Badri Prasad Vs. State Of Madhya
Pradesh & ANR  INSC 245 (11 October 1968)
11/10/1968 SIKRI, S.M.
CITATION: 1970 AIR 706 1969 SCR (2) 380
CITATOR INFO :
RF 1977 SC 687 (26,27) F 1978 SC1076 (13) F
1985 SC1293 (81)
Abolition of Proprietary Rights (Estates,
Mahals Alienated Lands) Act, (M.P. 1 of 1951) Forests and trees in Jagir--If
vest in State.
Contract to cut timber--If sate of
ascertained goods--Sale of Goods Act (3 of 1930), s. 19--Offer and
acceptance--Reservation in acceptance-If concluded contract.
The appellant entered into a contract in
respect of certain forests in a Jagir in Madhya Pradesh. Under el. 1 of the
contract, he was entitled to cut teak trees of more than 12 inches girth. Under
cl. 5, the stumps of trees after cutting, had to be 3 inches high. After the
passing of the Abolition of Proprietary Rights (Estates, Mahals.
Alienated Lands) Act, 1950 a notification was
issued vesting the estate in the State. and the appellant was prohibited from
cutting timber in exercise of his rights under the contract. After some
negotiations, a letter was written on February 1, 1955, to the appellant, on
behalf of the State, that the appellant's claim to cut trees under the contract
would be considered only if he gave up his claim to a sum of Rs. 17,000 which
he had already paid under the contract and was willing to pay a further sum of
Rs. 17,000. The appellant, by his letter dated February 5, 1955 expressed his
willingness to pay the additional sum but reserved his right to claim a refund
of the first sum. The State Government rejected the appellant's right to cut
trees. He then filed a Suit claiming specific performance of the contract on
the grounds: (1) The forest and trees did not vest in the State under the Act;
(2) Even if they vested, the standing timber, having been sold to the
appellant, did .not vest in the State; and (3) In any event a new contract was
completed on February 5, 1955, and the appellant was entitled to its specific
In appeal to this Court,
HELD: (1) The forest and trees vested in the
State under the Act.360 F--G] Mahadeo v. State of Bombay,  Supp. 2 S.C.R.
State of M.P.v. Yakinuddin,  3 S.C.R.
13 and Mulamchand v. State of M.P., C.A No 393 of 1965 dated February 20, 1968,
(2) Under the contract the appellant had not
become the owner of the trees as goods. The property in the timber could pass
to the appellant only when the trees are felled, but before they were felled,
the trees had vested in the State. [391 B] Under el. 5 of the contract there
was no sale of the whole of the trees, and, under cl. 1 it had to be
ascertained which trees fell within the description of trees which the
appellant was entitled to cut. Till that was done they were not 'ascertained
goods' within s. 19 of the Sale of Goods Act 1930. [391 A--B] (3) Even if the
letter of 1st February could be treated as an offer, there was no unconditional
acceptance of the offer, because, there was 381 a reservation by the appellant
of his right to claim refund in his letter dated 5th February and hence there
was no concluded contract. [391 C--D]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 18 of 1966.
Appeal by special leave from the judgment and
decree, dated October 9, 1962 of the Madhya Pradesh High Court in First Appeal
No- 94 of 1959.
G.L. Sanghi and A.G. Ratnaparkhi, for the
I. N. Shroff, for respondent No. 1.
The Judgment of the Court was delivered by
Sikri, J. This appeal by special leave is directed against the judgment and
decree of the Madhya Pradesh High Court allowing tile appeal of the State of
Madhya Pradesh and dismissing the suit brought by the appellant, Badri
Prasad--hereinafter referred to as the plaintiff. , The relevant facts for
determining the points raised before us are these. On December 27, 1950,- a
contract was entered into between Kumar Bharat Shah, minor, through iris
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 it carefully.
"Deed of agreement executed by Shri
Kumar Bharat Shah minor, guardian Shrimati Rani Umakuar Sahiba, Jagirdar of
Conditions of contract, area, forest Mouza
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 1,000 acres of the forest of big trees and excluding those teak
trees which have girth upto 12 inches is given to contractor Badri Prasad
Moolchand firm of Timarni for a sum of Rs. 17,006 (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- 12-1950. Rs. 11,000 (Eleven thousand rupees) on 21-1-1951.
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 upto 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 paring can be done. The coupe
guard shall make a hammer mark of passing on the stump and end of the pared
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 license book and submit the 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
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 27-12-1950 to 27-12-1953.
Hence the agreement in execution and the same
is The contractor and the owner of the forest On January 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 383 January 26,
1951. The plaintiff started working under the.
contract in March 1951. On 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 as follows:
Subject :---Contract of big trees of
Sunderpani village of Makrai State.
Reference :--Memo No. 5424-4339-11, dated
21st October, 1954 of the Forest Department of Madhya Pradesh Government.
Kindly inform whether you are ready to any
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 be informed." It is this letter which the plaintiff
contends was an offer and which he accepted by the following letter, dated
February 5, 1955:
"Subject: Contract of sale of teak-
trees in Sunderpani Forest in Makrai Range.
Reference :---Your letter No. 180, dated 1st Feb.
Dear Sir, I am ready to pay Rs. 17,000
provided my claim to have the refund of Rs. 17,000 already paid, from Shri
Bharat Shah, 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 these conditions I shall pay Rs.17,000 as required
in your above referred letter." By memorandum, dated October 24, 1956, the
Government wrote to the plaintiff as follows:
384 "Reference :--.Your application,
dated 12th September, 1956, addressed to the Minister for Forests, Madhya
Government regret that the request made in
your application under reference cannot be acceded to. Your application has,
therefore, been rejected." The application, 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
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 State 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.
Three points have been raised before us:
(1) that the 'forest and trees did not vest
in the State under the Act;
(2) that even if they vested, the standing
timber having been sold to the plaintiff did not vest in the State under the
(3) that a new contract was completed on
February 5, 1955, and the plaintiff was entitled to specific performance of the
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
The relevant statutory provisions of the Act
"Section 3. Vesting of proprietary
rights in the State..--( 1 ) Save as otherwise provided in this Act, on 385 and
from a date to be specified by a notification by the State Government in this
behalf, all proprietary rights in an estate, mahal, alienated village or
alienated land, as the case may be, in the area specified in the notification,
vesting in a proprietor of such estate, mahal, alienated village, alienated
land, or in a person having interest in such proprietary right through the
proprietor, shall pass from such proprietor or such other person to and vest in
the State for the purposes of the State free of all encumbrances.
(2) After the issue of a notification under
sub-section (1), no right shall be acquired in or over the land to which they
said notification relates, except by succession or under a grant or contract in
writing made or entered into by or on behalf of the State; and no fresh
clearing for cultivation or for any other purpose shall be made in such land
except in accordance with such rules as may be made by the State Government in
this behalf Section 4. Consequences of the vesting.--( 1 ) When the notification
under sec. 3 in respect of any area has been published in the Gazette, then,
notwithstanding anything contained in any contract, grant or document or in any
other law for the time being in force and save as otherwise provided in this
Act, the consequences as hereinafter set forth shall, from the beginning of the
date specified in such notification (hereinafter referred to as the date of
vesting) ensue, namely :- (a) all rights. title and interest vesting in the
proprietor or any person having interest in such proprietary right through the
proprietor in such area including land' (cultivable or barren), grass land,
shrub jungle, forest, trees, fisheries, wells, tanks, ponds, water channels,
ferries, pathways, village sites, hats, bazars and melas; and in all sub-soil,
including rights, if any, in mines and minerals, whether being worked or not,
shall cease and be vested in the State for purposes of the State free. of all
encumbrances; and the mortgage debt or charge on any proprietary right shall be
a charge on the amount of compensation payable for such proprietary right to
the proprietor under the provisions of this Act ..........
Section 5. Certain properties to continue in
possession of proprietor or other person.---Subject to the provisions in Sections
47 and 63-- (a) all open enclosures used for agricultural or domestic purposes
and in continuous possession for twelve' 386 years immediately before 1948-49;
all open house-sites purchased for consideration; all buildings, places of
worship; wells situated in and trees standing on lands included in such
enclosures or house-sites or land appertaining to such buildings or places of
ownership; within the limits of a village-site belonging to or held by the
outgoing proprietor or any other person shall continue to belong to or be held
by such proprietor or other person, as the case may be, and the land thereof
with the areas' appurtenant thereto.
shall be settled with him by the State
Government on such terms and conditions as it may determine;
(b) all private wells and buildings on
occupied land belonging to or held by the outgoing proprietor or any other
person shall continue to belong to or be held by such proprietor or other
(c) all trees standing on land comprised in a
home farm or homestead and belonging to or held by the outgoing proprietor or
any other person shall continue to belong to or held by such proprietor or
(d) all trees standing on occupied land other
than land comprised in home-farm or homestead and belonging to or held by a
person other than the outgoing proprietor shall continue to belong to or be
held by such person;
(e) all tanks situate on occupied land and
belonging to or held by the outgoing proprietor or any other person shah
continue to belong to or held by such proprietor or other person;
(f) all tanks, belonging to or held by the
outgoing proprietor which are situate on land other than village site or occupied
land and in which no person other than such proprietor has any rights of
irrigation, shall belong. to or be held by such proprietor.
(g) all tanks and embankments (bandhans)
belonging to or held by the outgoing proprietor or any other person which are
situate on land other than village site occupied land and the beds of which are
under cultivation of such proprietor or such other person shah "belong to
or be held by such proprietor or such other person and the land under such
tanks and embankments shall be settled with such proprietor or such other
person on such terms and conditions as the State Government may determine;
(h) all groves wherever situate and recorded
in -village papers in the name of the outgoing proprietor or any other person
shall continue to belong to or be held 387 by such proprietor or such other
person and the land under such groves shall be settled with such proprietor or
such other person by the State Government on such terms and conditions as it
Section 6. Certain transfers to be void. (1)
Except as provided in sub-section (2), the transfer of any right in the
property which is liable to vest in the State under this Act made by the
proprietor at any time after the 16th March, 1950, shall, as from the date. of
vesting, be void." Let us now look at the decisions of this Court and see
what has been laid down therein. In Chhotabhai jethabai Patel v. The State of
Madhya Pradesh,(1) which we may mention has since been overruled, the contract
was in respect of the right to pluck, collect and carry away tendu leaves, to
cultivate, culture and acquire lac, and to cut and carry away teak and timber
and other species of tree and bamboos.
The Court observed:
"It is clear from the provisions in the
impugned Act that only those rights of the proprietor vest in the State which
the proprietor had on the specified date .....
The scheme of the Act as can be gathered from
the provisions referred to above makes it reasonably clear that whatever was
done before 16th March, 1950, by the proprietors by way of transfer of rights
is not to be disturbed or affected, and that what vests in the State is what
the proprietors had on the vesting date.
If the proprietor had any rights after the
date of vesting which he could enforce against the transferee such as a lessee
or a licensee, those rights would no doubt vest in the State. In all these
petitions, the several contracts and agreements were before the date of
vesting, and many of them were prior even to the 16th March, 1950. The
petitioners had taken possession of the subject matter of the contracts,
namely, tendu leaves, lac palsadies, teak, timber and hardwood, bamboos and
miscellaneous forest produce." The Court construed the contracts in that
"The contracts and agreements appear to
be in essence and effect licences granted to the transferees to cut, gather and
carry away the produce in the shape of tendu leaves, or lac, or timber, or
wood." The Court further held that the rights of-the petitioners were not
encumbrances within the meaning of the expression "free from
encumbrances" in s. 3 ( 1 ) of the Act. The Court accordingly issued a
writ prohibiting the State from interfering in any manner with (1) 
S.C.R. 476, 479, 481,483.
388 the enjoyment of those rights by the
petitioner. It may be mentioned that in that case the Court was dealing with an
application under Art. 32 of the Constitution.
Chhotabhai's(1) case was distinguished in
Ananda Behera v. The State of Orissa(2) which again dealt with a petition under
Art. 32 of the Constitution. In Anand Behara v. The State of Orissa(2) the
subject-matter of licence was fishery rights and the Act which was construed
was the Orissa Estates Abolition Act, 1951. The Court held that the right
sought to be acquired by the petitioners by their several purchases was not in
respect of any future goods as claimed by them but was a license to enter on
the land coupled with a grant to catch and carry away the fish, in other words,
a profit a prendre which is immovable property within the meaning of the
Transfer of Property Act read with s. 3(25) of the General Clauses Act. The Court
further held that as it was an oral licence it contravened s. 54 of the
Transfer of Property Act, and therefore, no title or interest therein passed to
the petitioners in that case. The Court distinguished Chhotabhai's(1) case on
the following grounds:
"It is necessary to advert to Firm
Chhotabhai jethabai Patel & Co. v. The State of Madhya Pradesh(1) and
explain it because it was held there that a right to 'pluck, collect and carry
away' tendu leaves does not give the owner of the right any proprietary
interest in the land and so that sort of right was not an 'encumbrance' within
the meaning of the Madhya Pradesh Abolition of Proprietary Rights Act.
But the contract there was to 'pluck, collect
and carry away' the leaves. The only kind of leaves that can be 'plucked' are
those that are growing on trees and it is evident that there must be a fresh
crop of leaves at periodic intervals. That would make it a growing crop and a
growing crop is expressly exempted from the definition of 'immovable property'
in the Transfer of Property Act. That case is distinguishable and does not
apply here." In Mahadeo v. The State of Bombay,(a) which was again a
petition under Art. 32 of the Constitution, Chhotabhai's(1) case was not
followed. In flus case some of the proprietors had granted to the several
petitioners rights to take forest produce, mainly tendu leaves, from the
forests included in the Zamindaris belonging to the proprietors. The agreements
conveyed to the petitioners in addition to the tendu leaves other forest
produce like timber, bamboos, etc., the soil for making bricks, and the right
to build on and occupy land for the purpose of their business. These rights (1)
 S.C.R. 476. (2)  2 S.C.R. 919.
(3)  Supp. 2 S.C.R. 339.
389 were spread over many years but in the
case of a few the period during which the agreements were to operate expired in
1955. This Court held that the agreements required registration and pointed out
that some aspects had not been brought to the notice of the Court in Chhotabhai's(1)
Hidayatullah, J., as he then was, speaking
for the Court observed:
"But what was the nature of those
rights, of the petitioners ? It is plain, that if they were merely contractual
right then as pointed out in the two later decisions, in Ananda Behera v. The
State of Orissa(2), Shantabai's case(a) the State has not acquired or taken
possession of those rights but has only declined to be bound by the agreements
to which they were not a.party. If, on the other hand, the petitioners were mere
hcensees, then also, as pointed out in the second of the two cases cited, the
licences came to an end on the extinction of the title of the licensers.
In either case there was no question of the
breach of any fundamental rights of the petitioners which could support the
petitions which were presented under Art. 32 of the Constitution." The
Court then construed the agreements in question and came co the conclusion that
the agreements could not be said to be contracts of sale of goods simply. Then
the Court examined the provisions of the Central Provinces I and Revenue Act
and came to the following conclusion:
"From this, it is quite clear that
forests and trees belonged to the proprietors, and they were items of
The first of the two questions posed by us,
therefore, admits of none but an affirmative answer.
If then the forest and the trees belonged to
the proprietors as items in their 'proprietary fights', it is quite clear that
these items of proprietary rights have been transferred to the petitioners. The
answer to the second question is also in the 'affirmative. Being a 'proprietary
right', it vests in the State under ss. 3 and 4 of the Act. The decision in
Chhotabhai's(1) treated these rights as bare licences, and it was apparently
given per incuriam and cannot therefore be followed." It seems to us that
this decision concludes the controversy before us. This decision was followed
in State of Madhya Pradesh v.Yakinuddin(4) Various agreements were construed in
that case; one agreement was to propagate lac, another agreement was to (1)
 S.C.R. 476. (2)  2 S.C R. 919.
(3)  S.C.R. 265. (4)  3 S.C.R.
390 collect tendu leaves, and another
agreement was with respect to a right to collect fruits and flowers of Mahua
It was contended that these rights were saved
in view of the provisions of the Act, but this contention was negatived.
Sinha, C.J., speaking for the Court, observed
that the distinction between a bare licence and a licence coupled with grant or
profit a prendre was irrelevant because "whatever may have been the nature
of the grant by the outgoing proprietors in favour of the respondents, those
grants had no legal effect as against the State, except in so. far as the State
may have recognised them. But the provisions of the Act leave no manner of
doubt that the rights 'claimed by the respondents could not have been enforced
against the State, if tiao latter was not prepared to respect those rights and
the rights created by the transactions between the respondents and their
grantors did not come within any of the saving clauses of s. 5." Earlier
he had observed that "any person claiming some interest as a proprietor or
as holding through a proprietor in respect of any proprietary interest in an
estate has got to bring his interest within s. 5, because on the date of
vesting of the estate, the Deputy Commissioner takes charge of all lands other
than occupied lands and homestead, and of all interests vesting in the State
under s. 3. Upon such taking over of possession, the State becomes liable to
pay the compensation provided for in s. 8 and,the succeeding sections. The
respondents have not been able to show that their interest comes under any of
the clauses aforesaid of S. 5." The last case in which this Act was
construed was Mulamchand v. State of Madhya Pradesh(1). In that case Mulamchand
had purchased a right to pluck, collect and remove forest produce like lac,
tendu leaves, etc., from the proprietors of the different Malguzari jungles.
This Court followed State of Madhya Pradesh v. Yakinuddin(2) and negatived the
claim of Mulamchand to exercise his rights under the agreement.
In view of .these cases it is too late in the
day to contend that the forest and the trees did not vest in the State under
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" rights or
interest in proprietary rights within the meaning of ss. 3 and 4(a) of the Act
they must be felled under 1 the contract. It will be noticed that under cl. 1
of the contract (1) Civil Appeal No. 393 of 1965 dated February 20, 1968.
(2)  3 S.C.R. 13.
391 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 s. 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 the trees are felled. But
before that happened the trees had vested in the State.
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 an 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 Rs.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
In the result the appeal fails and is
dismissed with costs.
V.P.S. Appeal dismissed.