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CASE NO.:

Appeal (civil) 6487-6488 of 1998

PETITIONER:

Bharat Hydro Power Corp. Ltd. & Ors.

RESPONDENT:

State of Assam & Anr.

DATE OF JUDGMENT: 07/01/2004

BENCH:

Ashok Bhan & S.B. Sinha.

JUDGMENT:

J U D G M E N T

BHAN, J.

These 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.

Facts:

In the 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.

The 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.

In the 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.

The 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.

In 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

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as follows:

ASEB(the 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.

On the 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.

On 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 Act.

In 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.

The Preamble of the Act reads as follows:

"ASSAM ACT NO.1 OF 1997

(Received the Assent of the Governor on 6th January, 1997)

THE BHARAT HYDRO POWER CORPORATION LIMITED

(ACQUISITION AND TRANSFER OF UNDERTAKING) ACT,

1996

AN ACT

To provide for the acquisition, in the public interest, of the

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right, title and interest of the undertaking of the Bharat Hydro

Power Corporation Limited and for matters connected therewith

or incidental thereto.

WHEREAS 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 the State;

Whereas 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;

And whereas the company failed in the sole object of speedy

execution of the project within the specified time;

Whereas 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.

Section 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.

Section 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

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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.

On 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.

The 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.

Before 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 \026 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 246 reads:

"246. Subject-matter of laws made by

Parliament and by the Legislatures of States.-

(1) 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 List").

(2) 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").

(3) 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

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of the matters enumerated in List II in the Seventh

Schedule (in this Constitution referred to as the

'State List').

(4) 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."

Without 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.

In a 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 State.

It is 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 (i) to the

enactment as a whole, (ii) to its main objects, and (iii) to the scope and effect

of its provisions. For this see: Southern Pharmaceuticals & Chemicals

Vs. State of Kerala, AIR 1981 SC 1863; State of Rajasthan Vs.

G.Chawla, AIR 1959 SC 544; Thakur Amar Singh Vs. State of

Rajasthan, 1955 (2) SCR 303, Delhi Cloth and General Mills C o. Ltd.

Vs. Union of India AIR 1983 SC 937 and Vijay Kumar Sharma & Ors.

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Vs. State of Karnataka & Ors., AIR 1990 SC 2072. In the last mentioned

case it was held:

"Where 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

Shyamakant Lal Vs. Rambhajan Singh & Ors., AIR 1939 FC 74, the

Court held:

"When 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:

Their 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.

Before 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:

Entry 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

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the Union is declared by Parliament by law to be

expedient in the public interest.

Entry 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.

Entry 38 of List III: Electricity;

Entry 42 of List III: Acquisition and requisitioning of property.

It was conceded before us that Entry 56 List I would not be

applicable.

Learned 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.

Mr. 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 Legislature.

On the 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.

According 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

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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.

That 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 fields.

Learned counsel appearing for the appellants placing reliance on a

Constitution Bench decision of this Court in Deepchand Vs. State of U.P.,

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 29:

"Nicholas in his Australian Constitution, 2nd Edn.

Page 303, refers to three tests of inconsistency or

repugnancy:

(1) There may be inconsistency in the actual

terms of competing statutes;

(2) 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

(3) 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.

This 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.

In Zaverbhai 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 stated:

"The 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:

(1) Whether there is direct conflict between the

two provisions;

(2) Whether Parliament intended to lay down an

exhaustive code in respect of the subject

matter replacing the Act of the State

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Legislature; and

(3) 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.

In M.Karunanidhi Vs. Union of India, AIR 1979 SC 898, Fazal

Ali, J. reviewed the authorities on repugnancy under Article 254 and held

that the following propositions emerged from decided cases:

"1. 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.

2. That there can be no repeal by implication

unless the inconsistency appears on the face of the

two statutes.

3. 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.

4. 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.

The 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.

The Act of 1910 relates to the supply and use of electrical energy.

Section 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

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electric supply \026lines for the conveyance and transmission of energy.

Section 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:

"6. Purchase of undertakings.- (1) Where a

license has been granted to any person, not being a

local authority, the State Electricity Board shall,-

(a) in 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

(b) in 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.

(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

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 the undertaking.

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(6) 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 price.

(7) 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 licensees.

These 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.

Under 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.

Section 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.

Faced 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:

"26A. Applicability of the provisions of Act 9 of

1910 to Generating Company.- (1)

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.

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(2) 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, exercise-

(a) all or any of the powers conferred on a

licensee by sub-section (1) of Section 12 of the

Indian Electricity Act, 1910, as if -

(i) the reference therein to licensee were

a reference to the Generating

Company;

(ii) the 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 Company; and

(iii) the 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;

(b) all 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 -

(i) the references therein to licensee were

references to the Generating Company, and

(ii) the Generating Company had the powers of

a licensee under the said Act.

(3) 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.

(4) 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.

"Generating Company" has been defined in Section 2(4A) of the 1948

Act to mean:

"'Generating Company' means a company

registered under the Companies Act 1956 (1 of

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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.

Section 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.

The 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.

Since 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.

For 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.