' The suit giving rise to this revision was instituted by Aslam Khan petitioner for a declaration that he had become the owner by purchase of the timber of Inder Seri Forest and the defendants were not entitled to interfere in his rights. A prayer for permanent injunction was also made that the defendants be restrained from interfering in his rights and should not prevent him from taking away the timber from the forests. The facts of the case are that on the basis of a contract, dated 10-6-1970 Aslam Khan petitioner was allowed to extract timber from Inder Seri Guzara, Compartment No.1, Galliat Forest Division. Under clause 19(d) of the contract agreement the petitioner was to remove the timber beyond the limits of the Depot by 9-8-1970 and beyond the limits of Galies before 24-8-1970. The petitioner could not remove the entire timber within the stipulated period. Therefore, on his application the time was extended by 45 days on 5-9-1970. The time once again was extended by 40 days, but the petitioner was unable to remove the entire timber from the forests within the extended period. He applied for the third time for the extension of time but his application was refused. It was directed by the Conservator of Forests, Abbottabed, on 2-6-1971 that since a warning was administered while granting last extension that no further period will be granted, it was not a fit case for acceding to the request of the petitioner. It was also mentioned that if snowfall had occurred then it was the duty of the contractor to inform the Divisional Forest Officer to get the period of forest operations deferred appropriately. For these reasons it was directed that the balance stock in the forests as well as in road side depots reverts back to the Government under clause 19(d) of the agreement. It may be mentioned that the petitioner had paid full consideration for the timber purchased by him on the basis of the aforesaid agreement, The first extension of 45 days was granted to the petitioner on 5-9-1970. The second extension of 40 days was given on 14-11-1970 which was to expire by the end of the month of December, 1970. It is common knowledge that the snow season in the area in question sets in by the end of December and continues unabated for a period of 3/4 months. It was for this reason that the petitioner applied for extension of time for the third time on 30-3-1971. In his application he stated that before the expiry of the extended period already allowed to him the entire operation in the forests had come to a stand still because of the snowfall. This application was forwarded by the Divisional Forest Officer to the Range Officer for report. The Range Officer after measuring the timber which was yet to be cleared by the petitioner recomended on 5-5-1971 (vide Exh. P.W.2/3) for the extension of time since the contractor was unable to complete the operation due to snowfall. The Divisional Forest Officer vide Exh. P.W.2/4 also informed the Conservator of Forests on 21-5-1971 that the contractor could not complete the operation due to immediate snowfall after the grant of extension to him. It was, therefore, recommended that the extension applied for may be considered favourably in order to enable the contractor to complete the balance of the word. It appears that the aforesaid recomendations did not prevail with the Conservator of Forests and the contract was terminated as mentioned above.
2. Both the learned Courts below had come to the conclusion that since the petitioner was unable to complete the operation within the extended period allowed to him, the Department was fully justified under clause 19(d) of the contract to disallow further extension and to terminate the contract. The aforesaid decisions of both the learned Courts below are impugned in this revision petition.
3. The learned counsel for the petitioner raised two-fold contention in support of the revision. Firstly, that the time was not of the essence of the contract and, therefore, the contract could not be terminated on this ground. Secondly that clause 19(d) of the contract agreement being in the nature of a penal clause could not be enforced and, therefore, the Court had the power to relieve one of the parties to the contract against any term which operates as a penalty. The contentions raised by the learned counsel for the petitioner are not without force. From the perusal of the contract agreement Exh.P.W./16 it is clear that there is not only an express provision for granting extension of time under clause 19(d) of the agreement, there is also a provision under sub-clause
(e) that in the event of any breach of this clause, the purchaser shall be liable to pay a fine which may extend to Rs.500 for each such breach and further more the Conservator shall have the power to terminate the agreement and to confiscate the security and his decision shall be final. The very fact of the existence of the provisions in the agreement for extension of time and imposition of fine leads to the inference that the time was not of the essence of the contract and the parties never intended to strictly enforce the clause regarding time. Therefore, in spite of the forfeiture clause in the agreement the petitioner could legitimately ask for further extension of time and there were circumstances which justified his demand. Particularly when the subordinate officials of the Department who were quite familiar with the conditions prevailing in the area supported the petitioners demand that he was unable to complete the operation due to snowfall. In the circumstances there was no justification for the Conservator of Forests to terminate the contract and confiscate the timber which was yet to be removed from the forests by the petitioner. From the order of termiantion of the contract dated 2-6-1971 it appears that the Conservator of Forests was also alive to the fact that the work was held up because of the snowfall, and therefore, he mentioned in his order that if snowfall had occurred it was the duty of the contractor to inform the Divisional Forest Officer to get the period of forest operations deferred appropriately. In Pakistan v.
Firm Lodhi House PLD 1968 Lah. 923 by reference to an earlier decision reported as Shambhu Lal, Panalal Vaish v. Secretary of State AIR 1940 Sind 1 it was observed that:- "This was a case, in which the appellant had entered into two contracts with the P.W.D. in Sind to excavate a distributary and to fill up a gap on the banks of a distributary. One of the contracts was terminated by P.W.D. on the ground that he had not completed the work in time. The conclusions of the Court have been summed up in headnote at page I in the following terms: ' The question, whether or not time is of the essence of a contract is a question of the intention of the parties to be gathered from the terms of the contract. Where there is an express provision that time is of the essence of the contract and at the same time provisions for extension of time in certain contingencies and for the payment of a fine or penalty for every day or week the work undertaken under the contract remains unfinished on the expiry of the time provided in the contract, such provision is inconsistent with time being of the essence of a contract, and would be calculated to render ineffective an express provision in a contract to that effect. In such a case, it cannot be said that it was intended that time should be of the essence of the contract. This principle applies to P.W.D. contracts.'
' In the case before me, notwithstanding the provision that the time was of the essence of the contract, there were other clauses, which indicated that the intention of the parties was not to strictly enforce the clause regarding time. The clauses, regarding suspension of the work, and the payment of penalty for the non-performance of the contract in time, clearly indicate that the parties never intehded that the time was of the essence of the contract."
'In the case in hand it is also clear that time was not of the essence of the contract and there were circumstances which justified the request of the petitioner for the grant of further time to complete the operation and his request was turned-down without any sufficient cause. The learned Court below have omitted to take into consideration the recommendations of the Range Officer and the Divisional Forest Officer which supported the case of the petitioner that due to the snowfall he was unable to complete the work. It is not disputed by the learned counsel appearing for the respondents that full consideration for the timber in question had been paid by the petitioner. The learned counsel also did not dispute that the snow season sets-in in the area in B question by the end of the month of December and continues at least for a period of 3/4 months. Under section 55 of the Contract Act, 1872 if it is not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. In the facts and circumstances of the case it can legitimately be inferred that the parties to the contract never intended the time to be of the essence of the contract and, therefore, the termination thereof was not justified in law.
4. Regarding the other contention of the learned counsel for the petitioner it may be mentioned that clause 19(d) of the contract was in the nature of a penal clause which provided that in case the operation was not completed within the prescribed or the extended period, the timber, firewood etc., not so removed shall become the property of the Government and all the rights of the purchaser therein shall stand C extinguished. In view of the fact that the petitioner had paid the full price of the timber and became absolute owner thereof and there were circumstances justifying his demand for further extension of time, the order of confiscation of the timber and termination of the contract being in the nature of a penalty could not be given effect to.
5. In this view of the matter and for the reason that the learned Courts below had omitted to consider material evidence available in the case, particularly the reports of the Range Officer and the Divisional Forest Officer which supported the case of the petitioner, the revision is accepted and by setting aside the impugned decrees of the Courts below the decree prayed for is granted in favour of the petitioner. However, in the circumstances of the case the parties are left to bear their own costs throughout.