Statutory stowing assistance cannot be set off against unrelated royalty arrears absent express legal or contractual authority.

Statutory stowing assistance payable under the Coal Mines (Conservation and Development) Act, 1974 could not be withheld or appropriated against royalty arrears arising under a separate mining lease, because neither the statute nor any contract authorised such adjustment. Legal set-off and equitable set-off were unavailable where the cross-demands did not arise from the same transaction, and the assistance was earmarked for a public conservation and safety purpose. The Central Government was therefore required to release the assistance and could pursue royalty dues only through other lawful means.

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Issues: (i) Whether the Central Government could withhold statutory stowing assistance and appropriate it towards arrears of royalty payable by the coal company on the basis of set-off or equitable adjustment.

Issue (i): Whether the Central Government could withhold statutory stowing assistance and appropriate it towards arrears of royalty payable by the coal company on the basis of set-off or equitable adjustment.

Analysis: The stowing assistance was payable under the Coal Mines (Conservation and Development) Act, 1974 and was intended to secure conservation and safety in coal mines. The claimed royalty arrears arose from a separate contractual obligation under the mining lease. No contractual agreement or statutory provision authorised the Central Government to retain the assistance and adjust it against the royalty claim. The principles of legal set-off and equitable set-off did not apply because the claims did not arise from the same transaction, and the assistance was meant for a public and beneficial statutory purpose.

Conclusion: The Central Government could not withhold or adjust the statutory stowing assistance against royalty arrears.

Final Conclusion: The writ petition succeeded and the appeal was dismissed, while the Government was left free to recover any royalty dues by other lawful means.

Ratio Decidendi: Statutory assistance payable for a public purpose cannot be withheld by way of set-off against an unrelated contractual demand unless the statute or the contract expressly authorises such adjustment, and equitable set-off is unavailable where the cross-demands do not arise from the same transaction.

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