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

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 asthe owners are the owners of a Working Colliery comprising an area of 800 Bighas more or less and known 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 hereinthe 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 opt ion 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 itThat 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 t he 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 the se 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 saidthe 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 saidpetitioners 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,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 enactedthe 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) ofthe Coking Coal Mines (Nationalisation) Act, 1972, is May 1,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 &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,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 t hem was about Rs. 4, 50,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 ofHigh 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) ofthe 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 petitioner s, 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 utilised by the Central Government under sub-s. (4) of s. 22 for discharge of the liabilities of the coking coal mine.

Reasoning:
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.