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High Court Of Madhya Pradesh
C. P. Sen and B. C. Varma, JJ.
JUGALKISHORE ASATI - Appellant
Versus
STATE OF MADHYA PRADESH - Respondents
First Appeal 47 Of 1973
Decided On : 11/09/1978
FOREST CONTRACT - BREACH OF CONTRACT - DAMAGES - LIMITATION - ARBITRATION - EXCLUSION OF TIME - INDIAN LIMITATION ACT, 1963 - SECTION 14 - ARBITRATION ACT, 1940 - SECTION 37 - FOREST CONTRACT RULES - RULE 8 - RULE 29 - INDIAN FOREST ACT - SECTION 83.
Fact of the Case:
Plaintiff, a forest contractor, defaulted on the last installment of a contract to extract and remove Harra from government forests. The Forest Department stopped the plaintiff's work and issued a revenue recovery certificate for the defaulted amount. The plaintiff applied for extension of time to pay the installment and for stay of recovery proceedings, but the requests were denied. The plaintiff then referred the dispute to arbitration, but the Board of Revenue declined to arbitrate. The plaintiff applied for substitution of another arbitrator, but the application was rejected. The plaintiff then filed a suit for damages, claiming that the defendant and its servants had committed breach of contract by stopping the work.
Finding of the Court:
The court held that the plaintiff's suit was within limitation, as the time spent in the arbitration proceedings before the Board of Revenue and in the proceedings under Section 8 of the Arbitration Act could be excluded under Section 37 of the Arbitration Act. However, the court held that the plaintiff was not entitled to any damages, as the defendant and its servants were within their right to stop the working of the contract by the plaintiff after the plaintiff defaulted in payment of the last installment. The court also held that the plaintiff had failed to prove that he had suffered any damages.
Issues: 1. Whether the plaintiff's suit was within limitation. 2. Whether the defendant and its servants committed breach of contract by stopping the work. 3. Whether the plaintiff was entitled to any damages.
Ratio Decidendi: 1. The court held that the plaintiff's suit was within limitation, as the time spent in the arbitration proceedings before the Board of Revenue and in the proceedings under Section 8 of the Arbitration Act could be excluded under Section 37 of the Arbitration Act. The court relied on the fact that the Board of Revenue had refused to arbitrate in the matter and that the plaintiff had no option but to file a civil suit. 2. The court held that the defendant and its servants were within their right to stop the working of the contract by the plaintiff after the plaintiff defaulted in payment of the last installment. The court relied on the provisions of the Forest Contract Rules and the Indian Forest Act, which gave the Forest Department the power to stop the work and to seize and sell the forest produce in case of default in payment of an installment. 3. The court held that the plaintiff had failed to prove that he had suffered any damages. The court found that the plaintiff had not proved that there were 12,641.20 maunds of collected Harra and 68,400 maunds of uncollected Harra in the contract area when the work was stopped. The court also found that the plaintiff had not proved that he had suffered any financial loss as a result of the stoppage of work.
Final Decision: The court dismissed the plaintiff's appeal and upheld the dismissal of the suit by the trial court.
( 1 ) THIS is plaintiff's appeal against the dismissal of the suit with costs for damages and interest by the District Judge, Balaghat. The only relief granted is that the plaintiff is entitled to adjustment of an amount of Rs. 2391. 20p. towards the last defaulted instalment and the defendant is restrained from recovering the amount so paid from the plaintiff.
( 2 ) THE plaintiff is a forest contractor. In a public auction held on 3-8-1949 the plaintiff acquired right to extract, collect and remove all the Harra grown in government forest of Lamta, Baihar and Shupkhar ranges, a part of Balaghat range, Raiyatwari, Minhai forest and unoccupied lands lying within the boundaries of the said forest ranges and areas under the management of irrigation and Veterinary Departments within the said forest ranges. The indenture was signed by the Forest Secretary of the Forest Department of the defendant on 14-1-1950. The period of lease was from 30-1-1949 to 30-6-1952 as per Ex. B.-1. The consideration of Rs. 1,66,500/-was payable in six instalments each instalment being of Rs. 27,750/ -. The last instalment fell due on 1-1-1952 and the plaintiff defaulted in paying this instalment. The D. F. O. by his letter Ex. D. 5 dated 20-2-1952 issued a revenue recovery certificate to the tahsildar for recovery of the last instalment from the plaintiff. Copies of this letter were endorsed to the Range Officers with direction that they should stop working of the forest contract by the plaintiff till the production of a challan showing payment of the last instalment. The plaintiff moved the D. F. O. forextension of time to pay the last instalment and for stay of further proceedings against him. The D. F. O. by his letter dated 4-3-1952 stayed recovery proceedings before Tahsildar till 20-3-1952. The plaintiff's application was forwarded to the Conservator of Forest who returned the same as being unstamped. In the meanwhile, the plaintiff moved several applications for postponement of recovery proceedings and offered to pledge stock of about 1 lac maunds of Harra as security towards payment of the last instalment. Vide ex. P. 14 dated 16-4-1952 the plaintiff applied to the Secretary of the Forest department for extension of time to pay the last instalment and also for extension of the contract period. The secretary by his memo Ex-P. 21 dated 196-1952 rejected the plaintiff's prayer for extension of the contract period but granted him time till 30-6-1952 to pay the last instalment. This letter was communicated to the plaintiff by D. F. O. by his memo Ex. P. 22 dated 27-61952. Thereafter, as per Clause No. 9 of the indenture the plaintiff referred the dispute to the sole arbitration of the Board of Revenue vide Ex. P. 2 dated 14-81952, The defendant made appearance before the Board and contested the claim and insisted on enforcement of the arbitration clause. However, on 7-41961 the Board of Revenue declined to arbitrate in the matter expressing its inability because of the load of regular work in the Board. The plaintiff then served a notice Ex. P. 26 dated 20-6-1961 asking the defendant to concur in the appointment of another arbitrator. Since no reply was received, the plaintiff applied under Section 8 of the Arbitration Act, 1940, on 3-8-1961 for substitution of another arbitrator. The application was contested by the defendant. Finally the application was rejected by the Additional District Judge, balaghat, on 24-8-1962 vide Ex. D. 3. The plaintiff then sent a notice under section 80 C. P. C. on 20-11-1962 vide Ex P. 27 claiming Rs. 75,928. 33p. as damages along with interest for the wrongful act of the defendant and its servants and then filed the present suit on 23-9-1963.
( 3 ) THE plaintiff's case is that there was sudden and unforeseen depression in the Harra market at the end of 1951 on account of closure of Suez Canal and stoppage of shipment. At about the same time, proprietary rights were abolished under the M. P. Abolition of
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