Case: Industrial Supplies Private Limited Vs. Union of India and Ors

the working of mines.29. 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 an d 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.30. 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."31. In reaching that conclusion, it relied upon the decisions in 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. I n 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.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.32. 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 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. 22.33. 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.34. 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.35.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]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 Thapars case cannotwas 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 contract or. 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 t he 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 Nationalisationis then argued, in the alternative. that the term owner as define d 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, aswith due deliberation, in s. 3(n) adopted by incorporation the enlarged definition of owner in s. 2(1) ofthe 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 thatthe 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 provision s 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 anyis 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 notwhole 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 theAct and permit them to dismantle and remove the additional machinery, plants and equipment which were being utilised for the working ofis 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 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.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 orif 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 theNationalisation 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.