FACTUAL BACKGROUND:

The petitioner firm is forest lessee engaged in extraction of timber. State of Jammu and Kashmir granted a forest lease in favour of the petitioner in January, 1974. A lease agreement was executed between the parties in respect of forest compartment Nos. 13, 14, 15 and 16-a of Paddar range in Kishtwar division. Under the terms of the agreement the lessee was to pay a sum of Rs. 41,05,000/- to the lessor i.e. Govt. of J&K as royalty for being entitled to convert and remove the timber from the trees marked for felling in the above said compartments. Under clause 11 of the lease agreement the lessee was to commence felling immediately after handing over of the trees and was to remove the produce beyond the coupe boundaries concerned by the end of December 1974. Thus the period of lease was for four years. However1 sub-clause (2) of clause 12 of the agreement provided as follows:-

"(2)-Extension in the working period of forest lease under clause (1) shall not be claimed as a matter of right but may be granted in deserving cases in accordance with Government orders on the subject in force from time to time including furnishing of additional security by way of Bank guar

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