Holding

The order declaring the land Sarkari and ARTC Fout Ferrar was illegal; the land vested in the Central Government under the Coal Mines (Nationalization) Act, 1973 and falls within the definition of "mine".

Summary

The appellant, North Eastern Coalfields Coal India Ltd, succeeded the private Assam Railway and Trading Company (ARTC) whose coal mining assets were vested in the Central Government under the Coal Mines (Nationalization) Act, 1973. The Additional Deputy Commissioner declared the land held by the appellant as "Sarkari" and ARTC as "Fout Ferrar", subsequently allotting the land to Dr. Mubarak Ali. The Single Judge set aside that order, holding the appellant was a lessee who had paid land revenue and that the land fell within the definition of "mine" under the Act. The Division Bench reversed, deeming the land outside the definition of "mine" and validly declared it Sarkari. On appeal, the Supreme Court held that the Deputy Commissioner's order was ultra vires because all rights vested in the Central Government and the definition of "mine" under Section 2(h) is wide enough to include such land, making the order illegal. The Court affirmed the Single Judge’s decision and set aside the Division Bench judgment.

Issues considered

Whether the order of the Additional Deputy Commissioner declaring ARTC as Fout Ferrar and the land as Sarkari was legal under the Coal Mines (Nationalization) Act, 1973.
Whether the leased area vested in the Central Government falls within the definition of "mine" under Section 2(h) of the Act.
Whether the failure to pay land revenue for five years justifies the declaration of the land as Sarkari.

Legislation cited

Coal Mines (Nationalization) Act, 1973s. 2(h), s. 3, s. 5(1)

Subjects

NationalizationCoal Mines (Nationalization) ActLand vestingSarkari landFout FerrarDefinition of mineLeaseLand revenueSupreme Court

Judgment

A NORTH EASTERN COALFIELDS COAL INDIA LTD.
v.
MUBARAK ALI AND ORS.

APRIL 21, 2005

B [ASHOK BHAN AND A.K. MATHUR, JJ.]

Coal Mines (Nationalization) Act, 1973-Sections. 2(h), 3, 5(/)-Right
-
and title of erstwhile private company vesting in Government Company--
Erstwhile private company becoming patta holder of land in question-
C Declaring the .land as 'sarkari' (Government) and allotting to private
individual-Legality of-Held: Since after nationalization, the right, title and
interest of all private company stood vested fn Government Company, the
finding is illegal.

I) Appellant Company is a successor-in-interest of the erstwhile ARTC
Ltd., a private mining company engaged in the, coal mining operations.
On the nationalization of coal industry, the right, title and interest of all
private mines including ARTC Ltd •. stood vested in Central Government
and Central Government vested it in Coal Mines Authority Ltd. Appellant
company, became the subsidiary of Coals .Mines Authority Ltd. and its
E · patta holder of the land in question. Dispute arose when Additional Deputy
Commissioner made the land 'Sarkari' (Govt.) and settled the land in
favour of private individual, respondent . no. l. ,\ggrieved appellant
challenged the legality of the declaration of land JIS 'Sarkari'. Single Judge
held that since appellant had paid land reve.nue and Government
F recognised it as a lessee, the act of.declaring it as Fout Ferrar and land as
'Sarkari' was not legal Division Bench reversed the order of Single Judge.

In this appeal the questions which arose for consideration were
whether the order of Additional Deputy Commissioner declaring ARTC
Ltd. as Fout Ferrar and land as 'Sarkari' was legal and whether the whole
G leased area which bas vested in Central Government falls within the
definition of 'Mine' in Section 2(h) of the Coal Mines (Nationalization)
Act, 1973.

Allowing the appeal, the Court

H 850
NORTH EASTERN COALFIELDS COAL INDIA LTD. v. MUBARAK ALI [A.K. MATHUR, J.] 851

HELD : 1. The coal industry was nationalized under the Coal Mines A
(Nationalization) Act, 1973 and a Notification was issued under this Act
for the purposes of acquisition of rights of owners in respect of coal mines
mentioned in schedule under Section 3; whereby the right, title and interest
of the owners in respect of coal mines specified in the schedule stood vested
absolutely in Central Government free from all encumbrances and in that I;\
one of the coal mines belonging to the ARTC Ltd. was included. Therefore,
the finding given by the Additional Deputy Commissioner that since the
ARTC is Fout Ferrar i.e. already, abandoned and resuming the land to
the State was ex facie illegal order de hors the provisions of the Act and
notification of the Central Government. (853-D-E; 854-F(

2. By virtue of Section 3, all properties vest in the Central
c
Government and the definition of mine as defined in Section 2(h) of the
Act is wide enough to include any land, building used for the purposes of
residence of officers and staff of mine. It is open to the authorities to
examine the question whether whole leased area which has vested in
Central Government falls in definition of'Mine' as defined in Section 2(h) D
of the Act or not. This is a matter of inquiry. In case of doubt, State may
make inquiry after notice to the appellant. (855-G-H; 856-C-D)

Bharat Coking Coal Ltd v. Madan Lal Agrawal, (1997) 1 SCC 177,
relied on.
E'
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 8129 of2003.

From the Judgment and Order dated 27.9.2002 of the Guwahati High
Court at Assam in W.A. No. 355 of 1999.

Ajit Kumar Sinha for the Appellant. F
Shakil Ahmed Syed for Respondent No. I

V.K. Sidharthan, for Mis. Corporate Law Group for the Respondent
Nos. 2-4.
G
The Judgment of the Court was delivered by

A.K. MA THUR, J. This appeal is directed against the order dated 27th
September, 2002 passed by the Division Bench of the Gauhati High Court in
WA 355/1999 whereby the Division Bench set aside the Order dated 7th
September, 1999 passed by the learned single Judge in Civil Rule No. 3516/ H
852 SUPREME COURT REPORTS [2005] 3 S.C.R.
.,
A 1997. Aggrieved against this Order, the present appeal has been filed by the
appellant.

Brief facts which are necessary for disposal of this appeal are :

That the appellant is a successor-in-interest of the erstwhile Assam
B Railways and Trading Company Ltd. (for short ARTC) engaged in coal mining
operation which was acquired by Central Government under the provisions
of the Coal Mines (Nationalization) Act, 1973 (hereinafter referred to as the
Act). The land involved in the proceeding was covered by the Dag nos. 3042,
-
3043 and 3044 of Margherita town, Mouza- Makum. It may be relevant to
mention here that ARTC was the erstwhile Company incorporated at London
C and it was operating this coal mines but after the Coal Mines (Nationalization)
Act, 1973 coming into force the Central Government by virtue of sub-section
(I) of Section 5 Central Government directed that right, title and ,interest of
all mines referred to in Schedule under Section 3 shall vest in Coal Mines
Authority limited a Govt. Company incorporated in Companies Act. The
D North Eastern Coalfields Coal India Limited is its subsidiary therefore the
appellants become its patta holder of the land in question. The dispute in the
present case arose, when the Additional Deputy Commissioner, Tinsukia made
the land 'Sarkari' (Govt.) by order dated 22nd May, 1996 and Government
settled the area of I Bigha, 3 khattas, 10 Lachas land out of the aforesaid land
in favour of the private individual Dr. Mubarak Ali, Respondent No. I on
E behalf ofMunaf Memorial Hospital-cum-Research Centre by letter dated 2nd
June, 1997. Therefore, this was challenged by the appellant before the High
Court that the declaration of the land of the appellant as a "Sarkari" was ultra
vires and illegal. lt was alleged that no notice was given to the appellant
before declaring the land as "Sarkari". The learned Single Judge after going
F through the matter came to the conclusion that the Appellant-Company is
lessee being the successor of the ARTC & the lease could not be terminated
without following proper procedure. Learned Single Judge referred to the
definition of Mine under Section 2(h) of the Act and held that all the land
and property used for the operation of the mine vests in the Central
Government as a result of the nationalization. It was further observed that the
G Appellant had already deposited the land Revenue on local rates, etc. in both
ofMakum and Tirap Mouza amounting to Rs.2,01,267.74 and cleared all the
arrears of land revenue Therefore, learned Single Judge came to the conclusion
that the appellant had deposited the land revenue and the Government had
recognized it as a lessee, the act of declaring the aforesaid land as 'Sarkari'
H by the Govt. was not legal. Learned single Judge also held that the
NORTH EASTERN COALFIELDS COALINDIA LTD. v. MUBARAK ALI [A.K. MATHUR, J.] 853

respondent-state failed to point out any provision which empowered the A
State Govt. to delete the name of the appellant as recorded Pattadar for non-
payment of the land revenue. It was observed that the appellant had paid the
land revenue therefore it could not be declared faut, Ferrar, the learned Single
Judge by Order dated 7th September, 1999 set aside the order of the Additional
Deputy Commissioner, Tinsukia and also the allotment in favour of respondent
No. 1. A Letters Patent Appeal was filed by State before the Division Bench B
and the Division Bench reversed the Order of the learned Single Judge holding
that the land in question, was not covered under the definition of the expression
'Mine' under Section 2(h) of the Act and no land revenue was paid for a
period of five years therefore Govt. rightly declared this land as 'Sarkari'
(Govt). It was also held by the Division Bench that the appellant was not C
lessee of Government and left it open to the appellant to approach a competent
Civil Court for adjudication of its right in accordance with law. Aggrieved
against this Order, the present Special Leave Petition was filed by the appellant.

At the outset, it may be made clear that the Coal Industry was
nationalized under the Coal Mines (Nationalization) Act, 1973. and a D
Notification was issued under this Act for the purposes of acquisition of
rights of owners in respect of coal mines mentioned in schedule under Section
3; whereby the right, title and interest of the owners in respect of coal mines
specified in the schedule stood vested absolutely in Central Government free
from all encumbrances and in that one of the coal mines belonging to the
Assam Railway Trading Coal Company was included. Therefore, so far as E
the rights, title of the erstwhile company; i.e., Assam Railway Trading Coal
Company are concerned, all stood vested in the Central Govt. Therefore, it
is clear that aJI the assets of the erstwhile company and their land and buildings
and all other mining operation stood vested in the Central Govt.
F
It is not under dispute that all the lands and appurtenant building
belonged to the erstwhile mining company and it was leased out to Assam
Railway Trading Corporation. Therefore, after the Nationalization Act came
into force, all the property belonging to the erstwhile company stood vested
in successor,. i.e. Central Govt. and the Order of Additional Deputy
Commissioner passed without making any reference to any provision of law G
& declaring it a Fout Ferrar by order dated 22nd May, 1996 cannot be
sustained. In fact the order says that the ARTC as per the information given
by the SDO © Margherita is not in existence and they have no objection if
the·said land is used for publi' utility purposes by the District Administration.
Therefore, Additional Deputy Commissioner, on information received from U
854 SUPREME COURT REPORTS [2005] 3 S.C.R.
. ......:.
A SDO came to the conclusion that ARTC be declared as Fout Ferrar and the
land be declared as 'Sarkari'. This order has been passed by the Additional
Deputy Commissioner in total ignorance of the law. After the Nationalization
Act came into force company's assets movable and immovable stood vested
in the Central Govt. If he had given a notice to the Coal India or its subsidiary,
things would have been clear. In fact, the Govt. of India has passed the order
B on 9~h July, 1973 and vested all these properties of the various private mines
in a Govt. Company under the Mines Act. The order dated 9th July, 1973 of
the Govt. of India, Ministry of Steel and Mines, Deptt,. Of Mines reads as
under:

"ORDER
c
G.S.R.. 345 (E) - In exercise of the powers conferred by the Sub-
Section (I) of Section 5 of the Coal Mines (Nationalization) Act,
1973 (26 of 1973), the Central Government hereby directs that the
right, title and interest of the owners in relation to all the coal mines
referred to in Section 3 of the said Act, except the coal mines specified
D
against serial numbers 45 to 219 (both inclusive) 227, 235, 237, 260,
265, 275, 441, 483 and 583 of the Schedule to the said Act, shall with
effect from the 9th July, 1973, vest in the Coal Mines Authority
Limited, Calcutta, a Government Company incorporated under the
Companies Act, 1956 (I of 1956), and having its registered office at
E Calcutta, in the State of West Bengal."

A perusal of this order makes it clear that all the companies mentioned
in the schedule to the Act of 1973 were taken over by the Central Govt. and
all their right, title and interest of all the private company stood vested in
Central Government and Central Govt. vested it in its company Coal Mines
F Authority Limited, Calcutta. Therefore, the finding given by the Additional ..,
Deputy Commissioner, Tinsukia that since the ARTC is Faut Ferrar i.e. already,
abandoned and resumed the land to the State was ex facie illegal order de
hors the provisions of the Act and notification .of the Central Government.
Therefore, the order passed by the Additional Deputy Commissioner declaring
ARTC as Faut Ferrar and resuming land was absolutely illegal, without
G
jurisdiction and the same is set aside.

The question whether land revenue was paid or not, as per material -:
placed before us, it appears that land revenue upto 1996-97 was deposited by
Challan in treasury. Even if, some land revenue was due to the State then too
H also a proper notiee should have been given to the company to deposit land
NORTH EAS.TERN COALFIELDS COAL INDIA LTD.'" MUBARAK ALI [A.K. MATHUR,J .] 855

revenue and failing which it would have been possible for the govt. to take A
appropriate action. Neither the authorities nor the Division Bench has made
reference of any provision of law whereby they can take over the land vested
in the Central Govt.

Next question is whether whole of area comprising this area leased out
to ARTC come within the definition of 'Mine' as defined under Section 2(h) B
of the Act or not? This is secondary question. The first question was whether
the order of the Additional Deputy Commissioner resuming this land was
proper or not. We have already held above that the order of Additional
Deputy Commissioner was illegal, then question arises how much area will
be covered for mining operation; whether whole or part is a matter of inquiry. C
In fact, High Court has proceeded to examine the matter assuming the order
of Additional Deputy Commissioner being valid. But that is not correct. It is
open to authorities to examine the question whether whole leased area which
has vested in Central Government falls in definition of 'Mine' as defined in
Section 2(h) of the Act or not. This is a matter of inquiry and if State has any
doubt then a proper inquiry be conducted after notice to the appellant . D
In this connection, a reference may be made to a decision of this Court
in Bharat Coking Coal Ltd. v. Madan Lal Agrawal, Reported in [ 1997] I,
SCC 177. Wherein their Lordships has interpreted the expression 'Mine' as
defined in Section 2(h) and also considered the effect of Section 3 arid Section
~~tt~~~~~: E
"All properties or assets which fall within the definition of 'mine' in
Section 2(h) and which are used for over a period of time and not

- temporarily, as necessary for proper functioning of mine, irrespective
of whether or not belonging to owner of the mine, would vest in the
Central Govt. by virtue of Section 3. Hence, even though lands and
F

buildings solely used for the purposes of office or residence of officers
and staff of the mine did not belong to the owner of the mine but
belonged to a director of the owner-company right, title and interest
therein, vested in the Central Govt."

Therefore, the effect of Section 3 has already been considered by this
G
Court and it had been held by this Court that all the properties by virtue of
this Section vest in the Central Govt. and the definition of mine as defined
in Section 2(h) is wide enough to include any land, building used for the
purposes of residence of officers, staff of mine shall vest in the Central Govt.
H
856 SUPREME COURT REPORTS [2005] 3 S.C.R.

A However, if there is any doubt about area, State can make inquiry after
due notice to appellant in the light of aforesaid decision of this <;:ourt. lt will
also be open for State to recover lease money if it is due to State.

The view taken by the Division Bench is not correct, we set aside the
Judgment and order dated 27th September, 2002 of the Division Bench of the
B Gauhati High Court and affirm the order of the learned Single Judge with no
order as to costs.

D.G. Appeal allowed.

.