Holding

Raising contractors who occupy part of a mine are ‘owners’ under Section 3(n) and are entitled to a pro‑rata share of the compensation, so the High Court’s order is affirmed.

Summary

The appellant, East India Coal Co. Ltd., owned several coking coal mines that were nationalised under the Coking Coal Mines (Nationalisation) Act, 1972. Respondents Nos. 1 and 2, who were raising contractors and selling agents for the unworked mines, installed machinery and claimed they were owners entitled to a share of the compensation payable under the Act. They filed a claim under Section 26 before the Commissioner of Payment and obtained a writ from the Delhi High Court directing that they be treated as owners and that the Commissioner proceed with their claim. The appellant appealed, arguing that only the owners named in the First Schedule were entitled to compensation. The Supreme Court examined the definition of “owner” in Section 3(n) (borrowed from the Mines Act, 1952) and held that raising contractors who occupy part of a mine fall within this definition and are therefore owners for the purpose of the Act. Consequently, the compensation must be apportioned pro‑rata among all owners, and the High Court’s decision was affirmed.

Issues considered

The meaning of ‘owner’ under Section 3(n) of the Coking Coal Mines (Nationalisation) Act, 1972 and whether raising contractors qualify as owners.
Whether respondents Nos. 1 and 2 are entitled to a share of the compensation despite not being named in the First Schedule.
The method of apportionment of compensation among multiple owners and the priority of various debts under the Act.

Legislation cited

Coal Mines Nationalisation Laws (Amendment) Act, 1986s. 26(3)
Coking Coal Mines (Emergency Provisions) Act, 1971
Coking Coal Mines (Nationalisation) Act, 1972s. 10, s. 12, s. 12A, s. 20, s. 21, s. 23, s. 24, s. 25, s. 25A, s. 26, s. 3, s. 4, s. 5
Mines Act, 1952s. 2

Subjects

NationalisationCompensationOwner definitionRaising contractorApportionmentPriority of debtsWorkers dues

Judgment

A EAST INDIA COAL COMPANY LIMITED
v.
EAST BULLIAREE KENDWADIH COLLIERY CO.
P. LIMITED AND OTHERS

B MARCH 3, 1987

[O. CHINNAPPA REDDY & V. KHALID, JJ.]

Coking Coal Mines (Nationalisation) Act, 1972: Sections 3, 4, 5,
_.
12A, 23 & 24-'0wner'-Who is-Compensation-Claim for--Appor-
tionment of share-Guidelines for apportionment indicated.
c ·~ •
Respondent Nos. 1 and 2 were carrying on bnslness as raising
contractors and selling agents of Col<lng Coal of working coal mines.
Pursnant to an agreement with the appellant-company appointing them
~·
as contradors to raise and sell coal and manufacture hard coke In
D respect of the unworked mines, they installed valuable machinery,
utensils and coke ovens al a heavy cost.

On the nationalisation of the coal mines by the Coking Coal Mines
(Nationalisation) Act, 1972 all the mines vested In the Government.
Respondent Nos. 1 and 2 filed a claim under s.26 of the Act before the
E 4th respondent, the Commissioner of Payment, the statutory authority }
constituted under the Act and also moved the High Court by way of a
writ petition contending that they were also owners of some of the mines
in dispute and were entitled to their shares in the compensation and k

prayed for a direction that they be paid compensation at the market
value for machinery, plant, equipment, building, stores etc. A Division
F Bench of the High Court allowed the writ petition and hdd that respon- ?--
dent Nos. 1 and 2 were owners under the Act and directed respondent
No. 4 to proceed with the claim according to law.
-+
Dismissing the appeal by the appellant, this Court,

G HELD: 1. A combined reading of ss.4 and S of the Act makes it
abundantly clear that the right, title, Interest of the owners in relation
to the mines and the coke oven plants prescribed in the First Schedule
and the Second Schedule vests in the Central Government free from all
encumbrances on the appointed day. [49IH; 492A]

H 2.1. The term 'owner' has been defined in section 3(a). It is clear

484
EAST INDIA COAL. COMP. v. E.B.K.C.C. 485

from the def"mition that it takes within its ambit, occupier of the mine or
A
any part thereof. The definition of the word 'owner' clearly indicates
1 that there may he more than one 'owner' within the meaning of s.3(n) in
relation to a mine. Each or them would he entitled to a portion or the
amount shown in column 5 of the First Schedule. Raising contractors
will also come within the ambit or the expression 'owner' in the Act.
Therefore, they are also entitled to pro-rata distribution of the compen· B
sation deposited. [497G·H]
~ In the instant case, it cannot he disputed that respondent Nos. 1
c ~·
. and 2 admittedly a raising contractors, were in occupation or at least
part of the mines for their operation and thus an occupier within the
definition. They do ·not come within the exclusion clause in the defini·
tion section. Therefore, respondent Nos. 1and2 are 'owners' within the
c
~ definition of section 3(n) of the Act. [490C·D]

Industrial Supplies Private Limited v. Union of India, [1980] 4
sec 341, relied upon.
D
2.2. Sections 20(1) and 21(1) to (5) of the Act occurring in Chapter
VI of the Act have deliberately avoided the expression 'the owners in
the First Schedule' so as to achieve the object of the definition 'owner'
-+ in the Mines Act, 1952, which definition has been bodily borrowed by
this Act. If the owner whose name Is mentioned in column 4 is alone
entitled to the compensation, then there was no need for the remaining E
sections in Chapter IV for apportionment of the amount. [494E· F]
----: 3.1. Section 12·A makes the owner, who has employed the wor·
kers, liable for their wages and other dues and contains the procedure
for making the claim, its proof and determination. The important fact
~ to he noted regarding these dues is, as provided in suh-section(6) that F
the payment under this section shall have priority over all other debts
whether secured or unsecured. This is made further clear by Section
23(2) also. [496C·D]

3(ii) Secured creditors come next in priority, and will have priority
regarding their dues subject to the amounts payable to the workers. [496D] G
~
3(ili) The amount of compensation payable under the Act is kept
at the disposal of the Commissioner of Payment by the Central Govern·
ment. Section 23 provides that every person who has a claim against the
owner may prefer the same before the Commissioner within the
stipulated period. [496E-F] H
486 SUPREME COURT REPORTS [1987] 2 S.C.R.

3(v) Section 23(4) to (9) lays down the procedure for entertaining
A
and hearing of the claims against the owner. There is provision for
giving a hearing to the claimants as well as to the owner before the
Commissioner. The decision of the Commissioner is subject to appeal,
the Appellate Court being the Principal Civil Court of original Civil Jurisdic·
tion within whose local llinits the relevant mine is situated. [496H; 497A-BJ
B
4. Section 25 makes provision for payment of amounts advanced _.
by the Central Government for the management of the mine. It is
stipulated therein that such amounts can be recovered either out of the
income derived by the mine in the period during which the same · · ~ -
remained under the management by the Central Government till the
ownership vested in it or if tbe amount advanced is not so recovered
c then the Central Government is enabled to make a claim before the
Commissioner and this claim will have priority over the claim of all ~
other unsecured creditors of the mine. [497C·D)

5. Section 26 deals with cases where doubt or dispute arises as to
D the right of the person who is entitled to receive the compensation and
provides that the Commissioner shall refer the claim to the court of
competent jurisdiction. [497E-F]

6. The proper manner in which sections 23 & 24 have to be
understood is that the admitted claims can be deducted from the
E amount payable only when such claim related to the owner concerned.
In other words, it is only the owner who has incurred the said debt that
would be liable to pay the same. Care should be taken to see that the
. amounts of debts of one owner is not deducted from the compensation
amount payable to the other owner who does not owe that money. [498D·E]

F 7(1) Section 25A deals with the distribution of the balance
amount after meeting the liabilities. This has to be distributed, accord-
ing to the right of each owner determined by the Commissioner and in
case of dispute refer the dispute to a competent court. (499D·E] ·•
7 .2. The Commissioner will have to determine the share of the
G compensation of the mine claimed by respondents 1 and 2 in accordance
with section 26(2). (499H; SOOA] />...
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
3118 of 1982.

H From the Judgment and Order dated 11.8.1982 of the Delhi High
Court in Civil Writ Petition No. 112 of 1981.
EAST INDIA COAL COMP. v. E.B.K.C.C. [KHALID, J.] 487

S.N. Kackar and H.K. Puri for the Appellant. A

Shanti Bhusha<1, Mr. S.S. Jauhar, C.L. Sahu and M.L. Verma
for the Respondents.

The Judgment of the Court was delivered by
B
KHALID, J. The coal mines were nationalised by the Coking
Coal Mines (Nationalisation) Act, 1972, (for short 'the Act'). Under

- ~··.
this Act, the mines vested in the Government with effect from 1st
May, 1972. The Act contains a schedule showing the various mines
which come under the nationalisation scheme. The mines involved in
this appeal are shown as serial Nos. 112 to 116 in the First Schedule to C
the Act. The Schedule, in addition shows, the location of the mines,
name and address of the owners of the mines and the amount of
compensation. The owners' name in the fourth column of the mines
involved in the appeal is shown as East India Coal Company Limited,
the appellant before us and the total compensation as Rs. 93,23,500.
D
Respondent nos. 1 and 2 were carrying on the business as raising
contractors and selling agents of coking coal of working coal mines.
According to them, Messrs Jardine Handerson Limited, who were the
-+ managing agents of the appellant-company, appointed them as con-
tractors to raise and sell coal and manufacture hard coke in respect of
the unworked mines, as per an agreement. It was alleged that they E
<
.• were entitled under the agreement to instal plant, machinery and other
equipment for efficient discharge of their functions as raising
contractors. Pursuant to this agreement, they installed valuable
machinery, utensils and coke ovens at a heavy cost. After nationalisa-
tion, they felt that there would be difficulty for getting apportionment
from the appellant-company, of their due share in the compensation. F
Therefore, they filed a claim under Section 26 of the Act before the 4th \

respondent, the Commissioner of Payment, Coking Coal Mines, a
statutory authority constituted under the Act. They also moved the
High Court by way of writ petition and contended that they were also
owners of the mines under the Act and were entitled to their share in
the compensation and prayed for a direction that they be paid compen- G
sation at the market value for machinery, plant, equipment, building,
stores etc. and in addition challenged the validity of the Act. The
challenge against the valid;ty of the Act became infructuous since the
Act had been placed in the 9th Schedule. A Division Bench of the
High Court accepted the plea of the writ petitioners, who are respon-
dents 1 and 2 here, held that these two were owners under the Act, and H
'.

488 SUPREME COURT REPORTS [!987] 2 S.C.R.

A directed the 4th respondent to proceed with the claim according to
law. It is against this Judgment that this appeal is filed, by special
leave.

The appellants before us in their challenge against the judgment
of the High Court dispute the finding that respondents I and 2 were
B also owners under the Act and deny that they owned any part of the
plant and machinery or equipment which had been taken over under
the Nationalisation Act

The matter is now pending before the 4th respondent, a statutory
authority under the Act. He has to decide about the claims and if
necessary to refer the matter to a competent civil court, if any dispute
c arises as to the right of any person to receive the whole or any part of
the amount. We cannot go into the apportionment part of the claim.
All that we have to do in this appeal is to resolve the dispute between
the appellant and respondent Nos. I and 2, as to who is the owner of
the mines under the Act. In other words, whether the appellants are
D the owners of the mines to the exclusion of respondents 1 and 2 or not.
Then we will have to indicate the manner in which the debts due by the
owners have to be paid and which debt has priority over other debts.
This we will have to do after examining the scheme of the Act with
reference to some of the sections.

E The first question to be answered is as to who is the owner of the
mine in question. The appellants contend that they have exclusive
right over the compensation amount while respondents 1 and 2 claim
that they have a share in it. We will refer to the sections brought to our
notice to resolve this dispute. Sections 4, 5, 3{n), 10 and 12 can be
usefully looked into for this purpose.
F
Section 4(1) declares that the right, title, interest of the owners
in relation to the mines shall stand transferred to the Central Govern-
ment on the appointed day, free from all encumbrances. It reads thus:

"4(1)-0n the appointed day, the right, title and interest
G 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
encumbrances."

Similarly, Section 5 refers to the acquisition of rights of owners
H of coke oven plants specified in the Second Schedule by the Central
EAST INDIA COAL. COMP. v. E.B.K.C.C. [KHALID, J.] 489

Government by virtue of operation of this Section. Section 5 reads as
follows:
A

"5. On the appointed day, the rights, title and interest of
the owners of each of the coke oven plants. specified in the
Second Schedule being the coke oven plants which are
situated in or about the coking coal mines specified in the B
First Schedule, shall stand transferred to, and shall vest
absolutely in the Central Government free from all
encumbrances."

i'>. "A combined reading of these two sections, therefore, makes it
abundantly clear that the right, title, interest of the owners in relation
to the mines and the coke oven plants prescribed in the First Schedule c
-\ and the Second Schedule vest in the Central Government, free from all
encumbrances on th,e appointed day.

That takes us to the question as to who is the owner contemp-
lated by these two sections. The term 'owner' has been defined in D
Section 3(n). It reads as follows:

" "3(n) -'Owner'-

(i) When used in relation to a mine, has the
meaning assigned to it in the Mines Act, E
1952,

(ii) When used in relation to a coke oven plant,
means any person who is the immediate
proprietor of lessee or occupier of the coke
oven plant or any part thereof or is a contrac- F
tor for the working of the coke oven plant of
any part thereof."

For the purpose of the definition of the word 'owner' in relation
to a mine, therefore, we have to examine the definition in the Mines
Act, 1952. It reads as follows: G

"2(1)(1)-'0wner' when used in relation to a mine, means
any person who is the immediate proprietor of lessee or
occupier of the mine or of any part thereof and in the case
of a mine the business whereof is being carried on by a
liquidator or receiver such liquidator or receiver and in the H
490 SUPREME COURT REPORTS [1987] 2 S.C.R.

case of a mine owned by a company, the business whereof
A
is being carried on by a managing agent, such managing
agent; but does not include a person who merely received a
royality, rent or fine from the mine, or is merely the
proprietor of the mine subject to any lease, grant or licence
for the working thereof, or is merely the owner of the said
B mine and not interested in the minerals of the mine; 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 liabi-
lity."
··~ ...
It is clear from the definition that it takes within its ambit
c 'occupier of the mine or any part thereof'. It cannot be disputed that
respondents 1 and 2 here, admittedly a raising contractor, were in
occupation of at least a part of the mine for their operation and thus an
occupier within the defin.ition. They do not come within the exclusion
clause in the definition section. We have no hesitation, therefore, to
D hold that respondents 1 and 2 is a owner within the defintion of section
3(n) of the Act. For this conclusion of ours, we are supported by a
decision of this Court rendered by a bench of three Judges, to which
one of us was a party, in the case of Industrial Supplies Private Limited
v. Union of India, [1980] 4 SCC 341. Construing the indentical section,
AP Sen, J, speaking for the bench held thus:
E
"22. It was asserted that the petitioners were really not the
managing contractors, but wrongly described as such in the -
agreement ........... 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
,.
F virtually the price of coal supplied leaving to the owners a --f
margin of profit ......... The petitioners having bound
them-selves by the terms of the agreement, cannot be
permitted to escape from the provisions of sub-section ( 1)
of Section 4, as they come within the purview of the defini-
tion of 'owner' in section 3(n) of the Nationalisation Act.
G
23. It is then argued, in the alternative, that the term
'owner' as defined in Section 3(n) of the Nationalisation
Act read with Section 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 descrip-
H tion of a contractor in Section 2(1), but it is argued that the
EAST INDIA COAL. COMP. v. E.B.K.C.C. [KHALID, J.] 491

word 'includes' is not there. There was no need for Parlia-
A
ment to insert the word 'includes' because of the words 'as
i if he were':. Although the term 'owner' in common parl-
ance, in its usual sense, connotes ownership of a mine, the
term has to be understood in the legal sense, as defined.

24. Parliament, with due deliberation, in Section B
3(n) adopted by incorporation the enlarged definition. of
owner in Section 2(1) of the 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 lessee or occupier of mine or any C
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 com-
pany, 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 D
come in. Then come the crucial last words; "but any con-
tractor 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 cooiractor equally liable for the due observance of the E

- Act. It is needless to stress that the Mines Act, 1952, con-
tains various provisions for the safety of the mines and the
persons employed therein. In the case of a mine, the work-
ing whereof is being carried on by a raising contractor, he is
primarily responsible to comply with the provisions of the
Act. Though a contractor for the working of a mine or any F
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."

The learned counsel for the appellants in his attempt to deny to G
respondents 1 and 2 any right in the compensation, sought support
from the names shown in the first and second schedules which accord-
ing to him clearly indicated who the owner of the coal mines was and
made his submission as follows: The first schedule gives the location.of
the mine and the name of the owner. Section 4 refers to the owners
specified in the First Schedule to be a person whose right, title and H
492 SUPREME COURTREPORTS [1987] 2 S.C.R.

interest shall vest in the Central Government on the appointed day.
A
Section 4(3) which is an amended section gives the Central Govern-
ment powers to correct any ertor, omission or misdescription in rela-
tion to the particulars of a coking coal mine included in the First
Schedule or the name and address of the owner of any such coking coal
mine. Section 5 also refers to the owner of each of the coke oven plants
B specified in the second Schedule. He wants to emphasise the fact that
these sections by refering to owners mentioned in the schedule by
name, seek to exclude those who are not mentioned therein.

Then he relies upon Section 10 of the Act for the same purpose. . ~- -
Section 10 reads as follows: 1

c "10. Payment of amount to owners of coking coal mines:
The owner of every coking coal mine or group of coking
coal mines specified in the second column of the first
schedule, shall be given by the Central Government, m
cash and in the manner specified in section 21, for vesting
D in it, under section 4, the right title and interest of the
owner in relation to such coking coal mine or group of
coking mines, an amount equal to the amount specified
against it in the corresponding entry in the fifth column of
the said Schedule." '

E Here also, the section shows that the amount of compensation is to be
+
paid to the owner of the coking coal mine specified in the second
column of the First Schedule. Reliance was also placed on Section 12
for the same purpose. Section 12(1) and Section 12(2) also refer to the
-
owner mentioned in the first schedule. It is better to quote Section
12(1) and 12(2):
F
"12(1)-In consideration of the retrospective opera-
tion of the provisions of section 4 and section 5, there shall
be given by the Central Government in cash, to the owner
of every coking coal mine specified in the First Schedule of
the owner of every coke oven plant specified in the Second
G Schedule, an amount equal to the amount which would
have been, but for the provisions of the said section 4 or
section 5, as the case may be, payable to such owner under
the Coking Coal Mines (Emergency Provisions) Act, 1971,
for the period commencing on the 1st day of May, 1972,
and ending on the date of assent.
H
EAST INDIA COAL. COMP. v. E.B.K.C.C. [KHALID, J.] 493

(2) In addition to the amount specified in sub-section
(1), there shall be given by the Central Government, in A
cash, to the owner of every coking coal mine specified in
the First Schedule and the owner of every coke oven plant
specified in the Second Schedule, simple interest at the rate
of four per cent, per annum on the amount specified
against such owner in the corresponding entry in the fifth B
column of the First Schedule or the Second Schedule, as
the case may be, for the period commencing on the date of
assent and ending on the date of payment of such amount
to the Commissioner."

Emboldened with these submissions, specious though, and the
sections he ventured to meet the difficulty pased by Section 20 of the C
Act which does not use the same phraseology as in Sections 4, 5, 10
and 12. Chapter VI deals with Commissioner of Payments. By Section
20(1), in this chapter, the Central Government is given power to
appoint the Commissioner of Payments. It is necessary to read this
Section, to see how it is worded. D

"20(1) For the purpose of disbursing the amounts payable
to the owner of each coking coal mine or coke over plant
the Central Government shall appoint such person as it
may think fit to be the Commissioner of Payments."
E
The phraseology used in this section catches one's eyes immediately.

- Here the words used are "the amounts payable. to the owner of each
coking coal mine or coke oven plant". The word 'owner' is not
qualified with the expression "specified in the second column of the
First Schedule". Section 21 in the same chapter is also useful for this
discussion. It reads: F
"21(1). The Central Government shall, within thirty days
from the specified date, pay, in cash, to the Commissioner,
or payment to the owner or a coking coal mine or coke
oven plant, a sum equal to the sum specified against the
coking coal mine or coke oven plant, as the case may be, in G
the First Schedule or the Second Schedule together with
the amount and interest, if any, referred to in section 12.
(2) In addition to the sum referred to in sub-section
(1), the Central Government shall pay, in cash, to the
Commissioner, such amount as may become due to the
owner of a coking coal mine or coke oven plant in relation H
494 SUPREME COURT REPORTS [1987] 2 S.C.R.

to the period during which the management of the coking
A
coal mine or coke oven plant remained vested in the ~
Central Government."
In Section .21(1) and 21(2) the owner of a coking coal mine or
coke oven plant is not qualified with the expression "as specified in the
First Schedule or the Second Schedule". Section 21(3) directs the
B
Commissioner appointed under the Act to open and operate an
account in a scheduled bank in respect of each coking coal mine or 1
coke oven plant. Section 21(4) stipulates that the Commissioner shall
deposit the amount of compensation to the credit of the account of the
coking coal mine or coke oven plant to which the payment relates, and "! ~

section 21(5) states that interest accruing on the amount standing to
c the credit of the account shall ensure to the benefit of the owner of
coking coal mine or coke oven plant, as the case may be. It is necessary
}
to note that in these sub-sections the owner is not specified by name as
the owner specified in the second column of the First Schedule.
Absence of this specification in the above sections, thus, creates
D difficulty for the appellants. Mr. Kacker tried to get out of this diffi-
culty by contending that the 'expression owner specified in the First
Schedule' must be read into these sections also though they are absent
there. This attempt to deny any rights to the respondents 1 and 2, on
such a plea, cannot, in our view, succeed. The sections occurring in
Chapter VI have deliberately avoided the expression "the owners in
E the First Schedule" so as to achieve the object of the definition 'owner'
in the Mines Act, 1952, which definition has been bodily borrowed by
this Act. We conclude this discussion holding, agreeing with the deci-
-
sion of this Court referred to above, that respondents 1 and 2 as ;,-
occupiers are also owners. If the owner whose name is mentioned in
column 4 is alone entitled to the compensation, then there was no need
F for the remaining sections in Chapter VI, for apportionment of the --+·
amount after considering the various clauses.

What remains now is to lay down the guide lines to the Commis-
sioner regarding the priorities in which the debts due by the mine
owners have to be paid. Section 12-A deals with the workers' dues. It
G reads:

"12-A- Workers dues to be paid out of the amount:

(1) Out of the amount payable-

H (a) under section 10 and section 12 to the owner of
'l
EAST INDIA COAL. COMP. v. E.B.K.C.C. [KHALID, J.] 495

every coking coal mine or group of coking coal
mines; A
1
(b) under section 11 and section 12 to the owner to
every coke oven plant,

there shall be paid to every person employed by such owner B

~
a sum equal to the amount of arrears due, on the appointed
day, to such employee,-

... ~-
(i) in relation to a provident fund, pension fund;
gratuity fund or any other fund established for the
welfare of such employee; and
c
;

~ (ii) as wages.

(2) Every employee to whom the whole or any part of the
arrears referred to in sub-section (1) is due shall file the
proof of his claim to the Commissioner within such D
time, after the commencement of the Coking and Non-
ooking Coal mines (Nationalisation) Amendment Act,
1973, as the Commissioner may fix.

(3) The provisions of Section 23 shall, as for as may be,
apply to the filing, admission or rejection of the proofs E
referred to in sub-section (2).

(4) The Commissioner shall, after the admission or rejec-
~
tion of the claims made under sub-section (2), deter-
mine the total amount of the arrears referred to in
sub-section (1), .and shall, after such determination, F
""' deduct, in the first instance, out of the amount paid to
him under section 21, a sum equal to the total amount
of such arrears.

(5) All sums deducted by the Commissioner under sub-
section (4) shall, in accordance with such rules as may G
~- be made under this Act, be credited by the Commis-
sioner to the relevant fund or be paid to the persons to
whom such sums are due, and on such credit or pay-
ment, the liability of the owner of the coking coal mine
or group of coking coal mines or coke even plant, as
/
the case may be, in respect of the amounts of arrears H
496 SUPREME COURT REPORTS [1987] 2 S.C.R.

due as aforesaid, shall stand discharged.
A
(6) The deduction made by the Commissioner under sub-
section (4) shall have priority over all other debts,
whether secured or unsecured.

B (7) Save as otherwise provided in the foregoing sub-
sections, every secured debt due from the owner of a
coking coal mine or group of coking coal mines or coke
oven plant, as the case may be, shall have priority over
all other debts and shall be paid in accordance with the
rights and interests of the secured creditors."
c This section makes the owner, who has employed the workers, liable
for their wages and other dues. This section contains the procedure for
making the claim, its proof and determination. The important fact to
be noted regarding these dues is, as provided iii sub-section (6) that
the payment under this section shall have priority over all other debts
D whether secured or unsecured. This is made further clear by Section
23(2) also. Secured creditors come next in priority. They will have
'· priority regarding their dues subject to the amounts' payable to the
workers.

Now coming to the other claims, we will briefly examine the
E relevant sections. The amount of compensation payable under the Act
is kept at the disposal of the Commissioner of Payment by the Central
Government. Section 23 provides that every person who has a claim
against the owner may prefer the same before the Commissioner
within the stipulated period. We have already noted that section 23(2)
provides for priority of payments for debts, in the nature of wages and
F salary, amounts due towards contribution payable under the Provident
Fund A ,t, amounts due under the Workmen's Compensation Act,
amounts due to the employees from pension, gratuity. This section in
addition speaks of sums due to the State Government as royalty, rent
or dead rent. Section 23(3) provides that the amount payable under
sub-section (2) mentioned above shall rank equally among themselves
· G and be paid in full and if the assets are not sufficient, the balance
amount payable shall abate. This section should be read subject to
Section 12A(6) and (7). The sums due to the State Government shall
be subject to amounts payable to employees and secured creditors,
because Section 23(2) speaks of payment of debts mentioned therein in
priority to all other unsecured debts. Section 23(4) to (9) lays down the
H procedure for entertaining and hearing of the claims against the
EAST INDIA COAL. COMP. v. E.B.K.C.C. [KHALID, J.] 497

owner. There is provision for giving a hearing to the claimants as well
A
1 as to the owner before the Commissioner. The decision of the Com-
missioner is subject to appeal, the Appellate Court being the Principal
Civil Court of original Civil Jurisdiction within whose local limits the
relevant mine is situated. Section 24 provides that where the total
amount of claim admitted by the Commissioner does not exceed the
amount of money payable to the owne- under the Act then the amount B
of admitted claim shall be paid in full and the balance remaining shall
t' be paid to the owner. It also provides that when the amount payable to

- ....
the owner falls short to meet the full and total demand of the admitted
claim then every such claim is to abate in equal proportion and shall be
' paid accordingly. Section 25 makes provision for payment of amounts
advanced by the Central Government for the management of the
mine. It is stipulated therein that such amounts can be recovered
c
~ either out of the income derived by the mine in the period during
which the same remained under the management by the Central
Government till the ownership vested in it or if the amount advanced is
not so recovered then the Central Government is enabled to make a
claim before the Commissioner and this claim will have priority over D
the claim of all other unsecured creditors of the mine. In considering
this claim, the Commissioner, will have to see to which owner
advances were made, and after ascertaining this fact, make such owner
liable for the advances.
~
Section 26 deals with cases where doubt or dispute arises as to E
the right of the person who is entitled to receive the compensation.
The section provides that the Commissioner shall refer the claim to the
Court of competent jurisdiction, which in relation to a coking coal
-!. mine or coke oven plant means the Principal Civil Court of original
jurisdiction within the local limits of whose jurisdiction the coking coal
~ mine or the coke oven plant is situated, in the event of there being a F
doubt or dispute as to the right of a person to receive whole or any part
of the amount referred to in sections 10, 11 and 12.

After reading the scheme of the Act, it is now necessary to lay
down further guide-lines to the Commissioner as to how the amount of
compensation has to be apportioned. We have seen above that raising G
~ contractors will also come within the ambit of the expression 'owner'
in the Act. Therefore, they are also entitled to pro rata distribution of
the compensation deposited. Before the High Court, respondents. 1
and 2 pleaded that out of the amount which is payable, all the claims
admitted by the Commissioner under Section 23 cannot be deducted
from the share of the compensation amount. In other words, the con- H
498 SUPREME COURT REPORTS [1987] 2 S.C.R.

A tention was that debts due by the company should not be taken into
account when the amount due to the raising contractors is ascertained.
That is, the share of the raising contractors in the amount of compensa-
tion should not be burdened with the debts of the original owner. It is
submitted that there are huge claims against the company. If those
debts were to be deducted from the gross amount specified in column 5
B of the First Schedule, it would work serious hardship to the raising
contractors and would be doing violence to the scheme of the section
and at the same time doing injustice to those who are not liable for the.
said debts. The definition of the word 'owner' clearly indicates that
there may be more than one owner within the meaning of the section
2(n) in relation to a mine. Each of them would be entitled to a portion
the amount shown in column 5 of the First Schedule. Claims admit-
c of
ted can be deducted only from the amount payable to that owner
against whom the admitted claim relates. To read sections 23, and 24
to mean that· all the owners must bear burden of the admitted claim
irrespective of the· fact as to who is liable under these claims, would be
to do injustice to the section and doing violence to the language of the
D section. The proper. manner in which these sections have to be under- ·
stood is that the admitted claims can be deducted from the amount
payable only when such claim relates to the owner concerned. In other
words, it is only the owner who has incurred the said debt that would
be liable to pay the same. ·Care should be taken to see that the
amounts of debts of one owner is not deducted from the compensation
.
E amount payable to the. other
. owner who does not owe that money.

... The apprehension expressed by the learned counsel for respon-'
dents 1 and 2 that his clients should not be visited by adverse consequ-
ences by burdening their share of compensation with th~ company's
" debts is well founded. The section cann'ot be read to r;eate such an
F · undesirable situation. Care should be taken in ascertaining the debts
of each o:wner not to identify the debts, the burden of which.will fall on
which owner. ·· · 1'
· .Then comes section 25-A which enables the Commissioner to
make payment to the owners. It reads:
G: •
'. "25-A Notice to owners of coking coal mines of coke oven
plants and managing contractors, etc.

(1) After meeting the liabilities of persons whose claims
have been admitted under this Act, the Commissioner ·
H shall notify in such manner is he may think fit, the
EAST INDIA COAL. COMP. v. E.B.K.C.C. (KHALID, J.] 499

amount of money available with him and specify in
such notification a date within which the owners of the A
coking coal mines or coke oven plants, the managing
contractors and the owners of any machinery, equip-
ment or other property which was vested in the Central
Government company under this Act and which does
not belong to the owners of the coking coal mines or B
~ coke oven plants may apply to him for payment.
I
.. ~-"
!
(2) Where any application is made under sub-section (1),
the Commissioner shall, after satisfying himself as to
the right of the applicant to receive the whole or any
part of the amount, pay the amount to the person con-
cerned and in the event of there being a doubt or dis-
c
pute as to the right of the person to receive the whole
or any part of the amount, the Commissioner shall deal
with the application in the manner specified in sub-
section (1) of Section 26."
D
This section deals with the distribution of the balance amount after
meeting the liabilities. This has to be distributed according to the right
of each owner determined by the Commissioner and i11 case of dispute
refer the dispute to a competent court.

In this case, there are five mines. The appellants claim to be the E
exclusive owner of all the five mines. We have held that respondents 1
and 2 are also owners. But they do not claim right in all the mines.
Under Section 26(3), newly inserted by the Coal Mines Nationalisa-
tion Laws (Amendment) Act, 1986, No. 57 of 1986, it is for the Com-
missioner to apportion the amount as indicated therein. The amended
clause (3) reads as under: F

"(3) Where the amount specified in the fifth column of the
First Schedule is relatable to a group of coking coal
mines, the Commissioner shall have power to appor-
tion such amount among the owner of such group,
and in making such apportionment, the Commis- G
sioner shall have regard to the highest annual produc-
tion in the coking coal mine during the three years
immediately preceding the appointed day."

The Commissioner will have to determine the share of the compensa-
H
500 SUPREME COURT REPORTS [1987] 2 S.C.R.

A tion of the mine claimed by respondents I and 2 in accordance with this
section. Y
We have indicated above, the guidelines fo be adopted in appor-
tioning the compensation. We find that the High Court was correct in
B its conclusions. The appeal has therefore to fail and accordingly is
dismissed with costs of Respondents I & 2.

M.L.A. Appeal dismissed.