Back
SUPREME COURT OF INDIA
25th February 1965
K. SUBBA RAO, J.C. SHAH AND R.S. BACHAWAT, JJ.
The Cochin State Power and Light Corporation Ltd., Appellant
Versus
The State of Kerala, Respondent.
Civil Appeal No. 897 of 1963.
Advocates appeared
Mr. A.V. Viswanatha Sastri, Senior Advocate, (M/s. Arun B.Sacharaya and Sardar Bahadur Advocates, with him) for Appellant; Mr. V.P. Gopalan Nambiar, Advocate-General for the State of Kerala, (Dr. V.A. Seyid Muhammad, Advocate, with him), for Respondent.
ELECTRICITY ACT - S. 6 - Option of purchase of undertaking - Vesting in State Electricity Board - State Government's option - Conditions precedent - Notice under S. 6 (4) - Impossibility of performance - Effect.
Fact of the Case:
The appellant, a licensee holding an electrical supply undertaking, challenged the State Government's notice of its election to purchase the undertaking under S. 6 of the Indian Electricity Act, 1910. The appellant argued that the State Electricity Board had already exercised its option to purchase the undertaking, and therefore, the State Government had no right to do so. The State Government contended that the Board had not sent the required intimation of its intention to purchase the undertaking under S. 6 (4), and hence, it must be deemed to have elected not to purchase the undertaking.
Finding of the Court:
The Court held that the State Electricity Board was not required to give the notice under S. 6 (4) of the Act in respect of its option of purchase on the expiry of 25 years, as compliance with it was impossible. The Court reasoned that S. 6 (4) imposed a duty on the Board to give a notice of its intention to exercise the option at least 18 months before the expiry of the relevant period, but since S. 6 came into force on September 5, 1959, and the relevant period expired on December 2, 1960, giving the requisite notice of 18 months was impossible from the very commencement of S. 6. Therefore, the Board could not be deemed to have elected not to purchase the undertaking under S. 6 (4).
Issues: 1. Whether the State Electricity Board had duly exercised its option to purchase the undertaking, thereby precluding the State Government from exercising its option. 2. Whether the State Electricity Board was required to give the notice under S. 6 (4) of the Act in respect of its option of purchase on the expiry of 25 years.
Ratio Decidendi: 1. The Court held that the State Electricity Board had duly exercised its option to purchase the undertaking by serving a notice upon the appellant. 2. The Court held that the State Electricity Board was not required to give the notice under S. 6 (4) of the Act in respect of its option of purchase on the expiry of 25 years, as compliance with it was impossible. The Court reasoned that S. 6 (4) imposed a duty on the Board to give a notice of its intention to exercise the option at least 18 months before the expiry of the relevant period, but since S. 6 came into force on September 5, 1959, and the relevant period expired on December 2, 1960, giving the requisite notice of 18 months was impossible from the very commencement of S. 6. Therefore, the Board could not be deemed to have elected not to purchase the undertaking under S. 6 (4).
Final Decision: The Court allowed the appeal and restrained the State Government from taking any action under its notice of election to purchase the undertaking. The Court also directed the State Government to pay the appellant the costs in the Supreme Court.
Judgment
BACHAWAT, J. : The short question in this appeal is whether the proposed acquisition of the electrical supply undertaking of the appellant by the State of Kerala in pursuance of the notice, Ex. G. dated November 20. 1959 is authorised by S. of the Indian Electricity Act, 1910.
2. The appellant is the holder of a licence for the supply of electrical energy in Ernakulam and other places in Cochin. The licence was originally granted in the managing agents of the appellant under the Cochin Electricity Regulation III of 1102 then in force in Cochin and subsequently assigned to the appellant with the permission of the Cochin Government. On the merger of Travancore-Cohin with the Union of India, the Indian Electricity Act, 1910 was made applicable by the Part B States Laws Act, 1951 (Act III of 1951) to the Travancore-Cochin area and the Cochin Electricity Regulation stood repealed. The Electricity (Supply) Act, 1948 (Act 54 of 1948) was also made applicable to the Travancore-Cochin area by the Part-B States Laws Act, 1951. On March 31, 1957 the Kerala Electricity Board was constituted and by S. 71 of Act 54 of 1948 any right and option to purchase the undertaking of the licensee under the Indian Electricity Act, 1910 was transferred to and vested in the Board. Now, the right or option to purchase the undertaking of a licensee under S. 7 (1) of the Indian Electricity Act, 1910 then in force was exercisable "on the expiration of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years as shall be specified in this behalf in the license." Sub-section (4) of S.7, provided:
"Not less than two years notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government, as the case may be." Clause 15 (a) of the license held by the appellant provides:
"The option of purchase given by S. 7, subs. (i) of the Regulation shall first be exercisable on the expiration of 25 years from the commencement of this license and on the expiration of every subsequent period of ten years during the continuance of this license."
Section 7 (1) of the Indian Electricity Act, 1910 corresponds to S. 7 (i) of the Regulation that is to say, of the Cochin Electricity Regulation, The date of the commencement of the license is December 3, 1935. The period of 25 years mentioned in cl. 15 (a) of the license expired on December 2, 1960. The last date for giving the two years notice of the election to purchase on the expiry of December 2, 1960 required under S. 7 (4) of the Indian Electricity Act, 1910 expired on December 2, 1958. On February 11, 1959, the State Electricity Board served on the appellant a notice, Ex. B, of its election to purchase the undertaking of the appellant on the expiry of December 2, 1960, but this notice not being in accordance with S. 7 (4) was of no legal effect.
3. By the Indian Electricity (Amendment) Act, 1959 (Act 32 of 1959) S.6 now in force was substituted for the old S. 7 of the Indian Electricity Act, 1910. with effect from September 5, 1959. Section 6 of the Indian Electricity Act 1910 now in force reads:
"6.(1) Where a license has been granted to any person not being a local authority, the State Electricity Board shall,-
(a) in the case of license granted before the commencement of the Indian Electricity (Amendment) Act, 1959 on the expiration of each such period as is specified in the license; and
(b) in the case of a license granted on or after commencement of the Indian Electricity (Amendment) Act., 1959 on exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the license;
have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant peri
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
