Holding

Interest accrued under the nationalisation Acts is payable to the Commissioner and must be used to satisfy the owners' creditors before any balance is paid to the owners.

Summary

The Union of India appealed against a Patna High Court order that held interest accruing under the Coal Mines (Nationalisation) Act, 1973 and the Coking Coal Mines (Nationalisation) Act, 1972 was to be paid exclusively to the former mine owners. The owners had filed writ petitions seeking that the interest be excluded from the pool of funds used by the Commissioner of Payments to satisfy creditors' claims. The Supreme Court examined the scheme and plain language of Sections 18(5), 24A and 26 of the Coal Act, concluding that the interest forms part of the monies payable to the Commissioner and must be applied to discharge the owners' debts and liabilities before any balance is paid to the owners. The Court rejected the High Court’s dictionary‑based interpretation of "enure" and "benefit" and emphasized that allowing owners to retain interest without settling liabilities would defeat Parliament’s intent. Consequently, the appeals were allowed, the High Court judgment set aside, and the owners' writ petitions dismissed.

Issues considered

Whether interest accruing under the Coal Mines (Nationalisation) Act, 1973 and the Coking Coal Mines (Nationalisation) Act, 1972 is payable exclusively to the mine owners.
Whether such interest is to be made available to the Commissioner of Payments for meeting the claims of the owners' creditors.
Interpretation of Section 18(5) in relation to Sections 24A and 26 of the Coal Act.

Legislation cited

Coal Mines (Nationalisation) Act, 1973s. 17, s. 18, s. 18(5), s. 22(3), s. 24, s. 24A, s. 26, s. 3
Coking Coal Mines (Nationalisation) Act, 1972s. 21(5)

Subjects

interestnationalisationcoal minescreditor claimsstatutory interpretationCommissioner of Paymentspriority of debts

Judgment

..
I

UNION OF INDIA & ORS A
v.
NORTH TELUMER COLLIERY & ORS.

JULY 19, 1989
B
[E.S. VENKATARAMIAH, CJ, N.D. OJHA AND
KULDIP SINGH, JJ.]

-~ 24A and 26-lnterest accruing under the Act-Whether to be paid
• Coal Mines (Nationalisation) Act, 1973: Sections 3, 17, 18, 24,

exclusively to owners or available along with principal amount for
y disbursement to claimants of owners. c
The Coking Coal ,Mines (Nationalisation) Act, 1972_ (Coke Act)
and the Coal Mines (Nationalisation) Act, 1973 (Coal Act) divested the
ownership rights in the mines from the owners to the Central Govern-
ment. The Acts provided for payment in lieu of take-over. The payment D
was to be made to the respective owners after discharging their
liabilities. The Acts also provided for accrual of interest on the amount
payable, for the procedural period.
_,1 Some of the owners filed writ petitions before the High Court
claiming that the interest accrued exclusively belonged to owners and E
the same was not available for disbursement to the claimants of the
owners. The High Court allowed tbe writ petitions, and held that the
•
interest accrued under the Coal Act cannot be made available to the
Commissioner for meeting the claims of the creditors of the mine
~ owners and It is to be exclusively given to the mine owners.
F
The present appeals, by special leave, challenge the said decision
of the High Court.

Allowing the appeals,

HELD: 1. It is clear from the scheme and plain reading , of G
the various provisions of the Coal Act that the interest amount has
"-f to be made available to the Commissioner to meet the debts and liabilities.
The Commissioner has to adjudicate the claims of creditors of the
mine owners in accordance with the priorities. The claim, accepted by
the Commissi_oner, are to be satisfied out of the amount payable to the
mine owners and the balance left after meeting the claims of all the H

455
456 SUPREME COURT REPORTS [1989] 3 S.C.'R.

secured and unsecured creditors, is to be paid to the owners of the coal ).-
A
mines. [462A, B]

2.1. The High Court's conclusions are primarily based on the
interpretation of Section 18(5) of the Coal Act. The High Court has
quoted the meaning of the words "enure" and "benefit" from various
B dictionaries. No dictionary or any outside assistance is needed to under- ~
•
stand the meaning of these simple words in the context and scheme of
the Coal Act. The interest has to enure to the benefit of the owners of
the coal mines. The claims before the Commissioner under the Coal Act
are from the creditors of the owners and the liabilities sought to be
discharged are also of the owners of the coal mines. When the debts are
~ -
paid and the liabilities discharged, it is only the owners of coal mines
c who are benefited. Taking away the interest amount by the owners "'(
without discharging their debts and liabilities would be unreasonable.
They have only to adopt delaying tactics to postpone the disbursement
of claims and consequently earn more interest. Due to such delay the
owner would get huge amount of interest though ultimately he may not
D get a penny out of principal amount on the final settlement of claims. It
would amount to conferring unjust benefit on the owners which can
never be the intention of the Parliament. [462D, E, FJ

2.2. Section 24A of the Coal Act provided that interest shall be
paid at such rate not exceeding the rate of interest accruing on any
l,.
E amount deposited by the Commissioner under Section 18. Had the
Parliament intended to give interest to the owners, there would have
been no necessity for fixing the maximum limit of interest payable to the •
claimant with reference to t.he rate of interest accruing to the scheduled
amount. [464B]

F 3.1. A plain reading of Section 26 read with Section 18(5) of the ~
Coal Act makes it clear that moneys paid to the Commissioner in rela·
lion to a coal niine are to be used for satisfying the debts and liabilities.
Interest amount accrued under the Coal Act is undoubtedly money in
relation to coal mine and as such it squarely comes within the ambit of
Section 26 of the Coal Act. [463E]
G
3.2. The amended Section 18(5) of the Coal Act which escaped the
notice of the High Court provides that the amount of interest accruing )'
on the amounts standing to the credit of the deposit account is also
payable to the Commissioner. Section 22(3) of the Coal Act makes the
assets, in the hands of Commissioner available for satisfying the debts
H in order of priorities. The assets of the erstwhile owner lying in the
::1

) .
U.O.L v. NORTH COLLIERY [KULDIP SINGH, J.] A57
'<_·.:-;·~··.·
.
-

. .·· ..
-'.- ''
.:>:-' _,
~ ..
hands of the Commissioner of payment would include the interest which A
has been paid to the Commissioner under Section 18(5).Similarly Sec-
tion 24 of the Coal ,Act says that unsecured 'creditors will be paid out of
the money credited to the account of coal mine. Moneys credited to the
account of (oal mine also include interest. [463F, GI
•; 3.3. Under Section 18(5) of the Coal Act the interest accruing
B
on the amount standing .to the credit of the deposit account shall also
be payable to the Commissioner in addition to the sum referred to in
sub-section (I) of Section 18. It cannot be disputed that the interest paid
to the Commissioner under Section 18(5) is money paid to him in
relation to a coal mine• and as such it has to be utilised in meeting
the claims of the creditors of the mine owners and their other liabili- c
ties. Even otherwise interest amount in the present context has no sepa-
. rate entity. As the lamb belongs to the owner of the sheep. the interest
Y goes with the principal. The interest accrued ·under the Coal Act. is.
thus, part of the kitty out of which the claims and liabilities are to be
met. [463A-D]
D
4. The Coal Act and the Coke Act being identical, this decision in
the Coal Act is equally applicable to the Coking Act. [464C]

CIVIL APPELLATE JlJRISDICTION: Civil Appeal Nos.
1930-33 of 1989.
E
From the Judgment and Order dated 24.9.87 of the Patna High
Court in C.W.C. Nos. 489, 501, 502 and 1173 of 1982 (R) .
• G. Ramaswamy, Additional Solicitor General, Girish Chandra
and C.V.S. Rao forthe Appellants.
F
.l M.C. Bhandare; R.S. Meratia, S.S. Johar and A. Mariarputham
for the Respondents.

The Judgment of the Court was delivered by

KULDIP SINGH, J. The coal resources in the country have been G
brought under State ownership and control by The Coking Coal Mines
{Nationalisation) Act, 1972 (hereinafter called 'the Coking Act') and
the Coal Mines (Nationalisation) Act, 1973 (hereinafter called 'the
Coal Act'). These Acts completely divest the ownership rights in the
mines from the owners to the Central Government. The Acts provide
H
for payment of specified ambunt to each of the owners in lieu of
458 SUPREME COURT REPORTS (1989] 3 S.C.R.

take-over. Out of the said amount the claims of the creditors of the
A
owner and other liabilities against him are to be satisfied and the ~
balapce, if any, is to be paid to the owner. The Acts further provide for
accrual of interest on the payable amount for the procedural-period.
Section 18(5) of the Coal Act and Section 21(5) of the Coking Act
provide that the interest accruing on the amount shall enure to the
B benefit of the owners of coal mines.

The short question for consideration in these appeals is whether
~
the amount of interest which accrues under the Act is to be paid in its
entirety to the owner or the same is also available along with the
principal amount for disbursement to the claimants of the owner. ' ~

\
c The provisions of the Coking Act and the Coal Act are identical.
Both the Acts were enacted with the same object and purport, one
relating to the Coking Coal mines and the other to the coal mines.
"(

The Learned Counsel at the hearing referr~d to the Coal Act.
D We may briefly notice the scheme of the said Act. Section 2 gives
definitions. Section 3 transfers the rights, title and interest of owners
in relation to the coal mines and vests-the same in the Central Govern-
ment. Section 5 empowers the Central Government to direct vesting of
such rights in a Government company. Section 6 makes the vesting of
all properties in the Central Government free from mortgage, charge,
E lien or any other incumbrance. Section 7 provides that the Central ~
Government or Government company shall not be liable for liabilities
incurred by the owners prior to the take-over. Under Section 8 the
owner of every coal mine shall be given by the Central Government in
cash and in the manner specified under the Act the amount mentioned
•
in the Schedule to the Act. Section 9(2) provides for payment of simple
p interest at the rate of 4% from the date on which the Coal Act received
the assent of the President upto the date when the amount is paid by j
the Central Government to the Commissioner. Section 17 provides for
appointment of Commissioner of payments by the Central Govern-
ment for the purpose of disbursing the amounts payable to the owner
of each coal mine. Section 18(1) lays down that the Central Govern-
G ment shall within 30 days from the specified date pay in cash to the
Commissioner for payment to the owner of a coal mine, an amount
specified in the Schedule and also other amount payable to the owner
under Section 9. Section 18(2) provides further amount due to the
owner in lieu of management of the coal mine by the Central Govern-
r
ment and simple interest at the rate of 4% on such amount. Under
H Section 18(3) a deposit account is to be opened by the Central Govern-
U.0.1. .v. NORTH COLLIERY [KULDIP SINGH, J.] 459

ment in favour of the Commissioner in the Public Account of India and
A
every amount paid under the Act to the Commissioner has to be de-
posited by him to the credit of the said deposit account which is to be
operated by the Commissioner. Section 18(4) directs the Commis-
sioner to maintain separate records in respect of each coal mine in
relation to which payments have been made to him under the Act.
Section 18(5) provides that interest accruing on the amounts standing B
to the credit of the deposit account shall enure to the benefit of the
owners of coal mines and. shall also be payable to the Commissioner in
addition to the sum referred to in sub-section ( 1). U oder Section 20
every person having a claim against the owner of a coal mine has to
- ). prefer such claim before the Commissioner within thirty days from the
specified date. Sections 21 and 22 give first priority to .the claims to
arrears of wages, provident fund, pension fund, gratuity fund or any c
y other fund established for the welfare of the persons employed by the
owner of a coal mine. Next come the secured creditors of the owners.
Under Section 23 the Commissioner adjudicates the claims and can
accept or reject the same. Section 24A provides that ""here any
amount is payable in respect of a claim admitted under the Act, the D
interest payable on such amount for any period shall be at such rate
not exceeding the rate of interest accruing on any amount deposited by
the Commissioner under Section 18. Finally under Section 26 if out of
the moneys paid to the Commissioner in relation to a coal mine, there
i~ a balance left after meetin'g the liabilities of all the secured and
unsecured creditors, he shall disburse such balance to the owner of
such coal mine.

• Relevant provisions of the Coal Act are reproduced hereinafter .

"Section 3-Acquisition of rights of owners in respect of coal
mines-(1) On the appointed day, the right, title and F
interest of the owners in relation to the coal mines specified
in the Schedule shall stand transferred to, and shall vest
absolutely in, the Central Government free from all
incumbrances."

"Section 8_: Payment of amount to owners of coal mines- G
(1) The owner of every coal mine or group of coal mines
specified in the second column of the Schedule, shall be
given by the Central Government, in cash and in the
manner specified in Chapter VI, for the vesting in it, under
Section 3, of the right, title and interest of the amount
specified against it in the corresponding entry in the fifth H
460 SUPREME COURT REPORTS [1989] 3 S.C.R.

column of the Schedule."
A
"Section 17-Commissioner of Payments to be appoin·
ted-(1) For the purpose of disbursing the amount payable
to the owner of each coal mine or group of coal mines, the
Central Government shall appoint such person as it may
B think fit to be the Commissioner of Payments."

"Section 18-Payment by the Central Government to the
Commissioner.-(1) The Central Government shall, within
thirty days from the specified date, pay, in cash, to· the
Commissioner for payment to the owner of a coal mine, an
amount equal to the amount specified against the coal mine
c in the Schedule and shall also pay to the Commissioner
such sums as may be due to the owner of a coal mine under
Section 9.

(2) In addition to the sum referred to in sub-section
D (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 management of the coal mine remains vested in the
Central Government, and simple interest at the rate of four
per cent per annum on such amount for the period com~
E mencing on the 1st day of July, 1975 and ending on the da~
of payment of such amount to tire Commissioner.

(3) A deposit account shall be opened by the Central
Government, in favour of the Commissioner, in the PUblic
•
Account of India, and every amount paid under this Act to•
.F the Commissioner shall be deposited by him to the credit 0f
the said deposit account in the Public Account of India, J
and thereafter the said deposit account shall be operated by
the Commissioner.

(4) Separate rec<>rds shall be maintained by the
G Commissioner in respect of each coal mine in relation to
which payments have been made to him under this Act.

Amended (5) Interest accruing on the amounts standing t0'
the credit of the deposit account referred to in sub-section.
(3) shall enure to the benefit of the owners of coal mine-s-
H and shall also be payable to the Commissioner in. addition'
U.0.1. v. NORTH COLLIERY [KULDIP SINGH, J.] 461

to the sum referred to in sub-section (1). A

Unamended (5) Interest accruing cin the amounts standing
to the credit of the deposit account referred to in sub-
section (3) shall e11ure to the benefit of the owners of the
coal mines.
- ,
(6) Reference In this section to the owner of a coai .
mine shail, in relation to a group of coal mines specified in
the Schedule, be construed as references to the owner of
that group of coal mines.,.

"Section 24-Disbursement of money by the Commis- c
sioner to claimants-Where, after meeting the Claims
admitted by him, of secured creditors, and unsecured
creditors having priority under sub-section (2) of Section
22, the total amount of claims of other unsecured creditors
admitted by the Commissioner, does not exceed the total
D
amount of the money credited to the account of a coal
mine, every such admitted claim shall be paid in full and
the balance, if any, shall be paid to the tJWfief, but where
such amount is insufficiel\t ttJ meet ill full the total amount
of the admitted claims, all such claims shall abate in equal
l proportions and Ile paid accordingly."
E
"Section 24A~Intetest Oli admitted Claims-Notwith-
standing atty award, decree ot order of any court, tribunal
• or othet authority, passed before the appointed day, in
relation to any coal mine, where any amount is payable in
respect of a claim admitted under this Act, the interest
payable ofi such amoU!lt for any period after the appointed
day shall be at such rate not exceeding the rate of interest
accruing on any amount deposited by the Commissioner
under Section 18."

"Section 26-Disbursement of amounts to the owners of
G
coal mines-( 1) If out of the moneys 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
462 SUPREME COURT REPORTS [1989] 3 S.C.R.

The scheme of the Coal Act and the bare reading of its provisions
A
make it clear that the Commission.er has to adjudicate the claims of
creditors of the mine owners in accordance with the priorities. The
clalms, accepted by the Commissioner, are to be, satisfied out of the
amount payable to the mine owners and the balance left after meeting
the claims of all the secured and unsecured creditors, is to be paid to
B the owners of the coal mines. ·

The High Court has accepted the contention of the mine owners
and has held that the interest accrued under the Coal Act cannot be
made available to the Commissioner for meeting the claims of the
creditors of themine owner or to satisfy their other liabilities. Accord·
C ing to the High Court whole of the interest amount is to be exclusively
given to the mine owners and the claims and liabilities are to be
satisfied only out of the principal amount payable to the mine-owners
under the Coal Act. To support these conclusions the High Court has
given three reasons which we may presently examine.

D · . The High Court's conclusions are primarily based on theinterpre·
tation of Section 18{5) of the Coal Act. The High Court has quoted the .
meaning of words "enure" and "benefit" from various dictionaries.
No dictionary or any out-side assistance is needed to understand the
meaning of these simple words in the context and scheme of the Coal
Act. The interest has to enure to the benefit of the owners of the coal
E mines. The claims before the Commissioner under' the Coal Act are
from the creditors of the owners and the liabilities sought to be dis-.
charged are also of the owners of the coal mines. When the debts are
paid and the liabilities discharged, it is only the owners of coal mines
who are benefited. Taking away the interest amount by the owners
without discharging their debts and liabilities would be unreasonable.
· f They have only to adopt delaying tactics to postpone the disbursement
~ of claims and consequently earn more interest. Due to such delay the
owner would get huge amount of interest though ultimately he may not
get a penny out of principal amount on the final settlement of claims.
It would amount to conferring unjust benefit on the owners which can
never be the intention of the Parliament. We do not agree with the /
G interpretation given by the High Co;,rt and hold that the interest
accruing under the Coal Act is the money paid to the Co=issioner in
relation to the coal mine and the same has to be utilised by the Com-
missioner in meeting the claims of the creditors and discharging other
liabilities in =rdance with the provisions of the Coal Act.

·H The High Court noticed that apart from providing priorities for
U.0.1. v. NORTH COLLIERY [KULDIP SINGH, J.l 463

~ claims the Parliament has also indicated the accounts from which such
A
claims are to be satisfied. According to the High Court since no men-
tion has been made therein with regard to the recovery of any amount
of claim out of the interest the same cannot be used for that purpose
and has to be exclusively paid to the owners. We do not agree with the
reasoning. Under Section 18(5) of the Coal Act the interest accruing
~ on the amount standing to the credit of the deposit account shall also B
be payable to the Commissioner in addition to the sum referred to in
sub-section ( 1) of Section 18. Section 26 further provides that out of
the moneys·paid to the Commissioner in relation to the coal mine if
. J there is a balance left after meeting the liabilities of all the secured and
I
unsecured creditors, such balance shall be disbursed to the owner of
the coal mine. It cannot be disputed that the interest paid to the
Commissioner under Section 18(5) is money paid to him in relation to
c
)" a coal mine and as such it has to be utilised in meeting the claims of the
creditors of the mine owners and their other liabilities. Even otherwise
interest amount in the present ccntext has no separate entity. As the
lamb belongs to the owner of the sheep, the interest goes with the
principal. The interest accrued under the Coal Act is thus, part of the D
kitty out of which the claims and liabilities are to be met.

The High Court has further held that under Section 26 of the
Coal Act moneys paid to the Commissioner in relation to a coal mine
J. do not include the money accrued by way of interest. There is no basis
for this interpretation. The plain reading of Section 26 read with Sec- E
tion 18(5) of the Coal Act makes it clear that moneys paid to the
Commissioner in relation to a coal mine are to be used for satisfying
•
the debts and liabilities. Interest amount accrued under the Coal Act is
undoubtedly money in relation to coal mine and as such it squarely
comes within the ambit of Section 26 of the Coal Act.
_l F
The amended Section 18(5) of the Coal Act which escaped the
notice of the High Court provides that the amount of interest accruing
on the amounts standing to the credit of the deposit account is also
payabl~ to the Commissioner. Section 22(3) of the Coal Act makes the
assets, in the hands of Commissioner, available for satisfying the debts
in order of priorities. The assets of the erstwhile owner lying in the G
hands of the Commissioner of payment would include the interest
i which has been paid to the Commissioner under Section 18(5). Simi-
larly Section 24 of the Coal Act says that unsecured creditors will be
paid out of the money credited to the account of coal mine. Moneys
crediied to the account of coal mine also include interest. It is thus
clear from the scheme and plain reading of various provisions of the H

J,.;
464 SUPREME COURT REPORTS [1989] 3 S.C.R.

A Coal Act that the interest amount has to be made available to the
Commissioner to meet th~ debts and liabilities.

We may refer to Section 24A of the Coal Act which fixes the
maximum interest payable to the successful claimants. It is provided
that interest shall be paid at such rate not exceeding the rate of interest
B
accruing on any amount deposited by the Commissioner under Section
18. Had the Parliament intended to,give interest to the owners, there
would have no necessity for fixing the maximum limit of interest pay-
able to the claimant with reference to the rate of interest accruing to
the scheduled amount.

c The two acts being identical whatever we have said about the
Coal Act is equally applicable to the Coking Act.

. We, therefore, see no legal or equitable grounds to sustain the
judgment of the High Court. The appeals are accepted, judgment of
the High Court is set aside and the writ petitions of the respondents
D
filed in the High Court are dismissed. There shall be no order as to
costs.

G.N. Appeals allowed.

j