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PETITIONER: THE STATE OF BIHAR

       Vs.

RESPONDENT: THE TATA IRON STEEL CO. LTD.

DATE OF JUDGMENT17/02/1995

BENCH: KULDIP SINGH (J) BENCH: KULDIP SINGH (J) HANSARIA B.L. (J) MAJMUDAR S.B. (J)

CITATION:  1995 AIR 1170            1995 SCC  Supl.  (2)   4  JT 1995 (3)   479        1995 SCALE  (1)792

ACT:

HEADNOTE:

JUDGMENT: KULDIP SINGH, J.: 1.   The Tata Iron and Steel Company Limited (the  Company), respondent in the appeal herein, is primarily engaged in the manufacture  of  iron and steel/iron  and  steel  materials. According  to  the  Company, it owns  captive  "coking  coal mines"-  has  also installed "coke  ovenplants"  within  the factory premises  and as such it comes within the definition of  ’colliery’ under the Colliery Control Order,  1945  (the Order) promulgated by the Government of India.  The State of Bihar, with the prior concurrence of the Central Government, and in exercise of the powers conferred by Section 3 of  the Essential Commodities Act, 1955, has issued an order  called the Bihar Trade Articles (Licenses Unification) Order,  1984 (the Unification Order).  The question for consideration  in this appeal is whether the Company is a ’dealer’ within  the Unification Order, and as such is governed by the provisions thereunder.   A Division Bench of the Patna High  Court  has answered  the question in the negative and in favour of  the Company.   This appeal by the State of Bihar is against  the judgment of the Patna High Court dated April 14, 1988. 2.The  Company has its registered office at Bombay  and  its integrated  steel plant at Jamshedpur.  The  captive  coking coal mines of the Company arc in the Jharia Coal Fields  and at  West  Bokaro  in the State of Bihar.   The  coking  coal extracted  and raised from the mines is beneficiated in  the coal washing plants, sterilised at Jamaduba and West  Bokaro and  thereafter the entire production is transferred to  the Company’s coke oven plants at Jamshedpur for converting  the same  into  Hard Coke meant for use in the  blast  furnaces. According  to  the  Company about 85 per cent  of  its  coal requirement is received from the captive coal mines and  the remaining 15 per cent is procured indigenously or by  import from  abroad.   It is asserted by the Company that  for  the purpose of steel manufacturing only metallurgical quality of

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coke  is used and for that purpose the coking coal,  whether received  from  the  captive coal  mines  or  otherwise,  is converted  into  metallurgical coke through the  process  of coke ovenplants. 483 According  to the Company inferior quality of coke  such  as middlings,  and  coal  rejects  produced  at  the  Company’s collieries  and  some  of the coke fractions  such  as  coke breeze,  pearl coke, etc. produced at its oven plants  which are  not of metallurgical quality and not capable  of  being used in its steel plant that arc sold and disposed of by the Company.   It is stated that the disposal of  such  unwanted and  unusable material arising in the continuous process  of the  integrated manufacturing operation becomes a  necessity for preventing congestion in the steel plant. 3.The  Supply  Inspector of the State of  Bihar  seized  six truck,%  loaded  with  coke breeze which were  sold  by  the company  without  obtaining licence as envisaged  under  the Unification Order.  Criminal proceedings under Section 7  of the  Essential  Commodities Act, 1955 for violation  of  the Unification  Order were also initiate against  the  Company, which  was challenged by way of a writ petition  before  the Patna  High  Court.  The primary contention of  the  Company before  the High Co was that it being a colliery  under  the Order   which  was  Central  Government  promulgation,   the Unification  Order  issued  the  State  Government  was  not applicable The High Court by the judgment dated November 12, 1986  dismissed the writ petition.  The  Company  challenged the  judgment  of  the High Court by way  of  special  leave petition before this Court.  This Court in Civil Appeal  576 of  1986 decided on December 3, 1987 set aside the  judgment of  the  High  Court  and  remanded  the  matter  for  fresh decision.  The operative part of the order is as under:               "We  are  of the view  that  very  contentious               issues  were  involved  in  the  matter.   The               aspects  that required examination  could  not               have  been disposed of in the matter in  which               the  Division  Bench has dealt with  it.   The               question  as  to whether  the  appellants  are               dealers,  has  to be examined as  without  the               appellants  being a dealer within the  meaning               of the 1984 Order, no liability to comply with               the impugned requirements of the Order,  would               arise.  Even Mr. Jai Narain found it difficult               to  ask for sustaining  the impugned order  as               relevant  aspects  have  not  been   examined.               Taking  all these aspects into  consideration,               we  set aside the order of the High Court  and               remit  the matter to it for fresh disposal  on                             merits   after  hearing  the   parties.    Ful l               opportunity should be given to the parties  to               place  their arguments and the case should  be               disposed  of in accordance with law.   We  did               not intend to express any opinion on merit and               if  anything has been said it should be  taken               by way of justification for the remit." 4.   On remand, the High Court heard the parties afresh  and by  the impugned judgment dated April 14, 1988  allowed  the writ  petition.  The High Court came to the conclusion  that the  Company was a colliery and as such was governed by  the provisions  of the Order.  The High Court reached  the  said conclusion on the following reasoning:               "8. As noticed above, the Company is the owner               of  coal  mines as well as  coke  oven  plant.

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             Colliery within the meaning of die  definition               of the Central Order not only any mine or open               working  where  the  getting of  coal  is  the               principal  object of the mining, quarrying  or               other   operations  earned  on   therein   but               includes a plant for the production of coke or               for  the  washing  of coal.  In  view  of  the               inclusive definition, coke oven plant and coal               washeries  are  also  collieries  within   the               meaning of that Order.               9. Learned Standing   Counsel sub-               484               mitted that the word ’include’ in the  context               mean  only such coke oven plant which is  near               the  vicinity  of a coal mine and shall  be  a               colliery.  This submission cannot be accepted.               The word ’include’ is generally used as a word               of  extension  and when this word is  used  it               adds  to  the word or phrase a  meaning  which               does  not  naturally belong to it.   The  word               ’colliery’  ordinarily  will  signify  a  coal               mine,  but  because  of the use  of  the  word               ’include’  in the definition of  colliery,  it               must  be construed as comprehending  not  only               such  things  as it signify according  to  its               natural  import, but also those  things  which               the  interpretation clause declares that  they               shall  include.  Thus where ’includes’ has  an               extending force, it adds to the word or phrase               a  meaning  which  does  not  belong  to   it.               Reference  may  be made to the  South  Gujarat               Roofing  Tiles Manufacturers  Association  and               another vs.  The State of Gujarat and  another               1976 (4) SCC 601.               10.   The  word ’colliery’ as defined  in  the               Central Order does not envisage that coke oven               plant must be near about or in the vicinity of               coal mine.  We may mention that coal mines and               coke oven plant belonging to the Company  have               not  been nationalised under the  Coking  Coal               Mines (Nationalisation) Act, 1972 or the  Coal               Mines  (Nationalisation) Act, 1973.  It  must,               therefore, be held that the coke oven plant at                             Jamshedpur  belonging  to  the  Company  is a               ’colliery’  within the meaning of the  Central               Order-" The  High  Court further followed its  earlier  judgment  in Black  Diamond  Industries  Others v.  Coal  Controller  and others, 198 B.L.T. (Reports) 127, and held as under:               "For the reasons given in Black Diamond  case,               it must be held that to the coke oven plant at               Jamshedpur          the Central Order  applies               and  the  Unification  Order  shall  have   no               application." 5.  In  Black Diamond’s case, a Division Bench of  the  High Court  examined  the provisions of the Order  and  also  the Unification  Order, and came to the conclusion that the  two operated in different fields.  The Bench further came to the conclusion  that  the Order dealt with producers  of  coking coal  where as the Unification Order was only applicable  to those  who  were  not the producers of coal.   It  would  be useful  to  reproduce  the High  Court  reasoning  in  Black Diamond’s case, which is as under:               "A  comparison of the different provisions  of

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             the  Orders  noticed above,  brings  out  this               picture.  Colliery Control order is applicable               throughout India and deals with coal including               coke.   The provisions which are found in  the               Coal  Control  Order,  Unification  Order  and               Display  Order with regard to sale,  purchase,               storage price, inspection, compliance of order               given  by  different authorities  under  those               orders and filing of returns are also provided               in  the  Colliery  Control  Order.    Colliery               Control Order further provides for  regulating               production  of coal which is not there in  any               of  the Bihar Orders.  Colliery Control  Order               is a special statute which deals with colliery               which  means a mine or open working where  the               heating of coal is the principal object of the               mining,  quarrying or other operations  earned               on  therein  and  includes  a  plant  for  the               production of coke.  None of the Bihar  Orders               deal   in  colliery.   The  very   significant               difference  between Colliery Control Order  on               one hand and the Bihar Orders on the other  is               that  whereas the former  Order  specific-ally               deals with colliery and producers of coal  the               latter  Orders,  i.e.,  Bihar  Orders  do  not               specifically include them but purport to  deal               with all dealers of coal.               Respondents  want  us to  include  within  the               ambit of ’dealer’ in Bihar Orders producers of               coal also.  This cannot be done.               485               Firstly,  Colliery  Control Order  deals  with               producers  of  coal  and  the  definition   of               ’dealer’  in  Bihar  Orders  do  not   include               producers of coal.  Secondly, Colliery Control                             Order  is  an  exhaustive Code  in  respect  o f               Colliery.  If Bihar Orders are made applicable               to  Colliery, then these Orders will  come  in               conflict  with  Colliery Control  Order.   But               this  conflict  can be avoided if it  is  held               that  Bihar Orders do not apply  to  Colliery.               Thirdly,  according to the  respondents,  when               Colliery   Control  Order  and  Bihar   Orders               operate in different fields, there is no scope               for  holding  that Bihar Orders  will  operate               also in the field covered by Colliery  Control               Order.               It was urged on behalf of the respondents that               in  the  Colliery Control Order, there  is  no               provision  for  obtaining  a  licence.    This               appears  to  be  true,  but  the  issuance  of               licence  under the Unification Order is  meant               for   controlling  the  sale,  purchase,   and               storage   and  contravention  of   terms   and               conditions of the licence has been made penal.               If  Colliery owners, who are the  petitioners,               are  required  to  obtain  licence  under  the               Unification  Order,  that  must  be  for   the               purpose  that  production sale,  purchase  and               storage  of coke may be regulated  within  the               terms  and conditions of the  licence.   Since               the  State  Government  cannot  regulate   the               production, sale, purchase and storage of coke               colliery  owner, no licence is required to  be

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             taken   by  the  colliery  owners  under   the               Unification Order."  6.Learned  counsel  for the State of Bihar  has  vehemently contended  that the coke oven plants of the  Company  having been constructed within the factory premises at  Jamshedpur, it cannot be considered to be a part of the coal mine and as such  cannot come within the definition of ’colliery’  under the  Order.  To appreciate the argument, it would be  useful to  examine the definition of ’colliery’ given under  clause 2(2) of the Order which is as under:-               "‘colliery’  means  any mine or  open  working               where  the  getting of coal is  the  principal               object  of  the  mining,  quarrying  or  other               operations  carried on therein and includes  a               plant  for the production of coke or  for  the               washing of coal." 7.   A plain reading of the above quoted definition makes it clear  that  it  specifically  includes  ’a  plant  for  the production  of  coke  or  for the  washing  of  coal’.   The inclusive   definition  has  been  given  with  a   purpose. Ordinarily,  the coke oven plant is at a place where  coking coal  is converted into Hard Coke for the purposes of  using the same in the industry.  Coke oven plants are,  therefore, set  up at various places where Hard Coke is needed for  the industry,  Since hard coke also comes within the  definition of  ’coal’ under die Order and is subject to control by  the Central  Government authorities, the coke oven plants  which produce  hard  coke  have  been  rightly  included  in   the definition  of ’colliery’.  We agree with the  above  quoted reasoning given by the High Court in reaching the conclusion that the Company is a colliery under the Order. 8.   The  crucial  question to be considered  is  whether  a colliery which is governed by the Order can, in addition, be made  to  follow  the provisions of  the  Unification  Order issued by the State Government.  We may, therefore,  briefly examine the provisions of the Order and the Unification  Or- der. 9.   Clause  4  of  the  Order  provides  that  the  Central Government may fix the price at which or the maximum or  the minimum price, or both, subject to which coal may be sold by colliery owners.  Under Clause 486 5 no colliery owner or his agent can sell and no person  can purchase, coal at a price which is in excess of the price or the  maximum price or below the price or the  minimum  price fixed under clause 4. Clause 7 lays down that every colliery owner or an allottee of coal under the Order shall, on being requested to do so, submit returns and other information  in such  form and within such time as may be specified  in  the notice  or  direction.  Clause 8 provides that  the  Central Government may from time to time issue such directions as it thinks fit to any colliery owner regulating the disposal  of his stocks of coal or of the expected output of coal in  the colliery,  during  any period.  Under clause  10A  the  Coal Controller  may by order direct that any coal despatched  by any colliery owner which is in transit shall subject to such terms  and conditions, if any, as the Coal Controller  deems fit,  be diverted and delivered to another person  specified in   the  order.   Clause  11  provides  that  the   Central Government may issue such directions as it thinks fit to any colliery  owner  prohibiting  or  limiting  the  mining   or production  of any grade of coal.  Clause 28  prohibits  any person  from  using  coal  so  allotted  otherwise  than  in accordance with the conditions contained or incorporated  in the order of allotment.  Clause 12E provides that no  person

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shall  acquire or purchase any coal from a colliery  and  no colliery  owner  or his agent shall despatch coal  from  the colliery  except under the authority and in accordance  with the  conditions contained in a general or special  authority from  the  Central  Government.  Clause  12G  provides  that notwithstanding  anything contained in Clause 12A,  12B  and 12E,  any  person may from September 15,  1975  without  any order of allotment or authority acquire or purchase despatch or  transfer hard coke produced from beehive ovens,  country ovens  and bye-product ovens, provided that nothing in  this clause  shall  apply  to  hard  coke  in  respect  of  which direction is issued by the Central Government under Clause 8 of the Order.  It may be mentioned that by the  notification dated  July 24, 1967 the Central Government  has  authorized any person to acquire despatch or transfer without any order of  allotment or written authority non coking coals  of  all grades  produced  in  all  coal  fields,  coking  coals  not required  for metallurgical consumers and coal  produced  in Assam  provided  that  such coal shall  be  consumed  within India. 10.It  is obvious from the provisions of the Order  that  it tends  to regulate coal from the stage of production to  the stage of consumption including price control and inspection. Under the scheme of the Order, the coking coal from  various coal mines is allotted to various persons, The provisions of the  Order  give wide powers to the  Central  Government  to ensure  that the coal extracted from the mines  is  properly utilised for the benefit of the industry and other purposes. Apart  from  that,  the provisions of the  Order  give  wide powers  to  the Central Government to keep a  track  on  the allotted coal so that the same is not misutilised. 11.  The  Unification order defines the coal to  mean  coal, coke and other derivatives including soft and hard cokes  of various  grades.   ’Dealer’ has been  defined  under  Clause 2(e).   ’Retail  dealer’ has been defined to mean  a  person engaged in the business of purchase, sale, or storage of any article  specified in Schedule 1 for the purpose other  than personal  consumption within the storage limit fixed by  the Gov- 487 ernment  from  time to time.  ’Wholesale  dealer’  has  been defined  to mean a person engaged in business  of  purchase, sale  or storage of any article specified in Schedule 1  for the  purpose  other  than personal  consumption  within  the storage  limit  fixed by the Government from time  to  time. ’Coal dump holder’ means a person or firm appointed by or on behalf of the Government as such who is engaged in the busi- ness  of  storing  coal  from collieries  on  the  basis  of allocation  made  by  the Government  or  by  any  authority empowered  by the State Government for sale to retail  deal- ers.  Part 11 of the Unification Order provides for issuance of  licence  and prohibits dealer to carry  on  business  of purchase,  sale  or  storage for sale of any  of  the  trade articles mentioned in Schedule. 1, without a licence  issued under  the Order.  Part 11 of the Unification Order  imposes restrictions  relating  to price, stock, etc.   It  provides that  the  retail price of any trade  article  displayed  in compliance  with the provisions of the Display  Order  shall not  exceed  the retail price fixed or  recommended  by  the Central  Government or the State Government or  manufacturer or distributor from time to time for that trade article.  It further provides that no dealer shall sell to any person any trade  article  at  a price higher than  that  specified  in respect of such article in the list of prices and stocks and no dealer shall refuse to sell such article to any person at

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the price specified.  No dealer shall sell any trade article to  any  person  without issuing a cash  memo  or  bill  and without  keeping  a  duplicate copy of such  memo  or  bill. Clause  19  of the Unification Order requires  every  person holding stock of trade articles mentioned in Schedule 1  and Schedule 11 to sell to the State Government or to any person or class of persons the whole or specified part of the stock at such price and in such manner as may be specified in  the order.  Clause 20 provides that every dealer shall furnish a return  to  the prescribed authority from time  to  time  as notified.   It is laid down in Clause 21 that the  licensing authority may by general or special order in writing require a  dealer holding stock of trade article to sell article  on permits issued by the licensing authority.  In Part IV there are   usual  powers  to  call  for  information  and   issue directions to the dealers. 12.  The  various provisions of the Unification  Order  show that  the  purpose of the said order is  to  make  available scheduled  articles to the public at fair price and  without any  holding  of  stock by the dealers  The  object  of  the Unification  Order  in a nutshell is to make  available  the essential commodities to the public at large. 13.  Having  minutely examined the provisions of  the  Order and  the  Unification  Order,  we  have  no  hesitation   in concurring with the finding of the Patna High Court in Black Diamond’s  case  that the two operate in  different  fields. There  is  hardly  any overlapping  between  the  two.   The learned  counsel  for the Company has  however  invited  our attention  to  clause  15  (display  of  price),  clause  20 (furnishing  of  returns) clause 21 (sale  on  permits)  and clause  25 (power to issue directions to the dealer) of  the Unification Order which according to the learned counsel are covered  by  the provisions of the Order.  We do  not  agree with   the  learned  counsel.   As  mentioned   above,   the provisions of the Order issued by the Central Government are directed for the protection of the allotted/ allocated coal. The Order operates from the stage when the coal is extracted from the mines and continues to regulate its jour- 488 ney  till it leaves the colliery and is brought in the  open market for sale.  The Unification Order, on the other  hand, starts  operating  at a stage when the coal is  exposed  for open  sale  in  the market.  The two  operates  in  entirely different  fields.   The display of  prices,  furnishing  of returns,  sale  on  permits, power to  issue  directions  to dealers,  under  the  two Control Orders  are  for  entirely different  purposes  and they operate in  different  fields. We,  therefore, do not agree with the judgment of the  Patna High  Court  in Black Diamond’s case that  the  two  Control Orders  are  likely  to conflict with each  other  in  their operation.    Examined  from  another  angle,  the   Central Government  by  the  Notification dated July  27,  1967  has permitted free sale of non metallurgical coal provided it is consumed  in  India.   When the said coal is  sold  in  open market  in  the  State  of  Bihar  the  provisions  of   the Unification  Order, which are meant to protect the  interest of  the  consumers,  are squarely attracted and  are  to  be followed   even  by  a  colliery  which  falls  within   the definition of ’Dealer’ under the said Order. 14.We  may mention that the Control Orders emanate from  the same source.  The Order has been issued by the Central  Gov- ernment,  whereas the Unification Order has been  issued  by the  State Government of Bihar as a delegate of the  Central Government  under  the Essential Commodities Act,  1955  and further,  the  Unification Order has been  issued  with  the

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prior approval of the Central Government. 15. We, therefore, see no justification for the  respondent- Company for not complying     with  the  provisions  of  the Unification  Order.  The respondent-Company despite being  a colliery is bound by the provisions of the Unification Order if it is found to be a dealer under the said Order. 16.The  expression  ’dealer’ has been defined  under  clause 2(e) of the Unification Order which is as under:-               "’dealer’  means  a  person, a  firm,  an  as-               sociation of persons or a co-operative society               other  than  a National and  State  level  Co-               operative  Society, engage in the business  of               purchase,  sale  or storage for  sale  of  any               trade  article whether or not  in  conjunction               with  any  other  business  and  includes  his               representative or agent but does not include-               (i)a  person who holds or is in possession  of               agriculture  land  under  any  tenure  or  any               capacity and on which he raises or has  raised               crop of foodgrains. oilseeds or whole pulses;               (ii)  a manufacturer of sugar;               (iii) a producer of pulses and edible oil.  " Patna  High  Court  in  Black Diamond’s  case  came  to  the conclusion that the colliery being a producer of coal cannot come within the definition of ’dealer’ under the Unification Order.   We  do not agree with the conclusion  of  the  High Court  which is based on no reasoning.  It is  the  admitted case  of the Company that they sell coal in the open  market which  has  no metallurgical quality.  In the  written  sub- missions  filed  on  behalf of the  Company  by  M/s.   J.B. Dadachanji  & Co., in paragraph 18 the percentage  of  clean coal and non metallurgical coal has been given as under: 489        "% of the product to the total input                   Jamadoba          West Bokaro      Clean Coal     62/65%              38/40%      Middlings      19/13%              38/40%      Rejects        12/14%              8/10%      Slurry         7/8%                10/12%      Tailings                     Clean  coal,  the  only  prime   quality               product of metallurgical quality is meant  for               manufacture of BP hard coke, All the remaining               three are secondary products of the  Washeries               which are non-metallurgical quality." There   is  thus  no  doubt  that  the  quantity   of   non- metallurgical  coal sold by the Company is  not  negligible. In  any  case,the Company is  regularly  selling  non-metal- lurgical  coal in the open market and as such it  cannot  be said  that  it  is not engaged in the business  of  sale  or storage  for  sale of non metallurgical coal.   We  have  no hesitation in holding that the Company is a dealer under the Unification Order. 17.We,  therefore, allow the appeal, set aside the  impugned judgment  of  the  Patna High Court  and  dismiss  the  writ petition  filed  by the Company before the High  Court.   We further  hold that the Division Bench Judgment of the  Patna High Court in Black Diamond’s case does not lay down correct law  to  the extent indicated by us  above.   The  appellant shall  be  entitled  to  its costs,  which  we  quantity  as Rs.20,000/-. 491