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Nagpur Electric Light and Power Company Ltd. Vs. the Maharashtra State Electricity Board - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtMumbai High Court
Decided On
Case Number Special Civil Application No. 125 of 1967
Judge
Reported in(1968)70BOMLR177; 1968MhLJ185
AppellantNagpur Electric Light and Power Company Ltd.
RespondentThe Maharashtra State Electricity Board
DispositionPetition allowed
Excerpt:
indian electricity act (ix of 1910), sections 6, 58, 7, 4a, 4(3) - indian electricity act (iii of 1903), section 7(1), 4(3)--electricity (supply) act (liv of 1948), section 71--general clauses act (x of 1897), section 8--whether mention of correct date of expiry of relevant period in notice under section 6(1) of i.e. act of 1910 an essential requirement for its validity--section 58(2) whether immunizes licences granted under i.e. act of 1903 in respect of alteration or amendment of condition of licence under i.e. act of 1903.;the provision of section 6(1) of the indian electricity act, 1910, requiring the state electricity board to mention in the notice that the licensee is required to sell the undertaking at the expiry of the relevant period is an essential requirement of law and must.....abhyankar, j.1. this is a petition under article 226 of the constitution. the petitioner is the nagpur electric light and power company limited, nagpur, respondent no. 1 is the maharashtra state electricity board, bombay, and respondent no. 2 is the state of maharashtra.2. the petitioner challenges, by this petition, the validity of a notice dated april 26, 1966, purporting to have been given by respondent no. 1 to the petitioner under section 6(1) of the indian electricity act, 1910 (ix of 1910). that notice is annexure e to the petition, at page 36 of the paper-book, and is as follows:maharashtra state electricity boardmercantile bank building, fort, bombay-1. no. ple-vdb-2(a) 194751.date 26th april 1966. by regd. post a.d. tom/s. the nagpur electric light & power co. ltd., nagpur.....
Judgment:

Abhyankar, J.

1. This is a petition under Article 226 of the Constitution. The petitioner is the Nagpur Electric Light and Power Company Limited, Nagpur, Respondent No. 1 is the Maharashtra State Electricity Board, Bombay, and respondent No. 2 is the State of Maharashtra.

2. The petitioner challenges, by this petition, the validity of a notice dated April 26, 1966, purporting to have been given by respondent No. 1 to the petitioner under Section 6(1) of the Indian Electricity Act, 1910 (IX of 1910). That notice is annexure E to the petition, at page 36 of the paper-book, and is as follows:

MAHARASHTRA STATE ELECTRICITY BOARD

Mercantile Bank Building,

Fort, Bombay-1.

No. PLE-VDB-2(A) 194751.

Date 26th April 1966.

By Regd. Post A.D.

To

M/S. The Nagpur Electric Light & Power Co. Ltd., Nagpur Branch,

Post Box No. 2, Civil Lines, Nagpur.

Sub:-Notice under Sub-section 1 and Sub-section 6 of Section 6 of the Indian Electricity Act, 1910, to purchase your Electricity Undertaking by Maharashtra State Electricity Board on expiry of the licence granted to you under the said Act.

Dear Sirs,

I am directed to give you notice that the Maharashtra State Electricity Board has decided to purchase your Electricity Undertaking at Nagpur (District Nagpur) in exercise of the option to purchase vested in the Board by Sub-section (1) of Section 6 of the Indian Electricity Act, 1910 and to require you to sell your said undertaking to the Board on the midnight of 3rd/4th May, 1967, being the date of expiry of the licence granted to you by the Government under the said Act and also to call upon you under Sub-section (6) of Section 6 of the said Act to deliver the said undertaking to the Board on the said date of expiry of the said licence pending determination and payment of purchase price.

This Notice is given to you in supersession of the Notice No. PLE/VDB-2(A) 59597 15th September, 1965, in view of the amendment of your license by the Government Notification No. LNA(M)-1265/22530-Elec-I, dated 19-4-66.

Yours faithfully,

Sd/-K. B. Srinivasan,

25-4-66

Secretary.

3. There was in force in this region in 1905 the Indian Electricity Act, 1903 (III of 1903) (hereinafter referred to as the 1903 Act). Under Sub-section (1) of g. 4 of that Act, the Local Government was empowered to grant a licence to any person to supply energy for any purpose in specified areas. In exercise of this power, the Chief Commissioner of the then Central Provinces granted a licence to Messrs Crompton and Company, Limited, London, for supply of electricity for general purposes within the municipal area of Nagpur. A copy of that licence has been filed as annexure A with the petition. In the Central Provinces Gazette dated May 6, 1905, the notification granting the licence and the terras and conditions of the licence have been published. Though the notification is dated May 4, 1905, it is published in the Gazette dated May 6, 1905. The licence has six clauses and four annexures. Clause 4 of the licence states that the licence shall come into force and have effect upon the day when the notification confirming it is published in the Central Provinces Gazette, and that day shall, for the purposes of the said Act, be deemed to be the commencement of this licence.

4. Under Sub-clause (g) of Clause 3 of this licence, the right to purchase the undertaking in respect of which the licence is granted shall enure after the following periods, that is to say, (i) after 42 years from the commencement of this licence, and (ii) after every subsequent period of 10 years. Under Clause 2 of the licence, the licence is to be read and construed subject in all respects to the provisions of the incorporation of the Schedule to the Indian Electricity Act, 1903.

5. After the grant of this licence, the Indian Electricity Act, 1910 (hereinafter referred to as the 1910 Act) was enacted and it came into force from January 1, 1911. On or about June 25, 1913 the original licensee, i.e. Messrs Crompton and Company, assigned their rights under the licence to the petitioner Company and the assignment was published in the Gazette on June 28, 1913. Some of the terms and conditions of the licence were altered from time to time, namely, in June 1929, and again in March 1940, and also on an extensive scale in May 1947. This last amendment to the terms and conditions of the licence was effected by the notification dated April 24, 1947, published in the Central Provinces and Berar Gazette dated May 2, 1947. The petitioner has filed, as annexure B to the petition, a printed copy of the original licence as well as the subsequent amendments made from time to time including the one effected in 1947.

6. In 1948 Parliament passed the Electricity (Supply) Act, 1948 (LIV of 1948) and this Act came into force on September 10, 1948. We shall have occasion to refer to this Act where necessary and it will be referred to as the Supply Act of 1948. By this Act, power was taken for constitution of the Central Electricity Authority and the State Electricity Board. Respondent No. 1 Board is constituted in exercise of the powers vesting in the State Government under the Supply Act of 1948. The Supply Act of 1948 originally provided, under Section 71, that where under the provisions of the Indian Electricity Act, 1910, any right or option to purchase the undertaking of a licensee vests in the Provincial Government or a local authority, such right or option shall be deemed to be transferred to the Board, and shall be exercisable by the Board in accordance with the provisions of the said Act applicable to the exercise of such right or option by the Provincial Government, or a local authority, as the case may be. This provision would, therefore, appear to substitute the State Electricity Board in place of the Provincial Government or a local authority in so far as any right or option to purchase an undertaking of a licensee was concerned.

7. In 1959 Parliament passed the Indian Electricity (Amendment) Act, 1959 (XXXII of 1959) extensively amending the Indian Electricity Act, 1910, and also the Supply Act of 1948 in some respects. By Section 7 of the Amending Act (No. XXXII of 1959), Section 71 was omitted from the Supply Act of 1948. We will have occasion to examine the scheme of the new Sections 6 and 7 as substituted in the 1910 Act later on.

8. On May 21, 1965, respondent No. 1, through its Secretary, gave an intimation to respondent No. 2 that the Board had decided to exercise the option of purchasing the four electricity undertakings on the expiry of their respective licences and the petitioner was mentioned as one of those undertakings which the Board had decided to purchase. A copy of this intimation has been filed by the learned Additional Government Pleader for the State, and from the table given in this communication, it appears that the Board considered that the licence under which the petitioner was working would expire on May 4, 1967.

9. On September 15, 1965, respondent No. 1, through its Secretary, gave a notice to the petitioner purporting to be a notice under Sub-section (1) of Section 6 of the 1910 Act. By this notice, the Board required the petitioners to sell its undertaking to the Board on the midnight of May 3/4, 1967, being the date of expiry of the licence granted to it by the Government under the said Act, and also called upon the petitioner, under Sub-section (6) of Section 6 of the Act, to deliver the undertaking to the Board on the said date of the expiry of the licence. The respondents have alleged that on January 6, 1966, respondent No. 1 gave a notice to respondent No. 2 communicating to it its intention of exercising the option of purchasing the petitioner's undertaking.

10. On January 4, 1966, respondent No. 2, the State Government, published a notice in the Maharashtra Government Gazette Extraordinary, to the effect that Government proposed to make amendments as per the draft in the terms and conditions of the Nagpur Electricity Licence granted under the Government of the Central Provinces, Public Works Department, Notification No. 46, dated May 4, 1905. A draft of the proposed amendment was also given in its notification inviting objections. Exhibit 1 filed by respondent No. 2 is a copy of this Government notification.

11. Thereafter, on or about January 17, 1966, the tinder Secretary to the Government of Maharashtra, Industries and Labour Department, addressed a communication to the Manager of the petitioner Company requesting the petitioner to give its consent to the proposed amendment of the licence as per the draft notification, a copy of which was sent along with this communication. Communications were also addressed on the same date by the Under Secretary to the State Government to the Government of India for their consent to the proposed amendments. A similar communication was also sent by the Under Secretary to the Government to the Municipal Commissioner, Nagpur Municipal Corporation. In reply to these communications, the Secretary of respondent No. 1 intimated to the State Government on January 28, 1966, that the draft amendment was in order. The Municipal Commissioner also intimated that they had no objection to the proposed amendment. So far as the Government of India were concerned, the Deputy Director, Ministry of Irrigation and Power, intimated to the State Government that they had consented to the amendment as is required by Section 44(3) of the 1910 Act,

12. It may be mentioned that the petitioner apparently did not send any reply to the communication from the State Government regarding the proposed amendment of the terms and conditions of the licence and did not express consent to the proposed amendments being incorporated. Thereafter, the State Government issued a notification on April 19, 1966, making certain amendments in sub-para, (i) of para, (o) in Clause 3 of the licence. That notification is at annexure D and is as follows:

No. LNA-(M)-1265/22530-Elec, I. Whereas as required by Sub-section (3) of Section 4-A of the Indian Electricity Act, 1910 (IX of 1910) a draft of the farther amendment proposed to be made by the Government of Maharashtra in the terms and conditions of the Nagpur Electricity Licence, granted under the Government of the Central Provinces, Public Works Department, Notification No. 46, dated the 4th May 1905, as subsequently amended, was published in Government Notification, Industries and Labour Department, No. LNA-(M)-1265/8126-Elec. I, dated the 4th January 1966, for inviting objections and suggestions;

And whereas no objections or suggestions have been received by the Government of Maharashtra;

And whereas the Government of Maharashtra has consulted the Maharashtra State Electricity Board and local authorities concerned and obtained the consent of the Central Government;

And whereas the Government of Maharashtra also requested the licensee, the Nagpur Electricity Light and Power Company, Limited, to give its consent to the proposed amendment, as required by the proviso to Sub-section (1) of the said Section 4-A, but, in the opinion of the Government) of Maharashtra, such consent has been unreasonably withheld;

And whereas in the opinion of the Government of Maharashtra, the public interest so permits to make the proposed amendment;

Now, therefore, in exercise of the powers conferred by the said Section 4-A and of all other powers enabling it in this behalf, the Government of Maharashtra hereby amends the terms and conditions of the said license, as follows:-

In clause 3 of the license, in paragraph (o), in sub-paragraph (i), for the portion beginning with the words 'shall be exercisable' and ending with the words and figures 'May 1957', the following shall be substituted, namely:-'shall be exercisable on the expiration of the period of ten years on the 4th May 1957'.

13. It is thereafter that the notice impugned in this petition which we have extracted above, was issued by the Secretary of respondent No. 1, to the petition. The petitioner challenges the validity of this notice, particularly on two grounds, though several other ancillary objections have been raised in support of the challenge.

14. In the first place, it is contended that the notice dated April 26, 1966, is invalid and ineffective because of the manner in which it is worded and because it fails to comply with the requirements of Section 6(1) of the 1910 Act as now in force. In the next place, it is contended that the rights and obligations of the petitioner as a licensee in the matter of compulsory purchase and the duration of the period of licence, the manner in which the right to purchase can be exercised and the parties who can exercise this right of compulsory purchase, are all governed by the provisions of the licence then granted and by the provisions of the 1903 Act, and that the terms and conditions of that licence could not be altered as is purported to have been done by the State Government by issue of the notification dated April 19, 1966.

15. Both the respondents have filed detailed returns and have supported the notice as well as the notification as having been validly issued. We shall consider the respective submissions while dealing with the contentions raised by the petitioner in detail hereafter.

16. As regards the first objection of the petitioner challenging the validity of the notice dated April 26, 1966, it is pointed out that the licence given to a licensee under the Electricity Act is of indefinite duration. The date of commencement of the licence has been unequivocally fixed by Clause 4 of the licence and that date shows that the date of commencement is the date when the confirmation of the grant of the licence is published in the Central Provinces Gazette, i.e. on May 6, 1905. It has not been seriously disputed that the licence given to a licensee under the Electricity Act is of indefinite duration, though it is liable to be revoked under given circumstances. There is only one contingency contemplated by the Act in addition to revocation of the licence when the licence ceases to have further operation. The provision for this latter contingency is made in Section 7 of the .1910 Act as amended in 1959. Rules have been framed under the Indian Electricity Act from time to time and the rules would show that a definite date is fixed as a date of the commencement of the licence. Rules 17 and 18 of the 1911 Rules, rules 19 and 20 of the 1937 Rules and rule 20 of the 1956 Rules provide that the date of notification of the grant of licence is to be deemed to be the date of the commencement of the licence. There is no doubt that so far as the licence of this petitioner is concerned, the date of commencement of the licence was May 6, 1905. The notice dated April 26, 1966, however requires the petitioner to sell the undertaking to the Board on the midnight of May 3/4, 1967, which is styled as the date of expiry of the licence granted to the petitioner. The argument of the petitioner is that there is no such thing as a date of the expiry of the licence. Section 6 speaks of a date of expiry of the period as specified in the licence and not any date of the expiry of the licence. As we shall have occasion to refer to the various provisions of Section 6 as it now forms part of the 1910 Act, we reproduce the section below:

6. (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, on the expiration of each such period as is specified in the license; and

(b) in the case of a license granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten 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.

(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 (I) 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 7-A.

17. The right to purchase the undertaking has been given by the statute to the State Electricity Board like respondent No. 1 in the case of a licence granted before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiry of each period as is specified in the licence. The right that is given is a right of exercising an option of purchasing the undertaking and Sub-section (7) of Section 6 also prescribes the manner in which such a right is to be exercised. The right is to be exercised by requiring the licensee to sell the undertaking to the Board at the expiry of the relevant period referred to in this sub-section, that is, at the expiry of the period as is specified in the licence. Under the original terms of the licence as per annexure A, the right to purchase the undertaking was to enure after the following periods: (a) after 42 years from the commencement of this licence, or (b) after every subsequent period of ten years. The licence also provides that such purchase shall be on terms set forth in Section 7 of the 1903 Act. It is, therefore, obvious that the right first accrued 42 years after the commencement of the licence, that is, 42 years after May 6, 1905. In other words, the right would accrue for the first time on May 6, 1947, the first period indicated expiring on May 5, 1947.

18. We have already referred to the enactment of the new Indian Electricity Act, 1910, which repealed the Indian Electricity Act, 1903. Under Section 4(3) of the 1903 Act, as well, as under Section 4(3) of the 1910 Act as it was in 1947, a power was given to the Provincial Government on an application of the licensee or with the consent of the licensee, to make alterations or amendments in the terms and conditions of the licence and this power included the power to make alterations or amendments in the provisions specified in the Schedule to the Act, which ipso facto formed part of the licence. It will be seen that this power of effecting alterations or amendments in the terms and conditions of the licence could be exercised either on the application, that is, at the volition of the licensee, or in any case with the consent of the licensee. This power was exercised by the then Provincial Government by a notification dated April 24, 1947. It does not appear that the right to purchase the undertaking which vested firstly in the local authority, and on its failure, in the local Government, under Section 7 of the 1903 Act, and in the same order also under Section 7 of the 1910 Act, was exercised by either of these authorities prior to 1947. Extensive amendments were made to the terms and conditions of the licence in 1947 and it will have to be presumed that the alterations and amendments were effected either on the application, or at any rate, with the consent of the petitioner. It is necessary to point out that the alterations and amendments were made in the licence of 1905, and some of the clauses were not touched at all. Thus, Clause 4 of the original licence regarding the commencement of the licence was not touched and perhaps could not be touched at all. There was a complete substitution for Clause 3 by the now Clause 3, and so far as is relevant to the question under consideration, the original Clause 3(g) was substituted by a new cl, 3(o)(i) by the 1947 amendment. The original Clause 3(g) was as follows:

The right to purchase the undertaking, in respect of which the License is granted, Terms of shall for the purposes of the provisions in this behalf contained in the said purchase. Act enure after the following periods, that is to say:-

(a) After 42 years from the commencement of this licence.

(b) After every subsequent period of 10 years.

The terms of such purchase as aforesaid shall be those set forth in Section 7 of the Act.

19. In place of this provision, the new Clause 3(o)(i) provides as follows:

The option of purchase given by Sub-section (1) of Section 7 of the Act shall be exercisable on the expiration of the period of 10 years on the 4th of May 1957 and the expiration of every subsequent period of 10 years during the continuance of this licence.

20. Now, it will be seen that no option having been exercised when it first arose on the expiry of the first period of 42 years on May 6, 1947, in respect of the petitioner's undertaking, the first occasion on which the right or option to purchase the undertaking will arise, would be at the end of expiration of the next ensuing period of ten years and not earlier. This period of ten years has necessarily to be calculated from the date of expiry of the first period of 42 years. In other words, the next period of ten years after the initial period of 42 years would commence from May 6, 1947. The contention of the petitioner is that this second period of 10 years must, therefore, end not earlier than May 5, 1957. It does not appear that the right to purchase the undertaking was also exercised by the requisite authorities at the end of this period of ten years which expired on May 5, 1957, but. during this period several important changes had taken place. Parliament had passed a new Act called the Electricity (Supply) Act, 1948. Under this Act, power was taken to constitute the State Electricity Board and the State Electricity Board was constituted in most of the States, at any rate in the then State of Madhya Pradesh under the Supply Act of 1948. There was a reorganisation of States under which the eight districts of Vidarbha became part of the new State of Bombay, and the State of Bombay had also a State Electricity Board. There is no material on record to show whether either the State Electricity Board of Madhya Pradesh or the State Electricity Board of the State of Bombay took any steps to exercise the right of purchasing the petitioner's undertaking in 1956 or 1957. Under the Supply Act of 1948, a provision was made in Section 71 empowering the State Electricity Boards to exercise the right or option to purchase the undertaking of a licensee under the Electricity Act which vested under the provisions of the 1910 Act in the Provincial Government or the local authority. This right was conferred by the provision of Section 71 which said that the right of option of purchasing an undertaking of a licensee vesting in the Provincial Government or the local authority shall he deemed to be transferred to the State Electricity Board and shall be exercisable by the Board in accordance with the provisions of the 1910 Act in the same manner by which the right could have been exercised by the Provincial Government or the local authority. The Indian Electricity Act underwent drastic changes by Act No. XXXII of 1959 passed by Parliament. We have already pointed out that the original Sections 5, 6 and 7 of the Indian Electricity Act, 1910, were substituted wholesale by the new Sections 5, 6 and 7, by Act No. XXXII of 1959. Another important variation was the repeal of Section 71 of the Supply Act of 1948 which had vested the right of compulsory purchase of undertakings vesting in the Provincial Government or the local authority in the State Electricity Board. The State Electricity Boards were given a right to exercise the option of purchasing the undertaking of a licensee by express power granted to the State Electricity Board under the new Section 6 which was substituted in the 191.0 Act. Another important addition was the addition of Section 4A to the 1910 Act. Under this section, a unilateral power of effecting alterations and amendments in the terms and conditions of the licence was given to the State Government, only with the proviso that no such alteration, or amendment could be made except with the consent of the licensee, unless such consent was, in the opinion of the State Government, unreasonably withheld. The power to make alterations and amendments 011 the application of the licensee also vested in the State Government as previously provided in Section 4(3) of the 1910 Act and the 1903 Act. It will thus be seen that Section 6(1) of the 1910 Act as now standing prescribed a procedure and manner of exercising the right of purchasing the undertaking. It is also clear that the consequences of exercising the option were far-reaching. Once an option was validly exercised by the State Electricity Board under Sub-section (6) of Section 6, the licensee was under a statutory obligation to deliver the undertaking to the State Electricity Board at a specified point of time, namely, on the expiration of the relevant period referred to in Sub-section (1), that is, on the expiry of the period specified in the licence. Such delivery of the undertaking also has yet another far-reaching effect, namely, that the undertaking from then on vests in, the purchaser free from any debt, mortgage or similar obligation of the licensee or attaching to the undertaking, and further the rights, powers, authorities, duties and obligations of the licensee under his licence shall stand transferred to the purchaser and such purchaser would then be deemed to be the licensee, and where the purchase is by the State Electricity Board, the licence ceases to have further operation. This is because the Supply Act of 1948 itself operates as provided in Section 26 of that Act, as a licence of the Board for the purpose of the Indian Electricity Act, 1910,

21. A perusal of Section 6(1) of the 1910 Act as amended in 1959 shows precisely what has to be done by the Board which has the option of purchasing the undertaking. The option of purchasing the undertaking no doubt arises at the expiration of the period specified in the licence, but the law requires the Board to exercise the option in advance, as it were, by serving upon the licensee a notice in writing. That notice has to be sent not less than one year before the expiry of the period of licence and the notice must state that it requires the licensee to sell the undertaking to the Board at the expiry of the relevant period specified in the licence. Thus, the requirements of the notice are:

(i) intimation that the option is exercised;

(ii) demand on the licensee to sell the undertaking; and

(iii) specify the date on which the relevant period specified in the licence expired as the date on which the licensee is required to sell the undertaking.

22. Under Sub-section (6) of Section 6 of the 1910 Act, it does not appear that the demand for delivery of possession is required to be mentioned in the notice given under Sub-section (1) of Section 6. The obligation to deliver the undertaking to the State Electricity Board is cast by the statute itself on the licensee and the date on which the delivery is to be given its also indicated in that sub-section and that date is the date of expiry of the relevant period specified in the licence. Sub-section (4) of Section 6 requires the Board to give an intimation in writing to the State Government if it intends, to exercise the option of purchasing the undertaking of the licensee and that intimation has to be given at least 18 months before the expiry of the relevant period specified in the licence. It is thus clear that so far as the Board is concerned, it has to make up its mind whether it intends to exercise the option given to it under Section 6(1) at least six months before the notice required to be given in writing under Section 6(1) is to issue from the Board to the licensee. It does not therefore appear that there is any necessity for the Board to intimate to the licensee that it intends to exercise the option of purchasing the undertaking. Probably, the Board is required to intimate in writing of its intention to exercise the option of purchasing the undertaking to the State Government, because the State Government is the next authority in the order of priority which can exercise the option, in the like manner, and in cases where neither the Board nor the State Government elects to purchase, any local authority constituted for the area is the third best in the order of priority, which can exercise the option of purchase.

23. The petitioner's contention therefore is that the requirements as to the notice must be strictly followed, inasmuch as the right to purchase an undertaking which is conferred on the Board is a grant of the statute. It is a right of compulsory purchase. The licensee has no option to refuse to sell or give delivery of the undertaking once a valid notice under Sub-section (1) of Section 6 is issued to the licensee. When the right to purchase is created by the statute, the condition precedent for the exercise of the right, according to the petitioner, has necessarily to be satisfied and that condition is the issuance of a valid notice satisfying all the requirements of the statute. We have pointed out above what a valid notice that can be issued under Sub-section (1) of Section 6 must contain. Now, if the notice given by respondent No. 1 in this case is scrutinized, it will be seen that undoubtedly the notice purports to be given under Sub-section (1) of Section 6 and it undoubtedly requires the petitioner to sell the undertaking to the Board not at the expiry of the relevant period but on the midnight of May 3/4, 1967, and that time is described as the date of expiry of the licence granted to the petitioner. The objection of the petitioner is that the period specified in its licence did not expire on the mid-night of May 3/4, 1967, at all. It expired on the mid-night of May 5/6, 1967, or on the midnight of May 5, 1967. This is because the period which is to expire in May 1967 commenced on May 6, 1957, and that was the period of ten years and the period of ten years could not expire earlier than the anniversary of the date of the commencement, that is, on the mid-night of May 5/6, 1967.

24. The answer of the answering respondents to this objection is that the terms and conditions regarding the exercise of the option and the time when the option is to be exercised have been amended by a notification issued by the State Government on April 19, 1966, and if that notification and the amendment made thereunder are operative and binding, as they say it is, on the parties, the notice requiring the petitioner to sell the undertaking on the midnight of May 3/4, 1967, is flawless, because that, according to the respondents, is the date of expiry of the licence granted to the petitioner. We have therefore to examine the validity of this defence to the notice.

25. We have reproduced the above notification dated April 19, 1966, by which the amendment was effected in Clause 3(o) (i) in the terms and conditions of the licence. That clause would now read as follows after the amendment effected by the State Government by its notification dated April 19, 1966.

The option of purchase given by Sub-section (1) of Section 7 of the Act shall be exercisable on the expiration of the period of 10 years on the 4th of May 1957 and the expiration of every subsequent period of 10 years during the continuance of this licence.

26. We have already referred to the new Section 4A inserted in 1959 in the 1910 Act which empowers the State Government to make alterations and amendments in the terms and conditions of the licence. Under the proviso to Sub-section (1) of Section 4A, such alterations or amendments can be made either with the consent of the licensee or without the consent of the licensee if in the opinion, of the State Government such consent has been unreasonably withheld. According to the return filed by respondent No. 2, the State Government had addressed a letter on January 17, 1966, to the petitioner requesting it to consent to the proposed amendment. The amendment proposed was in the same form as it ultimately appears finally in the notification dated April 19, 1966. It is common ground that no reply was sent by the petitioner to this demand of consent made by the State Government. So, there is no doubt that the licensee withheld the consent. According to the licensee, the consent was withheld because the proposal sent to it was so unreasonable and ambiguous and therefore void, that it could not have possibly assented to such an amendment being made in Clause 3(o) (i). The question, therefore, whether consent has been unreasonably withheld is linked up firstly with the reasonableness, clarity or the validity of the amendment which was proposed and ultimately made in the proviso to Sub-section (1) of Section 4A of the 1910 Act. We have already pointed out that the third period of ten years of licence commenced on May 6, 1957. That would be so because the earlier period of ten years which commenced on May 6, 1947, would expire on May 5, 1957. Now, what the amendment proposed is that the option to purchase given under the Act shall be exercisable on the expiration of the period of ten years on May 4, 1957, meaning thereby that the period of ten years which was to end in 1957 ended on May 4, 1957. On the face of it, it would appear that the amendment effected in 1966 stating that the option to purchase under the Act shall be exercisable on the expiration of the period of ten years on May 4, 1957, is saying something which is meaningless and unenforceable. The period of ten years starting with the commencement of that period on May 6, 1947, could never end on May 4, 1957. In any case, the learned advocate for respondent No. 1 did not seriously dispute this position. Therefore, to say, 'on the expiration of the period of ten years on the 4th May 1957', is to say something which is an impossibility in fact. Once it is clear that the date of commencement is May 6, 1947, the date of commencement of the next period after the period of ten years will be May 6, 1957, and the date of ending of the earlier period can only be May 5, 1957. The further consequence of the amendment is, as it were, that the next period of licence, that is, the next period of ten years commences on May 5, 1957, and would end on May 4, 1967. We are unable to see how in purported exercise of the powers under Section 4A of the 1910 Act, the State Government could alter or amend clause 3(o) (i) of the licence in such a manner as to create complete confusion and communicate something which is impossible to happen. We are not called upon to find out what was the necessity for making such an amendment. According to the return filed on behalf of respondent No. 2, the clause, as it stood before the amendment, was unworkable and therefore the amendment in the present form in that clause was required to be made. It has not been explained to us how or why that clause was unworkable, but that clause having been substituted by the present clause, the rights and obligations of the parties must be determined on the clause as it is.

27. Here, we may dispose of a submission made on behalf of respondent No. 1. It was urged that in case the latest amendment made in this clause in 1966 was invalid or unworkable or for any reasons was void, then such finding would ipso facto revive the clause as it was prior to the amendment, and if that was the effect of declaring the new amendment void, respondent No. 1 would be entitled to fall back, as it were, on the clause as it stood prior to the new amendment, and on that footing, the validity of the notice ought to be adjudged. We are unable to accept that such a result would follow if the new amendment made in 1966 is found to be invalid. It is now well-settled that where a power to amend a rule or statute is exercised and something comes to be substituted in place of what was previously existing, the very act of substitution or amendment has the effect of the previously existing rule ceasing to subsist and it does not get automatically revived. What applies to a statute or a rule would equally apply to a term, especially when the new amendment has been effected in spite of want of agreement of the party affected thereby. This principle of construction of effect of amendment was followed in a Division Bench decision of this Court in Secretary, M'cipal Com. v. Nandkishore (1966) 69 Bom L.R. 303. If a term of a licence gets replaced or substituted by another term, merely because the latter term is found to be unworkable or invalid [it] cannot revive or restore, as it were, the term which it replaces to its original position so as to be available for working out the rights of the parties. In a recent decision in B. N. Tewari v. Union of India : [1965]2SCR421 the matter was examined in respect of the rule made by the Central Government in the matter of what is called the carry forward rule, which determined promotions of employees in public services. By an earlier decision of the Court, a certain rule was held to be invalid for certain purposes. It was substituted later on by another rule. The argument that seems to have been advanced was that if the latter rule was struck down, it necessarily implied revival of the earlier rule. This contention was negatived on the ground that by the act of substitution the earlier rule ceased to subsist. In our opinion, the same result must follow so far as the efficacy of the original term of Clause 3(o)(i) in the licence as it stood in 1947 until it was amended in 1966 was concerned. Respondent No. 1 will not therefore be able to rely on the previously existing Clause 3(o)(i) in finding out the date of expiry of the period.

28. Even on the substituted clause as it is the notice would suffer because the amended terms suggest that the ten-year period expires on May 4, 1957 and therefore the commencement of the new period on this basis would be on May 5, 1957. The period of ten years commencing on May 5, 1957, must end on May 4, 1967 and cannot possibly end on the mid-night between May 3/4, 1957. This is yet another fallacy that is introduced by the artificial fixation of May 4, 1957, as the date of the expiry of the ton-year period. It may be that the power to alter or amend conditions of the licence may include a power to determine the duration of the licence or even to fix a date for exercise of the option, but there is 110 power, as far as we can see, to say that the period of ten years in respect of the period which has commenced on May 6, 1947, would end on May 4, 1957. As rightly urged by the learned counsel for the petitioner, it is an impossibility. It must, therefore, be held that the amendment effected itself is unworkable and creates a situation which is impossible of performance.

29. There is also another fact with regard to the clause emerging after the amendment made in 1967. The clause as it now stands states that the option of purchase is given by Sub-section (1) of Section 7 of the Act. Obviously, this has reference to the old Sub-section (1) of Section 7 of the 1910 Act prior to its amendment in 1959. The option of purchase is given after the amendment effected in 1959 in the 1910 Act under Section 6(1) of the Act and under Section 7 as it now stands. In fact, there are no sub-sections to Section 7 of the 1910 Act as substituted by the amendment effected in 1959. When this was pointed out, it was explained that even though there is no corresponding amendment made in this section under which the right to exercise the option is given, Section 8 of the General Clauses Act can be legitimately called in aid in the interpretation of this clause in the agreement, and when construed with the aid of Section 8 of the General Clauses Act, it must be held that the reference to Section 7(1) is a reference to the existing Section 6(1) of the 1910 Act. In support of this proposition, the learned counsel invited our attention to the following decisions: Bombay Chronicle v. V. B. Potdar : (1961)IILLJ549Bom ; Mohan Chowdhury v. Chief Commr., Tripum A.I.R. [1904] S.C. 173; N. S. Thread Co. v. James Chadwick & Bros. : [1953]4SCR1028 and Emperor v. Rayangouda Lingangouda : AIR1944Bom359 . It may not be necessary to contest that Section 8 of the General Clauses Act is equally applicable in interpreting statutes as well as instruments and that a document like a licence given to an undertaking is an instrument. It will answer the description of an instrument as judicially noticed and the provisions of Section 8, if otherwise attracted, the respondents will be entitled to avail of, for construction of Clause 3(o) (i) as emerging after the amendment. But, in our opinion, Section 8 can be called in aid in respect of an existing instrument, that is, an instrument which itself does not get amended by amendments made in statutes which are referred to in the instrument, But we fail to sec how Section 8 can be of any assistance when what is to be considered is a clause in the instrument after its amendment long after the repealing Act is on the statute book. The amendment is effected in 1966 and it is difficult to see that in 1966 the amending authority could say that they would retain the reference to Section 7(1) of the Act and that by that they intended that the reference should be understood as referring to the repealed Section 7(1) of the 1910 Act. Though nothing much turns on the reference to this section in the clause as it stands, the omission to make the consequential change in the reference to the appropriate section shows that there is hardly any application of mind by the authority which was purporting to exercise its power under Section 4A of the 1910 Act in making an amendment in exercise of its powers under the proviso to Sub-section (1) of Section 4A. It is in that context that the retention of Section 7(1) prior to its amendment in 1959 assumes some importance. One of the complaints of the petitioner is that the power under Section 4A has not been consciously or properly exercised by the State Government by application of mind, and one of the instances in support of this contention is that even though Section 7(1) of the 1910 Act was substituted by Section 6(1) in 1959, the State Government did not care to notice this change and allowed the reference to the same old section which was repealed when it was amending Clause 3(o) (i). It may be that the amendment may not be bad merely because of retention of a reference to Section 7(1), but the fact that no care was taken to find out whether the right to exercise the option is exercisable under Section 7(1) of the old Act as it stood or under Section 6(1) of the Act as it now stands, displays a lack of due care and attention in exercising the power under Section 4A of the 1910 Act.

30. The proposed amendment, therefore, vests the right or option to purchase to be exercised at a point of time when the period for which the licence is in operation has not come to an end. This cannot be done because the right of exercising the option to purchase can only arise at the expiry of the period indicated in the licence. If that period did not end and cannot end either on May 4, 1957 or May 3, 1967, a notice which requires the petitioner to sell the undertaking on that date is patently bad and invalid.

31. In meeting these objections, the learned counsel for respondent No. 1 urged that in construing the impugned notice it will be proper to divide it into three parts. According to the learned counsel, the notice covers three aspects: (i) it communicates to the petitioner its decision to exercise the option to purchase; (ii) it requires the petitioner to sell the undertaking; and (iii) it calls upon the petitioner to deliver possession on the stated date. What is urged is that the only requirement of Section 6(1) which, a valid notice must; satisfy is the giving of a notice in writing and that notice must require the licensee to sell the undertaking at the expiry of the relevant period. This, according to the learned counsel, has been sufficiently complied with, though there may be an error in stating the date of the expiry of the relevant period. The argument is that both the parties knew what the date of the expiry of the relevant period is, and nothing much turned on mentioning a date which may not be identical with the date of the expiry of the relevant period. If an earlier date has been indicated, may be by mistake, the petitioner is not bound to sell the undertaking on that date but could sell on the appropriate date on the expiry of the period, and no harm is caused nor is the petitioner put to any injury or prejudice by the mention of a date earlier than the date of the expiry of the period. As to the demand in the notice for delivery of the undertaking on the same date, that is, on the mid-night of May 3/4, 1967, the obligation is cast by the statute as provided under Sub-section (1) of Section 6 of the Act and that obligation could very well be honoured by the petitioner by delivering the undertaking on the expiry of the relevant, period irrespective of what date of the expiry of the period is mentioned in the notice.

32. We are unable to accept this construction of the notice or what the law requires the Board to do in exercise of the right given to it under Section 6 of the Act. As we have already pointed out, the statute does not require the Board to give any intimation to the licensee that they intend to exercise the option of purchasing. Determination of such intention takes place much earlier when the Board is required to give a notice under Sub-section (4) of Section 6 to the State Government, Such a notice has been given by the Board to the State Government in this case. On a plain reading- of Sub-section (1) of Section 6, it is clear that what it provides for is the manner of exercising the option of purchasing and that manner requires (i) the Board to give a notice in writing, (ii) that the notice shall be given not less than one year before the expiry of the relevant period, and (iii) that the notice should require the licensee to sell the undertaking to the Board at the expiry of the relevant period.

33. This last requirement, namely, calling upon the licensee to sell the undertaking at the expiry of the relevant period is, in our opinion, the essence of the notice required to be given. It is not as if the indication of the date of expiry of the relevant period is a surplusage or an irrelevant or immaterial addition. Unless the date of expiry of the relevant period is mentioned, and mentioned correctly, the licensee cannot be called upon to deliver possession though it is not necessary to give any notice to the licensee calling upon him to deliver possession. The obligation to deliver possession is the requirement of the statute, but it is necessary to state at the time of giving the notice under Sub-section (1) of Section 6, what is the date of the expiry of the relevant period because it is on that date that the licensee is required to deliver the undertaking to the purchaser. We have already pointed out that other consequences follow on such delivery, namely, vesting of the property in the purchaser. It, therefore, cannot be denied that accurate and proper mention of the date of the expiry of the relevant period has an integral part to play in exercising the right or option to purchase under Sub-section (1) of Section 6. It might be remembered that the notice under the scheme of Section 6 is required to be given at least 12 months prior to the date of the expiry of the period. Though Section 7(1) of the 1910 Act is replaced by the new Section 6(1) by the amendment made in 1959, the effect of the new section is not merely to reproduce the provisions of the old section. The whole scheme seems to be altered by the provisions made in the new Section 6 of the 1910 Act. The changes effected have been pin-pointed under a recent decision of the Gujarat High Court in Sidhpur Electric Industrial Co. Ltd. v. State of Gujarat [1964] Guj. 647. The following differences will be noticed in the scheme of the old Section 7 and the new Section 6:

(1) Under the old law, the option vested in the Board; now, the option vests in not only the Board, but also in the Government and in the local authority;

(2) Under the old law, the notice was of one character, under the new law, it is required to be of another character;

(3) There was a right of the waiver of the option to purchase under the old law, that right is taken away under the new law;

(4) Under the old law, the price was to be paid before delivery was to be made, now, the payment of the price is deferred and delivery is to be made immediately on the specified date; and

(5) Under the old law, good-will was to be one of the items for valuation of the undertaking, now that item is to be excluded from valuation.

34. It will thus be seen that the provisions about the notice under Section 6 as to the manner of exercising the right of option and the consequences thereof have more far-reaching effects and, therefore, must be strictly constraed. The reason why a sufficient notice is required to be given when a business like the electricity company is proposed to be purchased can easily be imagined. If the licensee knows that from a particular date he will cease to be the licensee of the undertaking', he has to take steps in anticipation of that date to arrange for contracts and obligations for the services of the staff and numerous other matters which an undertaking of this dimension may require the licensee to anticipate and provide for. It cannot, therefore, be said that the correct mention of the date of the expiry of the period is a mere formality or a technicality. It is undoubtedly connected with the management of affairs of the undertaking and the licensee must know from what date he will be required to deliver possession and the licence will cease. It may be noticed that the transfer of title by operation of law is not deferred until the sale is effected. It takes place on the delivery of the undertaking as provided in Section 7 as is now stands. The obligation to give delivery to the Board is cast by the statute [and is] not dependent on any action by the Board. We are pointing out all these consequences and provisions to show that the mention of the appropriate and correct date of the expiry of the relevant period is an integral part of the requirement of the section, and if that is not properly indicated or accurately mentioned, the notice must suffer from a serious lacuna proving fatal to the validity of the notice,

35. In this context, it is also pointed out that the Legislature advisedly used the word 'shall' in prescribing the manner of exercising the right of purchase and provides that the Board shall serve 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 the sub-section. The mere use of the word 'shall' may not be decisive of the intention of the Legislature. It is, at any rate, indicative that the Legislature intended what ought to be done and what the contents of the notice should be. The learned counsel for the petitioner referred us to the decision of the Madhya Pradesh High Court in G. & M. I. & E. Supply Co. v. M. P. Electricity Board : AIR1963MP1 and in particular to the observations at pages 3 and 4. The case arose under the Indian Electricity Act, 1910, and was between a licensee and the Madhya Pradesh Electricity Board. The question in that case was with regard to compliance with Sub-section (4) of Section 6 under which the State Electricity Board is required to give intimation of its intention to exercise the option to purchase. No such intimation was given in terms of Section 6(4). On the other hand, what the Board did was to request the Government of Madhya Pradesh to entrust the distribution of electricity at Neemuch to the Board in terms of certain clauses in the licence. Repelling the contention that the intimation was equivalent to compliance with Section 6(4), the Division Bench observed as follows (p. 4) :

The giving of an intimation under Sub-section (4) is not an empty formality between the Board and the State Government. The intimation when given makes the licensee, at least eighteen months before the expiry of the relevant period mentioned in Section 6(1), aware of the fact that the Board intends to purchase the undertaking and gives to the licensee the minimum statutory time of eighteen months within which to get ready for selling the undertaking to the Board. The absence of an intimation eliminates the Board from the field of those entitled to exercise the option of purchasing the undertaking and thus to that extent improves the chances of the licensee retaining its undertaking even after 'the expiry of the relevant period' referred to in Sub-section (1).

36. The use of the word 'shall' is ordinarily mandatory, though it is sometimes capable of being interpreted as not so, depending on the context in which the word is used. In the context in which the word 'shall' is used in this Section 6(1), we are of opinion that every requirement of the notice must be compulsorily carried out for a valid and effective exercise of the right of option to purchase by the Board.

37. A decision of the Allahabad High Court was relied upon by both the sides though for different purposes. That decision is reported in U. P. S. E. Board v. Seth R. Gopal [1965] All. L J. 187. On the facts giving rise to that case, it appears that the State Electricity Board there had given two notices to the licensee. In the earlier notice, the date of the expiry of the period was wrongly stated to be January 4, 1964, but in the subsequent notice which was styled as 'amending notice', the correct date of the expiry of the period was mentioned. The High Court observed (p. 192) :

Undoubtedly, the option must be exercised strictly in accordance with the procedure prescribed. The procedure requires that the option is to be exercised by serving upon the licensee the requisite notice. The notice is to be in writing and of not less than one year.

The learned counsel for the petitioner relies on this part of the judgment, namely, that the option must be exercised strictly in accordance with the procedure prescribed.

38. Patel and Co. v. State : AIR1966MP34 is another decision on which reliance is placed in support of the contention that when a condition precedent has to be satisfied before the rights created can flow and be enforced, the statutory provisions regulating the manner in which the right shall be exercised cannot be whittled down by any considerations of equity. The Division Bench observed as follows (p. 40)

It is a settled rule of construction of statutes that statutory provisions which regulate the manner in which the Government or public officials shall exercise the power vested in them and which are intended for the protection of public interest and private rights are to be construed mandatory rather than directory. It has been stated in Maxwell on Interpretation of Statutes, Eleventh Edition, at page 364 that

'Where powers, rights or immunities; are granted with a direction that certain regulations, formalities or conditions shall be complied with, it seems neither unjust nor inconvenient to exact a rigorous observance of them as essential to the acquisition of the right or authority conferred'.. .

39. The last case referred to in this context is of the Gujarat High Court to which we have already made a reference namely, Sidhpur Electric Industrial Co, Ltd. v. State of Gujarat [1964] Guj. 647. The argument before the Gujarat High Court was that the provisions relating to the service of notice and the requirement of calling upon the licensee to sell the undertaking were directory in nature and were not mandatory, and therefore if they did not strictly comply with the terms of Section 6, they could be examined with a view to see whether there was substantial compliance with the terms thereof. The notices concerned were given by the Board to certain licensees, under the Electricity Act. Then a passage from Crawford on Statutory Construction has been quoted to the following effect (p. 333) :

If a statute enumerates the things upon which it is to operate everything else must necessarily and by implication be excluded from its operation and effect, So if a statute directs certain acts to be done in a specified manner by certain persons, their performance in any other manner than that specified or by any other person than is there named is impliedly prohibited.

Again, a passage from Maxwell on Interpretation of Statutes is quoted to the following effect (p. 362):

It may, perhaps, be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is in the main governed by considerations of convenience and justice, and, when that result would involve general inconvenience or injustice to innocent persons, or advantage to those guilty of the neglect, without promoting the real aim and object of the enactment, such an intention is not to be attributed to the legislature.

Thereafter, the Court observed as follows (p. 695) :

In a previous passage, the learned author has stated that, when a statute mentions a certain prescription by way of a condition precedent, then, the compliance with that condition precedent is a mandatory provision, He has also stated that, when a statute prescribes a certain form or manner in which a certain act is to be done and also does not mention as to what the consequence of the non-compliance of the form or manner will be, then, the question as to whether the prescription is directory or mandatory has got to be judged by examining the whole scope and purpose of the enactment concerned... .Judicial precedents in India have recognised the principle enunciated by the English authorities that where breach of a provision is likely to cause injustice to innocent parties, then, compliance with that provision must be regarded to be mandatory. Maxwell has also pointed out that if the result of the breach of a provision is likely to give an advantage to the person who has to carry out the statutory duty, then, the provision may well be regarded as mandatory.....It is of the essence of the matter that the notice must exercise the option at the point of time mentioned in the section and if it does not comply with that part of the section, then, in our judgment the breach is fatal.

40. In our opinion, this contention of the petitioner is well-founded and must be accepted. As we have already pointed out, the right given to the State Electricity Board is a right of compulsory purchase of the undertaking. The undertaking of the licensee is bound to be delivered into the possession of the purchaser irrespective of its valuation. The possession has to be delivered first and the amount of compensation or price may be determined at a later date. If that is the consequence of the exercise of the right of purchase, the requirements of the law which creates this right and prescribes a mode of performance for enforcement of that right must be followed according to the provisions of the statute itself. There is no doubt, therefore, that the provision of Section 6(1) requiring the Board to mention in the notice that the licensee is required to sell the undertaking at the expiry of the relevant period is an essential requirement of the law and must be accurately and sufficiently described and mentioned in the notice. We are unable to hold that by reason of the amendment effected by the State Government in Clause 3(o)(i) of the licence, the period could be artificially altered to something less than ten years, so as to expire on a date earlier than ten years and thus to give a cause of action to respondent No. 1 to issue a notice requiring the petitioner to sell the undertaking at such an artificial date. We have already indicated that to speak of a period of ten years ending on May 4, 1967, is to speak something which is unintelligible. Once it is held that the date of commencement of the period was May 6, 1947 or May 6, 1957, the period of ten years could not possibly end on a date earlier than on the mid-night of May 5, 1967. We have also pointed out that the notice speaks of the expiry of the period on the mid-night of May 3/4, 1967, which is also wrong, because even in that case, assuming that the period of ten years were to expire on May 4, 1957, the date of expiry of the next period would be the mid-night of May 4/5, 1967 and not May 3/4, 1967. We are really unable to understand how the term in Clause 3(o)(i) regarding the time of expiration of the period of ten years could at all come to be artificially fixed as expiring on May 4, 1957, in the year 1967. The amendment is effected in this clause by the State Government in 1966, and what that amendment tells is that one period of ten years would expire on May 4, 1957. We have already pointed out that to speak of something to be done in future as the amended clause would seem to suggest by use of the words 'shall be exercisable' in 1967 with respect to a date of 1957 is again prescribing something which is impossible of performance. We have reproduced the amended el. 3(o) (i) as it emerges by reason of the amendment effected in 1966, and we are unable to see any reason why it was necessary to effect such a type of amendment in the term of the licence which provides for the exercise of an option to purchase on the expiry of the period indicated in the licence.

41. It is interesting to notice how the State Government itself understood the original provisions of Clause 3(o)(i) as it existed from 1947 till 1966. In para. 4 of their affidavit, the State Government have averred as follows:

I submit that the said clause 3(o)(i) of the said licence, as it stood prior to its amendment by the Notification dated the 19th April 1966 did not clearly specify the date on which the option of purchasing the petitioner's undertaking covered by the said licence could be exercised. I submit that the said Clause 3(o)(i) prior to its amendment provided for two alternative dates for exercising the right of purchasing the undertaking. The Government considered that it was not in the public interest to have an ambiguous provision like the said clause 3(o)(i) as it was prior to its amendment in a licence under the Indian Electricity Act, 1910.

So, in the view of respondent No. 2, the term 3(o) (i) of the licence as it stood prior to the amendment in 1966 was ambiguous. We are unable to see how that ambiguity is resolved, if not made worse, by the amendment. If the existing provision in Clause 3(o)(i) was ambiguous, we have no hesitation in holding that the amendment effected in 1966 makes it even more so and it is also unintelligible. We have, therefore, come to the conclusion that the respondents were not entitled to take any advantage of the amendment effected in Clause 3(o)(i). That amendment created an ambiguity because it was made retrospectively applicable and curtailed the period without any authority and therefore was ineffective. If the notice impugned in this petition was purported to have been given in exercise of that power, the power itself is nonexistent so far as the mentioning of the correct, elate of the expiry of the period of the licence is concerned. It is true that the power to exercise the option of purchase has been independently conferred on the State Electricity Board by reason of Section 6(1) of the Act as amended in 1959, but the exercise of the power is coupled with an obligation to exercise it in accordance with the manner prescribed in the section. If the requirements of that sub-section have not been complied with, the notice itself is invalid and must be struck down on that account, and accordingly, we hold that the impugned notice dated April 26, 1966, as per annexure E is invalid in law and is unenforceable and cannot be relied upon or availed of by respondent No. 1.

42. We may now consider another limb of the argument addressed before us by the learned counsel for the petitioner. That contention, according to the petitioner, goes to the very root of the matter and the contention is that the terms and conditions of the petitioner's licence cannot be altered in the manner that has been done by respondent No. 2, nor is respondent No. 1 entitled to exercise any right of purchase. The original licence granted in 1905 has been extracted as annexure A to the petition. Clause 3(g) of the licence speaks of the right of purchase and it says that this right shall enure after the stated period and the terms of purchase shall be those set forth in Section 7 of the Act. Paragraph 2 of the licence states that the 'the Act' means the Indian Electricity Act, 1903. Under the Indian Electricity Act, 1903, the right of purchase is given under Section 7(1) 'of that Act first to the local authority, and if the local authority does not elect to purchase, then to the local Government. The argument is that these are the only authorities which can exercise the right of purchase and not the State Electricity Board which is a creation of a much later date under the Indian Electricity Act, 1948 [Supply Act of 1948]. When the 1903 Act was repealed by the 1910 Act, Section 58 provided for the repeal and consequences thereof. That section is as follows:

58, (1) The Indian Electricity Act, 1903, is hereby repealed:

Provided that every Application for a licence made and every licence granted under the said Act shall be deemed to have been made and granted under this Act.(2) Nothing in this Act shall be deemed to affect the terms of any licence which was granted, or of any agreement which was made, by or with the sanction of the Government for the supply or use of electricity before the commencement of this Act.

It will be seen that under Sub-section (1), though the 1903 Act is repealed, every licence granted under that Act is to be deemed to have been made and granted under the 1910 Act. Thus, by a fiction, the petitioner's licence is to be deemed to have been granted under the 1910 Act. But according to the petitioner, it is Sub-section (2) which preserves his rights and obligations because under that sub-section nothing in the Act is to be deemed to affect the terms of any licence which was granted or of any agreement which was made, before the commencement of the 1910 Act. According to the learned counsel for the petitioner, Sub-section (2) of Section 58 is an independent provision and is not in the nature of a proviso or an exception to what is provided in Sub-section (1). The argument further is that if no provision of the Act is to be deemed to affect the terms of the licence, then the same result must follow even in respect of the action taken under the provisions of the 1910 Act. In other words, what is contended is that the power to alter the terms and conditions of the licence expressly granted to the authority under Section 4A of the 1910 Act cannot be called in aid to make any alterations in the terms and conditions of the licence granted to the petitioner under the 1903 Act. We are unable to accept this contention. It would be more appropriate to construe the provisions of Sub-section (2) of Section 58 as providing that no provision in the new Act, i.e. the 1910 Act proprio vigore affects or alters the terms and conditions of a licence granted like that of the petitioner under the repealed Act. But we are unable to interpret this provision as immunizing the licences granted under the 1903 Act from any action in the matter of alteration or amendment of the conditions of the licence under the provisions of the 19.10 Act. If that effect is to follow, the proviso to Sub-section (1) of Section 58 would be nugatory and of no consequence. Apart from this, it will be seen that the petitioner's licence has been amended in respect of vital matters and which must be with its consent as the law then stood. On April 24, l947, it was so amended and the effect of that amendment is that the provision in para. 2 applied the 1910 Act to the licence which is to be read and construed as subject in all respects to the provisions of the 1910 Act. What is more pertinent to note is that not only the 1910 Act is applicable but the Act which is for the time being in force. In other words, whenever an occasion arises to determine as to what Act applies, regarding the terms and conditions of the licence and the obligations of the licensee, it will be the Indian Electricity Act, 1910, [sic] for the time being in force. Section 4A of the Act is one of the sections of the Act, and if the State Government have taken action to amend the licence, there is no reason why the power to amend can be said to be wanting. Similarly, the authority which has been given the right to exercise the option of purchase is expressly provided for in Section 6. We are unable to accept the view that any provision of the 1910 Act by itself impliedly effects an alteration in the terms and conditions of the licence. Therefore, it will not be possible to hold that the licence itself should be deemed to be altered or amended, and the State Electricity Board is one of the authorities which shall have the right of exercising the option to purchase. Once it is held that the existing licence of the petitioner is governed by the provisions of the 1910 Act, it must follow that it is subject to the rights created in the Board under Section 6 and the obligations also created by that Act. The Board, therefore, has undoubtedly the right to exercise the option to purchase and it cannot be said that the Board is not one of the authorities which can exercise that option.

43. We are also unable to hold that there is any indication that Section 58(1) was to be on the statute book making provision for the repeal of the 1903 Act and that the Legislature intended that Sub-section (2) of that section should operate as an independent section. It is part of Section 58 and must be read as providing for consequences of the repeal and enactment of the Act under which the existing licences are deemed to have been granted. We must, therefore, reject the second contention of the petitioner that there was no power in the Board to exercise the option to purchase.

44. As we have come to the conclusion that the notice dated April 26, 1966, is invalid in law and is unenforceable having failed to satisfy the essential conditions of the notice, that notice must be struck down and accordingly we quash that notice. The result is that the petition is allowed and the petitioner will be entitled to its costs from the respondents.


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