The Commissioner of Income Tax vs. The Chittoor District Coop Marketing Society Ltd

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA

RSA No.247 of 2008.

Reserved on: 23.4.2019. Date of Decision : 21st May, 2019. State of Himachal Pradesh through District Collector, Shimla.

...Appellant.

Versus Himalayan Industry & anr.

…Respondents.

Coram The Hon’ble Mr. Justice Chander Bhusan Barowalia, Judge. Whether approved for reporting?1 Yes. For the appellant : Mr. S.C. Sharma, Mr. Shiv Pal Manhans

and Mr. P.K. Bhatti, Additional Advocates

General with Mr. Raju Ram Rahi, Deputy

Advocate General.

For the respondents : Mr. Y.P. Sood, Advocate, for respondent

No.1.

Nemo for respondent No.2.

Chander Bhusan Barowalia, Judge.

By way of the present appeal, the appellant has challenged the judgment passed by the Court of learned District Judge, Shimla, District Shimla, in Civil Appeal No.111-S/13 of 2005, dated 01.01.2008, vide which, the learned lower Appellate Court, has affirmed the judgment and decree passed by the learned Civil Judge (Senior Division), Theog, District Shimla, in Civil Suit No.156-1 of 1997, dated 1.9.2005. 2.

Material facts necessary for adjudication of this Regular Second Appeal are that respondent/plaintiff (hereinafter referred to as ‘plaintiff’) maintained a suit for recovery of `1,16,252/- alongwith cost of

1 Whether reporters of Local Papers may be allowed to see the judgment? Yes.

2 the suit and interest at the rate of 18% per annum against the appellant/defendant (hereinafter referred to as ‘defendant No.1’) alleging that Anant Ram Negi, is owner of saw-mill being run in the name and style of Himalaya Industry at Village Halaila duly registered with Department of Industries and H.P. Forest Department. It is averred that in the year 1987, plaintiff was allotted 48 trees of Rai and Fir species volume of which comes to 112.80 cubic meter. After payment of `34,517, Range Forest Officer, Balson (Deha) issued Permit No.1, dated 20.6.1987, which was valid up-to February 19, 1987. After the issuance of permit, plaintiff converted the trees into small logs and started carrying them from the forest to saw-mill. Only half of the small logs were carried to saw-mill, but 568 logs could not be carried and in the meantime, validity of the permit got expired on July 19, 1987. Plaintiff had applied to Range Forest Officer, Balson, for the grant of extension of time, small logs were taken into possession by the Police, Enforcement South Zone, Khalini. In December, 1986 and January, 1987, Police Department of Enforcement South Zone, Khalini, on the basis of some complaint started inquires qua the alleged felling of trees in D-166, Hara Ritha, against the plaintiff. It is further averred that no illicit felling was found by Kuldeep Singh and to this effect, certificate was given to the plaintiff by Devi Singh, the then Block Forest Officer, Mahasu and Kuldeep Singh, Sub Inspector, concerning the fact that no illicit felling was found to have been done. In July, 1987, a team of

3 Investigators headed by Ram Swaroop, Deputy Superintendent of Police, accompanied by Forest Officials headed by the Assistant Conservator of Forest, also inspected the forest and found that no illicit felling was done. In the month of September, 1987, Rohli Ram, Inspector conducted the inquiry and seized the balance small logs of the plaintiff, on the basis of which, FIR No.24/87, dated 14.9.1987, under Sections 33, 41 and 42 of the Indian Forest Act read with Section 379 of the Indian Penal Code and Section 6(2) of the Prevention of Corruption Act, was lodged. The main grievance of the plaintiff is that he converted the small logs allegedly taken into possession by the police. However, an application was moved on behalf of the State for auction of small logs, same was allowed and logs were ordered to be auctioned through defendant No.2. Despite lapse of period of about ten years, no challan was filed in the Court by the Enforcement Department. Defendant No.2, after auction of the small logs on 5.4.1989, for a sum of `41,971/- had not deposited the auction amount. It is further averred that the auction proceedings is wrong, illegal, arbitrary, malafide and unconstitutional. So, the plaintiff is entitled to sale proceeds alongwith interest at the rate of 18% per annum from the date of seizure till the realization of the same. 3.

The suit of the plaintiff was resisted and contested by the defendants. Defendant No.1 has filed separate written statement and raising preliminary objections that the suit is not maintainable, barred by

4 limitation, suit is bad for non-joinder of necessary parties and Court has no jurisdiction to try and adjudicate the matter. On merits, it is averred that plaintiff was allowed 169 trees of Rai and Fir, during the year 1986- 87, under order Nos.1644, dated 4.6.1986, 2232, dated 30.7.1986, for 36 trees, 3138 dated 1.9.1986 for 43 trees and 1904 dated 11.6.1987 for 48 trees. It is averred that 568 small logs found in the Government land were illicit felling, because the date of permit had expired and 69 more trees, i.e. 64 Rai and 5 trees of Kail were found illicitly cut during the investigation. It is further averred that at the time of seizure of the logs, neither the plaintiff could show the valid permit nor explain the sizes of the logs. During investigation, Sale Register of the plaintiff was taken into possession and sizes of the logs and entries made in the Register do not tally. The case property, i.e. 568 logs are stated to be illegal and confiscated to the Government, in accordance with law. Defendant No.2 filed separate written statement and alleged that the auction proceedings were conducted, as per prescribed procedure and directions were given by the learned Sessions Judge, Shimla, on 15.5.1989. 4.

From the pleadings of parties, the learned trial Court framed following issues :

“1. Whether the plaintiff is entitled for the recovery

of the suit amount, as alleged ? OPP.

necessary parties ? OPD.

period ? OPP.

The learned trial Court after deciding Issue No.1 in affirmative, Issue Nos.2, 3 in negative, Issue Nos.4 and 5 in affirmative, decreed the suit. 6.

Feeling aggrieved thereby defendant No.1 maintained first appeal before the learned District Judge, Shimla, assailing the findings of learned Court below being against the law and without appreciating the evidence and pleading of the parties to its true perspective. The learned lower Appellate Court affirmed the findings of the learned Court below only to the extent that the suit of the plaintiff will be deemed to have been decreed for recovery of `41,971/- alongwith interest at the rate of 12 % per annum from the date of seizure of the small logs belonging to the plaintiff till actual deposit of the decreetal amount. Now, the appellant has maintained the present Regular Second Appeal, which was admitted for hearing on 11.12.2009, on the following substantial question of law:

“Whether the suit filed by the plaintiff was within limitation?”

Learned Additional Advocate General has vehemently argued that the judgment and decree passed by the learned Court below and learned lower Appellate Court is against the law, as the suit

6 was beyond limitation. On the other hand, Mr. Y.P. Sood, learned counsel for respondent No.1 has argued that the suit was within limitation. 8.

To appreciate the arguments of learned counsel appearing on behalf of the parties, I have gone through the entire record in detail. 9.

In order to prove its case, Anant Ram Negi, Proprietor of the plaintiff’s company appeared in the witness box as PW-1, deposed that he is owner of the saw-mill. As per this witness, in the year, 1987, he was allotted 48 trees of Rai and Fir Species having volume 112.80 cubic metre against the payment of `34,517/-. He has stated that permit No.1, dated 11.6.1987, Ex.PW1/A, was issued in his favour and was expired on 19.7.1987. He further deposed that after felling of 48 trees, he brought half of the small logs to his saw-mill and saw the apple boxes, however, 568 small logs remained in the forest. He deposed that the small logs were seized by Enforcement Department. He also produced the relevant documents to the Enforcement Department qua the small logs and also filed an application for release of logs, but the same were not returned to him. He has also filed an application for release of logs, before the learned Trial Court, which was dismissed. He stated that the logs in question were ordered to be auctioned, vide Ex.PW1/E. He has stated that the logs were auctioned by the Forest Department for `41,971/-, out of which, a sum of

7 `28,172/- was deposited before the learned Court below and remaining amount of `13,799/-, was cut on account of Income Tax, Sale Tax and other expenditure incurred by the Department. He has further stated that he was not liable to pay an amount of `13,799/-, whereas it was the Forest Department responsible for the same, as the logs were illegally seized. In his cross-examination, he has admitted that case was registered qua the logs. He has admitted that the Register maintained in the saw-mill was taken into possession. He has denied that the seize of logs entered in the Register were not tallying with the seized logs by the Enforcement Department. He has denied that illicit timber was found in the forest. He has denied that on his release application inquiry was being conducted and it was found that illicit felling was done in the forest. He has admitted that the trees were sanctioned in his favour for manufacturing apple boxes. He has admitted that on the sanctioned trees, there were hammer mark, whereas on the small logs, there were no hammer mark. He has shown his ignorance that during the investigation, 69 trees, that is, 64 trees of Rai and 05 trees of Kail were found illegally felled. He has denied that he had prepared the documents falsely in order to show the logs belonging to him. PW-2, Sant Ram, has also stated that the geltues were belonging to the plaintiff and had been converted from 48 allotted trees to him. He has stated that some of the logs were carried to saw-mill and 568 logs remained in the Forest. He has deposed that the entire work of cutting

8 and sawing the logs took place in his presence. He has stated that no illicit felling was done by Anant Ram Negi and 568 small logs were sanctioned by the Forest Department. In his cross-examination, he has shown his ignorance about the logs, which were converted out of the sanctioned trees in the year 1987. He has denied that on the spot 69 tree, that is, 64 trees of Rai and 05 tree of Kail were found illegally felled. He has shown his ignorance as to how much apple boxes were manufactured during the year, 1987. PW-3, Ved Parkash, remained posted as Range Forest Officer, has stated that Anant Ram Negi, had been sanctioned 48 trees of Rai and Fir in the year 1987, for manufacturing apple boxes. He has stated that on deposit of `34,517/-, had issued permit No.1 to the plaintiff and which was expired on 19.7.1987. In his cross-examination, he has admitted that in the permit, fix time is given to remove the timbers. He has shown his ignorance that Anant Ram Negi, had removed the entire logs from the spot before filing application, Ex.PW1/B, as per permit. He has shown his ignorance that on the spot 69 trees of Rai and five tree of Kail were illicitly felled. PW-4, Bansi Lal, deposed that 568 geltues lying on the spot were the produce of 48 trees allotted to the plaintiff. He has stated that after depositing a sum of `34,517/-, permit No.1, was issued to him by the Forest Officer, Balsan, which is, Ex.PW1/A/. He has further stated that Anant Ram Negi, felled 48 trees and converted them into small logs. In his cross-examination, he has shown his ignorance, as to how

9 much logs were converted from trees. He has stated that the logs were not having any hammer marks, whereas the trees were having hammer marks. He has denied that the officials of Enforcement Department found 69 tree illicitly felled. DW-1,Joginder Singh, deposed that on 8.9.1987, he alongwith other officials visited the spot in connection with a complaint about illicit falling of trees and found that 64 trees of Rai and 5 trees of Kial were illicitly felled, as there were bearing no hammer mark. He further deposed that during checking, 568 small logs were counted on the spot and no proprietary mark was found there on the logs. He further stated that it was the duty of plaintiff to remove the produce of marked trees within the prescribed period. DW-2, Prem Singh, stated that 69 trees as alleged to be illicitly felled. The geltues found on the spot were not containing any property mark. DW-3, Rohli Ram, deposed that 568 geltues found in the Government forest were illicit because the date of permit of plaintiff was expired. 10.

From the perusal of aforesaid evidence, DW-1, Joginder Singh Chauhan, while in cross-examination at length, he has admitted that in the year 1987, Forest Department used to give trees to the owners of saw-mill for manufacturing logs. He has admitted that the plaintiff was also allotted trees at that time. At the time of allotment, the trees are being allotted class wise and volume wise. He has shown his ignorance that the plaintiff was allotted 48 trees of Rai and Fir. He has stated that the trees allotted to the plaintiff were also checked. He

10 has stated that the Stock Register was also sought from the plaintiff. He has stated that in his report, he had not mentioned about the logs converted from 69 trees. He has denied that 568 logs were the extract of 48 trees allotted in favour of the plaintiff. He has admitted that hammer mark used to be put by Forest Guard of their department. He has admitted that due to delay in moving the timber, extension of time is allowed. DW-3, Rohli Ram, Retired Inspector from Enforcement Department has deposed that 568 small logs were found in the Government Forest because the date of permit was expired and 69 more trees, that is, 64 of Rai and 05 of Kail were also found illicitly cut during the investigation of the case. He has stated that 568 logs were seized by the Enforcement Department. He has also supported the version of DW-1, as regard visit of the spot on 8.9.1987 alongwith other officers. He has stated that on the written report of Mr. R.S. Hajuria, FIR No.24/87, dated 14.9.1987, under Section 379 of the Indian Penal Code was registered. He has stated that 568 logs were of illicit felling, as the plaintiff could not show the valid permit nor explain the size of logs during the year 1987. He has stated that the plaintiff was allotted 169 trees of Rai and Fir having 392-40 c.m. volume and approximately 27468 apple boxes could have been manufactured, but as per the entry in the Register maintained, 27225 boxes were manufacture. He has stated that the ownership of the plaintiff qua 568 logs is not genuine. There is no dispute that 48 trees of Rai and Fir of 112.80 cubic meter

11 volume were granted in favour of the plaintiff for manufacturing apple boxes against the payment of `34,517/-. Thereafter, the trees were felled by the plaintiff and the same were converted into small logs. He had shifted some small logs of his saw mill and prepared apple boxes, whereas half of the logs remained lying in the forest and in the meantime, permit granted in his favour was expired. Thereafter, as per the records, he moved an application, Ex.PW1/B, to extend the date of permit, so that he could transport the logs of his saw mill. Such application favourably dealt with by the Forest Officials, as per, Ex.PW1/C and Ex.PW1/D as well as Ex.PW1/B on record, but no decision by the concerned Divisional Forest Officer was taken. In the meantime, there was a report against illicit felling of some trees in the area. During the investigation, by the Enforcement Department based on FIR Ex.DW3/A, the small logs of the plaintiff lying in the converted forest were seized. The cause to sue of the plaintiff is that as he was owner of the logs and those were taken into possession and sold by the Enforcement Department. Further, the plaintiff was owner of those logs and he is claiming those logs, on the basis of title. Though, the FIR was of 1987, the police many times filed untraced report, before the learned Court below, which used to be sent back for reinvestigation. Finally, when it was again presented for keeping it as untraced, it was ordered to be kept as such, vide order, dated 27.2.1998. These facts and circumstances show that the Enforcement Department failed to establish

12 that the alleged geltues are illicit. As such, the investigation was continuing and cause of action was in favour of the plaintiff. The Enforcement Department failed to establish its illicit nature, the possession thereof by them definitely is of unlawful nature. The same, therefore, was also continuous cause of action against defendant No.1. The suit was filed in the year 1997, as such, it can be safely held that the same was within limitation. So, this Court finds that the suit was within limitation, as the appellant has recovered an amount `41,971/-, by selling the logs belongings to the plaintiff and he is entitled for the amount alongwith interest, as awarded by the learned lower Appellate Court. Therefore, I find no infirmity and illegality in modifying the judgment and decree passed by the learned lower Appellate Court and the same is upheld. Accordingly, substantial question of law is decided holding that the suit was within limitation. 11.

In view of the above discussion, the appeal of the appellant is without merit, deserves dismissal and is accordingly dismissed. In the peculiar facts and circumstances of the case, parties are left to bear their own costs. Pending application(s), if any, shall also stands disposed of.

(Chander Bhusan Barowalia) 21st May, 2019 Judge (CS)