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Barakar Coal Co. Ltd. v. N.C Mehta And Anr.
Structured Summary of the Opinion (Salil Kumar Dutta, J.)
Factual and Procedural Background
On January 17, 1973 the plaintiff (the "opposite party" in the Rule) instituted a money suit in the City Civil Court, Calcutta (Money Suit No. 49 of 1973) seeking recovery of Rs. 30,743.38 from Barakar Coal Co. Ltd. (the petitioner). The sum was said to be the balance outstanding in respect of advances made to the petitioner for supply of premium hard coke from the petitioner's Loyabad Coke Plant, after accounting for supplies credited to the plaintiff from time to time.
Prior statutory developments: (a) Coking Coal Mines (Emergency Provisions) Ordinance, 1971 and the Coking Coal Mines (Emergency Provisions) Act, 1971 resulted in takeover and vesting of management of coking coal mines and coke oven plants with the Central Government and appointment of a custodian; (b) Coking Coal Mines (Nationalisation) Act, 1972 (promulgated August 17, 1972) declared the appointed day as May 1, 1972 and vested owners' interests in the Central Government; thereafter the mines and plants were managed by Bharat Cooking Coal Ltd., a Government company. The Government company was impleaded as defendant No. 2 in the suit; no relief was claimed against that company.
On September 19, 1973 the petitioner applied to the City Civil Court contending the court lacked jurisdiction due to provisions of the Coking Coal Mines (Nationalisation) Act, 1972 which provided for lodging pre-appointed-day claims with a Commissioner of Payments. The City Civil Court framed two issues on jurisdiction and, following a precedent (Robindra Nath Ganguly v. Calcutta Dock Labour Board), held it had jurisdiction and that the Nationalisation Act did not oust civil court jurisdiction. The petitioner brought a Rule challenging that order.
Legal Issues Presented
- Whether the City Civil Court had no jurisdiction to try the suit by reason of item 10 of the first schedule of the City Civil Court Act (i.e., issue of jurisdiction under the City Civil Court Act).
- Whether the jurisdiction of the Civil Court to entertain and try the suit was ousted by the provisions of the Coking Coal Mines (Nationalisation) Act, 1972 (in particular by provisions requiring claims to be lodged with the Commissioner of Payments and by S. 28 which gives the Act overriding effect).
Arguments of the Parties
Petitioner's Arguments (as presented in the opinion)
- Relying on Section 28 of the Coking Coal Mines (Nationalisation) Act, 1972, Mr. Banerjee (for the petitioner) argued that the Act has overriding effect over any other law, decree or order, and therefore the statutory procedure set out in the Act (lodging claims with the Commissioner of Payments) is the exclusive mode for enforcement of creditors' claims arising prior to the appointed day.
- The petitioner's contention was that because the Act provides for submission of claims to the Commissioner and for proof and payment under the Act, creditors must enforce their claims only by the method provided in the Act and could not maintain suits in the civil courts for such pre-appointed-day claims.
The opinion does not contain a detailed account of the opposite party's counter-arguments in the trial court or before the High Court beyond the procedural facts (e.g., the plaintiff instituted the suit and the government company had issued a certificate in February 1972).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Robindra Nath Ganguly v. Calcutta Dock Labour Board, 74 CWN 313 | Authority relied upon in relation to jurisdiction under the City Civil Court Act (item 10 of the first schedule) — used by the City Civil Court in addressing its jurisdiction on the first issue. | The City Civil Court followed this precedent in holding that it had jurisdiction to try the suit. The High Court opinion records that the court's decision on the first issue was in accordance with this authority. |
Court's Reasoning and Analysis
The court examined the relevant provisions of the Coking Coal Mines (Nationalisation) Act, 1972 and proceeded by textual analysis of those provisions and their consequences for enforcement of pre-appointed-day liabilities.
Key statutory provisions considered:
- Section 4 — on the appointed day the right, title and interest of owners in the specified mines and plants stood transferred and vested in the Central Government, free from encumbrances.
- Section 9(1) — every liability of the owner/agent/manager in relation to any period prior to the appointed day shall be the liability of such owner/agent/manager and enforceable against him and not against the Central Government or the Government company.
- Section 9(2)(b) — clarifies that no decree or order of any court passed after the appointed day in relation to any matter, claim or dispute which arose before that day shall be enforceable against the Central Government or the Government company.
- Chapter 3, Section 20, Section 23(1) and related provisions — provide for appointment of a Commissioner of Payments, lodging of claims with the Commissioner within a specified period, the procedure for investigation and determination of claims, preferential ranking for certain debts, and appeal against the Commissioner's decision.
- Section 28 — declares that the Act shall have effect notwithstanding anything inconsistent in any other law or in any decree or order of any Court.
The court rejected the petitioner's contention that Section 28 and the Act's claim-procedure effect an ouster of civil court jurisdiction for pre-appointed-day claims. The court's analytical steps, as reflected in the opinion, were:
- Recognition that the Act transferred ownership interests to the Central Government free from encumbrances, but Section 9(1) expressly preserved that liabilities arising prior to the appointed day remained the liability of the original owner (or agent/manager) and enforceable against them, not against the Central Government or Government company.
- Interpretation of Section 9(2)(b) as addressing enforceability of decrees after the appointed day against the Central Government or Government company; it does not say such decrees cannot be entered or that courts lack jurisdiction to entertain suits concerning pre-appointed-day claims.
- Explanation that the statutory scheme establishes a specialized, alternative mechanism (lodging claims with the Commissioner to seek payment out of amounts paid by the Government for nationalisation) which benefits creditors by providing a route to payment from acquisition proceeds, but the absence of an express provision excluding civil court jurisdiction means ordinary suits against the owner remain maintainable.
- Clarification that the practical consequence of the Act is that any decree obtained after the appointed day in respect of pre-appointed-day liabilities will not be enforceable against the Central Government or the Government company; execution of any decree would be limited to assets or monies in the hands of the owner (and not against the Commissioner, Central Government, or Government company).
- Conclusion that the City Civil Court was justified in holding it had jurisdiction to try the suit; the Act provides an additional statutory mechanism but does not oust the civil court's jurisdiction by express provision or necessary implication.
Holding and Implications
Holding: The Rule was discharged; the High Court upheld the City Civil Court's conclusion that it had jurisdiction to try the suit.
Implications and consequences:
- The suit for recovery of the claimed sum is maintainable in the Civil Court despite the nationalisation provisions; the Nationalisation Act does not operate to oust civil court jurisdiction over pre-appointed-day claims.
- If a decree is obtained after the appointed day in respect of a pre-appointed-day liability, that decree will not be enforceable against the Central Government or the Government company; execution can lie only against assets or monies belonging to the owner (or otherwise in the owner's hands), and not against the Commissioner, Central Government or Government company.
- The Act creates a statutory mechanism (lodging claims with the Commissioner of Payments) through which claimants may seek payment out of acquisition monies; if creditors do not avail themselves of that procedure they run the risk of not being able to realize against the acquisition monies held by the Commissioner.
- The court made no order as to costs: the Rule was discharged but "there will be no order for costs" (per the opinion).
The opinion resolves the immediate dispute over jurisdiction and the applicability of the Nationalisation Act's claim-procedure to this suit; it does not purport to render that civil courts can compel payment from acquisition monies held by the Commissioner (the opinion emphasizes the Commissioner's role and the limits on enforceability against the Central Government/Government company).
Records were directed to be sent down at once. H.N. Sen, J. concurred and added explanatory remarks to the same effect.
Salil Kumar Dutta, J.:— This Rule is directed against order No. 31 dated September 16, 1974 passed by the learned Judge 4th Bench, City Civil Court, Calcutta in Money Suit No. 49 of 1973 holding that the Court had jurisdiction to try the suit. The facts are that on January 17, 1973 the opposite party instituted the suit in the City Civil Court, Calcutta for recovery of Rs. 30743.38 against Barakar Coal Co. Ltd. the petitioner before us. The amount is stated to be the balance outstanding out of the amount advanced by the said opposite party to the petitioner for supply of premium hard coke from its Loyabad Coke Plant after giving credit to the supplies made to him by the petitioner from time to time. It appears that in the month of October 1971 Coking Coal Mines (Emergency Provisions) Ordinanance 1971, followed by the Coking Coal Mines (Emergency Provisions) Act, 1971 were brought into force whereby the management of the coking coal mines and coke oven plants in or about the said mines were taken over and vested in the Central Government with all assets pending nationalisation and a custodian was appointed for the general management of the said mines and coke oven plants. As a result the management of the Loyabad Coke Plant of the petitioner was taken over with all assets and vested in the Central Government. Thereafter Coking Coal Mines (Nationalisation) Act, 1972 was promulgated on August 17, 1972 whereby the interests of the owners in coking coal mines and coke oven plants or about the said mines vested in the Central Government from the appointed day defined as May 1, 1972. The said mines and plants had since been managed by and vested in the Bharat Cooking Coal Ltd., a Government Company, under the provisions of the said Act. The said company impleaded as the defendant No. 2 in the suit, is now the opposite party No. 2 in this rule and it issued a certificate on February 23, 1972 stating that the amount claimed in the suit had been shown as per list of suspense account of the petitioner to the credit of the plaintiff. As in spite of demands the amount was not forthcoming the suit was instituted as already stated in the City Civil Court for a decree for the amount claimed therein against the petitioner. No relief was claimed against the said Government Company.
2. The written statement was duly filed by the petitioner on January 14, 1974 and the specific defence taken was that the suit should be dismissed with cost against the petitioner in view of the provisions of the Coking Coal Mines (Nationalisation) Act.
3. Earlier on September 19, 1973 an application was filed on behalf of the petitioner contending that the court had no jurisdiction to proceed with the suit in view of the provisions of the Coking Coal Mines (Nationalisation) Act, 1972. The Act provided for the appointment of a Commissioner of Payments for payment of the dues of the Coking Coal Mines and Coke Oven Plants arising prior to the appointed day, May 1, 1972. All such claims are to be lodged with the Commissioner for payment out of the amount paid to him by the Central Government on account of the nationalisation of the mines and coke oven plants. Accordingly the court has no jurisdiction to proceed with the said suit. The court framed two issues on jurisdiction namely (i) Has the court no jurisdiction to try the suit on account of the provision of item 10 of the first schedule of the City Civil Court Act? (ii) Has the jurisdiction of the Civil Court to entertain and try such suit been ousted by the provisions of the Coking Coal Mines (Nationalisation) Act, 1972? In respect of the first issue the court following Robindra Nath Ganguly v. Calcutta Dock Labour Board 74 CWN 313 held that the court had jurisdiction to try the suit. In respect of the second issue, the court held that there was no ouster of the jurisdiction of the Civil Court under the provisions of the said Act. The rule is against this order.
4. Before we consider the respective contentions of the parties it will be necessary to look into the provisions of the Act. Under S. 4, on the appointed day (which is under S. 3(a) the 1st May, 1972), the right, title and interest of the owners in relation to the Coking Coal Mines and Coke Oven Plants specified in the first and second schedules thereof stood transferred to and vested absolutely in the Central Government, free from all incumbrances. Section 9 is as follows:—
9(1) “Every liability of the owner, agent, manager, or managing contractor of a coking coal mine or coke oven plant in relation to 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 against him and not against the Central Government or the Government company.
(2) For removal of doubts, it is hereby declared that—
(a) …………………………………………………………………………………………………………….
(b) no award, decree or order of any court, tribunal or other authority in relation to any coking coal mine or coke oven plant passed after the appointed day, but in relation to any matter, claim or dispute which arose before that day, shall be enforceable against the Central Government or the Government Company.
5. It is obvious from the above provision that the coking coal mines and coke oven plants were acquired by the Centrat Government free from incumbrances, and, any claim on or liability of any mine or plant in relation to any claim or dispute prior to the appointed day shall be the liability of such owner, agent, manager or managing contractor as the case may be and not of the Government or Government company. Further any decree passed after the appointed day in relation to any claim or dispute which arose before that day shall not be enforceable against the Central Government of the Government Company.
6. Chapter 3 of the Act contains provisions for payment of the amount to be given by the Central Government for vesting in it the right, title and interest of the owner in such mines and plants. Such amount again are specified against it in the corresponding entry in the 5th column of schedule of the Act. Chapter 6 under S. 20 provides for appointment of a Commissioner of Payments to whom the amount payable for the vesting of mines or plants as aforesaid shall be paid for payment thereof to such owners of the respective mines or plants. Under S. 23(1) every person having a claim against the owner of the coking coal mine or coke oven plant shall prefer such claim before the Commissioner within 30 days from the specified date (November 1, 1973) which period can be extended by the Commissioner in proper cases to a further period of 30 days if he is satisfied that the claimant was prevented by sufficient cause from preferring the claim in time. In sub-s. (2) there is provision for certain preferential payments like wages or salary of employees, amounts due for contribution to Provident Fund or for workmen's compensation and the like. Sub-section 3 provides that the debts specified in sub-s. (2) shall rank equally among themselves and to be paid in full unless the assets are insufficient in which case they shall abate in epual proportion and be paid accordingly. Sub-section 4 to 9 provides for investigation of the claims by the Commissioner and the procedure for determining such claims. Sub-section 10 provides for appeal against decision of the Commissioner. Section 24 provides that where the claims admitted by the Commissioner does not exceed the total amount credited to the account of the coking coal mine or coke oven plant, every such admitted claim shall rank equally among themselves and be paid in full and the balance if any, shall be paid to the owner but where such amount is insufficient to meet in full the total amount of the admitted claims, every such claim shall abate in equal proportions and to be paid accordingly.
7. Section 28 provides as follows:—
“The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this act or in any decree or order of any Court, tribunal or authority.
8. It has been contended by Mr. Banerjee appearing for the petitioner Company that in view of S. 28, the provisions of Act shall have effect notwithstanding anything contained in any other law or decree or order of any Court. The Act provides for submission of claims with the Commissioner and the mode of proof and payment in respect of such claims. This obviously implies, it was contended, that any creditor having a claim against the owner of such mines and plants accruing prior to the appointed day shall have to enforce the same in the same in the manner laid down in the Act, that is, by lodging his claims with the Commissioner and not otherwise.
9. This contention though apperently attractive will be found untenable on scrutiny. It will be noticed that the Act does not take away the jurisdiction of the Civil Courts to enforce claims against owners of the mines or plants by the ordinary process of law. It only provides the procedure for payment of claim out of the amount paid by the Government for nationalisation of the mine or plant through the Commissioner due from such owner of the mine or plant in respect of matters claims or disputes arising prior to the appointed day. In view of the absence of any provision excluding the jurisdiction of Civil Court either expressly or by necessary implication in respect of such claims prior to appointed date, it appears that such matters, claims or disputes will be enforceable by the process of law subject to the condition that decree for such claims will not be enforceable against the amount in the hand of the Commissioner on account of nationalisation of the mine of plant as the Commissioner in law can only disburse the amounts against claims lodge with and admitted by him. The Act thus simply provides more convenient way of meeting the claims of the creditors so entitled against respective owners of the mines and plant out of the amount in hands of the Commissioner. If this procedure is not availed of by any creditor he runs the risk of not being entitled to enforce the claim against the amount which under the law is with the Commissioner for acquisition of the assets of the mines and the plants.
10. It will further be seen that S. 9(1) merely states, which S. 9(2)(b) clarifies, that the decree or order of the court passed after the appointed day in relation to the claim which arose before the appointed day shall not be enforceable against the Central Government or the Government company. This clearly visualises the situation when the decree is passed after the appointed day in a Civil Court in respect of any claim arising before the appointed date. The only prohibition is against the enforceability of the decree or order against the Central Government or Government Company. It is also provided that the claims against the owner of the mine or plant in matters arising prior to the appointed date can only be enforced against the amount, payable by the Government for nationalisation by lodging claims with the Commissioner of Payment and not otherwise. In respect of the decree for such claim or of the claim itself where the claim is not preferred before the Commissioner, the creditor runs the risk of realising of his decree only against any asset as may belong to the owner or any money in his hand if any as the balance after payment of all claims by the Commissioner or otherwise.
11. The suit accordingly is maintainable in the Civil Court but the execution of the decree if passed will be against the money or assets that may be in the hands of the owner and not of the Commissioner or against the Central Government or the Government company. The learned Court was accordingly justified in holding that the court had jurisdiction to try the suit.
12. In view of the above the rule fails and is discharged but there will be no order for costs.
The records be sent down at once.
H.N Sen, J.:—
13. I agree with my Lord that the Rule should be discharged. I would however, like to add a few words to justify such a conclusion. Section 9(1) of the Coking Coal Mines (Nationalisation) Act, 1972 in terms recognised the liability of the owner, agent, manager or managing Contractor of the Coking Coal Mine or Coke Oven Plant in relation to any period prior to the appointed day i.e 1st day of May 1972 and about enforcement of the same against the owner company and it laid down that such liability of owner company will not be enforceable against the Central Government or the Government Company.
14. Section 9(2)(b) visualises even decrees etc. after the appointed day, in respect of any matter, claim or dispute which arose before that day. It however laid down that such decrees etc. shall not be enforceable against the Central Government or the Government Company.
15. Section 23(1) required every person having a claim against the owner of the Coking Coal Mine or Coke Oven Plant to prefer such claim before the Commissioner of Payment within the 30 days from the specified date (i.e 1st day of November 1973) and the period may be extended by the Commissioner in appropriate cases to a further period of 30 days if he was satisfied that the claimant was prevented by sufficient cause from preferring the claim in time. The Act the decrees etc. visualised u/s. 9(2)(b) may be one passed after the appointed day without any further limitation. That being so, such decrees etc. may be one passed even after the specified day in which case there will be no question of preferring any claim before the Commissioner and the decree holder runs the risk of executing the decree against the owner company from the other assets in its hands. In respect of decrees etc. obtained after the appointed day but before the specified day there will be no difficulty in preferring the claim before the Commissioner. The very fact that the Act visualises decrees etc. against the owner company in respect of its liability in relation to any period before the appointed day the Civil Court's jurisdiction to entertain claims in suits against the owner company is not ousted. In the circumstances the learned judge of City Civil Court, Calcutta, was justified in holding that the Court had jurisdiction to try the suit.
Rule discharged.
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