Case: Union Of India &amp; Ors Vs. North Telumer Colliery &amp; Ors

1. The coal resources in the country have been brought under State ownership and control by the Coking Coal Mines (Nationalisation) Act, 1972 (hereinafter called the Coking Act) and the Coal Mines (Nationalisation) Act, 1973 (hereinafter called the Coal Act). These Acts completely divest the ownership rights in the mines from the owners to the Central Government. The Acts provide for payment of specified amount to each of the owners in lieu of takeover. Out of the said amount the claims of the creditors of the owner and other liabilities against him are to be satisfied and the balance, if any, is to be paid to the owner. The Acts further provide for accrual of interest on the payable amount for the procedural period. Section 18 (5) of the Coal Act and Section 21(5) of the Coking Act provide that the interest accruing on the amount shall enure to the benefit of the owners of coal mines

Reasoning:
6. The scheme of the Coal Act and the bare reading of its provisions make it clear that the Commissioner has to adjudicate the claims of creditors of the mine owners in accordance with the priorities. The claims, accepted by the Commissioner, are to be satisfied out of the amount payable to the mine owners and the balance left after meeting the claims of all the secured and unsecured creditors, is to be paid to the owners of the coal mines7. The High Court has accepted the contention of the mine owners and has held that the interest accrued under the Coal Act cannot be made available to the Commissioner for meeting the claims of the creditors of the mine owner or to satisfy their other liabilities. According to the High Court whole of the interest amount is to be exclusively given to the mine owners and the claims and liabilities are to be satisfied only out of the principal amount payable to the mine owners under the Coal Act. To support these conclusion the High Court has given three reasons which we may presently examine8. The High Courts conclusions are primarily based on the interpretation of Section 18(5) of the Coal Act. The High Court has quoted the meaning of words "enter" and "benefit" from various dictionaries. No dictionary or any outside assistance is needed to understand the meaning of these simple words in the context and scheme of the Coal Act. The interest has to enure to the benefit of the owners of the coal mines. The claims before the Commissioner under the Coal Act are from the creditors of the owners and the liabilities sought to be discharged are also of the owners of the coal mines. When the debts are paid the liabilities discharged, it is only the owners of coal mines who are benefited. Taking away the interest amount by the owners without discharging their debts and liabilities would be unreasonable. They have only to adopt delaying tactics to postpone the disbursement of claims and consequently earn more interest. Due to such delay the owner would get huge amount of interest though ultimately he may not get a penny out of principal amount on the final settlement of claims. It would amount to conferring unjust benefit on the owners which can never be the intention of the Parliament. We do not agree with the interpretation given by the High Court and hold that the interest accruing under the Coal Act is the money paid to the Commissioner in relation to the coal mine and the same has to be utilised by the Commissioner in meeting the claims of the creditors and discharging other liabilities in accordance with the provisions of the Coal Act9. The High Court noticed that apart from providing priorities for claims the Parliament has also indicated the accounts from which such claims are to be satisfied. According to the High Court since no mention has been made therein with regard to the recovery of any amount of claim out of the interest the same cannot be used for that purpose and has to be exclusively paid to the owners. We do not agree with the reasoning. Under Section 18(5) of the Coal Act the interest accruing on the amount standing to the credit of the deposit account shall also be payable to the Commissioner in addition to the sum referred to inn (1) of Section 18. Section 26 further provides that out of the moneys paid to the Commissioner in relation to the coal mine if there is a balance left after meeting the liabilities of all the secured and unsecured creditors, such balance shall be disbursed to the owner of the coal mine. It cannot be disputed that the interest paid to the Commissioner under Section 18(5) is money paid to him in relation to a coal mine and as such it has to be utilised in meeting the claims of the creditors of the mine owners and their other liabilities. Even otherwise interest amount in the present context has no separate entity. As the lamb belongs to the owner of the sheep, the interest goes with the principal. The interest accrued under the Coal Act is, thus, part of the kitty out of which the claims and liabilities are to be met10. The High Court has further held that under Section 26 of the Coal Act moneys paid to the Commissioner in relation to a coal mine do not include the money accrued by way of interest. There is no basis for this interpretation. The plain reading of Section 26 read with Section 18(5) of the Coal Act makes it clear that moneys paid to the Commissioner in relation to a coal mine are to be used for satisfying the debts and liabilities. Interest amount accrued under the Coal Act is undoubtedly money in relation to coal mine and as such it squarely comes within the ambit of Section 26 of the Coal Act11. The amended Section 18(5) of the Coal Act which escaped the notice of the High Court provides that the amount of interest accruing on the amounts standing to the credit of the deposit account is also payable to the Commissioner. Section 22(3) of the Coal Act makes the assets, in the hands of Commissioner, available for satisfying the debts in order of priorities. The assets of the erstwhile owner lying in the hands of the Commissioner of Payments would include the interest which has been paid to the Commissioner under Section 18(5). Similarly Section 24 of the Coal Act says that unsecured creditors will be paid out of the money credited to the account of coal mine. Moneys credited to the account of coal mine also include interest. It is thus clear from the scheme and plain reading of various provisions of the clear from the scheme and plain reading of various provisions of the Coal Act that the interest amount has to be made available to the Commissioner to meet the debts and liabilities12. We may refer to SectionA of the Coal Act which fixes the maximum interest payable to the successful claimants. It is provided that interest shall be paid at such rate not exceeding the rate of interest accruing on any amount deposited by the Commissioner under Section 18. Had the Parliament intended to give interest to the owners, there would have been no necessity for fixing the maximum limit of interest payable to the claiming with reference to the rate of interest accruing to the scheduled amount13. The two Acts being identical whatever we have said about the Coal Act is equally applicable to the Coking Act