
of the learned counsel. The letter re-produced above refers to the letter dated
January 25, 1928 (exhibit P-3) written by the
General Manager of the company to the Government. The letter P--l states as
question arose through the Forest Department claiming seigniorage on certain
species of timber, used by this Company within the concession area for building
purposes, and which have been reserved under the Forest Regulation.
The letter also states as under:
"..... I think it advisable that the whole question of Timber Rights in
the Concession should be considered and settled if possible." It is no
doubt correct that while focusing the controversy in respect of the timber used
by the company within the Concession Area the General Manager dealt with the
larger question of timber rights in the Concession Area but reading the two
letters P-3 and P-4 together the only conclusion which could be reached is that
the letter P-4 was with respect to the use of timber by the company within the
Concession Area. The letter P-4 cannot be read to mean that no Kuttikanam was leviable
on the timber removed by the respondent- company outside the Concession Area.
In any case the wording of clause 7 of P-64 is clear and unambiguous. The
Government letter P-4 is to be read in the light of clear phraseology of clause
7 and not the vice-versa.
allow the appeal and set aside the judgment of the High Court. We uphold and
approve the judgment and findings of the Trial Court. The suit of the
respondent-plaintiff is dismissed with costs which we quantify as Rs.5,000 R.
N. J. Appeal allowed.