Holding

The dispute over the inclusion of the engineering unit and related buildings in the definition of "mine" is a civil question of title that must be decided by a suit, and under s.19(3) and (4) the Central Government may receive all monies due up to 30 June 1975, while any un‑realised amounts thereafter are recoverable by the erstwhile owners; the petitioners are not entitled to a specific monetary award.

Summary

The petitioners, New Satgram Engineering Works and related properties, challenged the takeover of their engineering unit, bungalow and guest house by the Central Government under the Coal Mines (Nationalisation) Act, 1973, seeking a mandamus. The High Court declined to decide whether these assets fell within the definition of "mine" under s.2(h) and partially allowed the petition. The Supreme Court held that such a question of title is a civil dispute that must be resolved by a suit, not by a writ under Art.226, and that the proper remedy is a suit. It further interpreted s.19(3) and (4) to mean that the Central Government could receive all monies due to the mines up to the specified date (30 June 1975), but any amounts not realised by that date are recoverable by the erstwhile owners, and the petitioners are only entitled to procedural rights under s.19 and s.26, not a specific monetary award. Consequently, the Union of India's appeal was allowed and the Engineering Works' appeal dismissed, with directions to appoint a Commissioner of Payments to adjudicate the remaining disputes.

Issues considered

Whether a writ petition under Art.226 can decide the question of whether the engineering unit, bungalow and guest house are covered by the definition of "mine" in s.2(h) of the Coal Mines (Nationalisation) Act, 1973.
Interpretation of s.19(3) and (4) of the Act: whether the Central Government is entitled to receive all monies due to the coal mines up to the specified date, even if the realisation pertains to a period prior to the appointed day.
Whether amounts such as the subsidy from the erstwhile Coal Board and other pre‑appointed‑day dues fall within "current assets" excluded by the explanation to s.2(h)(xii) and thus vest in the Central Government.
Whether the petitioners are entitled to a specific sum (Rs.7,28,342.54) or only to the statutory rights of statement of accounts and balance under s.26.

Legislation cited

Coal Mines (Conservation and Safety) Act, 1952s. 4
Coal Mines (Nationalisation) Act, 1973s. 18, s. 19, s. 20, s. 21, s. 22, s. 23, s. 24, s. 25, s. 26, s. 27, s. 2(h), s. 3, s. 8, s. 9
Coal Mines Nationalisation Laws (Amendment) Act, 1978
Coal Mines (Taking Over of Management) Act, 1973s. 2(g), s. 6
Constitution of Indias. Art.226, s. Art.32
Industries (Development and Regulation) Act, 1951
Mines Act, 1952

Subjects

Coal mine nationalisationDefinition of "mine"Art.226 jurisdictionCivil suit vs writSection 19(3)(4) interpretationCompensation and disbursementEngineering worksProperty title dispute

Judgment

.406

NEW SATGRAM ENGINEERING WORKS & ANR.
v.
UNION OF INDIA & ORS. AND VICE VERSA
B
August 14, 1980
[V. R. KRISHNA IYER, 0. CHINNAPPA REDDY AND A P. SEN. JJ.J
Coal Mines (Nationalisation) Act, 1973, sections 2(h), 18(2) read with s11b..
sections (3) and (4) of section 19 of the Act as amended, interpretation of-
c Disbursement of amoullts to the owners of coal mines, secti'1ns 20 to 27 of
the Coal Mines (Nationalisation) Act, scope of.

M / s. Shethia Mining and Manufacturing Corporation, Calcutta owned three
non-coking coal mines one of which was New Satgram Coal Mines, besides a
workshop called- the New Satgram Engineering Works built on a plot adjacent
to the New Satgram Coal Mines in 1964, a building known as the Technical'
n Director's Bungalow, built somewhere in 1957-58 outside the mining area but
adjacent to it, and another building constructed in 1960·61 on the same plot
of land, namely the Guest House used for the residence of officers and staff
of mines.

The management of the New Satgram Coal Mine• along with two other
coal mines was taken over by the Central Government under the Coal Mines.
(Taking over of Management) Act, 1973, with effect from January 31, 1973:
E Thereafter the Coal Mines (Nationalisation) Act, 1973 was passed and by virtue
of section 3(1) thereof, the right title and interest of M/s. Shethia Mining and ir
Manufacturing Corporation Yested in the Central Government with effect from
May 1973 and subsequently by a notification in the Government company that
is, the Coal (India) Ltd. On May 17, 1973, the Central Government took over
possession of the Technical Director's Bungalow and the Guest House. The- -~
appellants who had filed two writ petitions challenging the taking over and the-
F Nationalisation Act in th1i Supreme Court withdrew them and filed a petition
under Article 226 of the Constitution in the Delhi High Court for the issuance
of a writ or direction in the nature of mandamus in regard to the taking over
of New Satgram Engineering Works and the dues pertaining to the New Satgram
Coal Mines and New Majri Coal Mines. The High Court partly allowed the
petition but declined to go into the question as to whether the Engineering
Unit, together with Shethia Bhavan and all its assets etc.. the Technical'
G Director's Bungalow and Guest House were or not covered by the definition-
of the term "mine" in section 2(h)(vi), (vii) & (xi) of the Nationalisation Act. T
Jlence the appeals by special leave one by New Satgram Engineering Wdrk~
·and the other by the Union of India.
Allowing the Government's appeal and dismissing the appeal of the
Engineering Works, the Court
H
HELD : (!) When the. facts themselves are seriously controverted, the-
dispute relating to the properties in question raise a "serious question of title"
and the parties must get their rights adjudicated upon in a civil court and nor
\

SATGRAM ENGG. WORKS V. UNION 407

.under Art. 226 of the Constitution. The question whether the engineering unit .A.
was "situate in, or adjacent to" the new Satgram Coal Mines and was
·"substantially" used for the purposes of the mine as well as the question whether
the Technical Director's Bungalow and the Guest House were "solely" med
for the ·residence of officers and staff of the mine and. therefore. fell within
the definition of 'mine' as contained in s. 2(h) of the Nationalisation Act, cannot
be decided in proceedings under Art. 226 of the ·Constitution. The proper
remedy is by way of a suit. [416 H; 418 G-H] Jt.
(2) Parliament instead of providing that the word 'mine' shall have the
meaning assigned to it in the Mines Act, 1952, has given an enlarged definition
·of 'mine' in s. 2(h) so that not merely the colliery but everything connected with
the mining industry should vest in the Central Government, that is, not only
.that part of the industry which consisted of raising, winning and getting coal
but also that part of it which consisted in the sale of coal and its supply to
.customers both of which are a part of an integrated activity. Parliament by ·c
.an enlarged definition of mine as contained in section 2(h) of the Act
has indicated the nature of the properties that vest, and the question whether
a particular asset is taken within the sweep of s. 2(h) depends on whether it
answers the description given therein. [415 H, 416 A-D]
(3) The language used in s. 2(h)(vii) and (xi) of the Coal Mines
(Nationalisation) Act, 1973 are different. • Sub-clause (vii) used the words "in,
or adjacent to, a mine" and "used substantially" for the purposes of the mine
or a number of mines under the same management, in relation to workshops.
The use of the word 'and' makes both the conditions conjunctive. Sub-clause
(xi) used the words "if solely used" for the location of ·the management,
sale or liaison offices, or for the residence of officers and staff of the mine, in
relation to lands and buildings. The difference in language between the two
expressions "used substantially" and "solely used" is clear. A workshop er
a building constructed initially for the purpose of a coal_ mine cannot by its
being diverted to other purposes cease to belong to the mine. What is of
the essence is whether the workshop or the building originally formed a part
and pa reel of the coal mine. The subsequent user may not b~ very material.
(415 B-E] . .

J (4) Merely because the land on which a workshop of a coal mine is located
bears a different plot number, or even if there is a compo,md wall between
·the main office of the coal mine and the workshop, it would not cease to be
'part of the mine. The question in such cases will always be whether the
workshop is "located in, or a'djacent to, a mine" and was "used substantially
for the purposes of the mine under the same management". Further the question
whether a workshop is "substantially" used for the purposes of a mine necessarily
involves an enquiry • as to whether it pertains to, or in substance
is, part of· the mine. The value of jobs executed for the mine as against those
for others is not really determinative of the question. If a workshop is, in
fact a part of a coal mine, it does not cease to be so merely because its
utilisation lies in the. production of materials supplied to third parties. While
a workshop may form part of a mine and is substantially used as such, it
may be utilised for turning out other products; it all depends. upon the
circumstances of each case, whether it forms part of a mine or not. [416 F-G,
417 D-F]
(5) Sub-sections (3) and (4) of section 19 of the Act are part <'f an integrate<!
scheme and must be read with sub-section (2) of section 18. According
tO the provisions of sub-sections (3) and (4) of section ·19 · the Central
408 SUPREME COURT REPORTS ll98ll I S.C.R.

Government, or the Government company was exclusively entitled to recei'i'C
monies in question to the exclusion of other persons up to the specified. date
and to utilise the same in discharge of the liabilities of the coal mine which
could not be discharged by the appointed day. Under the scheme of the Act,
the owner of the coal mine which has vested in the Central Government under
sub-section (!) of section 3 is entitled to receive, besides the. compensation amount
as determined under section 8, additional compensation amount under sub-
B section (l) of section 9, simple interest thereon at 4% per ·annum for the period
specified therein, together with "such amount as may become due" to the
owner of the coal mine in relation to the period during which the management
of the coal mine remained vested in the Central Government as provided by
sub-section (2) of section 18. [421 C-El
Provisions in sections 8, 9, 18· and 19 make it clear that unless the
requirements of section 19 are fulfilled there can be no ascertainment of "such
amount as may become due" to the owner of a coal mine, in relation to the
period during which the management of the coal mine remained vested in the
Central Government. as required under sub-section (2) of section 18. Any
other construction would render sub-section (2) of section 18 entirely otiose.
The amounts collected on behalf of the erstwhile owners of coal mines, represent
the money of such owners without distinction, and whether -they were sale
proceeds of coal or realisations from debtors, the amounts were liable to be
D. spent not only in the discharge of liabilities of the coal mine which could not
be discharged by the appointed day, but also were liable to be spent for the
purposes of management. All the rights and liabilities arise from the provisions
of the Acts, and the net balance in relation to the management period, means
the difference between authorised collections and legitimate liabilities of the
erstwhile owners. It is nec·essarily this balance which "becomes clue in relation
to the period during which the management of the coal mines remained vested
E in the Central Government" within the meaning of sub-section (2) of section 18.
[423 B-E]
When there is a payment made by the Central Government - under sub-
s. (2) of section 18, the elaborate procedure provided under sections 20-27 have
to be followed. The owner of .a coal mine is entitled to the payment by 'the
Commissioner of Payments,, under section 26 of "the balance, if any out of
the total amount of money credited to tbe account of the coal mine" after
F
he has gone through all the stages provided for in Chapter VI. Such being
the scheme, there is no question of the owner of a coal mine, who is divested
of his right, title and interest under sub-section (1) of section 3 to realise from
the Central Government any amount due to a coal· mine, which remained to
)Je realised until the specified date, that is, June 30, 1975. In· the· instant c~se,
in view of all these provisions of sections 20 to 27 of the Act and particularly
-G of sub-section (1) .of section 26 the claims made by the appellants Engineering
Works are not proper. They are certainly not entitled to recover any definite
or ascertained sum. All that they are entitled to under sub-section (5' of
section 19 is that they should be furnished with a copy of each statement of .
accounts prepared under section 19, to its being audited under sub-section (6)
and to the audit being conducted in such manner as the Central Government
may direct under sub-section (7), and to the payment under sub-section (J) of
section 26 of the balance, if any, out of the total amount .of money credited
H to the account of a coal mine after all the liabilities have been discharged.
[423 F, 424 F-H, 425 A, D-EJ
(6) There is no duty cast on the Central Government to make realisation&
SATGRAM ENGG. WORKS V. UNION 409

of any money due to a coal mine if it pertains to a period prior to the appointed A
day, and to discharge the liabilities of the coal mine beyond the specified date,
that .is, June 30, 1975. The 'appointed day' under section 2(a) of the
Management Act under the Nationalisation Act was January 31, 1973 and May
l, 1973 respectively; while the 'specified date' for purposes of sub-sections (3)
& (4) of section 19 was June 30, 1975. All that vested in the Central
Government under sub-section (1) of section 3 of the 'Management Act was
the management of all coal mines, as defined in section 2(g) of lhe Act, which B
included sundry debts etc., pending nationalisation of such mines, with effect
from the appointed day, that is, January 31, 1973. But this was only for the
purposes of management, the title all the time remaining in the erstwhile owners
of the coal mines. In the -course of management under that Act, all the
collections belonged to the owners, and the liabilities also in relation to the
mines were the liabilities of the owners. The Custodian appointed by the
Central Government under section 6 of the Management Act was liable for c
the net balance in relation to. the management period. He had the right to
collect and also the right to incur expenditure in relation to the management
by reason of the provisions of that Act. [426 C-F]
(7) The conferral of power upon the Central Government under sub-
sections (3) and (4) of section 19 to make realisation of monies due to the coal
mines and from such realisation to discharge the liabilities as well as to incur D
expenses in relation to the management thereof, was ·a necessary concomitant
of the vesting of such coal mines under sub-section (l) of section 3 of the Act.
The Nationalisation Act received the assent of the President on May 30, 1973
but the provisions of sub-section (l) of section 3 were brought into force with
retrospective effect, that is, with effect from the appointed day, that is, May 1,
1973. It follows that, although there was a complete extinction of all the
rights, title and interest of the owners of coal mines with effect from May 1,
1973, there was a fictional extension of the period of management under the
Management Act from May 1 to May 30, 1973. There is, therefore, provision
made in section 9 that apart from the amount of compensation provided for
by section 8, as mentioned in the Schedule, the owners of every coal mine 3hall
be entitled to receive additional compensation under sub-section (!) thereof. This
was to be an amount equal to the amount which would have been, but for the
provisions of. sections 3, 4 and 5 payable to such owner for the period
commencing on May 1, 1973 and ending on the date on which the Act received
F
the assent of the President that is, May 30, 1973. Under sub-section (1) of
section 11 the Central Government is entitled to exercise all such things as the
owner of the coal mine was authorised to do. [427 C, 426 G-427 BJ
(8) The definitions of coal mine in section 2(h)(xii) includes the current
assets belonging to a mine, but by reason of the explanation inserted by the
Coal Mines Nationalisation <Amendment) Act, 1978, the expression "current G
assets" appearing therein does not include amounts which had become due
before the appointed day, that is, May l, 1973. Thus these dues did not
vest in the Central Government. This exclusion of sundry debts ·under the
Nationalisation Act does not apply to the Management Act because there was
no 'imilar explanation to section 2(g)(xii) of that Act. [427 D·E]
(9) The Management Act was to be followed by the Nationalisation Act H
~nd, therefore, the accountability of the Central Government in regard to the
management period was provided for in section 19 of the Nationalisation Act.
Although there was vesting of the coal mines in the Central Government under
410 SUPREME COURT REPORTS [19811 1 S.C.R.

.A sub-section (1) of section 3 of the Act, the accounts had still to be settled.
Sub-sections (3) and (4) of section 19, therefore, extended the period during
which the Central Government was authorised to collect monies due to the
coal mines and to discharge the liabilities of such coal mines which could not
be discharged by the appointed day, that is, May 1, 1973 till the specified
date, that is, June 30, 1975. The liabilities of the coal mines were not taken
over under the Management Act. Section 7 of the Nationalisation Act implies
"B that after· the specified date, that is, June 30, 1975 the erstwhile owners of
coal mines would have to meet all their liabilities which could not be dis-
charged before the app9inted .day. It must result in the inevitable conse-
quence, as a necessary corollary that any amount which could not be realised
by the Central Government until the specified date, would be realisable by
the owners directly in order to meet their pre-existing liabilities. [427 F-
428 B]
.c (10) Provisions of sub-section (4) of section 19 of the Coal Mines (Nationa~
Iisation) Act, 1973 are in pari materia with sub-section (3) of section 22 of
the Coking Coal Mines (Nationalisation) Act, 1972. The >ubsidy receivable
from the erstwhile Coal Board established under section 4 of the Coal Mines
(Conservation and Safety) Act, 1952, being a payment "by way of reimburse·
ment" was like any other dues, and, therefore, must be treated as 'any money
due to the coking coal mine'. Therefore, the directions made by the High
Court requiring the Union of India to pay to the Satgram Engineering Works
Rs. 7,28,342-54 which is to· be recovered by the erstwhile Coal Board,,as subsidy
is incorrect. [428 C-D]
Industrial Supplies Pvt. Ltd., & Anr. v. The Union of India & Ors.
[1981] 1 SCR p. 375, followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1331 /79 and
:E' 426 of 1980.
Appeals by Special Leave from the Judgment and Order dated
16-4-1979 of the Delhi High Court in W.P. No. 489/76.
M. C. Bhandare, A. C. Gulati, G. S. Chatterjee and B. B. Sawhney
for the Appellants in CA No. 1331/79 and for Respondent in CA 426/
80.
Lal Narain ,Sinha, Att. Genl. and Miss A. Subhashini for th.e Ap-
pellants in CA No. 426 and Respondents in CA No. 1331 /79.
The Judgment of the Court was delivered by
SEN J.-These appeals by special leave from a. judgment of the
Delhi High Court, involve interpretation of s. 2(h) of the Coal Mines
(Nationalisation) Act, 1973. as amended by the Coal Mines Nationa- y
lisation Laws (Amendment) Act, 1978, as well as of sub-s. (2) of
s. 18 read with sub-ss. (3) and (4) of s. 19 of the Act.
The importance of this case in its legal aspect consists in the
:H question as to whether the Central Government has the power under
sub-s. (3) of s. 19 of the Act to receive up to the specified date, i.e.,
June 3,0. 1975 any money due to a coal mine notwithstanding that
SATGRAM ENGG. WORKS v. UNION (Sen, J.) 4 11'

the realisation pertains to a period prior to that date, even though A
'Such amounts may not be the "current assets'', by reason of Explana-
tion to s. 2(h)(xii), and to apply such realisations under sub-s. (4)
thereof to discharge the liabilities of such coal mine which could not
be dischar~ed by the appointed day, i.e., May 1. 1973.
The facts of the case are as follows : B
Messrs Shethia Mining & Manufacturing Corporation, Calcutta
apparently owned three non-coking coal mines, two in the State qf
West Bengal viz., New Satgram arid New Jamuria coal mines, and
one in the State of Maharashtra viz., New Majri coal mine. The
concern also owned a workshop called the New Satgram Engineermg
Works. in short, "Engineering Unit'', built on a plot adjacent to the c
New Satgram coal mine in 1964. Outside the mining area, but adja-
cent ·to it, it had constructed a building known as the Technical Direc-
tor's Bungalow built somewhere in 1957-58. In or about 1960-61,
it had constructed another building on the same plot of land, namely,
the Guest House used for the residence of officers• and staff Qf the
D
mines.
The management of the aforesaid coal mines was first taken
ove.r under the Coal Mines (Taking Over of Management) Ordinance,
1973 pending nationalisation of such mines and vested in the Central
Government from the appointed day i.e., January 31, 1973. The
Ordinance was replaced by the Co'al Mines (Taking Over of Manage- E
ment) Act, 1973, hereinafter referred to as the "Management Act".
Thereafter, Parliament enacted the Coal Mines (Nationalisation) Act,
1973, hereinafter referred to as the 'Nationalisation Act', providing
for the acquisition and transfer of the rights, title and interest of the
owners in respect of the coal mines specified in the Schedule with a
view to re-organising and reconstructing such coal mines so as to en• F
sure the rational. co-ordinated and scientific development and utilisa-
tion of coal resources consistent with the growing requirements of
the country.
The Nationalisation Act provides by sub-s. (1) of s. 3 that tile
right, title and interest of the owners in relation to the coal mines G
specified in the Schedule shall stand transferred to, and vest absolutely
in, the Central Government free from all incumbrances with effect
from the appointed day, i.e., May 1, 1973. The mines in question
were nationalised and have been mentioned at serial Nos. 383, 577
and 601 in the Schedule. The right, title and interest of Messrs
Shethia Mining & Manufacturing Corporation consequently ·vested in H
the Central Government and subsequently by a notification in the
Government Company, i.e., the Coal (India) Ltd.
412 SUPREME COURT REPORTS fl981J 1 S.C.R.

A The management of the New Satgram Engineering (hereinafter
called the· petitioners) Works tried at first, to challenge the validity
of the Coal Mines (Taking Over of Management) Ordinance, 1973 by
a petition in this Court under Art. 32 of the Constitution being Writ
Petition No. 81 of 1973. On February 12, 1973 they obtained rule
nisi and an interim order restraining the taking over of the Engineer·
B ing Unit. On May 4. 1973 the Court made the stay absolute. Bet·
ween the making of the two orders, the Coal Mines (Taking Over
of Management) Act, 1973 was enacted on March 31, 1973 with retro-
spective effect from January 31, 1973. On May 17. 1973, the Central
Government took over possession of the Technical Director's Bunga·
low and the Guest House.
c
On May 30, 1973 the Coal Mines (Nationalisation) Act, 1973
was enacted and came into force with retrospective effect from May
1, 1973. On August 30, 1973 the Management filed another petition
under Art. 32 .of the Constitution being Writ Petition No. 1673 of
1973 challenging the validity of the Act. On September 19, 1973
D the Court issued rule nisi and an ad interim order in terms of the
earlier order. ·~.
.-~~
On August 10, 1975 the Management Act and the Nationalisation
Act were both placed in the Ninth Schedule, by the Constitution
(Thirtyninth Amendment) Act being item Nos. 98 and 99 then~ot.
E On April 1, 1976 the petitioners withdrew their Writ Petitions Nos. 81
and 1673 of 1973 but two days after, i.e., on April 3, 1976 they
presented a petition under Art. 226 of the Constitution .before the Delhi
High Court being Writ Petition No. 489 which .has given rise to these
appeals.
It is not unworthy of mention here that the main relief, if J'ot
1

F
the only substantial relief, sought by the petitioners in their petition
under Art. 226 of the Constitution, was for the issue of a writ or
direction in the nature of Mandamus in regard to the New Satgram
Engineering Works, but it appears that at the hearing in the High
Court ·the submissions ranged over a much wider field. The peti·
G tioners alleged that until April 30, 1973, i.e., prior to the appointed
day, Messrs Shethia Mining & Manufacturing Corporation were the
owners of the two coal mines i.e., New ·satgram and New Majri, and
as on that day, the outstanding dues from sundry debtors were
Rs. 68.74 lacs, further that from January 31, 1973 to April 30. 1973
i.e., during the period of management, the Central Government had
H despatched coal from the aforesaid two mines worth Rs. 53.22 lacs
and that a sum of Rs. 7,28,342.54 was still outstanding as on April
30, 1973 towards subsidy receivable from the erstwhile Coal Board
SATGRAM ENGG. WORKS -v. -UNION (Sen, J.) 413

established under s. 4 of the Coal Mines (Conservation and Safety) A
Act, 1952 on account of hard-rock mining and stowing operations. It
was also asserted that between the years 1962 and 1967 the petitioners
had advan-ced a sum of Rs. 2,51,597.24 to the Eastern Railways for
the construction of a railway siding, but the project having been
abandoned on January 18, 1973 'the amount had become due, although
no such claim was made in the writ petition. B

The High Coun partly allowed the writ petition. It declined
to go into the question as to whether the Engineering Unit, together

~·· with Shethia Bhavan and all its assets etc., the Technical Director's
Bungalow and the Guest House, were or were not covered by the
definition of 'mine' in s. 2(h)(vi), (vii) and (xi) of the Nationalisation c
Act, but declared that the su~sidy amounting to Rs. 7,28,342.54 re-
ceivable· from the erstwhile Coal Board and outstanding as on May
1, 1973 did not vest in the Central Government under sub-s. (1) of
s. 3 being impressed with trust. It further held that any amount
which could not be realised until June 30, 1975, i.e,, the specified D-
date, under sub-s. (3) of s. 19 of the Act, would be realisable by the
erstwhile owners of the coal mi:n,es. As regards the amount of
Rs. 2,51,597.74 advanced by the petitioners to the Eastern Railways
for construction of a railway siding, it held that no such claim having
been made in the writ petition, they cannot be permitted to raise it.
E
In these appeals, three qu,estions arise; (!) whether the High
- Court having held that there was no special machinery provided in
the Act for determining the question whether a particular. asset fell
within the definition of 'mine' contained in s. 2(h) of the Act, it ought
to have, on the facts and circumstances of the present case, decided
the said question in the exercise of its jurisdiction under Art. 226 F
of the Constitution? (2) Whether on a true construction o'f sub-s. (3)
of s. 19 of the Act, -the Central Government was entitled, to the exclu-
sion of all other persons, to receive up to the specified date, any money
due to the coal mines in question, realised after the appointed day, i.e.,
May 1, 1973 notwithstanding that the realisation pertained to a period
prior to that day, and under sub-s. (4) thereof to discharge the liabili- G
ties of the coal mines which could not be discharged by the appointed
day, from out of such realisation up to the specified date, i.e., June
30, 1975? If that be so, whether any amount which could not be
realised until the specified date, i.e., June 30, 1975 would be realisable
by the erstwhile coal mine owners directly? (3) Whether the amount
of subsidy receivable from the Coal Board established under s. 4 of
the Coal Mines (Conservation and Safety) Act, 1952 with respect to
any period before the appointed day did not fall within the purview
6-647 S. C. India/80
414 SUPREME COURT REPORTS [198ll 1 S.C.R.

,\ of the definition of 'mine' contained in s. 2(h)(xii), being excluded from
the expression 'current assets' by reason of the Explanation thereto.
It will be convenient in the first instance to deal with the first
point which involves a mixed question of law and fact. The facts
have still to be investigated but the parties seek a declaration of the
B law in the light of which the issues may be determined.
The Coal Mines (Nationalisationf Act, 1973 contains no provi-
sion for determining the question whether a particular asset falls
~ithin the definition of 'mine' as defined in s. 2(h) of the Act or not.

In the Nationalisation Act, 'mine' in s. 2(h) is defined, except
c iwhat is immaterial, in the following terms:
"2. Definitions.-In this Act, unless the context otherwise
requires,
:xxx xxx xxx
(h) 'mine' means any excavation where any operation for the
D purpose of searching for or obtaining minerals has been or is being
carried on,' and includes-
(vi) all lands, buildings, works, adits, levels, planes,
machinery and equipments, instruments, stores, vehicles, rail-
ways, tramways and siding in, or adjacent to, a mine and
E used for the purposes of the mine;
(vii) all workshops (including buildings, machinery,
instruments, stores, equipment of such workshops and the
lands on which such workshops stand), in, or adjacent to, a
mine and used substantially for the purposes of the mine or
a number of mines under the same management;
F
xxx :xxx xxx
(xi) all lands and buildings other than those referred to
in sub-cl. (x), wherever situated, if solely used for the location
of the management, sale or liaison offices, or for the residence
of officers and staff, of the mine:
G (xii) all other fixed assets. movable and immovable.
belonging to the owner of a mine, wherever situate, and current
assets, belonging to a mine, whether within its premises or
outside.
Explanation .....,--The expression 'current ass,ets' does not include,-
H (a) dues representing the sale of coal and coal products
effected at any time before the appointed day and outstanding
immediately before tlie said day;
SATGRAM ENGG. WORKS v. UNION (Sen, /.) 415

(b) dues from the Coal Board, established under section 4 A
-0f the Coal Mines (Conservation,. Safety and Development) Act,
1952, prior to the repeal of the said Act with respect to any period
before the appointed day;
(c) dues from sundry debtors, loans and advances to other
parties and investments, not being investments in the coal mines;" B

It will be seen that there is a difference in the language used in
s. 2(h)(vii) and '(xi). Sub-clause (vii) uses the words "in, or adjacent
to, a mine" and "used substantially" for the purposes of the mine or
a nmp.ber of mines under the same management, in relation to work-
shops. The use of the word 'and' makes both the conditions conjunc- c
tive. Sub-clause (xi) uses the words "if solely used" for the location
.of the management, sale or liaison offices, or for the residence of offi-
·cers and staff, of the mine, in relation to lands and buildings.: The
·difference in language between the two expressions "used substantially"
and "solely used" is obvious. It is, therefore, possible to contend
D
that lands and buildings appurtenant to a coal mine, if not exclusively
used for purposes of the colliery business, would not come within the
'<iefinition of mine in s. 2(h), i.e., it would depend upon the nature of
user, and t·hat the crucial date is the date of vesting. We are inclined
to think that the distinction though apparent may not be real in the
facts and circumstances of a particular case. ,. A workshop or a build- E.
ing constructed initially for the purpose of a coal mine cannot by
its being diverted to other purposes cease to belong to the mine. What
is of the essence is whether the workshop or the building originally
formed a part and parcel of the coal mine. The subsequent user
may not, in om; opinion, be very material. To illustrate, a work-
-shop which has come into existence for and because of the mine but F
which also comes to be used for purposes other than of the mine
does not on that account alone cease to be a workshop used substan-
tially for the purposes of the mine. Again, a building which is con-
·structed to locate the management offices of the mine but which is ·
used to accommodate some other concern because of the availability
-0f space does not on that account alone cease to be solely used for G
locating the management offices of the mine. ·

By reason of sub-s. (I) of s. 3 of the Act the right, title and
interest of the owners in relation to the coal mines specified in the
Schedule stand transferred to, and vest absolutely in the Central Gov-
~rnment free from all incumbrances. Parliament instead of providing H
that the word 'mine' shall have the meaning assigned to it in. the Mines
Act, 1952 has given an enlarged definition of 'mine' in s. 2(h) so that
416 SUPREME COURT REPORTS [19811 1 S.C.R.

not merely the colliery but everything connected with the mining in-
dustry should vest in the Central Government, i.e., .not only that part
of the industry which consisted of raising, winlling and getting coaf
but also that part of it which consisted in the sale of coal and its
s~pply to customers both of which are a part of an integrated activity.
This is manifested by sub-clauses (i) to (xii) of clause (h) of s. 2, i.e.,
all the assets belonging to a, mine vest in the Central Government..·
As against this, the liabilities a:re not taken over. Section 7 of the
Act provides that every liability of the owner; agent, manager or
managi:ng contractor of a coal mine, in respect of any period prior to
the appointed day shall be the liability of such owner, agent, manager
or managing contractor, as the case may be, and shall be enforceable
c against him and not against the Central Government or the Govern-
ment Company. Thus, there was no question of setting up a Tribu-
nal for adjudication of title to the properties vested. Parliament by
an enlarged definition of mine as contained in s. 2(h) of the Act
has indicated the nature of the properties that vest, and the questioru
D whether a pal'ticular asset is taken within the sweep of s. 2(h) depends
on whether it answers the description given therein. Where there
is a dispute as to whether a particular property vests or not, the dis-
pute undoubtedly is a civil dispute and must, therefore, be resolved.
by a suit.

E It was contended that the High Court should have gone into the
question of title of the. parties with respect to the properties in dispute·
particularly when sufficient documentary evidence was placed on record,
as reflected in the judgment. We are afraid the matter is not as simple
as is suggested. The documents on record· merely tend to show that
the engineering unit though adjacent to, was situate on a different plot,
F
and there was an attempt to show that it was not a workshop in, or
adjacent to, a mine. We are of the view that this hardly matters.
Merely because the land on which a workshop of a coal mine is located
bears a different plot number, or even if there is a compound wall bet-
ween the main office of the coal mine and the workshop, it would not
G cease to be part of the mine. The question in such cases will always
be whether the workshop is 'located in, or adjacent to, a mine', and
was 'used substantially for the purposes of the mine under the same
management'. These are but essentially questions of fact to be deter-
mined according to the facts and circumstances of each particular case.
When the facts themselves are seriously controverted, the High Court
H was justified in observing that the dispute relating to the properties.
in question .raised a 'serious question of title' and the parties must get
their rights adjudicated upon in a civil court.
SATGRAM ENGG. WORKS v. UNION (Sen, !.) 417

It was pressed upon the High Court that the two businesses of
Messrs Shethia Mining & Manufacturing Corporation viz., the colliery
business and the engineering business were two separate and distinct
.businesses, for they were governed by two different sets of laws. It
was alleged that there were separate accounts kept, ,\\'.ith a separate
profit and "loss account and a separate balance-sheet with respect to
each. According to the management, therefore, the colliery business B
on the one hand and the engineering business on the other were treated
severally for all purposes. It was alleged that between the years 1968
and 1971.' the total sales billed by the engineering unit were to the
magnitude of Rs. 50,79,675. As against this, the sales' to the New
Satgram O:lal Mines were only to the tune of Rs. 3,71,384 representing
.C
the costs of light structurals supplied. With respect to the remaining
sum of Rs. 47,08,391 received by the engineering unit it was alleged
to represent sales of light and medium structural works, for which no
licence under the Industries (Development and .Regulation) Act, 1951
was required, to various public sector .undertakings like Hindustan Steel
Construction Co. for Bokaro steel plant, Fertilizers & Chemicals Travan- .D
core for Durgapur Fertilizer Project, Hindustan Cables, Kapper
India, Government of Nagaland etc. viz., to parties altogether unconnect-
ed with the coal industry. The question whether a workshop is 'sub-
stantially' used for the purposes of a mine necessarily involves an en-
quiry as to whether it pertains to, or in substance is, part
of the mine. The value of jobs executed for the mine as against those
for others is not really determinative of the question. If a workshop
is, in fact, a part of a coal mine, it does not cease to be so merely
because its utilisation lies in the production of materials supplied to
third parties. While a workshop may form part of a mine and is
substantially used as such.- it may be utilised for turning out other
products; it all depends upon the circumstances of each case, whether F
it forms part of a mine or nqt.
The Union of India has joined issue by contending that not only
the mine in question but also the workshop has ¥ested in .the Central
Government. The assertions made by the management with .regard
to workshop are all denied. It is pleaded that the relationship and .G
nexus of the said workshop is, established by its being adjacent to the
New Satgram Colliery and by the fact that the workshop was used
substantially for the purposes of that mine and other mines under the
same management as required by s. 2(h)(vii) of the Nationalisation Act.
It is asserted that the management has rested their case on a bald state-
ment that the workshop is not situate in, or adjacent to, a mine, with- 1H
out supporting it with any documentary proof. It is alleged that as
soon as information regarding passing of the law vesting management
418 SUPREME COURT REPORTS U9Sll 1 S.C.R.

A of the mine was derived, the management deliberately remo~ed all the
relevant books including the books of accounts which could have con-
tradicted their present claim. Obviously the claim of the appellant that
the workshop was not substantially used for purposes of the mine is
only .an afterthought.
B With regard to the Technical Director's Bungalow, it is submitted
by the Union of India that the said bungalow, wherever situate, is in·
eluded in sub-clause (xi) of clause (h) of s. 2. It is urged. that merely
because that the land under such building is not 'one falling within the
mining area' is wholly immaterial. Even otherwise, the said bungalow,
in any case, falls under sub-clause (xii) of cl. (h) of 's. 2 of the Act.
c The said bungalow heing a fixed asset belonging to the owners of the
mine, forms part of the mine as defined in s. 2(h)(xii). As such, even
assuming that the said bungalow was not used solely for the purpose
of the residence of ·officers, it would still be included in the definition
of inine under the Nationalisation Act.
D Reliance is also placed on the admission made by the management
in para 11 of the writ petition that the workshop was 'closed down in
July 1970'. The Management Act and the Nationalisation Act came
into force ·in 1973. The said workshop was, therefore, admittedly clos-
ed down about 3 years earlier. As such, it is urged that there could '
·be no question of the Technical Director of the coal mine being in
E
charge of the said workshop at the relevant time so as to justify the
plea raised by the management. It is pointed out. that the manage-
ment have themselves admitted that the building in question was con-
structed in 1957-58 for the residence of the Technical Director, whereas
the workshop was 'constructed in 1964', as stated in para 9 of the
F petition.
As regards the Guest House also, it is urged by the Union of India
that for similar reasons it would be covered by sub-cl. (xi) or (xii) of
cl. (h) of s. 2 of the Act.

G The question whether the engineering unit was 'situate in, or adja-
cent to', the New Satgram coal mine and was 'substantially' used for
purposes of the mine as well as the question whether the Technical
Director's Bungalow and the Guest House were 'solely' used for the
residence of officers and staff of the mine and, therefore, fall within
the definition of 'mine' as contained in s. 2(h) of the Nationalisation
H Act, cannot obviously be decided in proceedings under Art. 226 of
the Constitution. The .proper remedy is by way of a suit, as rightly
observed by the High Court.
SATGRAM !JNGG. WORKS v. UNION (Sen, J.) 419

It is, however, urged that the filling of a suit would involve the A
parties into protracted litigation and inordinate delay in se!tling their
claims. The parties request that their dispute with respect 10 the New
Satgram Engineering Works including Shethia Bhawan together with
its all assets, Technical Director's Bungalow and the Guest House be
referred to arbitration.
B
This brings us to the main question, namely, as to. the scope and
effect of sub-ss. (3) and (4) of s. 19 of the Nationalisation Act. On
a construction of these provisions, the High Court was of the view that
the Central Government, upto the specified day, i.e., June 30, 1975
were entitled to receive to the exclusion of all other persons, any money
due to the coal mine, after the appointed day, notwithstanding that c
realisations pertained to the period prior to that day; but with respect
to any amounts which could not be realised until June 30, 1975 it held
that they would be realisable by the erstwhile owners of the coal mines
directly.
For a proper appreciation of the point involved, it is necessary to D
set out the provisions of s. 19 which read as follows :
"19. Statement of accounts in respect of the period @f
management by rthe Central Government, etc.-(1) The Central
Government or the G<Jvernment Company, as the case may be,
shall cause the books in relation to each coal mine, the
management of which has vested in it under the Coal Mines E
(Taking Over of Management) Act, 1973, to be closed and
balanced as on the date immediately before the appointed d~y.
and shall cause a statement of accounts, as on that day, to be
prepared, wi>thin such time, in such form and in such manner
as may be prescribed, in relation to each such mine in respect
of the transact'ion effected by jt during the period for which the F
management of such coal mine remamed vested in it :

Provided that where two or more coal mines were owned,
before the commencement of this Act, by the same owner, a
1

consolidated statement of accounts may be prepared for all the
G
coal mines owned by such owner.
(2) All amounts received by the Central Government or the
Government company after the closure of such accounts shall
where such accounts relate to transactions effected before the
appointed day, be included in the said statement of accounts in
respect of the coal mjne to which the said receipt relates.
(3) The Central Government or the Government company in
which the right, title and interest of coal mine stand vested shall
SUPREME COURT REPORTS [19811 l S.C.R.

A be entitled to receive, up to the specified date, to the exclusion
of all other persons, any money, due to the coal mine. realised
after the appointed day notwithstanding '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 day immediately before
B
the appointed day, a supplementary statement of accounts shall
be prepared and furnished, at such intervals as may be prescribed.
by the Central Government or the Government company to ,the
owner of the coal mine.
(4) The liabilities of the coal mine (no~ being liabilities
c arising out of advances made by the Central Government or the
Government company), which could not be discharged by the
appointed day, may be discharged by the Central Government or
the Government company up to the specified date, and every
payment so made shall be included in the statement of accounts
as on the day immedialtely before the appointed day, indicat:ing
D
therein the period in relation to which the payments were made :
Provided that the liabilities in relation to the period prior
to the appointed day, which have not been discharged on or
before lthe specified date, shall be the liabilities of the owner of
the coal mine."
E
x x x x x ...
In this context, the provisions of sub-s. (2) of s. 18 may also br.
read. It runs thus :
"18. Payment by the Central Government to the Commissioner.
F x x x x x
(2) In relation 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 1 coal mine in
relation to the period during which the management of the coal
mine remains vested in 1the Central Government."
It was said that by reason of the Explanation to s. 2(h) inserted
by the Coal Mines Nationalisation Laws (Amendment) Act, 1978, the
expression 'current assets' used in sub-cl.(xii) does not include (a) dues
representing lthe sale· of coal and coal products effected at any time
before the appointed day and outstanding immediately before the said
H date, and (b) dues from the Coal Board, established under s.4 of the
Coal Mines (Conservation, Safety and Development) Act, 1952 prior
to the repeal of the .said Act, with respect to any period before the
SATGRAM ENGG. WORKS v. UNION (Sen, J.) 421

::appointed day. It was, accordingly, urged that these two items do A
not fall within the purview of the definition of 'mine' as defined in
s.2(h)(xii), and, therefore, they did nolt vest in the Central Government
under sub-s.(l) of s.3 of the Act. It was urged that the erstwhile
·owners of coal mines and not the Cent'ral Government were entitled
to deal with :these assets, as they belong to the owners of the coal
mines and not to the Central Government. The submission proceeds B
-0n a complete misconception of the scheme of the Act.
The learned Attorney General contends that according to the

~··
provisions of sub-ss.(3) and (4) of s. 19, the Central Government or
the Government company was exclusively entitled to receive the
moneys in question to the exclusion of other persons upto the specified c
date and to utilise the same in discharge of the liabilities of the coal
mine which could not b~ discharged by the appointed day. It is urged
that sub-ss. (3) and (4) are part of an integrated. scheme and must be
read along with sub-s.(2) of s.18. We are clearly of the opinion that
the contention advanced by .the learned Attorney General accords with
the real legislative intenlt. :D
Under the scheme of the Act, the owner of the coal mine which
bas vested in the Central Government under sub-s.( l} of s.3 is entitled
to receive, besides the compensation amofillt as determined under s.8, '
.additional compensation amount under sub-s.(1) of s.9, simple interest
thereon at 4% per annum for the period specified therein,· together E
with 'such amount as may become due' to the owner of the coal mine
in relation ·to the period during which the management of the coal
. mine remained vested in the Central Government as provided by
sub-s.(2) of s.18.

J To understand the correlation of sub-ss. (3) and (4) of s. 19. with
sub-s.(2) of s. 18 of the Act, it is necessary to refer to the provisions
of Chapter VI entitled 'Commissioner of Payments' which provides
for the computation of the amount of compensation and other amounts
payable to the erstwhile owners of coal mines, and for matters
F

connected therewith ·or incidental thereto.
The provisions of. Chapter VI are brought into operation by the ,G
appointment of a Commissioner of Payments by the Central
Government under sub-s.(1) of s.17. There is a statutory duty cast
on the Central Government under sub-s.(1) of s.18 that it shall, within
30 days from the specified date, pay, in cash, to the ,Commissioner
for payment to the owner of the coal mine an amount equal to the
amounts specified against the coal mine in the Schedule and shall H
also pay to the Commissioner such sums as may be due to the owner
-Of a coal mine under s.·9. Subs .. (2) of s. 18 .quoted above enjoins.that,
422 SUPREME COURT REPORTS [19811 1 S.C.R.
A in addition to the sum referred to in sub-s.(1), the Central Government
shall pay, in cash to the Commissioner 'such amount as may become
due to the owner of a coal mine' in relation to the period during which
the managemynt of the coal mine remained vested in the Central
Government. It is then provided by sub-s.(3) of s.18 that a deposit
account shall be opened by the Central Government in favour of the
B Commissioner, in the Public Account of India, and every amount
paid under this Act to the Commissioner shall be deposited by him
to the credit of the said deposit account, and thereafter the said deposit
account· shall be operated by the Commissioner. Separate records
are required to be maintained by the Commissioner under sub-s.(4) ··~
of s.18 in respect of each coal mine in relation fo which payments
c have been made by him under the Act. Under sub-s.(5) of s.18.
interest accruing on the amounts standing to the credit of the deposit
account referred to in sub-s.(3) shall enure to the benefit of the owners
of coal mines.

D Section 19 of the Act provides for the preparation by the Central
Government of a statement of account in respect of the period of
management. The Central Government is required under sub-s. (1) of
s.19 to cause the books of. accounts in relation to each coal mine,
the management of which has vested in it under the Coal Mines
(Taking Over of Management) Act, 1973 to be closed and balanced
E a8 on the date immediately before the appointed day, i.e., April 30,
1973, and to cause a statement of accounts as on that date, to be
prepared in relation to each such mine in respect of the transactions.
effected by it during the period for which the management of such
coal mine remained vested in it. Under sub-s.(2) of s.19, a!I amounts.
F received by the Central Government or the Government company after
the closure of such accounts where such accounts relate to transactions.
effected before the appointed day, to be included in the said statement
of accounts, in respect of the coal mine to which such receipts relate.

Under sub-s.(3) of s.19, the Central Government is conferred power
to receive up to the specified date, i.e., June 30, 1975 any amount due
G to the coal mine, to the exclusion of all other persons, realised after
the appointed day notwithstanding that the realisations pertained to
a period prior to the appointed day. Proviso to sub-s.(3) enjoins that
where such realisations have not been included in the statement of
accounts. as on the day immediately before the appointed day, a
supplementary statement of accounts shall be prepared and furnished,
H at such intervals, as may be prescribed by the Central Government
or the Government company to the owner of .the coal mine. By
sub-s. (4) of s. 19, a duty is cast on the Central Government to discharg~
SATGRAM ENGG. WORKS v. UNION (Sen, J.) 423

the liabilities of the coal mine, which could not be discharged upto A
the specified date, i.e., June 30, 1975 and every payment so made is
to be included in the statement of accounts. as on the day immediately
before the appointed day, indicating the period in relation to which
the payments were made.
It is plain on a reading of these provisions, that unless the B
requirements of s.19 are fulfilled there can be no ascertainment of
'such amount as may become due' to the owner of a coal mine, in
relation to the period during which the management of the coal mine
remained vested in the Central Government, as required under sub-s.(2)
of s. 18. Any other collSltruction would render sub-s. (2) of s. 18 entirely
otiose. The amounts collected on behalf of the erstwhile owners of ·c
coal mines, represent the money of such owners without distinction
and whether they were sale proceeds of coal or realisations from
debtors, the amounts.were liable to be spent not only in the discharge
of liabilities of the coal mine which could not be discharged by the
appointed day, but also were liable to be spent for the purposes of
management. An the rights and liabilities arise from the provisions D
of the Acts, and the net balance in relation to the management period
means the difference between authorised collections and legitimate
liabilities of the erstwhile owners. It is necessarily this balance which
'becomes due in relation to the period during which the management
of the coal mines remained vested in the Central Government' within
the meaning of sub-s.(2) cif s.18. E

It would, therefore, be obvious that the various steps provided by
s.19 are to be taken for the compliance of the requirements of s.18.
When there is payment made bv the Central Government under s.18,
the provisions of ss.20'27 become attracted. Every person having a
claim against the owner of a coal mine has to prefer such claim under F
sub-s.(1) of s.20 before the Commissioner of Payments within 30 davs
from the specified date. Proviso to sub-s.(l) confers powers on the
Commissioner of Payments to entertain such claim within a further
period of 30 days but not thereafter, on being satisfied that the claimant
was prevented by sufficient cause from preferring the claim within the
specified period. Under sub-s.(2) of s.20 claims in relation to a G
Provident Fund, Pension Fund, Gratuity, etc., established for the
welfare of the persons employed by the owner of a coal mine may be
filed on behalf of the persons so empowered by the Coal Mines
Provident Fund Commissioner appointed by the Central Government,
under s.3C of the Coal Mines Provident Fund, Family Pension and
Bonus Schemes· Act, 1948. By sub-s.(3) of s.20 the Co=issioner of H
Payments is empowered to entertain claims, not being a claim which
was time-barred on January 31, 1973, but was rejected merely on the
424 SUPREME COURT REI'O.RTS ll93ll 1 S.C.R.

ground that such claim was time,barred, and such claim should be
deemed not to have been rejected and shall be restored on his file
and shall be dealt with in the manner specified in s.23. Section 21
provides for priority of claims in relation to arrears of Provident Fund,
Pension, Gratuity, etc.
Section 22 provides for priority of certain debts in relation to
B
every other claim, viz. (a) all sums due to the State Government
including royalty and dead rent, (b) all amounts due in respect of
any compensation or liability for compensation under the Workmen's
Compensation Act, 1923 etc., (c) all sums deducted by the employer
from the ~alary or wages of any workman or any 0th.er empl9yee for
,c credit to any Provident Fund, or any other fund established for the
welfare of the employees, but not deposited to the credit of such
fund. Sub-section (3) of s.22 provides that the debts specified in
sub-s.(2) shall rank equally among themselves and be paid in full,
unless the assets are insufficient to meet them, in which case they
shall abate in equal proportion and be paid accordingly. Admission
iD or rejection of claims by the Commissioner of Payments is provided
for by s. 23 disbursement of amounts by him to .the claimants by s. 24
payment of interest on admitted claims by s.24A, recovery of amounts
advanced by the Central Government by s.25. It is after .meeting all
these liabilities that the Commissioner of Payments is required to
serve a notice on the owners of the coal mines, the managing
contractors, and the owners of any machinery, equipment or other
prnperty which has vested in the Central Government or a Government
company under the Act and which does not belong to the owners
of the coal mines, may apply to him for payment.
Under the scheme of the Act the owner of a c@al mine is entitled
to the payment by the Commissioner of Payments under s.26. of 'the
balance, if any, out of the total amount of money credited to the
account of a coal mine', after he has gone through all the stages
provided for in Chapter VI. Sub-s.(l) of s.26 of the Act reads :
"26. Disbursement of amounts to the owners of coal mines.-
(1) If out of the monies paid to him in relation to a coal mine
or group of coal mines specified in the second column of the
Schedule, there is a balance left after meeting the liabilities of
all the secured and unsecured creditors, the Commissioner shall
disburse such balance to the owner of. such coal mine or group
of coal mines."
.H Such being the scheme, there is no question of the owner of a coal
mine, who is divested of his right, title and interest under sub-s.(1) of
s.3 to realise from the Central Government any amount due to a coal
SATGRAM ENGG. WORKS v. UNION (Sen, !.) 425

mine, which remained to be realised until the specified date, i.e., June A.
30, 1975.
The Commissioner of Payments is, therefore, required under s.26
to pay to the owner of such coal mine the balance left, if there is any,
out of the monies paid to him in relation to a coal mine, after meeting
the liabilities of all the secured and unsecured creditors. Sub-section
(5) of s.26 makes a provision for apportionment of such amount
between the owner of the coal mine and the owner of machinery,
equipment and other property which does not belong to the owner
of the coal mine. Any amount which remains undisbursed or unclaimed
for a period of three years has to be transferred by the Commissioner
of Payments to the General Revenue Account of the Central Govern- c:
ment under s.27. '
In view of all these provisions of ss.20 to 27 ·of the Act, and
particularly of sub-s.(1) of s.26, we fail to see the propriety of the
claim made by the · petitioners. The petitioners are certainly not
entitled to recover any definite or ascertained sum. All that they are
entitled to under sub-s.(5) of s.19 is that they should be furnished
with a copy of each statement of accounts prepared under s.19. to
its being audited under sub-s.(6) and to the audit being conducted in.
such manner as the Central Government may direct under sub-s.(7),
and to the payment under sub-s.(l) of s.26 of the balance if any, out
of the total amount of money credited to the account of a coal mine
after all the liabilities have been discharged..
The learned Attorney General makes a statement that this has
all been done before a commissioner of P.aiments was appointed
under sub's.(l) of s.17. Nevertheless, the j;etitioriers assert that the

J
Central Government ·has not accounted for the realisation, if any, and
the disbursement of two amounts of Rs. 68.74 Iakhs and Rs. 58.22 F'
lakhs, representing the outstanding dues from suridry debtors as on
the appointed day, i.e., January 31, 1973 arid the value of coal
despatched from the mines in queStion during the period of
management, i.e., from January 31, 1973 and April 30, 1973
respectively. In view of this assertion, we direct the Central
G
Government to appoint a Commissioner of Payments under sub-s.(l)
-.....,· of s. 17 of the Coal Mines (Nationalisation) Act, le73 to go into the
dispute as to these items.
There still reniil.ins the question whether the powers of the Central
Government under sub-ss.(3) and (4) of s.19 of the Act eXotend only
up to the specified date, that is, up to .Jiune 30, 1975. In dealing H
with the questiOn, the High Court having regard to the provisions of
·ss.20 to 27 of the Act rightly observes that the Nationalisation Act·
426 SUPREME COURT REPORTS U981l 1 S.C.R.

A provides for claims to be preferred and for. disbursement after
adjudication of such claims, and if any balance is left after meeting
the liabilities, it is only then that the Commissioner of Payments can
under sub-s.(l) of s.26 disburse it to the owner of the coal mine. It
then goes on to say :
B "however, any amount which could not be realised until
June 30, 1975 would be realisable by the erstwhile coal mmt:
owners directly."
To put it conversely, there is no duty cast on the Central Government
to make realisation of any money due to a coal mine if it pertains to
a period prior to the appointed day, and to discharge the liabilities
c of the coal mine beyond the specified date, that is, June 30, 1975. To
understand the implications of this it is necessary to briefly deal with
the different stages by which nationalisation of coal mines was brought
about.
There are three dates. 'Appointed day' under s.2(a) of the
D Management Act was January 31, 1973; that under the Nationalisation
Act was May 1, 1973 while the 'specified date' for purposes of sub-ss.(3)
and (4) of s.19 was June 30, 1975.(
I
I of theAllManagement
that vested in the Central Government under sub-s.(l) of s.3
Act was 'the management of all· coal mines, as
E defined in s.2(g) of the Act, which included sundry debts etc., pending
nationalisation df such mines, with effect from the appointed day, i.e.,
January 31, 1973. But this was only for the purposes of management,
the title all the time remaining in the erstwhile owners, of the coal
mines. In the course of management under that Act, all the collections
belonged to the owners; and the liabilities also in relation to the mines
F were the liabilities of the owners. The Custodian ' appointed by the
Central Government under s.6 of the Management Act was liable for
the net balance in relation t~ the management period. He had the
right to collect and also the right to incur expenditure in relation to
the management by reason of the provisions of that Act.
G The Nationalisation Act received the assent of the President on
May 30, 1973 but the provisions of sub-s.(l) of s. 3 were brought into
force with retrospective effect, that is, with effect from the appointed
day i.e., May 1, 1973. It follows that although there was a complete
extinction of all the rights, title and interest of the owners of coal
mines with effect from May 1, 1973, there was a fictional extension
H of the period of management under the Management Act from May,
1 to May 30, 1973. There is, therefore, provision made in s.9 that
apart from the amount of compensation provided for by s.8, as ·
SATGRAM ENGG,· WORKS v. UNION (Sen, J.) 427

mentioned in the Sc.hedule, the owners of every coal mine shall
be entitled to receive additional compensation under sub-s. (1) A
thereof. This was to be an amount equal to the amount which would
have been, but for the provisions of ss. 3, 4 and 5 payable to such owner for
the period commencing on May 1, 1973 and ending on the date on which the
Act received the assent of the President, that is, May 30, 1973. Under sub-s.
(I) of s. 11 the Central Government is entitled to exercise all such powers and B
to do all· such things as the owner of the coal mine was authorised to do.
The conferral of power upon the Central Government under sub-ss. (3) and
(4) of s. 19 to make realisation of monies due to the coal mines and from such
realisations to discharge the liabilities as well as to incur expenses in relation
to the management thereof, was a necessary concomitant of the vesting of
c
sucli. coal mines under sub-s.(l) of s. 3 of _the Act. ·

Sub-section (1) of s. 3 provides that the right, title and interest of the.
owners in relation to the coal mines shall vest in the Central Government free
from all incumbrances. As set out above, the definition of coal mine in s. D
2(h)(xii) ipcludes the current assets belonging to a mine, but by reason of the
Explanation inserted by the .Coal Mines Nationalisation Laws (Amendment)
Act, 1978, the expression "current assets" appearing therein does not include
E
amounts which had become due before the appointed day. i.e., May l, 1973.
Thus, these dues did not vest in the Central Government. This exclusion of
·). sundry debts un.der the Nationalisation Act does not apply to the Manage-
ment Act because there was no similar explanation to s. 2(g)(xii).

t The Management Act was to be followed by the Nationalisation Act
and, therefore, the accountability of the Central ,Government in regard to the
management period was provided for in s. 19 of the Nationalisation Act.
Although there was vesting of the coal mines in ,the Central Government
under sub-s. (1) of s. 3 of the Act, the accounts had still to be settled. Sub-
F

G
sections (3) and (4) of s. 19 therefore, extended the period during which the
Central Government was authorised to collect monies due to the coal mines
and to discharge the liabilities of such coal mines which could not be dis-
charged by the appointed day, that is, May 1, 1973, till the specified date i.e.
June 30, 1975.

As we have stated, the liabilities of the coal mines were not taken over. H
Section 7 of the Act, in terms, provides that every liability of the owner,
agent, manager or managing contractor of a coal mine in r~spect of any
428 SUPREME COURT REPORTS [1981) 1 S. C. R.

period prior to the appointed day shall be the liability of the owner, agent,
manager or managing contractor, as the case may be, and shall be enforce-
A
able against him and not against the Centr~l Government or the Govern-
ment company, it logically follows that after the specified date, i.e. June 30,
1975, the erstwhile owners of coal mines would have to meet all their liabili-
ties which could not be discharged before the appointed day. It must result
in the inevitable consequence, as a necessary corollary that any amount which
B •
could not be realised by the Central Government until the· specified date,
would be realisable by them directly in order to meet their pre-existing liabi-
lities. ·

c In Industrial Supplies Pvt. Ltd. & Anr. v. The Union~of India]& Ors.(I)
we have by our Judgment delivered on August 7, 1980 held that the subsidy
receivable from the erstwhile Coal Board, established under s. 4 of the Coal
Mines (Conservation and Safety) Act, 1952, being a payment \'by way of re-
imbursement" was like any other dues, and, therefore, must bo treated as 'any
D
money due to the coking coal mine' within the meaning or sub-s. (3) :or 8. 22 ·
of the Coking Coal Mines (Nationalisation) Act, 1972, and, therefore, it
could be utilised for the discharge.'.of liabilities of such) coking coal mines
under sub-s. (4), thereof, which provisions are in pari materia with :sub-ss. (3)
and (4) of s. 19 of the Coal Mines (Nationalisation) Act, 1973. We accor-
E
dingly, 11et aside the direction made by the High Court requiring the Union
of India to pay to the petitioners Rs. 7,28,342 ·54 which it had recovered

I
from the erstwhile Coal Board as subsidy.

F
If the Commissioner of Payments finds that these two items or Rs. 68 ·74
lakhs and Rs. 58 ·22 lakhs ~nd the subsidy amount of Rs. 7,28,342 ·54 have
. been duly accounted for, nothing further need be done. Obviously, the
Commissioner or Payments cannot make an award, he can only enquire into
the que&tion and make the necessary directions, if any. The parties will
G
have their remedy of an appeal under sub-s. (7) of s. 23 or the Act.

The result, therefore, is that the appeal of the Union of India must
succeed and is alJowed and that of the New Satgram Engineering Works
H
fai11 and ia dismissed, with costs throuihout.
(t) c19s111 s.c.R. p. 31s:.
SATGRAM ENGG.-WORKS v. UNION (Sen, J.) 4 29

The judgment and order of the High Court is, accordingly modified by
directing the appointment of a Commissioner of Payments under sub-s. (1)
A
ofs. 17 of the Coal Mines (Nationalisation) Act, 1973, who' shall proceed to
adjudicate upon the disputes tetween the parties, with advertencc to the
observations made above.

S.R.

C.A. 1331/79 dismissed.
C.A. 426/80 allowed.