(1) In case of any breach or neglect of the provisions of section 37 or of rules made under section 38 or wilful disobedience to any regulation or prohibition notified under section 39 or if the purposes of any work to be constructed under that section so require and when it appears to the State Government that it is necessary for the purpose of preservation and protection of the forest in public interest to assume management of such forest, the State Government may, after notice in writing to the owner of such forest and after considering his objections, if any, by notification assume management of such forest and may by notification declare that all or any of the provisions of this Act, relating to reserved forests shall apply to such forest. A notification assuming management of a forest under this sub-section shall be conclusive.
(2) The notice referred to in sub-section (1) and the notification, if any, issued assuming management of the forest shall be served on the owner of such forest in the manner provided in the Code of Civil Procedure, 1908 (Central Act V of 1908), for the service of the summons.
(3) The management of the forest by the State Government shall be deemed to commence from the date of publication of the notification under Forest [1964: KAR. ACT 5 378 sub-section (1) in the official Gazette, and the State Government shall appoint a Forest Officer to be in charge of the forest.
(4) (a) The State Government shall, during the period of management of a forest pay, at prescribed intervals, to the owner of the forest, compensation, which shall be the aggregate of,—
(i) an allowance calculated on the total area of the forest as determined by the Conservator of Forests at the rate of ten naye paise per acre per annum; and
(ii) the net profits, if any, accuring from the working and management of the forest.
(b) For the purpose of calculating the net profits, the total expenditure incurred on the working and management of the forest shall be adjusted against the total income from the working and management up to the date of account and the amount of any deficit shall be carried forward with interest at the prescribed rate from year to year till such amount is made up and surplus is effected.
(5) (a) During the period of management the State Government shall receive all revenues accruing from the working and management of the forest and shall pay the whole expenditure incurred in the working and management of such forest, and the owner of such forest or any other person shall not be entitled to make any objection to any expenditure that the State Government may consider it necessary on such working and management.
(b) The State Government shall maintain the revenue and expenditure account of the forest and shall at the request of the owner furnish to him an extract of the yearly account so maintained.