TMI Blog1936 (5) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) defendant 1 Narendra Chaudhury, in whose name a lease of the underground rights was taken from the plaintiff for a period of 499 years by Sudhangsu Bhusan (defendant 11), (2) Defendants 2 and 3 (the Sarkars), transferees from the real lessee defendant 11; (3) Defendant 4, the Official Assignee, the Sarkars having been adjudged insolvent; (4) the Dagas, defendants 5 to 9, who advanced money to the Sarkars on mortgage of their leasehold rights in the Colliery: and (5) Defendant 10, Vithal Das, purchaser at the sale by the Official Assignee who are to sell the mortgaged property and to pay off the mortgage; and (6) defendant 11, the real lessee under the plaintiff. 2. The plaintiff deity founds its claim on the pottah executed in favour of defendant 1 on 31st Chaitra 1327, B.S. 13th April 1921 and filed the Kabuliyat which is the counterpart of the said pottah along with the plaint. It is common ground that defendants 2 and 3 took a transfer of the leasehold interest under the lease of 13th April 1921 from defendants 1 and 11, the real lessee. The plaintiff next alleges that defendants 5 to 9(now appellants) took an English mortgage of the property in suit fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venants contained in the lease in question; they deny that they have kept wider galleries; they allege that the statement in para. 7 of the plaint quoted above is false; they pleaded that the rule as to keeping of galleries of certain dimensions was not an inflexible rule and that she working of the mine was done with the full knowledge of plaintiffs and there was waiver and that the plaintiff's officers frequently used to come and inspect the mines, that the plaintiffs are estopped From claiming damages; that the claim for damages are excessive; that they are not trespassers and they did no injury to the colliery. On this state of the pleadings several issues were framed and decided, but it is not necessary to refer to them all as the question in controversy before us in appeal has been limited to certain issues. The material issues are: issue 2 which is in these terms: Whether the mortgages dated 26th February 1923 and 17th December 1926 were English mortgages as defined in the Transfer of Property Act. If so, are the mortgagees liable for the rents and royalties? 5. Issue 4 is to the following effect: Are the defendants 5 to 9 liable to any portion of the claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an error in law in making the appellants liable for breach of covenants, for keeping proper pillars of coal for supporting the roof contained in the head lease Ex. 1 dated 13th April 1921 (Book B, p. 1) as they were no parties to the head lease and as they were not as-signees of the head lease, but the mortgages in their favour being by way of sub-lease they were merely lessees under the Sarkars (defendants 2 and 3), the transferees from defendants 1 and 11, the head lessees. The argument of the appellant has been put in this way: 9. It is unarguable on the authorities that there being no privity between Dagas (sub-lessees) and the plaintiff the Dagas are liable for breach of covenants contained in the head lease, assuming that the breach was committed by the Dagas and that the view of the Subordinate Judge, that this rule does not apply as the Dagas had notice of the covenants contained in the head lease, is erroneous as the basis of the principle is not whether the sub-lessee had notice of the covenants, but that there is neither privity of contract nor estate as between the lessor and the sub.lessee, and the following authorities were cited in support of this contention: Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ground that the interest of Sudhangshu Mukherjee in the leasehold devolved by several intermediate transactions on 8th November 1922 on Bolai Sarkkar, defendant 2; and the said defendant along with his brother Sailendra, defendant 3, mortgaged the leasehold in the colliery along with other properties to the Dagas (defendants 5 to 9) on 17th December 1926: see Ex. A (1) 47 Book B, This mortgage was by way of sub-lease for the residue of the terms less two days as the habendum clause at p. 51, line 20 would show. 12. The mortgage by way of sub. demise was for a consideration of over a lakh of rupees. And it provides that the Dagas were to take possession but the Sarkars were to pay rent and royalty. There was some discussion at the Bar as to the real nature of this mortgage. On the one hand it is argued for the respondent that this mortgage was an English mortgage and it was contended on the other hand by the appellants that this was really a mortgage by way of sub-lease within the meaning of Section 108 (J), T. P. Act. We have no doubt that it is not an English mortgage which would have vested the whole legal interest in the mortgagees and created privity of estate between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was appointed took possession of the Colliery. In support of the ground that as there is no privity of contract between the sub-lessees (Dagas) and the head lessor (the plaintiff) the latter cannot sue the sub-lessee on any of the covenants in the head lease: reliance has been placed in Holford v. Hatch, (1779) 1 Doug 183 and on the decision of this Court in Akshoy Kumar Chatterjee v. Akman Molla 1915 Cal 154 reliance has also been placed on the following passage from Woodfall's Law of Landlord and Tenant, 23rd Edn. 334. Where there is a contract to perform all the contracts of the head lease or to perform sub-stantially the same covenants in substantially the same terms and both the contracts of the head lease and the sub-lease are broken the head landlord (although he can eject) cannot sue the sub-tenant for damages, there being no privity of contract between them; but the head landlord may sue the mesne landlord who, in his turn, may sue the sub-tenant, or pursue what seems to be the more convenient course of bringing him in as third party under Section 39, Supreme Court of Judicature (consolidation) Act, 1925 (re-enacting Section 24, Sub-section 3, Judicature Act, 1873) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venants where, as the authorities, presently to be noticed show, the question of notice becomes very material even if there is want of privity of contract or estate as between lessor and sub-lessee. 18. Indeed in support of the view taken in Woodfall's Landlord and Tenant in the passage referred to above the learned author refers to the case in Hornoy v. Cardwell (1881) 8 Q B D 329 which was the case of an affirmative covenant-covenant by the defendant being to repair and paint and leave in repairs the demised premises. The equitable doctrine of restrictive covenants has been brought to a focus in the leading case of Tulk v. Maxhay (1848)2 Ph 774 That doctrine has been affirmed in later decisions: see Haywood v Brunswick Permanent Benefit Building Society (1881) 8 Q B D 403 and has more recently been approved by their Lorships of the Judicial Committee of the Privy Council in Lord Strathcona Ltd. v. Dominion Coal Co. Ltd. (1926) A C 108 a case to which I drew the attention of Mr. P.R. Das, in the course of his argument. If therefore the covenant to keep pillars of a certain width, which it is conceded is a negative covenant although affirmative in form be also a restrictiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and unknown to the principles of the law and could not bind such assignee by affecting his conscience. No reply was called for to this argument and the Lord Chancellor said that Lord Brougham never could have meant to lay down the doctrine that this Court would not enforce an equity attached to land by the owner, unless under such circumstances as would maintain an action at law. If that be the result of thess observations added the Lord Chancellor, I can only say that I cannot coincide with it: and again Lord Shaw remarks But Tulk v. Maxhay (1848) 2 Ph 774 is important for a further and vital consideration, namely that it analyses the true situation of a purchaser who having bought upon the terms of the restriction upon free contract existing, thereafter when vested in the lands attempts to divest himself of the condition under which he had bought: 'it is said that the covenant being one which does not run with the land, this Court cannot enforce it; but the question is not whether the covenant runs with the land, but whether a party shall be permitted to use the land in a manner inconsistent with the contract entered into by his vendor, and with notice of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be restrictive that the covenantee must retain some interest in the land for the benefit of which the covenant is entered into. That this is an essential requirement of a restrictive covenant appears plain on the authorities as has been pointed out by Lord Shaw in Lord Strathcona Ltd. v. Dominion Coal Co. Ltd. (1926) A C 108 in the following passage: A perusal of the numerous decisions on this branch of the law shows that much difficulty has been caused by the attempt to extend these principles to cases to which they could not by the nature of the case have been meant to apply. It has been forgotten that to put the point very simply the person seeking to enforce such a restriction must, of course, have and continue to have an interest in the subject matter of the contract: for instance, in the case of land he must continue to hold the land in whose favour the restrictive covenant was meant to apply. That was clearly the state of matters in Tulk v. Maxhay (1848)2 Ph 774 applicable to the possession of real estate in Leicester Square. It was also clearly the case in De Mattos v. Gibson (1858) 4 De G J 276 in which the person seeking to enforce the injunction had an interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Judge, 'a conveyance in fee simple leaves nothing in the grantor, it does not follow that a lease in perpetuity here has any such result .... The law of this country does undoubtedly allow of a lease in perpetuity ... a man who being owner of land, grants a lease in perpetuity carves a subordinate interest out of his own, and does not annihilate his own interest. This result is to be inferred by the use of the word lease, which implies an interest still remaining in the lessor.' He held, therefore, that whether the Transfer of Property Act applied or not, such a lease is forfeitable, notwithstanding that it is permanent. In this opinion their Lordships concur, and it follows that they are unable to give to the Limitation Act wider interpretation adopted by the High Court and to treat the lessee as a purchaser under Article 134 of the Act. The purchaser must be the purchaser of an absolute title. 22. The reversion in the Kajora Colliery still remained in the plaintiff and to protect that, the covenant that the galleries and pillars of certain width must be kept was entered into. The only case which supports the contention of the appellant, that there is no reversion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the plaintiff and the covenant is for that reason also a restrictive covenant in the sense stated by the authorities previously referred to. In reply the appellant has argued that the covenant was for the protection of the roof which is distinct from the surface and as the roof is a part of the demised premises the covenant is not a restrictive one. The argument of the respondent, however, seems to be plausible one and apart from the question of the protection of the reversion, the protection of the surface which belongs to the respondent might have been intended when the covenant to keep pillars of certain width was entered into. For the aforesaid reasons we are of opinion that the defendants 5 to 9 treating them as sub-lessees, i.e., treating their mortgage being by way of sub-demise are bound by the covenant and remedy by injunction was undoubtedly available against them apart from the principle of restrictive covenant on the principle laid down in the following passage in the judgment of Knight Bruce, L.J. in De Mattos v. Gibson (1858) 4 De G J 276 Reason and justice seem to prescribe that at least as a general rule where a man by gift or purchase, acquires property from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 indicate that property in pillars did not pass and was excepted from the demise. It is a possible construction in any event. The clause that permission was intended to be taken (although not definitely expressed) in cutting pillars after all the land on regularly keeping pillars is worked out would suggest that property in the pillars remained in the lessor. As against this construction it is pointed out for the appellants that the pillars were not exempted from the demise and that what passed were the underground rights in the entire 181 bighas which included the pillars, and the lease in this case was sought to be distinguished from the lease in Taylor v. Mostyn (1883) 23 Ch D 583 to which I drew the attention of learned Counsel for the appellant. According to Clause 6, the pillars of certain width had to be kept for the protection of the roof and then follows Clause 17 which according to the correct translation agreed to by the learned advocates on both sides is in these terms: When the cutting of all coal in all the land settled on keeping proper pillars regularly is finished I will be able to cut the pillars after informing you and presenting a petition to you and af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A C 98 and it was held that a covenant is annexed to land if it binds the land in its inception or affects the nature, value and quality of the land. In the same case it was said that the principle of restrictive covenants as enunciated in Rogers v. Hosegood (1900) 2 Ch 388 as between vendor and purchaser was equally applicable to the case of lessor and lessee. The Rt. Hon'ble late Sir Dinshaw Mulla in his commentary on the Transfer of Property notices under his notes to Section 40 that the case law in India as to restrictive covenants is meagre and it has not yet been decided whether a restrictive covenant would be binding on trespasser as in In Re: Nisbet Potta's Contract (1906) 1 Ch 386 or a more occupier as in Mander v. Fakke (1891) 2 Ch 554 The words immovable property are not defined in the Transfer of Property Act. They are said to include timber, standing crops. We have to look for its definition to the General Clauses Act which again is not exhaustive. The definition is as follows: immovable property shall include land, benefits to arise out of land and things attached to earth. 29. A benefit to arise out of land is interest in land and is, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no issue on the question of liability of defendants 5 to 9 as to damages which was admitted. See, p. 36, Vol. A, order sheet. See also the written statement of the defendants para. 17 124 Vol. the question of waiver by the plaintiff is suggested. There is no substance in this ground, which must fail. It is also to be mentioned in fairness to learned Counsel for the appellant that although this point was taken in the opening it was not eventually persisted in. 31. The third ground taken is that the evidence does not show that there has been any breach of covenants by the appellants (Dagas, defendants 5 to 9). It is argued with great force that there is no evidence that breaches of covenants regarding pillars and galleries took place after the Dagas entered into possession in December 1926. On the other hand it is submitted that the plan Ex. 4 (i), which was adduced in evidence on behalf of the plaintiff, is conclusive on the point that all the breaches of covenant regarding pillars and galleries took place before the Dagas (appellants) took possession. Ex. 4 (i) is map No. 5 in the book of maps. It is pointed out that the dotted red lines show the workings before the Dagas took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of plan Ex. 4 (i)]. Here a little correction must be made in the printed map 5, Ex. 4 (i). The printed map shows working up to 1929-in the original it is up to 27th June 1928. It is to be noticed that during the hearing plaintiff produced Ex. 4 (h) which was filed by the defendants to the Chief Inspector of Mines under the Mines Regulation, Ch. (i). Rules 10, and 12 of the Regulation and the commissioner relied on the same. The appellants strongly object to the reception of this map in evidence as it was made for another purpose. The first exception taken to the Commissioners' report, viz. that Ex. 4 (i) plan could not be verified as the Commissioners never made an underground survey must fail seeing that the Commissioners in para. 5 of their report, Vol. A, p. 213 say: We held an investigation after giving due notice to the parties and made a thorough inspection of all the underground working accompanied by the representatives of the parties. 34. The Commissioners were never examined on this point although there were ample opportunities of examining them as we shall show hereafter. It is said that it was physically 'impossible for the commissioners to measure the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kerr v. Nuzzur Mahomed (1865) 2 W R 28 (P C) and the case in Preo Nath Mozumdar v. Durga Tarini Ghose (1911) 14 C L J 578 It is said that for the purpose of Mines Regulation Rule 12, Ch. (i), it was not necessary to show the correct working on the eastern side. The mine authorities were not concerned with the question as to whether there was depillaring or not or whether the galleries were driven wide. The report of the commissioners, it may be stated in passing, was not attacked on the ground that it was a dishonest report. So far as the statements of fact were concerned learned Counsel for the appellants said he was prepared to accept them, e.g., the fact that roof stones have been exposed and collapsed, but what is challenged is the findings of the commissioners that these devastating acts were committed after the appellants came on the scene. The respondents wanted to prove depillaring and for that purpose they would rely on Ex. 4 (i) but they are not prepared to accept the date of depillaring as given in Ex. 4 (i), viz. all the depillaring was done before 30th December 1926, the crucial date as the defendants came on the scene after that date. It is argued that it is not permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p to January 1928 and has been properly admitted in evidence. The admission of this map in evidence has this important effect that it discredits Ex. (4) (i), the map No. 5, to a large extent and justified the view of the Subordinate Judge that if not a fabrication it does not correctly represent the working of the mine with reference to the dates of the workings in particular. It is a matter of very great significance that Aswini under whose supervision the working plan, of which Ex. 4 (h) is a tracing, was prepared was not examined to prove that Ex. 4 (h) was incorrect although he was cited as a witness by the defendants and was present in Court: see p. 248 (Book A). For the reason given, we must overrule the objection to the reports of the Commissioners on the ground that the Commissioners should not have compared their own plan with Ex. 4 (h) as the same was inadmissible. It may also be mentioned in this connexion that under Section 35 of the Mines Act 4 of 1923, that Act prescribes a punishment for not preparing a plan. It is very unlikely that in such circumstances an incorrect plan would be submitted. We agree therefore with the Subordinate Judge in the preliminary judgment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dinate Judge, while conceding that in assessing damages all expenses incurred by defendants for raising coal should be deducted from the whole value of the coal, felt himself bound by the preliminary judgment and held that he could not allow any deduction on account of costs for bringing it to the pit's mouth and for severing the coal. The learned Counsel for the appellant has contended that this view is opposed to a recent decision of the Judicial Committee in Currimbhoy v. L.A. Creet 1933 P C 29 and as the present appeal is directed both against the preliminary and final judgment there is nothing to prevent us in giving the relief on this head asked for by the defendant. The rule laid down in Currimbhoy v. L.A. Creet 1933 P C 29 is this: As against the gross value of the coal there will be charged all expenses properly incurred by the defendants in getting the coal, bringing it to Bank and marketing it, including any rents or royalties so incurred; if these are not ascertainable the Court will fix a proper rate to be deducted from the gross value in respect of these matters. A deduction from the gross value will also be allowed, to be leased on a reasonable rate of depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidence of Sakti Pada Bhattacharya, plaintiff's agent, see Book A, p. 394, line 10 et seq, we think a deduction should be made on the basis of ₹ 2 per ton. It has been conceded by Mr. Chakravarti that from the quantity of 25,338 tons, there would be a deduction of 6,490 tons upon which royalty was allowed so that the profit must be calculated on the basis of the steam coal and dust coal being in the proportion of 80 per cent and 20 per cent. To this extent the decree must be varied on this head. The result is that the decree of the Subordinate Judge on this head of damages must be varied in this way. On the head of damages, for 25,338 tons of coal raised after December 1927 up to the date of suit the Subordinate Judge has awarded a decree to plaintiff for ₹ 80,449.8-0 (see p. 487, Book-A). This figure was arrived at on the basis indicated in the 2nd and 3rd report of the commissioners (see pp. 405 and 458, Book-A). 42. According to the concession made by Mr. Brojo Lal Chakravarty the price of 6,490 tons of steam and slack coal in the proportion of 80 to 20 per cent must be deducted, i.e. the price of 5,192 tons of steam at ₹ 3-10-0 per ton and of 1,298 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (30) ought to be usefully reproduced here in order to clear the ground as to the extent of the legal liability of the defendants-appellants on this head. There is no doubt, said his Lordships: That if a man furtively and in bad faith robs his neighbour of property and, because it is underground, is probably not for some time detected the Court of Equity in this country will struggle or I would rather say will assert its authority to punish fraud by fixing the person with the value of the whole of the property which he has so furtively taken, and making him no allowance in respect of what he has done as would have been justly made to him if the parties had been working by agreement or if as in the present case they had been the one working and the other permitting the working through a mistake. The Courts have already made a wide distinction between that which is doneo?=by the common error of both parties, and that which is done by fraud. 45. In the case before us the pillars were being worked out secretly contrary to the covenants. No one can deny that it is a fraud to rob the owner of the colliery of the pillars of coal contrary to the covenant resulting in portions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in place of 45,675-42,525 will have to be substituted on the basis of 12,600 tons at ₹ 3-10-0 less 4 annas per ton, and in lieu of ₹ 4,331-4-0 the figures ₹ 3,544-2-0 will have to be substituted, and in lieu of ₹ 50,001-4-0 the sum of ₹ 46,044-2-0 will have to be substituted. The respondent contended that on the evidence 1 anna 4 pies per ton might be allowed for bringing coal to pit's mouth. Although there is some evidence to that effect it is not decisive. We think 4 annas per ton might be allowed. 47. It has next been argued that the report of the Commissioners as to the amount of coal worked is wrong as the Commissioners have not acted on the raising reports which would show that the raisings during the material period were much below 25,538 tons. The Subordinate Judge has held that the defendants did not produce the real raising reports which were contained in a bound book and we agree with the Subordinate Judge that Ex. 7 was not the original despatch book of the colliery as is testified to by the witness of the plaintiff. Both the witnesses of the plaintiff state that the original despatch book of the colliery was a big bound book and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given. The preliminary decree directed that the plaintiffs will get a decree against defendants 5 to 9 for the price of all coal raised by them during the period and interest thereon after date of notice (14th September 1928) up to the date of suit for which period they are trespassers: see p. 341, Book A. In the final judgment at p. 484, Book A, the Judge expresses himself thus: I again quote the following from the judgment of the Court to show what the intention of the Court was if it were not possible to ascertain separately the quality of coal mined after the date of notice and that raised after January 1928. If however it cannot be ascertained how much coal was raised after January 1928 and the date of notice (14th September 1928) then the price of coal raised after January 1928 will have to be allowed: see p. 333 of the preliminary judgment. 49. In passing the final decree the Subordinate Judge said: The plaintiffs are entitled to interest on price of coal as directed in the said judgment and decree. Interest has therefore been rightly allowed from date of suit up to the date of final judgment. Another point has been taken that the Court both by preliminary decree an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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