JUDGMENT:

Altamas Kabir,J.

1. This appeal, by way of special leave, is directed against the judgment and order dated 29th December, 2000, passed by the Division Bench of the Andhra Pradesh High Court in Letters Patent Appeal No. 78 of 1988, which was preferred against the order passed by the learned single Judge in A.S. No. 610 of 1979 on 24th June, 1987.

2. As it appears from the materials on record, the appellant herein, Guntur Power and Light Limited, hereinafter referred as "GPL", was incorporated for the purpose of running an Electrical Undertaking to supply electricity to the Guntur area of Andhra Pradesh. It was granted a licence for the aforesaid purpose under the provisions of the Indian Electricity Act, 1910 and acquired various properties for the Undertaking.

3. In 1938, GPL ceased to generate electricity and it confined itself only to distribution of power. Receiving and distributing stations were located in places belonging to the GPL, outside the properties forming the subject matter of the present appeal. It is the categorical case of the appellant herein that the said properties were not used by GPL for the purposes of the Electricity Undertaking or for any other ancillary purpose from the year 1939 onwards.

4. On 3rd August, 1945, GPL granted a lease in favour of Guntur Tobacco Company, hereinafter referred to as "GTC", a sister company, in respect of two acres of land with right to construct buildings thereon in terms of Clause 5 of the registered Lease Deed and also with an option to purchase the demised land in terms of Clause 8 thereof. By another registered Lease Deed executed by GPL in favour of GTC on 4th November, 1949, a further portion of vacant land measuring one acre was also demised in favour of GTC, which is the appellant in these proceedings. Subsequently, two more lease deeds were executed by GPL in favour of GTC on 15th March, 1950 and 18th March, 1954, extending the period of the lease till the end of the year 1971. In the Lease Deed of 18th March, 1954, clause 8 containing the option of purchase was substituted by a new clause, which, inter alia, provided that even if the lessors came to be wound up voluntarily or went into liquidation or became insolvent, or if the lessors ceased to carry on business, the lease would not terminate but would remain in full force with the right to the lessees to purchase the demised lands and buildings and structures thereon belonging to the lessors at the market value or be entitled to repayment of the market value of the buildings and super structures which may be put up by the lessees.

5. In 1956, the Government of Andhra Pradesh acquired the Electrical Undertaking from GPL in exercise of its powers under the Andhra Pradesh Electricity Supply Undertaking Acquisition Act, 1954, whereupon the Undertaking of GPL vested in the State Government with effect from 1st May, 1956. Upon such vesting, the demised premises, along with the land and buildings situated thereupon, became the property of the State Government by virtue of such acquisition. The Transmission Corporation of Andhra Pradesh, being the respondent No. 1 herein, was formed on 1st April, 1959, under Section 5 of the Electricity Supply Act, 1948, and pursuant to its policy the State Government transferred the Undertaking of GPL with all its assets to the Andhra Pradesh State Electricity Board, which became the owner of the said properties.

6. Even after formation of the respondent No. 1 Corporation, GTC continued to remain in possession of the properties in question purportedly on the strength of the Lease Deeds executed by GPL in its favour. According to the respondent No. 1 Corporation, in 1961 the Lease Deeds executed by GPL in favour of GTC came to be scrutinized and it was noticed that GPL had executed the leases in favour of GTC without obtaining requisite sanction of the Government in terms of Section 9(2) of the Indian Electricity Act, 1910 which rendered the Lease Deeds void.