DIVISIONAL FOREST OFFICER AND ORS. versus TATA FINLAY AND ANR.

Citation: [2001] 3 S.C.R. 821 · Decided: 10-07-2001 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Dismissed

Judgment (excerpt)

DIVISIONAL FOREST OFFICER AND ORS. 
A 
v. 
TATA FINLAY AND ANR. 
JULY 10,2001 
[SYED SHAH MOHAMMED QUADRl AND S.N. VARIAVA, JJ.] 
B 
Kera/a Grants ai1d leases (Modification of Rights) Act: 1980-Seclions 
2(b), (c).(d).(e), 3 and 4-Demand of seigniorage rates in respect of cutting 
and removing _eucalyptus trees grown and used by the lessees on the leased C 
/and-Validity of-Held, Government has ownership on timber trees grown 
and removed from leased lands and entitled for seigniorage rates-Timber 
includes eucalyptus trees-On facts, since the tre_es were cut and removed to 
the fact01y situated in the same leased lands, the demand for seigniorage 
rates invalid 
D 
Respondents filed a Writ Petition before High Court challenging the 
constitutional validity of the Kerala Grants and Leases (Modification of Rights) 
Act, 1980 and legality of demand of seigniorage rates raised by appellants 
under the Act in respect of cutting and removing eucalyptus trees grown and 
used by the respondents on the lands held by the respondents as lessees. The 
High Court held that the Act was not applicable to the lands held by the E 
respondents and quashed the demand notices issued by the appellants 
demanding segniorage from the lessees and issued a writ prohibiting the 
appellants from interfering with the cutting of eucalyptus anci other trees by 
the respondents and from levying seigniorage on such trees and firewood 
under the Act. 
The respondents contended that the seigniorage rates cannot be levied 
under Section 4 of the Act on eucalyptus and other trees which were cut and 
utilised in the factories which are situated within the boundaries of the lands 
in question ; that the claim of seigniorage implied ownership of a share in 
F 
the value of the trees grown in leased lands by the State Government in respect G 
of which seigniorage is payable on removal of trees ; that the equivalent term 
in Malayalam is "kuttikonam" whiCh means 'owner' or 'shareholder'; that 
since the eucalyptus trees are grown by the respondents and the appellants 
had no share in them, the demand for seigniorage is unsustainable; that the 
provisions of the Act deal with timber trees and not eucalyptus trees; that 
821 
H 
822 
SUPREME COURT REPORTS 
(200 I] 3 S.C.R. 
A since the eucalyptus trees are cut and taken to the factory situated in the 
leased land itself, the liability to pay seigniorage rates does not arise for the 
respondents under the Act. 
Dismissing the appeal, the Court 
B 
HELD : 1.1 Under Section 4 of the Kerala Grants and Leases 
(Modification of Rights) Act, 1980, e\'ery grantee and lessee is made liable to 
pay the Government seigniorage at the rates in force for the time being for 
the timber cut and removed from any land held by him under the grant or 
lease. The contention of the respondent that the Government has no ownership 
C in the property is not acceptable as in Section 4, the expression seigniorage 
is employed to enforce a prerogative of the State de ho;·s the right of 
ownership in the property. 1825-F; 827-DI 
D 
State of Kera/av. Kanan Devan Hills Produc~ Co., 11991) 2 SCC 272 
and Leslie v. State of Kera/a, AIR (1970) Kerala 21, referred to 
New Shorter Oxford English Dictionary, referred to. 
1.2 A perusal of clause (a) of Section 3 of the Act shows that the word 
'timber' used in Section 4 of Act is in the enlarged sense to mean trees -other 
than teak, blackwood, ebony, Karumthali etc. and in that sense includes 
E standing eucalyptus trees. 1828-E-FJ 
Concise Oxford Dictionary, Eighth Edition, 1990 !Page 12771; 
Halsbury 's laws of England, Fourth Edition I Vol. 19 page 211; New Webster's 
Dictionary; Corpus Juris Secundum IVol. 54 Page 1, referred to. 
F 
1.3. The words 'cut and removed from any land' used in Section 4 of the 
Act do not suggest felling of the trees and removing the wood from one the 
part to another part of the land. The words indicate the cutting of the trees 
and removing them out of the limits of the land held by the grantee or the 
lessee under the grant or lease. In this case, the eucalyptus trees, which are 
G felled, are taken to the factory of the respondents which is situated on the 
lands in question. Therefore, by cutting and taking the wood of the felled 
eucalyptus trees from the place where they are cut to the factory on the demised 
land where they are consumed, the respondent does not incur liability to pay 
the seigniorage rates under Section 4 of the Act. 1828-G-H; 829-A-BI 

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