( 1 ) THIS appeal preferred by the State Government is directed against the judgment and decree of the Additional District Judge, Kanker, dated 16-6-1967 whereby the learned Judge has granted to the plaintiff a decree for:-- (i) a declaration that the State Government was in breach of the forest contract granted to him by ordering a stoppage of working and, therefore, not entitled to recover Rs. 35,625/- towards the balance of the auction price; (ii) a permanent injunction restraining the State Government from recovering that amount as arrears of land revenue or otherwise, and (iii) refund of Rs. 4,750/- representing the security deposit.

( 2 ) FACTS leading to the appeal may be shortly stated. On 17-8-1962, the plaintiff purchased the right to fell and extract bamboos from Coupe No. 'a' Walhar O/b. F. S. Kanker Division, at a public auction held by the Divisional Forest Officer, kanker, for Rs. 47,500/ -. The purchase price was payable in 4 instalments. Rs. 11,875/-were payable at once and were so paid. The other instalments-2nd of Rs. 11,875/-, 3rd and 4th of Rs. 11,875/- each were due on 1-11-1962, 1-2-1963 and 1-4-1963. Admittedly, beyond paying the 1st instalment, the plaintiff paid no other instalments, despite repeated notices.

( 3 ) HAVING paid the first instalment, furnished the requisite coupe boundary certificate and having executed the contract deed, the plaintiff obtained possession of the contract area. The usual contract in writing. Ex. D-3, embodying the terms was executed between the parties. The contract provided, by Clause (1), for sale of the forest produce described Sn the First Schedule, i. e. bamboos, on the conditions set forth therein. By Clause 2, the period of contract was to expire on 30-6-1963. Clause 4 provided for payment of the consideration in four instalments on the specified dates. By Clause 6, the contract was made subject to the Forest contract Rules which were to be deemed to be part of the contract.

( 4 ) ON 25-11-1962, the plaintiff having defaulted in payment of the 2nd instalment which was due on 1-11-1962, was served with the Divisional Forest Officer's notice dated 17-12-1962 (Ex. P-1) requiring him to pay the amount of Rs. 11,875/which had by then fallen due, and drawing his attention to Rule 29 of the Forest contract Rules. It further stated that in the event payment was not made by 3112-1962. further extraction would be stopped and steps would be taken to terminate the contract. The plaintiff did not comply with the notice of demand on one pretext or another, and stopped the working from the 1st Section on 9-11963. He represented to the Divisional Forest Officer that due to lack of sufficient time between the issue of the work order and the date for payment of the 2nd instalment, he could not extract sufficient material from the 1st Section and was, therefore, not in possession of sufficient funds to pay the 2nd instalment. He contended that he was entitled to pay the 2nd instalment from out of the proceeds of the forest produce extracted from the 1st Section. In the meanwhile, the 3rd instalment fell due on 1-2-1963. So, on 17-2-1963, the Conservator issued another notice (Ex. P-2) on terms similar to the earlier, requiring payment of 2nd, 3rd instalments of Rs. 11,875/-, i. e. , Rs. 23,750/- in all, by 25-2-1963, failing which the contract was to be terminated. The plaintiff again did not comply with this notice. Eventually, by the Conservator of Forest's Order No. 39, dt. 27-24963 (Ex. P-3) the Contract was terminated under Rule 29 of the Forest Contract Rules, with the following directions- (1) The 1st instalment of Rupees 11,8757- and 10 per cent S. D. Rs. 4,750/-already paid by the contractor shall be retained with the Forest Department for adjustment towards consideration or part consideration of the contract. (2) To recover as arrears of land revenue the 2nd and 3rd instalments of rs. 23,750. 00 S. D. = 19,000/- (Nineteen thousand) which have already fallen d