R.S. Pathak, C.J.
1. The petitioner purchased forest trees standing in lot No. 6/64-65 in the Mashobra Range of Simla Forest Division. On the said purchase he was liable to pay Rs. 1,43,000/- to the Government. It seems that the petitioner was not able to pay the entire amount immediately, and, therefore, the Forest Department appropriated timber of the value of Rs. 40,106.88 against the liability. The remaining timber was not released by the Department for disposal by the petitioner. The Forest Department put the remaining timber to auction, and it fetched a sum of Rs. 5,500/- only. The petitioner requested the Divisional Forest Officer to permit him to pay Rs. 5,500/- and to release the timber in his favour. But the Forest Department directed that the timber be re-auctioned, and the re-auction held in May, 1968 yielded Rs. 8,340/-, The petitioner says that by this time against the total timber now appropriated by it against the petitioner's liability the Forest Department adjusted Rs. 65,328/- to the credit of the petitioner. It appears from the official record placed before me by Shri Hari Krishan, learned counsel for the respondents, that the Forest Department made successive demands on the petitioner for payment of the remaining liability, and ultimately in 1971 a demand was made for payment of Rs. 1,18,115.65. The notice did not specify the details of the demand. The petitioner filed an objection on June 8, 1971 to the demand stating, inter alia, that he was entitled to an opportunity to show that he was not liable to pay the amount demanded. The respondents, however, commenced recovery proceedings against the petitioner for realisation of the amount of Rs. 1,18,115.65. The petitioner has filed this writ petition challenging the demand.
2. I have heard learned counsel for the parties. A number of contentions have been raised by the petitioner, but it seems to be that the petition can be disposed of on a short ground. When the notice demanding Rs. 1,18,115.65 was served on the petitioner the details of the demand were never disclosed to him. In the result all that he could do was to file a 'blind' objection to the validity of demand. The petitioner was entitled to an opportunity to show that the amount demanded from him was not payable and should not have been demanded. It appears from the break-up of that amount that the following items were included :--
'Interest on belated payment of royalty paid so far.5,420.00Damnge Bill830.25Looking after charges on the seized timber.3,000.00Carriage etc. of passed timber620.55Interest on belated (balance payment of royalty).30,210.50Interest on damage bill297.80'
It will thus appear that a large sum of over Rs. 40,000/- has been demanded from the petitioner in addition to the balance of the royalty due from him. So far as the balance of royalty is concerned it is not disputed by learned counsel for the petitioner that that amount remains due. Whether the timber already appropriated by the Forest Department for the realisation of Rs. 65,328/- was of that value of or greater value is not for decision at this stage. The petitioner was entitled to know the details of the items which made up the balance amounting to over Rs. 40,000/-. One of the items included is interest. There is a provision for payment of penalty in Clause 11 of the agreement. Apparently interest is charged in the shape of penalty for the belated payment of royalty, The terms of the clause indicate that the matter is within the discretion of the Forest Department. The amount of penalty is not a fixed amount or chargeable at a fixed rate. Inasmuch as it lies within the discretion of the Forest Department, the quantum of the liability has to be determined on the basis of all relevant considerations. And there the petitioner is entitled to have his say. The principles of natural justice require that. On an opportunity being afforded, it will be open to the petitioner to show that there is good reason why penalty should not be charged from him at all and if it has to be charged then the rate should be fixed having regard to the extenuating circumstances disclosed by him. Until he has been heard in the matter the petitioner cannot be mulcted with penalty. As has been noticed above, other items such as superintending charges in respect of the seized timber were also included. Before the petitioner can be treated as being in default, these items should also be disclosed to the petitioner so that he could have an opportunity of presenting his case against such liability. It is upon a final determination of the petitioner's liability reached in accordance with the principles of natural justice that a demand can be made on the petitioner to pay. In case he fails to comply with the demand within the time allowed, the petitioner becomes a defaulter: so long as that stage is not reached, he cannot be stigmatised as a defaulter. Upon his becoming a defaulter the door opens for taking recovery proceedings. On the facts of the present case the recovery proceedings must be considered premature.
3. It is urged for the respondents that the petitioner should have paid at least the amount admitted as royalty and the recovery is good to that extent. The contention is without force. When a single indivisible amount is made the subject of a demand, the demand must be recovered either in its entirety or not at all. In the absence of statutory power to that effect, it is not for the recovering authority to decide which Part of the demand is good and which bad.
4. It is also urged for the respondents that if the liability was disputed it was open to the petitioner to have had the matter referred to arbitration under paragraph 29 of the Arbitration Agreement. It is difficult to appreciate that submission. The validity of the recovery proceeding cannot be justified by the circumstance that the petitioner had the right to have the matter referred to arbitration.
5. The writ petition is allowed. The proceedings for the recovery of Rupees 1,18,115.65 from the petitioner are quashed. The petitioner is entitled to his costs, which I assess at Rs. 150/-.