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PETITIONER: MADANLAL SETHI & ORS. ETC.

       Vs.

RESPONDENT: STATE OF M.P  & ORS. ETC.

DATE OF JUDGMENT:       27/03/1997

BENCH: K. RAMASWAMY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:     WITH        CIVIL APPEAL NO.2740 OF1997  (Arising out of SLP (C) No. 2104 of 1993)  O R D E R      Leave granted  in SLP  (C)No.  2104/93. We  have heard learnedcounselfor theparties.      These appeals  by special leave arise fromthe judgment of theHigh Court  of Madhya Pradesh, made on 29.1.1986 and 14.11.1992 in M.P No. 2107 and M.P No. 3764/92.      The primary  question  inthis  case  relates  to the validity of  the Madhya Pradesh Kashtha  Chiram (Viniyaman) Adhiniyam, 1984 (for short,  the ‘Act’) and Rule 27  of the M.P. (Transit  (forest Produce) Rules,1961 (for short, the ‘Rules’). The  appellants have challenged the valiity of the aboveprovisions of  the Actand the Rules on the ground that they  require them to maintain proper records andduly enter in  the registercertainspecifications of the forest wood  purchased by  them  under  public  auction  from the Governemnt timber  depots. After sawingand cutting thewood into differentsizes, they  appellantsare required tomake proper entriesinto the  relevant register.  When consumers take out  the wood  from the  timber depot,  they  arealso required to submit a transit permit. Thereby, they havebeen made accountable to give particulars ofthe forest woodthey purchase from the respective Governmentdepots.It is stated that the  licensees of the saw mills are being unnecessarily harassed by being askedto makenumerous needless entries in the relevant  register ,  like Forms D-1 and D-2 and thereby gettingsubjected  to  confiscation  of the  wood  lawfully purchased by  them. Itis stated  that cumbersome  process hinderstheir  business. The  prescription  ofthe  details required of  them alsoimpinges upon  and  restricts  their business. Thus, it isclaimedthat  the Act  and the Rules are  arbitrary and  unreasonable   as they  offend  their fundamental right  of fredom  to carryon thebusiness and trade  under  Article  19(1)(g) of  the  Constitution. The Division Bench, it is argued, has not correctly appreciated the grievance of the appellants. When the matter had come up for consideration  before us inthe first instance, by order dated December 19, 1996, we observed asunder:

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    "Shri  S.S. Ray, the learned senior      counsel appearing in this batch has      concentrated on one aspect, namely,      that  theForestofficers,  by  a      written undertaking  haveabsolved      themselvesof  their  liability  to      deliver  the   logs  withspecific      measurements but  will be delivered      only in  the lots as they are, When      they entered  in the  Form-D  under      Rule  6(1)    Extract   from  M.P.      Kashtha Chiran     (Viniyaman)      Adhiniyam,1984  read  with section      8 of  the Adhiniyam,  it enumerates      entry on open stock of thespecies,      its Cmt..Sawan Cme.,  date,  T.P.      No. ,  Name of  species Depot  from      which it  was purchased  logs, Nos,      Omt. SawnCmt. received  from Cmt.      the  Forest  Department  and  other      than  Forest   Department. Various      grounds have been raised in the SLP      (C) No.  2104/93 arising out of the      order dated November 14, 1992  made      inM.P. No. 3764/92 stating that it      would be  impracticable for the saw      mill   owners or  merchantto  make      necessary entrieswhen  they  were      not  delivered   with   the   above      specifications   and    the    non-      compliancerenders them  forfeited      their   stock    and   liable    to      prosecution. Shri Gulabe Gupta, the      learned  senior  counsel  appearing      for the  respondents states that in      each depot various  types of  the      logs would be stocked  instore of      different sizes atdifferent places      separately.  Intending   purchasers      were  kept on  notice  of Various      sizes. A  willing purchaser  in the      open auction  fromthe  above  lots      each lot contains not onlyspecies,      the  length   of  the   timber,  it      contains etc.  thedetails will be      available on   verification   and      satisfaction.  On theirpurchase      once theytake possession of  the      logs, they require to  enter these      details  in   Form-D1.   Similarly,      after taking  overto the saw mill,      they require  to fill  in detail in      Form-D2. He  further explains Form-      D2with  referenceto  Rule 6(2) of      the rulesrelate to  the owner  of      the saw  mill whoreceives it into      the Saw  Mill andopening balance      received during  the  dayand  the      quantum  sawn   during   the   day,      delivered to the owners (purchasers      the balance  on the date require to      the  entered.   Similarly, Form-D3      relates to monthly abstract of the      receipt and  disposal of  the  wood      purchasedor  brought  for  sawing

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    during that  monthand disposed of.      Accordingly, there is no in actual      practice.  Unfortunately,     the      Government havenot  filed   any      counter not  produced anymaterial      in support   of  the   contentions      learned counsel  seeks  to impress      upon us.  It is  necessary in  the      circumstances   that   acounter-      affidavit by  a  competent officer      requires to  be filed  andalso the      materialin    support thereof      requires to  be produced before the      Court. Learned  counsel  seeks  for      and  granted  onemonth  time  for      filing  the  counter-affidavit  and      producingthe   record.  One  week      thereafter  for rejoinder    is      granted. List after five weeks".      Pursuant thereto,Dr. M.SRana, Conservator of Forest, Government of  Madhya Pradesh,Sagar has  filed a  counter- affidavit explaining  in  detail  the  position rightfrom identification of  theworking plan,demarcation  of the coupe-wise   felling of the trees,  stacking of  the trees, numbering of  the trees,  putting of  hammer marks and their aligning for  measurement at  the timber depotsfor auction. It is  stated that the logs arestackeddepending upon their length,girth  etc. atrelevant places in   the depot. The intending purchasers  are given liberty to inspect thelogs of thelength ,  girthand  measurement  in  cubic  meters, speciesetc.  Thereafter, on  their  purchase  in  auctions, possession of  the purchased logs is given possession to the successful bidders.  Necessary entriesare bemade in the certificate ofpossession as  given in Annexure XI  to the said counter-affidavit finding place ofpage 98of the paper books; the  details thereof  being not materialare omitted. Once   they take  possession of the timber,  they are given necessary transit  permits fortransportation thereofwith truck number  etc. as  specified  in  AnnexureXIV  to the counter-affidavit and the officer who gives delivery thereof enters the  factum of  the delivery,  of the  quantum of the wood  with  all specifications enumerated  therein.  After carriage of thelogs from the various depots tothe premises of saw-mills  or saw-pits,  they are  required to  enter the specifications in  FromD-1   as  per Rule  6(1). Whenthey disposeof  thewoods,they are  required to make necessary entriesin  Form D-2  read with Rule 6(2)  of the Rules. In addition, theyare also  required to submit monthly returns in FormD-3  read with Rule 8 of the Rules.      Thus, it is the case of the respondents that everycare is taken  to ensure that the licensee or personin charge of the Sawmill  orsaw   pit  is given  possessionof  thewood purchased fromthe Governmentdepots and  arerequired  to enter the  specified details ofthe wood in Form No. D-1 and of thefinished product  in Form D-2 so that at every point of time the officer  on duty  of inspection  would bein a position to  verify whether  the wood in possession hasbeen purchased by  the licensee  from lawful source; is properly accounted for;is in  their lawful  possession; and  to see that the disposal of the same is done in accordance with the Rules.      Shri D.D  Thakur, learnedsenior counseland Mr.A.K. Sanghi, learned   counsel  appearing  for  the appellants, contendthat though theRules require that specifications of the forest woodkept insaw-mill and saw-pit berecorded, in

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realitywhen  the woodis taken  to the saw-mill and is cut into logs  of different sizes,there  would beconsiderable wastageand  the finished  woodrealised  by sawing thelogs would be less than the originallength and girth etc.  It is really impossible  forthe  licensee  to  enter  all  those specifications in  the relevantentriesin FormD-1, D-2 and D-3 etc.  and  to  account  for the  wood  they  purchased. Therefore,  it hinders  their  peaceful  conduct  of the business. As one of theillustrations, it is stated that one of theDivision Forest Officers even meticulously measured zero point of the differential wood in the possession of the saw mill  and on  failure to  account for it, Look action by confiscating the  entire  wood. That  would  show  that  by operation  of  the  Act,  licensees  are  being arbitrarily prevented fromexercising theright of freedom to carry on trade and  business and are  being  subjectedto  needless harassment.      Shri   D.D.  Thakur  has  also  stated  that  necessary guidelines are lacking in this case. Therefore,observations may bemade bythis Court to stop arbitrary exercise of the power or  unlawful hinderance  in carrying  outthe trade by the licensees;and topermit High rank officers to inspect the premises.      Shri G.C.Gupta, learnedsenior counsel appearing for the respondents, contends that the contentions raised by the appellants areimaginary. Every  minute procedure  hasbeen provided in  detail, viz.  the cuttingof  the trees; the markingof  thetrees;the delivery  of the  wood purchased from the  Government depots;  and transportingthem,  which would indicatethat the  object of theAct andthe Rules is only toensure that thelicensee is inlawful possession of the wood  obtained from the Government depots to  prevent illicitfelling of the trees and  unlawful purchase of the forest wood  . The  Act and  the  Rules  provide  that the licensee should account for  the  wood purchased  and the finished wood;that cuts pieces are appropriately accounted for, as specified in Form D-1,D-2 andD-3 respectively. As an illustration,  he has  placed beforeus the record of the appointment ofan Expert  Committee on the  basis  of the returns  received andspecifications of the grading of the wood, their  lengths, girth  and the  marginal variations in that behalf;  and categorisation  of the respective woods in that behalf. Asa result , evenif there is anyfaulty entry in thetransitRules,they can  be easily  identifiedwith reference to  the length,  girth and the quantum of thewood purchased by  the licensee.  Ifthere is any further defect, it is always open to them to bring the same to the notice of the  Government wouldalwayssolve  the  problem  of the parties.      Inview  of the  respective contentions,  the  question arises:whether the High  Court has  committedany manifest error of  law warranting  interference;It  is seen that the Act deals  withvarious steps involved starting rightfrom the cutting  ofthe  trees upto the delivery of the logs to the purchasers. Thereafter it deals with the requirement of being in  lawful possession of the woodso purchased and the necessity to account for the same.      Section 8deals with  furnishingof  returns  by the licensee. It  postulates that  every licensee  shall  submit such return relating tothe business ofthe saw-mill orsaw- pit, as the case may be, in such form,to suchofficer, and on such dates,as  maybe prescribed. Sections9 dealswith maintenance of account of stockof woodin saw-mill andsaw- pit. Itpostulates thus:      "All wood whether sawn or not found

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    in  or brought  to the saw mill or      saw pit orat the site of sawing at      any time  or during  any period  by      any person in anymanner or by any      means forpurposeof sawing or for      any otherpurposeshall  always be      properly  accounted   forand  all      relevant evidence     documents,      receipts, order  and  certification      asare  necessary to  showthat the      wood is  legally obtainedshall be      maintainedand  made  available  at      time of  inspection.  It  shall  be      presumed in respect of thestock of      wood  which   is  not  account  for      satisfactorily that  the  same  has      been obtained  unlawfullyand  the      stock of  wood shall  be liable for      confiscation."      The object of Section  9 is  to ensure  that thewood obtained by  the licensee  and found insaw mill  or saw pit is theone obtained  from a lawful source and the person in possession of  the wood or in control of the saw-mill is to accountfor  and is  required to maintain the details of the wood obtained,the source  andmanner in whichhe has dealt with the  wood.It  postulates that it shall bepresumed, in respect of  stock  ofwood  which  is not  accounted for satisfactorily,that  the samehas been obtained unlawfully and such  stockof  wood shallbe liable  for confiscation. Section7 givespower to the authorisedofficerto enter and inspectany  saw-mill and  saw-pit andexaminethe  records relating to  stock of  wood etc.  for that  purpose.  He  is empowered to call upon the licensee  orperson in control of or management  of the  business,  or  employedtherein,  to producethe  required documents, books,registers or records in thepossession. They  are also  entitled to search the premises. Vehicles,  machine, tools  and equipments  used or intended  to   be  used in  contravention  ofany  of the provisions of  the Actand the Rules made thereunder.When they are  satisfied that  any such  contravention has  taken place, they  are entitled  to seize  any wood  etc. andtake appropriate action  as has  been  laidunder  the  Act for confiscation etc.  The rules  have beenmade inthat behalf, Section13  prescribes the  penalties for contravention; the detailsthereof are not  material forthe purpose  ofthis case. Rule  6 of  the Rules  provides that  thelicensee  is required to  submit the returns in  Form D-1,of thewood purchased by  the  licensee  for  sawing  and  for  disposal thereof, and  rule 6(2) postulates  the  maintenance  of  a register  meant  for  recording  the  arrival, sawing and disposal of  the wood  received for  sawing  in  FormD-2. Thereafter, under  Rule6(3),  the licensee  isrequired  to submit the  monthly returns of these accounts in Form D-3 to the concerned Range officer, and to thelicensing officer by a date not later than 10th of the following month.      Wehave  perused the  relevant forms  submitted by the parties. Afterperusing the same, we are satisfied that the details, as  have beenprovided for, are required onlywith the object  of ensuring that  the  licensees  who  are the personsin  thecontrol of  the  Saw-mill  and Saw-pit  or employee etc.  are in  lawful possession  of the wood and of furtherensuring  that the  wood  in  their  possession was obtained from  a lawful sourceand they have duly accounted for such  a  wood.  Otherwise,unaccounted  wood  would  be presumed to  have beenobtained from  unlawful source and

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therebythey  are liable  to account  for, and on failure to accountfor  the same,they should  face  theconsequences ensuing thereunder,  viz.,  confiscation,  cancellation  of licenceor  prosecution. It  isalso  seen  that  an  Expert Committee cameto be constituted to lay down modalities for identificationsof  logs and wood purchased from the auction depots in the forest area etc. it is true that these are the administrative instructions andthey donot have the flavour of statutory  rules. Itis stated by Mr. G.C. Gupta that the Government  would   issue  necessary   orders  making  those instructions as a part of the Rules so  thatit  will  be operative as acontinuous process of  the identification of the woods rightfrom the stage of purchase tillthe stage of accounting for in Form D-3.      Itis  true, as  shown byMr. Sanghi,  that one of the conditions of  the  auction  is that  the  authorities are absolved of  their  liability  for  any deficiency  in the quantity and  quality of  the timber and of themeasurements when the  intending bidder  purchases the logs in the forest timber depots. That is one of the conditions ofthe auction, i.e. ,qualityand  quantity of   wood is notassured. The government is  absolvedof the liability for any shortcoming in thequalityand  quantity of  the  wood  the  appellants purchase  from the  Government.   Thereafter, there are provisions that the empoweredofficer wouldinspect the premises and verify thewood purchased to satisfy himself of the source  of the woodfound in the depot and also purchase of thelogs either  inauction and the mode of disposal of the wood according to the Rules. However, that does notmean that the licensees are kept in dark as to the details of the wood  purchased  by  them.  As seen  earlier, the  detail procedure has  been prescribed in the relevant forms inthat behalf from  the time  of felling  of  the  trees  till the entrustment ofthe purchased logs to the auction purchaser. The transit  permit issued to the purchaser does contain the same details with the number ofthe truck carrying the wood. The meticulousdetailsis  required to be mentioned in the required Forms.Thus, at the time of entrustment of thelogs purchased by the auction purchaser, details aregiven to him before the  transit ofthe wood  withthe  transit  permit issued by  the competent  officer. When the logs  reach the destination, namely,  saw-mill or  saw-pit ,  the  necessary entriesof  theforestwood are required to bemade inForm D-1, of finished goods in Form  D-2 and monthly returns in Form D-3.  Thus, Rulesare consistentwith the  meticulous detailsand  there is  no gap.The Rules cannot be declared ultra vires  the Constitution  as offending Article 19(1)(g) or Article  14 simply  because some shortfall or discripancy is noticed  by the officer in the quantity or quality of the wood. Equally,when officers  take action for the violation of thestatutory provisions, an individual case is required to be  considered on  the fact-situation.  The Act and Rules cannot be declared ultra vires on account thereof.      Thus  considered, we  do  not  find  any  illegality committed by  the HighCourt  in  itsjudgment  warranting interference.      The appeals are accordingly dismissed. No costs.