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2000 Supreme(SC) 1046
Supreme Court Of India
S.SAGHIR AHMAD,Y.K.SABHARWAL,S.N.VARIAVA
State of U.P. - Appellant
Versus
Upper Jamuna Valley Electricity Supply - Respondent
Civil Appeal No. 3656 of 1993
Decided On : 05/12/2000
A.B. Rohtagi, Sr. Advocate, R.C. Verma, Dr. B.S. Chauhan and R.B. Misra, Advocates, with him, for Appellant; R.N. Trivedi, Addl. Solicitor General, Ms. Arptia Sharma, Ms. Tania Bery, Vineet Kumar, Sanjay V.S. Chaudhary, Ms. Nina Gupta Advocates, with him, for Respondent in Bank of India.
Headnote:
Electricity Act - Acquisition of Undertakings - Sections 6, 7-A, and 7 - The court upheld the validity of the Act/Ordinance, holding that it had nexus with the principles in Article 39 (b) and was protected by Article 31 (c). The Act was not a piece of colourable legislation and was eligible for protection. The provisions for payment of amount to the undertaking, by reducing the market value to book value, formed an integral part of the nationalisation scheme and did not admit of being considered as distinct provisions independent of each other.
Fact of the Case:
The Government of Uttar Pradesh granted a license for the supply of electric energy to M/s. Martin and Co. The license was subsequently transferred to the 1st respondent with a term that the Government had the right to purchase the undertaking at the end of the license period. The Appellant served a notice on the 1st respondent to sell the undertaking to the appellant at the expiry of the license period. An Ordinance and an Act were passed amending certain provisions of the Indian Electricity Act, changing the compensation from market value to book value.
Finding of the Court:
The court found that the Act had nexus with the principles in Article 39 (b) and was protected by Article 31 (c). The Act was not a piece of colourable legislation and was eligible for protection. The provisions for payment of amount to the undertaking, by reducing the market value to book value, formed an integral part of the nationalisation scheme and did not admit of being considered as distinct provisions independent of each other.
Issues: The issues included the constitutional validity of the amending Act/Ordinance, the violation of rights under Article 19 (1) (f) and Article 31 (2), and the reasonableness of the amendments in relation to the determination of the amount payable to the undertaking.
Ratio Decidendi: The court held that the Act had nexus with the principles in Article 39 (b) and was protected by Article 31 (c). The provisions for payment of amount to the undertaking, by reducing the market value to book value, formed an integral part of the nationalisation scheme and did not admit of being considered as distinct provisions independent of each other.
Final Decision: The Appeal was allowed, and the judgments of the Division Bench and the learned single Judge were set aside. The Writ Petition filed by the 1st Respondent was dismissed.
Judgement
S. N. VARIAVA, J. :- This Civil Appeal is against the judgment dated 11th January, 1989 delivered by a Division Bench of the Calcutta High Court. By this judgment the Division Bench dismissed the Appeal filed by the Appellant against a judgment of a learned single Judge of the Calcutta High Court which upheld the challenge of the 1st respondent to Ordinances and Amendment Act set out hereinafter.
2. Briefly stated that facts are as follows:
On 28th June, 1929 the Government of Uttar Pradesh granted to one M/s. Martin and Co. a licence for supply of electric energy. This licence was subsequently transferred to the 1st respondent. One of the terms of the licence was that at the end of the licence period the Government had a right to purchase the undertaking. The licence was for a period of 35 years. The 35 years period would thus end on 27th June, 1964. On 30th November, 1962 the Appellant served a notice on the 1st respondent, under Section 6(1) of the Indian Electricity Act, 1910 (hereinafter called the said Act). By this the Appellants called upon the 1st respondent to sell the undertaking to the appellant on the expiry of the period of 35 years from the commencement of the licence, i.e. at 12 Oclock in the night between the 27th and 28th June, 1964.
3. On February 4, 1975, Indian Electricity (U.P. Amendment and Validation) Ordinance No. 7 of 1975 was passed. This Ordinance amended certain provisions of the Indian Electricity Act. Subsequently this Ordinance was replaced by an Act namely Indian Electricity (U.P. Amendment and Validation) Act, 1976. The Ordinance and the Act amended amongst others Sections 6 and 7-A of the Indian Electricity Act.
4. At this stage it is necessary to see what the unamended Sections 6 and 7-A provided for. They read as follows:
"6. Purchase of undertakings.- (1) Where licence has been granted to any person, not being a local authority, the State Electricity Board shall,-
(a) in the case of a licence granted before the commencement of the Indian Electricity (Amendment) Act, 1959 (32 of 1959) on the expiration of each such period as is specified in the licence; and
(b) In the case of a licence granted on or after the commencement of the said Act, on the expiration of such period not exceeding thirty years and of every such subsequent period, not exceeding twenty years, as shall be specified in this behalf in the licence;
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 period referred to in this sub-section.
(2) Where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking the State Government shall have the like option to be exercised in the like manner of purchasing the undertaking.
(3) Where neither the State Electricity Board nor the State Government elects to purchase the undertaking any local authority constituted for an area within which the whole of the area of supply is included shall have the like option to be exercised in the like manner of purchasing the undertaking.
(4) If the State Electricity Board intends to exercise the option of purchasing the undertaking under this section it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in sub-section (1) and if no such intimation as aforesaid is received by the State Government the State Electricity Board shall be deemed to have elected not to purchase the undertaking.
(5) If the State Government intends to exercise the option of purchasing the undertaking under this section, it shall send an intimation in writing of such intention to the local authority, if any, referred to in sub-section (3) at least fifteen months before the expiry of the relevant period referred to
