Holding

Contractual obligations cannot be enforced by writ jurisdiction and a corporate entity cannot claim the fundamental right under Article 19(1)(g); the royalty demand was lawful and the High Court's order was set aside.

Summary

Bishwanath Tea Co. Ltd., a corporate lessee of a tea plantation lease, sought to cut timber from the leased grant for constructing staff houses in other tea estates and challenged the Divisional Forest Officer's demand for royalty, filing a writ petition under Art. 226 for refund and a mandamus to waive royalty. The High Court allowed the petition, interpreting the lease clause and Rule 37 to permit royalty‑free removal of timber when used for purposes connected with the grant, even if the timber was taken to other estates. The Supreme Court held that a corporation cannot invoke the fundamental right under Art. 19(1)(g) and that contractual rights such as the lease clause must be enforced in a civil court, not through writ jurisdiction. It further ruled that the royalty demand was supported by law and that the High Court erred in granting relief without factual proof. Consequently, the appeal was allowed, the High Court judgment was set aside, and the writ petition dismissed.

Issues considered

The corporation's standing to claim a fundamental right under Article 19(1)(g) of the Constitution.
Whether a contractual obligation arising from a lease can be enforced by a writ under Article 226.
The correct construction of Clause 2 of Part IV of the lease and its relation to Rule 37 of the Assam Land and Revenue Regulation regarding royalty on timber.
Whether the High Court erred in granting relief without a factual investigation.

Legislation cited

Assam Land and Revenue Regulations. Rule 37
Companies Act
Constitution of Indias. Article 19(1)(g), s. Article 226

Subjects

writ jurisdictionArticle 226Article 19corporate personhoodleaseroyaltytimberAssam Land and Revenue Regulationcontract enforcementspecific performancecivil courtfundamental rights

Judgment

662

A DIVISIONAL FOREST OFFICER
v.
BISHWANATH TEA CO. LTD.

May, 5, 1981
B
[D.A. DESAI AND R.B. MISRA, JJ.]

Constitution of India, 1950, Article 226-Contractual obligations cannot be
enforced by the writ jurisdiction-A company, being a juristic Person is not
entitled to any of the freedoms guaranteed under Article 19-Assam Land and
Revenue Regulation-Settlement Rule 37,-Scope of-Interpretation of clause 2
c Part IV of Indenture lease.

Respondent Tea Company took on lease land N.C. Tezalpatty No. 1 from
the then Government. The lease was to b~ exploited for cultivation and raising
tea garden, and was subject to conditions set out therein and generally to Assam
Land and Revenue Regulation and the rules made thereunder. The respondent
company sought permission from the appellant to cut 7,000 cubic feet of timber
D from Grant N.C. Tezalpatty No. 1 for utilising the same for building of staff
and labourers' house as per clause 2 of Part IV of the lease dated 27-9-1932 and
Rule 37 of the Assam Land and Revenue Regulations. Since the timber was
required by the company for use in Partabghur and Dekorai tea estates which
were outside Tezalpatty No. 1, the appellant demanded full royalty on timber
cut, felled and removed. The company paid an amount of Rs. 7069.37 Paisc
under protest and later filed a petition under Article -226 of the Constitution in
the Assam High Court, praying for refund of the amount and for a mandamus
E directing the appellant for issuing permits without insisting on payment of royalty
whenever timber was to be cut from the leased area for the purposes connected
with the exploitation of the grant.

The preliminary objection raised by the appellant that since the right claimed
by the respondent flowed from the contract of lease such contractual right can
F only be enforced in civil court and .therefore cannot be gone into under Article 226
was rejected by the Assam High Court. On merits, the High Court further held
that as the grant of N.C. Tezalpatty No. 1 was in favour of the respondent, the
company was entitled to cut, fell and remove timber from that grant area for its
use covered either by the same area or in other tea gardens which a re outside
the grant. The High Court made the rule nisi absolute and hence the appeal by
special leave.
G
Allowing the appeal, the Court

HELD : 1. The Writ Petition on the allegation of infringement of funda-
mental right under Article 19(1)(g) of the Constitution, at the instance of respon-
dent company alone was not maintainable for the reasons that : (a) a juristic
H person such as a corporation is not entitled to any of the freedoms guaranteed
by Article 19 and here the respondent is a company incorporated under the
Companies Act ; (b) Article 19(l)(g) guaranteed the fundamental freedom to a
DIVISIONAL FOREST OFFICER V. BISHWANATH TEA CO. 663

citizen and the respondent being a company is not a citizen and (c) the share- A
holders of a company alone can complain of infringement of their fundamental
rights. [669 E-H, 670 A-CJ

Tata Engineering and Locomotive Co. v. State of Bihar, [1950] S.C.R.
869 ; State Trading Corporation of India Ltd. v. The Commercial Tax Officer,
Vishakhapatnam, [1964] 4 S.C.R. 99 and Benuott Coleman and Co. and Other
v. Union of India and Others, [1973] 2 S.C.R. 757, followed. 8
2:1. It is undoubtedly true that the High Court can entertain in its extra-
ordinary jurisdiction a petition to issue any of the prerogative writs for any other
purpose. But such writ can be issued where there is executive action unsupport-

, ed by law or even in respect of a Corporation where there is a denial of equality
before law or equal protection of Jaw. The Corporation can also file a writ
petition for enforcement of a right under a statute. Here, the relief claimed by
the respondent was referable to nothing else but the terms of lease, namely, clause
2 Part IV. The fact that this term is a mere reproduction of proviso to Rule 37
of Assam Land and Revenue Local Rate Regulation but that by itself is not
c

sufficient to cont~nd that what the respondent was doing was enforcing a
statutory provision. The validity of regulations is not challenged. Therefore, the
demand for royalty is supported by law. [670 C-F]
D
2:2. Ordinarily, where a breach of contract is complained of, a party
complaining of such breach may sue for specific performance of the contract, if
the contract is capable of being specifically performed, or the party may sue for
damages. Such a suit would ordinarily be cognizable by the Civil Court. The
High Court in its extraordinary jurisdiction would not ordinarily entertain a
petition either for specific performance or for recovering damages. A right
to relief flowing from a contract has to be claimed in a civil court where a suit E
for specific performance of contract or for damages could· be filed. Here, this
was a suit for refund of a royalty alleged to be unauthorisedly recovered and that
could hardly be entertained in exercise of the writ jurisdiction of the High
Court. [670 F-G, 671 A-G, 672 A]

Har Shankar and Ors. etc. etc. v. The Deputy Excise and Taxa/ion Com-
missioner and Ors., [1975] 3 S.C.R. 254, applied. F
Woodcrafts Assam v. Chief Conservator of Forests, Assam, AIR 1971
Assam p. 92, approved.

3:1. Upon a true construction of clause 2 Part IV of indenture ·Of lease, ihe
respondent company was not entitled to remove timber without payment of
royalty. The specific provision is that the grant is for a purpose of cultivation G
and raising tea garden and that from the area covered by the grant, if timber is
felled for purpose connected with the grant itself, namely, cultivation and raising
tea garden in that area, then alone the benefit of removal of timber without
payment of royalty can be availed of. [673 G-H., 674 A]

3:2. In order to obtain relief, namely to cut and remove timber from lease H
area for purpose connected with exploitation, of .the grant the company must
show that the timber is being felled and cut from an area covered by the lease in
664 SUPREME COURT REPORTS [1981] 3 S.C.R.

A which clause 2 finds its place and that such timber is being removed for a purpose
connected with the exploitation of grant. To be more specific, following facts
will have to be proved for obtaining relief : (i) the area covered by the grant ;
(ii) felling of the trees from the area covered by the grant ; (iii) use to which the
felled timber was to be put to; (iv) such use will have to be one connected with the
exploitation of the grant and (v) meaning of the exploitation of the grant, when
controverted these aspects will have to he proved by relevance. And that was
the situation when return was filed by the present appellant in the High Court.
B [672 G-H, 673 A-D]

ClvIL APPELLATE JURISDICTION : Civil Appeal No. 218 of
1970.

Appeal by special leave from the judgment and order dated
C the 10th September, 1968 of the Assam and Nagaland High Court
in Civil Rule No. 56.of 1967.

S.K. Nandy for the Appellant.

S.N. Chowdhary for the Respondent.
D
The Judgment of the Court was delivered by

DESAI, J. Thi~ appeal by special leave arises out of a
writ petition filed by the respondent Bishwanath Tea Co. Ltd., in
the Assam and Nagaland High Court questioning the action of the
appellant, the Divisional Forest Officer, Darrang Division, of re·
covering Rs. 7069.37 p. as royalty for cutting and felling trees from
Tezalpatty grant No. I held under lease dated September 27, 1932,
and for a mandamus directing the appellant to issue permits without
insisting upon payment of royalty for the trees cut and felled from
the area under lease.
F Respondent Bishwanath Tea Co. Ltd. ('Company' for short),
took on lease land admeasuring 1107.26 acres from the Government.
The lease was executed between the Company and the Secretary
of the State for India. The lease in the first instance was for a period
of 15 years commencing from April I, 1932. The lease was to be
exploited for cultivation and raising tea garden. The lease was
G subject to conditions set out therein and generally to Assam Land
and Revenue Regulation and the rules made thereunder. On
February 15, 1966, manager of the Company approached the
appellant seeking permission to cut 7000 cubic feet of timber from
Grant N.C. Tezalpatty No. I of Nagshankar Mouza, for utilising
H the same for building of staff and labourer's houses. By the reply
dated April 4, 1966, the appellant noted that the timber was to be
DIVISIONAL FOREST OFFICER v. BJSHWANATH TEA co. (Desai, J.) 665

cut for constructing houses in Partabghur and Dekorai Tea Estates A
and that it was necessary to ascertain whether any of the aforemen-
tioned two Tea estates was situated within the grant evidenced by
lease of N.C. Tezalpatty No. I. It was made clear that if it was
not so, full royalty will be payable by the company for cutting,
felling and removing timber. The manager by his letter dated April
23, 1966, informed the appellant that as the lessee is Bishwanath B
Tea Co. Ltd., it can cut and fell timber from any of its leased area
to be utilised for its purposes in any other division. Therefore, the
manager suggested that the permit must be issued without insisting
on payment of royalty. The appellant by his letter dated May 12,
1966, informed the manager that as the timber was required for
use in Partabghur and Dekorai tea estates which were not within c
N.C. Tezalpatty Grant No. 1 of Nagshankar Mouza from which
timber was to be felled and cut, full royalty will be payable on timber
so cut and removed because it was to be utilised for the purpose un·
connected with the grant. For this assertion the appellant relied upon
a portion of clause (2) of Part IV of the lease deed dated September
27, 1932. Correspondence further ensued between the parties and D
ultimately the respondent company paid an amount of Rs. 7069.37;p.
as and by way of royalty under protest and then filed a petition
under Article 226 of the Constitution in the High Court alleging
that upon a true construction ·of the relevant clause of the grant as
also proviso to Rule 37 of the Settlement Rules as the timber was
required for the purpose connected with the exploitation of the
grant, the company as lessee was entitled to cut and remove timber
without payment of royalty and, therefore, the recovery of royalty
being unsupported by law, the appellant was liable to refund the
same. The company also prayed for a mandamus directing the
present appellant who was respondent in the High Court for issuing
permits without insisting on payment of royalty whenever timber was F
to be cut from the leased area for the purposes connected with
the exploitation of the grant.

The appellant filed his return to the rule issued by the High
Court. A preliminary objection was raised that the right claimed G
by the respondent flowed from the contract of lease and such con-
tractual rights and obligations can only be enforced in· civil court.
It was contended that apart from the fact that interpretation of the
contract of lease is generally not undertaken by the High Court in
exercise of its extraordinary jurisdiction under Article 226, it was H
further con tended that even if interpretation of the relevant clause
of the lease as alleged on behalf the respondent finds favour with
666 SUPREME COURT REPORTS [1981] 3 S.C.R.

A the court, yet facts will have to be investigated before any refund
could be ordered or a blanket injunction could be granted for all
times to come against the appellant from performing his duty,
namely, of granting permit and recovering royalty.

The High Court overruled the preliminary objection observing
B
that the court was not called upon to decide any complicated ques-
tion of fact and the question for decision before the Court was
whether the company was entitled to enforcement of its legal right
under the proviso to rule 37 of Settlement Rules. The Court further
observed that even though part of the proviso to rule 37 of the
c Settlement Rules was incorporated in the lease itself, nonetheless
what the Court had to consider was the interpretation of a statutory
rule and that is the function of the Court under Article 226. On
merits the High Court held that as the grant N.C. Tezalpatty No. I
was in favour of M/s. Bishwanath Tea Co. Ltd., the company was
entitled to cut and fell timber from N.C. Tezalpatty grant area for
its use in other tea gardens, namely, Partabghur and Dekorai and
D
even if the latter two gardens were outside N.C. Tezalpatty Grant
No. I, yet they being under the ownership and magement of the
company, felling of trees from the area of one grant for utilisation
at other places would fall within the second part of the proviso to
rule 37 in that the felling and removal of timber was for use not un-
E connected with the exploitation of the grant and, therefore, the com-
pany was entitled to fell and remove timber in the aforesaid situation
without payment of royalty. In accordance with this finding the
High Court made the rule absolute, directed refund of the amount
paid under protest and issued a mandamus directing the appellant
to issue permits to the respondent company without payment of
royalty for removal of timber from Tezalpatty Grant No. 1 for use
F
in tea garden of Dekorai division for exploitation of tea plantation.
Hence this appeal by special leave.

Unquestionably, the rights and obligations between the parties
to this appeal are governed by the terms of the lease dated Septem-
G ber 27, 1932. Specifically the respondent who was a petitioner in the
High Court claimed the right to relief under Clause 2 of Part IV of
the indenture of lease which reads as under :

"2. The lessee shall pay to the lessor as provided by rules
H for the time being in force under the Assam Land and
Revenue Regulation for all timber (if any) on the
DIVISIONAL FOREST OFFICER v. BISHWANATH TEA co. (Desai, J.) 661

demised lands cut down, removed or utilised by the A
lessee during the period of the lease.

Timber valuation at reduced rates estimated at
Rs. 12472.7 (Rupees Twelve thousand four hundred
and seventy-two and annas seven only) was credited
into the treasury by Challan Nos. 43 dated the 24.2.32 B
The lessee shall be liable to pay timber valuation at
full rates on all timber sold or removed for sale and
on all timber removed for use unconnected with ex-
ploitation of the grant during the period of his lease or
renewed lease."
c
According to the respondent, it would be entitled to remove timber
cut and felled from the leased area without liability to pay
royalty for its own use irrespective of the fact whether such timber
was to be used outside the leased area, because such use would be
in connection with the exploitation of the grant and there is such a
reservation in the grant evidenced by the lease. True it is that if
D
the timber is felled and removed for purpose connected with the
exploitation of the grant, there would be no liability to pay the
royalty. Such a positive right is claimed from a negative covenant
in the lease. Clause 2 provides that the lessee had paid timber
valuation at the reduced rate at Rs. 12472.7 on 24-2-32 The
lessee according to the respondent would be liable to pay timber
E
valuation at full rates on all timber sold or removed for sale
on all timber removed for use unconnected with exploitation
of the grant during the period of the lease or renewed lease.
The implication of the negative covenant would be that
if timber is removed from the leased area connected with the F
exploitation of grant, there would be no liability to pay royalty on
such timber. The respondent claimed to remove timber without
the liability to pay royalty in exercise of the right reserved under
Cl. 2 thus interpretated. In para 5 of the Writ Petitton filed by
by the respondent in the High Court, a reference has been made to
the aforementioned term in the lease deed. It was further stated G
that the respondent paid the royalty under protest which it was not
liable to pay as the timber was urgently required for the purpose of
the business of the Company in connection with the grant. These
averments in the petition would show that the respondent claimed
the right to remove timber without the obligation to pay royalty as H'
flowing from the grant evidenced by the lease. Anticipating a pos-
sible contention about the jurisdiction of the High Court to entertain
668 SUPREME COURT REPORTS (1981] 3 S.C.R

A a writ petition for enforcement of contractual obligation, the
respondent contended that the levy of royalty had no authority of
law and that this was an unreasonable restriction on the fundamental
right of the respondent to carry on its trade. This camouflage of
contending that the levy of royalty was not supported by law and
that this was an unreasonable restriction on the fundamental right
B to carry on trade successfully persuaded the High Court to entertain
the petition.

Shorn of all embellishment the relief claimed by the respondent
was referable to nothing else but the term of the lease viz. Cl. 2
Part IV. Maybe, that this term .is a mere reproduction of proviso
c to Rule 37 of Assam Land and Revenue and Local Rates Regu·
lations, but that by itself is not sufficient to contend that what the
respondent was doing was enforcing a statutory provision. Proviso
to Rule 37 is an enabling provision. The relevant portion of the
proviso reads as under :

D "Provided that if any person taking up land for special
cultivation is unwilling to pay the full royalty valuation of
the timber as estimated, he shall have the option of paying
a reduced valuation representing only the profit which is
likely to derive from the use of the timber for the purposes
connected with the exploitation of the grant. If he
E exercises such option, he shall be liable to pay royalty at
full rates on all timber sold, bartered, mortgaged, given or
otherwise, transferred or removed for transfer and on all
timber removed for use unconnected with the exploitation
of the grant during the period of his lease or renewed
lease."
F
A bare perusal of clause 2 of Part IV of the indenture of lease
extracted hereinbefore and the proviso to Rule 37 would at a glance
show that the proviso enables a grantee to take benefit of it by
fulfilling certain conditions namely by paying a reduced valuation
representing only the profit which it is likely to derive from the use
G of timber for purposes connected with the exploitation of the grant.
It is thus an enabling provision and the grantor of the lease may
permit this option to be enjoyed by the grantee. But whether that
has been done or not is always a question of fact. If the pre-
condition is satisfied, the benefit can be taken. That again is a
iI- matter to be worked out by the parties to the indenture of lease. In
fact, clause 2 of the indenture of lease would show that the respon-
DIVISIONAL FOREST OFFICER v. BISHWANATH TEA co. (Desai, J.) 669

dent grantee paid Rs. 124727/- being timber valuation at reduced A
rates. The respondent having made the payment, whereupon the
grantor of the lease agreed that the grantee will have to pay timber
valuation at full rates on all timber sold or removed for sale and on
all timber removed for use unconnected with exploitation of the
grant during the period of his lease or renewed lease but the grantee
will not have to pay royalty for timber felled and removed for B
purpose connected with the grant. It thus can be demonstrably
established that the respondent was trying to enforce through the
writ petition the right to remove timber without the liability to pay
royalty not under the proviso to Rule 37 which was merely an
enabling provision, but the specific term of lease agreed to between
the parties. Proviso to Rule 37 may not be incorporated in an c
indenture of lease. If incorporated after fulfilling pre-condition
it becomes a term of lease. The High Court, 'in our opinion,
therefore, was in error in posing a question to itself as to
whether the applicant (respondent herein) was entitled to the
enforcement of legal right under the proviso to Rule 37 of the
Settlement Rules. The camouflage successfully worked, but once D
this cloak is removed, it unmistakably, transpires that the respondent
was trying to claim benefit of clause 2 of the lease having fulfilled
its pre-condition and obtaining the inclusion of its latter part in the
contract of lease. The question, therefore, really is whether such
contractual obligation can be enforced by the writ jurisdiction?
How dangerous it is, can be demonstrably established in this case. E

But we would first address ourselves to the question of law.
Art. 226 confers extraordinary jurisdiction on the High Court to issue
high prerogative writs for enforcement of the fundamental rights or for
any other purpose. Undoubtedly, the respondent contended that its
fundamental right under Art. 19(1) (g) to carry on trade has been F
vi"olated. The High Court overlookd the well-settled legal position
that a juristic person such as a Corporation is not entitled to any of
the freedoms guaranteed by Art. 19. The respondent was the sole
petitioner in the High Court. It is a company incorporated under the
Companies Act. The fundamental right claimed under Art. 19 (!)
(g) is to practise any profession or carry on any occupation, trade or G
business. The respondent (company) contended that it had a right to
carry on its trade or business of cultivating and raising a tea garden
and as part of it to cut timber and remove the same from the leased
area without the payment of royalty and that insistence upon
payment of royalty unsupported by law is an unreasonable restriction. H
denying the fundamental right guaranteed. to the respondent. Art.
670 SUPREME COURT REPORTS [1981] 3 S.C.R.

A 19 (1) (g) guarantees the fundamental freedom to a citizen. The
respondent not being a citizen was not entitled to complain of
breach or violation of fundamental right under Art. 19 (l) (g).
[See State Trading Corporation of India Ltd. v. The Commercial
Tax Officer, Vishakhapatnam (1) and Tata Engineering and Loco-
motive Co. v. State of Bihar (2).] However, the shareholders of a
B company can complain of infringement of their fundamental rights
[See Bennett Coleman & Co. and Others v. Union of India and
Others] (3). Such is not the case pleaded. Therefore the writ
petition on the allegation of infringement of fundamental right under
Art. 19 (I) (g) at the instance of respondent company alone was
not maintainable.
c
It is undoubtedly true that High Court can entertain in its
extraordinary jurisdiction a petition to issue any of the prerogative
writs for any other purpose. But such writ can be issued where
there is executive action unsupported by law or even in respect of a
Corporation where there is a denial of equality before law or equal
D protection of law. The Corporation can also file a writ petition for
enforcement of a right under a statute. As pointed out earlier, the
respondent (Company) was merely trying to enforce a contractual
obligation. To clear the ground let it be stated that obligation
to pay royalty for timber cut and felled and removed is prescribed
by the relevant regulations. The validity of regulations is not
E challenged. Therefore, the demand for royalty is unsupported by
law. What the respondent claims is an exception that in view of a
certain term in the indenture of lease, to wit, Clause 2, the appellant
is not entitled to demand and collect royalty from the respondent.
This is nothing but enforcement of a term of a contract of lease.
Hence, the question whether such contractual obligation can be
F enforced by the High Court in its writ jurisdiction.
Ordinarily, where a breach of contract is complained of, a
party complaining of such breach may sue for specific performance
of the contract, if contract is capable of being specifically performed,
or the party may sue for damages. Such a suit would ordinarily be
G cognizable by the Civil Court. The High Court in its extraordinary
jurisdiction would not entertain a petition either for specific perfor-
mance of contract or for recovering damages. A right to relief
flowing from a contract has to be claimed in a .civil court where a
suit for specific performance of contract or for damages could be
H (I) (1964] 4 S.C R. 99.
(2) [1950l S.C.R. 869.
(3) [1973 2 S.C.R. 757.
DIVISIONAL FOREST OFFICER v. BISHWANATH TEA co. (Desai, J.) 671

filed. This is so well settled that no authority is needed. However, A
we m·ay refer to a recent decision bearing on the subject. In Har
Shankar and Ors. etc. etc. v. The Deputy Excise and Taxation Com-
missioner and Ors.(1), the petitioners offered their bids in the auctions
held for granting licences for the sale of liquor. Subsequently, the
petitioners moved to invalidate the auctions challenging the power
of the Financial Commissioner to grant liquor iicence. Rejecting B
this contention, Chandrachud J., as he than was speaking for the
Constitution Bench at page 263 observed as under :
"Those who contract with open eyes must accept the
burdens of the contract along with its benefits. The powers
of the Financial Commissioner to grant liquor licences by
auction and to collect licence fees through the medium c
of auctions cannot by writ petitions be questioned by those
who, had their venture succeeded, would have relied upon
those very powers to found a legal claim. Reciprocal rights
and obligations arising out of contract do not depend for
their enforceability upon whether a contracting party D
finds it prudent to abide by the terms of the contract. By
such a test no contract could ever have a binding force."
Again at page 265 there is a pertinent observation which may be
extracted.
"Analysing the situation here, a concluded contract E
must be held to have come into existence between the
parties. The appellants have displayed ingenuity in their
search for invalidating circumstances but a writ petition is
not an appropriate remedy for impeaching contractual
obligations."
This apart, it also appears that in a later decision, the Assam High F
Court itself took an exactly opposite view in almost idential ~circum
stances. In Woodcrafts Assam v. Chief Conservator of Forests,
Assam,(2) a writ petition was filed challenging the revision of rates
of royalty for two different periods. Rejecting this petition as not
maintainable, a Division Bench of the High Court held that the
complaint of the petitioner is that there is violation of his rights G
under the contract and that such violation of contractual obligation
cannot be remedied by a writ petition. That exactly is the position
in the case before us.. Therefore, the High :court was in error in
entertaining the writ petition and it should have berm dismissed at
the threshold.
H
(1) (1975] 3 S.C.R. 254.
(2) A.LR. 1971 Assam 92.
672 SUPREME COURT REPORTS [1981] 3 s.c.R.

A In substance, this was a suit for refund of a royalty alleged
to be unathorisedly recovered and that could hardly be entertained
in exercise of the writ jurisdiction of the High Court.

As the High Court has also disposed of the case on merits
after overruling the preliminary objection, it is but meet that we may
B examine the case on merits and that itself would demonstrably show
the dangerous course adopted by the High Court in examining rights
and obligations claimed under the contract without proper or
adequate material or evidence to reach a conclusion, more so when
the petition raised disputed questions of facts which needed investi-
gation.
c
Respondent No. 1 had entered into a lease dated September
27, 1932 with the Secretary of State for India. Part Ir of the lease
describes the land leased to the respondent. The description is as
under;

D N. C. Tengalbasti Village in Sootea Mauza in the
Tezpur Sadar Sub-Division of Darrang District. Block
No. 1 Field No. 2-1804 B. 4 K-12L, Block No. 2 Field
No. 3-1544 B. 2 K-13L.

Total-] I 07.26 Acres on 3349 B. 2K-5L
E
This land was taken on lease for cultivation and raising tea garden.
Under the relevant Clause 2 above, the lessee was to pay timber
valuation on full rate for all timber sold or removed for sale and on
all timber removed for use unconnected with exploitation of the
grant during the period of lease or renewed lease. From this negative
F covenant in the indenture of lease, the respondent says that where
timber is cut and felled and removed for a purpose or use connected
with the exploitation of grant during the period of lease or renewed
lease, royalty shall not be payable. Assuming the respondent is
right in its construction of Clause 2 of the indenture of lease, in
order to obtain relief, namely, to cut and remove timber from the
G leased area for purpose connected with the exploitation of the grant,
it must show that the timber is being felled and cut from an area
covered by the lease in which Clause 2 finds its place and that such
timber is being removed for a purpose connected with the exploita-
tion of the grant. To be more specific, following facts will have to
H proved for obtaining relief :

(i) The area covered by the grant.
DIVISIONAL FOREST OFFICER v. BISHWANATH TEA co. (Desai, J.) 673

(ii) Felling of the trees from the area covered by the A
grant.
(iii) Use to which the felled timber was to be put to •.
(iv) Such use will have to be one connected with the
exploitation of the grant.
{v) What is meant by the exploitation of the grant? B

Could these facts be assumed without evidence? Was the High
Court justified in observing that it was called upon to decide com-
plicated questions of facts ? Some averments in the petition were
disputed. The appellant contended that Clause 2 of 1he indenture
of lease only means that if there is some use of timber which is c
being felled and removed from the area covered by the grant for
the purpose connected with the exploitation of that very grant, then
and only then the relief can be claimed und-::r Clause 2. The High
Court found as a fact that the timber was sought to be removed for
the purpose of constructing quarters for the workmen employed in
Partabghur Garden situated in Dekorai Division. Admittedly, this
D
Partabghur Garden is not situated in Tezalpatty Village. At any
rate, Partabghur Garden where the houses for the workmen were to
be constructed was situated outside the area covered by the grant,
as also outside the Revenue Division in which the leased area is
located. The High Court got over this difficulty by observing that
the grant being in favour of an incorporated company, it can cut
E
and remove timber from leased area for use at any place which is
owned, managed or controlled by the company and it is immaterial
whether one is directly connected with the other or not. If the
timber is being felled from the area of one grant to be used at some
other place where the Company is carrying on its operation, the
benefit of the remJval of timber without payment of royalty would
F
• be available to the Company anywhere in the world. To stretch
this logic a little further, it would mean that if the respondent
(Company) is to set up a tea garden outside India, it can as well
cut and remove timber from N.C. Tezalpatty, Grant No. 1 in Assam
to the place outside India without the obligation to pay royalty. The
G
fallacy underlying the approach of the High Court becomes self-
evident. It is immaterial that the grantee was the Company. The
specific provision is that the grant is for a purpose of cultivation
and raising tea garden and that from the area covered by the grant,
if timber is felled for purpose connected with the grant itself,
namely, cultivation and raising tea garden in that area then alone
benefit of removal of timber without payment of royalty can be
H
674 SUPREME COURT REPORTS (1981) 3 S.C.R.

A availed of. It is admitted that Partabghur Tea Garden is outside
the area covered by the grant, in fact in an altogether different
division. In such a situation upon a true construction of Clause 2,
Part IV of indenture of lease, the respondent Company was not
entitled to remove timber without payment of royalty. Therefore,
even on merits, the High Court was in error in granting relief.

B Accordingly, this appeal is allowed and the judgment of the
High Court is quashed and set aside and the writ petition filed by
the respondent in the High Court is dismissed with costs throughout.

c
S.R. Appeal allowed.
'