Case: M/S.Bharat Coking Coal Ltd Vs. New Govindpur Pvt.Ltd

Brief Facts of the Case Are:2. Theis a Central Government Company within the meaning of Section 617 of the Companies Act, constituted under the Coal Nationalisation Act in and around of Distt. Dhanbad in the State of Bihar.3. Theafter formed by the Central Government was appointed as custodian on behalf of the Central Government to manage the Companys Coal mines, the management of which were taken over by the Central Government on enactment of the Coal Mines Act.4. The intervening period i.e. between the 17.10.1971 to 30.4.1972 is known as Management period during which the management of such coal mines was with theDuring the said management period the Central Government used to advance money to thefor management of coal mines under Section 25 of Nationalisation Act, 1972. In the event the said amount of advance was not recovered from the income of the Colliery on account of Coal extracted the Central Government was empowered to make the claim before the Commissioner of payment under the said Act.5. Prior to nationalisation, the New Govind Pur colliery used to be under the respondent and its income during the management period was insufficient to meet the expenditure of the said coal mine. It is the case of the appellant that during the management period, thehad actually incurred loss due to excess payment for which a claim for an amount of Rs.15,21,320.32 was filed before the Commissioner of Payment.6. The Central Government enacted Coking coal mines (Emergency Provisions) Act, 1971) hereinafter referred to as Act of 1971, where under the management of all the Coking coal mines in the country were taken over by the Central Government with effect from 11.10.1971.7. The Central Government incorporated theThe right, title and interest of the Coking coal mines in the country, the management of which were taken over under the Act, 1971 stood vested absolutely and free from all encumbrances in theunder Section 3 of the Coal Nationalisation Act, 1972. Under the said provisions of said Nationalisation Act, 1972 the Central Government was empowered to make recovery of the excess expenditure over receipts in the management of Coal Mines during the management period in terms of Section 25 of the said Act, which is set out asry amount advanced by the Central Government or the custodian as the case may be, for the management of a coking coal mine or coke even plant shall be recovered from the income derived by such coking coal mine or coke even plant in respect of the period during which the management of such mine or plant remained vested in the Central Government.Provided that where such income is insufficient to meet in full the total amount of advance made by the Central Government or the Custodian for the management of the coking coal mine or coke even plant, the Central Government may make a claim to the Commissioner for the deficiency of the amount so advanced and the claim in respect of such deficiency shall have priority over the claims of all other unsecured creditors of the coking coal mine or coke over plant.The claim so covered under Section 25 of the Act, was to be filed under Section 23 of the Act and was to be supported by audited statement of account as proof of the claim drawn up in prescribed format as provided under Section 22 of the Act.10. TheThe Assistant Commissioner of Payment, before whom the claim case was preferred for adjudication on 19.12.1981, rejected the claim of the Central Government on the following groundsThe appellant company failed to disclose the quantum of advance receipt from the Central Government during the management period.(ii) Thefailed to submit the proof of the claim as total statement of account filed not supporting the claim cannot be accepted as a proof of claim u/s. 23(4) of the Act.(iii) Thedid not prefer P/l account of the later transaction, hence the amount submitted was not acceptable without individual item of the expenditure debited in the account and are not supported by voucher etc;(iv) Amount shown as spent during the management period in respect of salaries and wages of the workmen is exclusive.(v) Amount spent as shown in account books are not tenable.(vi) Amount has been spent subsequent to the Nationalisation of the mine and cannot be considered as an expenditure realisable to management.(vii) A detailed entry on account of interest in the statement of account amount be treated as advance received from Central Government.(viii) Amount debited in the account under the item of income tax not tenable being not proved.(ix) Amount spent on account of capital expenditure are no expenditure.(x) Value of closing stock of coal not included in the receipt folio of the account.Under Section 23(10) of the Nationalisation Act, 1972 thepreferred an appeal against the order of the Assistant Commissioner of Payment which rejected the claim of the Central Government in its entirety in Misc. Appeal No. 29/82.14. The Central Government enacted the Coal Mines Nationalisation Laws (Amendment) Act, 1986 with retrospective effect from 1.5.1972 in respect of Nationalisation Act of 1972 whereby and where under the related section on the basis of which the Trial Court (the Asstt. Commissioner of Payment) passed an order weret of accounts in relation to the period of management by the Central Government, etc. (1) The Central Government or the Government company, as the case may be, shall cause the books in relation to each coking coal mine or coke oven plant, the management of which has been vested in it under the Coking Coal Mines (Emergency Provisions) Act, 1971 to be closed and balanced as on 30th of April, 1972, shall cause a statement of accounts, as on that day, to be prepared, within such time, in such form and in such manner as may be prescribed, in relation to each such mine or plant in respect of the transactions effected by it during the period for which the management of such coking coal mine or coke oven plant remained vested in it.Provided that where two or more coking coal mines or coke oven plants were owned, before the commencement of this Act, by the same owner, a consolidated statement of accounts may be prepared for all the coking coal mines or coke oven owned by such owner.(2) All amounts received by the Central Government or the Government company after the closure of such account shall, where such amounts related to transactions effected before the appointed day, be included in the said statement of accounts in respect of the coking coal mine or coke oven plant to which the said receipt relates.(3) The Central Government or the Government Company in which the right, title and interest of the coking coal mine or coke oven plants stands vested shall be entitled to receive, upto the specified date, to the exclusion of all other persons, any money, due to the coking coal mines or coke oven plant, as the case may be, realised after appointed day notwithstanding that the realisations pertain to a period prior to the appointed day.Provided that where such realisations have not been included in the statement of accounts as on the 30th days of April, 1972, a supplementary statement of accounts shall be prepared and furnished, at such intervals as may be prescribed, by the Central Government or the Government company to the owner of the coking coal mine or the coke oven plant, as the case may be.(4) The liabilities of the coking coal mine or the coke oven plant (not being liabilities arising out of advances made by the Central Government or the Government company), which could not be discharged by the appointed day, may be discharged by the Central Government of the Government company up to the specified date out of the realisations, effected before or after the appointed day or out of advances or borrowings made up to the specified date and every payment so made shall be included in the statement of accounts as on the date immediately before the appointed day indicating therein the period in relation to which the payments were made and the payments so made shall not be called in question in any count:Provided that the liabilities in relation to the period prior to the appointed day, which have not been discharged on or before the specified date, shall be the liabilities of the owner of the coking coal mine or the coke oven plant, as the case may be.(5) A copy of each statement of accounts prepared under this section shall be delivered by the Central Government or the Government company, as the case may be, to the Commissioner and also the owner:Provided that where the number of owners is more than one, only one copy of the statement of account shall be given to the owners for the benefit of all of them.(6) The statement of accounts prepared under the section shall be audited by a person who is qualified to be appointed as an auditor of a company under Section 226 of the Companies Act, 1956, and the auditor so appointed shall receive, from the funds of the coking coal mine or coke oven plant, as the case may be such remuneration as the Central Government may fix.(7) The audit of the statement of accounts shall be conducted in the manner as the Central Government may direct.(8) The statement of accounts audited under(6) shall, unless the contrary is proved, be conclusive proof in respect of every matter entered therein.Explanation: For the purposes of this section, statement of accounts means a statement in the form of receipts and payments, and does not include any statement that may be prepared as a result of the closing and balancing of the books for the preparation of the profit and loss account and balance sheet or any statement prepared in accordance with the normal commercial practice.""Section 25of excess payments made by Central Government or CustodianAny amount in excess of payments over receipts in the statement of accounts prepared under Section 22 shall be deemed to be an amount advanced by the Central Government or the Custodian, as the case may be, for the management of a coking coal mine or a coke oven plant during the period in which the management of such mine of plant remained vested in the Central Government and the Central Government may make a claim to the Commissioner for such excess payment and such claim shall have priority over the claims of all other unsecured creditors of the coking coal mine or a coke oven plant.ExplanationIn this section Custodian means the Custodian appointed under the Coking Coal Mines (Emergency Provisions) Act, 1971.Similarly the amended act made it clear that the closing stock of coal has vested and thereby the value of the same is not to be incorporated in the side of the account folio.16. On behalf of thea petition was filed before the lower appellate court in the pending misc. appeal 29/92 for consideration of amended provisions of the Nationalisation Act, 1986, inter alia, contendingThat the impugned order of the learned court is purely based on anSections as the said order was delivered on 31.12.1983.ii) That it is apparent from the order of the learned court below that the court below has rejected the claim of the appellant in interpreting the section which have been amended and given retrospective effect. As for instance, the learned court below has reduced the claim under item (m) of the last page of the order while quantifying the amount to the extent of Rs.2,34,994.00 on account of the value of closing stock of coal whereas by virtue of the amended Act it has been declared that the closing stock as on the date of vesting of the collieries in the Central Government has vested with the mine in the Central Government as the amount specified against the colliery includes the value of the closing stock of coal.iii) That similarly the learned court below has held that the audited statement of account which has been filed by the claimant in support of the claim is not proof of the claim although the amendment has been made to the contrary that the entrees in the audited statement which is in the prescribed format shall be the conclusive proof unless contrary is proved. The onus to prove the entries has been shifted to theOpp. Party. The entire claim of the claimant has beenreduced on the basis of wrong interpretation of the terminology of proof which has been made clear by the amended act.iv) That as a result of amendment of the Act by virtue of which the sections under which the claim has been preferred, the section under which payment has been made, there was no occasion for the learned court below to reject the claim of the Central Government represented bylower appellate court dismissed the appeal on various other grounds.On behalf of thethe Civil Revision bearing No. C.R. No. 224/92 Â® was filed in the High Court against the order of the lower court dismissing the appeal, inter alia, contending therein asThat the SLP(C) No. 10072/89 before the Supreme Court of India, was not similar to the present case as in the present case the coal related documents were produced from the trial court. In support of the entry made in the statement of account further, section 22(B) of the Act puts the owner to disproof contrary to the entry made into the accounts and the respondents could not produce before the trial court any evidence to proof any of the entry made in the statement of account. Further the Trial Court rejected the claim not on fact but on the legal issue namely by interpreting the provisions. After amendment the interpretation made by the trial court was of no consequence as no legal issue remain good in view of the amendment so made. It was also averred in the Civil Revision filed before the High Court that the trial court failed to appreciate that the amended provisions of the Act clearly reflected in the petition filed before the High Court dated 26.9.1991 subsequent to the amendment made in the parent Act by of 1986.17. The Patna High Court passed an order dismissing the Civil Revision application as being devoid of merits.18. Being aggrieved, the appellant has preferred the above SLP in this court. Leave was granted on 15.4.1999.

Reasoning:
23. We have perused the grounds taken in SLP which, in our opinion have no merit because the management of Coking Coal Mines in India was taken over by the Central Government under the provisions of the Ordinance promulgated by the President of India known as Coking Coal Mines (Emergency Provisions) Ordinance on or from 17th day of October, 1971. Subsequently it was converted into an Act according to which the management of the mines were taken over but the ownership remained vested with the erstwhile owners till 30.4.1972. It is seen from the records that during the period of management i.e. from 17.10.1971 to 30.4.1972, this coal mine earned large profits and received huge accounts from sale proceeds from transactions prior to 17.10.1971 and from other sectors but could not and did not proper accounts of receipts and payments by keeping proper statements. Such statement of accounts were statutorily required to be audited by a qualified auditor in terms of Section 22 of the Coking Coal Mines (Nationalization) Act, 1972 (36 of 1972) by the enforcement of which the Coking Coal Mines were nationalized on and from 1.5.1972 and all the rights, title and interests of the erstwhile owners of the coking coal mines vested with the Central Governmentto a Government company i.e. BBCL. On the basis of the statement of accounts, the BCCL was authorized to prefer the claim under Section 25 of the Act because such audited statements of account is conclusive proof of the claim unless contrary is proved. The fact remains that thehas failed to prove the contra as required under Section 22(8) of thethe instant case, the mines have been nationalized in the year 1972 and if the respondent is made to pay the amount demanded after 26 years, the respondent will suffer immeasurable loss. The claim, in our opinion, cannot be admitted and the amounts cannot be relied upon because of the following specified defects andclaimed amount could not be stated correctly at any time.(b) Salary and wages could not be proved at least to the extent of Rs. 2,35,800.00.(c) Bonus amount could not be approved and paid without any basis.(d) Income tax paid on colliery income amounting to Rs. 81,967.00 could not be proved was not paid for the management purpose.(e) Sales tax payment could not be proved.(f) National defence fund to the extent of Rs. 6500/wrongly claimed.(g) Contractors payment to the extent of Rs. 3,54,594/could not be proved fully.(h) Interest of Rs. 76,414 wrongly claimed.(i) Head Office and Group Office expenses to the extent of Rs.56,453.000 cannot be proved and also not required in connection with the management of the collieries and not authorized by law.(j) Excess debit of Rs. 10,000/in plant and machinery.(k) Excessive claim in respect of stores.(l) Discrepancies of stock of coal.(m) Sales realization could not be proved nor accounted fully and wrongly adjusted.(n) Advance of Rs.2,34,594/paid after 1.5.1992 and wrongly claimed as Central Government advance and last of all the doubtful nature of entry regarding cashour opinion, this adjustment is not fair and we are not satisfied with the transaction and recommend for investigation of the entire transaction of this opening cash balance taken over.Thus, it is clear that the accounts statement in relation to the period of management by the appellant is not correct and the procedure prescribed under Section 22 of the Act, 1972 has not been allowed at all. We, therefore, hold that the claim made by the appellant in its entirety is not maintainable and the order by the Commissioner of payment iswhich has been based on cogent reasoning covering all aspects of the matter. Likewise, the Appellate Court and the High Court in revision has rightly dismissed the claim of the appellant holding the appellant has failed to file required paper and proof to substantiate the claim. The appellant has also failed to comply the provisions of the Nationalisation Act, in particular, Section 22 and Section 23 sub clause (4), (6) & (7) of the Nationalisation Act in the matter of filing of the proof in support of the claim. Although auditors check of account as per insertion of Section 21(8) of the Nationalisation Act shall be the proof of the claim unless contrary is proved but the facts remains the auditor statement of account also did not support the case of the appellant and rather it goes in favour of the respondent in view of the fact that the respondent had proved the contrary to the entries and the court has also considered it and accordingly rejected the claim of the appellant after thorough examination and discussion.