Full Judgment Text
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PETITIONER:
INDUSTRIAL SUPPLIES PVT. LTD. & ANR
Vs.
RESPONDENT:
UNION OF INDIA & ORS.(AND VICE VERSA)
DATE OF JUDGMENT07/08/1980
BENCH:
SEN, A.P. (J)
BENCH:
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 upto
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
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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 docs 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
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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]
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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.
378
JUDGMENT:
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 upto 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
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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
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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)
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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
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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
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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
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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
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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
them selves 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.
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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
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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 incumbrances. 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."
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In reaching that conclusion, it relied upon the decisions in
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Barclays Bank Ltd. v. Quistclose 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
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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
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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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