Biogenic origin of the significant proportion of coal bed methane has indicated the role of microbial communities in methanogenesis. By using cultivation-independent approach, we have analysed the archaeal and bacterial community present in the formation water of an Indian coal bed at 600-700 m depth to understand their role in methanogenesis. Presence of methanogens in the formation water was inferred by epifluorescence microscopy and PCR amplification of mcrA gene. Archaeal 16S rRNA gene clone library from the formation water metagenome was dominated by methanogens showing similarity to Methanobacterium, Methanothermobacter and Methanolinea whereas the clones of bacterial 16S rRNA gene library were closely related to Azonexus, Azospira, Dechloromonas and Thauera. Thus, microbial community of the formation water consisted of predominantly hydrogenotrophic methanogens and the proteobacteria capable of nitrogen fixation, nitrate reduction and polyaromatic compound degradation. Methanogenic potential of the microbial community present in the formation water was elucidated by the production of methane in the enrichment culture, which contained 16S rRNA gene sequences showing close relatedness to the genus Methanobacterium. Microcosm using formation water as medium as well as a source of inoculum and coal as carbon source produced significant amount of methane which increased considerably by the addition of nitrite. The dominance of Diaphorobacter sp. in nitrite amended microcosm indicated their important role in supporting methanogenesis in the coal bed. This is the first study indicating existence of methanogenic and bacterial community in an Indian coal bed that is capable of in situ biotransformation of coal into methane.