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High Court Of Madhya Pradesh
P. V. Dixit, C. J. and K. L. Pandey, J.
GWALIOR AND MALWA INDUSTRIES AND ELECTRIC SUPPLY LTD. - Appellant
Versus
MADHYA PRADESH ELECTRICITY BOARD - Respondents
Misc. Petn. 85 Of 1962
Decided On : 08/02/1962
ELECTRICITY ACT - SECTION 6 - OPTION TO PURCHASE UNDERTAKING - INTIMATION TO STATE GOVERNMENT - ESSENTIALITY - INTERPRETATION OF CLAUSE 13 (2) OF THE LICENCE - RELEVANCE OF ELECTRICITY (SUPPLY) ACT, 1948 - LEFT OPEN.
Fact of the Case:
The petitioner, a limited liability company holding a license for the supply of electricity at Neemuch, challenged a notice issued by the Madhya Pradesh Electricity Board (Board) under Section 6 of the Indian Electricity Act, 1910, requiring the petitioner to sell its electrical undertaking to the Board by 1st January 1963. The petitioner contended that the Board failed to give the required intimation to the State Government of its intention to exercise the option of purchasing the undertaking under Section 6 (4) of the Act, and therefore, the notice was ineffective.
Finding of the Court:
The court held that the letter addressed by the Board to the Government on 2nd December 1960, which the Board claimed to be an intimation under Section 6 (4) of the Act, was not a valid intimation as it was written on the erroneous view that the terms of clause 13 (2) of the license governed the sale of the petitioner's undertaking and that it was for the Government to decide whether the distribution of electricity at Neemuch should be entrusted to the Board or any other entity. The court found that the Board was unaware of its right to purchase the undertaking under Section 6 of the Act when it wrote the letter.
Issues: 1. Whether the letter dated 2nd December 1960 addressed by the Board to the Government was a valid intimation under Section 6 (4) of the Act? 2. Whether the Board lost its right to purchase the undertaking by failing to give the required intimation under Section 6 (4)? 3. Interpretation of clause 13 (2) of the license and its relevance to the expiry of the relevant period referred to in Section 6 (1).
Ratio Decidendi: 1. The court held that the letter dated 2nd December 1960 was not a valid intimation under Section 6 (4) of the Act because it was written on the erroneous view that the terms of clause 13 (2) of the license governed the sale of the petitioner's undertaking and that it was for the Government to decide whether the distribution of electricity at Neemuch should be entrusted to the Board or any other entity. 2. The court held that the Board lost its right to purchase the undertaking by failing to give the required intimation under Section 6 (4) because the intimation is essential for making the licensee aware of the Board's intention to purchase the undertaking and giving the licensee the minimum statutory time to prepare for the sale. 3. The court left open the question of the interpretation of clause 13 (2) of the license and its relevance to the expiry of the relevant period referred to in Section 6 (1) as it was not necessary to examine this issue in the present case.
Final Decision: The court allowed the petition, declared that the Board was not entitled to purchase the petitioner's undertaking or demand its possession pursuant to the notice dated 16th December 1961, and restrained the Board from giving effect to the notice in any manner.
( 1 ) THIS is an application under Article 226 of the Constitution of India for the issue of a writ' of certiorari for quashing a notice dated the 16th December 1961 given under Section 6 of the Indian Electricity Act, 1910, (hereinafter referred to as the act), by the Madhya Pradesh Electricity Board, Jabalpur, to the petitioner Company requiring the Company to sell its electrical undertaking at Neemuch including the distribution lines, transmission lines and all other equipment but excluding the generating plant, to the Board by 1st January 1963 at a price to be determined in accordance with Sub-section (4) of Section 7-A of the Act, and to deliver possession of the undertaking etc. , to the Board on 1st January 1963.
( 2 ) THE petitioner is a limited liability company holding a licence for the supply of electri- city at Neemuch. The licence was granted on 8th October 1948 under the gwalior Electricity Act, Sam vat-1995. On 2nd May 1961, the Company filed in this court an application (M. P. No. 126 of 1961) under Article 226 of the Constitution for the issue of a writ of certiorari for quashing a direction made by the Government on 14th April 1961 to the petitioner Company for handing over its undertaking excluding the generating ' plant to the M. P. Electricity Board, jabalpur. That petition was allowed by us and the direction, given by the government on 14th April 196,1 was quashed. In the order disposing of Misc. Petition. No. 126 of 1961, it has been pointed out that, the licence granted to the petitioner on 8th October 1948 tinder the Gwalior Electricity Act, Samvat-1995, is now by fiction a licence granted under the Indian Electricity Act; that the licence is of a variable term ranging from ten years to thirty years; that the licence is terminable at any time after ten years in the circumstances stated in clause 13 (2)of the licence; and that its terms will be of thirty years if those circumstances do not come into play. It was further held by us in Misc. Petition No. 126 of 1961 that under Section 6 of the Act the option given to the Government under clause 13 (2)of the licence became the first option of the Board and that the Board would have had the first option under Section 6 even if the licence had not contained any term granting expressly an option to the local authority or the State Government. In misc. Petition No. 126 of 1961, we proceeded to say :
"9. If, as we think, section 6 applies to the licence, then it is plain on the wording of the provision that the first option of purchasing the undertaking is of the Board. It is only if the Board does not elect to purchase the undertaking that the State Government can exercise the option of purchasing it in the same manner as the Board itself would have done. Section 6 (1) also prescribes in so many words that the option shall be exercised by the Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it. Whether the undertaking is purchased by the Board or the State Government a notice of the period indicated above must be given to the licensee. Again, Sub-section (4) requires that if the Board intends to exercise the option of purchasing the undertaking, then an intimation in writing of such intention must be given 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 is received by the State, then the Board is deemed to have elected not to purchase the undertaking. Likewise, under Sub-section (5) the State government is required to give an intimation to the local authority and if no such intimation of the intention as is spoken of in Sub-section (5) is received by the local authority, then the State Government is deemed to have elected not to purchase the undertaking. Now, in the present case, the minimum period of thelicence was specified to be ten years and the maximum was specified t
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