Holding

The claim for excess payment is not maintainable as the statement of accounts did not meet statutory requirements and no contrary proof was established, so the appeal is dismissed.

Summary

Mis. Bharat Coking Coal Ltd. (BCCL), a Central Government company appointed as custodian of coking coal mines, claimed recovery of excess payments made to New Govindpur Coal Co. for the management period (17 Oct 1971 to 30 Apr 1972) under Section 25 of the Coking Coal Mines (Nationalisation) Act, 1972. The claim was supported by a statement of accounts audited as required by Section 22, but the Assistant Commissioner of Payments rejected it for lack of proper proof and procedural defects. BCCL contended that the 1986 amendment to the Act, which made the auditor's statement conclusive proof unless contradicted, should revive its claim. The Supreme Court examined whether the statement complied with the statutory format, whether the appellant had proved any contrary evidence, and whether the retrospective amendment altered the earlier findings. Finding that the accounts were inaccurate, the auditor’s report itself did not support the claim and no contrary proof was adduced, the Court held the claim untenable. Consequently, the appeal was dismissed, affirming the orders of the lower courts.

Issues considered

The statement of accounts filed by the appellant complied with the requirements of Section 22 of the Coking Coal Mines (Nationalisation) Act, 1972.
Whether the auditor's statement of accounts is conclusive proof under Section 22(8) unless the appellant proves contrary.
Whether the 1986 amendment to the Act, with retrospective effect, changes the legal position regarding the claim.
Whether the claim for excess payment under Section 25 is maintainable in view of procedural deficiencies.

Legislation cited

Coking Coal Mines (Nationalisation) Act, 1972s. 22, s. 23(4), s. 23(6), s. 23(7), s. 25
Companies Act, 1956s. 226

Subjects

excess payment claimstatement of accountsauditnationalisationSection 22Section 25procedural complianceretrospective amendment

Judgment

MIS. BHARAT COKING COAL LTD. A
v.
NEW GOVINDPUR COAL CO. PVT. LTD.

MARCH 22, 2004

[R.C. LAHOTI AND DR. AR. LAKSHMANAN, JJ.] B

Coking Coal Mines (Nationalisation) Act, 1972:
) ·-~
Sections 22, 23 and 25-Statement of accounts in relation to management
period-Claim petition under-Central Government appointed a Company as C
custodian to manage various coal mines-During the 111anagement period the
said Company incurred losses due to excess payments made to one of the
collieries-Assistant Co111missioner of Payments dismissed the said Co111pany 's
clai111 petition-First appellate court and High Court, in revision, also dismissed
the claim-Correctness of-Held.• Statement of accounts in relation to the D
111anagement period filed by the said Company not carrect-Procedure
prescribed under S. 2 2 not followed at all-No proof in support of the claim
was filed-Hence, claim petition rightly rejected.

The appellant-company was a Central Government company
constituted under the Coking Coal Mines (Nationalisation) Act, 1972. The E
Central Government appointed the appellant-company as custodian on its
behalf to manage the Company's coal mines.

During the management period the appellant-company had incurred
losses due to excess payments made to the respondent's colliery. The
appellant-company, therefore, preferred a claim petition before the F
""?: Assistant Commissioner of Payments for recovery of the excess payment
made to the respondent, which was rejected. The first appellate court and
the High Court, in revision, also rejected the claim. Hence the appeal.

Dismissing the appeal, the Court
G
HELD: 1. The accounts statement in relation to the period of
management by the appellant is not correct and the procedure prescribed
under Section 22 of the Coking Coal Mines (Nationalisation) Act, 1972
has not been followed at all. The Appellate Court and the High Court, in
315 H
316 SUPREME COURT REPORTS f2004j 3 S.C.R.

A revision, has rightly dismissed the claim of the appellant holding that the
appellant has failed to file the required papers and proof to substantiate
the claim. The appellant has also failed to comply with the provisions of
the Nationalisation Act, in particular, Sections 22 and Section 23(4), (6)
& (7) of the Nationalisation Act in the matter of filing of the proof in
B support of the claim. Although the auditor's check of the account as per
insertion of Section 21(8) of the Nationalisation Act shall be the proof of
the claim unless contrary is proved but the fact remains that the auditor's
statement of account also did not support the case of the appellant and
rather it goes in favour of the respondent in view of the fact that the
respondent had proved the contrary to the entries and the court has also
C considered it and accordingly rejected the claim of the appellant after
thorough examination and discussion. [329-A-E[

2. It must, therefore, be held that the claim made by the appellant
in its entirety is not maintainable. [329-81

0 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2355 of 1999.

From the Judgment and Order dated 23.9.97 of the Patna High Court
in C.R. No. 225 of 1992 (R).

Ajit Kumar Sinha for the Appellant.
E
S.B. Upadhyay, Rana S. Biswas and Shiv Mangal Sharma for the
Respondent.

The Judgment of the Court was delivered by

F DR. AR. LAKSHMANAN, J. The above appeal arising out of S.L.P.
(Civil) No. 11082/1998 was filed against the final judgment and order passed
in Civil Revision Petition No. 225/1992 dated 23.09.1997 by the High Court ,-
of Judicature at Patna whereby the High Court dismissed the Civil Revision
Petition.

G BRIEF FACTS OF THE CASE ARE:
The appellant-company is a Central Government Company with in the
meaning of Section 617 of the Companies Act, constituted under the Coal
Nationalisation Act in and around of Distt., Dhanbad in the State of Bihar.

H The appellant-company after formed by the Central Government was
BHARAT COKING COAL LTD. r. NEIVGOVINDrURCOALCO. rvr. LTD. [LAKSllMANAN,J.] 317
)
appointed as custodian on behalf of the Central Govern·ment to manage the A
Company's Coal mines. the management of which were taken over by the
Central Government on enactment of the Coal Mines Act.

The intervening period i.e. between the 17.10.1971 to 30.04.1972 is
known as Management period during which the management of such coal
mines was with the appellant-company. During the said management period B
the Central Government used to advance money to the appellant-company
for management of coal mines under Section 25 of Nationalisation Act, 1972.
\ ·~ In the event the said amount of advance was not recovered from the income
of the Colliery on account of Coal extracted the Central Government was
empowered to make the claim before the Commissioner of payment under C
the said Act.

Prior to nationalisation, the New Govind Pur colliery used to be under
the respondent and its income during the management period was insufficient
to meet the expenditure of the said coal mine. It is the case of the appellant
that during the management period, the appellant-company had actually D
incurred loss due to excess payment for which a claim for an amount Rs.
--c 15,21,320.32 was filed before the Commissioner of Payment.

The Central Government enacted Coking coal mines (Emergency
Provisions Act, 1971) hereinafter referred to as Act of 1971, where under the
management of all the Coking coal mines in the country were taken over by E
the Central Government with effect from 11.10.1971.

The Central Government incorporated the appellant-company and
directed that the management of the Coking coal mines was taken over under
the Act, 1971 be carried on by the appellant-company.
F
The right, title and .interest of the Coking coal mines in the country, the
management of which were taken over under the Act, 1971, stood vested
absolutely and free from all encumbrances in the appellant-company under
Section 3 of the Coal Nationalisation Act, 1972. Under the said provisions of
said Nationalisation Act, 1972 the Central Government was empowered to G
make recovery of the excess expenditure over receipts in the management of
Coal Mines during the management period in terms of Section 25 of the said
Act, which is set out as under:-

'·Section 25 - Every amount advanced by the Central Government
or the custodian as the case may be, for the management of a coking H
318 SUPREME COURT REPORTS [2004] 3 S.C.R.

A coal mine or coke even plant shall be recovered from the income
derived by such coking coal mine or coke even plant in respect of the
period during which the management of such mine or plant remained
vested in the Central Government.

Provided that where such income is insufficient to meet in full
B the total amount of advance made by the Central Government or the
Custodian for the management of the coking coal mine or coke even
plant, the Central Government may make a claim to the Commissioner
for the deficiency of the amount so advanced and the claim in respect ~' ,
of such deficiency shall have priority over the claims of all other
unsecured creditors of the coking coal mine or coke over plant."
c
The claim so covered under Section 25 of the Act, was to be filed
under Section 23 of the Act and was to be supported by audited statement of
account as proof of the claim drawn up in prescribed format as provided
under Section 22 of the Act.
D The appellant-company preferred a claim petition before the
Commissioner of Payment for recovery of excess payment made to respondent
which was registered as case No. 9480/73 in the Court of the Commissioner
of Payment, appointed under the Act.

The respondent no. I filed objections/rejoinder of the said claim of the
E
appellant-company.

The Assistant Commissioner of Payment, before whom the claim case
was preferred for adjudication on 19.12.1981, rejected the claim of the Central
Government on the following grounds i.e.:-
F (i) The appellant-company failed to disclose the quantum of advance
receipt from the Central Government during the management
period.
(ii) The appellant-company failed to submit the proof of the claim as
total. statement of account filed not supporting the claim cannot
G be accepted as a proof of claim u/s 23 (4) of the Act.
(iii) The appellant-company did not prefer PIL account of the later
transaction, hence the amount submitted was not acceptable
without individual item of the expenditure debited in the account
and are not supported by voucher etc;
H
llllARATCOKINGCOAL LTD.•·. NEW GOVINDPUR COAL CO. PVT. LTD. [l.AKSHMANAN . .1.J 3 J9
_) (iv) Amount shown as spent during the management period in respect A
of salaries and wages of the workmen is exclusive.
(v) Amount spent as shown in account books are not tenable.
(vi) Amount has been spent subsequent to the Nationalisation of the
mine and cannot be considered as an expenditure realisable to
management of the mine. B
(vii) A detailed entry on account of interest in the statement of account
amount be treated as advance received from Central Government.
(viii) Amount debited in the account under the item of income tax not
tenable being not proved. c
(ix) Amount spent on account of capital expenditure are no
expenditure.
(x) Value of closing stock of coal not included in the receipt folio
of the account.
D
Under Section 23 ( 10) of the Nationalisation Act, 1972 the appellant-
company preferred an appeal against the order of the Assistant Commissioner
of Payment which rejected the claim of the Central Government in its entirety
in Misc. Appeal No. 29/82.

The Central Government enacted the Coal Mines Nationalisation Laws E
(Amendment) Act, 1986 with retrospective effect from 01.05.1972 in respect
of Nationalisation Act of 1972 whereby and where under the related section
on the basis of which the Trial Court (the Asst!. Commissioner of Payment)
passed an order were amended.

"Section 22 :- Statement of accounts in relation to the period of F
management by the Central Government, etc. - (I) The Central
Government or the Government company, as the case may be, shall
cause the books in relation to each coking coal mine or coke oven
plant, the management of which has been vested in it under the Coking
Coal Mines (Emergency Provisions) Act, 1971 to be closed and G
balanced as on 30th of April, 1972, shall cause a statement of accounts,
as on that day, to be prepared, within such time, in such from and in
such manner as may be prescribed, in relation to each such mine or
plant in respect of the transactions effected by it during the period for
which the management of such coking coal mine or coke oven plant
remained vested in it. H
320 SUPREME COURT REPORTS [2004] 3 S.C.R.

A Provided that where the two or more coking coal mines or coke oven
plants were owned, before the commencement of this Act, by the
same owner, a consolidated statement of accounts may be prepared
for all the coking coal min es or coke oven plants owned by such
owner.

B (2) All amounts received by the Central Government or the
Government company after the closure of such account shall,
where such amounts related to transactions effected before the
appointed day, be included in the said statement of accounts in ~,·I
respect of the coking coal mine or coke oven plant to which the
said receipt relates.
c
(3) The Central Government or the Government Company in which
the right, title and interest of the coking coal mine or coke oven
plant stands vested shall be entitled to receive, upto the specified
date, to the exclusion of all other persons, any money, due to the
coking coal mines or coke oven plant, as the case may be, realised
D after appointed day not withstanding that the realisations pertain
to a period prior to the appointed day.

Provided that where such realisations have not been included in the "·
statement of accounts as on the 30th day of April, 1972, a
supplementary statement of accounts shall be prepared and furnished,
E at such intervals as may be prescribed, by the Central Government or
the Government company to the owner of the coking coal mine or the
coke oven plant, as the case may be.

(4) The liabilities of the coking coal mine or the coke oven plant
(not being liabilities arising out of advances made by the Central
F Government or the Government company), which could not be
discharged by the appointed day, may be discharged by the Central
Government of the Government company up to the specified
date out of the realisations, effected before or after the appointed
day or out of advances or borrowings made up to the specified
G date and every payment so made shall be included in the statement
of accounts as on the date immediately before the appointed day
indicating therein the period in relation to which the payments
were made and the payments so made shall not be called in
question in any count.

H Provided that the liabilities 111 relation to the period prior to the
.,..
BHARAT COKING COAL LTD.,. NEW GOVINDPLIR COAL CO. PVT. LTD. [LAKSllMANAN. J.] J2 J
_) appointed day, which have not been discharged on or before the A
specified date, shall be the liabilities of the owner of the coking coal
mines or the coke oven plant, as the case may be.

(5) A copy of each statement. of accounts prepared under this section
shall be delivered by the Central Government or the Government
company, as the case may be, to the Commissioner and also the B
owner:

Provided that where the number of owners is more than one, only one
! K"
copy of the statement of account shall be given to the owners for the
benefit of all of them.
(6) The statement of accounts prepared under the section shall be
c
audited by a person who is qualified to be appointed as an auditor
of a company under Section 226 of the Companies Act, 1956,
and the auditor so appointed shall receive, from the funds of the
coking coal mine or coke oven plant, as the case may be such
remuneration as the Central Government may fix. D
(7) The audit of the statement of accounts shall be conducted in the
manner as the Central Government may direct.
(8) The statement of accounts audited under sub-section (6) shall,
unless the contrary is proved, be conclusive proof in respect of
every matter entered therein. E
Explanation: For the purposes of this section, "statement of accounts"
means a statement in the form of receipts and payments, and does not
include any statement that may be prepared as a result of the closing
and balancing of the books for the preparation of the profit and loss
-i account and balance sheet or any statement prepared in accordance F
with the normal commercial practice."

"Section 25:- Recovery of excess payments made by Central
Government or Custodian - Any amount in excess of payments
over receipts in the statement of accounts prepared under Section 22
shall be deemed to be an amount advanced by the Central Government G
or the Custodian, as the case may be, for the management of a coking
coal mine or a coke oven plant during the period in which the
,,,.. management of such mine of plant remained vested in the Central
Government and the Central Government may make a claim to the
Commissioner for such excess payment and such claim shall have H
322 SUPREME COURT REPORTS [2004] 3 S.C.R.

A priority over the claims of all other unsecured creditors of the coking
coal mine or a coke oven plant.

Explanation - In this section "Custodian" means the Custodian
appointed under the Coking Coal Mines (Emergency ~rovisions) Act,
1971.
B
Similarly the amended act made it clear that the closing stock of coal
has vested and thereby the value of the same is not to be incorporated in the
side of the account folio.

On behalf of the appellant-company a petition was filed before the
C lower appellate court in the pending misc. appeal 29/92 for consideration of
amended provisions of the Nationalisation Act, 1986, inter alia, contending
therein.

(i) That the impugned order of the learned court is purely based on
an unamended Sections as the said order was delivered on
D 31.12.1983.
(ii) That it is apparent from the order of the learned court below that
the court below has rejected the claim of the appellant in
interpreting the section which have been amended and given
retrospective effect. As for instance, the learned court below has
E reduced the claim under item (m) of the last page of the order
while quantifying the amount to the extent of Rs.2,34,994.00 on
account of the value of closing stock of coal where as by virtue
of the amended Act it has been declared that the closing stock •
as on the date of vesting of the collieries in the Central
Government has vested with the mine in the Central Government
F as the amount specified against the colliery includes the value of r.-
the closing stock of coal.
(iii) That similarly the learned court below has held that the audited
statement of account which has been filed by the claimant in
support of the claim is not proof of the claim although the
G amendment has been made to the contrary that the entrees in the
audited statement which is in the prescribed format shall be the
conclusive proof unless contrary is proved. The onus to prove
the entries has been shifted to the ex-owner Opp. Party. The ...
entire claim of the claimant has been item-wise reduced on the
H basis of wrong interpretation of the terminology of"proof' which
\
)..

~
BHARA TCOKING COAL LTD. 1•. NEW GOVINDPUR COAL CO. PVT.LTD. fLAKSHMANAN, J.) 323
__ )
has been made clear by the amended act. A
(iv) That as a result of amendment of the Act by virtue of which the
sections under which the claim has been preferred, the section
under which payment has been made, there was no occasion for
the learned court below to reject the claim of the Central
Government represented by BCCL. B
'The lower appellate court dismissed the appeal on various other
grounds.
I r1'
On behalf of the appellant-company the Civil Revision bearing No.
C.R. No. 224/92 @was filed in the High Court against the order of the lower
court dismissing the appeal, inter alia, contending therein as under:-
c
(I) That the SLP (C) No. I 0072/89 before the Supreme Court of
India, was not similar to the present case as in the present case the
coal related documents were produced from the trial court. In support
of the entry made in the statement of account further, section 22 (B) D
of the Act puts the owner to disproof contrary to the entry made into
the account and the respondents could not produce before the trial
court any evidence to proof any of the entry made in the statement
of account. Further the Trial Court rejected the claim not on fact but
on the legal issue namely by interpreting the provisions. After
amendment the interpretation made by the trial court was of no E
consequence as no legal issue remain good in view of the amendment
so made. It was also averred in the Civil Revision filed before the
High Court that the trial court failed to appreciate that the amended
provisions of the Act clearly reflected in the petition filed before the
High Court date 26.9.1991 subsequent to the amendment made in the F
-, ·-;.· parent Act by Act of 1986,

The Patna High Court passed an order dismissing the Civil Revision
application as being devoid of merits.

Being aggrieved, the appellant has preferred the above SLP in this G
court. Leave was granted on 15.04.1999.
<'
We heard Mr. Ajit Kumar Sinha, learned counsel for the appellant and
'"'· Mr. S.B. Upadhyay, learned counsel for the respondent. Mr. Sinha contended
that the courts below are not justified in not appreciating the provisions of the
Coking Coal Nationalisation Laws (Amendment) Act, 1986 which was given H
324 SUPREME COURT REPORTS 12004) 3 S.C.R.

A retrospective effect and the amendments made in Section 22 and 25 of the l .
Act and insertion of Section 22 (8) and Section 10(2) in the Act settle and
answer the reasoning of the trial court and the lower appellate court in rejecting
the claim. He would further submit that the Central Government would be
deprived of its legitimate claim amount invested in the management of coal
mines during the period of such management pending nationalisation of the
B mines and that the High Court also is not justified in rejected and dismissing
the statutory appeal and revision application merely relying on a case which
was not identical.
.,., j

Arguing contra, Mr. S.B. Upadhyay, learned counsel for the respondent
c would submit that the judgment passed by the Trial Court and the Revisional
Court cannot at all be assailed and that the well considered judgment of the
courts below are not liable to be interfered with. The learned counsel further
contended that in an identical case similar law points were involved in Claim
Case No. 9418 of 1973 (BCCL v. Khas Mehtadih Coal Co.) where in the
auditor's report is similar as in the present case and the miscellaneous appeal
D was dismissed by the Additional District Judge after due consideration of the
amendments made in the Amendment Act. Against the said order. BCCL
filed writ application which was dismissed by the High Court after hearing
all the aspects of the amended provisions of 1986. Against the said judgment,
the appellant came up before this Court in SLP (C) No.10007/1989 in which
E the same questions were agitated but this Court heard and dismissed the SLP
(C) No.10007/1989 by its order dated 7.11.1989. Besides the above, the
Appellate Court in its judgment dated 26.3.1992 in the Appeal No.29 of 1982
of this SLP has rightly considered all the aspects of amendments made in
Section 22 and 10 of the Coking Coal Nationalisation Laws (Amendment)
Act, 1986 and has dismissed the appeal. Against the orders of dismissal of
F SLP(C)No. I 0072/1989, the BCCL preferred a review petition which again
;:""
was dismissed which facts have not been disclosed in the present SLP by the
appellant.

We have perused the judgment passed by the Commissioner of Payments
G in Appeal No. 2911982, order of the Additional Sessions judge, Dhanbad in
Civil Revision No. 22511992 and the order passed by this Court in SLP(C)
No. I 0072/1989, this Court (...... three Judges Bench) while rejecting the claim
of the appellant therein has observed as under:-
""'
"We have heard Mr. Sinha for the petitioner and Mr. Jain for the
H respondents. The petitioner mainly relies upon the provision of section
BHARAT COKING COAL LTD. r. NEW GOVINDPUR COAL CO. PVT.LTD. [LAKSHMANAN, J.] J 25
22 (8) of the Coking Coal Mines (Emergency Provisions) Act, 1971, A
,.) which provides: "Tlie statement of accounts audited under sub-clause
(b) shall, unless the contrary is proved, be conclusive proof in respect
of every matter entered therein."

This provision has been kept in view when the forums below rejected
the claim of the petitioner. The auditors indicated in their report: B
"So far as we understand the correct amount due to the owner or due
from the owner cannot be calculated from the statement itself as
prepared unless it is balanced and adjustment of stock of coal and
I 1--4
coke taken over on 17. l 0.1971 and remained as closing stock as on
30,04.1972 with other such adjustment for stores and capital c
expenditure etc. are credited to owner's account.

We are not fully satisfied with the maintenance of books of
accounts. The statement is prepared, out of cash book transactions in
a rough-sheet. No proper ledgering is done. The statement is compiled
from· rough sheet. D
So far as the question of maintenance of stock account is concerned
no day-to-day raising and dispatches accounts are maintained. No
such books are maintained to verify the day-to-day manufacture and
dispatches of coke accounts!'
E
We do not think any view other than what has been done could be
appropriate in the facts of the case.

The SLP is dismissed."

We have perused the grounds taken in SLP which, in our opinion have F
no merit because the management of Coking Coal Mines in India was taken
over by the Central Government under the provisions of the Ordinance
promulgated by the President of India known as Coking Coal Mines
(Emergency Provisions) Ordinance on or from 17th day of October, 1971.
Subsequently it was converted into an Act according to which the management
of the mines were taken over but the ownership remained vested with the G
erstwhile owners till 30.04.1972. It is seen from the records that during the
period of management Le. from 17.10.1971 to 30.04.1972, this coal mine
earned large profits and received huge accounts from sale proceeds from
l"-, transactions prior to 17. I0.1971 and from other sectors but could not and did
not proper accounts of receipts and payments by keeping proper statements. H
326 SUPREME COURT REPORTS 12004] 3 S.C.R.

A Such state1ne11t of accounts were statutorily required to be audited by a
qualified auditor in terms of Section 22 of the Coking Coal Mines
(Nationalization) Act, 1972 (36 of 1972) by the enforcement of which the
Coking Coal Mines were nationalized on and from l.05.1972 and all the
rights, title and interests of the erstwhile owners of the coking coal mines
vested with the Central Government vis-a-vis to a Government company i.e.
B BCCL. On the basis of the statement of accounts, the BCCL was authorized
to prefer the claim under Section 25 of the Act because such audited statements
of account is conclusive proof of the claim unless contrary is proved. The
fact remains that the appellant -company has failed to prove the contra as
~,
required under Section 22 (8) of the Act. In this context, we may refer para
C (6) of the judgment dated 26.03.1992 of the appellate Court which reads
thus:-

"Sri Mallick, the learned advocate appearing for the B.C.C.L.
claimant/appellant , in course of argument, could not meet aforesaid
points raised on behalf of the respondent rather he had to concede
D that in a similar case the appellant claimants lost its claim right from
the Court of Commissioner of Payment to the Hon 'ble Supreme Court
which has been referred by the learned counsel for the respondent,
Sri. Mallick, although tried his level best to assail the impugned
order, but he could not refer any specific instance or cite any relevant
papers which was not considered by the learned Asstt. Commissioner
E of Payments and in the circumstance, practically he has nothing to
urge so as to allow this appeal. In the circumstances, Sri. Mallick had
to fairly concede that order of the court below cannot be set aside for
the aforesaid reasons and points replied by the learned counsel for the
respondents.
F
The auditor appointed by the appellant company itself could not be
satisfied regarding the correctness of the account and the auditor statement
of account failed in support of the claim of the Central Government. The
auditor appointed by the appellant company itself could not be satisfied
regarding the correctness of the account and the auditor statement of account
G filed in support of the claim of the Central Government was not accepted by
any of the courts because there were certain baseless entries and hence the
claim was rejected/dismissed by all the courts after due consideration of all
the arguments advanced on ·behalf of the appellant. Jn the instant case, the
mines have been nationalized in the year 1972 and if the respondent is made
H to pay the amount demanded after 26 years, the respondent will suffer
I

k
,. BHARA TCOKING COAL LTD. 1•. NEW GOVINDPUR COAL CO. PVT.LTD. [LAKSHMANAN, J.) J 27

immeasurable loss. The claim, in our opinion ,cannot be admitted and the A
~)
amounts cannot be relied upon because of the following specified defects and
discrepancies:-

"(a) claimed amount could not be stated. correctly at any time.
(b) Salary and wages could not be proved at least to the extent of
B
Rs. 2,35,800.00.
(c) Bonus amount could not be approved and paid without any basis.
(d) Income tax paid on colliery income amounting to Rs. 81,967.00
I !-<'
could not be proved was not paid for the management purpose.
(e) Sales tax payment could not be proved . c
(f) National defence fund to the extent of Rs. 6500 wrongly claimed.

.. (g) Contractor's payment to the extent of Rs. 3,54,594 could not be
proved fully.
(h) Interest of Rs.76,414 wrongly claimed . D
(i) Head Office and Group Office expenses to the extent of Rs.
56,453.00 cannot be proved and also not required in connection
with the management of the collieries and not authorized by law.
Q) Excess debit of Rs. 10,000 in plant and machinery.
E
(k) Excessive claim in respect of stores.
(I) Discrepancies of stock of coal.
(m) Sales realization could not be proved nor accounted fully and
wrongly adjusted.
F
(n) Advance of Rs. 2,34,594 paid after 1.5.1992 and wrongly claimed
as Central Government advance and last of all the doubtful nature
of entry regarding cash balance.

The Lala and Company Chartered Accountants, Dhanbad, who are the
auditors submitted their audit report and audit of statement of accounts under G
Section 22 (6) of the Act, 1972 in regard to the respondent companies. It is
seen from the report that the statement of accounts which were submitted to
them were subsequently revised with necessary changes of error found during
r . . ., the course of their audit report . It is also observed in para (4) of the report
which reads as follows :
H
328 SUPREME COURT REPORTS [2004] 3 S.C.R.
'
A "We, are not fully satisfied with the maintenance of books of
account. The statement is prepared, out of cash book transaction in
rough sl1eets. No proper ledgering is done. The statement is complied
from rough sheets.

So far as the question of maintenance of stock account is concerned
B no day-to-day raising and dispatches account are maintained. No such
books are maintained to verify the day-to-day manufacture and
dispatches of coke."

It is also observed under the capital statement of accounts that the
Cashier or Manager has not signed the cash books on 16.10.1971 to confirm
C the balance on 16. I 0.1971.

When asked to explain why the custodian did not take over cash in
hand of Rs. 64,800.04 on 17. l 0.1971 instead of cash of Rs. 288.78 only on
18. I0.1971, the statement of accounts are revised by showing cash in hand ...
as on 18.IO.I971 at Rs. 288.78 which remark in the bottom. The difference
D of actual cash in hand of Rs. 64,800.04 and Rs. 288. 78 which comes to Rs.
64,511.26 are adjusted by omitting the payments from the items of payments
under the following heads:

Auditor's Report on 01.07.1973
E I. Salary & Wages Rs. 57,970.76
2. Bonus Ale Rs. l,7I2.66
3. Building Repairing Rs. 693.17
4. Stores Ale Rs. 424.00
F Miscellaneous Ale Rs. 3,710.67
5.
Total Rs. 64,511.26

In our opinion, this adjustment is not fair and we are not satisfied with
the transaction and recommend for investigation of the entire transaction of
G this opening cash balance taken over.

Several other serious infirmities have also been pointed out by the
auditors in their report in regard to C.W.P.F. Accounts, sales realisation, sales
,..,
tax realisation, L.D.C.C. salary and wages, bonus account, royalty account
H etc. In the conclusion, it is mentioned that the result of physical takings on
BHARA TCOKING COAL LTD."· NEW GOVINDPUR COAL co: PVT.LTD. [LAKSHMANAN,J.) 329
17 .10.1971 have not been shown to the auditors and the physical takings as A
~) on 30.04.1972 are differing with book figures as shown in this statement.

Thus, it is clear that the accounts statement in relation to the period of
management by the appellant is not correct and the procedure prescribed
under Section 22 of the Act, 1972 has not been followed at all . We, therefore,
hold that the claim made by the appellant in its entirety is not maintainable B
and the order by the Commissioner of payment is self-explanatory which has
been based on cogent reasoning covering all aspects of the matter. Likewise,
the Appellate Court and the High Court in revision has rightly dismissed the
l f.t claim of the appellant holding the appellant has failed to file required paper
and proof to substantiate the claim. The appellant has also failed to comply
the provisions of the Nationalisation Act, in particular, Section 22 and Section
c
23 sub clause (4), (6) and (7) of the Nationalisation Act in the matter of filing
of the proof in support of the claim. Although auditor's check of account as
per insertion of Section 21 (8) of the Nationalisation Act shall be the proof
of the claim unless contrary is proved but the facts remains the auditor
statement of account also did not support the case of the appellant and rather D
I it goes in favour of the respondent in view of the fact that the respondent had
proved the contrary to the entries and the court has also considered it and
)'{ accordingly rejected the claim of the appellant after thorough examination
and discussion. We see no merit in the appeals. The appeal stands dismissed.
No costs.
E
V.S.S. Appeal dismissed.