Shiva Prasad Singh vs Maharaja Sris Chandra Nandi

Harries, C.J.—This is a plaintiff''s appeal from a decree of the Subordinate Judge of Dhanbad passed in a suit for an account of royalties due from the defendant to the plaintiff under a certain mining lease and recovery of the sum so found due by enforcement of a charge upon the demised premises. The suit was decreed in part, and the plaintiff, being dissatisfied with the decision, has preferred this appeal. The defendant has filed a cross-objection and contends that no g sum was due to the plaintiff and that the suit should be dismissed in its entirety. The plaintiff claimed an account of royalty from the defendant who was working coal under a mining lease of 6th Kartik 1805 B.S. (corresponding to 22nd October 1898) granted by the plaintiff''s predecessor to the defendant''s father benami in the name of Gosta Bihari Nandi. It is common ground that the latter was a benamidar of the father of the present defendant.

By the terms of this lease, it was provided that the lessee should pay royalty of 3 annas a ton on steam coal, soft coal, etc., and 1 1/2 anna a ton on brick burning rubble and dust. It was further provided that if on the extension of the Bengal Nagpur Railway to the district the freight on coal decreased by more than 2 annas per ton then royalty on steam coal, etc., would be payable at the rate of 5 annas a ton and on brick burning rubble and dust at the rate of 2% annas per ton. If the freight was reduced by less than 2 annas, then such amount would be added to the royalty of 3 annas per ton on steam coal, etc., and half the amount to the royalty of 1 1/2 anna on brick burning rubble and dust. Such royalty was to be payable in four kists according to the Bengali year. It appears, however, that by arrangement between the parties the royalty was payable on 1st April, 1st July, 1st October and 1st January.

The defendant took possession of the property demised under the said lease and shortly afterwards (i.e. in August 1902) the Bengal Nagpur Railway was extended to the Jharia coal field and in consequence of the competition between the East Indian Railway and the Bengal Nagpur Railway freight on coal to Calcutta was reduced on both the railways by an amount considerably more than 2 annas per ton. The lessor thereupon called upon the lessee to pay the increased royalty of 5 annas and 2 1/2 annas on the various classes of coal as provided in the said lease; but the lessee, however, refused to pay at this increased rate. The lessor sued the lessee for this increased royalty in the Court of the Subordinate Judge, but the suit was dismissed. On appeal, however, the decision of the learned Subordinate Judge was reversed by the High Court at Calcutta and the suit for arrears of royalty at the increased rate with interest thereon was decreed in full. The lessee preferred an appeal to His Majesty in Council, but this appeal was dismissed and the decree of the High Court at Calcutta affirmed.

Thereafter the lessee continued to pay royalty at the increased rate, but early in the year 1924, the lessee pointed out that freights had, since the month of April 1921, risen to or above the level prevailing at the date of the lease. Consequently, the lessee contended that increased royalties were not payable from that date. As such had been paid for four years, the lessee alleged that the lessor had been greatly overpaid. The lessee, therefore, stopped further payments and claimed to adjust or appropriate the overpayments made in discharge of royalty falling due and royalty which would become due in the future. After the defendant had appropriated or adjusted the alleged overpayments to royalty falling due at the reduced rates, the lessee then paid by cheque royalty at the reduced rate only. The lessor contended that royalty at the increased rate was still payable and accepted the payments made by the lessee on account and not in full discharge of the latter''s obligation. The contention of the lessor was that it was wholly immaterial whether coal freights had again risen to the level prevailing at the date of the lease and that once increased royalty had become payable it was payable for all time to come. This the lessee denied and the dispute dragged on until the present suit was instituted on 5th February 1936.

In the plaint royalty was claimed at the rate of 5 annas per ton for steam coal, etc., and 2 1/2 annas per ton for brick burning rubble and dust from the month of March 1924, credit being given for payments made by the lessee for royalty at the reduced rates. The plaintiff also claimed to appropriate Rs. 25,169 towards arrears of royalty due for the months of October, November and December 1923 from payments made by the lessee. It is to be observed that a claim for these arrears would be barred by limitation as the sum fell due at the end of December 1923, which was more than twelve years from the date of the suit. There was also a claim for fuel coal which, it was alleged, the lessee had failed to deliver to the plaintiff in accordance with the terms of the lease. The plaintiff prayed that an account should be taken and a decree passed for the arrears of royalty found due together with interest thereon at the rate stated in the lease. He further prayed that the amount found due should be declared a first charge on the demised premises and that the same should, if unpaid, be realised by sale of the property.

The defendant by his defence denied any liability and alleged that all royalty due had been paid. He pleaded that the royalty at the increased rates was not payable after the month of April 1921 but that the fact was not discovered until the month of March 1924. Consequently, large overpayments had been made which the defendant had rightly appropriated to or set off against royalty falling due after the month of March 1924. It was pleaded that no payment was made towards royalty until the month of June 1925 because the sums due during that period were actually paid by appropriation or adjustment of the overpayments towards these dues. It was pleaded that after the month of June 1925 all royalty at the reduced rate had been paid regularly and as such only was due from the defendants there were no arrears at the date of the suit and consequently the plaintiff had no claim whatsoever.

It is to be observed that all the defendants pleaded was that the overpayments were first discovered in March 1924, and there is no explanation given as to how these overpayments came to be made. The defendant further denied that the plaintiff was entitled to appropriate any sum from payments made by the defendant to any arrears of royalty due from the months of October to December 1923, and in addition it was denied that the plaintiff was entitled to any interest on any sum found due from the defendant. The claim to the price of fuel coal was also denied. Other pleas were taken both in the plaint and in the written statement; but as these pleas were not pressed before us, I have made no reference to them.

The learned Subordinate Judge held, in the first place, that upon a true construction of the lease royalty at the increased rate was only payable during such period as the freight on coal was below the level prevailing at the date of the lease. He found that the freight on coal which had fallen materially from the year 1902 had risen again to or above the level prevailing at the date of the lease from 14th October 1923. He, therefore, held that royalty at the increased rate was not payable by the defendant after that date. It is to be observed that the Subordinate Judge cast the onus on the defendant of proving that the freight on coal had increased to the level prevailing at the date of the lease, and he did not place the onus on the plaintiff of proving that royalty at the increased rate was still payable. Before the Subordinate Judge, the defendant contended that the overpayments made before March 1924 were made owing to a mistake of fact. It was contended that the defendant was wholly unaware of the increase in freight and that such ignorance was the cause of the overpayments.

As I have stated earlier, this was not alleged in the written statement and in that document there is no reference whatsoever to any mistake of fact or ignorance of the true state of facts. The learned Subordinate Judge, however, held that the payments were made not under a mistake of fact but under a mistake of law. The learned Judge appears to have been satisfied that the defendant and his agents were aware of the increase in freights, and in his view the overpayments were made because the defendant had not fully realised his liability under the lease. This, the learned Judge held, amounted to a mistake of law and not of fact. He further held that as the payments were made under a mistake of law they were not recoverable and, therefore, they could be set off or appropriated against any sums due from the defendant to the plaintiff.

The learned Subordinate Judge further held that the plaintiff could not appropriate any sum paid by the defendant towards arrears of royalty for the period October to December 1923 as such appropriation had not been agreed to by the defendant and further the payments made by the defendant had been appropriated by him to other dues. The Subordinate Judge held that the plaintiff was entitled to a decree in respect of the price of fuel coal not delivered for six years previous to the suit. In the view of the learned Subordinate Judge, a sum amounting to Rs. 53,061-5-6 was due from the defendant to the plaintiff, such being the royalty at the reduced rate payable during the period during which no payments had been made, that is from March kist of 1924 to June kist of 1925. Holding as he did that during the period in suit royalty at the reduced rate was payable, he found that but for these arrears no other sum was due to the plain, tiff by way of royalty. The Subordinate Judge held that no interest was payable on the arrears of royalty, and passed a mort-gage decree in favour of the plaintiff for Rs. 53,061-5-6 without any pendente lite or future interest. He also gave the plaintiff a simple money decree for the price of fuel coal not delivered. It is to be observed that no point has been taken on the question of fuel coal not delivered and no further reference, therefore, need be made to that part of the case.

On behalf of the plaintiff-appellant, three points were taken in this Court: (1) That the Subordinate Judge was wrong in construing the contract as meaning that increased royalty was payable only so long as the freight on coal remained below the level prevailing at the date of the lease. It was contended that once freight had fallen by more than two annas the increased royalty became payable during the continuance of the lease and, therefore, the claim should have been decreed in full. (2) That the learned Subordinate Judge was wrong in not permitting appropriation by the plaintiff towards arrears of royalty due for the amounts of October, November and December 1923. (3) That the learned Subordinate Judge was wrong in not granting interest on the arrears and in not granting pendente lite and future interest.

On behalf of the defendant who had preferred the cross-objection it was contended, (1) that the Subordinate Judge was wrong in holding that the overpayments were made by the defendant under a mistake of law. It was urged that these overpayments were made under a mistake of fact and were, therefore, recoverable.

As they were recoverable, the defendant, shortly after they were made, appropriated or adjusted them to royalty falling due, and, therefore there were no arrears of royalty and the plaintiff''s suit should have been dismissed. It was further contended that even if these overpayments were made under a mistake of law, yet the defendant could set off such overpayments j against royalty falling due. (2) That the Subordinate Judge was wrong in holding that the defendant could not raise the question of set-off or adjustment as it had not been specially pleaded. To appreciate the points at issue, it will be necessary to consider the terms of the lease dated 22nd October 1898, which are evidenced by a kabuliyat of that date (Ex. 1), printed at pp. 1 to 5 of Part. III of the paper-book. The lease is described as "mourushi mukarrari, i.e., permanent settlement on commission of coal land." The property demised was 1103 bighas 12 kathas being the entire mauza Ekra and the salami paid was Rs. 22,073. The relevant terms of the lease are as follows:

(1) That for the quantity of coal which I shall raise from the leasehold entire 1103 bighas 12 kathas of coal land of Ekra, I shall pay commission i.e., royalty on steam coal, rubble coal, hard coke and soft coke at the rate of 3 annas per ton and for rubble and dust for burning bricks at 1 anna 6 pies per ton. Be it stated that I shall pay royalty at the present fixed rate for the coals, which will be despatched by the East Indian Railway line. But in future if the Bengal Nagpur Railway line is constructed and the freight of coal becomes less by 2 annas at least or more than what is fixed at present per ton, I shall pay royalty for those coals, which shall be despatched in the aforesaid manner at the said reduced freight, at 5 annas per ton on steam, steam rubble, soft coke and hard coke and 2 annas 6 pies per ton on rubble and dust for burning bricks. But if the said railway freight becomes less than 2 annas per ton, the amount which will be reduced will be enhanced on the rate of royalty at present fixed on steam, steam rubble, soft coke and hard coke and enhanced by half thereof on rubble and dust for burning coal.

The underlined (here italicized) words "in the aforesaid manner" do not appear in the translation of this kabuliyat made by this Court. The expression is a translation of the Bengali words "ukta rupey," and it is now conceded by both parties that the original translation is not accurate and that the expression "ukta rupey" must be translated in the manner I have indicated.

(2) That if a small quantity of coal is raised or is not raised at all, you may suffer loss. Therefore, if due to raising a small quantity of coal or not raising it at all, the annual minimum royalty falls short of Rs. 6622 at the rate of Rs. 6 per bigha from the third year after the registration of the deed, I shall make up the deficit of the annual minimum royalty of Rs. 6622.... I shall submit a monthly account of the coal I shall despatch. According to that, the account of the amount of royalty will be made. If, on reference to the said account, it is found that the royalty of coal despatched or sold has become more than the annual minimum royalty of Rs. 6622, I remain bound to pay commission per ton of all coal, according to the rules set forth in para. 1, which will be despatched or sold at the mouth of the pit....

6) I shall pay the minimum amount of royalty quarterly, i.e., in these four kists of the year, Ashar, Aswin, Pous and Chaitra. If I make default in payment of kist, I shall pay interest on the kist amount at Re. 1 per cent, per month till realization.

(10) That I shall pay the amount of minimum royalty or commission on the aforesaid condition to the officer appointed by you or at your Raj Kachahari and take regular receipt.... For payment of the said amount the pit etc., will always remain hypothecated, i.e., if the amount of royalty, which will be due falls in arrear for 12 months at a time, you or your own authority will be competent to stop work of my pit, and for the amount of royalty my workshop, engine, coolie shed, articles, etc., all sorts of tools and instruments, etc., shall remain hypothecated. If the amount is not realised by the sale of those properties and articles, you will realise the remaining amount by attachment and sale of my swanami or benami moveable and immovable properties with the help of the Court.

(16) ...To this effect, after paying up the entire amount of consideration, as per schedule below, in sound health and in sincere mind I execute this mourushi mukarrari kabuliyat on commission after receiving a patta corresponding to this....

On behalf of the appellant it was contended that the construction given to para. 1 of the lease was erroneous as the lease was described as a "mourushi mukarrari" which is a permanent lease at a fixed rent. According to the appellant, the royalty payable was the rent reserved and as the lease was mourushi mukarrari the rent reserved must: be a fixed rent or rent at a fixed rate. The construction placed on para. 1 by the Subordinate Judge made the rate of royalty a factor varying on the decrease or increase in coal freight. Such a varying rate of rent, it was contended, is contrary to the whole conception of a mourushi mukarrari lease. It is true that in such leases the rent or rate of rent is fixed for all time; but it is quite clear that though the lease in question in this case is described as mourushi mukarrari it is not such a lease in the true sense of the word. Paragraph 1 of the lease fixed the rate of royalty at 3 annas per ton for steam coal, etc., and 1 1/2 anna per ton for brick burning rubble and dust. Such a rate, however, is not made permanent because it is provided that if the Bengal Nagpur Railway was extended to this area and the freight of coal was in consequence reduced the royalty was to be increased, and such increase was to depend upon the amount by which the freight was reduced if the said freight was reduced by 2 annas or more per ton, the royalty on the various classes of coal would become 5 annas and 2 1/2 annas respectively. But if the freight was reduced by less than 2 annas the whole of such reduction was to be added to the royalty paid on steam coal etc., and half the sum added to the royalty on brick burning rubble and dust. It is, therefore, clear that the parties to this transaction never contemplated a rate of rent fixed in perpetuity but actually made provision for a variation in the rates of royalty. Though the lease is described as mourushi mukarrari it appears to me that the whole of the terms of the document must be given effect to, and, it cannot be held that the rates of royalty must be fixed in perpetuity merely because of the description which is actually given to it by the parties to the lease.

It was strenuously contended on behalf of the appellant that the learned Subordinate Judge was wrong in holding that the rate of royalty payable on coal carried by rail was dependent upon the level of the freight charged by the railway companies. The appellant contended that Para. 1 of the lease meant that if in consequence of the extension of the Bengal Nagpur Railway to the coal-field the freight of coal fell by 2 annas or more, then royalty at the increased rate of 5 annas and 2 1/2 annas per ton became payable for the duration of the lease. The contention was that the fall in the rate of freight was a condition precedent to an increase in the rate of royalty, and once the condition had been fulfilled the in-creased rate became payable for all time under the lease.

It was argued that any subsequent increase in the rate of freight was wholly immaterial as the increase in the rate of royalty merely depended upon whether at any time after the execution of the lease freights fell by 2 annas or more. Dr. Dwarka Nath Mitter who appeared for the plaintiff-appellant had also to concede that if the original fall in freight had been less than 2 annas, then the rate of royalty for all time would be 3 annas plus the amount of fall in freight per ton on steam coal etc., and 1 1/2 anna plus half the fall in frieght per ton and brick burning rubble and dust. This concession must follow from the argument advanced, namely that once there is a fall in freight and an alteration in the rate of royalty such becomes the rate for all time.

In my judgment, the construction sought to be placed by the plaintiff-appellant upon Para. 1 of the lease cannot be sustained. It appears to me clear that the parties to this lease realised that the extension of the Bengal Nagpur Railway to Jharia might well result in a decrease in railway freights. It seems that at the date of the lease the only railway which would carry the coal of this colliery was the East Indian Railway, and it is expressly stated in Para. 1 of the lease that the rate of royalty namely, 8 annas and 1 1/2 annas per ton on various classes of coal applied to coal which would be despatched on the one railway then serving this district, namely, the East Indian Railway. Realising as they did that competition would result in all probability in a decrease in freights, the parties provided that both the lessor and the lessee should obtain some advantage from this. If the freight was reduced by less than 2 annas per ton, the lessor was to obtain the whole advantage with regard to steam coal etc., and half the advantage with respect to brick burning rubble and dust. If, however, there was a greater fall, that is, 2 annas per ton or more the lessee was to have a greater share in the advantage thus gained. The lessor''s benefit was to be limited to an increase of royalty by 2 annas per ton on steam coal and 1 anna per ton on brick burning dust and rubble. The lessee was to obtain all other benefits from the fall in the rate of freight.

In my view, the agreement entered into between the parties contemplated a varying rate of royalty on coal despatched by rail. It was an equitable arrangement, both parties sharing in the benefit conferred by a fall in freight. It is to be observed that the increase in the rate of royalty, when the rate of freight fell, did not apply to all coal disposed of by the lessee but only to coal despatched by rail. This also, to my mind, makes it clear that the provision as to increased royalty was made with a view to sharing the benefits which would follow from a fall in the freight. The lessee would not obtain any advantage from a fall in freight in so far as pit head sales were concerned, and, therefore, the royalty on coal sold at pit head was to remain for ever constant. The advantage would be gained only on coal despatched by rail--hence the provision as to increased royalty is confined to such coal. In the previous litigation, Para. 1 of this lease was construed by the Calcutta, High Court and by their Lordships of the Privy Council, and it is clear from the judgment of their Lordships of the Privy Council, which was delivered by Lord Parmoor on 8th March 1917, Manindra Chandra v. Durga Prasad reported in AIR 1917 P.C. 23 that increased royalty was only payable on coal despatched by rail. Dealing with the words;

But if, in future, the Bengal Nagpur Railway ia constructed and the freight on coal becomes less by 2 annas at least or more than what is fixed at present per ton, I shall pay royalty for those coals which will be despatched in the aforesaid manner at the reduced freight, at 5 annas per ton on steam, steam rubble, soft coke and hard coke and 2 annaa 6 pies per ton on rubble and dust for burning bricks,

Lord Parmoor observed:

If the words in question are not limited in their application to coals despatched by the East Indian Company, they must refer back to the earlier context in the clause and include all coals despatched by rail at a reduced rate, either by the East Indian Company or the Bengal Nagpur Company. Their Lordships are of opinion that this is what the words naturally mean, and agree in the judgment of the High Court.

The judgment of Lord Parmoor clearly lays down that increased royalty is only to be payable on coal despatched by either of the railways and coal despatched in such a manner at the reduced rates. If increased royalty was only to be payable on coal des, patched by rail at reduced rates, then the moment the freight on coal rose to or above the level prevailing at the date of the lease, such increased royalty would cease to be payable because coal was no longer despatched by rail at reduced rates.

On behalf of the appellant, it was contended that the phrase "which will be despatched in the aforesaid manner at the said reduced freight" should be taken to be merely words of description and meant only coals despatched by rail. There would be some force in this argument if the words used were "which will be despatched in the aforesaid manner;" but immediately following these words is the expression "at the said reduced freight." Dr. Dwarka Nath Mitter had to contend that the expression "at the said reduced freight" was mere surplusage; but, in my judgment, effect must be given to them. The words form a part of this paragraph, and unless it is clear that the expression can have no meaning then a meaning must be given to them, and that meaning must be the natural meaning of the words. It appears to me that it is clear that the increased royalty was to be payable on such coal as was despatched by rail at the reduced freight and where no coal was despatched by rail at a reduced freight then no increased royalty was payable. In my view, their Lordships of the Privy Council have already construed this paragraph to mean that the increased royalty is payable only on coal despatched at reduced freight. That being so, the increased royalty would cease to be payable when the freight again rose to the level prevailing at the date of the lease. It is true that the actual point now before this Court was not in issue in the earlier litigation, but their Lordships in that litigation did place a construction upon this paragraph which it appears to me binds this Court. That being so, the learned Subordinate Judge was undoubtedly right in holding that a subsequent increase in the freights would affect the royalty payable on coal despatched by rail and that increased royalty would cease to be payable once the rate of freight had risen to or above the level prevailing at the date of the lease.

The learned Subordinate Judge held that freight on coal rose to the level prevailing at the date of the lease on 14th October 1923. When the case first came before this Court, this finding was hotly challenged by the respondent who urged that it was not open to the Subordinate Judge to arrive at such a finding. It was contended that it had been conceded by Counsel for plaintiff in the Court below that coal freights had risen to the level prevailing at the date of the lease on 1st April 1921. It is clear that throughout the proceedings in the Court below, both parties had regarded the rise and fall of coal freights to Calcutta as indicative of the rise or fall in coal freights generally, though it appears to me that freights for west bound coal might not have been affected at all by the competition between the two railways as the Bengal Nagpur Railway when extended only served districts east of the Jharia coal field. However, it is clear from the record that Mr. P.R. Das who appeared for the plaintiff in the Court below admitted that freights had risen to the level prevailing at the date of the lease by April 1921. At the date of the lease freight on coal to Calcutta for the use of public generally was Rs. 3-11-0 per ton. In the year 1902 after the Bengal Nagpur Railway had been extended to the Jharia coal field the freight to Calcutta fell to Rs. 3-2-0 a ton. By 1st April 1921, however, the freight had again risen to Sections 3-11-0 a ton. This was clearly admitted by Counsel for the plaintiff, and throughout the trial there was no suggestion that freight on any other class of coal fluctuated in a different manner. On e 10th May 1987, the Subordinate Judge had recorded the following order:

Parties are ready. At the instance of the learned Counsel of both the parties the issues framed in the suit are recast. The learned Counsel for the plaintiff does not press his case about the non-rendition of accounts of coal raised and despatched. He accepts the figures supplied by the defence and as embodied in the schedule of the written statement. He also is agreeable to accept the rate of freight as comprised in the coal Tariff Books--published by the railway authorities, with this reservation that he does not admit the surcharge and terminal tax as a part of the freight. He also does not press the point raised in the plaint that the previous decision about the interpretation of the lease relating to the circumstances under which increased rate of commission is payable is res judicata.

It is to be observed that no reference was ever made at any later stage to the question whether, a surcharge or terminal tax formed part of the freight. After Counsel for the defence had completed his argument, Mr. Das on behalf of the plaintiff wished to limit the scope of his admission. He stated that his admission referred only to what he described as public coal, that is, coal supplied to the public generally, and that he did not admit that the freight on loco coal, that is coal supplied to foreign railways, had risen to the rate prevailing at the date of the lease by 1st April 1921. He contended that freight on this so-called loco coal had not risen to the level prevailing at the date of the lease until a date much later than 1st April 1921.

On 1st June 1937, the defendant filed a petition before the learned Subordinate Judge where it was pointed out that on 10th and 11th May when Counsel was opening the case on behalf of the plaintiff the correctness of the railway rates given by the defendant in his written statement was admitted and that no suggestion was made that the admission did not apply to all classes of coal. It is pointed out that when the witness for the defendant was cross-examined no question was ever put to him or any suggestion made to the effect that the rates of freight on coal for foreign railways were in any way material or relevant to the suit. On 3rd June 1937, the plaintiff filed a counter-petition, and in para. 3(d) of that petition the plaintiff admits that his Counsel had made the admission alleged by the defendant, but it is stated that at that time Counsel was not informed and was ignorant of the fact that freight on railway coal was lower than the freight on public coal and further that Counsel was even ignorant that there was such a thing as railway coal. The learned Subordinate Judge deals with the matter in his judgment at page 39 of parts I and II of the paper-book in these words:

The next question, which I take up for consideration, is whether there has been an increase in the railway freight since the Privy Council decision referred to already. If there has been an increase in freight nullifying the reduced rates contemplated by the lease the defendant is not liable at the higher rates of royalty. In this connexion it is to be observed that the written statement of the defendant in para. 6 has taken up the position that the rate of freight Rs. 3-11-0 per ton as prevailing at the date of the lease was reduced to Rs. 3-2-0 per ton in August 1902, that is a few months before the opening of the Bengal Nagpur Railway in 1903. Both the railways fixed Rs. 3-2-0 per ton as freight to Calcutta. This reduced rate came to an end from 1st April 1921, and that the increased rates from that time went above the original rate of Rs. 3-11-0 a ton. The learned Counsel for the plaintiff at the beginning accepted this position with this reservation that the increased freights should include surcharge, terminal taxes, etc., and that shipment coal had been granted rebate so far as the freight was concerned. Later on, however, and after the learned Counsel for the defence had closed his arguments he took up the position that the said rates had application respecting only a portion of the total coal despatched by the railways for the loco coal, that is coal supplied to other railways bore rates which were not higher than the previously reduced rates. Undoubtedly the defence has been taken by surprise and Mr. Das admitted that he had no previous information on this point. So this matter did not at all form the subject-matter either of the plaint or the written statement. It was a new thing sprung upon the defendant which he could hardly meet. The evidence on the point may be considered.

It will be seen that the learned Subordinate Judge went into the evidence upon this question, though he fully realised that the defendant had been taken entirely by surprise and could not meet the allegations which were made at this very late stage. He cast the onus upon the defendant of showing when the freights on loco coal rose to the level prevailing at the date of the lease. He finally held that the defendant had failed to prove that the freight on loco coal had risen to the level prevailing at the time of the lease before I4fch October 1923. At the first hearing before us, it was contended by the respondent that this admission by Counsel for the plaintiff being an admission of fact was binding on his client who could not resile from it at a later stage of the hearing. Alternatively, it was contended that if the plaintiff was not bound by this admission made by his Counsel the defendant should be given an opportunity of meeting the new allegation and of calling such evidence as was thought proper to rebut the allegation.

In my judgment, the admission made by Mr. P.R. Das is binding on the plaintiff. He admitted the facts in clear terms and, as pointed out by the learned Subordinate Judge, the case proceeded until the end of the argument for the respondent upon the facts as admitted. That being so, the plaintiff should not have been allowed to resile from that admission merely on the ground that neither he nor his Counsel were at the time the admission was made fully in possession of the facts. It was an admission made in opening after full deliberation, and the case proceeded practically to its conclusion upon the basis of such admission. That being so, the Subordinate Judge should not, in my view, have allowed the plaintiff to withdraw from the position which he had taken up and should not have held contrary to that admission that all freights did not rise to the level prevailing at the date of the lease until 14th October 1923.

In my judgment, he should have held that all freights had risen to the level prevailing at the date of the lease by 1st April 1921. In any event, the finding of the Subordinate Judge could not be sustained as it was conceded that the defendant had been taken by surprise after he had closed his evidence and even the argument. We, therefore, thought it right that this question should be remanded to the Court below for a further finding after the defendant had been given an opportunity of producing evidence. We were of opinion that such a finding was necessary in the event of it being held in appeal that this Court was wrong in the view it had taken as to the finality of counsel''s admission. On 11th December 1940, this Court framed the following issues for the findings of the lower Court:

What was the freight for loco coal or coal supplied for foreign railways between Jharia and Calcutta at the date of the said lease, namely 20th. October 1898? 2. What was the freight on the said coal in the years 1902 and 1903, that is for the period immediately following the extension of the Bengal Nagpur Railway to the Jharia District 1, 3. What was the freight on the said coal at the date of the institution of the previous suit, Suit No. 398 of 1908? 4. What was the freight on the said coal on 1st April 1921, and was there any variation in the said freight between that date and 14th October 1923? 5. If the freight on the said coal decreased at any time after the year 1898, was such decrease due to the extension of the Bengal Nagpur Railway. Company to the Jharia District?

The Court below considered further evidence and returned its findings to this Court. The learned Subordinate Judge held that after the extension of the Bengal Nagpur Railway to Jharia the freight on loco coal fell by more than two annas. On 1st April 1921, the freight on loco coal was Rs. 3-4-0 per ton which included annas 2 per ton terminal charge. It is, therefore, clear that on that date the freight on loco coal was still more than 2 annas per ton below the rate prevailing at the date of the lease which was RS. 3-11-0 per ton. The learned Subordinate Judge further held that the freight on loco coal continued to be 2 annas and more below the rates prevailing at the date of the lease until 1st May 1922, when the freight plus terminal charges rose to Rs. 3-10.6. However, on 14th October 1923, the freight on loco coal rose to Rs. 3-11-0 excluding terminal charges which was the rate prevailing at the date of the lease.

These findings were hotly contested before us by the defendant who urged that the terminal charges formed part of the freight. If such was the case, then from 1st May 1922, the freight on loco coal was only 6 pies below the level prevailing at the date of the lease, and according to the lease the royalty on steam coal, etc., would only be increased by 8 pies and the royalty on brick burning rubble and dust by 3 pies. No evidence had been given that this colliery had ever despatched loco coal during the period in suit, and eventually Dr. Dwarka Nath Mitter who appeared for the plaintiff at the second hearing before us abandoned the contention that the original admission made by the plaintiff was not binding on his client and accepted the position that for the purposes of this case all coal freights had risen to the level prevailing at the date of the lease by 1st April 1921. It appears to me that in making this admission Dr. Dwarka Nath Mitter acted wisely and with discretion, because even if he had succeeded in establishing that the freight on loco coal had not reached the level prevailing at the date of the lease until somewhat later than 1st April 1921, the advantage which he would gain might be very little. It must, therefore, now be accepted that all freights had risen to the level prevailing at the date of the lease by 1st April 1921.

Having regard to the construction which I place on the terms of the lease, the plain, tiff was, therefore, not entitled to royalty at the increased rate after 1st April 1921, though he was actually paid at the increased rate until the autumn of 1923. This overpayment, according to the defendant, amounted to Rs. 63,680-4-9. Even if that figure be not accurate, it is clear that very large overpayments were made for a period of over two years. The question, therefore, arises whether this sum could be adjusted or apportioned to or set-off against royalty due and to become due. The defendant discovered this over, payment early in 1924 and adjusted or apportioned it to or set it off against the royalty, falling due from March 1924 to June 1923. The defendant urged at the trial that he had a right to make such adjustment or apportionment or in the alternative he had the right to set off these overpayments against the royalty due.

In the first place, the Subordinate Judge held that the defendant could not raise the question at all as a set-off had not expressly been pleaded in the written statement. According to the Subordinate Judge, what had been pleaded in the written statement was not a right to set off but that a set-off had already been made. To meet this objection the defendant on 25th May 1937 towards the conclusion of the hearing applied to amend his written statement and to add a plea of a right of equitable set-off. The plaintiff objected, and on 28th May 1987 the learned Subordinate Judge refused to allow the defendant leave to amend his written statement. It is clear that the defendant was not attempting to set up a right to set off under Order 2, Rule 6, Civil P.C. His plea was that the plaintiff had in fact been paid all the royalty due by adjustments of these overpayments or that the defendant was entitled equitably to set off these overpayments against the royalty due and to become due. In my judgment, though the written statement does not contain in express words a plea of equitable setoff, yet the plea, as now put forward, is in my view, clearly raised in para. 7 of the written statement and in the schedule attached to that document. In that paragraph, and in the schedule, it is clearly stated and shown that a claim was made at the time to set off the overpayments against the dues from March 1924 to June 1925, and that sums falling due between those days had actually been paid out of these overpayments. Sir Manmatha Nath Mukherji who appeared at i the last hearing for the respondent urged that his plea was not really a plea of equitable set-off but of actual payment of what was due by adjustment of the overpayments, and this, he urged, had been sufficiently indicated in his written statement. He also urged that as the plea was in effect that of payment no question of limitation would arise. In my judgment, the Subordinate Judge was wrong in holding that the defendant could not raise this plea of equitable set-off or payment as, in my view, the plea was sufficiently indicated in the written statement.

Whether these overpayments could or could not be adjusted to or set off against royalty falling due thereafter must depend upon whether the overpayments when made were recoverable. If the plaintiff was entitled to retain the payments, then no question of adjustment or set-off could arise, because such a set-off or adjustment could only be made if the overpayments were such as legally belonged to the defendant. It was urged in the Court below and before this Court that these overpayments were made under a mistake of fact, that is in ignorance of the fact that coal freights had stood since 1st April 1921 at the level prevailing at the date of the lease or above that level. There is no suggestion whatsoever of this plea in the written statement, und no application was ever made to the Court below or to this Court for leave to amend that document by pleading mistake of fact. Payment of money under a mistake of fact should in my view be pleaded, and in the absence of any plea to that effect the Subordinate Judge should not have allowed the question to be raised. He did however consider the question on its merits and eventually hold that the overpayments were made not under a mistake of fact but under a mistake of law. In his view, the payments were made, because the defendant''s father was mistaken as to his rights and liabilities under the lease. He made the overpayments because he was ignorant not of the rise in freights but of the legal effect of such a rise. It will therefore be necessary for this Court to record its findings on this aspect of the case.

The onus clearly lay on the defendant to prove that the overpayments had been made under a mistake of fact. It was not sufficient for him to show that he was mistaken as to the facts. He wits also bound to show that it was such a mistake which caused him to pay. This principle is clearly laid down in Home and Colonial Insurance Co. Ltd. v. London Guarantee and Accident Co. Ltd. (1928) 45 T.L.R. 134. In that case a liquidator of an insurance company, which had entered into marine insurance contracts without issuing stamped policies, admitted claims under these contracts, and a final dividend was paid in respect of the claims, the liquidator being at the time unaware that no stamped policies had been issued, and that in the absence of such policies the contracts were invalid in law. An action was brought for money paid under a mistake, and the liquidator''s evidence showed that if he had known of the fact of the absence of stamped policies his ignorance of the law e would still have led him to pay. It was held that as knowledge of the fact would not have affected his conduct the action failed. Wright J. at page 135 observed:

Mr. Barham (liquidator) admitted that it he had been told that no stamped policies had been issued he would have regarded it as irrelevant. His mind was ignorant both of the fact and of the law, but the more important part of the ignorance was that of the law. If he had known that there were no stamped policies his ignorance of the law would still have led him to act as he did in paying the money. The onus was on a plaintiff claiming to recover money paid under mistake of fact to show that he was induced to pay by his ignorance of the fact and by nothing else, and there was no right to recover money paid where knowledge of the fact would not have affected his conduct.

It is clear, therefore, that the defendant was bound to show not only that he was mistaken as to the facts but that it was such a mistake which caused him to make the payment. In my judgment, the defendant has wholly failed to show that the overpayments in this case were made under a mistake of fact. In the month of April 1929 Messrs. Low & Co., were the managing agents for the lessee and continued so to act for some years. In fact, they made all the overpayments except one, namely, a sum of Hs. 57,069-3-0 which was actually made by 9 the defendant''s father on 28th January 1924. Under the terms of the managing agency agreement, the managing agents were not liable for the payment of royalties, the lessee himself being liable for such. In practice however, Messrs. Low & Co. regularly paid the royalty when due and submitted accounts of such payments to the lessee which were approved by the latter from time to time. It is clear from the evidence of Harendra Krishna Roy (D.W. 1), who was called on behalf of the defendant, that Messrs. Low & Co. paid these royalties with the full authority and consent of the Maharaja, and though they were not liable so to do under their agreement it cannot possibly be argued that they were not the authorized agents of the Maharaja when they made the payments.

It would be difficult to suggest that Messrs. Low & Co. did not know of the fluctuation of the rates of freight on coal. As managing agents of collieries, they would be bound to know such facts, and it is significant to note that no one, who was connected with Messrs. Low & Co. at this time, has been called to suggest that Messrs. Low & Co. did not know of the rise in freights after the initial fall. Sir Manmatha Nath Mukherji with his usual frankness and fairness found it impossible to suggest that Messrs. Low & Co. did not know of the rise in freights. He however urged that the knowledge of Messrs. Low & Co. could not be imputed to the Maharaja. In my view, however, where a principal allows an agent to make payments of royalty for him the knowledge of the agent must be implied to the principal. In such a case the principal cannot be heard to say that he was acting under a mistake of fact when the agent, who made the payment and who was permitted to make it, was aware of all the facts.

Sir Manmatha Nath Mukherji further argued that in any event the payment of Rs. 57,069-3-0 made by the Maharaja himself on 28th January 1920 was certainly a payment made under a mistake of fact. (After considering the evidence, his Lordship held that the increased royalty had been paid after the freights had risen to the level prevailing at the date of the lease not because of any ignorance of any rise in freights but because the defendant and his agents were unaware of their rights under the lease and proceeded.) The mistake was a mistake as to the construction and meaning of a contract, and such a mistake cannot be said to be a mistake of fact but is a mistake of law. The construction of a contract is clearly a matter of law, and if a party acts on a mistaken view of his rights under a contract he is not entitled to any relief under the heading mistake. Similarly if money is paid in iconsequence of a mistake as to the true construction of a contract it is paid under a mistake of law and not under a mistake of fact--per Lord Chelmsford in Midland Great Western Railway of Ireland v. Johnson (1858) 6 H.L.C. 798 and Powell v. Smith (1872) 14 Eq. 85.

There can be no doubt that under English ilaw money paid under a mistake of fact is recoverable, but, generally speaking money paid under a mistake of law is not recoverable. This has been clearly laid down in a I large number of English authorities. The Indian Contract Act, though it deals with the effect of mistakes of fact and law upon a contract, has no express provision relating to the effect of payments made under such mistakes, and it appears to me that the law relating to the matter is the same in this country as it is in England. It will, therefore, be necessary to consider in some detail the English authorities which Counsel on both sides have cited to us. In Bilvie v. Lumley (1802) 2 Eas 469 it was held that money paid by one with full knowledge (or the means of such knowledge in his hands) of all the circumstances cannot be recovered back on account of such payment having been made under ignorance of the law. The action was one for money had and received, and was brought by an underwriter upon a policy of insurance to recover back �100 which he had paid upon the policy. The plaintiff alleged that the money had been paid under a mistake as the defendants, at the time the insurance was effected, had failed to disclose to the plaintiff a material letter which had been received by them relating to the time of the sailing of the ship insured. The plaintiff contended that at the time he paid �100 to the defendants he was not aware that the concealment of the particular letter afforded him a good defence in law and accordingly he sought to recover back the amount as having been paid under a mistake. Lord Ellenborough C.J., held that as the mistake was one of law the sum paid could not be recovered.

Another case dealing with the question of mistake is Skyring v. Greenwood (1825) 4 B. & C. 281. In that case a paymaster of a military corps had given credit in account to an officer in that corps from 1st January 1817 to 5th November 1820, for certain increased pay, erroneously supposed to be granted by a general order of 27th August 1806, to an officer of his situation, and a statement of that account was delivered to that officer in 1821. In December 1816, the paymasters were informed by the Board of Ordinance that the increased pay granted by the order of 1806 would not be allowed to persons in the situation of the officer in question. The paymasters did not communicate this information to the officer until 1821, and subsequently to that time they continued to receive his pay. It was held in an action brought by his personal representative to recover such pay, that it was not competent to the paymaster to retain any of such sums of money on account of the sums which they had credited him for by way of increased pay, and which they had allowed him to consider his own for so long a period. The learned Judges who decided this case held that the mistake of the paymasters was a mistake of law, that is, as to the true construction of the order of the Board of Ordinance and accordingly they Could not recover the overpayments made to the officer concerned: neither could they set off such overpayments against money owed by them to the officer.

A similar case is Brisbane v. Dacres (1813) 5 Tau 143. In that case, the captain of a King''s ship brought home in her public treasure upon the public service, and treasure of individuals for his own emolument; he received freight for both, and paid over one third of it according to a usage heretofore established in the navy, to the admiral under whose command he sailed. Discovering that the law did not compel captains to pay admirals one-third of the freight, the captain brought an action for money had and received, to recover it back from the admiral''s executrix. It was held that he could not recover back the private freight, because the whole of that transaction was illegal, nor the public frieght, because he had paid it with full knowledge of the facts, although in ignorance of the law, and because it was not against conscience for the executrix to retain it. This was a clear case of money paid under a mistake of law which was held to be irrecoverable. In Stafford v. Stafford (1857) 1 De. G. & J. 193 a married woman entitled to the income of a legacy for her separate use, continued for fifteen years, with full notice of the circumstances affecting her rights, to receive) income on the footing that the legacy was liable to contribute in favour of the residuary legatees to a loss occurring on the reinvestment of part of the estate. It was afterwards decided that the legacy was not liable so to contribute, but must be paid in full. It was held that she was not entitled to recover from the residuary legatees the difference between the income of the full amount of the legacy and the reduced income which she had actually received. This also is a case where the money had been paid under a mistake of law.

In Sharp Brothers & Knight v. Chant (1917) 1 K.B. 771, the Court of Appeal held that a tenant who had paid rent in excess of that permitted by the Increase of Rent and Mortgage Interest Act, 1915, could not recover such overpayments because they were paid under a mistake of law and in ignorance of his rights under that Act. A similar case is that in Hot v. Markham (1923) 1 K.B. 504. In that case officers in the Royal Air Force were under certain military regulations entitled on demobilization to a gratuity varying in amount according to circumstances. If their names were on a certain list, called the Emergency List, they were only entitled to a gratuity at a lower rate than if they were not on that list. The defendant was a demobilized officer of the Royal Air Force. The plaintiffs who acted as Government agents for the payment of gratuities to demobilized officers of that force, in ignorance of the fact that the defendant was on the Emergency List, but also in forgetfulness of the regulation which provided that the gratuities of officers on the Emergency List should be paid at the lower rate, and not appreciating the materiality of an officer being on that list, paid the defendant his gratuity at a higher rate to which he would have been entitled if he had not been on that list. More than a year afterwards, and before notice of the mistake the defendant spent the money. In an action to recover back the excess payment as money paid under a mistake of fact, Bankes and Warrington L. JJ., held that the mistake was not a mistake of fact but a mistake of law and the money was not recoverable. It was also held that the plaintiff was estopped from alleging that the money was paid under a mistake.

A similar view was taken by Hamilton L.J., in Stanley Brothers Ltd. v. Corporation of Nuneaton (1913) 108 L.T. 986. In that case, by an agreement entered into between the parties in 1910, it was agreed that in the event of the plaintiffs being unable to obtain sufficient water for the purposes of their works from all their available sources of supply, the defendants who were the local water authority, would supply the plaintiffs with water at cost price not exceeding 2d. per 1000 gallons. The plaintiffs'' supply of water from their available resources proving insufficient for their requirements, from the date of the agreement until 30th June 1910, they used over 8,10,00,000 gallons of water supplied by the defendants. The plaintiffs did not call upon the defendants to supply them at the rate of 2d. per 1000 gallons, but paid the usual charge of 8d. per 1000 gallons. A claim was made to the excess payment of 6d. upon each 1000 gallons of water. It was held on a number of grounds that the claim was not sustainable. Bailhaohe J. bad in the first instance held that this sum was recoverable, but his judgment was reversed in appeal. Dealing with the question of whether money paid under a mistake of law was recoverable, Hamilton L.J. at page 992 observed:

I think, however, as Bailhache J. decided otherwise, and decided upon the ground that in his view it was a mistake of fact and not of law, that I ought to say a word upon that. His attention was directed to Earl Beauchamp v. Winn (1873) 6 H.L.C. 223, which is a case in which the claimant was ordered relief from the obligation of an agreement upon the ground that the specific private rights affecting the subject-matter of that agreement had been mistakenly construed by the plaintiff in the action. His attention was not drawn to the proposition laid down in Rogers v. Ingham (1876) 3 Ch. D. 351, by Lord Mellish, that such a doctrine has never been applied to a claim for the return of money paid under a mistake of fact. The equity in the latter case is the supposed equity that it is unusual for the defendant to keep money which the plaintiff voluntarily gave him, but under a mistake which was not common to the two: the equity whatever else may be said of it, is at any rate not the same equity as that which is put into force when the relief by way of rescission by the act of the Court of an obligation which is entered into is sought upon the ground that the contract had been entered into or the conveyance executed under a misapprehension as to one of the parties existing private rights. Even so a passage in Midland Great Western Railway of Ireland v. Johnson (1858) 6 H.L.C. 798, and in this Court in Wilding v. Sanderson (1897) 2 Ch. D. 534 ougbt to be borne in mind. The passage by Lord Chelmsford in the former case is: ''It must be a mistake not in the matter of law but a mistake of facts. The construction of a contract is clearly a matter of law; and if a party acts upon a mistaken view of his rights under a contract, he is no more entitled to relief in equity than he would be in law''. The passage in the other judgment is: ''A written contract cannot be impeached simply because one of the parties to it put in an erroneous construction on the words in which the contract is expressed.'' There must be some case either of error induced by misrepresentation of the opposite party or error as to the subject-matter with which the contract purports to deal. I think, therefore, the mistake in question was not a mistake of fact but of law.

In a very recent case, Anglo-Scottish Beet Sugar Corporation, Ltd. v. Spalding Urban District Council (1937) 2 K.B. 607, the rights of the parties to recover money paid under a mistake) was considered by Atkinson J. At page 615 he observed:

It is, of course, common ground that mistake of law does not entitle a person paying to recover money; and a mistake in the construction of a contract is treated as a mistake of law and not as a mistake of fact.

These authorities abundantly establish that money paid under a mistake of law cannot be recovered in an action for money had and received and neither can money so paid be set off against money due from the person who made the payment. The respondent, however, has relied upon certain cases and has urged that the distinction drawn in the earlier cases between mistake of fact and mistake of law is not a clear one and the equity will permit the recovery of money when paid under a mistake of law. It has been urged that if a party makes a payment under a mistake as to his rights the mistake is really one of fact though it may have been j caused by failing fully to appreciate that party''s rights. Great reliance was placed upon a dictum of Lord Westbury in Copper v. Phibbs (1867) 2 H.L. 149 Lord Westbury observed:

The result, therefore, is that at the time of the agreement for the lease which it is the object of this petition to set aside, the parties dealt with one another under a mutual mistake as to their respective rights. The petitioner did not suppose that he was, what in truth he was, tenant for life of the fishery. The other parties acted upon the impression given to them by their father; that he (their father) was the owner of the fishery, and that the fishery had descended to them. In such a state of things there can be no doubt of the rule of a Court of Equity with regard to the dealing with that agreement. It is said, ''Ignorantia juris haud excusat'' but in that maxim the word ''jus'' is used in the sense of denoting general law, the ordinary law of the country. But when the word ''jus'' is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact; it may be the result also of matter of law; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that that agreement is liable to be set aside as having proceeded upon a common mistake.

The respondent also placed great reliance on Earl Beauchamp v. Winn (1873) 6 H.L.C. 223, in which it was held that where, in the making of an agreement between two parties, there has been a mutual mistake as to their rights occasioning an injury to one of them, the rule of equity is in favour of interposing to grant relief. At p. 234 Lord Chelmsford observed:

With regard to the objection, that the mistake (if any) was one of law, and that the rule, ''Ignorantia juris neminem excusat'' applies, I would observe upon the peculiarity of this case, that the ignorance imputable to the party was of a matter of law arising upon the doubtful construction of a grant. This is very different from the ignorance of a well known rule of law. And there are many cases to be found in which equity, upon a mere mistake of the law, without the admixture of other circumstances, has given relief to a party who had dealt with his property under the influence of such mistake. Therefore, although when a certain construction has been put by a Court of law upon a deed, it must be taken that the legal construction was clear, yet the ignorance before the decision of what was the true construction, cannot, in my opinion, be pressed to the extent of depriving a person of relief on the ground that he was bound himself to have known before hand how the grant must be construed.

The facts of these two cases were peculiar and the mistake in each was regarded not as a mistake of law but of fact. It has been urged by the respondent that equity will relieve in a case such as the present one where the overpayments were made under a mistaken construction of the mining lease. It is to be observed, however, that the mistake in the present case is clearly a mistake jof law and falls within the dictum of Lord Chelmsford in Midland Great Western Railway of Ireland v. Johnson (1858) 6 H.L.C. 798 where he observed:

The construction of a contract is clearly a matter of law; and if a party acts upon a mistaken view of his rights under a contract, he is no more entitled to relief in equity than he would be in law.

It appears to me that the two decisions of the House of Lords relied upon by the respondent do not support the proposition that money paid under a mistaken construction of a contract is recoverable. The respondent cited Kelly v. Solari (1841) 9 M. & W. 54 but the mistake in that case was one of pure fact. The respondent also placed great reliance upon Levesey v. Livesey (1830) 3 Rus. 287. In that case a testator gave his property, after the death of his wife, to trustees, on trust to pay the interest and profits to his two daughters J and D, to their separate use, with a direction to pay to and apply for the benefit of A, the son of E, �200 annually, when he attained the age 21 years, and before that time, such part of the �200 bequeathed to him, as might be judged proper. The executrix upon a mistaken construction of the will made payments to A in respect of his annuity for two years before he attained the age of twenty-one. It was held that she was entitled to retain the payments so made out of the future payments of annuity due to A. There can be no question that in this case the Court did hold that the money was recoverable, though clearly paid under a mistake of law. It must be remembered, however, that the proceedings were in the nature of administration proceedings and that the payments had been made by the executrix out of moneys belonging to the estate and not out of her personal moneys.

In such a case the Court would endeavour to adjust the equities, and this case has been distinguished from other cases of payments made under a mistake of law upon this ground. In In re Robinson; Mclaren v. Public Trustee (1911) 1 Ch. 502, the case in (1880) S Buss. 28717 was considered by Warrington J. At page 508 he observed:

The first of the cases which the plaintiff cited is that in Levesey v. Livesey (1830) 3 Russ. 287. There an executrix had by mistake made certain payments to an annuitant before he became entitled to the annuity. The annuitant did afterwards become entitled to the annuity, and it was decided that the executrix was entitled to treat those payments as payments on account of the actual annuity, and to retain them out of future payments. Obviously that is an instance of a case in which the Court, administering an estate adjusts the account between the several persons entitled....

Another case relied upon by the respondent was Lady Hood of Avalon v. Amckinnon (1909) 1 Ch. 476. In this case Lady Hood, the plaintiff, made an appointment by a deed poll in entire forgetfulness of an earlier appointment made by her to the same person. It was held that such an appointment could be rescinded and set aside on the ground of mistake. It is to be observed that Eve J., who decided this case, treated the mistake as a pure mistake of fact. The plaintiff had entirely overlooked the fact that she had made an earlier appointment, and it was that mistake of fact which caused her to make the subsequent appointment which the Court of Equity was prepared to rescind. Counsel for the respondent also cited the case in Imperial Bank of Canada v. Bank of Hamilton (1903) 1903 A.C. 49. Lord Lindley who delivered the judgment of the Board in that case, expressly approved of the decision in Kelly v. Solari (1841) 9 M. & W. 54 and it is to be observed that the mistake in this particular case was purely one of fact and not of law. Reference was also made to a decision of Hamilton J. in Bakker v. Courage & Co. (1910) 1 K.B. 56. But again this is clearly a case where the money was paid under a mistake of fact and not under a mistake of law. There is one decision, however, Edward James Daniell v. James Sinclair (1881) 6 A.C. 181, where their Lordships of the Privy Council did grant relief where the mistake was one of law. In that case a mortgage account had been settled on the footing of compound interest with half-yearly rests, both parties wrongly understanding the mortgage deed to require the same. It was held that the account could be re-opened as there had been a mutual mistake of law. The respondent placed great reliance upon this authority; but in my view the case is not an authority for the general proposition that money paid under a mistake of law is recoverable. The suit giving rise to the appeal was a redemption suit, and their Lordships of the Privy Council allowed the account to be re-opened so that the rights of the parties should be equitably adjusted, it is true that a mortgagee is not a trustee for the mortgagor; but the relationship existing between them is very much like a fiduciary one. It would be inequitable in a redemption suit to compel the mortgagor to pay more to the mortgagee for the recovery of his property than what was, in fact, due under the mortgage.

From some of these cases cited by the respondent it will be seen that Courts of Equity have granted relief where the mistake was a mistake of law. All the cases, however, are special cases where the Court has held that there was an equity in favour of the party seeking to recover. The effect of the decisions in which Courts of Equity have granted such relief is discussed by James L.J. in Rogers v. Ingham (1876) 3 Ch. D. 351. In that case an executor, acting on the advice of Counsel on 3 the construction of a will, proposed to divide in certain proportions a fund between two legatees. One of the legatees, being dissatisfied, took the opinion of the Counsel, which agreed with the former opinion. The executor then divided and paid over the fund in accordance with the opinions. Two years afterwards the dissatisfied legatee filed a bill against the executor and the other legatee, alleging that the will had been wrongly construed, and claiming repayment from the other legatee. It was hold that the suit could not be maintained. At page 355 James L.J. observed:

I have no doubt that there are some oases which have been relied on, in which this Court has not adhered strictly to the rule that a mistake in law is not always incapable of being remedied in this Court; but relief has never been given in the case of a simple money demand by one person against another, there being between those two persons no fiduciary relation whatever, and no equity to supervene by reason of the conduct of either of the parties.

At page 357 Mellish L.J. observed:

There is no doubt as to the rule of law that money paid with a full knowledge of all the facts, although it may be under a mistake of law on the part of both parties, cannot be recovered back; and I think it is equally clear that, as a general rule, the Court of Equity did not, in such cases, interfere with the Courts of law. Nothing, in my opinion, would be more mischievous than for us to say that money paid, for instance, under a mercantile contract, according to the construction which the parties them-selves put upon that contract, might, years afterwards be recovered because perhaps some Court of justice, upon a similar contract, gave to it a different construction from that which the parties had put on it. I think there is no doubt that the rule of law is in itself an equitable and just rule which is not interfered with by Courts of Equity; but, on the other hand, I think that, no doubt, as was said by Turner L.J., ''This Court has power (as I feel no doubt that it has) to relieve against mistakes in law as well as against mistakes in fact;'' that is to say, if there is any equitable ground which makes it, under the particular facts of the case, inequitable that the party who received the money should retain it.

In the present case the parties are parties to a mining lease. The money was paid voluntarily and without any misrepresentation made by the plaintiff. The relationship between the parties cannot possibly be described as a fiduciary relationship, and in my view there is no special equity in the defendant which would entitle him to ask a Court of Equity to afford him relief. It appears to me that the present case falls entirely with in the dicta of James and Mellick, L.JJ. in Rogers v. Ingham (1876) 3 Ch. D. 351, and that being so, it must be held that the overpayments in the present case are irrecoverable either by suit or by way of set-off or adjustment as the defendant has attempted to do in this case. That being so, the respondent''s claim to adjust or set-off these payments must fail, and the plaintiff is entitled to recover the full amount of royalty at the reduced rate due from March 1924 to June 1925, namely, Rs. 53,061-5-6.

The next point taken by the appellant was that the learned Subordinate Judge was wrong in holding that the plaintiff could not appropriate part of the money paid by the defendant for royalty due after June 1925 to arrears of royalty due for the months of October, November and December 1923. No suit could be brought for these arrears because any claim to them is clearly barred by limitation. The plaintiff, however, sought to appropriate later payments by the defendant to these arrears; but in my view he cannot do so. It is abundantly clear that all the later payments made by the defendant towards royalty due were specifically appropriated by the defendant to such royalties. Had no appropriation been made by the defendant, the plaintiff could have appropriated the payments as he desired and could have done so in this suit. The plaintiff''s right to appropriate, however, has been entirely taken away by the express appropriation made by the defendant when he paid the sums. Dr. Dwarka Nath Mitter had to admit that each of the payments made by the defendant had been appropriated by him to specific dues, and eventually Dr. Dwarka Nath Mitter had to concede that the decision of the learned Subordinate Judge on this point is right. One of the reasons given by the learned Subordinate Judge, namely that the plaintiff did not consent to the appropriation by the defendant, is not a sound one, but the decision which he arrived at cannot be assailed. That being so, I am bound to hold that the Subordinate Judge was right in holding that the plaintiff could not appropriate any part of the moneys subsequently paid by the defendant to the arrears of royalty due for the quarter October to December 1923.

The last point taken by the plaintiff was that the learned Subordinate Judge was wrong in disallowing interest on the arrears of royalty. The learned Subordinate Judge held that interest was not recoverable on the arrears of royalty because there was no provision for the payment of such interest in the mining lease. It is to be observed that in para. 6 of the lease, which deals with the payment of minimum royalty. It is expressly provided that if a default is made in payment of a kist interest at the rate of one per cent, per month is payable until realisation; but there is no provision as to payment of interest on what is called commission, that is, any further sum due to the landlord over and above the minimum royalty. It has not been argued before us that the plaintiff is entitled to interest on the full amount of the arrears by reason of any term in the agreement between the parties.

It was, however, strongly contended that the matter is res judicata and that this Court is bound to allow interest as interest was allowed in the previous litigation which ended in the defendant''s appeal being dismissed in the Privy Council. In that litigation the plaintiff had claimed royalty at the increased rate together with interest thereon at 12 per cent, per annum, and it is clear from the judgment of the Calcutta High Court (Ex. 2) and the decree of that Court (Ex. 3) that the plaintiff''s claim was decreed with interest, the interest in fact amounting to Rs. 15,021-1.3. The defendant appealed to their Lordships of the Privy Council, and the appeal was dismissed with costs; but it is clear from the judgment of their Lordships (Ex. 2(a)) that no point was taken as to interest and no reference whatsoever is made to it in the judgment. It is now argued that in the former litigation the liability of the defendant to pay interest on arrears of royalty has been for ever determined, and, therefore, interest must be decreed in the present suit.

The plaintiff in hia plaint did not plead that the matter was res judicata, and no issue was framed on this question by the Court below. Further, it is clear from the judgment of the learned Subordinate Judge that it was never suggested to him that the matter was res judicata. Indeed, it has been conceded in this Court that this question is being raised for the first time. As the matter has not been pleaded and no issue raised, I should be very reluctant to arrive at any finding that the matter is res judicata. In my view, however, it is necessary that I should express my opinion upon the merits of this contention. The only materials before the Court when this question was first raised were the judgment and decree of the Calcutta High Court, (Exs. 2 and 3) and the judgment of their Lordships of the Privy Council (Ex. 2(a)).

All that these documents show is that the plaintiff''s claim in that case for arrears of royalty was decreed with interest thereon at 12 per cent, per annum. There is no reference whatsoever to this question of interest in the judgments of the Calcutta High Court, and, as I have already stated, the matter is not referred to by Lord Parmoor who delivered the judgment of their Lordships of the Privy Council. From these materials it is impossible to say why interest was decreed. There may have been special circumstances existing in that case which entitled the plaintiff to claim interest; but all that can be said is that interest was decreed for some reason or another. Whether similar reasons exist in the present case it is quite impossible to say. In my judgment, it would be impossible to say upon these materials that the Court was bound by the principle of res judicata to grant interest on the arrears claimed in the present suit.

Counsel for the plaintiff at the first hearing before us asked the Court to admit further documents in evidence with a view to substantiate his contention that the question of interest was res judicata. He asked the Court to admit in evidence the plaint in the suit, the written statement and the additional written statement together with the judgment of the learned Subordinate Judge and the decree drawn up in pursuance thereof. On behalf of the respondent it was urged that the Court should not allow the plaintiff to adduce this additional evidence.

The plaintiff suggested that as these were public documents they could be admitted; but even if they are public documents, there is no question that the Court was being asked to admit additional evidence. In my judgment, this is not a case where the Court can permit the plaintiff to adduce additional evidence. The matter is governed by Order 41, Rule 27 as amended by this Court. The amended rule is in these terms:

(1) The parties to an appeal shall not be entitled to produce additional evidence, whether oral or documentary, in the appellate Court. But it--(a) the Court from whose decree the appeal is preferred has refused to admit evidence which ought to have been admitted, or (b) the party seeking to adduce additional evidence, satisfies the appellate Court that such evidence notwithstanding exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree or order under appeal was passed or made, or (c) the appellate Court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause, the appellate Court may allow such evidence or document to be produced, or witness to be examined.

(2) Wherever additional evidence is allowed to be produced by an appellate Court, the Court shall record the reason for its admission.

This evidence was not tendered in the Court below, and, therefore, the evidence cannot be admitted on the ground that the Court below had wrongly refused to admit it. Further, there was no reason at all why this evidence should not have been adduced in the Court below. The parties must have boon aware of the existence of these documents and could, with the exercise of due diligence, have produced and proved them before the Court. Lastly, it cannot possibly be said that these documents are necessary to enable this Court to pronounce judgment upon the question. On the materials which wore before the lower Court, this Court can decide the question and must decide it against the plaintiff. In my view, this Court cannot admit this additional evidence at this stage. It was urged, however, that as the parties might appeal from the decree of this Court the documents should be on the record in the event of it being held that this Court was wrong in the view which it takes as to the admission of this additional evidence. It was suggested that all the documents had been printed in Privy Council Appeal No. 54 of 1912 and that the copies of these documents in question should be brought on the record. Counsel for the respondent naturally objected, but he was prepared to allow them to be brought on the record subject to his objection that the question of res judicata could not be raised at all. The documents were therefore admitted in evidence subject to the defendant''s objection which was to be decided finally in the judgment.

Even if these documents are admissible and can be looked at, they do not, in my view, substantiate the plaintiff''s contention that the question of interest is res judicata. The plaintiff undoubtedly claimed interest in his plaint (Ex. 1) printed at p. 46, part III (after remand). In his written statement (EX. 2) the right to interest was not denied; but an additional written statement was subsequently filed (Ex. 3) in which it is expressly denied that the plaintiff was entitled to interest on arrears of commission or royalty other than minimum royalty, and that the plain, tiff''s claim in respect of interest on any sum payable as commission or royalty in any year in excess of minimum royalty was not maintainable. An issue was framed by the learned Subordinate Judge which was issue 5, which was in these terms: "Is the plaintiff entitled to any interest?" In his judgment (Ex. 4) the learned Subordinate Judge held that interest at the rate of 12 per cent, per annum on arrears of royalty could be decreed by way of damages for non-payment of the royalty and also under the provisions of the Interest Act (Act 32 of 1839). He does not, however, state in the judgment under which of the provisions of the Interest Act interest was recoverable.

It was urged by Counsel for the plaintiff that as the learned Subordinate Judge had granted interest by way of damages and under the Interest Act, it had been forever held that such interest would be recoverable on arrears of royalty. There can be no doubt that at the date of the judgment of the learned Subordinate Judge, namely, 8th September 1909, it was commonly thought that interest by way of damages could always be granted for non-payment of any sum due from one party to the other. Such interest was at that time frequently granted by the High Court at Calcutta, and this erroneous view of the law prevailed in these districts until the decision of their Lordships of the Privy Council in AIR 1938 67 (Privy Council) in which it was 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 on the decretal amount for the period before the institution of the suit, interest for that period could not be allowed by way of damages caused to the respondents by the wrongful detention of their money by the appellants. However, even if the judgment of the Subordinate Judge was clearly wrong and contrary to law, yet the decree in the earlier suit would still operate as res judicata between the parties if the circumstances existing in the present case were the same as those existing in the earlier case. Why the learned Subordinate Judge gave interest by way of damages is not stated. It may be that there were some special circumstances. It is alleged in the plaint in that suit that the plaintiff had failed to pay in spite of repeated demands and there may have been other factors which are not stated in the judgment. In that particular case it might have been argued that there was such a breach of the agreement as to entitle the plaintiff to damages, but the question as to whether damages are recoverable must depend upon whether there has been a particular breach which entitles a party to damages. In my view, the earlier judgment must be held to mean that in the particular facts of that case interest by way of damages was recoverable; but that does not mean that in every case of default, it must now be held that interest by way of damages should be granted.

The second ground for granting interest was under the provisions of the Interest Act (Act 32 of 1839). That Act allows interest to be recovered upon all debts or sums certain payable by virtue of some written instrument at a certain time and in cases where a demand in writing has been made with an intimation that if the money is not paid interest will be chargeable thereon from the date of the demand. Clearly the learned Subordinate Judge did not grant interest upon these arrears of royalty on the ground that they were sums certain payable at a certain time. The amount due for each quarter could only be ascertained after an account had been taken of the quantities of coal of various kinds raised and despatched by rail. Though the sums due could be ascertained with certainty after such accounts had been taken, yet it cannot be said that the claim was for a sum certain payable at a certain time: see Joggomohun Ghose v. Manickchund (1857) 7 M.I.A. 263. The sum certain upon which interest is payable must be certain at the time the promise is made and such is not the case here. It may be that interest was granted in this case under the second provision of the Interest Act, namely, that a demand had been made coupled with an intimation that interest, would be payable from the date of demand if the money were not paid. The judgment does not make it clear upon what precise grounds the claim for interest was granted under the Interest Act. That being so, it cannot be argued that because on the particular facts of the earlier case it was held that interest was recoverable such must now be granted on the facts of this case. The result, therefore, is that even if these documents are admitted in evidence, they do not establish the contention that the question of interest is now res judicata.

As I have stated earlier, it is provided in, para. 6 of the mining lease that interest will be payable at the rate of 12 per cent, per annum on all arrears of minimum royalty, and the question arises whether interest should not be given in this case upon the arrears of minimum royalty. A similar point arose in J.H. Pattinson v. Bindhya Devi AIR 1933 Pat. 263. In that case a claim was made for royalty and interest thereon. The mining lease contained a provision that interest was payable on any arrear of minimum royalty, but there was no provision for interest on any sum in excess of the minimum royalty. A Bench consisting of Wort and Fazl Ali JJ. held that interest was recoverable on the arrears of minimum royalty but not on sums in excess of the minimum royalty. The terms of the present lease are somewhat different from the terms of that in J.H. Pattinson v. Bindhya Devi AIR 1933 Pat. 263, but the fact remains that the arrears in the present case included the minimum royalty for each quarter. The instalment of minimum royalty was certainly a sum payable at a certain time, and any additional payment by way of royalty was the difference between the total amount of royalty worked out at the rates provided in the lease and the minimum royalty. It appears to me that it can be said that part of the arrears for each kist included the instalment of minimum royalty and that being so, interest would run on the quarterly instalments of minimum royalty in arrear but not on the excess. Nothing was paid in the four kists ending 31st March, 30th June, 30th September and 3lst December 1924, and on the kist ending 31st March 1925. For the kist ending 30th June 1925, Rs. 4529-4-0 was paid towards the total demand of royalty of Rs. 9088-14-9.

The minimum royalty during this period was Rs. 6622 per annum, that is, Rs. 1655-8-0 for each quarter. This sum was due for each quarter in 1924 and for the first quarter in 1925, but a sum considerably in excess of this was paid in the June quarter of 1925. That being so, interest will run on the sum of Rs. 1655-8-0 due for each of the quarters of 1924 and the first quarter of 1925 until the date of suit, but no interest will run on the balance of royalty due in respect of each of those quarters or on the balance due for the June quarter of 1925. The learned Judge did not grant pendente lite interest, and it was urged that he should have done so. It was contended that as provision was made for interest in the mining lease the Court had no option but to grant interest on the arrears from the date of the institution of the suit to the end of the period of grace.

As I have pointed out, the only provision for interest is on the kists of the minimum royalty, and I would give the plaintiff pendente lite interest on the arrears of minimum royalty for the five kists to which I have referred. This pendente lite interest will run until the end of the period of grace. The Court could grant pendente lite interest on the whole of the arrears of royalty if it thought proper; but, in my view, it would not be just to give the plaintiff interest on anything more than the arrears of minimum royalty. It must be remembered that the plaintiff has been overpaid a large sum and that the defendant cannot recover the same. It would, in my view, be most unfair to grant the plaintiff pendente lite interest on anything more than the arrears of minimum royalty having regard to these overpayments which have been held to be irrecoverable. That being so, no pendente lite interest is granted on the arrears of royalty other than the arrears of minimum royalty. The learned Judge also refused to grant future interest; but, in my view, the plaintiff is entitled to such interest at the Court rate, namely, 6 per cent, per annum on the whole amount due at the end of the period of grace.

No other point has been taken in this appeal, and for the reasons which I have given the appeal is allowed in part, and the decree will be varied in the manner which I have indicated by granting interest and pendente lite interest on the arrears of mini-mum royalty for the four kists of 1924 and the first kist of 1925. In all other respects the decision of the Court below is affirmed. The defendant has failed on his two points taken in the cross-objection which is accordingly dismissed. A fresh mortgage decree will be drawn up, and I would fix the end of the period of grace at three months from to-day. The parties will receive and pay costs of this appeal and of the proceedings in the Court below in proportion to their success and failure. The defendant-respondent must pay to the plaintiff, appellant the costs of the cross-objection.

Manohar Lall, J.

I entirely agree and have nothing to add.