Hydro Power Corp. Ltd. & Ors Vs. State of Assam & Anr  Insc 20 (7 January 2004)
Bhan & S.B. Sinha. Bhan, J.
appeals are directed against a common judgment passed by the Division Bench of
the High Court of Gauhati wherein the Division Bench while setting aside the
judgment of the learned Single Judge dated 19th July, 1997 has dismissed the writ petition
filed by the appellants. The writ petition was filed by the appellants
challenging the constitutional validity of the Bharat Hydro Power Corporation
Limited (Acquisition and Transfer of Undertaking) Act, 1996 being Assam Act 1
of 1997 published in the Assam Gazette Extraordinary dated 6th January, 1997.
year 1979, the Planning Commission of India sanctioned a proposal of the Assam
State Electricity Board (hereinafter referred to as 'the Board') for
construction of a Hydro Electric Power Station in the District of Karbi Anglong
on the river Barapani at an estimated cost of Rs.36.36 crores.
project comprised construction of 51 meter high concrete dam on the river Barapani
near Hatidubi for utilising flow of water from catchment area of 1178 Sq. km.
The installed capacity of the project was 2 x 50 MW. The dam was to be
completed in the year 1986, but due to the failure of the local contractor, the
project could not be completed and the Board terminated the contract and
protracted litigation ensued.
year 1992, after termination of the contract as aforesaid, the project was
entrusted to National Project Construction Corporation (in short 'NPCC'), but
the similar fate followed and Board had to terminate their contract as well in
December, 1992. In the mean time, cost of the project initially sanctioned at Rs.
36.36 crores rose to Rs. 189.90 crores. Out of the aforesaid estimate, the work
completed was of about Rs.116 crores and the Board needed about Rs. 60 crores
to complete the project excluding other liabilities. The Board could not
generate the additional fund required for completing the project.
Central Government in the year 1992-93 accepted the policy of privatisation
even in the power sector. The State Government following the policy of privatisation
of the Central Government decided to transfer the project to joint sector.
On 25th March, 1993, Memorandum of Undertaking (MOU)
was signed between the Board, Government of Assam and M/s Subhash Project and
Marketing Limited (SPML), appellant No.2 herein. According to the said MOU,
SPML was to promote a new company to complete the project.
terms of the said MOU a new company under the name and style of M/s. Bharat
Hydro Power Corporation Limited (hereinafter referred to as 'appellant No.1')
came into existence in which the equity participation was as follows:
Board) - 11% SPML(appellant No.2) - 40% General Public - 49% On 8th April, 1993
the Deed of Assignment was executed between the Board and the appellant No.1,
in terms of which all the assets and liabilities of the project were
transferred to appellant No.1 w.e.f. 8.4.1993. In terms of the said Deed of
Assignment appellant No.1 was to complete the project and start generation by
June, 1995 which was subsequently extended to June, 1996. Disputes arose
between the parties. According to Board as well as the State of Assam, the
appellant No.1 after its incorporation failed to take charge of the project
till 5th April, 1994. Even after taking over of the
project, the appellant No.1 could not achieve any progress towards completion
of the project due to serious lapses and negligence on its part.
other hand, appellants Nos. 1 & 2 put the entire blame on the Board and the
State Government for the delay in the progress of the project.
On 20th December, 1995, appellant No.1 filed a suit being
TS No. 244/96 in the Court of the Assistant District Judge No.1, Guwahati for
specific performance of the contract against the Board alleging that the Board
was remiss in the performance of its obligation under the MOU and the Deed of
Assignment. Board filed an application for stay of suit in view of arbitration
clause. Appellant No.1 filed an application in the High Court under Sections 8
and 11 of the Arbitration and Conciliation Act, 1996 for appointment of
Arbitrator to decide pending disputes between the parties.
On 27th May, 1996, Board wrote to appellant No.1 that
due to the failure of the appellant No.1 to complete the work within the
extended period, the MOU was liable to be terminated and repudiated.
30th November, 1996 the State of Assam, keeping in view, the inordinate delay
in the completion of the project and to safeguard the public interest by
completing the project as early as possible in the context of acute power
shortage in the State, promulgated Bharat Hydro Power Corporation Limited (Acquisition
and Transfer of Undertaking) Ordinance, 1996 acquiring the undertaking of Karbi
Langpi Project of appellant No.1. The Ordinance was subsequently replaced by Bharat
Hydro Power Corporation Limited (Acquisition and Transfer of Undertaking) Act,
1996 (hereinafter referred to as 'the Act'). On 1st December, 1996, the State Government by Notification transferred to and
vested the said project in the Board. After the said notification the
possession of the project was handed over to the Board in the presence of the
representatives of the both sides on 2nd December, 1996. On 5th December, 1996 Memorandum of handing over and taking over was signed.
Thereafter writ petitions being CR 6/97 and CR 283/97 were filed in the High
Court of Assam challenging the legality and validity of the Ordinance and the
writ petitions the appellants challenged the constitutional validity of the Act
being ultra vires and violative of Articles 14 and 19 (1)(g) of the
Constitution of India and on the ground of being vague, unfair and arbitrary.
It was prayed that the Act be struck down being unconstitutional and beyond the
legislative powers of the State and/or is inoperative and void in law on the
grounds mentioned in the writ petitions.
Preamble of the Act reads as follows:
"ASSAM ACT NO.1 OF 1997
the Assent of the Governor on 6th January, 1997)
BHARAT HYDRO POWER CORPORATION LIMITED
AND TRANSFER OF UNDERTAKING) ACT, 1996
provide for the acquisition, in the public interest, of the right, title and
interest of the undertaking of the Bharat Hydro Power Corporation Limited and
for matters connected therewith or incidental thereto.
the Bharat Hydro Power Corporation Ltd., having its registered office in the
State of Assam, has been engaged for speedy execution and completion of the Karbi
Langpi (Lower Barapani) Hydro Electric Project for ensuring supply of
electricity in the State of Assam in view of the chronic shortages of power in
it was agreed upon in the Memorandum of Understanding entered into between the
Government of Assam, the Assam State Electricity Board and the M/s Subhas
Project and Marketing Limited on 25th March, 1993 that the project would be
completed and would be commissioned by the month of June, 1995;
whereas the company failed in the sole object of speedy execution of the
project within the specified time;
it is expedient in the public interest that the undertaking of the Bharat Hydro
Power Corporation Limited should be acquired for the purpose of the enabling
the State Government to efficiently supervise manage and execute the work
expeditiously as to subserve the common good, in the context of the acute power
shortage in the State." In the impugned Act Section 4 provides for general
effect of vesting.
5 provides that the State Government shall not be liable for past liabilities.
Section 6 provides that notwithstanding anything contained in Sections 3 and 4,
the State Government may, if it is satisfied that the Board is willing to
comply, or has complied with such terms and conditions as that Government may
think fit to impose, direct by notification, that the undertaking of the
company and the right, title and interest of the company in relation to its
undertaking which has vested in the Government, vest in the Board either on the
date of the notification or on such earlier or later date as may be specified
in the notification. The Board shall on and from the date of such vesting, be
deemed to have become the owner in relation to such undertaking and all the rights
and liabilities of the State Government in relation to such undertaking shall,
on and from the date of such vesting, be deemed to have become the rights and
liabilities, respectively of the Board.
7 provides for payment of compensation that may be fixed by the Commission
considering the value of the assets of the company after observing proper
financial formalities. Section 8 provides for the gross amount payable to the
company. Section 9 provides that the State Government if it is satisfied that
the appellant has on or before the appointed day, disposed of any fixed asset
whether by way of sale, exchange, gift, lease or otherwise than in the normal
course of events, with a view to benefit the company or some other person
unduly and thereby causing loss to the State Government as the succeeding owner
of the company, the State Government shall be entitled to deduct such amount
from the amount payable to the Company under the Act. Section 10 provides for
recovery of loss from the company. Section 11 provides for certain deductions
to be made from the gross amount payable. Section 12 provides for payment of
net amount. Section 13 provides for recovery of excess amount. Section 14
provides for constitution of Commission. Section 15 provides for the
continuance in service of employees already working on the same terms and
conditions as were applicable to them earlier. Section 16 provides for
provident fund and other funds. Section 17 provides for making inventory of
assets. Section 19 provides for penalty. Section 20 provides that no court
shall take cognizance of an offence punishable under this Act except with the
previous sanction of the State Government. Section 22 provides that no suit
against the State Government or the Board shall lie for any act done by them in
good faith or intended to be done in good faith in pursuance of the Act or the
Rules made thereunder. Section 23 provides for bar of jurisdiction of the court
to call in question any act done or purported to have been done under the Act or
the Rules. Section 24 provides that no provision of the Indian Electricity Act,
1910, Electricity (Supply) Act, 1948 or any other Act for the time being in
force and of any rule made under any of those Acts, shall, in so far as it is
inconsistent with any of the provisions of the Act, have any effect. Section 26
provides for arbitration in case of any dispute arising in respect of the
matters mentioned thereunder.
completion of the pleadings, the writ petitions were placed for hearing before
a learned Single Judge who after hearing the counsel for the parties, passed a
detailed order striking down Sections 3, 4, 5, 6, 7, 7A, 15(2), 23 and 24 of
the Act being repugnant to the Central Acts, i.e, the Indian Electricity Act,
1910 and the Electricity (Supply) Act, 1948. It was observed that because of
the striking down of the various provisions, the impugned Act could not be
given effect to. The entire Act was held to be unenforceable.
Board and the State of Assam filed separate Writ Appeals Nos. 460 of 1997 and
464 of 1997 challenging the order of the learned Single Judge. The Division
Bench by its impugned judgment has set aside the judgment of the learned Single
Judge and held the Act and its provisions to be intra vires of the
Constitution. Resultantly the writ appeals were accepted and writ petition
filed by the appellants were ordered to be dismissed.
adverting to the submissions made before us we would broadly refer to a few
fundamental principles regarding the competence of the respective legislatures
to enact laws and as to which law would prevail in case of inconsistency
between the laws made by the Parliament and the laws made by the State
Legislature. The principles are being referred to in the context of the
controversy involved in the present appeals.
India being a Union of States has Union
Legislature (Parliament) and the State Legislatures for framing laws.
Legislative fields in which the union or the State legislatures can frame laws
are prescribed in the three lists contained in the Seventh Schedule to the
Constitution of India Union List (List I); State List
(List II); and Concurrent List (List III). Source of power for enacting laws
relating to the three lists is to be found in Articles 245 and 246 of the
Constitution of India. Article 245 provides that subject to the provisions of
the Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole
or any part of the State. Law made by the Parliament shall not be deemed to be
invalid on the ground that it would have extra- territorial operation. Article
Subject-matter of laws made by Parliament and by the Legislatures of States.-
Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List I in the
Seventh Schedule (in this Constitution referred to as the "Union
Notwithstanding anything in clause (3), Parliament and, subject to clause (1),
the Legislature of any State also, have power to make laws with respect to any
of the matters enumerated in List III in the Seventh Schedule (in this
Constitution referred to as the "Concurrent List").
Subject to clauses (1) and (2), the Legislature of any State has exclusive
power to make laws for such State or any part thereof with respect to any of
the matters enumerated in List II in the Seventh Schedule (in this Constitution
referred to as the 'State List').
Parliament has power to make laws with respect to any matter for any part of
the territory of India not included in a State notwithstanding that such matter is
a matter enumerated in the State List."
going into the finer aspects but broadly speaking it provides that Parliament
has exclusive power to legislate with respect to matters in List I. The State
Legislature has exclusive power to legislate in respect to matters in List II.
Both Parliament and the State Legislature have power to make laws with respect
to any of the matters enumerated in List III.
federal Constitution, in which there is a division of legislative powers
between the Central and the Provincial Legislatures, controversies often arise
as to whether one or the other legislature is not exceeding its legislative
power, and encroaching on the other's constitutional legislative power. To
resolve the dispute as to which law would prevail in a case where both the
Union as well as the State Legislature have the competence to enact laws,
Article 254 provides that if any provision of a law made by the Legislature of
a State is repugnant to any provision of law made by Parliament which
Parliament is competent to enact, or to any provision of an existing law with
respect to one of the matters enumerated in the Concurrent List, then, subject
to the provisions of clause (2), the law made by Parliament shall prevail and
the law made by the Legislature of the State shall to the extent of the
repugnancy be void. Clause (2) provides that where a law made by the Legislature
of a State with respect to one of the matters enumerated in the Concurrent List
contains any provisions repugnant to the provisions of an earlier law made by
the Parliament or an existing law with respect to the matters, then, the law so
made by the Legislature of such State shall, if it has been reserved for the
consideration of the President and has received his assent, prevail in that
likely to happen from time to time that enactment though purporting to deal
with a subject in one list touches also on a subject in another list and prima
facie looks as if one legislature is impinging on the legislative field of the
another Legislature. This may result in large number of statutes being declared
unconstitutional because the legislature enacting law may appear to have
legislated in a field reserved for the other legislature. To examine whether a
legislation has impinged in the field of other legislatures, in fact or in
substance, or is incidental, keeping in view the true nature of the enactment,
the Courts have evolved the doctrine of "pith and substance" for the
purpose of determining whether it is legislation with respect to matters in one
list or the other. Where the question for determination is whether a particular
law relates to a particular subject mentioned in one list or the other, the
courts look into the substance of the enactment. Thus, if the substance of
enactment falls within Union List then the incidental encroachment by the
enactment on the State List would not make it invalid. This principle came come
to be established by the Privy Council when it determined appeals from Canada or Australia involving the question of legislative competence of the
federation or the States in those countries. This doctrine came to be established
in India and derives its genesis from the
approach adopted by the Courts including the Privy Council in dealing with
controversies arising in other federations. For applying the principle of
"pith and substance" regard is to be had
the enactment as a whole,
its main objects, and
the scope and effect of its provisions.
this see: Southern Pharmaceuticals & Chemicals Rajasthan, 1955 (2) SCR 303,
Delhi Cloth and General Mills C o. Ltd. case it was held:
a law passed by the State Legislature while being substantially within the
scope of the entries in the State List entrenches upon any of the Entries in
the Central List the constitutionality of the law may be upheld by invoking the
doctrine of pith and substance if on an analysis of the provisions of the Act
it appears that by and large the law falls within the four corners of the State
List and entrenchment, if any, is purely incidental or inconsequential."
Another principle which needs to be stated here is that when the question is as
to whether a provincial legislation is repugnant to the laws enacted by the
Parliament the onus to showing its repugnancy and the extent to which it is
repugnant would be on the party attacking its validity. There ought to be a
presumption in favour of its validity and every effort should be made to
reconcile them and construe both so as to avoid they being repugnant to each
other. Repugnancy has to be there in fact and not based on a mere possibility.
If the two enactments operate in different fields without encroaching upon each
other then there would be no repugnancy. In Court held:
the question is whether a provincial legislation is repugnant to an existing
Indian Law, the onus of showing its repugnancy and the extent to which it is
repugnant should be on the party attacking its validity. There ought to be a
presumption in favour of its validity, and every effort should be made to
reconcile them and construe both so as to avoid their being repugnant to each
other; and care should be taken to see whether the two do not really operate in
different fields without encroachment. Further repugnancy must exist in fact,
and not depend merely on a possibility:
Lordships can discover no adequate grounds for holding that there exists repugnancy
between the two laws in districts of the province of Ontario where the
prohibitions of the Canadian Act are not and may never be in force: (1896) AC
348 at pages 369-370." It was conceded by the learned counsels appearing
on both sides that this view has been accepted and reiterated by this Court in
a number of judgments. It is not necessary to refer to all those cases which
would be repetitive only. Though in the High Court (both before the learned
Single Judge as well as Division Bench) and in the special leave petition
number of points were taken/argued but before us the submissions were limited
to three points to which reference would be made in the subsequent paragraphs.
adverting to the actual submissions made by the respective learned counsels,
entries in the three lists relating to generation of power/electricity and
acquisition may be noticed, which read:
56 of List I: Regulation and development of inter-State rivers and river
valleys to the extent to which such regulation and development under the
control of the Union is declared by Parliament by law to
be expedient in the public interest.
17 of List II: Water, that is to say, water supplies, irrigation and canals,
drainage and embankments, water storage and water power subject to the
provisions of entry 56 of List I.
38 of List III: Electricity;
42 of List III: Acquisition and requisitioning of property.
conceded before us that Entry 56 List I would not be applicable.
Single Judge held that the Act enacted by the Assam Legislature would fall
under Entry 38 of List III. Since the Parliament had already enacted
comprehensive laws regarding the generation and supply of electricity by
enacting the Indian Electricity Act, 1910 (hereinafter referred to "Act of
1910") and the Electricity (Supply) Act, 1948 (hereinafter referred to
"Act of 1948") covering the entire field, the field being occupied,
the State Legislature did not have the competence to enact the laws under Entry
38 of List III. As the Act passed by the State Legislature related to a field
which was already occupied by enactments of the Central Legislature, was not
reserved for the assent of the President of India and assented to by him the
same was void being repugnant to the Central legislation. Division Bench
reversing the judgment of the learned Single Judge held that the Act passed by
the Assam Legislature would fall under Entry 17 of List II and not under Entry
38 of List III and therefore would not be repugnant to the Central legislation.
Another finding recorded by the Division Bench is that even if the Act is taken
to be enacted under Entry 38 of List III, even, then there was no actual
repugnancy as both the Acts did not operate in the same field. Since there was
no repugnancy, it was not necessary to keep the Act for the assent of the
President of India. Division Bench held the Act to be valid, intra vires and
falling within the legislative competence of the State Legislature.
V.R. Reddy learned senior counsel for the appellants contended that
"Electricity" for the purpose of legislation is enumerated in Entry
38 of the concurrent list. That electricity in broad term includes
"generation of electricity from any source whether thermal, water, gas,
wind or any other source". As far as generating company and licensee are
concerned the Central Government has made specific provisions in the Act of
1910 and Act of 1948 for compulsory purchase of undertaking and a detailed
procedure has been prescribed under Sections 6, 7, 7A, 8, 9, 10 and 11 of the
Act of 1910 and Sections 37 of the Act of 1948. The impugned Act and Acts of
1910 and 1948 passed by the Central Legislative operate in the same field as in
both the sets of Acts there are provisions for compulsory purchase of undertakings
producing electricity. The State Act transgresses the Central Acts and
therefore repugnant to the Central Acts. In view of the provisions of Article
254 Central Acts would prevail as the State Act was neither kept reserved for
the assent of the President of India nor assented to by the President of India.
The State Act was bad in law and could not be enforced being ultra vires of the
Constitution of India and beyond the Legislative competence of the State
other hand, Mr. Vijay Hansaria, learned senior counsel appearing for the State
of Assam as well as the Board contended that the impugned Act was not repugnant
to the provisions of the Central Acts.
to him, impugned Act and the Central Acts in the instant case operate in two
different fields without encroaching upon each others field in as much as the
true nature and character of the impugned State Act is to acquire the
undertaking, whereas both the Central Acts have made general provisions with
regard to supply and use of electrical energy. It was vehemently contended that
there was no violation of Sections 3, 4, 5, 6, 7 of 7A of the Act of 1910, by
Sections 3 and 4 of the impugned Act as the appellants were not 'licensees'
under the Act of 1910 and the State Government had the jurisdiction and power
to acquire any property for public purposes making necessary provisions for
payment of compensation.
the impugned Act has taken adequate care for payment of compensation after
proper assessment by the Commission to be constituted by the authority. There
is no direct conflict between the provisions of the Central Act and the State
Act bringing a position where one cannot be obeyed without disobeying the other
and the impugned Act and the Central Act both can stand together even though
the State law may provide for certain additional/supplementary provisions. In
substance the submission made is that in pith and substance the State Act is
not repugnant to the Central Acts as the two sets of Acts operate in different
counsel appearing for the appellants placing reliance on a AIR 1959 SC 648,
contended that even in the absence of direct conflict, the State law would be
inoperative as the Central Acts of 1910 and 1948 intended to be exhaustive
Codes in the field of electricity and the State Legislature did not have the
legislative competence to enact law in the field occupied by the Central
Legislation. Law made by the State Legislature in the occupied field could not
come into operation unless it was reserved for the assent of the President of
India and assented by him in terms of Article 254 (2). It was observed in para
in his Australian Constitution, 2nd Edn.
303, refers to three tests of inconsistency or repugnancy:
There may be inconsistency in the actual terms of competing statutes;
Though there may be no direct conflict, a State Law may be inoperative because
the Common Wealth Law, or the award of the Common Wealth Court, is intended to
be a complete exhaustive Code; and
Even in the absence of intention, a conflict may arise when both State and
Common Wealth seek to exercise their powers over the same subject matter.
Court in Tika Ramji vs. State of Uttar Pradesh, 1956 SCR 393: [(S) AIR 1956 SC 676] accepted the said three
rules, among others, as useful guides to test the question of repugnancy.
Amaidas vs. State of Bombay, 1955- 1 SCR 799: (AIR 1954 SC 752), this Court
laid down a similar test. At page 807 (of SCR): (at p. 757 of AIR), it is
principle embodied in section 107 (2) and Article 254 (2) is that when there is
legislation covering the same ground both by the centre and by the Province,
both of them being competent to enact the same, the law of the Centre should
prevail over that of the State." Repugnancy between two statutes may thus
be ascertained on the basis of the following three principles:
Whether there is direct conflict between the two provisions;
Whether Parliament intended to lay down an exhaustive code in respect of the
subject matter replacing the Act of the State Legislature; and
Whether the law made by Parliament and the law made by the State Legislature
occupy the same field." This Court laid down three broad principles to
find out whether there is any Repugnancy between the two statutes, i.e.,
whether there is a direct conflict between the two statutes, whether the two
statutes occupied the same field and as to whether the Parliament intended to
lay down an exhaustive code in respect of the subject matter.
J. reviewed the authorities on repugnancy under Article 254 and held that the
following propositions emerged from decided cases:
That in order to decide the question of repugnancy it must be shown that the
two enactments contain inconsistent and irreconcilable provisions so that they
cannot stand together or operate in the same field.
That there can be no repeal by implication unless the inconsistency appears on
the face of the two statutes.
That where the two statutes occupy a particular field, but there is room or
possibility of both the statutes operating in the same field without coming
into collision with each other, no repugnancy results.
That where there is no inconsistency but a statute occupying the same field
seeks to create distinct and separate offences, no question of repugnancy
arises and both the statutes continue to operate in the same field."
Without entering into the controversy whether the State Act would fall under
Entry 17 of List II or under Entry 38 of List III and assuming (but not holding
that it falls under Entry 38 of List III) we examine as to whether there is any
conflict between the provisions of the Central Act and the State Act. If there
is no conflict at all the question of repugnancy would not arise.
State Act has been enacted to take over the Bharat Hydro Power Corporation in
public interest as it could not complete the project within time so that the
State could efficiently supervise manage and execute the work expeditiously to subserve
the common good, in the context of the acute power shortage in the State. The
State after taking over the project had the power to hand it over to the Board
for completing the project. Provision has been made to pay adequate
compensation which is to be determined by a Commission constituted under the
Act for payment of adequate compensation. Contention raised on behalf of the
appellants is that Central Act makes specific provisions for compulsory
purchase of undertaking and a detailed procedure has been prescribed and the
State Act has created a parallel procedure for purchase of the undertaking
thereby impinging on the Central Act and is therefore repugnant to the Central
Act. We do not find any substance in this submission.
Act of 1910 relates to the supply and use of electrical energy.
3 provides that the State Government may on an application made in the
prescribed form and on payment of the prescribed fee (if any) grant a license
to supply energy in any specified area and also to lay down or place electric
supply lines for the conveyance and transmission of energy.
4 speaks of revocation or amendment of licenses under the specified conditions.
Section 4A speaks of the amendment of licenses. Section 5 makes provisions
where license of a licensee is revoked. Section 6 relates to purchase of
undertakings. Section 6 of the Act of 1910 reads:
Purchase of undertakings.-
Where a license has been granted to any person, not being a local authority,
the State Electricity Board shall,-
the case of a license 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 license; and
the case of license 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 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 period referred to
in this sub- section.
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.
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.
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.
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 in
sub-section (1) and if no such intimation as aforesaid is received by the local
authority, the State government shall be deemed to have elected not to purchase
Where a notice exercising the option of purchasing the undertaking has been
served upon the licensee under this section, the licensee shall deliver the
undertaking to the State Electricity Board, the State Government or the local
authority, as the case may be, on the expiration of the relevant period referred
to in sub- section (1) pending the determination and payment of the purchase
Where an undertaking is purchased under this section, the purchaser shall pay
to the licensee the purchase price determined in accordance with the provisions
of sub-section (4) of section 7A." Section 4 which provides for revocation
or amendment of licenses, Section 4A which provides for amendment of licenses
at the instance of the licensee or otherwise and Section 5 which enumerates the
procedure to be followed where the Government revokes the license under Section
4 would not be attracted/applicable as the appellants are admittedly not
provisions would apply to licensees only. Section 6 is again applicable to
licensees only. It is not applicable to sanction holders. It talks of pre-emptory
right of the Board to purchase the undertaking on the expiry of the period
mentioned in clauses (a) and (b) of Section 6 which can be done after 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 period referred to
in clauses (a) and (b) of Section 6. Section 6 (7) provides for payment of
purchase price by the purchaser to the licensee determined in accordance with
the provisions of Section 7A. Since the appellants have not been given a
license and are not 'licensees', Section 6 would not apply.
Section 6 there is an 'option' with the Board to purchase. The word 'option'
leaves two courses open to the authority, i.e., either to purchase an
undertaking or to renew the license. Either of the two courses would not be
available as the appellant No. 1 is not a licensee.
7A which deals with the determination of purchase price again talks of where an
undertaking of a licensee is purchased. Since the appellants are not the
licensees they would not be covered under any of the provisions dealing with
the sale or purchase of undertaking as provided under the Act of 1910. The
benefit of Sections 7 and 7A shall also not be available because it speaks of
an undertaking of a licensee. As the appellants are not covered by the
provisions of the Act of 1910 the question of the State Act which seeks to take
over the appellants' undertaking and make provisions for compensation would not
be repugnant to any of the provisions of the Act of 1910. Submission made by
the learned counsel for the appellants that the State Act creates procedure
parallel to the existing procedure provided under Section 6 of the Act of 1910
or for determing the purchase price as provided under Section 7A cannot be
accepted because the provisions of Chapter II (Sections 3 to 11) are not
applicable to the appellants as they are not licensees.
with this situation Mr.V.R. Reddy, learned senior counsel for the appellants,
submitted that the appellants are deemed licensees under the provisions of Act
of 1948. For this he has referred to Section 26A of the Act of 1948. Section
26A reads as:
Applicability of the provisions of Act 9 of 1910 to Generating Company.-
Notwithstanding anything contained in sub- section (2), nothing in the Indian
Electricity Act, 1910, shall be deemed to require a Generating Company to take
out a licence under that Act, or to obtain sanction of the State Government for
the purpose of carrying on any of its activities.
Subject to the provisions of this Act, Sections 12 to 19 (both inclusive) of
the Indian Electricity Act, 1910 (9 of 1910) and clauses XIV to XVII (both
inclusive) of the Schedule thereto, shall, as far as may be, apply in relation
to a Generating Company as they apply in relation to a licensee under that Act
(hereafter in this section referred to as the licensee) and in particular a
Generating Company may, in connection with the performance of its duties,
or any of the powers conferred on a licensee by sub-section (1) of Section 12
of the Indian Electricity Act, 1910, as if –
reference therein to licensee were a reference to the Generating Company;
reference to the terms and conditions of licence were a reference to the
provisions of this Act and to the articles of association of the Generating
reference to the area of supply were a reference to the area specified under
sub-section (3) of section 15A in relation to the Generating Company;
or any of the powers conferred on a licensee by sub-section (1) of section 14
of the Indian Electricity Act, 1910 (9 of 1910), as if –
references therein to licensee were references to the Generating Company, and
Generating Company had the powers of a licensee under the said Act.
The provisions of section 30 of the Indian Electricity Act, 1910 (9 of 1910)
shall not apply to the transmission or use of energy by a Generating Company.
For the removal of doubts, it is hereby declared that sections 31 to 34 (both
inclusive) of the Indian Electricity Act, 1910 (9 of 1910) shall apply to a
Generating Company." Section 26A provides that notwithstanding the
provisions of Sub- Section (2) a generating company would not be required to
take a licence under the Act of 1910 or to obtain sanction of the State
Government for the purpose of carrying on any of its activities. Under
sub-section (2) provisions of Sections 12 to 19 of the Act of 1910 are made
applicable to a generating company as they apply to a licensee under the 1910
Act. It is to be noted that provisions of Sections 3 to 11 of 1910 Act have not
been made applicable to the generating company.
Company" has been defined in Section 2(4A) of the 1948 Act to mean:
Company' means a company registered under the Companies Act 1956 (1 of 1956)
and which has among its objects the establishment operation and maintenance of
generating stations" "Licensee" has been defined under this Act
in Section 2(6) as under:
"licensee" means a person license under Part II of the Indian
Electricity Act, 1910 (9 of 1910) to supply energy or a person who has obtained
sanction under Section 28 of that Act to engage in the business of supplying
energy but the provisions of Section 26, or 26A of this Act notwithstanding,
does not include the Board or a Generating Company." A combined reading of
Sections 2(4A) and 2(6) makes it clear that even if the appellant No. 1 is
taken to be a generating company (which is not necessary to be determined in
this case) it would not be a 'licensee' because the generating company has been
specifically excluded from being a licensee notwithstanding the provisions of
Sections 26 or 26A of the 1948 Act. As pointed out earlier only Sections 12 to
19 of the Act of 1910 have been made applicable to a generating company.
Sections 3 to 11 of Act of 1910 do not apply to a generating company.
37 of Act of 1948 provides for purchase of generating stations or undertakings
or main transmission lines by the Board. This Section would also not apply to
the present case. The legislature in its wisdom made only certain provisions of
Act of 1910 applicable to a generating company in Section 26A. Contention that the
impugned Act is in violation of provisions of Act of 1910 or the Act of 1948
has no basis to stand on.
impugned Act and the Central Acts in the instant case operate in two different
fields without encroaching upon each other's field in as much as the true
nature and character of the impugned State Act is to acquire the undertaking
and pay compensation as provided in the Act whereas both the Central Acts (Acts
of 1910 and 1948) have made general provisions with regard to supply and use of
electrical energy. The provisions regarding purchase of undertaking in the Act
of 1910 would not be applicable as the appellants are not licensees within the
meaning of the Act of 1910. There is not even a semblance of conflict what to
talk of direct conflict between the impugned State Act and the Central Acts to
bring about the situation where one cannot be obeyed without disobeying the
others. Both the Acts can operate simultaneously as they do not occupy the same
field. As the enactments operate in two different fields without encroaching
upon each other's field there is no repugnancy.
there is no repugnancy the question of the State Act being kept for the
consideration of the President or receiving his assent did not arise.
the reasons stated above, we do not find any merit in these appeals and the
same are dismissed. Parties shall bear their own costs in these appeals.