IMPORTANT POINT
The impugned demand notices issued by the appellants demanding "seigniorage" rate from the respondents - lessee for all the produce cut and removed from the demised land as per sanction given, including cutting and removing eucalyptus trees grown and used by respondents on the land held by them as lessee is liable to be quashed. The High Court judgment confirmed but for different reason.

Headnote:Kerala Grants and Leases (Modification of Rights) Act, 1980-Sections 2 and 4-Respondents holding land as lessee-Appellants demanding seigniorage rates in respect of cutting and removing eucalyptus trees grown and used by the respondents on that land-High Court of Kerala holding 1980 Act not applicable to the lands held by respondent and quashed demand notices issued by appellants-Appeal to Supreme Court-Meaning of expression "seigniorage"-Distinction between kuttikanom and seigniorage-Whether Appellants can levy seigniorage? (Yes)-Whether it can be levied on eucalyptus trees? Distinction between Timber and eucalyptus tree-Dictionary meaning-Impugned demand whether liable to be quashed? (Yes)-Whether reasons given by High Court were necessary? (No)-Appeal dismissed-Dictionaries and case law referred.
       Held : 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. (Para 12)
       Held also 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 eucalyptus trees. The 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 lease. In our 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. (Paras 15, 16 and 17)
       Held consequently : Admittedly, 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. (Para 18)
       Held however, inasmuch as the High Court had 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. In the result we dismiss the appeal and direct the parties to bear their own costs. (Paras 19 and 20)

JUDGMENT

Syed Shah Mohammed Quadri, J.-The 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.

2. The 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.

3. To make the controversy intelligible, it will be necessary to note the relevant facts.

4. The 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 ).

5. After 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 trespassers. 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 a

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2001 Supreme(SC) 916

Cases Referred (1)

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