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Andhra Pradesh High Court
Judges : ANANTA NARAYANA AYYAR, P.JAGMOHAN REDDY
Conservator of Forests Nizamabad Circle, Nizamabad - Appellant
Versus
K.Sridhara Reddy - Respondent
Decided On : 09-07-66
FOREST CONTRACT - BREACH OF CONDITIONS - PENALTY - RECOVERY - RULES 29, 30 AND 31 OF THE ANDHRA PRADESH (TELENGANA AREA) FOREST RULES, 1955 - INTERPRETATION - CONTRACTOR'S LIABILITY TO PAY PENALTY - DEPARTMENT'S POWER TO RECOVER PENALTY - DISTINCTION BETWEEN CONTINGENCY (I) AND CONTINGENCY (II) - APPLICABILITY OF RULE 31 - TERMINATION OF CONTRACT - EFFECT ON PENALTY LIABILITY.
Fact of the Case:
The petitioner, a forest contractor, entered into a written forest contract with the Government under Rule 29 of the Andhra Pradesh (Telengana Area) Forest Rules, 1955. Clause 7 of the contract provided for a penalty of not exceeding one-quarter of the total consideration payable by the contractor for any breach of the contract. The contractor committed breaches of the contract, and the Conservator of Forests levied penalties on him under Rule 29. The contractor filed writ petitions challenging the levy of penalties, contending that the Department was only entitled to recover a maximum of Rs. 100 as penalty under Rule 31, since it did not terminate the contract on account of the breaches.
Finding of the Court:
The court held that the Department had the right to recover the whole penalty after the termination of the contract. The court interpreted Rules 29, 30, and 31 of the Andhra Pradesh (Telengana Area) Forest Rules, 1955, and held that the contractor's liability to pay the penalty and the Department's power to recover the penalty were distinct. The court distinguished between two contingencies: (i) when the contract has been duly terminated under Rule 30, and (ii) when it is not proposed to terminate the contract on account of a breach of condition under Rule 31. The court held that Rule 31 applied only during contingency (ii), and that the Department was entitled to recover the whole penalty under Rule 29 after the termination of the contract under contingency (i).
Issues: 1. Whether the Department was entitled to recover the whole penalty after the termination of the contract? 2. Whether Rule 31 barred the collection of the whole penalty after the termination of the contract?
Ratio Decidendi: 1. The court interpreted Rules 29, 30, and 31 of the Andhra Pradesh (Telengana Area) Forest Rules, 1955, and held that the contractor's liability to pay the penalty and the Department's power to recover the penalty were distinct. 2. The court held that Rule 31 applied only during contingency (ii), when it is not proposed to terminate the contract on account of a breach of condition, and that the Department was entitled to recover the whole penalty under Rule 29 after the termination of the contract under contingency (i).
Final Decision: The court allowed the Writ Appeals, set aside the orders of the learned Judge, and dismissed the Writ Petitions with costs.
( 1 ) SRIDHARA Reddy filed Writ petition No. 106 praying for the issue of a writ in the nature of Mandamus or such other appropriate writ, direction or order as may be deemed necessary to restrain respondents 1 and 2 from imposing and demanding a sum of Rs. 23,088 towards Government loss or fine and to restrain them from collecting the said sum as arrears of land revenue. This sum included a sum of Rs. 11,250 by way of penalty. There were three respondents in the said Writ Petition viz. . the Conservator of Forests. Divisional Forest Officer and Tahsildar.
( 2 ) SRIDHARA Reddy filed another Writ Petition No. 107 of 1962 against the same respondents for similar relief regarding another sum of Rs. 27,949 which included a penalty of Rs. 14,500.
( 3 ) THE respondents represented by the learned IIIrd Government Pleader, contested the two Writ Petitions after filing counter in each of them.
( 4 ) OUR learned brother. Gopal Rao, Ekbote J heard both the Writ Petitions together by common consent and passed a common judgment allowing both the Writ Petitions only to the extent of reducing the compensation (penalty) in each case to a sum of Rs. 100.
( 5 ) THE respondents filed Writ Appeals Nos. 71 and 72 of 1964 against the judgment so far as it related to W. P. Nos. 106 and 107 of 1962 respectively. Sridhara Reddy has not filed any appeal against the judgment in so far as it went against him, relating to other items of demand notices.
( 6 ) THE relevant facts in Writ Petition No. 106 of 1962 are as follows. The petitioner was a forest contractor and entered into a written forest contract (agreement) under Rule 29 of the Rules framed under the Andhra Pradesh Telengana Area) Forest Act (No. II of 1355f) hereafter referred to as the Act. Clause No. 7 of the agreement runs as follows:--"penalty for breach of conditions. The forest contractor. . . . . . further agrees to pay to the Government a sum of not exceeding one quarter of the total consideration payable by him under this contract for every omission by himself, or for every act by himself or by his servants, or agents which may be in contravention of this clause. For the purposes of this clause, the total consideration payable for this contract has been estimated by the forest officer to be Rs. 45,000,. . . . . . . . . . . . 1/4 of which is Rs. 11,250. "the forest agreement is signed by the Conservator of Forests, Nizamabad and the Divisional Forest Officer as well as by the contractor. Subsequently, the Officers of the Forest Department hereafter referred to for convenience as the department ) took action against the contractor on the ground that he had committed breach of the contract. Ultimately, the Conservator of Forests passed au order, which is concerned in W, P No 106 or 1962, levying as follows :-- The Divisional Forest Officer issued a notice of demand dated 22-7-1960 to Sridhara Reddy stating as follows:--"the Conservator of Forests levied the following penalties. . . . . . . . . as per Section 29 of the Forest Contract Rules. . . . . . . . . . . . . . . . . . Please pay the amount within a week. . . . . . . . . . . . . . . . "
( 7 ) SIMILARLY, the Conservator passed another order making levy, which is concerned in W. P. No. 107 of 1962, as follows: The Divisional Forest Officer issued a similar demand notice dated 16-10-1960 for this amount.
( 8 ) IN each case, contract was due to expire on 31-12-1960. The competent forest authority terminated each of the contracts by a notice dated 28-12-1960. Subsequent to the termination, the Department took steps for collection of the entire amount regarding each contract as arrears of land revenue. The Tahsildar issued notice dated 8-1-1962 regarding the amount concerned in W. P. No. 106 of 1962 and another notice dated 9-1-1962 regarding the amount concerned in W P. No. 107 of 1962. threatening to attach and sell properties of the petitioner. Thereupon, the petitioner (hereafter referred to as the contractor)
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