Judgement Consolidated Appeals (No. 69 of 1937) from two decrees of the High Court (March 24, 1936), which had affirmed a decree of the District Judge of Burdwan (December 7, 1932), which modified a decree of the Subordinate Judge at Asansol (July 17, 1930). Law. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 124 By a mining lease, dated March 4, 1915, the plaintiffs, Sri Sri Janardan Kishore Lal Singh Deo and Sri Sri Jagannath Kishore Lal Singh Deo (the respondents in the first appeal and the appellants in the second appeal) granted a coal mining lease for a term of thirty years from April i, 1915, to the defendants, the Bengal Coal Co., Ld. (appellants in the first appeal and respondents in the second appeal). By the indenture the lessees were granted the right to work mines for raising coal under Mousa Poidih, in the district of Burdwan. The first of the lessees covenants, contained in Part VII. of the schedule to the lease, provided that "The lessees shall pay the royalty and royalties reserved by this lease at the time and in the manner above appointed in that behalf and shall also pay and discharge all taxes, rates, assessments and impositions whatsoever being in the nature of public demands which shall from time to time be charged assessed or imposed upon the said mines or any part thereof by authority of the Government of India or the said Local "Government or otherwise except demand for land revenue and shall also pay interest at the rate of 12 per cent, per annum on all arrears of such royalty or royalties from the due date thereof.” In their action, filed on June 21, 1929, the plaintiffs claimed to be entitled to be reimbursed by the defendant lessees in respect of the following cesses or taxes for which they (the plaintiffs) became liable between the years 1923-29 inclusive, and which they had paid (1.) Road and Public Works Cess under the Cess Act, Bengal Act IX. of 1880; (2.) expenses charged to the plaintiffs under cl. (b) of sub-s. 1 of s. 10 of the Bengal Mining Settlements Act, II of 1912; and (3.) income-tax upon royalties reserved by the lease. of 1880; (2.) expenses charged to the plaintiffs under cl. (b) of sub-s. 1 of s. 10 of the Bengal Mining Settlements Act, II of 1912; and (3.) income-tax upon royalties reserved by the lease. The defendant lessees denied that they were liable under the terms of the indenture to pay to the plaintiffs the entire "amount of tax or cess or other assessment on the annual net profits of the mines which may be imposed by the Government, or any portion thereof." The relevant statutory provisions appear from the judgment of the Judicial Committee. The Subordinate Judge at Asansol gave the plaintiffs a decree in respect of all three heads of claim, but disallowed a claim for interest. On appeal by the defendants the District Judge of Burdwan disallowed the claim in respect of income-tax, but upheld the Trial Courts decision as to the other two heads of claim. The High Court (Nasim Ali and Edgley JJ.), on appeal by both parties, affirmed the decision of the District Judge. In the first of the present appeals the defendants contested liability to pay the Road and Public Works Cess and the charge under the Mining Settlements Act. In the second appeal the plaintiffs appealed against the disallowance of their claim in respect of income-tax. 1938. June 17. Cyril Radcliffe K.C. and L. M. Jopling for the Bengal Coal Co., Ld. The question is whether or not the three particular taxes with which this case deals have, on the true construction of the covenant, to be borne by the lessees or by the landlords who have in fact been charged under them and have paid them. There has always been a distinction between a charge on mines and a charge on the landlord and tenant in respect of the mines; Elphinstones Precedents in Conveyancing, 13th ed., vol. i., pp. 892, 1070; Prideauxs Forms and Precedents in Conveyancing, 22nd ed., vol. iii., pp. 1029, 1046. The Road and Public Works Cess is imposed by the Cess Act, Bengal Act IX. of 1880. [Reference was made to the Preamble, and to ss. 4, 5, 6, 72, 75, 80, 81 and 98 of the Act of 1880.] Is that cess a tax upon the property, or a tax in the sense of a personal demand on the persons interested in the property ? of 1880. [Reference was made to the Preamble, and to ss. 4, 5, 6, 72, 75, 80, 81 and 98 of the Act of 1880.] Is that cess a tax upon the property, or a tax in the sense of a personal demand on the persons interested in the property ? It has been held by the Privy Council that the Collector acts quite rightly under the Act of 1880 if he assesses the landlord upon nothing more than the annual profits which he derives from the mines Maharajah Manindra Chandra Nandi v. Secretary of State for India in Council. Law. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 125 (( 1910) L. R. 38 I. A. 31.) The Road Cess is really a tax on the landlords interest in the present case, because it is a tax on the royalty. Secondly, it carries no remedies as against the property at all, it only carries the general remedy as against the landlord if he does not pay. Thirdly, it is a tax in respect of his interest in the royalty, and not in respect of the mine itself. With regard to the expenses to be charged under the Bengal Mining Settlements Act, 1912, it is plain that under the scheme of s. 10 there are two entirely separate taxes imposed separately upon individuals; one tax made payable directly by the owner of the mine, and based on the output of the mine, and a quite separate tax to be imposed on the individual who receives the royalties from the mine, and which is based on the amount of the Road Cess which he pays in respect of what he receives. [Reference was made to ss. 2, 3, 6 and 10 of the Bengal Mining Settlements Act, II. of 1912, and, on the question of modes of execution, to the Bengal Public Demands Recovery Act, III. of 1913, s. 14.] It is submitted that there never is a charge or tax imposed on the mine; it is a purely personal tax, and it cannot be brought within the words of the covenant. The Indian Income-tax Act, 1922, has nothing to do with a charge or tax on the mine at all; it imposes a personal tax on total income. The Indian Income-tax Act, 1922, has nothing to do with a charge or tax on the mine at all; it imposes a personal tax on total income. It is not conceivable that it was the intention of the parties that the lessees should bear any of the liability of the lessors in respect of income-tax—a liability the extent of which would depend on the total income from all sources of the lessors. On the distinction between a tax on property and a tax in respect of property see A Hum v. Dickinson (( 1882) 9 Q. B. D. 632.); Foulger v. Arding ([ 1902] 1 K. B. 700, 711.); and Eastwood v. McNab. ([ 1914] 2 K. B. 361.) The form of the covenant and the absence of the words " in respect of the mines " or "on the lessor or "lessee in respect thereof " shows that it was not the intention of the parties that taxes assessed or imposed upon the lessor should be included in the covenant. In the absence of express words it must be assumed that the parties did not intend to vary the rights and liabilities imposed on them respectively by the Cess Act, 1880, and the Bengal Mining Settlements Act, 1912. L. M. Jopling followed. A. M. Dunne K.C.,]. M. Parikh, Ralph Parikh and Sir Hari Singh dour for the respondent plaintiffs, were not required to argue on the question of the Road Cess. The question is whether there are not words in this covenant sufficiently clear to denote that the intention was to indemnify the owners, the lessors, against all public demands which were to be made against the mine itself. There is a question whether " on " the mine cannot be interpreted as "in respect "of" the mine. It is submitted that what was meant was that the lessees of the mine undertook that whatever taxes, rates, assessments or impositions were in the nature of a public demand, and which would be charged, assessed or imposed on the mine or any part thereof, they would indemnify the lessors against payment. Payne v. Esdaile (i) is sufficient authority to support the view of one of the judges in the present case, who said that he could not see any difference between "on " and " in respect of " the mine. Payne v. Esdaile (i) is sufficient authority to support the view of one of the judges in the present case, who said that he could not see any difference between "on " and " in respect of " the mine. The Mines Board of Health Cess falls within the provisions of the covenan, and all the three Courts in India were right in so deciding. With regard to income-tax, the plaintiffs are entitled to recover, as held by the Subordinate Judge, the amount of the income-tax paid by them on the royalties paid to them by the defendant company. Income-tax, being recoverable as if it were an arrear of land revenue (s. 46, sub-s. 5 (2.), of the Indian Income-tax Act, 1922) is charged, assessed or imposed on the demised mines within the meaning of the covenant. J. M. Parikh followed. At the time the lease was entered into the position with regard to income-tax Law. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 126 was more simple, and it is submitted that it was within the intention of the parties that the income-tax should come within the covenant. Cyril Radcliffe K.C. replied. Payne v. Esdaile (( 1888) 13 App. Cas. 613.) supports the contentions of the defendant company rather than those of the plaintiffs. There is nothing in the context of the lessees covenant to show that anything other than the common signification of the words " charged upon the land " should be given to the words in the covenant. June 28. The judgment of their Lordships was delivered by SIR GEORGE RANKIN. By a mining lease, dated March 4, 1915, the plaintiffs demised to the Bengal Coal Co., Ld. (defendants), therein called " the lessees,” the mines, beds, veins and seams of coal in Mousa Poidih in the district of Burdwan for thirty years from April 1, 1915. The first of the lessees covenants, contained in Part VII. By a mining lease, dated March 4, 1915, the plaintiffs demised to the Bengal Coal Co., Ld. (defendants), therein called " the lessees,” the mines, beds, veins and seams of coal in Mousa Poidih in the district of Burdwan for thirty years from April 1, 1915. The first of the lessees covenants, contained in Part VII. of the schedule to the lease, was in the following terms " The lessees shall "pay the royalty and royalties reserved by this lease at the "time and in the manner above appointed in that behalf "and shall also pay and discharge all taxes, rates, assessments "and impositions whatsoever being in the nature of public "demands which shall from time to time be charged assessed "or imposed upon the said mines or any part thereof by "authority of the Government of India or the said Local "Government or otherwise except demand for land revenue "and shall also pay interest at the rate of 12 per cent, per "annum on all arrears of such royalty or royalties from the "due date thereof." By their plaint, filed in the Court of the Subordinate Judge at Asansol on June 21, 1929, the plaintiffs claimed to be entitled under this covenant to decree against the defendants for a sum of Rs.2,095—8—0, together with certain interest. The claim is for reimbursement in respect of certain cesses or taxes for which the plaintiffs became liable between the years 1923-29 (inclusive), and which they have paid. These public demands are three in number—namely, (1.) Road and Public Works Cess under the Cess Act, 1880 (Bengal Act IX. of 1880); (2.) expenses charged to the plaintiffs under cl. (b) of sub-s. 1 of s. 10 of the Bengal Mining Settlements Act, 1912 (Bengal Act II. of 1912); (3.) income-tax upon royalties reserved by the lease. The Subordinate Judge gave the plaintiffs a decree in respect of all three heads of claim, but disallowed the claim for interest. On appeal by the defendants the District Judge of Burdwan (December 7, 1932) disallowed the claim in respect of income-tax, but upheld the Trial Courts decision as to the other two heads of claim. Both sides having appealed to the High Court, Nasim Ali and Edgley JJ. affirmed the decision of the District Judge by decrees dated March 24, 1936. On appeal by the defendants the District Judge of Burdwan (December 7, 1932) disallowed the claim in respect of income-tax, but upheld the Trial Courts decision as to the other two heads of claim. Both sides having appealed to the High Court, Nasim Ali and Edgley JJ. affirmed the decision of the District Judge by decrees dated March 24, 1936. Two appeals to His Majesty have been brought pursuant to certificates granted by the High Court under cl. (c) of s. 109 of the Civil Procedure Code, and they have been consolidated, The defendants by their appeal dispute that they are liable in respect of Road and Public Works Cess or the charge under the Mining Settlements Act. The plaintiffs appeal against the disallowance of their claim in respect of income-tax. No question as to interest arises; nor is it contended that there is any reason why the covenant should not have effect according to its tenor. Learned counsel for the defendants have drawn attention to the fact that the words of the covenant—charged, assessed or imposed upon the said mines or any part thereof—are not accompanied by phrases (to be found in books of conveyancing precedents) designed to enlarge their scope by making express mention of demands imposed in respect of the demised premises, or in respect of the royalties reserved by the lease. Allum v. Dickinson (( 1882) 9 Q. B. D. 632.) has been cited to show that the fact that a charge can be enforced against the premises does not in all circumstances make it a charge imposed on the premises; and the observations of Mathew L.J. in Foulger v. Arding ([ 1902] 1 K. R. 700, 711.) have been referred to as showing that unless there be express mention of demands imposed on the owner in respect of the premises, such a demand is not Law. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 127 within the covenant. As regards the claim for monies paid under the Cess Act, 1880, their Lordships are of opinion that the terms of that enactment deprive the defendants contention of its force— "5. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 127 within the covenant. As regards the claim for monies paid under the Cess Act, 1880, their Lordships are of opinion that the terms of that enactment deprive the defendants contention of its force— "5. From and after the commencement of this Act in any district or part of a district all immovable property situate therein, except as otherwise in sections 2 and 8 provided, shall be liable to the payment of a road cess and public works cess. "6. The road cess and the public works cess shall be "assessed on the annual value of lands and on the annual "net profits from mines, quarries, tramways, railways, and other immovable property, ascertained respectively as in this Act prescribed;...." These words, together with the preamble and other sections (e.g., s. 80), are to the effect that the cess is levied on the immovable property, and that the immovable property is liable to pay it. It is assessed differently as regards lands and mines—in the case of lands it is assessed on the annual value, and in the case of mines on the annual net profits. The judgment of the Board delivered by Mr. Ameer Ali in Maharajah Manindra Chandra Nandi v. Secretary of State for India in Council (( 1910) L. R. 38 I. A. 31.) has been referred to, but their Lordships are unable to find that it casts any doubt upon the character of the cess as one imposed upon the immovable property by the plain terms of the Act. The nature of the payment to be made under s. 10, sub-s. I, of Bengal Act II. of 1912 by the persons mentioned in cl. (b) —"all persons who receive any royalty, rent or fine from such "mines " is not so clear. The word "owner " in this Act points in such a case as the present to the lessees and not to the lessors. Expenses incurred by the Mines Board of Health in respect of any area declared to be a " mining settlement " are to be "charged to" the persons mentioned in cl. The word "owner " in this Act points in such a case as the present to the lessees and not to the lessors. Expenses incurred by the Mines Board of Health in respect of any area declared to be a " mining settlement " are to be "charged to" the persons mentioned in cl. (b) and to the lessees in such proportions as the Local Government may direct; the total burden of the lessees is to be divided among them on the basis of output, while the total burden of the receivers of royalties, etc., is to be divided among them on the basis of the Road Cess payable by each. There is a provision [sub-s. 4] that "all expenses chargeable under this section shall "be recoverable as if they were arrears of land-revenue." This would subject the defaulter not merely to "certificate "procedure " under the Public Demands Recovery Act, but also to a sale of his estate or interest under the Land Revenue Sales Acts [Act XI. of 1859, Bengal Act, VII. of 1868]. Their Lordships think that the effect of the Act is to distribute the burden of the expenses among the interests (superior and inferior) in the mine. They say nothing upon the question whether a revenue-sale for the zemindars default would affect the interest of his lessees [cf. Act XI. of 1859,s- 37], because they are not of opinion that the words "upon the said mines or any "part thereof " refer to the interest of the lessees as distinct from that of the lessors. Nor are the plaintiffs concerned in the present case to demonstrate that for default by the lessees there is a remedy against the leasehold interest. Land revenue is certainly a burden "charged, assessed or imposed upon " the land. If the remedy against the land be what makes it so, or be sufficient to make it so, then the payment now in question is related in like manner to the lessors interest. This conclusion cannot be avoided by contending that the persons referred to in cl. (b) of s. 10 of the Act of 1912 need not necessarily have any interest in the mine at all. This conclusion cannot be avoided by contending that the persons referred to in cl. (b) of s. 10 of the Act of 1912 need not necessarily have any interest in the mine at all. Receipt of "royalty, rent or fine "from such mines " prima facie imports such an interest, and in the absence of such interest Road Cess would not be chargeable under the Cess Act of 1880. The words "taxes, rates, assessments and impositions "whatsoever " are followed by the words "charged, assessed "or imposed upon the said mines "—a variety of phrase which is intended to avoid restricting the covenant to cases in which the demand is in the strictest sense "charged upon the land." The phrases are to be taken in their ordinary and natural meaning. In Payne v. Esdaile (( 1888) 13 Law. Rep. 65 Ind. App. 354 ( 1937- 1938) Bengal C oal C o. Ltd. v. Janardan Kishore Lal Singh Deo 128 App. Cas. 613.) the House of Lords had to interpret the phrase in a Statute of Limitations "periodical "sums of money charged upon or payable out of any land "(except moduses or compositions belong to a spiritual or "eleemosynary corporation sole)." As moduses were incapable of being charged on land in the sense of being payable out of land, or realizable by remedy against the land itself, the phrase "charged upon " was interpreted in a wider sense and as having no technical meaning. It was considered by Lord Herschell that the prima facie and most common meaning would make it applicable only to those cases in which there was some remedy against the land itself, but that it might well be used to describe a burden imposed upon the land if a payment has to be made in respect of land and the land can only be enjoyed subject to the liability for that payment. Lord Macnaghten observed (13 App. Cas. 626.) "The liability to the payment falls "upon the occupier or taker for the time being by reason of his "occupation. The land carries the liability as a burthen from "taker to taker. Beyond all doubt that liability subtracts "something from the profitable enjoyment of the land; it "must be taken into account on the occasion of a sale, a mort-"gage, or a lease. The land carries the liability as a burthen from "taker to taker. Beyond all doubt that liability subtracts "something from the profitable enjoyment of the land; it "must be taken into account on the occasion of a sale, a mort-"gage, or a lease. An intending purchaser would give so "much less purchase-money; an intending mortgagee would "strike the amount off the rental in calculating the value of the "proposed security, and an intending lessee would offer so "much less rent. It seems to me that according to the ordinary "understanding of mankind that is a charge upon land which "cannot be dissociated from the land and which charges the "occupier in respect of the land." The particular illustration of an intending lessee does not here apply owing to the special nature of the demand in question; but the other illustrations (intending purchaser, intending mortgagee) are applicable, and add point to the circumstance that a remedy is given against the land itself. Their Lordships see no features in the present case rendering these considerations insufficient to attract the operation of the covenant, and are of opinion that the High Court was right in holding that this part of the plaintiffs claim is well-founded. Income-tax is in a very different position, as intending purchasers or mortgagees of the lessors interest would appreciate. It is not a tax imposed upon the mines in any sense relevant to the lessees covenants in a mining lease. Indeed, express words referring to public demands imposed upon the proprietors in respect of the mine would not have brought income-tax within the covenant. It may be true that the suggestion that the covenant extends to income-tax in respect of the plaintiffs royalties would not in 1915 seem so unreasonable as it would after the Indian Income-tax Acts of 1918 and 1922 had graduated the tax according to the amount of the assessees total income. But a general tax on the income of all persons, with exceptions for smaller incomes, is plainly outside the scope of the covenant. The result is that in their Lordships opinion both appeals should be dismissed. They will humbly advise His Majesty accordingly. There will be no order for costs.