The relations of the British with Bhutan commenced in 1772, when the Bhutias invaded the principality of Kuch Behar, a dependency of Bengal. The Kuch Behar Raja applied for aid, and a force under Captain James was despatched to his assistance; the invaders were expelled and pursued into their own territories. Upon the intercession of Teshu Lama, then regent of Tibet, a treaty of peace was concluded in 1774 between the East India Company and the ruler of Bhutan. In 1783 Captain S. Turner was deputed to Bhutan, with a view of promoting commercial intercourse, but his mission proved unsuccessful. From this period little intercourse took place with Bhutan, until the occupation of Assam by the British in 1826. It was then discovered that the Bhutias had usurped several tracts of low land lying at the foot of the mountains, called the Dwars or passes, and for these they agreed to pay a small tribute. They failed to pay, however, and availed themselves of the command of the passes to commit depredations within the British territory. Captain R. B. Pemberton was accordingly deputed to Bhutan to adjust the points of difference. But his negotiations yielded no definite result; and every other means of obtaining redress and security proving unsuccessful, the Assam Dwars were wrested from the Bhutias, and the British government consented to pay to Bhutan a sum of 1000 per annum as compensation for the resumption of their tenure, during the good behaviour of the Bhutias.
Continued outrages and aggressions were, however, committed by the Bhutias on British subjects in the Dwars. Nothwithstanding repeated remonstrances and threats, scarcely a year passed without the occurrence of several raids in British territory headed by Bhutia officials, in which they plundered the inhabitants, massacred them, or carried them away as slaves. In 1863 Sir Ashley Eden was sent as an envoy to Bhutan to demand reparation for these outrages. He did not succeed in his mission; he was subjected to various insults; and under compulsion signed a treaty giving over the disputed territory to Bhutan, and making other concessions which the Bhutan government demanded. On Sir Edens return the viceroy at once disavowed his treaty, sternly stopped the former allowance for the Assam Dwars, and demanded the immediate restoration of all British subjects kidnapped during the last five years. The Bhutias not complying with this demand, the governor-general issued a proclamation, dated the 12th of November 1864, by which the eleven Western or Bengal Dwars were forthwith incorporated with the queens Indian dominions. No resistance was at first offered to the annexation; but, suddenly, in January 1865, the Bhutias surprised the English garrison at Dewangiri, and the post was abandoned with the loss of two mountain guns. This disaster was soon retrieved by General Sir Henry Tombs, and the Bhutias were compelled to sue for peace, which was concluded on the 11th of November 1865. The Bhutan government formally ceded all the eighteen Dwars of Bengal and Assam, with the rest of the territory taken from them, and agreed to liberate all kidnapped British subjects. As the revenues of Bhutan mainly depended on these Dwars, the British government, in return for these concessions, undertook to pay the Deb and Dharm rajas annually, subject to the condition of their continued good behaviour, an allowance beginning at 2500 and rising gradually. Since that time the annexed territories settled down into peaceful and relatively prosperous British districts.