Case: Bharat Coking Coal Ltd.  Vs. Madanlal Agrawal

Victory Colliery was owned by United Mining Company Private Limited. The case of the appellant is that the company was practically a one man company. If the corporate veil is lifted, it will be found that Madanlal Agrawal was de facto owner of the company. Madanlal Agrawals case is that he had in his individual capacity purchased certain properties together with structures thereon by registered deeds of sale dated 7.7.1949 and 24.3.1950 and built further structures and remodeled them. The United Mining Company Private Limited took these structures on monthly rent. These structures were utilised as office premises of Victory Colliery as also staff quarters. Eviction was sought for non-payment of monthly rent for several years.2. Bharat Coking Coal Limited in its written statement alleged that the said properties were bought with the moneys belonging to the colliery and as such the land and the structures really belonged to the company. The alleged payment of rent by Victory Colliery to Madanlal Agrawal was only a paper transaction and for tax benefit. All the purchases were made by United Mining Company and sources of investment came from the funds of the said company.3. It may be mentioned that even before the Coal Mines (Nationalisation) Act came into force on 1.5.1973, the management of Victory Colliery along with the disputed properties were taken over by the Central Government on 1.1.1973. No objection was taken thereto by the plaintiff. It was only on 1.1.1976 the plaintiff issued a legal notice to the appellant to vacate the suit premises and to pay arrears of rent from January, 1973 till the filing of the suit. Title Suit (T.S. No. 7/6 of 1976) for eviction was filed on 2.2.1976. On 21.5.1979, the 1st Additional Subordinate Judge dismissed the suit with costs. The respondent preferred an appeal against the judgment and decree passed by the Trial Court. It was allowed by the Division Bench of the Patna High Court. The High Court was of the view that right, title and interest in the suit premises had not vested in the Central Government. Bharat Cooking Coal Limited in respect of the suit premises was a tenant under Madanlal Agrawal. Since it had defaulted in payment of rent for the period from January, 1973, it was liable to be evicted from the suit premises. Therefore, the respondents suit was decreed. A further direction was given to pay the arrears of rent to the tune of Rs. 66,000 and mesne profits.4. The Trial Court on examination of the facts came to the conclusion that there was no relationship of landlord and tenant between the plaintiff and the defendant, it found that Bharat Cooking Coal Limited was maintaining the said premises since vesting of victory Colliery in the Central Government. The cost of repairs, electricity and water charges in respect of the suit premises were to be borne by the United Mining Company on behalf of the colliery before its nationalisation. Madanlal Agrawal, the plaintiff stated in cross-examination that he was the director of the United Mining Company. The other director was his own brother. He also stated that he had got the account books to prove that he purchased the suit premises out of personal funds but he did not file the same. He also stated that the Company used to pay rent of the suit property but he did not produce the rent receipts. He also admitted that he could not say when he constructed the house and what was the total cost. The expenses of electricity and water connections in the suit properties were paid by the United Mining Company. He admitted in the cross-examination that the employees of United Mining Company were in occupation of the suit premises. The office store, compressor room, garage etc. of the Victory Colliery were in the suit properties. The suit premises were used by United Mining Company exclusively for the purpose of Victory Colliery. The Trial Judge observed that it appears that defendant No. 2 is nobody but the family member of the plaintiff. The Trial judge came to the conclusion that in view of these facts and also in view of the provisions of the Coal Mines (Nationalisation) Act, the suit was not maintainable and the plaintiff was not entitled to any of his claims.5. In appeal, it was held by a Division Bench of the Patna High Court that the plaintiff/appellant was the owner of the suit premises of which Bharat Coking Coal Limited was the tenant and as it had defaulted in payment of rent from January, 1973 onwards. It was liable to be evicted. The High Court came to the conclusion on the strength of a share certificate that Madanlal Agrawal became a shareholder of United Mining Company for the first time in 1951 but had purchased the suit properties in the year 1949.6. That being the position, it was held that the suit premises had not vested in the Central Government by virtue of the provisions of the Coal Mines (Nationalisation) Act. Therefore, an eviction order had to be passed for non-payment of rent against Bharat Cooking Coal Limited.

Reasoning: In the Schedule annexed to the Act, names and addresses of the mines, management of which was taken over as well as the names of the owners of the mines were given. Victory P.O. Dhansar was mentioned at Serial No. 68 and United Mining Company Limited has been shown as the owner of the mine. By virtue of Section 3 read with the extended definition of mine given in the Act, not only the colliery, but the buildings which are being utilised for location of the management and the office of the mine as also for residence of the officers and staff of the mine were brought under the management of the Central Government. If the office building belonged to a person other than the Colliery Company which owned the mine, then it was his duty to draw the attention of the Central Government to the fact that these building even though included in the definition of mine, actually did not belong to United Mining Company Limited which was described generally as the owner. In such a case, the description of the owner might have been corrected. But even if such an error took place which required correction, the owner of the lands and buildings falling within Sub-clause (xi) of Clause (g) of Section 2 could not get back the management or control over these lands and buildings. It is of significance to note that Madanlal Agrawal who is a Director of United Mining Company Limited did not raise any objection to the description of United Mining Company Limited as the owner of the coal mine at any point of time and did not seek for any correction. It is not his case that he was unaware of the wide definition of mine given in this Act.20. By virtue of Section 3, the right, title and interest of owners in relation to the coal mines specified in the Schedule stood transferred to and vested absolutely in the Central Government free from all encumbrances from the appointed day, 1st May, 1973. The idea behind the Nationalisation Act appears to be that the Government wanted to take over and run the coal mines so as to ensure rational, co-ordinated and scientific development and utilisation of coal resources. The object of the Act was to subserve the common good and for matters connected therewith or incidental thereto. The Act should not be construed in a way to frustrate the working of the coal mines altogether and thereby stop or bring down production of coal by the nationalisation of coal mines. The extended meaning given to mine was to ensure that the activity of mining of coal could be carried on in an uninterrupted fashion. Not only the lands, buildings and equipments belonging to the owners of the mine but other lands and buildings which were solely used for the purposes of office or residence of the officers and staff of the mine also vested in the Central Government. The words of Sub-clause (xi) are very clear and there is no ambiguity in them.22. If this argument is upheld, it will make the extended meaning given to mine in Sub-section (h) of Section 2 nugatory and of no effect. Coal Mine has been defined by Section 2(b) to mean a mine in which there exists one or more seams of coal. Mine has been defined to include amongst others all conveyers or aerial ropeways provided for the bringing into or removal from a mine of minerals or other articles or for the removal of refuse therefrom, all lands, buildings works, vehicles, railways, tramways and sidings in, or adjacent to a mine and used for the purpose of the mine, all workshops (including buildings, machinery, instruments, stores, equipment of such workshops and the lands on which such workshop stands) in or, adjacent to, a mine and used substantially for the purposes of the mine, all power stations in a mine or operated primarily for supplying electricity for the purpose of working the mine. All these things may not belong to the owner to come within the ambit of the Nationalisation Act. The extended definition of mine has been given in order to ensure that after taking over of the mine, the Central Government is in a position to operate the mine and extract coal and do everything that is needful for the purpose of working the mine. In fact, the phrase belonging to the owner of the mine is to be found only in Sub-clauses (viii), (x) and (xii). That clearly goes to show that the other assets, movable or immovable, which were being actually used and utilised for operation of the mining activity were all being taken over by the Central Government even though these did not belong to the owners. There is no sense in giving this extended meaning to mine if the intention of the Act was not to acquire the right of ownership in these assets falling within the definition of Mine.23. It is also of significance that Section 3 speaks of vesting of right, title and interest of the owners in relation to the coal mines specified in the Schedule. All ownership rights not only of, but in relation to, the coal mines were being taken over by the Central Government free from all encumbrances from the appointed day. The Section also does not speak of the right, title and interest of the owners specified in the Schedule. On the contrary, it speaks of coal mines specified in the Schedule. In other words, the coal mines specified in the Schedule are being brought under the ownership of the Central Government which will take in everything included in the definition of mine. The ambit of the coal mine has to be understood in the sense as given in the Act. The fact that the name of the company has been given as the owner and the amount of compensation has also been fixed in the Schedule does not mean that the vesting was confined only to the assets of the company in the mine. The Schedule contains a list of the mines which have vested in the Central Government. In order to ascertain exactly what has vested in the Central Government, the definition of mine given in Section 2(h) will have to be taken into account. What the Schedule has done is to give the names and location of the mines, the names and addresses of the owners of the mines and also the amounts of compensation to be paid. It is not in dispute that United Mining Company was named as the owner of Victory coal mine. From this, however, it does not follow that all assets, lands, buildings and equipments which fall within the ambit of the definition of mine as given in Section 2(h) will not vest in the Central Government unless they belong to the Company. If Section 3 is read with Section 2(h) and also Sub-sections (3) and (5) of Section 26, it will be clear that vesting under Section 3 was not confined to the interest of the owner named in column 4 of the Schedule.24. The contention that Section 3 was of limited application and only took away the rights of the owners specified in the Schedule is not borne out of the scheme of the Act and also the wording of Section 3.25. Section 3 of the Act which deals with acquisition of the rights of owners of coal mines in relation to the coal mines, requires to be interpreted in the light of the objects for which the Coal Mines (Nationalisation) Act, 1973 was enacted. As set out in the Preamble, the purpose is reorganizing and reconstructing such coal mines so as to ensure a rational, coordinated and scientific development and utilisation of coal resources. Therefore, all assets required for functioning of coal mines are to be acquired.27. That is why under Section 2(n) and 2(o) read together, the term owner would carry a wider meaning assigned to that term under the Mines Act of 1952 which would cover, depending on the context, even the rights of a lessee or occupier of the mine or any part thereof. Thus the entire interest in the properties which are covered under the definition of a mine is to be acquired so that the mines can be reorganised and run efficiently.28. In this context, therefore, Section 3 refers to the acquisition of the rights of owners in respect of all the properties which are covered by the definition of a mine.29. Regarding those properties which are not of the ownership of the coal mine, it is clear from the definition of mine that only properties which are required for a proper functioning of the mine and which are covered by the definition would be acquired. Any and every property belonging to another person which happens to be on the surface of the mine or adjacent to it is not taken away. Only those properties of another person which fall within the definition of a mine and which are necessary for a proper functioning of the mine are to be taken away. The definition itself takes care of this aspect by stipulating wherever necessary that such properties must be used for the purpose of the mine, whether the purpose is specified or general.31. In the light of the definition of an owner which also includes a lessee or an occupier apart from the immediate proprietor, and the definition of mine, one can conclude that even assets of which the mine or the mining company may not be the proprietor, but which are leased by the mine or which are in the possession of a mine over a period of time, are also acquired. A temporary acquisition, or a short term lease, or even some special additional amenities which the mine may provide but which are not required for the purposes of the mine may not be covered. It will depend upon the facts of each case. In the Madhya Pradesh case, for example, the equipment in question was only temporarily in the possession of the mine to meet certain exigencies. This was held to be not covered by the definition of mine. In the Calcutta case, however, the weigh bridge which was leased by the company was a necessary equipment for the proper functioning of the mine and was installed in the mine for a period of time. It was held as falling within the definition of a mine. Thus it is quite possible that property which is temporarily in or adjacent to a mine, and which does not belong to the mine, or certain machinery and equipment which does not belong to the mining company but may be temporarily leased to meet some special temporary requirements, would not be covered by the definition of a mine. But the present case is not such a case.32. The scheme of payment of compensation also goes to show that apart from the owners named in the Schedule, other persons may have to be compensated. Sections 8 of the Coal Mines (Nationalisation) Act lays down that the owner of every coal mine or group of coal mines specified in the second column of the Schedule shall be given by the Central Government, in cash and in the manner specified in Chapter VI for the vesting in it, under Section 3, of the right, title and interest of the owner in relation to such coal mine or group of coal mines, an account equal to the amount specified against it in the corresponding entry in the fifty column of the Schedule. The Commissioner of payments to be appointed under Section 17 for the purpose of disbursement of the amounts specified in the Schedule has to consider and investigate the claim of every person against the owner and decide the validity of the claim. The Commissioner may transfer the claim for settlement to an authorised person.These provisions clearly go to show that the colliery company named in the 4th column is not the only person who will be paid the compensation money. If plants, machinery and building which come within the definition of mine are not owned by the person named in the 4th column, then the Commissioner will have to satisfy himself as to the right of any other person who owns such plants or machineries or buildings and divide the amount of compensation among such persons and the persons in the 4th column.These provisions clearly go to show that the colliery company named in the 4th column is not the only person who will be paid the compensation money. If plants, machinery and building which come within the definition of mine are not owned by the person named in the 4th column, then the Commissioner will have to satisfy himself as to the right of any other person who owns such plants or machineries or buildings and divide the amount of compensation among such persons and the persons in the 4th column.35. The controversy has been put beyond any doubt by Sub-section (5) of Section 26 which specifically provides for apportionment of the compensation money when any machinery, equipment or other property which does not belong to the owner of the mine has vested in the Central Government. The amount may be apportioned between the person named in the 4th column and the owner of machinery, equipment or other property by a court. All these provisions clearly go to show:(1) Mere mention of the name of the owner of a coal mine in 4th column is not conclusive of its right to get the entire amount of compensation specified in the 5th column.(2) There may be other claimants for the amount. The dispute may be resolved by a court on reference by the Commissioner.(3) Machinery, equipment or other property in a coal mine which does not belong to the owners specified in the 4th column may vest in the Central Government or a Government Company.(4) If such vesting takes place, then the owner of such machinery equipment or property may be compensated out of amounts specified in the 5th column.(5) The claim of such owners as against the owners named in the 4th column may be referred to a court and the compensation money may be apportioned by the court between the owner of the coal mine and the owner of machinery, equipment or other property.36. In the context of Section 3 and also Section 26, the owner has to be understood as owner of a mine in the extended sense given in Section 2(h). The limited definition of the word mine given in the Mines Act, 1952 has not been designedly adopted by the Coal Mines (Nationalisation) Act. All these provisions go to show that it was not only the interest of the owners of the coal mine specified in the fourth column, but also the ownership of all other persons in the properties enumerated in Section 2(h) vested in the Central Government by virtue of the provisions of Section 3 of the Act.37. That means that things which did not belong to the mine owners mentioned in column 4 of the Schedule but fall within Sub-clauses (i) to (xii) of Section 2(h) of the Nationalisation Act will vest in the Central Government free from all encumbrances. If the mine owner had located staff quarters and offices on rented buildings, these will also vest in the Central Government.38. In view of the aforesaid, we hold that the suit premises fall within the ambit of the definition of mine in Section 2(h) of the Coal Mines (Nationalisation) Act, 1973 and as such had vested in the Central Government on the appointed day by virtue of the provision of Section 3 of the Act, even though these premises might not have been in the ownership of the United Mining Company.