Someshwar Prasad v. State of Bihar — 1974 DIGILAW 36 (PAT)

JUDGMENT : S.P SINGH, J. 1. This application under Articles 226 and 227 of the Constitution of India is for quashing the ORDER :of assessment of cess (Annexure 4) made against the petitioner and for cancellation of the notice under Section 72(1) of the Cess Act (Bengal Act 9 of 1880) hereinafter referred to as the Act, Annexure 3, issued by the Cess Deputy Collector, Palamau, and the demand notice (Annexure 5) issued by the Certificate Officer, Palamau, against the petitioner. 2. The facts of the case are that the petitioner entered into agreements with the Forest Department of the State of Bihar (respondent no. 1) in respect of the Baresand and Jobey forest coupes as also in respect of coupes of Betla Bamboos in the year 1967 for their exploitation according to the terms and conditions contained in the Articles of Agreements (Annexure 1 and 2). According to these terms and conditions, the petitioner had to conduct the operation of forest produce which included felling, conversion, collection, extraction, removal and transport of the aforesaid produce subject to the restrictions contained in those agreements. As per agreement the petitioner was entitled to fell only such trees which had been earmarked by the Department. On the failure of the petitioner to remove the bamboos, which were over three years old and declared fit for felling within the specified period, the State reserved the right to fell and remove the same and realise the cost of such felling from the petitioner. The right of the petitioner to exploit the forest produce was subject to several conditions including the previous permission of the authorities concerned for (a) felling the bamboos and other ripe trees, (b) for their removal from the site, (c) for their storage, (d) for their transportation and (e) for employment of labour at the site for exploitation of the produce. The petitioner was also bound to sell the produce at concessional rate to the Forest Department and other right holders at a price only equivalent to the felling cost to be determined by the Department. Besides, he had to pay royalty for weighment of bamboos on the weigh-bridge installed by the Department in addition to the royalty which he had to pay as per agreements. The petitioner paid a sum of Rs. 1,20,338.56 for the aforesaid coupes covered by the two agreements for the year 1967-68. 3. Besides, he had to pay royalty for weighment of bamboos on the weigh-bridge installed by the Department in addition to the royalty which he had to pay as per agreements. The petitioner paid a sum of Rs. 1,20,338.56 for the aforesaid coupes covered by the two agreements for the year 1967-68. 3. According to the petitioner, his status was nothing more than of a mere licencee, the licence being revokable at will. A notice (Annexure 3) was issued by the Cess Deputy Collector, Palamau (respondent no. 3) under Section 72(1) of the Act directing him to file his return with respect to the profits derived from the forest produce of the coupes settled with him. While objecting to the jurisdiction of the Cess Deputy Collector to make any assessment of cess against him, the petitioner submitted a return showing a total investment of Rs. 1,70,017.32 including the amount of royalty (Rs. 1,20,338.56) paid by him to the Forest Department. The total outturn of the petitioner being Rs. 1,66,255.15, he claimed that he suffered a loss of Rs. 3,762.17. The Cess Deputy Collector arbitrarily disallowed 20% of the expenses incurred by the petitioner and fixed a profit of Rs. 6,173.58 over which the petitioner was asked to pay a cess of Rs. 385.85 (vide Annexure 4). The Certificate officer (respondent no. 6) thereupon started a proceeding against the petitioner under the Bihar & Orissa Public Demands Recovery Act for realisation of the said amount and issued a demand notice (Annexure 5) under Section 7 of the Act on the 16.3.1970. Annexure 3, 4 and 5 are characterised by the petitioner to be illegal, void and unenforceable, inter alia, on the ground that he being a licencee cannot be called upon to pay the cess. 4. Mr. Balbhadra Prasad Singh appearing on behalf of the petitioner contended that the petitioner being a mere licencee could not be an occupier for the purposes of issuing notice to return profits under Section 72 of the Act and was not liable to pay any cess under the Act. He strongly relied on a Bench decision of this Court in Hind Constructions Limited vs. The Cess Deputy Collector, Hazaribagh, 1956 BLJR 223, wherein it has been held that the word occupier used in Section 72 of the Act does not include a licencee. He strongly relied on a Bench decision of this Court in Hind Constructions Limited vs. The Cess Deputy Collector, Hazaribagh, 1956 BLJR 223, wherein it has been held that the word occupier used in Section 72 of the Act does not include a licencee. In view of the rule laid down in the said decision, if the petitioner is a mere licencee, he is not an occupier within the meaning of the term as used in Section 72 of the Act. However, Mr. Shreenath Singh, learned counsel for the State submitted that the right conferred by the petitioner under the contracts amounted to a licence to enter on the land coupled with a grant to cut and carry away trees and bamboos, that is to say, it is a profit a prendre, which is regarded in this country, as a benefit that arises out of the land and as such is immovable property. He further contended that under Section 5 of the Act all immovable property is liable to cess and the petitioner as a grantee is an occupier of immovable property within the meaning of the term as used in Section 72 of the Act. According to learned counsel for the State, therefore, the petitioner was liable to pay cess under the Act and the notice was rightly issued to him. 5. Many decisions were cited by learned counsel for the petitioner wherein distinction between a lease and a licence has been pointed out. It will suffice to refer to only one of them, namely, the decision in B.M. Lall vs. M/s. Dunlop Rubber Co. India Ltd., AIR 1968 Supreme Court 175, wherein it has been observed:– "The distinction between a lease and a licence is well known. Section 105 of the Transfer of Property Act defines a lease. Section 52 of the Indian Easements Act defines licence. A lease is the transfer of a right to enjoy the premises whereas a licence is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writing it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licencee. If the agreement is in writing it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licencee. The transaction is a lease if it grants an interest in the land it is a licence if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant is not decisive." Mr. Shreenath Singh, learned counsel for the State also relied on this decision for according to him, the decision lays down that even the licencee is an occupier. 6. The question which arises for decision in law case is whether the petitioner is liable to pay cess under the Act and whether a notice for filing return of profits could issue to him under Section 72 of the Act. Section 5 of the Act reads as follows:– "5. All immovable property to be liable to local cess-From and after the commencement of this Act in any district or part of a district all immovable property situate therein except as otherwise in Section 2 provided, shall be liable to the payment of local cess." Learned counsel for the petitioner did not claim any exemption under Section 2 of the Act. Section 6 of the Act lays down how cess is to be assessed. It makes an exception in the case of notified mines. Sections 6A and 6B were inserted in the Act by the Bihar Cess Amendment Act 2 of 1936 providing for assessment of local cess on the annual despatches of coal and coke even from notified mines and the rate at which such assessment was to be made. It is not necessary for the purpose of this case to deal any further with the provisions of Sections 6A and 6B of the Act. Sections 12 to 71 consisting of Chapters II, IIA, III and IV of the Act deal with mode of payment of cess on lands and provide for valuation of lands, rathing and levy of cess etc., Chapter V deals with valuation, assessment and levy of cess on mines, railways and other immovable properties. Sections 12 to 71 consisting of Chapters II, IIA, III and IV of the Act deal with mode of payment of cess on lands and provide for valuation of lands, rathing and levy of cess etc., Chapter V deals with valuation, assessment and levy of cess on mines, railways and other immovable properties. Section 72 is the first Section of this Chapter. Sub-section (1) of Section 72 is as follows:– "On the commencement of this Act in any district, and thereafter before the close of each year, the Collector of the district shall cause a notice to be served upon the owner, chief agent, manager or occupier of every mine or quarry other than a notified mine and of every tramway, railway and other immovable property not included within the provisions of Chapter II, and not being a tramway or railway on which local cess is not leviable; such notice shall be in the form in Schedule (E) contained, and shall require such owner, chief agent, manager or occupier to lodge in the office of such Collector within two months a return of the net annual profits of such property, calculated on the average of the annual net profits thereof for the last three years for which accounts have been made up." Section 81 which is also in this Chapter reads as follows:– "In any case in which the occupier of such property is a different person from the owner, and has paid in excess of half of the sum due as local cess on account of any installment, such occupier shall be entitled to deduct the amount of such excess from the next and subsequent installments of rent payable in respect of such property and every owner who has paid in excess of half of such sum due shall be entitled to recover the amount of such excess from the occupier, provided that in no case shall an occupier deduct from his annual rent more than half of the rate of the local cess on every rupee thereof." 7. In the case of Hind Constructions Ltd. vs. The Cess Deputy Collector, Hazaribagh, the question which arose for decision was whether the petitioner of that case which were a limited company and entered into two contracts with the Damodar Valley Corporation for the construction of Konar Dam No. 1 exclusive of hydro-electric power plant were liable to pay cess under the Act on the value of stone chips, ballast and boulders used for the purpose of construction which in pursuance of the agreement the petitioner utilised for the work of construction after recovering them by excavation of the neighouring lands with the permission of the Corporation. It was observed (1) that the expression occupier in Section 72 of the Act meant a lessee who was in possession of the quarry of mine and who was liable to pay rent to the proprietor and (2) that the word occupier in Section 72 could not be construed so as to include licencees who were not legally in possession of the mine or quarry and who did not pay rent to the proprietor. It was pointed out by Ramaswami, J. (as he then was) who delivered the JUDGMENT : that the expression occupier as used in Section 81 of the Act meant a lessee who pay annual rent to the proprietor and in Section 72 too the expression should have the same meaning. The petitioner of that case were not deriving any benefit for themselves from the stone-chips, ballasts and boulders. They were properties of the Corporation. The petitioner were merely recovering them by excavation of the neighbouring lands and using them in the construction for the benefit of the Corporation. It was, therefore, not a profit a prendre for the petitioner of that case so as to make them liable to pay cess. It was a case of a mere licence not of a licence coupled with a grant. 8. 'Immovable property' is defined in Section 4 of the Act as follows:– "Immovable property includes land and all benefits to arise out of land and things attached to the earth, or permanently fastened to anything which is attached to the earth, but does not include crops of any kind, or houses, shops or other buildings." Section 3 of the General Clauses Act (Act 10 of 1897) also defines the expression immovable property. The definition reads as follows:– "Immovable property shall include land, benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth." Section 3 of the Transfer of Property Act defines immovable property as follows:– "Immovable property does not include standing timber, growing crops or grass." On a comparison of the three definition it will appear that the definition of the expression in the Act is similar to the definition of the expression in the General Clauses Act except that it excludes crops of any kind or houses, shops or other building and differs from the definition of the expression in the Transfer of Property Act to the extent that while standing timber and grass are excluded from the definition of the term in the Transfer of Property Act, they are not so excluded in the definition of the expression in the Act. Thus, standing timber and grass will be immovable property for the purposes of the Act. The grants made in favour of the petitioner of the case before us were in respect of trees (including standing timber) and in respect of bamboos which come under the genus grass. The grants, therefore, were in respect of immovable property as defined in the Act which were liable to assessment of cess. In Ananda Behera and another vs. State of Orissa and another, AIR 1956 Supreme Court 17, the learned Judges of the Supreme Court had to construe the definition of the expression immovable property in the General Clauses Act (Act 10 of 1897) and in the Transfer of Property Act. The petitioners of that case long before the vesting of the estate in the State of Orissa under the Orissa Land Reforms Act had entered into contracts with the ex-proprietor and had obtained from the latter on payment of heavy sums licencees for catching and appropriating fish from some fisheries and had obtained receipts on payment in accordance with the prevailing practice. The State of Orissa refused to recognise the right of the petitioners under the contracts and, therefore, they filed applications under Article 32 of the Constitution before the Supreme Court. Dealing with the contention, the learned Judges of the Supreme Court observed:– "What was sold was the right to catch and carry away fish in specific sections of the lake over a specified future period. Dealing with the contention, the learned Judges of the Supreme Court observed:– "What was sold was the right to catch and carry away fish in specific sections of the lake over a specified future period. That amounts to a licence to enter on the land coupled with a grant to catch and carry away the fish that is to say, it is a profit a prendre. In India it is regarded as a benefit that arises out of the land and as such is immovable property." Then they held that as the sales were oral there was neither writing nor registration, the transactions passed no title or interest and the petitioners have no fundamental right which they could enforce. 9. Clause 1 of the agreements with which we are concerned in this case, grants liberty and licence to the purchaser/lessee, his agents, servants and workmen to enter upon the lot at all times between a specified period for the purposes of exploiting the said lot as detailed in Schedule B attached to the two agreements. It further lays down that this permission was subject to all the conditions and restrictions contained in the agreements. Clause 2 of the agreement in respect of forest produce including trees but excluding bamboos (Annexure 1) says that the purchaser shall pay to the Forest Officer in the manner required by the Forest Officer the agreed amount in full payment for the produce sold to the purchaser in installments and on the dates indicated in Schedule D to the agreement. Similarly Clause 2 of the other agreement relating to bamboos, which is Annexure 2 to the writ application, says that the lessee shall pay annually the amount agreed upon as royalty in installments and on dates as specified in Schedule D to it. Clause 3 of the agreements gives power to the purchaser/lessee to sublet, resell, transfer, conveyor assign his couple to anyone with the previous permission of the Conservator of Forests. Clause 6 (a) lays down that the exploitation shall be as soon as possible and any negligence on the part of the purchaser/lessee to abide by the terms would amount to a breach of the agreement and would render him liable for the penalties provided in the agreement. The other sub-clauses of Clause 6, viz., (b), (c), (d) and (e) also deal with the restrictions imposed upon the purchaser/lessee. The other sub-clauses of Clause 6, viz., (b), (c), (d) and (e) also deal with the restrictions imposed upon the purchaser/lessee. As per Clause 7, if felling was not done within the time allowed or within the time extended, the purchaser/lessee shall not only forfeit his right to cut and remove the trees but also be liable to pay all costs incurred by the State in felling and removing the trees, which sum was to be deducted from his security deposit and if it exceeded the same, it was to be recovered as a public demand. Clause 17 lays down that in the event of termination of the agreement by efflux of time, all forest produce not removed prior to the date of termination shall forthwith become property of the State and the purchaser/lessee shall forfeit all his rights under the agreement. Clause 18 further lays down that if after deduction some amount of security deposit remained in the hands of the State, it was to be refunded to the purchaser/lessee. In my opinion, these agreements do not create bare licence in favour of the petitioner but they also create a grant of the nature referred to in the decision of the Supreme Court in Ananda Behera's case. 10. It is well settled that a bare licencee having no interest in property cannot maintain a suit for possession. He cannot bring a suit or get a declaration for removing the obstruction put up by third parties over subject matter of licence. But it is also well settled that the aforesaid rule is not extended to a case where the transaction is not a bare licence but also creates an interest in immovable property. In such case a licencee who has entered possession after execution of licence has a right to maintain a suit against a trespasser who has dispossessed him. It follows from the decision of the Supreme Court in Ananda Behera's case that a transaction may be of composite nature creating in favour of a person a licence to enter on the land and at the same time conferring upon him a right in respect of profit a prendre, that is, a benefit that arises out of the land, in other words, an interest in immovable property. 11. In support of his contention that the petitioner was a bare licencee, Mr. 11. In support of his contention that the petitioner was a bare licencee, Mr. Balbhadra Prasad Singh relied on the decisions in Rajindra Bahadur Singh vs. Malhoo Khan and others, AIR 1929 Oudh 93, Mammikkutti and others vs. Puzhakkal Edom and others, ILR 29 Madras 353 and Dan Singh Bisht vs. Firm Janki Saran Kailash Chander Dhampur, AIR 1948 Allahabad 396. They are not of any real help for the decision of the question as to liability of the petitioner to submit returns and pay cess under the Act for they do not deal with the provisions of a statute similar to the Act. 12. Now, the question arises whether the petitioner who is not a bare licencee but also grantee of a benefit in immovable property is an occupier within the meaning of the term as used in Section 72 of the Act. In my opinion, he is an occupier. The Bench decision of this Court in the case of Hind Constructions Ltd. is an authority only for the proposition that a bare licencee of the nature of the petitioner in that case cannot be an. occupier within the meaning of the term as used in Section 72 of the Act. It cannot be read as an authority that a person who is not a bare licencee but also grantee of a benefit that arises out of the land is not an occupier for the purposes of the Act. The authority lays down that one who cannot be an occupier for the purposes of Section 81 of the Act cannot be an occupier for the purposes of Section 72 of the Act. In my opinion, the petitioner being a grantee of benefit arising out of land and who was under the agreements liable to make periodical payments is an occupier for the purposes of Section 81 of the Act as well. Section 81 lays down that an occupier who is not an owner, if he has paid in excess of half of the sum due as local cess, he shall be entitled to deduct the amount of such excess from the next and subsequent installment of rent payable for the property in respect of which he has made excess payment of cess. Firstly, in my opinion, Section 81 cannot be construed to mean that au occupier who has made excess payment of cess can get it back from the owner by deduction from the rent only and not otherwise. It does not bar other remedies available to the occupier for realisation of the excess amount of cess paid by him, such as by a suit. Therefore, it does not necessarily follow that a person who does not pay rent cannot be an occupier. Secondly, the expression rent in Section 81 of the Act appears to have been used in a wider sense. Section 4 of the Act interprets Annual value of land, etc. as Annual value of any land, estate or tenure means the total rent which is payable or if no rent is actually payable, would on a reasonable assessment be payable during the year by all the cultivating raiyats of such land, estate or tenure or by other persons in the actual use and occupation thereof. Then there is an explanation which says that for the purposes of the foregoing definition of annual value of land, etc. whatever is lawfully payable or deliverable or would on a reasonable assessment, be lawfully payable or deliverable in money or in kind directly to the Government:– (a) By raiyats cultivating land in a Government estate on account of the use of occupation of the land. (b) By other persons in the actual use and occupation of land in such an estate, shall be deemed to be rent. It is manifest from the explanation that whatever is lawfully payable or deliverable in money or in kind even by persons who are not raiyats but are in actual use and occupation of land shall be deemed to be rent for the purposes of the Act. The words 'deemed to be' are important, for, they connote that what may not ordinarily be rent will be fictionally considered as rent for the purposes of the Act. The expression rent in Section 81, does not, therefore, necessarily mean rent payable by a lessee. It will also mean rent payable by persons in actual use and occupation of immovable property even though he is not a lessee. Therefore, the expression occupier in Section 81 cannot mean only a lessee. The expression rent in Section 81, does not, therefore, necessarily mean rent payable by a lessee. It will also mean rent payable by persons in actual use and occupation of immovable property even though he is not a lessee. Therefore, the expression occupier in Section 81 cannot mean only a lessee. It will include even persons who are not lessee persons like petitioner of this case who under the agreements (Annexure 1 and 2) is a licencee for the purpose of entering on the land and at the same time grantee of a profit a prendre, a benefit that arises out of the land and as such is immovable property. 13. Strong reliance was placed by Mr. Balbhadra Prasad Singh on certain observations of Vivian Bose, J. in the case by Smt. Shantabai vs. State of Bombay and others, 1958 Supreme Court Appeals 727: AIR 1958 Supreme Court 532. The petitioner of that case had moved the Supreme Court under Article 32 of the Constitution praying for setting aside an ORDER :of an officer of the State of Bombay by which she was stopped from cutting forest wood. She claimed to have derived interest in forest wood on the basis of a document from her husband, the proprietor of certain forests granting to her the right to take and appropriate all kinds of wood building wood fuel wood and bamboos etc., for a certain period. Vivian Bose, J. went into the question as to what was the nature of the document. The other four Judges, however, delivered a separate JUDGMENT : and did not consider it necessary to examine or analyse the document minutely or to finally determine what was the true meaning, and effect thereof. They dismissed the application of the petitioner on the ground that she could not complain of the infringement by the State of any fundamental right. Vivian Bose, J. while considering the nature of the document observed as follows:– "In my opinion, the document only confers a right to enter on the lands in ORDER :to cut down certain kinds of trees and carry away the wood. To that extent the matter is covered by the decision in Chhotabhai Jethabhai Patel & Co. Vivian Bose, J. while considering the nature of the document observed as follows:– "In my opinion, the document only confers a right to enter on the lands in ORDER :to cut down certain kinds of trees and carry away the wood. To that extent the matter is covered by the decision in Chhotabhai Jethabhai Patel & Co. vs. The State of Madhya Pradesh (1953) S.C.R. 476, 483 and by the later decision in Ananda Behera vs. State of Orissa (1955) 2 S.C.R. 919 , 922 and 923, where it was held that a transaction of this kind amounts to a licence to enter on the land coupled with a grant to cut certain trees on it and carry away the wood. In England it is a profit a prendre because it is a grant of the produce of the soil like grass or turves or trees. See 12 Halsbury's Laws of England (Simonds Edition) page 522 Note (m). It is not a transfer of right to enjoy the immovable property itself (Section 105 of the Transfer of Property Act), but a grant of a right to enter upon the land and take away a part of the produce of the soil from it. In a lease one enjoys the property but has no right to take it away. In a profit a prendre one has a licence to enter on the land, not for the purpose of enjoying it, but for removing something from it, namely, a part of the produce of the soil" He has merely held that the document was not a lease, for there was no transfer of a right to enjoy the immovable property which must be in a lease. However, he did not differ from the view taken in Ananda Behera's case that such a document was a licence coupled with a grant of a profit a prendre and that as such a grant would be a grant of an immovable property, the document did not confer any title on the petitioner for want of registration. Of course, he has observed that standing timbers were movable property and not immovable property, but that was on account of the fact that he was dealing with the question whether the grant was in respect of immovable property as defined in the Transfer of Property Act. Of course, he has observed that standing timbers were movable property and not immovable property, but that was on account of the fact that he was dealing with the question whether the grant was in respect of immovable property as defined in the Transfer of Property Act. As the definition of the expression immovable property in the Act does not exclude standing timber, this observation is of no help to the petitioner. 14. For the foregoing reasons, I hold that the petitioner not being a bare licencee but also a grantee in respect of immovable property is an occupier for the purposes of the Act and he has rightly been noticed to return profits under Section 72 of the Act. 15. Mr. Shreenath Singh, learned counsel for the State also submitted that as the petitioner had an alternative remedy under the Act itself this writ application was not maintainable. In support of his contention that the petitioner has alternative remedy, he drew out attention to Sections 75, 102 and 105 of the Act. On the other hand, Mr. Balbhadra Prasad Singh for the petitioner submitted that as he challenged the very jurisdiction of the Collector to notice the petitioner to return profits under Section 72 of the Act, the writ was maintainable. He also contended that in view of the decision of the Board of Revenue in Narain Ram vs. Cess Deputy Collector, Hazaribagh, 1965 BLJR Revenue 23, any appeal under Section 102 or revision under Section 105 of the Act would have been futile. In view of the finding recorded in the preceding paragraph, I do not consider it necessary to go into this question. 16. In the result, the application fails and is dismissed with costs. Hearing fee is assessed at Rs. 250/-. Application dismissed.