Case Note & Summary
The appeals arose from compensation proceedings under the U.P. Zamindari Abolition and Land Reforms Act, 1950 after forests belonging to Lala Triloki Nath and Lala Digambar Prasad in villages Chharba and Prithipur, Dehra Dun District, vested in the State of Uttar Pradesh by notification dated 1 July 1952. The original proprietors received Draft Compensation Assessment Rolls on 2 May 1953 under Section 46(1)(b) showing nil annual compensation. They filed objections on 20 May 1953 claiming compensation for the forests, including sayar income from poola grass and forest income. The Compensation Officer by order dated 6 September 1955 determined compensation partly on the basis of 25 years' income and appraised annual yield, disallowing poola grass as forest income but allowing some sayar income. Lala Triloki Nath and Lala Digambar Prasad filed four appeals and the State filed two appeals in the Allahabad High Court. The High Court by judgment dated 1 September 1965 allowed the State appeals fully and allowed the proprietors' appeals in part. It held that the Compensation Officer erred in adding the average annual income computed under Section 39(1)(e)(i) and the appraised annual yield under Section 39(1)(e)(ii). It further held that income derived by processing wood was trade income, not forest income, and that income from poola grass was sayar income. Aggrieved, the legal representatives of the proprietors appealed to the Supreme Court by certificate. The Supreme Court examined the interpretation of Section 39(1)(e) and the nature of forest income. It held that the High Court was correct in ruling that average annual income from forest could not be computed by arithmetical addition of figures under clauses (i) and (ii). The provision required the Compensation Officer to take recourse to both methods—actual income for a reasonable period of 20 to 40 agricultural years preceding the date of vesting and appraisement of annual yield on the date of vesting considering number and age of trees, area of cultivation and produce—but not to add the resulting figures. The Court also affirmed that forest income was referable to the price of standing timber; income derived by processing wood was in the nature of trade and not forest income. Accordingly, the Supreme Court dismissed the appeals and upheld the High Court's decision.
Headnote
A) Land Reforms - Compensation Assessment - Computation of Average Annual Income from Forest - U.P. Zamindari Abolition and Land Reforms Act, 1950, Section 39(1)(e)(i) and (ii) - The Compensation Officer added the annual income computed under clause (i) based on a 25-year period and the appraised annual yield under clause (ii) as on the date of vesting. The Supreme Court held that the High Court was correct in holding that average annual income cannot be computed by arithmetical addition of figures under clauses (i) and (ii). The section requires computation by taking recourse to both methods: actual income for a reasonable period of 20 to 40 agricultural years preceding vesting, and appraisement of annual yield on the date of vesting considering number and age of trees, area of cultivation and produce; but these are alternative or complementary, not additive. Held that compensation officer must compute average annual income by using both methods but not by adding the figures. B) Land Reforms - Forest Income - Processing Wood as Trade Income - U.P. Zamindari Abolition and Land Reforms Act, 1950, Section 39(1)(e) - The appellants derived income by processing wood from the forest. The High Court held such income was referable to trade and not forest income. The Supreme Court upheld that forest income means income referable to the price of standing timber; any income derived by processing wood is income in nature of trade and not forest income. Held that the High Court rightly held forest income was referable to price of standing timber and processing wood income excluded.
Issue of Consideration
Whether average annual income under Section 39(1)(e) of U.P. Zamindari Abolition and Land Reforms Act, 1950 should be computed by adding figures under clause (i) and clause (ii) or by other method; Whether income derived by processing wood constitutes forest income or trade income
Final Decision
The Supreme Court upheld the High Court's decision: average annual income under Section 39(1)(e) cannot be computed by arithmetical addition of figures under clauses (i) and (ii); forest income is referable to price of standing timber, and income from processing wood is trade income, not forest income. The appeals were dismissed.
Law Points
- Average annual income from forest under Section 39(1)(e) cannot be computed by arithmetical addition of figures under clauses (i) and (ii)
- Compensation Officer must compute average annual income by taking recourse to both methods but not by adding the figures
- Forest income referable to price of standing timber
- Income derived by processing wood is trade income not forest income
