Holding

The company did not acquire absolute ownership of the concession area or its timber; it only possessed a limited right to fell trees for clearing, and the State was justified in demanding Kuttikanam under the forest rules.

Summary

The State of Kerala challenged K.D. Hills Produce Co. Ltd.'s claim of absolute ownership over a 150‑acre concession in the Kanan Devan Hills, originally granted by the Poonjar Raja in 1877 and later transferred to the company. In 1963 the company clear‑felled the area and sought free passes to transport the timber, but the Government refused unless the levy called Kuttikanam was paid under rules framed under the Travancore‑Cochin Forest Act, 1951. The company sued for a declaration of ownership, exemption from Kuttikanam and injunctions for free passage. The trial court dismissed the suit, the Kerala High Court reversed in favour of the company, and the State appealed. The Supreme Court held that the concession deeds conveyed only a limited right to fell trees for clearing and use within the grant, subject to clause 7 of the 1886 agreement, and that the State was entitled to levy Kuttikanam under the forest rules. Consequently, the appeal was allowed, the High Court judgment set aside, and the company’s suit dismissed with costs.

Issues considered

The nature of the rights conveyed by the 1877 and 1879 concession deeds – whether they granted absolute proprietary ownership of the land and timber to the company.
Whether the company had the right to remove timber from the concession area without paying Kuttikanam.
The applicability and validity of the rules framed under Section 93 of the Travancore‑Cochin Forest Act, 1951 (saved by the Kerala Forest Act, 1961) to levy Kuttikanam.
The interpretation of clause 5 of the 1878 ratification deed and clause 7 of the 1886 agreement concerning timber removal and payment of seigniorage.
The legal character of Kuttikanam – fee, tax or the Government’s share of timber value.

Legislation cited

Kerala Forest Act, 1961s. 85(3)
Travancore-Cochin Forest Act, 1951s. 93(2)(d)(dd), s. 93(2)(e)

Subjects

forest lawconcessiontimber rightsKuttikanamownershipleaseTravancore-Cochin Forest ActKerala Forest Actproperty rightsinjunction

Judgment

STATE OF KERALA AND ANR. A
V.
~- KANAN DEVAN HILLS PRODUCE CO. LTD.

FEBRUARY 7, 1991

[KULDIP SINGH AND N.M. KASLIWAL, JJ.] B

Forests: Travancore Cochin Forest Act, 1951-Section 93(2)(d)
-~(dd) & (e)-Rules regulating.the levy of Kuttikanam on trees in respect
of Government lands-Kuttzkanam-Govt. share of the value of the
trees-Ownership over the growth-Held Government has right to levy
and demand Kuttikanam under the 1951 rules saved by Section 85(3) of
c
-- __, the Kera/a Forest Act, 1961.

The dispute between the parties is regarding the ownership rights
and right of removal of timber clear-felled from 150 acres of jungle
_ ---(' area in Kallar Valley in the erstwhile Travancore territory of Kerala
State commonly called the Kanan Devan Hills Concession area over D
which the Poonjar Raja held free-hold proprietary rights under the
suzerainty of Travancore State.

By a deed dated July 11, 1877 called the 'First Concession'
(Exhibit P-1) the Raja conveyed the concession area with all the Hills
,.~ and Forests to one J .D. Munro for a certain cash consideration and a E
', deferred perpetual annual payment from 1884 onwards. This was
followed by another deed (exhibit P-2) between the same parties
reiterating all the original terms. This grant to Munro was ratified by
the Travancore Government by a deed dated November 28, 1878
(Exhibit P-62). Munro in turn assigned the area to the North Travan-
... core Land Planting & Agricultural Society Ltd. Later an agreement was F
executed between the Travancore Government and the Society in
-_, August 1886 (Exhibit P-64). In 1899 the entire territory comprising the
,...- Kanan Devan Hills including the concession area was declared part of
Travancore State. After several transfers the concession area finally
came to be vested in the Respondent Company in virtue of a Deed dated
July 16, 1900. G

Somewhere in 1963 the Respondent Company clear-felled about
150 acres in the concession area for cultivation and sought permission
from the State Government for grant of free passes to carry the felled
timber out of the concession area. The Government by order dated
25.11.1966 informed the company that it could not take out the timber H

261
262 SUPREME COURT REPORTS (1991] 1 S.C.R.

A from the concession area without payment of Kuttikanamin terms of
the deeds of conveyance/ratification. Thereupon the company filed a
suit against the State pra~ing inter alia for a declaration claiming full
ownership, title and right to remove the fimber without payment of
Kuttikanam, a mandatory injunction directing the defendants to grant
free passes for removal of the timber and a 'prohibitory injunction to
B
restrain it from taking any further steps under its order dated
25.11.1966. On the interpretation of Exhibits P-1, P-2, P-62 and P-64
the trial court came to the findings that the company did not acquire ~-

absolute proprietary rights over the concession area or the trees and
timber. It also held that the Government was jusfitied in demanding
Kuttikanam in terms of the Rules framed under the Travancore
c Cochin Forest Act, 1951. Accordingly the suit was dismissed.

The Company preferred an appeal to the High Court which was
--
allowed and the decree of the Trial Court set aside. The decision of the
High Court has been challenged by the State in this appeal by way of Y .....,...
D special leave. This court while allowing the appeal and setting aside the
judgment of the High Court,

HE~D: The respondent-company did not acquire absolute pro-
prietary rights over the Concession Area or the trees and the timber
therein. The company only acquired the right to fell the trees and use
E the timber subject to the restrictions imposed in clause 7 of the agree- r-·
_ment Exhibit P-64. Since the respondent-company has no right to
remove the timber beyond the limits of the Concession Area, the State
Government was justified in refusing to permit free transportation of
timber from the said area. [269C]

F
Clause 7 states that no unworked timber or articles manufactured
therefrom shall be carried outside the limits of the grant except in
conformity with the rules of the forest department for the time being in - ""'f"
t
-
force. [270D]

The Government of Kerala, in exercise of its rule making power
under Section 93 of the Travancore-Cochin Forest Act, 1951 had by a
G notification dated July 9, 1958 framed rules regulating the levy ofKut-
tikanam on trees standing on Government land. [270E]

The rules were holding the field at the relevant time and the (
>--:
Government Was justified in demanding Kuttikanam from the
H Company. [272A-B]
STATEOFKERALAv. K.D. HILLS PRODUCE CO. [SINGH.J.] 263

·~~ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1277 A
of 1979.

From the Judgment and Decree dated 4.8.1977 of the Kerala
High Court in A.S. No. 640 of 1971.

G .. Viswanath Iyer, F.S. Nariman, K. Parasaran, K.R. Nambiar, B
/ P .K. Pillai, S. Balakrishnan, S. Ganesh, Joy Joseph, Mrs. A.K.
~ Verma, S. Sukumaran for J.B.D. & Co., Baby Krishnan and V.J.
Francis for the appearing parties.

The Judgment of the Court was delivered by

KULDIP SINGH, J. The dispute before us is regarding the
c
ownership rights over the timber clear-felled from about 150 acres of
jungle-area in Kallar Valley and the right to transport the timber so
felled from the said area.

The Kallar Valley area forms part of the tract of land originally D
known as Kanan Devan Anchanatu Mala in the erstwhile Travancore
territory of Kerala State. This area is generally called the Kanan
Devan Hills concession (hereinafter called the 'Concession Area').
The Poonjar Raja, held free-hold proprietary rights in the Concession
Area. Originally the Raja was exercising sovereign rights but later on
he came under the suzerainty ofTravancore State. E

- The Poonjar· Raja, by a deed dated July 11, 1877 (hereinafter
called 'First Concession'), conveyed the concession area with all the
hills and forests therein to one J.D. Munro for cash consideration of
Rs.5,000 and a deferred perpetual annual payment of Rs.3,000 from
,_, 1884 onwards. Thereafter on July 26, 1879 a second document was F
r -executed between the same parties (hereinafter called 'Second Con-
cession'). The terms of the first concession were reiterated enuring to
Munro, his heirs, successors ·and assigns absolute right for ever to
make all kinds of cultivations and improvements on the Concession
Area.
G
The grant of rights to Munro by the First Concession was ratified
-~ by the Travancore Government by a deed of ratification dated
November 28, 1878. Munro assigned the Concession Area to The
North Travancore Land Planting and Agricultural Society Limited by
a deed dated December 8, 1879. Thereafter an agreement was
executed between the Travancore Government and the Society on H
August 2, 1886.
264 SUPREME COURT REPORTS [1991] 1 S.C.R.

By virtue of the agreement dated September 18, 1889 between
A the Poonjar Raja and the Travancore Government and the proclama- '~
tion C?f the Maharaja of Travancore dated August 24, 1899 the territory
comprising the Kanan Devan Hills including the Concession Area
was declared part of the Travancore State. There were various trans-
fers in respect of the Concession Area but finally by a deed dated July
B 16, 1900, the Concession Area came to be vested in the Kanan Devan
Hills Produce Company Limited, (hereinafter called 'the company').

In and around May 1963 the company clear-felled about 150
acres in the Concession Area for cultivation. The Company applied to
the State Government for grant of free passes to transport the timber
from the Concession Area. The State Government by an order dated >:-...
c November 25, 1966 informed the company that it could not take away
timber outside the limits of the Concession Area except in accordance
with the Rule,; of the forest department and on payment of levy in the
shape of Kuttikanam. According to the Government in terms of the
deeds of conveyance/ratification the company was liable to pay Kut-
D tikanam in respect of the timber taken out of the Concession Ar~a.

The company filed a suit in the year 1968 in the Court of Subordi-
nate Judge, Kottayam against the State of Kerala and its officers. In
the suit, the company prayed for the following reliefs:

E (a) A declaration that the plaintiff-company has full and unqual-
ified ownership and title over, and right of removal of the said
timber from the Concession Area;

(b) Declaration that the State has no right to claim seigniorage,
-
Kuttikanam or any other payment in respect of the said timber;
F
(c) A mandatory injunction directing the defendants to grant the ·----(
r
necessary free passes for the free transit of the timber outside the
Concession Area;

(d) Prohibitory injunction restraining the defendants from tak- •
G ing any steps under the order dated 25 .11.1966.

The State Government resisted the suit and controverted the
interpretation placed l)y the company on the deeds of conveyance/
;--·
ratification. According to the State the company was only a lessee of
the Concession Area and in terms of the deeds of conveyance/ratifica-
H tion the State Government had the absolute right over the trees and
STATE OF KERALA v. K.D. HILLS PRODUCE CO. [SINGH, J.] 265

timber in the Concession Area. The company only acquired the right A
+- to use and remove the timber subject to the restrictions imposed in the
said documents. It was further contended by the State Government
that the title and ownership in the trees and timber in the Concession
area always remained with the State Government and the company
could only take the timber outside the limits of the Concession Area in B
accordance with the rules framed by the State Government and on
_payment of Kuttikanam.
---(
The Trial Court in a detailed and well reasoned judgment dismis-
sed the suit of the company. The Trial Court on the interpreta,tion of
First Concession (Exhibit P-1), Second Concession (Exhibit P-2), deed
of ratification (Exhibit P-62) and the Government agreement with the c
Society dated August 2, 1866 (Exhibit P-64) came to the conclusion
that the company did not acquire absolute proprietary rights over the
. Concession Area or the trees and timber in the said area. It was held
~ --r that the Poonjar Chief had only conveyed heritable and transferable
possessory rights over the Concession area to the grantee. It was also
D
held that absolute rights over the trees and timber in the Concession
Area did not pass to the grantee and it had only the right to use and
remove timber subject to the restrictions imposed in the deeds of
conveyance/ratification. The Court further held that the relevant rules
framed under the Travancore Forest Act, 1952·for levy of Kuttikanam
- _j were applicable to the timber transported from the Concession Area.
E
~The contention of the company that it was entitled to free passes for
transportation of timber outside the Concession Area under the
Transit Rules was rejected. The suit of the company was thus dismis-
sed with costs.

- ~
The company went up in appeal before the High Court. It was
contended that the Trial Court misinterpreted the documents P-1, P-2,
F
rP-62 and P-64. It was contended that the Poonjar Raja had conveyed
absolute possession to the grantee to be enjoyed perpetually with
heritable and transferable right and it ought to have been held that the
natural consequence of such a conveyance was to grant the company
absolute title to the trees standing on the area so conveyed. It was
argued before the High Court that the State Government had no !"ight G
over the trees and the timber within the Concession Area.
--{
Before adverting to the various contentions raised by the parties
before it the High Court indicated the approach it adopted to the
questions involved in the case in the following words: H
266 SUPREME COURT REPORTS [1991) 1 S.C.R.

"For resolvi~g the real controversy in the case we do not
A
think there should be an enquiry into the question whether ~'
the plaintiff-company is the absolute owner of the Conces-
sion Area as alleged by them or the company is only a
lessee as contended by the defenda~ts. Nor do we think any
decision is necessary here as to whether at the time, the
B agreement and proclamation of 1899 came into existence,
the Poonjar Chief had vested in him any proprietary rights
over the Concession Area which he could pass to the r-·
government. We also do not think we sheuld make a
general enquiry as to the nature and extent of the rights
conveyed and secured by the First Poonjar Concession of ~
11. 7 .1877 and second Poon jar Concession of 26. 7. 1879
c (Exs. Pl and P2). We can well proceed in the matter on the
basis, as stated by the court below, that absolute rights over
the Concession Area had not been conveyed under Exs.
P-1 and P-2, that by virtue of the transactions the plaintif~ -
had only absolute possession with heritable and transfer-
D able interest and the right to enjoy the land subject to the
terms and conditions declared and defined in the Ratifica-
tion Deed and agreement of modification, namely Exs.
P-62 and P-64. The question is what is the plaintiff's right
over the timber and tree-growth in the area on the basis of
the grant under Exs. P-1 and P-2, wherein it gets wide~
E rights in regard to the jungles and forest in the Concession
Area-unqualified rights to clear the land and improve the
source. It is no doubt true that the rights which the plaintiff
has acquired as per the grant of the Poonjar Raja are -
F
subject to the terms and conditions imposed by the
Sovereign power of the Maharaj a under Ex. P-62 and P-64.
In short the question for a decision in the appeal will
r
revolv.e round the interpretation of the relevant clauses ir:J....,.r
-
these documents."
The High Court then considered the contents of the documents
P-62 and P-64 and came to the conclusion that the company had full
rights over the timber clear-felled from the Concession Area and it had
G
right of removal of the timber with the necessary free passes issued
under the timber transit rules. It was further held that the State of'.--
Kerala had no right or claim for the seigniorage or Kuttikanam or any/
other payment in respect of the said timber. The High Court allowed
the appeal of the company and set aside the judgment and decree of
H
the Trial Court. This appeal via special leave petition is against the
judgment of the High Court.
STATE OF KERALA v. K.D. HILLS PRODUCE CO. [SINGH, J.] 267

The High Court proceeded on the basis that absolute rights over
~- the Concession .Area had not been conveyed under the documents of A
conveyance/ratification and the right to enjoy the land was subject to
the terms and conditions declared in the ratification deed P-62 and the
agreement of modification P-64. We agree with the approach of the
High Court. The question, therefore, is what are the company's rights
over the timber and the tree-growth in the Concession Area. This B
takes us to clause 5 of P-62 and clause 7 of P-64 which are relevant.
.,

Clause fifth of the ratification dated November 28, 1878 Exhibit
P-62 is as under:

"Fifth: The grantee can appropriate to his own use within
the limits of the grant all timber except the following and c
such as may hereafter be reserved, viz., Teak, Coal-teak,
Black-wood, Aboney, Karinthali Sandalwood. Should he
carry any timber without the limits of the grant it will be
subject to the payment of Kuttikanam or customs duty or
both as the case may be in the same way as timber ordina- . D
rily felled. In the case of the excepted timber the grantee is
required to pay seigniorage according to the undermen-
tioned scale ....... The grantee is bound to deliver to the
Poon jar Chief, to enable him to make over to the Sirkar, all
ivory, caMamoms and other royalties produced in the land
and all captured elephants and he will be paid by the said E
Chief according to agreement with him the regulated price
for the articles of produce and the regulated reward for the
elephants."

Clause 7 of the agreement dated August 2, 1886 Exhibit P-64 is
as under: F

"7. The society, its successors and assigns may use and
. appropriate to its own use within the limits of the said tract
of land all timber except the following and such as may
hereafter be reserved, viz., Teak, Coak-teak, Black-wood,
Aboney, Karinthali and Sandalwood. But such societ], its G
successors and assigns shall not fell any timber beyond
what is necessary for clearing the ground for cultivation
and for building, furniture and machinery within the limits
of the grant. No unworked timber or articles manufactured
therefrom shall be carried outside the limits of the grant
except in confo,rmity with the rules of the forest and H
268 SUPREME COURT REPORTS [1991] 1 S.C.R.

customs department for the time being in force. In the case
A
of the excepted timber the society for itself, its successors
and assigns agrees to pay seigniorage according to the un-
dermentioned scale .............. The society for itself.
its successors and assigns agrees to deliver to the said Poon-
jar Raja or Chief to enable him to make over the same to
B the government of Travancore, all ivory and cardamoms
and other royalties ....... captured elephants ......... "

Mr. Parasaran, learned counsel appearing for the respondent-
company contended that in P-62 it was provided that the grantee could
not carry timber beyond the limits of the grant without payment of
Kuttikanam but by the time the agreement P-64 was executed in the
c year 1886 Kuttikanam had been abolished and as such there was no
provision for the payment of Kuttikanam in the document P-64.

Clause 7 of P-64 reproduced above makes it clear that the~--'
respondent-company may use and appropriate to its own use within
D the limits of the Concession Area all timber except to the extent
mentioned therein. It was further provided that " ......... society, its
successors and assigns shall not fell any timber beyond what is neces-
sary for clearing the ground for cultivation and for building, furniture
and machinery within the limits of the grant. No unworked timber or
articles manufactured therefrom shall be carried outside the limits of ,...__..
E the grant except in conformity with the rules of the forest and customs
department for the time being in force". It is thus clear that the com-
pany has no right under the said clause to carry the unworked timber
beyond the limits of the grant. The company could not fell timber
...
beyond what was necessary for clearing the ground for cultivation and
for building, furniture and machinery within the limits of the grant.
F Clause 7 clearly indicates that the grantee has no absolute right of
ownership over the tree-growth and the timber within the Concession~ r--
Area. The ownership remains with the Government and the grantee
has been given the right to fell the trees for clearing the ground for
cultivation and to use the timber for specified purposes within the
limits of the grant. An identical clause in another grant entered into by
G the Travancore Government came for consideration before a Full
Bench of the Kerala High Court in George A Leslie v. State of Kerala,
[1969] K.L.T. 378. K.K. Mathew, J. (as the learned Judge then was)~
interpreted the clause as under: . /

"We think that if title to the reserved trees passed to
H the grantees, a provision of this nature would have been
STATEOFKERALA v. K.D. HILLS PRODUCE CO. [SINGH,J.) 269

quite unnecessary. There was no purpose in stating that the. A
grantees will be free to appropriate the reserved trees for
consumption within the limits of the grant, if title to the
trees passed to the grantees; the provision is a clear indica-
tion that the grantees were allowed to cut and appropriate
· the reserved trees for consumption within the limits of the
grant as a matter of concession." B

·-----"(
We agree with the interpretation given to the clause by Mathew,
J. and hold that the respondent-company did not acquire absolute
proprietary rights over the Concession Area or the trees and the

....~
timber therein. The company acquired the right to fell the trees and
use the timber subject to the restrictions imposed in clause 7 of P-64.
Since the respondent-company has no right to remove the timber
beyond the limits of the Concession Area, the State Government was
C

justified in refusing to permit free transportation of timber from the
-- ---r·
/
said area.

We do not agree with Mr. Parasaran that Kuttikanam having I)
been abolished in the year 1884 the respondent-company was not
liable to pay Kuttikanam while transporting the timber from within the
Concession Area. In Leslie v. State of Kerala (supra) the term
"Kuttikanam" was explained as under:
I
-~
"In the Malayalam and English Dictionary by Rev. H. E
Gundert D. Ph. page 278, 'Kuttikanain' is defined as mean-

- ing 'the price of timber; fee claimable by the owner for
every tree cut down by the renter'. In 'The Manual of
Malabar Law' by Kadaloor Ramachandra Iyer, Chapter,
VII, page 44, it is stated:
F
'Kuttikanam is a mortgage of forests by which the
landlord assigns on mortgage a tract of forest land,
receiving a stipulated fee for every trees felled by the
mortgagee, the entire number of the trees, to be cut
down and the period within which they are to be
felled being expressly fixed in the karar entered into G
between the parties ...... '
/
-...;.
In the Glossary attached to the Land Revenue
Manual (1916) Vol. IV, at page 883, the word 'Kutti-
kanam' is said to mean 'a fee paid to the Sirkar for feeling
trees other than royal trees and tax-paying trees'. In the H
270 SUPREME COURT REPORTS [1991] 1 S.C.R.

Glossary of Administrative Terms, English-Malayalam, by
A
the Official Language Committee, at page 302, 'seignior- k
age' is defined as meaning ....... .

We do not think that 'Kuttikanam' is either a fee or
tax. A tax or fee is levied in the exercise of sovereign
B power. We think that in the context 'Kuttikanom' means
the Government's share of the value of the reserved trees."

It was further held by Mathew, J. that Kuttikanam being the
Government's share of the value of the trees owned by the Govern-
ment it has the power to fix the value of the trees. We agree with the
reasoning and conclusions reached by Mathew J. Since the ownership
c over the tree-growth and timber in Concession area vests with the
Government it has a right to impose Kuttikanam on the removal of the
trees from within the Concession area.
'-y- -·
We may examine the justification. for levying Kuttikanam from
D another angle. Clause 7 of P-64 states that no unworked timber or
articles manufactured therefrom shall be carried outside the limits of
the grant except in conformity with the rules of the forest department
for the time being in force. The Government of Kerala, in exercise of
its rule making power und:!r Section 93 of the Travancore-Cochin
Forest Act, 1951, framed rules regulating the levy of Kuttikanam on
E trees, standing on Government land by a notification dated July 9,
1958. The said rules are reproduced hereinafter.

"TRAVANCORE-COCHIN FOREST ACT, 1951 (III OF
1952)
RULES REGULATING THE LEVY OF KUTTIKA-
F NAM ON TREES IN GOVERNMENT LANDS. (Section
93(2)( d)( dd) and (e)

Notification No. 14824/58-3/Agri./F.(B) 3 dated 9th July
1958 published in the Gazette dated 15th July 1958 Part I,
Page 2189.
G
In exercise of the powers conferred by sub-section
(2)(d)(dd) and (e) of Section 93 of the Travancore-Cochin
Forest Act, 1951 (Act III of 1952) the Government of
Kerala hereby make the following rules, regulating the levy
of Kuttikanam on trees, standing on Government lands,
H namely:
STATEOFKERALA v. K.D. HILLS PRODUCE CO. [SINGH,J.] 271

1. All trees standing on land temporarily or permanently A
assigned, the right of Government over which has be<::n
·expressly reserved in the deed of grant or assignment of
such land, shall be the absolute property of Government.

2. It shall not be lawful to fell, lop, cut or maim or B
otherwise maltreat any tree which is the property of
Government without proper sanction in writing granted by
an officer of the Forest Department not below the rank of
an Assistant Conservator:

Provided that in cases where the holder of the land is
allowed under the title deed to lop or fell any such tree, C
such lopping or felling may be done by such holder in the
manner and subject to such conditions and payment as may
be specified in the title deed in that behalf. Any lopping or
felling of such trees otherwise than in accordance with the
conditions and limitation specified in the deed of grant D
shall be unlawful.

3. Government may, in the absence of any provision to the
contrary in the title deed, sanction the sale of timber which
is the property of Government to the holder of the land on
which such timber is standing, on payment of Kuttikanam
or Seigniorage or such other rates as may be specified by E
Government in each individual case. In cases where the

- title deed specified .the rate at which the timber will be sold
to the holder of the land, such rates only will be levied.

Explanation: 'Kuttikanam' means the seigniorage rate that
may be in force in the Forest Department from time to time F
and notified by Government.

4. The Collector of each District shall forward to the Chief
Conservator of Forests a stateme11t showing the full details
of the trees standing on such lands at the disposal of G
Government as may hereafter be granted for permanent
cultivation, under the Land Assignment Act and the rules
framed thereunder. On receipt of such statement, the
Chief Conservator of Forests will take appropriate action
for the disposal of such tree growth within the period
allowed under Section 99 of the Forest Act."
H
272 SUPREME COURT REPORTS [1991] 1 S.C.R.

The Travancore-Cochin Forest Act 1951 was repealed by the
A
Kerala Forest Act, 1961 but Section 85(3) of the said Act saves the
rules framed under the repealed Act. It is thus obvious that the rules
reproduced above were holding the field at the relevant time. The trial
Judge primarily relied on these rules for holding that the Government
was justified in demanding Kuttikanam from the respondent-com-
B pany. The High Court, however, did not take into consideration these
rules while interpreting clause 7 of Exhibit P-64. We agree with the
findings of the trial court to the effect that the above quoted rules read
with clause 7 of Exhibit P-64 empowers the State Government to levy
and demand Kuttikanam from the respondent company in respect of
timber taken out of the limits of the Concession area.
c <
Mr. Parasaran invited our attention to a letter dated May 21, ----
1932 (Exhibit P-4) from Chief Secretary to Government to the General
Manager of the respondent-company. The letter reads as under:
'y_
"With reference to your letter dated the 25th January, 1928
D regarding the payment of seigniorage on reserved trees
felled from the K.D.H.P. Compay's Concession Area, I
have the honour to inform you that Government accept
your view that no seigniorage is due from the Company on
trees other than the Royal Trees specifically mentioned in
Clause 7 of the Agreement and sanction accordingly."
E
Mr. Parasan contended that the State Goyerrrment interpreted
clause 7 of P-64 to mean that no seigniorage (K!Jttikanam) was due
from the company on trees other than the Royal Trees specified in the ...
said clause. He argued that in the face of the Government decision in
the above letter the Government could not demand Kuttikanam from
F the respondent-company in respect of the non-Royal Trees removed
from within the limits of the Concession Area. We do not agree with. -,....- r
the contention of the learned counsel. The letter re-produced above
refers to the letter dated January 25, 1928 (exhibit P-3) written by the
General Manager of the company to the Government. The letter P-3
states as under:
G
"The question arose through the Forest Department claim-,
ing seigniorage on certain species of timber, used by this
Company within the concession area for building purposes,
·>--"'
and which have been reserved under the Forest Regu-
lation."
H
STATE OF KERALA v. K.D. HILLS PRODUCE CO. [SINGH, J.] 273

The letter also states as under: A
~·
" .... I think it advisable that the whole question of Timber
Rights in the Concession should be considered and settled
if possible."
B
It is no doubt correct that while focussing the controversy in
respect of the timber used by the company within the Concession Area
the General Manager dealt with the larger question of timber rights in
the Concession Area but reading the two letters P-3 and P~4 together
the only conclusion which co·. dd be reached is -that the letter P-4 was

- ;,
..
with respect to the use of timber by the company within the Conces-
sion Area. Tile letter P-4 cannot be read to mean that no Kuttikanam
was leviable on the timber removed by the respondent-company out-
side the Concession Area. In any case the wording of clause 7 of P-64 is
c

~ ,,,_ clear and unambiguous. The Government letter P-4 is to be read in the
~ · light of clear phraseology of clause 7 and not the vice-versa.

We allow the appeal and set aside the judgment of the High
D
Court. We uphold and approve the judgment and findings of the Trial
Court. The suit of the respondent-plaintiff is dismissed with costs
which we quantify as Rs.5,000

R.N.J. Appeal allowed.

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