State Of Uttar Pradesh And Others v. Deewan Chand .

Satish Chandra, J.:— The Forest Department of the State Government put up for auction several lots of forests. The respondent Deewan Chand purchased two lots at the auction. The sale was confirmed on July 12, 1967. The respondent, however, did not comply with the terms of the agreement, and ultimately, in October, 1968, the lease was cancelled. The two lots were re-auctioned; but they fetched a much lower price. The difference between the price now fetched and the price for which they had been purchased by the respondent was Rs. 1,72,423/-. The State Department demanded payment of this amount. The respondent, however, did not make the payment, leading to the launching of recovery proceedings. The Tahsildar issued a certificate for recovery of this amount as an arrear of land revenue. The respondent challenged these proceedings by way of a writ petition. A learned Single Judge held that Sec. 82 of the Indian Forest Act, 1927, was the only provision authorising recovery of moneys as an arrear of land revenue. The amount in question, which was in the nature of damages for non-compliance with the terms of the agreement, was not included in any of the clauses of Sec. 82. Consequently, it was held that this amount was not legally recoverable as an arrear of land revenue. On this view, the writ petition was allowed and the recovery proceedings were quashed. Aggrieved, the State of U.P has come up in appeal.

2. During the pendency of this appeal, the State Legislature passed the U.P Public Moneys (Recovery of Dues) Act No. 23 of 1972. Secs. 1 to 5 of this Act were deemed to have come into force on ??? deemed to have been in operation at all material dates, namely, the date of auction, the cancellation of the lease as well as the commencement and pendency of the recovery proceedings. Clause (d) of Sec. 3 authorised the recovery of any money payable to the State Government under an agreement as an arrear of land revenue, if any default is committed in complying with the terms of the agreement. The question is whether the amount of Rs. 1,72,423/-, which was claimed by the State Government as due to it against the respondent for his having committed breach of contract, is money payable under the agreement. Sec. 82 of the Forest Act also referred to moneys payable to the Government. In Firm Gobardhan Das Kailash Nath v. Collector . A.L.D 1956 All 721., a Division Bench of this Court held that if a contract for sale of a forest is cancelled and then the forest is re-auctioned, the claim for the deficit is in its true nature a claim for damages upon the re-sale. It cannot be held to be a claim for unpaid price. If the claim cannot be termed as price, then the claim for deficit on re-sale will not be money payable to the Government and so it cannot be recovered as an arrear of land revenue under Sec. 82 of the Forest Act. This authority applies to the present case on all fours. Under the agreement between the parties, the deficit was realisable as an arrear of land revenue. But such an agreement will, in the eye of law, be an agreement providing for a maximum under Sec. 74, Contract Act, and not for the exact amount of deficit that can be recovered straightaway. The Government has to establish its loss and it can recover only that much amount. That has not yet been done. The recovery of the maximum amount as the money payable to the State Government is hence unauthorised. Sec. 3 of the Public Moneys (Recovery of Dues) Act, 1972, cannot hence assist the State Government.

3. We are in agreement with the learned Single Judge that Sec. 82 of the Forest Act was inapplicable. The recovery proceedings were rightly quashed The appeal fails and is accordingly dismissed with costs.

Appeal dismissed.