GOVERNMENT OF N.-W.F.P. Versus DEVLIKUND FOREST AND MULTIPURPOSES COOPERATIVE SOCIETY LIMITED

1. SAEEDUZZAMAN SIDDIQUI, J.‑‑‑ The above appeal by the leave of this Court is filed by the Government of North‑West Frontier Province (N: W.F.P.) to call in question the order of a learned Judge in Chambers of Peshawar High Court, Abbottabad Bench, dated 16‑12‑1992 whereby Civil Revision Application No. 15 of 1992 filed by the appellants, against the two concurrent orders of the Courts below granting temporary injunction in a pending suit and dismissing the applications under section 34 of the Arbitration Act (hereinafter to be referred to as `the Act' only) for stay of the proceedings, was dismissed and the order of the lower Courts was maintained.

2. The relevant facts of the case are that the respondents entered into an agreement with the appellants on 22‑7‑1990 for management of waste land for the villages of Develi Guzaras Tehsil and District Mansehra, in accordance with the management plan which formed integral part of the agreement. The agreement provided besides exploitation of trees marked by the Forest Department, afforestation of blanks, reafforesation of felled over area and execution of cultural and other works envisaged by the management plan. The agreement was valid for a period of 10 years from the date of its signing and included the backlog period from 1988‑89 to 1989‑90. According to year-wise figures given in the management plan, the respondent Society was entitled to exploitation of trees between the period from 1988‑89 to 1997‑98, measuring 11,300 cubic metres standing volume which works out to 3,99,000 cubic feet as jointly admitted by the parties. The respondents claim that the Forest authorities marked the trees for the purpose of cutting by the respondents, on 1‑9‑1990 and 7‑9‑1990 and thereafter a release/work order dated 8‑9‑1990 was issued to the respondents, which authorised the respondents to enter upon the area for exploitation of trees. The respondents claim to have entered upon the site immediately on issuance of the release/work order and carried on the exploitation of trees in accordance with the management plan. However, while the respondents were busy in their operations as aforesaid, they were served Letter No. 203 dated 21‑4‑1991 on 27‑4‑1991 in which they were informed that Forms Nos. 5 and 6, Form A of Field‑book issued to the respondents stand withdrawn on the allegation that no marking of trees was done by the. Forest Department and respondents were forbidden from carrying on exploitation work in the area. In the above‑stated background respondents instituted civil suit against the appellants for permanent injunction before the Senior Civil Judge, Manshera. Alongwith the suit, the respondents also filed an application for grant of temporary injunction till the pendency of the suit. The appellants on being served with the notice of interim application, moved an application under section 34 of the Act for stay of the suit on the ground that the agreement dated 22‑7‑1990 provided for reference of all disputes arising under the agreement to an arbitrator in accordance with the arbitration clause contained in the agreement. By two separate orders dated 21‑7‑1991, the trial Court dismissed the application under section 34 of the Act filed by the appellants for stay of the suit, and granted the application under Order 39, Rules 1 and 2, C.P.C. filed by the respondents, restraining the appellants from interfering with the lawful exploitation of the area in accordance with the terms of the agreement dated 22‑7‑1990 and the management plan annexed thereto. The appellants filed single appeal against both the orders which was dismissed by the first appellate Court and Civil Revision Application against the appellate order also failed. The appellants obtained leave to appeal in the above case which was granted to consider the question whether the dispute disclosed in the plaint was covered by the arbitration clause of the agreement and principles of section 34 of the Act have properly been applied? We have heard the learned counsel for the parties at length, both on the questions of stay of suit, on which leave has been granted, as well as the proprietary of grant of temporary injunction in the circumstances of the case. The arbitration clause in the agreement dated 22‑7‑1990 reads as follows:‑‑

3. "(8) If any question, difference of objection arises at any time in any way connected with or arising out of this agreement except such matter the decision whereof has specifically been provided in this agreement then every such matter shall be referred for arbitration to the Secretary to Government of N.‑W.F.P. Forestry, Fishery and Wildlife Department or his nominee as sole arbitrator and his decision shall be final and binding on the parties:

4. Provided that where the matter involves claim for payment or recovery or deduction of money only, no such reference shall be made after the expiry of this agreement,:"

5. (The underlining is by us).

6. A careful reading of the above clause will show that the arbitration clause reproduced above does not apply to matters the decision whereof has specifically been provided in this agreement dated 22‑7‑1990. The application under section 34 of the Arbitration Act filed by the appellants before the Senior Civil Judge, Mansehra, for stay of the proceedings reads as follows:‑‑

7. The above application does not spell out the particulars of the dispute which has arisen between the parties and which is required to be referred to the Arbitrator in accordance with the arbitration clause in the agreement. However, the learned A.‑G. has relied on the letter dated 21‑4‑1991 issued by the Divisional Forest Officer (D.F.O.), which according to him contains the details of the dispute.

8. The letter dated 21‑4‑1991 reads as follows:‑

9. "OFFICE ORDER NO. 203 DATED MANSEHRA THE 21‑4‑1991 ISSUED BY MR. HASHIM ALI KHAN, DIVISIONAL FOREST OFFICER, SIRAN FOREST DIVISION, MANSEHRA

10. As per record of this office the marking Kund‑Devi Forest Production;., and Multipurpose Cooperative Society has not been done as already reported by the inspecting party comprising of Divisional Forest Officer, Haripur Mr. Muhammad Aslam Khan Khattak, Mr. Hanif Shah, Divisional Forest Officer, Working Plan Unit‑I.

11. Therefore, if any register issued as Forms 5 and 6 Form `A' Field Book are withdrawn and the Society is not allowed for any exploitation working if the marking has not be carried out.

12. (Sd).

13. (Hashim Ali Khan),

14. Divisional Forest Officer,

15. Siran

16. Forest Division,

17. Mansehra.

18. Memorandum:

19. Copy forwarded to the

1. Conservator of Forests, Abbottabad Circle, Abbottabad for favour of information please.

2. Range Officer, Devli Range for information and necessary action.

3. Managing Director, Kund Devli Society for information.

20. (Sd.)

21. Divisional Forest Officer,

22. Siran Forest Division, Mansehra."

23. A reading of the above letter shows that it was contended by the appellants that according to the record of their office marking of Kund Devli Forest Production and Multipurpose Cooperative Society was not done as reported by the inspecting party comprising D.F.O., Haripur Mr. Muhammad Aslam Khan Khattak and Mr. Hanif Shah, D.F.O. working on Plan Unit‑I. In the concluding paragraph, it is stated that if any register is issued as Forms 5 and 6, Form `A' Field Book to the respondents stand withdrawn and no exploitation work is to be done by the respondents if marking has not been carried out. From the tenor of the letter, it is quite clear that the authorities themselves were not sure whether marking of the trees in Kund Devli Forest had been done or not. It is not denied by the learned counsel for the appellants that the agreement between the appellants and the respondents was executed on 22‑7‑1990 and the period for which the agreement was valid started running on the signing of the agreement. There is nothing either in the, agreement or in the management plan to indicate that the commencement of exploitation work by the respondents in the area was postponed notwithstanding the signing of agreement. The respondents claim that the marking of the trees in the area covered by agreement was done by the Forest authorities on 1‑9-1990 and 7‑9‑1990 accordingly, release/work order dated 8‑9‑1990 was issued. From the impugned order it appears that the issuance of the release/work order dated 8‑9‑1990 was not disputed by the appellants though it was contended that this letter was addressed to one Mian Tufail and was dated 5‑9‑1990 and the figure 5 was overwritten as figure 8. It is also apparent from the statement made before the learned Judge in Chambers on behalf of appellants that the marking which the respondents claimed was done on Ist and 7th September 1990 was the result of alleged collusion between respondents and the D.F.O. The learned counsel for the respondents has drawn our attention to paragraph 6‑A of the agreement which provided that if any tree not marked by the Forest authorities but having been felled negligently, accidentally or intentionally within its working coupe by respondents or, its contractors, agents, supervisors and labour or by any one from outside whether known or unknown, the respondents would be liable to pay penalty to Forest Department at the discretion of D.F.O. concerned up to ten times of the price of timber obtainable from such trees. The learned counsel for the respondents on the basis of above stipulation in the agreement, contended that the agreement specifically provided a procedure for dealing with the unauthorized cutting of trees not marked by the Forest Department and as such a dispute of this nature could not be referred to arbitrator under clause 8 of the agreement.. It is, accordingly, contended that even if allegation of the appellants that respondents had cut unmarked trees was correct the matter could not be taken before the arbitrator under the arbitration clause. The contention of the learned counsel for the respondents is not without force. Besides the fact that clause 6‑A of the agreement provides a specific procedure for resolving the dispute concerning cutting of unmarked trees by the respondents, the. Letter dated 21‑4‑1991 served on respondents by the appellants contained vague allegations. In these circumstances, it cannot be said that the trial Court acted illegally in exercise of its discretion in refusing to stay the suit under section 34 of the Act. W e are, therefore, of the view that the High Court has acted properly in refusing to interfere with the orders of the Courts below in exercise of its revisional jurisdiction.

24. However, the matter with regard to grant of injunction in the case which was agitated both in the appeal as well as revision before the first appellate authority and the High Court respectively, needed consideration. According to figures admitted by the learned counsel for the respondents which are given in the management plan, the total quantity in terms of standing volume which could be exploited by the respondents for the period from 1988‑89 to 1997‑98 works out to 3,99,000 cubic feet. According to the statement of the learned counsel for respondents made before us, the respondents after entering into the leased area uptodate had already cut trees to the extent of standing volume of 2,65,000 cubic feet. In Form `A' submitted by the respondents for the year 1991 which also included backlog of 1988‑89 and 1989‑90 the standing volume of fell trees due to windfall was mentioned as 4,76,976 cubic feet. Therefore, if the quantities of trees cut by the respondents and those fell due to windfall are added together, the total exceeds the quantity of standing volume permitted for cutting during the entire period of agreement. The learned counsel for the respondents, however, contended that the quantity of 4,76,976 cubic feet of fell tress due to windfall is not to be counted towards the exploitation permitted under the marking plan annexed with the agreement, namely, 3,99,000 cubic feet. The learned counsel for the appellants on the other hand has taken us through the admitted documents on record which show that the fell trees due to windfall are also to be marked by the Forest Department for appropriation towards the permitted exploitation under the agreement and the management plan. Therefore, prima facie the contention of the respondents in the plaint that they were entitled to the exploitation of trees under the agreement to the extent of 5,35;095 cubic feet was not supported from the material on record. In these circumstances, grant of injunction which permitted further exploitation of trees by the respondents in the area was not justified. The position which, therefore, emerges as a result of statement made by respondents before us is that the total quantity of trees cut by the respondents lying at the site in terms of standing volume comes to 2,65,000 in addition to 4,75,000 cubic feet of standing volume of fell trees due to windfall. We have noticed that before the learned Judge in Chambers, as consent order was passed during the pendency of C.RA. which was to the following effect:‑‑

25. "Learned counsel for the parties mutually agreed to the arrangement on the following terms an& conditions:‑‑

(i) 1,70,000 c.ft. timber which is lying on the roadside and is deteriorating day by day and also causing unnecessary financial loss to the parties, it is agreed that the Government shall issue transport permit for the said timber so as the same can be transported .to Goharabad Federation Depot for sale. Its sale shall be made after wide publicity so as to attract good number of buyers and be sold at the best possible price' under the supervision of the Forest Department.

(ii) Out of the total sale proceeds 50% of it shall be deposited in Court as security and 50% thereof shall be given to respondent for dispursement to the owners.

(iii) The functionaries of the Forest Department shall be allowed to enter the forest to perform all duties/functions as required under the law. In the above terms and conditions the C. M's. Nos. 15/92 and 24/92 are disposed of accordingly."

26. The abovementioned arrangement appears to be quite equitable. We, accordingly, direct that the entire quantity of timber mentioned above, namely 2,65,000 cubic feet, cut by respondents as a result of their exploitation operations in the forest, and 4,75,000 cubic feet of fell trees due to windfall lying at the site will be sold by the appellants after due publicity, and the sale proceeds to the extent of 3,99,000 cubic feet will be appropriated between the appellants and respondents according to the terms of agreement. The sale ` proceeds of balance quantity of timber shall be deposited by the appellants in some profit bearing account and will be available for disposal subject to the final decision of pending suit between the parties. The impugned order is modified as stated above and the appeal stands disposed of, accordingly. In the circumstances of the case, we will make no order as to costs. The trial Court shall make every effort to dispose of the suit at an early date.

27. G‑473/S Order accordingly.