VELLORE ELECTRIC CORPORATION LTD. & ANR. v. STATE OF TAMIL NADU & ORS

Citation: [1989] 2 S.C.R. 475

Court: Supreme Court of India

Bench: R.S. PATHAK, SABYASACHI MUKHERJI, S. NATARAJAN, M.N. VENKATACHALIAH, S. RANGANATHAN

Case summary

, challenge the constitutional validity of the Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, - 1973, ('Act' for short) on the ground that the 'Act', which envisages the acquisition of the Electric Supply Undertakings of three petitioners, as violative...

Judgment text

The Judgment of the Court was delivered by VENKATACHALIAH, J. In these writ-petitions under Article -It 32 of the Constitution of India, three electric supply undertakings in the State of Tamil Nadu, namely, Vellore Electric Corporation Ltd. , Nagapatam Electric Supply Co. Ltd. , and Kumbakonam Electric Supply Corporation Ltd. , challenge the constitutional validity of the Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, - 1973, ('Act' for short) on the ground that the 'Act', which envisages the acquisition of the Electric Supply Undertakings of three petitioners, as violative of Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitution. These writ-petitions were heard along with Writ Petition (Civil) Nos. 457 and 458 of 1972, pertaining to the acquisition of Tinsukhia --- Electric Supply Co. Ltd. , and Dibrugarh Electric Supply Co. Ltd. , under the provisions of the Tinsukhia and Dibrugarh Electric Supply .....

Undertakings (Acquisition}Act, 1973, (Assam Act 1973) and the main contentions touching the constitutionality of such State laws, providing for acquisition of private electricity undertakings-independently of and without recourse to the option to purchase envisaged by the terms of . licences and under the provisions Sections 6, 7 and 7A of the Electricity Act 1910-are considered in the main judgment in the said WP -;} • n VELLORE ELECffiIC CORPN. v. STATE (VENKATACHALJAH, J. ] 481 ·'II ;},_, ~/ :1 Nos. 457 & 458, separately rendered today. 2. The scheme and the broad features of The Tamil Nadu Private Electricity Supply Undertakings (Acquisition) Act, 1973, which received the assent of the President on 30th September, 1973, are that the "Act" enables and provides for the acquisition of the private undertakings engaged in th. e business of supplying electncity to the --!

public other than those belonging to and are under the control of the State Electricity Board or the local authorities. •· Section 2 of the Act declares that the "Act" is for giving effect to the policy of the State towards securing of the Directive Principles, specified in clauses (b) & (c) of Article 39 of the Constitution of India. Section 3 is the interpretation clause. Section 4 empowers the State I Government to· declare, by order in writing, that any undertaking shall vest in Government on the date specified in such order. The proviso to Section 4 enables the Government to modify, by advancing or postponing, the date originally fixed in such order, or the modified date; or to cancel such order.

The proviso is, however, subject to a limitation which is in terms following: "So, however, that no such order shall be modified or cancelled after the undertaking has vested in the Govern- ~ment but such cancellation shall not be deemed to prevent the Government from taking any proceeding de novo in respect of such undertaking under this Act. " - The mode of promulgation and the incidence and consequence of an order under sub-section (1) of Section 4, are envisaged in subsection (3) (4) & (5) of Sections 4 and 6 of the Act. Sub-sections (3), ~ (4) and (5) of Section 4 provide: "(3) Every order under sub-section (1) shall be- . ~-- (a) served on the licensee in the pres~Tibed manner; and -{ (b) published in such manner as the Government may deem fit. (4) On the vesting date the undertaking, to which the order under sub-section (1) relates, shall, sub1ect to the provisions of section 6, stand transferred to, and yest in~ H· the Government.

~>I:' ~ (5) Eyery licensee who, after the vesting date, was in possession of, or deriving any benefit from the undertaking vested in the Government under sub-section (1), shall be liable to pay to the Government, for the period, after such vesting, for which he was in such possession or deriving such benefit, an amount as compensation for the use, occupation or enjoyment of that undertaking as the prescrib1>d authority may fix in the prescribed manner. Such authority shall take into consideration such factors as may be prescribed. " - We shall refer to Section 6 and its impact at an appropriate stage later. Section 5 of the "Act" envisages the "amount" to be given to the licensee on whom an order has been served under Section 4 and provides for its determination on two alternative basis-Basis (A) or Basis (B)-as may be chosen by the licensee in the exercise of the option given under Section 8.

Section 7(1) contemplates and requires the appointment of an "Accredited-Agent" by the iicensee within three months of service of the order under Section 4(1). Such accreditedagent is required within one month of his appointment or with such further time as may be granted by Government, signify the choice of the Basis for the determination of the "Amount''. Section 8(2) says that the choice of the Basis once intimated shall not be open to revision except with the concurrence of the Government. 'Basis (A)' provides that the amount to be given shall be equivalent to 12 times of the average net annual profits of the undertaking during a period of any five Account-years at the option of the licensee within a period of seven consecutive account-years immediately preceding the vesting date. 'Basis (B)' contemplates a different mode of determination of the amount. It provides for payment of the aggregate value of the sums specifieJ in clauses (i) to (ix) of sub-section (2) of Section 5.

Section 10 speaks of the deduction that the Government is entitled to make for the amount. They are specified at clauses (a) to (i) of Section 10. Section 11 provides for the manner of payment of the "Amount''. Section 13(1) renders any dispute "in respect of any of the matters in clauses (a) to (e) of Section 13(1)" arbitrable. The Arbitrator is required, by Section 11(2), to be a District Judge or a person who is a retired District Judge or a retired High Court Judge. Chapter Ill of the Act, comprising Sections 14, 15, 16 and 17 contemplate and provide for the termination of agreements between the licensee on the one hand and the managing-agent or the managing- VELLORE ELECTRIC CORPN. C,v. STATE IVENKATc»,.. '\LJAH, J. ] 483 ~.. - ""'' . ' ' ·v director,. as the c~se may. be, on ihe other; the continuation under the Go~hmnent or·.

the EleCiridty Board;· of services of persons on· the staff of the"licensee taking an inventory of the as>ets and for information in reg~rd to ihe documents maintained by the licensee and other incidental matters. · ' .... , Sections 18 and 19 of Chapter IV deal with offences, penalities ~ and procedure therefor. Chapter V, comprising Sections 20, 21, 22, 23 • . and 2. 4, deals with miscellaneous matters. Two sections in Chapter V are of particular relevance. Section 22(i), inter-alia, provides that no provisions of Electricity Act, 1910, or the Electricity Supply Act, 1948, - in so far as such provisions are inconsistent with any of the provisions of the Act, shall have any effect. Section 23 refers to and deals with the action initiated under the earlier State law viz. , the Tamil Nadu Electric Supply Undertaking (Acquisition) Act, 1954, (Tami! Nadu Act 29 of 1954) which is repealed by the 'Act'.

Sub-section (1) of Section 23 says that the said Act 29 of 1954 shall cease to apply to any undertaking as defined in Section 3(12) of. the 'Act' which has "not. vested with and taken possession of by the Government under the provisions of the 1954 Act" before t! ;e commencement of the 1973 Act. Sub-section (2) and (3) of Section 23 envisage and provide for situations where some action had been initiated by the 1954 Act but such action had not culminated in the vesting of the undertaking and possession thereof being taken-over by Government.

Sub-section (2) and (3) of Section 23 provide: · "(2) Notwithstanding anything contained in \he 1954 Act, if, in pursuance of any order under sub-section (1) of section 4 of the 1954 Act in respect of any undertaking as defined in section 3 (12) of this Act, the Government have not taken possession of such undertaking before the commencement of this Act that order shall lapse and be of no effect and such undertaking shall not vest and shall be deemed never to have vested in the Government under the 1954 Act and in respect of such undertaking it shall be lawful for the Government to make an order under sub:. section (1) of section 4 of this Act and the provisions of this Act shall'accordingly apply to such undertaking.

" "(3) Notwithstanding anything contained in the 1954 Act, where, in respect of any undertaking as defined in section 3(12) of this Act, the Government have postponed the date of vesting under the proviso to sub-section (1) of "-; section 4 of the 1954 Act, that undertaking shall not vest, and shall be deemed never to have vested, in the Government under the 1954 Act, notwithstanding the expiration of " a period of one year from the date originally fixed under sub-section (1) of section 4 of the 1954 Act and in respect of such undertaking it shall be lawful for the Government to make an order under sub-section (1) of section 4 of this ). - Act, and the provisions of this Act shall accordingly apply to such undertaking. " , The provisions of Section 23 acquire particular significance in the case of the Kumbakonam Electric Supply Corporation Ltd. and - ~ Nagapatam Electric Supply Co. Ltd. , petitioners in W. P. 14 & 15 of 1974, as.

indeed, proceedings for the acquisition of the undertakings of f these two . companies had been initiated under the 1954 Act but full effectuation thereof had been interrupted by the interlocutory orders made by courts in proceedings in which these two companies had challenged the validity of the 1954 Act. Section 23 of the present 'Act' seeks legislatively to set at naught such legal consequences as might come to be considered as ensuing from the action taken under the earlier 1954 A{:t. Some contentions urged in these cases centre round what the petitioners refer to as some irreversible, vested rights according to them under the earlier proceedings under the 1954 Act. i- 3. The Vellore Electric Corporation Ltd. , petitioner in WP No. 5(N) of 1974, was granted on 14. 5.

1929 by the Government of the then-Presidency of Madras under the provisions of the Indian Elec- tricity Act, 1910, ('1910 Act' for short), for the supply of electrical-energy within the municipal limits of Vellore town which was later extended to cover the adjacent area of Ranipet. Clause 12 of the j... licence envisages the option to the Government to purchase the licensee's undertaking on the expiry of 30 years from the commencement of the licence or if licence is renewed thereafter on expiration of every subsequent period of 20 years, during the continuance of the . ----licence. At the relevant time when the order under Section 4(1) was made, the remaining period of the licence was upto 14. 5. 1979. The State Government in exercise of powers under Section 4(1) of the Act ~· made an order da~d 30. 10. 1973, served on the petitioner on 5. 11. 1973 fixing 1. 12. 1973 (which was later postponed to 7. 1. 1974) as the date of vesting. 4. The facts in W. P.

14 of 1974 are the following: · VELLORE ELECTRIC CORPN. v. STATE (VENKATACHALIAH, J. l 485 The petitioner, the Kumbakonam Electric Supply Corporation Ltd. , a public limited company, then engaged in:the business of distrlbution and supply of electrical energy in the Taluks of Kumbakonam and Papanasam and a portion of Thanjavur Taluk, in the District of Thanjavur in· the State of Tamil Nadu, was granted a licence dated 15. 4. 1930 under the Indian Electricity Act, 1910, by the Government I of the then-Presidency of Madras. The initial period of the licence was --.. / 20 years with a provision for renewal for further periods of 7 years .. , each. At the time the impugned order under Section 4(1) of the "Act" was made, in relation ·to the Electricity Supply Undertaking of this company, the unexpired period of the licence was up to 15'. 4. 1978. - On 12. 1.

1968, the State Government in exercise of its power under Section 4(1) of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, made an order for the taking-over of the undertaking. The petitioner~company filed a writ-petition No. 704 of 1968 in the High Court of Madras, challenging the constitutional validity of the 1954 Act under which the order was made. That writ~ petition was dismissed on 31. 7. 1968. The Writ Appeal No. 338of1968, filed by the petitioner was also dismissed by the Division Bench. The petitioner preferred, by special leave, an appeal to this Court in CA 119 of 1971. During the pendency of lhe proceedings before the High Court and before this Court, petitioner had had the benefit of interlocutory orders, "staying delivery of possession of the undertaking". However, the petitioner withdrew the appeal, according to it, on the suggestion of the Government with ·a view to facilitating negotiations for a settlement. - However, on 30. 9.

1973, the 'Act' in the present proceedings came into force .. As noticed earlier, sub-section (2) and (3) ofSection 23 of the 'Act' statutorily abrogates the effect, incidents and consequences of all earlier proceedings taken under the 1954 Act, except in cases where the vesting and the taking over of possession of the undertaking had already"occtired before 30. 9. 1973. The. order under Section 4(1) of the 1973 Act in the case of the petitioner in WP 14 of 1974 was made on 30; 10. 1973 declaring 1.. 12. 1973 as the date of the vesting. G' 5. In WP No. 15 of 1974, the first petitioner, the Nagapatam Electric Supply Co. Ltd. , a public limited company, was the grantee of a licence, dated 22. 8. 1933, under the Indian Electricity Act, 1910, by the then-Government, Presidency of Madras; for the St\ ply of electricity in the areas specified in the grant. The initial period of the licence was 20 years with a provision for renewal for further periods of "} 7 years each.

At the time the order under Section 4(1) impugned in the writ-petition was made, the unexpired period of the licence was upto I 22. 8. 1974. As in the case of Kumbakonam Electric Supply Corporation Ltd. , so in the present case, Government in purported exercise of powers under Section 4(1) of the earlier Act, viz. , the Tamil Nadu Electricity Supply Undertaking (Acquisition) Act, 1954, had made an ~ order on 12. 1. 1968 declaring that the undertaking of th'. · petitioner ~ shall vest in the Government with eff~ct from 15. 7. 1968. The petitioner also challenged the constitutional validity of the 1954 Act in WP 1 No. 703 of 1968 in the High Court of Madras. The writ-petition was dismissed in Madras High Court on 3. 7. 1968. The Writ Appeal 337 of 1968 preferred by the company before a Division Bench of the High Court, also came. to be dismissed. The Company preferred, by special leave, CA No. 120 of 1971 before this Court.

During the pendency of y the proceedings in the High Court and in the appeal before this Court, [j there were interlocutory orders, staying delivery of possession of the \~ undertaking. The appeal before this Court was however, withdrawn by ii the company on 5. 10. 1972. "'1' Thereafter, 1973 Act came into force. As stated earlier, Scctii>n 23 of the 'Act' sought to nullify the effect of the action taken under the 1954 Act and a fresh order dated 30. 10. 1973 under Section 4(1) of 1973 Act came to be promulgated declaring that the undertaking of the f petitioners would vest in Government with effect from 1. 12. 1973. f. 6. The three petitioner-companies assail the constitutional validity of the 'Act' as ;tlso the orders made under Section 4(1) in the individual cases. - We have heard Sri Harish Salve, learned counsel for the peti- 1. -. tioners in the three petitions and Shri Shanti Bhushan, learned Senior Advocate for the State of Tamil Nadu and its authorities.

The challenge in the main, is to the constitutionality of the "Act", on the basis of discrimination as between the procedures for take-over con- ·-· tained in Section 6 and 7 of the Electricity Act, 1910, on the one hand ~ and the less advantageous, so far as licencee is concerned, contained in ' the present 'Act'. However, some specific provisions are also cha! - ! ~ lenged as arbitary and unreasonable. The contentions in support of the petitions urged at the hearing • of these petitions-of which (b) & (c) are particular to WP Nos. 14 and H \ 15 of 1974--may be noticed and formulated thus: '"ll•ii

J '487 ' "(a) that the legislative declaration in Section 2 of the 'Act' that 'A ' ;; the legislation is for giving effect to the Directive Principles of State Policy, specified in clauses (b) & (c) of Article 39 of the Constitution is invalid, it being merely a pretext to undo and take away the petitioners' legitimate entitlement to the payment of market-value as provided in the terms of the licence read with Section 6 and 7 of Electricity Act, 1910, and, accordingly, the legislation does not attract the constitutional validity from challenge under Article 31-C of the Constitution; · (b) that, pursuant to the order made under Section 4(1) of the 1954 Act petitioners' undertakings stood vested in Government in the year 1968 and the concomitant right to receive compensation as determinable under and in terms of the 1954 Act was came to be vested in the petitioners and got crystalized into a 'chose-in-action' and that in the circumstances the impugned 'Act' which in effect and substance acquires only these "choses-in-action", and not the undertakings as such which had already vest~.

d under the 1954 Act; '·' (c} that Section 23(2) of the Impugned Act in so far . it seeks to unodo the legal incidents and consequences of the order made which provided a less disadvantageous standards for the determination of the amount and the impugned orders which seeks to declare that the said undertakings vest again in Government;-this time pursuant to order promulgating under Section 4(1) of the impugned Act is violative of Article 14, 19(1)(g) and 31 (as the latter Articles then stood) being a fraud on the power to acquire; · F· (d) that ihe 'Act' is violative of Article 14. of the Constitution in. I ·as much as it seeks to confer upon the Government analterna- · tive and· discriminatory power of ·attaining the same end, namely, the acquisition of petitioner5' undertakings on terms more advantageous•to the Government and more disadvantageous to the petitioners than those contained in the Electricity Act 1910; . . .

·l, ' that the direct effect of the impugned Act is to extinguish the rights conferred upon the P. etitioners·iii carry on a la... :iu1 . ~tj business in terms 'of thesl. lbsisting licences in their favour and is violative of Ariicie 19(1)(£) (as it then stood) and 19(J)(g): ~- -. _ ~ ,- -;;·,:-· ,. ·A·;. ~. • ,. ,,. , The conten~•. ·. ·• ~··. -~-'. ''~. '. 1••. '_'. • •·:. t10n _1s_ noticed m ouqudgment m those appeals thus:• ,. ,... : '~ · 1 ·. >~· ':ij r:_;"l'-_. -,~ . •-·! _~·'. ::· .. ~ . -:. ,,f:~:·:. ·, -t! :";1·. _~:_, _~f ~ " .. ' :·'' :··- - '. ,:_ ' -~-;:·;. , ' ~ , '~1.. , . the a·cquisiticiflYof, the tWO' Uridertiikings are Cha[- . · · ... •Jenged bythe·petitionfr'on severaigroiinds;'the principal F' ' .. '· attack, howevei/beirig that the Ie'gislations, brought forth, . . . as they were, in the wake of the private-negotiations and'' . 1;,:,the eiiercise• ot'the optfon fo purchas. e,:are not 'bo1lafiile, ('-{·. ~. · ~~ bllt coils~~%~~ a·:me~~"~Olo'! ra~1e ~~~T~is·~,. :?!

~h. ~~~~gislatiVe · 'ii: '"~power and that;' at''all eyents the 'rea1"m1ectsfof. the two . . leglslatfons haje no~iilir~C! arid "rea~nablf he~us~t? the );. ''. ' objects envisage in' clause (b}ofArticle 39 of tlie Constitution and that a careful and critical discernment of the con- '~" . ,,,_, . '''text in which thel[egislat[on was brought'forth would lay •1', ;. ;·~-bare· before: the judicial eye that \Vhat was sought to be :;r;. ~ :f';~ acquired was not "t'. illdertakings"Ofthe two ColliJ>anies but· ery heart and 23:~not beisolated. ·Both the provi: ''ir-: ·· "' sions relating·to the vestitute ofc'the,underialdngs in the. , State. and f! '. those pertaining io the quantification of ·the . ,,,L,~• :'Am,sunt''. :aiedntegrar'aiidHnseparabte1-part~'of -the in-· E _,~;L 'JI. •'' ;/\ . , tegraJrscheine·of. llaticilialisation and do'not adinifof,being•· ;,. ,-,,,,. - . '"lti,: · co~idered'•as]i'ctistfnct·· pro;isions.. independent of·,~ach) "":1"1 ,. t other. " · -i - · '"'. '" i''. 1 ·f.

't: ,. '>+,,-~~~-- -' ;,;;;,J,~':',~~:·:! :lf1:,:=·;:;~~~~i:~~>' ~'. . >'Article 31,C or not. If Article 31-C comes in/Articles 14, 19 and 31 go,.. /-, ; ! \I',~ :':- ~~~~. ;~i%f~~=J~~;~i:~&J;~;ii: . '·;~ ' . ,; 'in>. Goveirim~'ni',\under; the J'954· Act. •It, is, ·no 'doubt~'. true that G),. '! ~ . "T appropriate. orders had been h,ad~ _under Secti6n 4(1) cif. 11954 Act, Sri , , ;. 4 . ,·~· ,,.. - - -. ' . 'r . . -. -___ ' ". - • Salve:eonte. nds that. by·the ciperati,ori·of Iaw;. the. undertakings·of the ' · ·;t " twoJpetitio'llers, ,namely;'. Kumbakonam . Electric Supply Corporation cii ,,:,;'1 Ltd:· ;arid Nagapatani;,Electrlc·:Supply . Co. Ltd,,;'became 'vested dn • " .. ,, Government and that Section 23 of thep~esent Act virtualiy creates an j artjficial'. divestitive)event and s~~ks'! tci ~e-inv! :. ~r•{i. ~gai.!. '. in pi'ivern- Hi i ,:41. "' .. :'' -:' ~- ,_ ' :'~,. i. : . •~... ,,:- :;,, -'~-: ::t,J:·,~·(, ~· ~ ment by the.

device under the impugned Act with the sole object of cutting down the quantum of the "amount". Sri Salve pointed out that Section 5 of the 1954 Act envisaged three alternative Bases-Basis A, Basis B, and Basis C-and_tha_tunder Basis A the amount equal to 20 times of the average net annual profit of the undertaking during a period of five consecutive accounting year. ; immediately preceding the vesting date was payable. The number of years' purchase value is, Sri Salve says, now reduced to 12 by the impugned Act. Shri Salve submits that the amount payable under the 1973 Act is wholly illusory. 9. Shri Shanti Bhushan, learned Senior _coμnsel for the State, submitted that if it is held that the legislation has the protection of Article 31-C, barring the question of legislative competence all other attacks based Oil Articles 14 and 19 and 31 cannot be countenanced.

Sri Shanti Bhushan submitted that all the contentions that the petitioners 'f advance in support of their challenge to the validity of the Act rest, in the ultimate analysis, on Articles 14, 19 and 31 which is precisely what Article 31-C forbids. So far as legislative competence is concerned, Shri Shanti Bhushan submitted that it is;referable to Entry 42 of List III and with Presidential assent, the legislation prevails over any other law and, t[\erefore, no question. of lack of legislative competence can be urged. Learned counsel s_ubmitted ihat the contentions urged by the petitioners, in the last analysis, wo_uld amount to this:. ,that a legislation1which -offends Articles 14. 19 and 3t •would ~ot be a valid law at all and would, therefore, not•be•eligible to. protection. Article of 31-C.

If a law satisfies the demand of Article 14, 19 and 31 then such a law, says learned counsel, would not need the protection of Article 3_1-C at an' and that such an· approach would render Article 3l'C itse! Fmeaningless. •· ,, In regard to the Contention (d), Sri. Shanti Bhushan would say that it proceeds on afactual fallacy. There cannot; it is urged a vesting·'' of the undertaking )n the Government und~r the 1954 Act urile! i! ; the,' concept of vesting ,has and is accompained by, the plen_itude ··of the•legal incidents a:nd ·consequences of such vesting for purj>oses ofthe· • implementation of the 1954 Act. When.

the delivery of possession of · the undertaking pursuant to the alleged vesting under the 19~4Act ha'd been interdicted by:'the High Court and the Suprem-e Couri by ordiors of stay,•at the instance of the petitioners, the exercise under the 1954 Act became infructuous and the present stance of the petitioners is mer_ely an attempt tri exploit to their own advantage a situation emerg- ;~ - - - - , ' VELLORE ELECTRIC CORPN. v. STATE (VENKATACHALIAH, J. ) 493' ing from the· consequences of their own;. actions. That apart, the contentfon (d), says counsel, is re. ally one based on. Articles 14, 19 and,31 ·~ . , and the protection of Article 31-C to the Act would, in any event, disallow any such attack. · i · 10. On a consideration of the matter, we think that all the ; ( Contentions-::-(a). (b), (c) and (d)-are covered in one form or the other B ~ -by our pronouncement in WP Nos. 457 and 458 of 1972. We are also of ...

the opinion that Sri Salve's contention that what was sought to be acquired was mere "choses-in-action" is not sound. In any event, the 'decision of this Court in State ofMadhya Pradesh v. Ranojirao Shinde -,. , & Anr. , [1968] 3 SCR 489 relied upon by Shri Salve to contend that choses-in-action could not be acquired would require. to be read with -"'c' later pronouncement'in Madan Mohan Pathak v. Union of India. & ::· Ors:, [1978] 3 SCR'334. It is not necessary,' however, to pronounce on this poini as in our view what was acquired were not mere,ly choses-in-" action. but the undertakings-themselves. : ·,·, Ji • . . .. Contentions (a). ;'•(b) and (c),accordingly fail and a~e held and ,,p answered~and againSt. ihe p~titione·rs. . --· . · : · ; . "- :," ¥_~-, ~! 'l~(~:.. l~'~·;::'"-,;'. lf,:"·;_ - . ·_,_·,: "'. f'l ··J· . . ·,_,~! I:· - ! '! :i> , . - ,,. __~ . •. -· ,. _.. . - , ,,~. "' ; • - ,;_~'"':H j ta](e away the" property of the licensee. The option under St! c. Fis ·;.

' ' ' · -''really sta! Utory and in its. essential . nature the power ih1ot distinguish- F~:,~. / 1 . ' able tr6m the, State's power to ~equire an inC! ividual's properiy wh_ich ,__ - • {- •_: - . - _. . ,. - ~,_ - ' •;1- States · ~: '"1'- Siiprem~ Court in Ne_w Orleans Gaslight Co: v. Louisiiine Light _&, • HeatProdui:ing&Mfg. Co. , 115U. S. 650werereferredto: ·c. 4:' ·: ,:.. r, i,:,.. ~ . -- f _· - ' - ;, ••. -_2 -. l. '. '. ·:~·'. :.. :-;> .. "the manufacture and distributfrm ofgas by· means of•:. H . S". ;. -~---~ - - . ···_· :·-: • ·: ""'. '". :.. '":J - _-- _.. ' """" '" - • lice,I1seeto th_e, Goyernmento,r,the, ~ectricity B ,n·. ::B11t; th~ poin!.. ShricSalve. sought. to put :; . across is. that,. even £! :, disputed1and,. untenable Claim in that . behalf• '"' [,i(· . , b~co~~s. e11tt~l. e~ tq,dedilction,. :mer~·is ":~just! ficatio,n for,this ~ppre- 1 f'~1 •h~11s1on. ~e~t! ,? n p :of a disput~d . ~. tail\! : can b. ~justified liy ... • t-.. ji~-':;. ,: rq~~~e~f!! ~~ft_-~f tti~..

~fRUE. ~\~~;;. w~~01'is'~r:,J1_aS q¢~e~:~ RiSt,~i,~:~-I~-dg: -~r ,_ (11'... ~e. ~7,. d ~1? h Co! lrt J? dge"'.! hol~~:. f)! a\othefd:,~uctI()n 1s: ~e1ust~f1ed;. ; > i. • 1 1 ~ t. " , ,~Jet~~l~p~ (g) h~s n? s~bsta~cee,it~:r. J, . . ,,. ,, •... · '" ·: .. '\t ,,, r ,... ··~ ;~:~,· '. '. '. '. --_-:. -~:fr --~1(·,i!. ,~~ . ,f··fl-·. ,__.. ·1: ,~; ~ ,of. the \j! SSfts· vestmg m. 8ovemment;,however, •,;>ec. 10(e) , ·::.. ~ :, render,;;. ,CJ11e_species,sif. s~ch debt viz,: sums due.. to theG<Jy. ernment o~,. . • " . . the. :Electnc1ty Board, hable _to be deduc_te~. frgm. the amo! 'nt. Shn ' , ts~tyio,contends that this would make. for a'double'recovery of. the same , •. ,. deb~; This,;\Ve are afraid, is a,wrong \Vay of looking at the,two. provi- · ... 1'.. _ . 'sions: If. a. debt is deducted from the "amount",. the debt issatisfiecl .. ~~~ :is~'? ~tinguish~d and. no;'. ,~lther deb~ remain~ ·outstanding· t. ,;,/iet_ i 1tse[f, attached to and•became an encumbrance. upoll' the substituted•~·".

H• *1.! :i}~~- ""'"' /;. - '":",,,<· ,- . . -: : - - . ~~- - . ,. - . . ·. :_~ :· --·: . -,·.. ': ;·;_:;:-~·~:·i~~;. ~' ;. [1989) 2 S. C. R. security viz. , the 'amount'. Sec. 6(2) and Sec. lO(e) must be construed harmoniously and in a reasonable manner. There is no scope for· any_ apprehension of a: possible double recovery of the same debt. There is no substance in contention (h). 16. Re: Contention (i): ~ The point of the matter is that sec. lO(f) entitles the deduction of ~ the market value of any "property" or "right" which vests in Government and which is not delivered by the licensees to Government. The grievance of the petitioner is that while recovery of "market value" is sought to be made for non-delivery of the item, however, in computing the "amount" only the "book value" of such "property" Or "right" is taken into account. This, it is contended, is an instance of application of double standards and is, therefore, arbitrary. We see no substance in this contention.

•Tue measure of the reimbursement for an asset withheld by the licensee is the corresponding expenditure to beiiii. cur{ , red by Government for replacement which, in eminently conceivable' ' cases, could be the market value·of the asset which is so' withheld by · the licensee and which has to be replaced fo keep the undertaking functioning. There is no substance in this contention either. l. }I ·17. Re: Co'!. lention (j). : . -! 14' '· Shri Sa! Ve submitted that the·accredited rep~esentative 'is,··~ri? er • " ,_,, ,, sec. 8(1), given only a . month's'tim~. from the date of his appointme'nt if . • to signify the choice under sectiori·5'as to oftlie basis of delerm\ri~tibri;': · - :i " of the amount. The time granted, it is said, is\mreasonably short. Th~. <, 'i argument clearly o~erlooks the cla~se 'or ~heh rurther time as may be . , ' granted by the Government' occurring in Section 8(1). If the exercis'e • L of this power is arbitrary or capricious the lice.

nsee has remedies in , , Administrative Law: But the· provision itself cannot be held to be bad;. ' ~- There is no substance· in this contention either. '. ~ 18. Certain other subsidiary contentio~'s were urged a. t the hear-'' -~ , ing. All these matters have been elaborately cons_idered in· our. judgi_ ment in Writ Peto. Nos. 457 and 458 of 1972 arising out of the Assam • "- ' legislation. We have not foun~ any merit in them. '" ·' · ·. "• ''. \. . 19. However, "there is one aspect which merits consideration. Shri Salve submitteil thatthe petitioners in Writ Peto. No. : 5(N) of 1974, . who initially, on 16. 1. 1974, had opted for basis A had sought a· change to basis B by their application dated 4. 10. 1977. On 2:2. '1978, .. , . VELLORE ELECTRIC CORPN. v. STAIB [VENKATACHALIAH, J. ] . '497 ·. jll Government refused :to permit the change. Shri Salve submits that a. - -~: serious and indeed, irreparable hardship has been occasioned to the petitioners by this arbitrary refusal.

In these writ petitions we have dealt with questions of constitutionality leaving the questions of construction of the provisions to the appropriate authorities. However, having regard to the checkered history of the proceedings, it appears to us that Shri Salve's submission deserves to be accepted. Accordingly, the. order of the Government dated 2. 2. 1978 refusing a change in the basis for determinatiOn of the amount is set aside and the Government is directed to consider and dispose of the application dated 4. 10. 1977 afresh within two months from today. We make it clear that the Government shall not unreasonably withhold the permission for the change. 20. In the result, subject to the direction in para 19 supra relating to W. P. No. 5(N) of 1974, we find no substance in these writ petitions which are dismissed. There will be no order as to costs. T. N. A. Petitions dismissed. ·. ~ - •;- If··' ··•t<'~·. ' •'), - . ~: .