Industrial Supplies Pvt. Ltd. & ANR
Vs. Union of India & Ors [1980] INSC 148 (7 August 1980)
SEN, A.P. (J) SEN, A.P. (J) KRISHNAIYER, V.R.
REDDY, O. CHINNAPPA (J)
CITATION: 1980 AIR 1858 1981 SCR (1) 375 1980
SCC (4) 341
CITATOR INFO :
R 1981 SC 124 (49) R 1987 SC1428 (10) RF 1988
SC 587 (11)
ACT:
Coking Coal Mines (Nationalisation) Act, 1972,
sub-s.
(1) of s. 4-Whether a raising contractor of a
coal mine is an "owner" and if so, whether the fixed assets like
machinery, plants, equipment and other properties installed or brought in by
such a raising contractor vest in the Central Government-Whether subsidy
receivable from the erstwhile Coal Board established under s. 4 of the Coal Mines
(Conservation, Safety and Development) Act, 1952 up to the specified date from
a fund known as a Conservation and Safety Fund, by such raising contractor
prior to the appointed day can be realised by the Central Government by virtue
of their powers under sub-s. (3) of s 22 of the Nationalisation Act, to the
exclusion of all other persons including such contractor and applied under
sub-s. (4) of s. 22 towards the discharge of the liabilities of the coking coal
mine, which could not be discharged by the appointed day.
HEADNOTE:
The appellants by virtue of two agreements
with M/s. Balihari Colliery Co. Pvt. Ltd. and with New Dharamband Colliery Ltd.
became the managing contractor for a period of 20 years of the former and the
raising contractor of the latter. In terms of the said agreements, they
installed from time to time various fixed assets like machinery, plants and
equipment and erected structures and raised new roads within the said
collieries. These two collieries were taken over by the Central Government
under its management with effect from October 17, 1971, by virtue of the powers
vested in it under the Coking Coal Mines (Nationalisation) Act, 1972. The
appellants aggrieved by the said taking over filed a writ petition in the Delhi
High Court seeking a declaration that subs. (I) of s. 4 of the Nationalisation
Act does not provide for the acquisition of the right, title and interest
inasmuch as being raising contractors they were not covered by the term 'owner'
within the meaning of s. 3(n) of the Nationalisation Act and, therefore, they
were entitled to dismantle and remove the fixed assets like machinery, plants
etc. They also sought to recover the amount of subsidy of about Rs. 4,50,000
collected by the Central Government from the erstwhile Coal Board.
The High Court substantially disallowed the
claim of the appellants holding that they fall within the meaning of term
'owner'. It, however, held that the amount of subsidy of Rs. 4,50,000
receivable from the Coal Board by way of reimbursement towards the cost of sand
stowing and hard mining operations carried on by them could not be treated to
be as an amount due to the coking coal mine within the meaning of sub-s. (3) of
s. 22 and, therefore, could not be utilised by the Central Government under
sub-s. 4 of s. 22 for discharge of the liabilities of the coking coal mine.
Hence, the two appeals one by the appellants
and the other by the Union of India.
Allowing the Union of India's appeal only and
dismissing the Company's appeal, the Court 376 ^
HELD: (I) The appellants do fall under the
purview of the term "owner" in s. 3(n) of the Nationalisation Act
read with s. 2 of the Mines Act, 1952 and any other construction as sought to
be placed on the definition would frustrate the very object of the legislation
and the intention of the Legislature.[387 F] Parliament, with due deliberation.
in s. 3(n) adopted by incorporation the enlarged definition of the
"owner" in s. 2(1) of the Mines Act, 1952 to make the Nationalisation
Act all embracing and fully effective. The definition is wide enough to include
three categories of persons (i) in relation to a mine. the person who is the
immediate proprietor or a lessee or occupier of mine or any part thereof, (ii)
in the case of a mine the business whereof is carried on by a liquidator or a
receiver, such liquidator or receiver, and (iii) in the case of a mine owned by
a company, the business whereof is carried on by a managing agent, such
managing agent. Each is a separate and distinct category of persons and the
concept of ownership does not come in. The insertion of the clause "but
any contractor for the working of a mine or any part thereof shall be subject
to this Act in like manner as if he were an owner, but not so as to exempt the
owner from any liability" is to make both the owner as well as the
contractor equally liable for the due observance of the Act Tn the case of a
mine the working whereof is being carried on by a raising contractor he is
primarily responsible to comply with the provisions of the Mines Act. Though a
contractor for the working of a mine or any part thereof, is not an owner he
shall be subject to the provisions of the Mines Act in the like manner "as
if he were a owner" but not so as to exempt the owner from any liability.
[387 A-D] The whole object and purpose of the Nationalisation Act is to
expropriate private ownership of coking coal mines and all interests created
therein. The term 'owner' in sub-s. (l) of s. 4 is to be given an extended
meaning so as to include a contractor for the working of a mine or any part
thereof. It has to be presumed that Parliament was fully aware of the normal
pattern of working of all the coal mines, that is, by employment of raising
contractors. Any other consumption would lead to a manifest absurdity and
attribute to Parliament a result which it never intended. It would result in
the contractors escaping from the consequences of vesting under sub-s. (I) of
s. 4 of the Act and permit them to dismantle and remove the additional
machinery, plants and equipment which are being utilised for the working of
mines. [388 B-D] (2) The word 'occupier' in 5. 3(n) of the Nationalisation Act
should be understood to have been used in the usual sense according to its
plain meaning. In the legal sense an occupier is a person in actual occupation.
The appellants being "raising
contractors" were under the terms of the agreement dated February 7, 1969
entitled to and were in fact in actual possession and enjoyment of the colliery
and were, therefore, an occupier thereof. That being so, the appellants in
possession in their own right by virtue of their substantial right acquired by
them under the agreement were not in possession on behalf of somebody else.
[384F-G] The Chief Inspector of Mines and
Anr. v. Lala Katarnchand Thaper etc. [1962] 1 S.C.R. 9, distinguished.
(3) The Nationalisation Act, no doubt,
separately defines 'owner' and 'managing contractor'. The words and expressions
used and defined in the Act have the meaning respectively assigned to them
"unless the context otherwise requires". Therefore, the expression
'managing contractor' as defined in s. 3(1) of the Nationalisation Act comes
into play only for the purpose of apportionment 377 of compensation under
sub-s. (2) of s. 26. To exclude a "managing contractor" from term 'owner'
used in sub-s. (I) of s. 4 of the Nationalisation Act would be against the
scheme of the Act. The term 'owner' in sub-s. (I) of s. 4 of the Act must bear
the meaning given in the definition contained in s. 3(n). Any reservation under
any process of any agreement between the parties to reserve the power to
appoint managers, does not take the appellants out of the definition of
'managing contractor' under s. 3(1) of the Nationalisation Act since they still
had substantial control over the mine. The plea that not they but someone else
was the managing contractor is only an after-thought. The appellants who have
bound themselves by the terms of the agreement, cannot be permitted to escape
from the provisions of sub-s. (I) of s. 4 of the Act, as they come within the purview
of the definition of 'owner' in s. 3(n) of the Nationalisation Act. [384 H, 385
C, 385 H-386 A; 386 E-F] (4) When a legal fiction is incorporated in a statute,
the Court has to ascertain for what purpose the fiction is created. After
ascertaining the purpose, full effect must be given to the statutory fiction
and it should be carried to its logical conclusion. The court has to assume all
the facts and consequences which are incidental or inevitable corollaries to
giving effect to the fiction. The legal effect of the words "as if he
were" in the definition of owner in s. 3(n) of the Nationalisation Act
read with s. 2(1) of the Mines Act is that although the petitioners were not
the owners, they being the contractors for the working of the mines in
question, were to be treated as such though, in fact, they were not so. [388
E-G] East End Dwelling Co. Ltd. v. Finebury Borough Council, L.R. [1952].A.C.
109, p. 132; quoted with approval.
(5) The bills for the subsidy were for the
cost of stowing and connected safety operation and all hard mining operations
which the appellants had already prior to October 17, 1971 at their own cost,
carried out. If that be so, the amount of subsidy in question was like any
other amount due to the coking coal mines prior to the appointed day and,
therefore, did not fall outside the purview of sub-s. (3) of s. 22. [389 H-390
A] The payment in question was not by way of assistance receivable from the
erstwhile Coal Board for carrying out the stowing and other safety operations
and conservation of the coal mines. The payment of Rs. 4,50,000 claimed by the
appellants was, therefore, one to reimburse for the expenditure already
undertaken. Indubitably, the amount in dispute was payable 'by way of
reimbursement". The appellants were, therefore, free to utilise their
money in any manner they liked. In other words, the grant was not impressed
with any particular purpose or purposes. [390 B-C] (6) Even if the subsidy receivable
from the erstwhile Coal Board was by way of 'assistance' the amount of Rs.
4,50,000 was recoverable by the Central 6
Government in whom the coking coal mines have vested under sub-s. (1) of s. 4
of the Nationalisation Act and not by tho appellants. If the grant were by way
of assistance under rule 49 of the Coal Mines (Conservation and Safety) Rules
1952, the grant being conditional, the Central Government would in that event,
be bound to comply with the requirements of r. 54 and apply the same for the
purposes for which it was granted namely, for the purposes of stowing or other
safety operations and conservation of coal mines. [390 D-E] H Barclays Bank
Ltd. v. Quistclose Investments Ltd., L.R. [1970] A.C. 567, Coal Products
Private Ltd. v. Income Tax Officer (1972) 85 I.T.R. 347 explained and
distinguished.
CIVIL APPELLATE JURISDICTION: Civil Appeal
Nos. 815 and 1284 of 1978 Appeals by special Leave from the Judgment and order
dated 20-12-1977 of the Delhi High Court in Civil Writ No. 616176.
Soli J. Sorabjee, A. C. Gulati, A. K.
Ganguli, G. S. Chatterjee and B. B. Swahney for the Appellant in CA No. 815/78.
Lal Narain Sinha, Att. Genl. Miss A.
Subhashini and Girish Chandra for the Appellant in CA No. 1284 and Respondent
No. 1 in CA No. 815178.
The Judgment of the Court was delivered by
SEN, J.-These appeals by special leave against a judgment of the Delhi High
Court turn on the construction of certain provisions of the Coking Coal Mines (Nationalisation)
Act, 1972.
The appeals raise a question of far reaching
importance namely, whether a raising contractor of a coal mine is an owner
within the meaning of sub-s. (1) of s. 4 of the Coking Coal Mines
(Nationalisation) Act, 1972 (hereinafter referred to as the Nationalisation
Act), and if so, whether the fixed assets like machinery, plants, equipment and
other properties installed or brought in by such a raising contractor vest in
the Central Government. They also give rise to a subsidiary question, namely,
whether subsidy receivable from the erstwhile Coal Board established under s. 4
of the Coal Mines (Conservation, Safety and Development Act, 1952 up to the
specified date, from a fund known as Conservation and Safety Fund, by such
raising contractor prior to the appointed day, can be realised by the Central
Government by virtue of their powers under sub-s. (3) of s. 22 of the
Nationalisation Act, to the exclusion of all other persons including such
contractor and applied under sub-s.
(4) of s. 22 towards the discharge of the
liabilities of the coking coal mine, which could not be discharged by the
appointed day.
To make the points intelligible, it is
necessary to state a few facts. By an agreement dated February 7, 1969 made
between Messrs Balihari Colliery Co. Pvt. Ltd.
(hereinafter referred to as the 'owner' of
the one part and Messrs Industrial Supplies Pvt. Ltd. (hereinafter referred to
as 'the petitioners') of the other part, it was recited as follows:
"WHEREAS the owners are the owners of a
Working Colliery comprising an area of 800 Bighas more or less and known 379 as
Balihari Colliery particularly described in the first Schedule A hereunder
written held under the lease and subleases mentioned in the said Schedule and
in connection therewith have built various structures, dhewrahs coolie lines
(hereinafter referred to as the said buildings) and also installed and put up
various machinery, plants, tools, implements and utensils (hereinafter referred
to as the said machinery therein;
AND WHEREAS the owners have appointed
INDUSTRIAL SUPPLIES PRIVATE LIMITED as Managing Contractor of their said
colliery and the said Managing Contractor has agreed to act as such Managing
Contractor for the period and upon the terms and conditions herein contained:"
Under the said agreement the petitioners were appointed to be the Managing
Contractors of Kutchi Balihari Colliery for a period of 20 years. Under cl.
7(a) the petitioners were required at their own cost to install fixed assets
like equipment, machinery and plants and also invest in the form of current
assets like stores in the said colliery and to work the same as raising
contractors. By cl. 7(b) the additional machinery so installed and the chattels
and utensils so brought in by the petitioners were to remain the property of
the petitioners absolutely and on the determination of the agreement they were
entitled subject to the provisions of cl. 9, to remove such additional fixed
assets and current assets. Clause 9 gave an option to the owners to purchase
the additional machinery, chattels and utensils referred to in cl. 7. Clause 25
of the agreement is material for our purposes and it reads:
"25. That in case the said colliery is
nationalised these presents shall stand determined and all moneys then due and
owing by the owners to the Managing Contractor or by the Managing Contractor to
the owners under the provisions hereof shall at once become due and payable by
the owners to the Managing Contractor or by the Managing Contractor to the
owners as the case may be. If as result of such nationalisation the machinery,
chattels and utensils installed at and/or brought into the said colliery by the
Managing Contractor under the provisions of clause 7 of these presents or any
one or more of them or the buildings and structures created by it at the said
colliery under the provisions of clause 8 of these presents are taken over by
the authorities concerned then and in such event the Managing Contractor shall
be entitled to compensation payable for or attributable to the said machinery,
chattels and utensils and the buildings and structures so taken over and the
owners shall be entitled to receive compensation for all other properties
comprised in the said colliery." 380 Under the said agreement, the
petitioners installed from time to. time various fixed assets like machinery,
plants and equipment and erected structures and raised new roads within the
said colliery and brought in various current assets and movables for the
efficient working of the said mine.
The petitioners were also raising contractors
in respect of another coking coal mine known as 'Khas Dharmaband Colliery'
owned by Messrs Khas Dharmaband Colliery Co. Pvt. Ltd., subsequently known as
'New Dharmaband Colliery'. They had similarly brought over various assets including
stores which were being used in the said colliery. Under an agreement of
October 1969, the New Dharmaband Colliery was brought over by Messrs Sethia
Mining & Mfg. Corporation Ltd. An inventory was prepared of the assets like
plants, machinery and stores belonging to the petitioners which were lying in
the colliery, the value of which was approximately Rs. 1,21,000, On October 171
1971, the resident promulgated the Coking Coal Mines (Emergency provisions) ordinance
1971 to provide for the taking over by the Central Government, in the public
interest of the management of 214 coking coal mines and 12 coke oven plants,
including the coal mines in question, pending nationalisation of such mines.
The ordinance was replaced by the Coking Coal Mines (emergency Provisions),
Act, 1971. Thereafter, Parliament enacted the Coking Coal Mines
(Nationalisation) Act, 1972 to complete the process of nationalisation of the
coking coal mines and coke oven plants. It was entitled as 'An Act to provide
for the acquisition and transfer of the right, title and interest of the owners
of the coking coal mines specified in the First Schedule and the right, title
and interest of the owners of such coke oven plants as are in or about the said
coking coal mines with a view to reorganising and reconstructing such mines and
plants for the purpose of protecting, conserving and promoting scientific
development of the resources of coking coal needed to meet the growing
requirements of the iron and steel industry and for matters connected therewith
or incidental thereto', "Appointed day" under s. 2(a) of the Coking
Coal Mines (Emergency Provisions Act, 1971 was October 17, 1971, while that
under s. 3(a) of the Coking Coal Mines (Nationalisation) Act, 1972, is May 1,
1972.
According to the petitioners, the total value
of the fixed and current assets and movables of Kutchi Balihari Colliery taken
over by the Central Government on October 17, 1971 was to the tune of Rs.
11,85,591.00. As regards New Dharmaband Colliery they allege that between October
1969 and October 17, 1971, Messrs Sethia Mining 381 & Mfg. Corporation
Ltd., had utilised some of the stores lying in the colliery to the extent of
Rs. 50,000.00 and the balance of the stores lying in the colliery as on October
17, 1971 was approximately Rs. 72,000.00.
Since April 1969 when the petitioners became
raising contractors of Kutchi Balihari Colliery and until October 17, 1971 when
the management of the said colliery was taken over by the Central Government,
the petitioners allege that they had undertaken, at their cost, operations for
sand stowing and hard-mining and had accordingly submitted bills to the Coal
Board established under s. 4 of the Coal Mines (Conservation and Safety) Act,
1952 for subsidy through the owners from time to time. As on October 17, 1971
the amount of subsidy payable to them was about Rs. 4,50,000.
On May 5, 1976 the petitioners filed a Writ
petition in the Delhi High Court seeking a declaration that sub-s. (1) of s. 4
does not provide for the acquisition of the right, title and interest of the
petitioners inasmuch as being raising contractors they were not an owner within
the meaning of s. 3(n) of the Nationalisation Act and, therefore, they were
entitled to dismantle and remove the fixed assets like machinery, plants and
equipment installed in the two mines and also to remove the movables and
current assets thereof like furniture, stores, etc. and were further entitled
to recover the amount of subsidy of about Rs. 4,50,000 collected by the Central
Government from the erstwhile Coal Board. They, accordingly, sought a writ or
direction in the nature of mandamus requiring the Central Government to return
the assets like machinery, plants, equipment and other assets and movables and
all amounts collected by way of subsidy or other dues, or in any event pay Rs.
16,35,591 with interest thereon from May 1, 1972 till the date of payment.
The High Court substantially disallowed the
claim of the petitioners, holding that they fall within the meaning of the term
'owner' as defined in s. 3(n) of the Nationalisation Act read with s. 2(1) of
the Mines Act, 1952 and that as such the various machinery, plants, equipment
and other filled assets, current assets and movables belonging to them lying in
the two coal mines were included in the expression "mine" as defined
in s. 3(i) of the Nationalisation Act, and therefore, the right, title and
interest of the petitioners therein stood vested in the Central Government
under sub-s. (1) of s. 4 free from all incumbrances. It, however, held that the
amount of subsidy of Rs. 4,50,000 receivable from the Coal Board by way of
reimbursement towards cost of sand stowing and hard mining operations carried
on by the petitioners, could not be treated to be as an "amount due to the
coking coal mine" within sub-s. (3) of s. 22 and, therefore, could not be
382 utilised by the Central Government under sub-s. (4) of s. 22 for discharge
of the liabilities of the coking coal mine.
It was contended by the petitioners that they
were neither the owners nor immediate occupiers or managing contractors of the
coal mines in question, but were merely raising contractors thereof and,
therefore, they did not come within the purview of the term 'owner' as defined
in s. 3(n) of the Nationalisation Act read with s. 2(1) of the Mines Act, 1952.
It was, therefore, said that the plants, equipment and machinery and other
assets, and current assets and movables belonging to them as on October 17,
1971 could not, and did not, vest in the Central Government under sub- s. (1)
of s. 4 of the Nationalisation Act. It was urged that the High Court was in
error in construing the definition of the term 'owner' as defined in s. 2(1) of
the Mines Act, 1952 so as to include a raising contractor, by laying emphasis
on the words 'as if he were' in the last sentence of the definition, and
particularly so, because the Act itself, separately and/or clearly
distinguishes between an 'owner' and a 'contractor'.
It was further contended that due to the
absence of the word 'includes' in the last sentence, in the definition of
'owner' in s. 2(1) of the Mines Act, a 'contractor' cannot be treated to be an
'owner'. It was said that the object of the fiction in s. 2(1) of the Mines
Act, 1952 was for the limited purpose of making such a raising contractor
responsible for the due observance of the provisions of that Act and such a
deeming provision could not be invoked for construing the purpose and object of
the Nationalisation Act which were different, i.e., for the purpose of
acquiring machinery, plants and equipment and \ other assets belonging to such
raising contractor, lying within the mine, under sub-s. (1) of s. 4 of the Act.
We are afraid, we cannot accept these contentions.
The construction that is sought to be placed
on the definition of 'owner' in s. 3(n) of the Nationalisation Act read with s.
2(1) of the Mines Act, upon the basis of which the argument proceeds would, if
accepted, frustrate the very object of the legislation.
The Nationalisation Act provides by sub-s.
(1) of s. 4 that the right, title and interest of the owners in relation to the
coking coal mines specified in the First Schedule, on the appointed day, i.e.,
on October 17, 1971 shall stand transferred to and shall vest absolutely in the
Central Government free from all incumbrances.
In the Nationalisation Act, 'owner' is
defined in s. 3(n) thus:
"3(n) "owner",- (i) when used
in relation to a mine, has the meaning assigned to it in the Mines Act, 1952;
383 (ii) when used in relation to a coke oven
plant, means any person who is the immediate proprietor or lessee or occupier
of the coke oven plant or any part thereof or is a contractor for the working
of the coke oven plant or any part thereof ;" Section 2(1) of the Mines
Act, 1952 reads as follows:
"(1) "owner", when used in
relation to a mine, means any person who is the immediate proprietor or lessee
or occupier of the mine or of any part thereof and in the case of a mine the
business whereof is being carried on by a liquidator or receiver, such
liquidator or receiver and in the case of a mine owned by a company, the
business whereof is being carried on by a managing agent, such managing agent;
but does not include a person who merely receives a royalty, rent or fine from
the mine, or is merely the proprietor of the mine, subject to any lease, grant
or licence for the working thereof, or is merely the owner of the soil and not
interested in the minerals of the mine; but any contractor for the working of a
mine or any part thereof shall be subject to this Act in like manner as if he
were an owner, but not so as to exempt the owner from any liability;" In
support of the contention that the petitioners could not be regarded as occupiers
and, therefore, do not come within the definition of 'owner' under s. 3(n) of
the Nationalisation Act, reliance was placed on the decision in The Chief
Inspector of Mines & Anr. v. Lala Karamchand Thapar etc. While a raising
contract may not be a lease and, therefore the contractor not a lessee, we find
no reason why he should not be treated to be an occupier within the meaning of
s. 3(n). Under the terms of the agreement dated February 7, 1969, the
petitioners acquired complete dominion and control over the colliery in
question for a period of 20 years. It is common ground that the said agreement
was by a registered instrument and even though this perhaps may not amount to a
leases there can be no doubt that it was a licence coupled with a grant. The petitioners
were by virtue of cl. 7(a} of the agreement entitled to install at their own
cost such additional machinery, tramways, ropeways etc., in connection with the
transport of coal raised and to bring in chattels for the purpose of discovery
and removal of coal. They were entitled under cl 7(b} to remove such additional
machinery that may be installed and such chattels and utensils as may be
brought in by them to the said collieries unless of course, the owners
exercised their option to purchase the same under cl. 9. In view of these
terms, it is futile to contend that the petitioners were not occupiers of the
mines. They had the actual use and occupation of the coal mine in question.
384 We have carefully gone through the
judgment in Lala Karamchand Thapar's case and, if we may say so, the decision
is distinguishable on facts. There the question was whether the managing agent
of a company owning a colliery was an occupier of the colliery, and the Court
negatived this observing:
"From the very collocation of the words
"immediate proprietor, or lessee or occupier of the mine", it is
abundantly clear that only a person whose occupation is of the same character,
that is, occupation by a proprietor or a lessee-by way of possession on his
behalf and not on behalf of somebody else is meant by the word
"occupier" in the definition. Thus, a trespasser in wrongful
possession to the exclusion of the rightful owner would be an occupier of the
mine, and so be an "owner" for the purpose of the Act." The
Court further observed:
"That must be because possession on
behalf of somebody else was not in the contemplation of the legislature such
"occupation" as to make the person in possession an
"occupier" within the meaning of s.
2(1)." These observations, if we may say
so, with great respect, are rather widely stated. They are indeed susceptible
of a construction that a raising contractor being in possession on behalf of a
proprietor or the lessee of a mine in possession is not an 'occupier' within
the meaning of s.
3(n) of the Nationalisation Act read with s.
2(1) of the Mines Act, 1952. We are quite sure that was not the intention of
the Legislature. There is no reason why the word 'occupier' should not be
understood to have been used in its usual sense, according to its plain
meaning. In common parlance, an 'occupier' is one who 'takes' or (more usually)
'holds' possession: Shorter oxford Dictionary, 3rd edn., vol. 2, p. 1433. In
the legal sense, an occupier is a person in actual occupation. The petitioners
being raising contractors were, under the terms of the agreement dated February
7, 1969 entitled to, and in fact in actual physical possession and enjoyment of
the colliery and were, therefore, an occupier thereof. That being so, the
petitioners being in possession, in their own right, by virtue of the
substantial rights acquired by them under the agreement, were not in possession
on behalf of somebody else and, therefore, the decision in Lala Karamchand Thapar's
case cannot apply.
It is next urged that the Nationalisation Act
itself makes a distinction between an 'owner' and a 'managing contractor',
there being separate provisions made with regard to both. It is said that in
view of this. there is no legal justification to read the word 'contractor' 385
for the word 'owner' in sub-s. (1) of s. 4. The contention is wholly
misconceived and cannot be accepted. The Nationalisation Act no doubt
separately defines 'owner' and 'managing contractor'. The definition of
managing contractor in s. 3(i) reads:
"3(i) "managing contractor"
means the person, or body of persons, who, with the previous consent in writing
of the State Government has entered into an arrangement, contract or under-
standing, with the owner of a coking coal mine or coke oven plant under which
the operations of the coking coal mine or coke oven plant are substantially
controlled by such person or body of persons ," The words and expressions
used and defined in the Act have the meaning, respectively, assigned to them
'unless the context otherwise requires'. The expression 'managing contractor'
finds place in Chapter VI, which deals with the power, functions and duties of
the Commissioner of Payments appointed under sub-s. (I) of s. 20, for the purpose
of disbursing the amounts payable to the owner of each coking coal mine or coke
oven plant. It appears in sub-s. (2) of s. 26, which provides:
"(2) In relation to a coking coal mine
or coke oven plant, the operations of which were, immediately before the 17th
day of October, 1971 under the control of a managing contractor, the amount
specified in the First Schedule against such coking coal mine or in the Second
Schedule against such coke oven plant shall be apportioned between the owner of
the coking coal mine or coke oven plant and such managing contractor in such
proportions as may be agreed upon by or between the owner and such managing
contractor, and in the event of there being no such agreement, by such
proportions as may be determined by the Court." Under cl. 25 of the
agreement, it was agreed upon between the parties that (i) in the event the
colliery was nationalised, the agreement shall stand determine and all moneys
then due and owing by the owners to the petitioners and vice versa shall at once
become due and payable, and (ii) in the event of such nationalisation, if the
machinery, . chattels and utensils installed at and/or brought into the
colliery by the petitioners or the buildings and structures erected by them are
taken over by the authorities, they shall become entitled to compensation
payable for or attributable to the said machinery, chattels and utensils and
buildings and structures so taken over and the owners shall be entitled to
receive compensation for all other properties comprised in the said colliery.
The expression 'managing contractor' as defined in s. 3(i) of the
Nationalisation Act comes into play only 386 for the purpose of appointment of
compensation under sub-s. (2) of s. 26. The submission that the term 'owner'
used in sub-s. (1) of s. 4 of the Nationalisation Act excludes a 'managing
contractor' is against the scheme of the Act. The term 'owner' in sub-s. (1) of
s. 4 of the Act must bear the meaning given in the definition contained in s.
3(n).
It was asserted that the petitioners were
really not the managing contractors but wrongly described as such in the
agreement. A bare perusal of the agreement would, however, be destructive of
the argument. It is a document drawn consisting of 46 clauses defining the
mutual rights and obligations of the parties., The petitioners were conferred
all the rights to work the mine for winning, getting and raising coal. The
so-called 'remuneration' payable to them was virtually the price of coal
supplied leaving to the owners a margin of profit. Even the liability for
payment of rent, royalty, taxes etc., in relation to the mine was saddled on
the petitioners. In view of these terms, they cannot be heard to say that they
were not the managing contractors though they have been so described in the
preamble to the agreement and in each and every clause thereof. It is, however,
asserted that the functions of a managing contractor. namely, appointment of
managers, were not entrusted to the petitioners but were actually assigned to
Messrs Madhusudan & Co. under a separate agreement. The submission is
spelled out from the terms of cl. 11 relating to employment of workers of the
colliery. All that was done was that the erstwhile owners had by this clause
reserved to themselves the power to appoint managers. Such reservation does not
take the petitioners out of the definition of managing contractor under 6. 3(i)
of the Nationalisation Act, as they still had substantial control over the
mine.
The plea that not they but someone else was
the managing contractor is only an after thought. The petitioners having bound
themselves by the terms of the agreement, cannot be permitted to escape from
the provisions of sub-s. (1) of s. 4. as they come within the purview of the
definition of 'owner' in s. 3(n) of the Nationalisation Act.
It is then argued, in the alternative. that
the term 'owner' as defined in s. 3(n) of the Nationalisation Act read with s:
2(1) of the Mines Act. 1952 does not in any event, include a raising
contractor. It is not suggested that a raising contractor does not come within
the description of a contractor in s. 2(1), but it is urged that the word
'includes' is not there. There was no need for Parliament to insert the word
'includes' because of the words 'as if he were'. Although the term 'owner' in
common parlance, in its usual sense, connotes ownership of a mine.
the term has to be understood in the legal
sense, as defined.
387 Parliament, with due deliberation, in s.
3(n) adopted by incorporation the enlarged definition of owner in s. 2(1) of
the Mines Act, 1952 to make the Nationalisation Act all embracing and fully
effective. The definition is wide enough to include three categories of
persons: (i) in relation to a mine, the person who is the immediate proprietor
or a assesses or occupier of mine or any part thereof, (ii) in the case of a
mine the business whereof is carried on by a liquidator or a receiver, such
liquidator or receiver, and (iii) in the case of a mine owned by a company, the
business whereof is carried on by a managing agent. such managing agent. Each
is a separate and distinct category of persons and the concept of ownership does
not come in. Then come the crucial last words: "but any contractor for the
working of a mine or any part thereof shall be subject to this Act in like
manner as if he were an owner, but not so as to exempt the owner from any
liability". The insertion of this clause is to make both the owner as well
as the contractor equally liable for the due observance of the Act. It is
needless to stress that the Mines Act, 1952 contains various provisions for the
safety of the mines and the persons employed therein. In the case of a mine,
the working whereof is being carried on by a raising contractor, he is
primarily responsible to comply with the provisions of the Act. Though a
contractor for the working of a mine or any part thereof is not an owner, he
shall be subject to the provisions of the Act, in the like manner 'as if he
were an owner' but not so AS to exempt the owner from any liability.
It is now axiomatic that when a legal fiction
is incorporated in a statute, the Court has to ascertain for what purpose the
fiction is created. After ascertaining the purpose, full effect must be given
to the statutory fiction and it should be carried to its logical conclusion.
The Court has to assume all the facts and consequences which are incidental or
inevitable corollaries to giving effect to the fiction. The legal effect of the
words "as if he were" in the definition of owner in s. 3(n} of the
Nationalisation Act read with s. 2(1) of the Mines Act is that although the
petitioners were not the owners, they being the contractors for the working of
the mine in question, were to be treated as such though, in fact, they were not
so. The oft-quoted passage in the judgment of Lord Asquith in East End Dwelling
Co. Ltd. Fine-bury Borough Council brings out the legal effect of a legal
fiction in these words:
"If you are bidden to treat an imaginary
state of affairs as real, you must surely, unless prohibited from doing so,
also imagine as real the consequence and incidents which, if the putative state
of affairs had in fact existed, must inevitably have 388 flowed from or
accompanied it.. The statute says that you must imagine a certain state of
affairs, it does not say that having done so, you must cause or permit your
imagination to boggle when it comes to the inevitable corollaries of that state
of affairs. " The whole object and purpose of the Nationalisation Act is
to expropriate private ownership of coking coal mines and all interests created
therein. It provides by sub-s. (1) of s. 4 that on the appointed day, the
right, title and interest of the owners in relation to the coking coal mines
specified in the First Schedule shall stand transferred to, and shall vest
absolutely in the Central Government, free from all in-cumbrances. Now unless
the term 'owner' in sub-s. (1) of s. 4 is given an extended meaning so as to
include a contractor for the working of a mine or any part thereof, the very
object of the legislation would be frustrated. It has to be presumed that
Parliament was fully aware of the normal pattern of working of all the coal
mines, i.e., by employment of raising contractors. Any other construction would
lead to a manifest absurdity and attribute to Parliament a result which it
never intended. It would result in the contractors escaping from the
consequences of vesting under sub-s. (1) of s. 4 of the Act and permit them to
dismantle and remove the additional machinery, plants and equipment which were
being utilised for the working of mines.
This brings us to the next question, namely
whether the amount of Rs. 4,50,000 receivable by the petitioners from the
erstwhile Coal Board, was an amount impressed with a trust, being advanced for
a specific purpose, i.e., for the purpose of stowing and other safety
operations and conservation of coal mines, and could not be regarded as
"any money due to the coking coal mines" within sub-s. (3) of s. 22
of the Act and the Central Government, therefore, could not appropriate the
amount of subsidy and utilize it under sub-s. (4) thereof for meeting the
liabilities of the coking coal mines.
The conclusion of the High Court upon this
point is contained in the following passage:
"The amount of subsidy due could not be
current assets of the coking coal mine because it had to be utilised for a
certain definite specified purpose. In the instant case cost of stowing and
other safety operations had already been incurred and the subsidy was by way of
reimbursement. The amount was already identified as belonging to the petitioner
and is on the analogy or in the nature of trust money impressed with a specific
purpose." 389 In reaching that conclusion, it relied upon the decisions in
Barclays Bank Ltd. v. Quist close Investments Ltd. and Coal Products Private
Ltd. v. I.T.O., which are both distinguishable. They enunciate the principle
that when property is entrusted for specific purpose, it is clothed with a
trust. It seems somewhat illogical that the equitable doctrine of resulting
trust should be brought into play in the construction of the provisions of a
legislation dealing with nationalisation like the Coking Coal Mines (Nationalisation)
Act, 1972. In Barclays Bank Ltd. v. Quistclose Investments Ltd., the House of
Lords dealt with a question as to rights of set off following the liquidation
of a company. The principle was applied to a sum of money lent to a company
(later wound up) for a specific purpose, viz., payment of dividend, which was
not implemented; the money, being still identifiable, was held to be impressed
with a trust, and accordingly did not enure to the benefit of the general body
of creditors, but was recoverable by the lender. In Coal Products Private Ltd.
v. I.T.O. there was an extension of this principle by a Single Judge of the
Calcutta High Court to "assistance" which was payable to the assessee
and was sought to be 1 attached by the Income-tax Department by way of
garnishee proceedings under s. 226(3)(i) of the Income tax Act, 1961. There was
an application made for grant of assistance under r. 49 of the Coal Mines
(Conservation and Safety Rules, 1952. There were conditions attached to the
grant under r. 54. There was an affidavit filed before the Calcutta High Court
showing that the grant was subject to the condition that it would be utilised
for the purpose of stowing and other connected operations in the coal mine. The
High Court quashed the garnishee notice on the ground that the Income-tax
Department was not entitled to any part of the money for the payment of
income-tax liabilities of the assessee, as it could only be utilized for the
purpose of stowing and other safety operations and conservation of coal mines.
F Two questions arise, both of which must be answered in favour of the Union of
India. The first is whether the payment of Rs. 4,50,000 was advanced for a
special purpose, i.e., as 'assistance' under r. 49 and not 'by way of
reimbursement'. The second is whether, in that event, the money having been
advanced for a special purpose, and that being so clothed with a specific
trust, it could not be adjusted by the Central Government under sub-s. (4) of
s. 22 of the Nationalisation Act towards the liabilities of the coking coal
mines.
It is not difficult to establish precisely on
what terms the money was advanced by the erstwhile Coal Board. On behalf of the
petitioners, it is not disputed that the bills for the subsidy were for the H
390 cost of stowing and connected safety operations and of hard mining
operations which, the petitioners had already prior to October 17, 1971, at
their own cost, carried out. If that be so, the inevitable conclusion is that
the amount of subsidy in question was like any other amount due to the coking
coal mine, prior to the appointed day, and therefore did not fall outside the
purview of sub-s. (3) of s. 22.
The payment in question was not by way of
'assistance' receivable from the erstwhile Coal Board for carrying out of
stowing and other safety operations and conservation of the coal mines. In the
present case, the petitioners on their own showing had already carried our sand
stowing and hard mining operations and had admittedly applied for subsidy by
way of reimbursement. The payment of Rs. 4,50,000 was, therefore, one to
reimburse for the expenditure already undertaken. Indubitably, the amount in
dispute was payable 'by way of reimbursement'. The petitioners were, therefore,
free to utilise the money in any manner they liked. In other words, the grant
was not impressed with any particular purpose or purposes.
Even if the subsidy receivable from the
erstwhile Coal Board was by way of 'assistance', the amount of Rs. 4,50,000 was
recoverable by the Central Government in whom the coking coal mines have vested
under sub-s. (1) of s. 4 of the Nationalisation Act and not by the petitioners.
It is, however, needless to stress that if the grant were by way of
'assistance' under r. 49 of the Coal Mines (Conservation and Safety) Rules,
1952, the grant being conditional, the Central Government would in that event.
be bound to comply with the requirements of r. 54 and apply the same for the
purposes for which it was granted viz., for the purposes of showing or other
safety operations and conservation of coal mines.
For these reasons, the judgment of the High
Court partly allowing the claim of the petitioners with regard to the subsidy
amount of Rs. 4.50,000 is set aside, and the writ petition is dismissed:
Accordingly, the appeal of the Union of India is allowed and that of the
Industrial Supplies Pvt. Ltd., is dismissed with costs throughout.
Civil Appeal No. 815/78 dismissed, and Civil
Appeal No. 1284/78 S.R. allowed.
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