KATRAS JHERRIAH COAL CO LTD Vs. MERCANTILE BANK

JUDGEMENT

(1.) This is an application under Article 227 of the Constitution of India at the instance of the petitioner, Katras Jherriah Coal Co. Ltd., and is directed against an appellate order passed in Misc. Appeal No. 52 of 1979 of the Court of the District Judge, Burdwan, affirming the order of the Commissioner of Payments in several claim cases brought at the instance of the opp. party, Mercantile Bank Ltd. The claim cases related to several collieries known as Lachipur, Seebpore, Pretoria and Dangra, of which the petitioner was the owner, the total claim being Rs. 40,23,580.29. Separate claims in respect of the aforesaid separate collieries were made and alt the cases were heard analogously.

(2.) Briefly stated the case of the claimant is as follows : -- By virtue of an agreement entered into by and between the claimant Bank (hereinafter called the Bank) and the Coal Company (hereinafter called the Company) in 1962 the Bank agreed to grant accommodation to the company by way of overdraft facilities on current account up to a drawing limit of Rs. 10,000,00.00. This limit was enhanced from time to time until December 26, 1972 when an agreement was executed whereby the drawing limit was raised to Rupees 40,000,00.00. In pursuance of the agreement the stocks of coal and stores of every kind wherever stored or kept and whether in the possession of the Company or of the Bank or of any third party including all such properties as may be in the course of shipment, transit or delivery and also all documents of title, negotiable instruments, policies of insurance and other documents and instruments relating to all such property together with the benefit of all rights relating thereto and all present and future book debts, outstanding bills and moneys receivable of the company together with the benefit of all rights relating thereto were hypothecated to the Bank. In terms of the agreement the Bank granted accommodation and charged interest at the stipulated rate of l3 1/2. While this arrangement and agreement were in force, the Coal Mines (Nationalisation) Act 1973 came into effect on and from 1st May, 1973. This Act was preceded by the Coat Mines (Taking Over of Management) Act, 1973 which was deemed to have come into effect on the 30th day of January, 1973. With the passing of the Coat Mines (Nationalisation) Act. 1973 the four Coal Mines belonging to the company vested in the Central Government free of all encumbrances, with the result that the Bank's first charge was shifted from the aforesaid securities to the amounts payable by the Central Government to the company. After giving credit for all sums paid by and on behalf of the company, a sum of Rs. 40,23,580.29 remained due as on October 31, 1973. The Bank further claimed interest on and from 1st November, 1973 till realisation at the rate of 13% per annum with monthly rests.

(3.) The claim was resisted by the company. They contended that as a result of the takang over of management of the Coal Mines belonging to the company all the Bank accounts of the company stood frozen with effect from 31st January, 1973 and the company was unable to operate or derive any benefit out of the said account. They further contended that the company had no liability to pay any amount to the Bank beyond what was due on the close of business on 30th January, 1973. The book debts collected by the coal mines authority as the successor in interest of the company should be credited in the said overdraft account and the balance thereof only shall be payable to the claimant.