Raja Kamakshya Narain Singh vs Bhuramull and Others

Chatterji, J.—This is an appeal by the plaintiff in a suit for recovery of royalty, cess and Income Tax said to be payable by the defendants in respect of 246 bighaa 7 ch. of coal lands under two leases dated 3rd October 1912 and 27th February 1922 held by the defendants under the plaintiff. The claim in respect of royalty was Rs. 3673-6-1 besides interest, for the period from September 1937 to July 1940. The claim in respect of cess was Rs. 4064, besides interest, for the period from 1917-18 to 1983-89. The claim in respect of Income Tax was Rs. 25,717-4-0, besides interest, for the period from 1917-18 to 1938-89.

The first lease dated 3rd October 1912 was executed by the plaintiff''s grandfather in respect of 200 bighas. The second lease dated 27th February 1922 was executed in respect of 46 bighas 7 ch. during the minority of the plaintiff by the Court of Wards which was in charge of his estate till 10th August 1937 when he attained majority. The plaintiff''s case is that the defendants did not pay the royalties reserved in the leases from September 1937 to July I940,and that they did not pay cess and income, tax, according to the stipulation in the leases from 1917-18 to 1938-39. To save limitation, the plaintiff alleged that his estate was under the Court of Wards since his father''s time till 10th August 1937 when the plaintiff attained majority, and, therefore, limitation should run from that date. The present suit was brought on 9th August 1940.

The defendants denied the claim of the plaintiff and pleaded limitation. They also pleaded that the suit was not maintainable as the claim was in respect of two seperate leases.

The learned Subordinate Judge who tried the suit decreed the claim for cess, except for the period 1917-18, 1918-19 and 1936-37 to 1938-39. He also slightly modified the rate at which cess was claimed. The claim for 1917-18 and 1918-19, which related to the plaintiff''s father''s time, was dismissed on the ground of limitation. The claim for 1936-37 to 1938-39 was dismissed on the ground that the cesses in respect of these years were not assessed according to the provisions of the amended Section 72, Cess Act (2[II] of 1936), and, therefore, the payments made by the plaintiff in respect of these years were voluntary. The claim for interest on cess was disallow, ed. The claim for royalty was substantially decreed. The claim for Income Tax was altogether dismissed.

The plaintiff, therefore, preferred this appeal, limiting the claim to cess and royalty, while the defendants filed cross objection. At the hearing of the appeal, however, the plaintiff pressed his claim only with regard to cess and interest on cess. The first point argued by Mr. L, K. Jha on behalf of the appellant is that the learned Subordinate Judge was not justified in disallowing interest on cess, and at any rate he should have allowed interest from the date of the suit. Under the terms of the two leases, Exs. 1 and 1(a), dated 3rd October 1912 and 27th February 1922 respedtively, the lessees were required to pay

cess, taxes and other impositions which now are or may at any time hereafter daring the continuance of this lease be assessed or imposed on the said lands and premises.

There is no provision for payment of interest on cess in either of the leases. Therefore, no interest for the period before the institution of the suit can be claimed on basis of contract. In AIR 1938 67 (Privy Council) their Lordships of the Privy Council held that in the absence of any usage or contract, express or implied, or of any provision of law to justify the award of interest for the period before the institution of the suit, interest for that period cannot be allowed by way of damages for wrongful detention of the plaintiff''s money. That was a suit brought by the plaintiff as a contractor against the Bengal Nagpur Railway for recovery of the price for the work done by him. But the principle laid down in that case is of general application. Referring to the Interest Act (32[XXXII] of 1839), their Lord-ships said:

Under the Interest Act, 32 [XXXII] of 1839, the Court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument.... The Interest Act, however, contains a proviso that ''interest shall be payable in all cases in which it is now payable by law.'' This proviso applies to cases in which the Court of Equity exercises jurisdiction to allow interest.

In other words, their Lordships pointed out that the Court might award interest under the above-quoted proviso to Section 1, Interest Act, where equitable jurisdiction could be invoked. Mr. Jha contends that in the present case interest should be allowed on equitable grounds. But I cannot find what equitable grounds there are. Under the terms of the leases the defendants were required to pay cesses which were to be assessed by the Government. The plaintiff was assessed with cess on the entire income derived from his estate. He had to pay the cess which was assessed on these leasehold properties, and it is this cess which he seeks to recover from the defendants under the terms of leases. The defendants could not know what amount the plaintiff actually paid and when he paid, unless the plaintiff informed the defendants.

On these facts there is obviously no equity on the side of the plaintiff. If in this case interest were to be allowed on the ground of equity, then in every case of wrongful detention of money, interest could be allowed, which would be quite contrary to the principle laid" down by the Privy Council in the above case. Mr. Jha relies on the earlier decisions of the Privy Council in Hurropersaud Roy Chowdhry v. Shamapersaud Roy Chowdhry 3 Cal. 654; Chajmal Das v. Brijbhukan Lal 17 All. 511 and Hamira Bibi v. Zubaida Bibi AIR 1916 P.C. 46 . In the first case their Lordships, referring to the above quoted proviso to Section 1, Interest Act, held that interest could be allowed on mesne profits, having regard to "the state of the law and the practice in India independently of the statute." It will not be out of place to mention here that according to the definition of "mesne profits" in the present Civil Procedure Code, it includes interest. In the second case, their Lordships had to deal with a bond which provided for payment of the principal in two years with interest, but omitted to provide for interest after the expiration of the two years. The question arose whether the plaintiff was entitled to interest beyond two years. Their Lordships held that for the subsequent period the plaintiff was entitled to interest as damages for non-payment at the due date. In the third case; certain heirs of a deceased Muhammadan sued his widow, who was in possession of her husband''s estate in lieu of her dower, for the taking of accounts and for recovery of possession of their shares in the estate in case the dower debt was found to be discharged. The widow in her defence claimed interest on her dower. Their Lordships held that she could not be made to account for the profits of the estate without being allowed reasonable compensation for for. bearing to enforce her right to the dower debt; this compensation was to be calculated on the basis of an equitable rate of interest. Thus the facts of these cases are quite distinguishable. In any view, we cannot go behind the later decision in AIR 1938 67 (Privy Council) to which I have already referred.

It is suggested by Mr. Jha that their Lordships of the Privy Council kept the matter open in a still later case AIR 1938 292 (Privy Council) . But in this case their Lordships, referring to the earlier decision in AIR 1938 67 (Privy Council) , said:

Their Lordships will not repeat what was there said. In the present case no custom has been shown for treating the debt as a debt in equity to which equitable rules as to recovery of interest can apply.

Thus their Lordships affirmed the same principle. Mr. Jha also relies on the latest decision of this Court in Raj Ranjan Prasad v. Khobari Lal AIR 1941 Pat 90, which was decided by Harries C.J. and Dhavle J. That was a suit for compensation brought by one cosharer against another who was in exclusive possession of lands held in common. It was held that the plaintiff was entitled to interest on the compensation allowed. Dhavle J., who dealt with all the previous cases including AIR 1938 67 (Privy Council) , pointed out that there is hardly any distinction between mesne profits and compensation, as between cosharers. His Lordship said:

But the difference between mesne profits and compensation in the case of eosharers tends on occasion to be very fine indeed.

As I have already pointed out, the present definition of mesne profits in the CPC includes interest and even under the old law interest used to be allowed on mesne profits. For the aforesaid reasons I am of opinion that the plaintiff is not entitled to interest on cess prior to the institution of the suit. As regards interest from the date of the suit, however, the position is different. The matter is governed by Section 34, Civil P.C., which gives complete discretion to the Court to award pendente lite interest. The learned Subordinate Judge has not said anything regarding pendente lite interest. Having regard to the fact that the claim for cess which is being allowed extends over a long period from 1918-19 to 1938-39, I consider that the Court ought to allow pendente lite interest. It is argued by Dr. D.N. Mitter on behalf of the respondents that in the grounds of appeal no objection has been taken with regard to pendente lite interest, nor has court-fee been paid on such interest. As regards court-fee the appeal has been valued at Rs. 9158-6-4 the bulk of which includes interest. Ground No. n of the memorandum of appeal covers the entire interest.

The next point is whether the plaintiff is entitled to cess for the period 1917-18, 1918-19 and 1936-37 to 1938-89. So far as the cess for 1917-18 is concerned, it was paid during the lifetime of the plaintiff''s father, who was then a minor. He attained majority on 6th April 1919, but he died on 10th April 1919. Limitation in respect of the cess for 1917-18 would, therefore, run from 6th April 1919.It is true that the Court of Wards which had already been in possession of the estate during the plaintiff''s father''s minority continued in possession without any break until the plaintiff attained majority. But this fact is of no avail to the plaintiff. The point is settled by the decision of the Privy Council in Mani Singh Mandhata v. Nawab of Murshidabad AIR 1918 P.C. 180. The claim for 1917-18 is obviously barred. As regards the cess for 1918-19, the learned Subordinate Judge altogether overlooked the fact that the pay. ment of this cess was made on 16th February 1920, after the death of the plaintiff''s father, when the Court of Wards was in possession on behalf of the plaintiff. Limitation for the cess in respect of 1918-19 therefore, will run from the date when the plaintiff attained majority. The suit being brought within three years from that date, the claim for 1918-19 must be held to be within time. It is argued by Dr. D.N. Mitter that it has not been found by the learned Subordinate Judge that the payment in fact was made on 16th February 1920. In Schedule B to the plaint, a detailed account of the dates of payment of the cesses is given. The plaintiff also produced the chalans in support of his claim. There is nothing on behalf of the defendants to suggest that the payment in respect of 1918-19 was made on any other date. It must, therefore, be taken that the payment was actually made on 16th February 1920. The amount of cess for 1918-19, as found by the Subordinate Judge, is Rs. 23-11-0.

Then as regards the cesses for 1936-37 to 1938-39, the learned Subordinate Judge was palpably wrong in dismissing the plaintiff''s claim. The reason given by him is that Section 72, Cess Act, was amended in 1986, but cess was levied on the plaintiff under old Section 72, and, therefore, "the assessment was illegal and the payment of the cess by the plaintiff was voluntary payment." Under the old Section 72 notice was to be served in the form in Schedule E on the owner or occupier of every mine requiring him to submit a return of the net annual profits of the property. Under the next Sub-section (2) of the Section notice is to be given in the form in Schedule EE requiring the owner or occupier of every notified mine to submit a return showing

(a) the annual despatches of coal and coke from such mine calculated on the average of the annual despatches of coal and coke therefrom for the last three years for which accounts have been made up, and (b) the annual net profits from such mine calculated on the average of the annual net profits thereof for the last three years for which accounts have been made up.

The present case relates to a notified mine, and, therefore, according to the new Sub-section (2) of Section 72, notice in the form in Schedule EE would be necessary. The Subordinate Judge seems to think that no such notice was issued. He relies on the following statement of P.W. 2 who is an accountant in the plaintiff''s estate:

The Cess Department did not issue any notice to the plaintiff calling on him to furnish returns showing despatches of minerals.

I very much doubt whether on this statement of P.W. 2 it can be definitely held that no notice was issued in the form in Schedule EE. But assuming that no such notice was issued, the fact remains that the plaintiff did submit returns and the Collector accepted those returns and assessed cess accordingly. And the plaintiff made payments according to that assessment. Under the provisions of the leases the defendants were required to pay cess that might be assessed. It is suggested by Dr. Mitter that unless the assessment was in accordance with the provisions of the law, the defendants would not be liable to pay cess to the plaintiff under the terms of the leases. I am unable to accede to this contention.

In my opinion the plaintiff is entitled to recover cess for the years 1936-37 to 1938-39. The amounts for these years, as found by the learned Subordinate Judge, are Rs. 104-14-0 for 1936-37 Rs. 117-7-0 for 1937-38 and Rs. 67-50 for 1938-39. I shall now deal with cross-objection. The point taken by Dr. Mitter is that the claim being in respect of two separate leases, the suit is not maintainable. Though there are two leases, it is quite clear, if they are read together, that they relate to the same mine and the second lease is supplementary to the first. The first lease was in respect of 200 bighas "within the entire boundaries of mouza Karmatar", and the lands were described not with reference to the plots but with reference to the boundaries which were mentioned at the foot of the deed. It appears from the second lease that the first lease had been granted on the understanding that if it was found to include a larger area, the lessees would have to take a new lease for such area.

From the second lease it further appears that on measurement the area in possession of the defendants was found to be 246 bighas 7 ch. that is to say, 46 bighas 7 ch., in excess. The second lease shows that an additional salami was paid for this excess 46 bighas. The schedule attached to the second lease, however, gives a description of the entire 246 bighas 7 ch. with reference to the plot numbers and their respective areas, and it is not possible to distinguish the plots covered by the first lease from those covered by the second. Then there is the following important recital in the second lease: "to hold the said premises hereby demised unto the lessees from the 3rd day of October 1912 for 999 years." This shows that the lease was to take effect from 3rd October 1912 which is the date of the first lease. The terms as to payment of royalty, cess, etc., are the same in both the leases. In the circumstances, it is not possible to hold that the suit is not maintainable because it includes claims in respect of both the leases. The cross-objection, therefore, fails and must be dismissed with costs.

In the result, I would allow the appeal in part and modify the decree of the Court below to this extent that, besides the amount decreed by the Court below, the plaintiff will get a decree on account of cess for an additional sum of Rs. 313-5-0, that is to say, Rs. 23-11-0 for 1918-19, Rs. 104-14-0 for 1936-37, Rs. 117-7-0 for 1937-38 and Rs. 67-5-0 for 1938-39. The plaintiff will also be entitled to interest on the total amount of cess decreed at 6 per cent, per annum from the date of the institution of the suit up to this date. Future interest will run on the entire decretal amount at 6 per cent, per annum until realization. The parties will get their respective costs in the appeal in proportion to their success. The costs in the cross-objection will be payable by the contesting respondents to the appellant.

Shearer, J.

I agree.