Forest Officer & Ors Vs. TATA Finlay
Ltd. & Anr  Insc 311 (10 July 2001)
S.S.M.Quadri Syed Shah Mohammed Quadri, J.
State of Kerala and the Divisional Forest Officers
of two divisions are in appeal, by special leave, against the judgment and
order of the High Court of Kerala at Ernakulam in O.P.No.1156 of 1981 dated January 31, 1984. The High Court held that the Kerala
Grants and Leases (Modification of Rights) Act, 1980 (for short 'the 1980 Act')
was not applicable to the lands held by the respondents under lease and quashed
the impugned demand notices issued by the appellants demanding seigniorage
rates from the lessees for all the produce cut and removed from the demised
lands, as per sanction given, including produce consumed inside the concession
area by them.
dispute centres round the validity of demand of seigniorage rates raised by the
appellants in respect of cutting and removing eucalyptus trees grown and used
by the respondents on the land held by them as lessee.
make the controversy intelligible, it will be necessary to note the relevant
first respondent is the successor-in-interest of the lessee of Poonjar
concession land. It carries on the business of plantation and manufacturing
tea. On July 11, 1877, Poonjar Chief granted concession by way of lease of
large extent of land in the erstwhile Travancore State, in favour of one John
Daniel Munro for consideration of Rs.5000/- and yearly rent of Rs.3,000/-. The
grant was ratified by Maharajah of Travancore under a deed executed on November 28, 1878. On a request made by the said
Munro, a further concession was granted in respect of the same land with some
extended rights on July
26, 1879. That land
which comprises of Kannan Devan Hills was later transferred by him in favour of
North Travancore Land Planting and Agricultural Society Ltd. on December 8, 1879. With regard to reduction of the
tax liability under the said deed an agreement was entered into between the
society and the Poonjar Chief on August 2, 1886. By a Royal Proclamation dated September 24, 1899 made by the Maharaja the territory of Poonjar Chief including the lands in
question was made part of the State of Travancore reserving the right of Poonjar Chief to receive the annual rent of Rs.3000/-
under the aforementioned concession. The first respondent also holds as lessee
'Malki Marai Estate' which was leased out by the Maharaja of the erstwhile
Government of Cochin in favour of its predecessor-in-interest. The land in
dispute encompasses both Kannan Devan Hills area as well as Malki Marai Estate.
The second respondent is the Regional Officer of the first respondent
(hereinafter they will be referred to as 'the respondent').
States re-organization the State of Travancore and Cochin became part of the State of Kerala. In 1971, the State of Kerala passed the Kannan Devan Hills
(Resumption of Lands) Act, 1971 (for short 'the 1971 Act') which came into
force on January 21,
1971. By Section 3(1)
of the 1971 Act the possession of the entire extent of the land situated in the
Kannan Devan Hills village in the Devicolam taluk stood transferred to and
vested in the Government of Kerala free from all encumbrances Clause (a) of
sub-section (2) of Section 3 provides that sub-section (1) shall not apply to
plantations other than plantations belonging to tresspassers. Under Section 4
of the said Act possession of the land which had vested in the State under
Section 3(1), was restored on the application of the respondent on the same
terms and conditions on which it was holding before the appointed day.
Thereafter, the State of Kerala passed the aforementioned 1980 Act.
Section 3 of the 1980 Act specifies the grants and leases of lands to which
that Act applies. Section 4 which is in the nature of charging section imposes
an obligation on the grantees and lessees to pay seigniorage rates in force for
the time being for the timber cut and removed from any land held by him under
the grant or lease. It is under that section that the appellants raised demand against
the respondents. In O.P.No.1156-H of 1981, filed in the High Court of Kerala at
Ernakulam, the respondent challenged the constitutional validity of the Act,
the legality of the demand and sought a writ prohibiting the appellants from
interfering with felling of eucalyptus and other trees for the use of the
respondent and from levying seigniorage on such trees and firewood under the
Act. The High Court by judgment dated January 31, 1984, under challenge,
declared that the provisions of the 1980 Act did not apply to the lands in
question, quashed the demand raised under various letters and issued a writ
prohibiting the appellants from interfering with the cutting of eucalyptus and
other trees for the respondents own requirement and from levying seigniorage on
such trees and firewood under the Act.
regard to the nature of real controversy which arises in this appeal, we
consider it unnecessary to refer to the various contentions urged by Mr.P.Krishnamurthi,
the learned senior counsel appearing for the appellants and Mr.Ashok H.Desai,
the learned counsel appearing for the respondents. The respondent is primarily
aggrieved by levy of seigniorage rates under Section 4 of the 1980 Act on the
eucalyptus and other trees which were cut and utilised in the factories which
are situated within the boundaries of the lands in question. This issue can be
resolved with reference to the provisions of Section 4 of the 1980 Act which
reads as under :
Grantees and lessees to pay current seigniorage rates –
anything contained in any law for the time being in force, or in any grant,
lease deed, contract or agreement, or in any judgment, decree or order of any
court, with effect on and from the commencement of this Act, every grantee and
every lessee shall be bound to pay to the Government the seigniorage rates in
force for the time being for the timber cut and removed from any land held by
him under the grant or lease." The section, quoted above, commences with a
non-obstante clause and gives an overriding effect to the provisions of that
section over anything contained in any law for the time being in force, or in
any grant, lease deed, contract or agreement, or in any judgment, decree or
order of any court, with effect on and from the commencement of that Act (June
25, 1980). The impost -- seigniorage rates in force for the time being -- is
payable by every grantee and lessee to the Government for the timber cut and
removed from any land held by him under the grant or lease. Thus, it is clear
that every grantee and every lessee is made liable to pay the Government seigniorage
at the rates in force for the time being in force for the timber cut and
removed from any land held by him under the grant or lease. Since the liability
to pay seigniorage is cast on the grantee and the lessee, it may be necessary
to notice the meanings of the terms 'grant, grantee, lease and lessee' defined
in clauses (b), (c) (d) and (e) respectively of Section 2. They are as follows
"grant" means any grant to which this Act applies.
"grantee" means the person in whose favour a grant has been made and
includes his heirs, successors and assigns;
"lease" means any lease to which this Act applies;
"lessee" means the person in whose favour a lease deed has been
executed and includes his heirs, successors and assigns." A perusal of the
definition of terms 'grant' and 'lease' indicates that the liability under
Section 4 extends to only those grants and leases which satisfy the
requirements of Section 3 of the 1980 Act.
High Court, as noted above, held that the 1980 Act would not apply to subject
'leases'. In our view, as alluded, without touching upon that aspect, the
appeal can be decided on the terms of Section 4 of the 1980 Act, referred to
reverting to Section 4 of the 1980 Act, Mr.Ashok Desai would contend that a
claim for seigniorage implied ownership of a share in the property in respect
of which it would be payable; that word is equivalent of Malyalam term "kuzhi
kanam" which means owner or shareholder and as the eucalyptus trees were
grown by the respondent and the appellants had no share in them, the impugned
demand was unsustainable and was rightly so held by the High Court.
first point that is required to be examined is the import of the expression
"seigniorage". It is not defined in the Act. It is not a term of art.
It has to be understood in the meaning it bears in English. The relevant
meaning of that expression "seigniorage" given [in the New Shorter
Oxford English Dictionary] is : Profit made by a government by issuing
currency; the difference or margin between the face value of coins and their
production costs; the Crown's right to charge a percentage on bullion brought
to a mint for coining; the amount charged, something claimed by a monarch or
feudal lord as a prerogative.
the above meaning, it may be seen that the expression "seigniorage"
has two distinct meanings
profit made by a Government by issuing currency, the Crown's right to charge a
percentage on bullion brought to a mint for coining; and
claimed by a monarch or feudal lord as a prerogative.
unable to accept that seigniorage is used in Section 4 synonymous with "kuzhi
kanam" because the legislature has used the said expression in clause (d)
of Section 3 in the sense of conferment of right of ownership by the State on
payment of royalty, kuzhi kanam.
distinction between kuttikanom and seigniorage is explained by a Kerala High
Court in Leslie vs. State of Kerala [AIR
1970 Kerala 21] in the following words :
do not think that 'kuttikanom' is either a fee or tax. A tax or fee is levied
in the exercise of sovereign power. We think that in the context 'kuttikanom'
means the Government's share of the value of the reserved trees." And it
has been approved by this Court in State of Kerala vs. Kanan Devan Hills Produce Co. [1991 (2) SCC 272] in paragraph 20
which reads as under :
was further held by Mathew, J. that kuttikanom 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
the ownership over the tree growth and timber in Concession Area vests with the
Government it has a right to impose kuttikanom on the removal of the trees from
within the Concession Area." In Section 4(1), the expression "seigniorage"
is employed to enforce a prerogative of the State de hors the right of
ownership in the property. Therefore, the contention of Mr. Desai cannot be
second point for consideration is : whether eucalyptus trees fall within the
meaning of timber. This term is also not defined in the Act. Its ordinary
meaning in English may be gathered from :
Concise Oxford Dictionary, Eight Edition, 1990 at p.1277 Timber : wood prepared
for building, carpentry etc.
piece of wood or beam, esp. as the rib of a vessel large standing trees
suitable for timber;
or forest a warning cry that a tree is about to fall Halsbury's Laws of
England, Fourth Edn. Vol.19 at p.21 Timber : At common law oak, ash and elm are
timber if over twenty years old, but not so old as to have no usable wood in
them. Other trees may be timber by the custom of the country.
beech is timber by the custom of Buckinghamshire and parts of Gloucestershire. Aspen and horse-chestnut are timber in
some countries. Trees less than six inches in diameter have been said not to be
usages between landlord and tenant also frequently define the species of trees
which are regarded as timber in the localities where the usages subsist. In a
contract for the sale of standing timber, "timber" may be synonymous
with "trees" and so include lops and tops as well as trunks. By
statute, "timber" includes all forest products.
Webster's Dictionary, the meaning of the word 'timber' is "Building
material, timber........... wood suitable for building or for use in carpentry;
wood of growing trees suitable for structural uses; growing trees themselves; a
single beam or peace of wood forming or capable of forming part of a
Juris Secundum, Vol.54 at p.1 The word "timber" has an enlarged or
restricted sense, according to the connection in which it is employed, and may
refer to standing trees or wood suitable for the manufacture of lumber to be
used for building and allied purposes.
it is seen that the word 'timber' may be used in a restricted as well as
enlarged sense. In the restricted sense it means specified trees like oak, ash,
elm, teak, blackwood, abony, karumthali etc. and in the enlarged sense it means
woods suitable for building, furniture and carpentry etc. and includes standing
trees. Its true meaning has to be determined from the context in which it is
employed. In this connection it will be appropriate to refer to Section 3 of
the 1980 Act which specifies the terms and conditions of the grants and leases
of lands to which the Act applies. A perusal of clause (a) in the light of the
meaning of 'timber', noted above, shows that the word 'timber' is used in
Section 4 of the 1980 Act, in the enlarged sense to mean trees other than teak,
blackwood, ebony, Karumthali etc. and in that sense it includes standing
last aspect that needs to be addressed is whether felling of eucalyptus trees
and taking them to the factory of the respondent situate on the land in
dispute, amounts to removal of timber cut from any land held by it under the
view, the words 'cut and removed from any land' used in Section 4 do not suggest
felling of the trees and removing the wood from one part to another on the
land. They would indicate cutting the trees and removing them out of the limits
of the land held by the grantee or the lessee under the grant or lease.
in this case, the eucalyptus trees which are felled are taken to the factory of
the respondents which is on the lands in question. Therefore, by cutting and
taking the wood of the felled eucalyptus trees from the place where they are
cut to the factory on the demised land where they are consumed, the respondent
does not incur liability to pay seigniorage rates under Section 4 of the 1980
Act. On this ground alone, the impugned demand is liable to be quashed and to
that extent we confirm the impugned judgment of the High Court.
as the High Court had held that the letters of demand were unsustainable in law
and quashed them, it was not necessary for the High Court to go into the
question as to whether the provisions of the 1980 Act would apply to the leases
of the lands in question. In this view of the matter, we are not inclined to go
into the question as to whether Section 3 of the 1980 Act applies to the leases
of the land in question and leave the question open to be decided in an
appropriate matter. We, therefore, vacate the findings recorded by the High
Court on this point.
result we dismiss the appeal and direct the parties to bear their own costs.