IMPORTANT POINT
The Appellant Board is liable to pay to the liquidators of the respondent Co. (in liquidation) the sum of Rs.68,29,636.87 together with interest being the amount collected by the Board after purchase of respondent Co. towards arrears of electricity charges for the electricity supplied to consumers prior to sale of undertaking to the Board, and all collections made by the Board subsequently on that account.

Headnote:Indian Electricity Act, 1910-Sections 6 and 6-A-Purchase of undertakings-Section 7-Vesting of undertaking in purchase-Amendment of Section 7 by U.P. Act No. 16 of 1975 -Section 7A-Determination of purchase price-Appellant purchasing respondent undertaking-Book debts outstanding of respondent-Realised by appellant-Respondent going in liquidation-Liquidators claiming realised outstanding book debts from Appellant-Appellant opposing-Single Judge rejected-Upheld by DB-Appeal against to Supreme Court-Whether appellant Board is liable to pay to the liquidators outstanding Book debts of respondent undertaking realised by it after purchase? (Yes)-Appeal dismissed- (Companies Act, 1956-Sections 468, 518(1)(b) and (4)-Electricity (Supply) Act, 1948).
Held : On a close reading of the provisions noted above it is clear that no provision is made in the Act requiring the licensee to deliver the book debts of the company to the Board on vesting of the Undertaking in the latter, nor is there any provision in the statute empowering the Board to deduct the amount of unrealised dues of the company from its consumers towards the electricity supplied to them prior to the date of vesting from the purchase money to be paid by the Board to the company. Further, there is no provision in the Act which enables the Board to adjust the said amount towards security deposits or any other dues. The plea of adjustment/set off is untenable. The field being covered by statute the exercise has to be done strictly in accordance with the statutory provisions. It is not open for the Board to make any deduction by way of adjustment or set off from the amount to be paid to the company without a statutory mandate in that regard. It follows therefore that the company is entitled to receive from the Board the amounts realised by the latter from consumers towards charges of the electricity supplied by the company to them prior to the date of vesting. The Division Bench has also referred to the correspondence between the Board and Company indicating that the Board was conscious of its liability to hand over a sum of Rs. 68,29,636.87 to the company. The High Court was right in allowing the petition filed by the liquidators of the company (in liquidation) and directing the Board to pay the amount realised by it with interest to the liquidators. In the result, the appeals being devoid of merit, are dismissed. The hearing fee is assessed at Rs. 10,000/-. (Paras 12,13 and 14)

JUDGMENT

D.P. Mohapatra, J.-In these appeals filed by special leave, the U.P. State Electricity Board (for short the Board ), a statutory body constituted under the Electricity (Supply) Act, 1948 assails the judgment of the Division Bench of the Calcutta High Court vide its Judgment dated 26.8.1982 in the Appeal from Original Order No. 229 of 1980 dismissing the appeal filed by the Board and confirming the judgment passed by the single Judge.

2. The core question that arises for determination in these cases is whether the Board is liable to pay to the liquidators of the company (in liquidation) respondent herein the sum of Rs. 68,29,636.87 together with interest being the amount collected by the Board between the 4th/5th February, 1975 till 30th April, 1979 towards arrears of electricity charges for the electricity supplied to consumers during periods prior to the take over of the Undertaking by the Board, and all collections made by the Board subsequently on that account.

3. The factual matrix of the case, which is not in dispute, may be stated thus:

Banaras Electric Light & Power Co. Ltd. (hereinafter described as the Company ) was the holder of the license dated 6th February, 1925 for generation, supply and distribution of electric energy in the city of Banaras under the Indian Electricity Act, 1910 (for short the Act ). On 1st February, 1974 a notice under Section 6(1) of the Act was served upon the company notifying the intention of the Board to purchase the undertaking of the company. The possession of the Undertaking was taken over at midnight between 5th and 6th February, 1975. The undertaking of the company thereupon vested in the Board. On the date of the take over of the Undertaking there were certain uncollected dues for the electricity supplied by the company to its consumers up to the date of vesting which were thereafter collected by the Board. Up to 30th April, 1979 a total sum of Rs. 68,29,636.87 had been collected. In the meantime the company had gone into voluntary liquidation and joint liquidators had been appointed. On the application filed by the liquidators on 30th January, 1980 under Sections 468 and 518(1)(b) and (4) of the Companies Act, 1956 seeking an order against the Board to pay to the liquidators of the company the aforementioned sum together with interest thereon and all further collections made by the Board from 1st May, 1979 till date. The gist of the case of the company was that the aforementioned amount was the dues of the company from its consumers for the electricity supplied before the date of vesting, which the Board collected from the consumers after vesting of the undertaking. The company contended that the amount was collected by the Board as agent of the company and the Board held the amount as a trustee. Therefore, the Board was required in fact and in law to make over the amount collected by it and any further sum which it may collect from the consumers towards such arrear dues of the company to the liquidators.

4. Contesting the claim of the company the Board took the stand that it was entitled to retain and appropriate any amount collected by it after vesting of the undertaking since the book-debts of the company which were part of the undertaking vested in the Board. The further case pleaded by the Board was that under the provisions of the Act it was entitled to adjust the said amount towards dues of the company towards the cost of the electricity supplied and the security deposits of the consumers which the company had failed to make over to the Board at the time of vesting.

5. The learned single Judge of the High Court on consideration of the case of the parties and on interpretation of the relevant provisions of the Indian Electricity Act and also the Indian Electricity (Uttar Pradesh Amendment and Validation) Act, 1975 (U.P. Act No. 16 of 1975) particularly Sections 6 and 7(A) thereof held that the book-debts of the company were not a part of the undertaking which

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