Judgment

BHARGAVA, J.-The appellant, the South Arcot Electricity Distribution Company Ltd. (hereinafter referred to as "the company"), was carrying on the business of distribution of electricity as a licensee under the Government in South Arcot District in the State of Madras. The Government of Madras, in exercise of the powers conferred on it by the Madras Electricity Supply Undertakings (Acquisition) Act No. 29 of 1954 (hereinafter referred to as "the Madras Act"), took over the appellant s undertaking with effect from 1st of June, 1957. The company chose to be paid compensation on Basis A, laid down in Section 5(1) of the Madras Act, with the result that all the property belonging to the company, including the fixed assets, cash, security investments, and the like and all rights, liabilities and obligations as on the date of vesting, vested or must be deemed to have vested in the Madras Government. Under Rule 17 of the Madras Electricity Undertakings (Acquisition) Rules, 1954 (hereinafter referred to as "the Rules"), framed by the Governor of Madras under the provisions of the Madras Act, all the staff of the company employed immediately before the vesting date were retained by t