TMI Blog1980 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... subsidy amount of ₹ 4.50,000 is set aside, and the writ petition is dismissed: Accordingly, the appeal of the Union of India is allowed and that of the Industrial Supplies Pvt. Ltd., is dismissed with costs throughout. - Civil Appeal Nos. 815 and 1284 of 1978 - - - Dated:- 7-8-1980 - Sen, A.P. (J), Krishnaiyer, V.R. And Reddy, O. Chinnappa (J),JJ. JUDGMENT The Judgment of the Court was delivered by SEN, J.-These appeals by special leave against a judgment of the Delhi High Court turn on the construction of certain provisions of the Coking Coal Mines (Nationalisation) Act, 1972. The appeals raise a question of far reaching importance namely, whether a raising contractor of a coal mine is an owner within the meaning of sub-s. (1) of s. 4 of the Coking Coal Mines (Nationalisation) Act, 1972 (hereinafter referred to as the Nationalisation Act), and if so, whether the fixed assets like machinery, plants, equipment and other properties installed or brought in by such a raising contractor vest in the Central Government. They also give rise to a subsidiary question, namely, whether subsidy receivable from the erstwhile Coal Board established under s. 4 of the Coal Mines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Clause 9 gave an option 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 it reads: "25. That 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 the 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 these 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation) Act, 1972, is May 1, 1972. According 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. 72,000.00. Since 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 them was about Rs. 4,50,000. On May 5, 1976 the petitioners filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalisation Act read with s. 2(1) of the Mines Act, 1952. It was, therefore, said that the plants, equipment and machinery and other assets, and current assets and movables belonging to them as on October 17, 1971 could not, and did not, vest in the Central Government under sub- s. (1) of s. 4 of the Nationalisation Act. It was urged that the High Court was in error in construing the definition of the term 'owner' as defined in s. 2(1) of the Mines Act, 1952 so as to include a raising contractor, by laying emphasis on the words 'as if he were' in the last sentence of the definition, and particularly so, because the Act itself, separately and/or clearly distinguishes between an 'owner' and a 'contractor'. It was further contended that due to the absence of the word 'includes' in the last sentence, in the definition of 'owner' in s. 2(1) of the Mines Act, a 'contractor' cannot be treated to be an 'owner'. It was said that the object of the fiction in s. 2(1) of the Mines Act, 1952 was for the limited purpose of making such a raising contractor responsible for the due observance of the provisions of that Act and such a deeming provision could not be invoked for construing the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 3(n) of the Nationalisation Act, reliance was placed on the decision in The Chief Inspector of Mines Anr. v. Lala Karamchand Thapar etc. While a raising contract may not be a lease and, therefore the contractor not a lessee, we find no reason why he should not be treated to be an occupier within the meaning of s. 3(n). Under the terms of the agreement dated February 7, 1969, the petitioners acquired complete dominion and control over the colliery in question for a period of 20 years. It is common ground that the said agreement was by a registered instrument and even though this perhaps may not amount to a leases there can be no doubt that it was a licence coupled with a grant. The petitioners were by virtue of cl. 7(a} of the agreement entitled to install at their own cost such additional machinery, tramways, ropeways etc., in connection with the transport of coal raised and to bring in chattels for the purpose of discovery and removal of coal. They were entitled under cl 7(b} to remove such additional machinery that may be installed and such chattels and utensils as may be brought in by them to the said collieries unless of course, the owners exercised their option to purchas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, were not in possession on behalf of somebody else and, therefore, the decision in Lala Karamchand Thapar's case cannot apply. It is next urged that the Nationalisation Act itself makes a distinction between an 'owner' and a 'managing contractor', there being separate provisions made with regard to both. It is said that in view of this. there is no legal justification to read the word 'contractor' for the word 'owner' in sub-s. (1) of s. 4. The contention is wholly misconceived and cannot be accepted. The Nationalisation Act no doubt separately defines 'owner' and 'managing contractor'. The definition of managing contractor in s. 3(i) reads: "3(i) "managing contractor" means the person, or body of persons, who, with the previous consent in writing of the State Government has entered into an arrangement, contract or under- standing, with the owner of a coking coal mine or coke oven plant under which the operations of the coking coal mine or coke oven plant are substantially controlled by such person or body of persons ," The words and expressions used and defined in the Act have the meaning, respectively, assigned to them 'unless the context otherwise requires'. The expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 contractor. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor, he is primarily responsible to comply with the provisions 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 any liability. It is 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 not so. The oft-quoted passage in the judgment of Lord Asquith in East End Dwelling Co. Ltd. Fine-bury Borough Council brings out the legal effect of a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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." 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 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not fall outside the purview of sub-s. (3) of s. 22. 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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