K. SREEDHARA REDDY versus THE CONSERVATOR OF FORESTS AND ORS.

Citation: [1976] 1 S.C.R. 770 · Decided: 12-09-1975 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Dismissed

Judgment (excerpt)

770 
K. SREEDHARA REDDY 
V. 
THE CONSERVATOR OF FORESTS AND ORS. 
September 12, 1975 
[V. R. KRISHNA IYER, A. C. GUPTA ANDS. MURTAZA FA2;AL ALI, JJ.] 
H'\!derabad Forest .Act-Forest Contract rules-Rule 29-30-3l-Whether tenni-
natio;z vf contract to precede i111po~ition of penc.J.ty-Natural Justice. 
A 
B 
The appellant & Forest Contractor 
fell'~d trees in excess of the perrnitted 
number aut1horised by 
th·~ contract entered into by him with the State 
of 
Andhra Pradesh. 
Certain penalty was in1posed on the appellant under rule 
29 of he_ Forest Contract Rules framed in exercise of the powers conferred 
by Hyderabad Forest Act. 
The Forest Officer found that the appellant felled 
more trees and, therefore. gave a show cause notice to the appellant. 
The 
C 
appellant prayed for re-enumeration of the trees given from the forest. 
}Ie 
was given an opportunity which was not availed by him to check. the stun1ps 
in the coupe as desired by him. 
Consequently, a penalty was Jev1red. 
There-
after, the contract was terminated. 
After the termination of the contract the 
process for recovery of the penalty was startred. 
Rule 29 reads as under : 
- +- -
+ 
( 1) Penalty on termination of a contract for breach of conditions :--
..,
Every fore91: contract shall be in writing in the form annexed he~to 
D 
and shall contain a provision whereby the forest contractor bind~ him-
self to do all the duties and acts required to be done by or under the, 
contract, and convenants that hre. and his servants and 
agents 
shall 
abstain from all the acts forbidden by or under such contract. 
(2) The sums to be mentioned in a forest contract as payable in case 
of a breach of any such stipulation shall not exceed one-quarter of the 
total consideration to be paid by the· contractor, and shall be recoverable 
in accordance \Vith the provisions of the Hyderabad Forest Act 1355 F 
E 
and of this rule. 
Provided that where such consideration i5 
not 
an 
ascertained 
amount the forest officer executing the contract !!-hall make an estimate 
of the total amount that would be payable if the contract were fully 
complied with, and such estimate shall be deemed to be for the purpose 
of this sub-rule. the total consideration to be Paid by the contractor. 
(3) This sum shall be realized from the contractor if the contract 
has been duly terminated in accordance with the provision3 of rule 30, 
and then only under the written order of the forest officer executins 
the contract." 
The appeIIant filed a Writ Petition in the High Court challenging the vali-
dity of the imposition of the penalty. The learned Single Judge allowed the 
Writ Petition but the· Division Bench allowed the appeal filed by the State. 
Jn an appeal by certificate, it w<i.s contended by the appellant before this 
Court that the termination of the contract for breach of conditions m-entioned 
in rule 29· should precede the impost of penalty. 
It was further contended that 
tho principles of natural justice were violated. 
The respondent contended that 
ascertaining the amount which is to be levied as a penalty need not be preceded 
by the t'ermination of the contract. 
Dismissing the appeal, 
HELD : 1. It is clear that in the absence of a statutory exclusion of natural 
justice any exercise of ,power prejudicially affecting another must be in confol'· 
mity with the rules of natural justice. In the present case, we are satisfied 
F 
G 
H 
<' 
•-:'.Ji. 
' 
*~
~ 
~~ 
'~-
A 
B 
c 
D 
K. s. REDDY v. CONSERVATOR OF FORESTS (!Krishna Iyer. J.) 771'. 
that there is no foundation for the grievance of the appellant on the score 
of natural justice since an opportunity was afforded to the appellant before· 
finally quantifying the penalty to be levied but the appellant did not avail him~ 
self of the opportunity. 
(773-E-F] 
2. On a true construction of ru1e 29 once a Forest Authority detects 
a 
breach it must investigate thie, extent and estimate, the nature and degree 
of· 
damage caused bv the breach. 
If it is serious they must proceed to ascertain 
the <;um to be fiXed as penalty. 
In doing this, a reasonable opportunity must 
be given to the affected party. 
After that, the penalty shall be quantified and· 
the contract shall be tern1inated in the event the authorities come to the conclu:.. 
sion that the breach is grave enough for that drastic step. 
Once the contract' 
is termir.atcd the last procedure is realisation which can in no case be before· 
the termination of the contract

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