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Narasaraopet Electric Corporation Ltd. Vs. State of Andhra (Now Andhra Pradesh) - Court Judgment

LegalCrystal Citation
CourtAndhra Pradesh High Court
Decided On
Case NumberW.P. Nos. 528/529 of 1955
Reported inAIR1959AP328
ActsAndhra Electricity Supply Undertakings (Acquisition) Act, 1954 - Sections 1, 5 and 8; Constitution of India - Articles 14, 31, 31(2), 31(5) and 366(10)
AppellantNarasaraopet Electric Corporation Ltd.
RespondentState of Andhra (Now Andhra Pradesh)
Appellant AdvocateB.V. Ramanarasu, Adv.
Respondent AdvocateD.V. Sastri, Adv.
DispositionPetition dismissed
.....1954 - vires of andhra act under question - act provided for takeover of electricity companies by government - compensation awarded at market rates but different modes of calculation - contention that different modes of computation of compensation violative of principle of equality - statute not violative of article 14 - another contention that statute invalid as it did not fall under list 2 - statute empowers state to acquire electricity company for its own purpose not for the union - statute falls under list 2 entry 36 of schedule 7. (ii) compensation - articles 31 (2) and 31 (5) of constitution of india - contention of company that different modes of calculation of compensation violative of article 31 (2) read with article 31 (5) - court opined that power of legislation does not flow..........competent for the madras legislature to make the enactment in question.3. subsequently, the andhra state legislature enacted the impugned statute. this law was made in exercise of the powers conferred by the constitution by means of entry 30 in list ii which gives power to state legislatures to make laws bearing on 'acquisition or requisitioning of property, except for purposes of the union, subject to the provisions of entry 42 of list iii'.we are not here concerned with the later amendment which deleted entry 36 from list ii and substituted entry 42 in the concurrent list. indisputably, the acquisition is not for the purpose of the union. consequently, it falls within the sweep of entry 36 of list ii. therefore, the competency of the state legislature to enact this legislative measure.....

P. Chandra Reddy, C.J.

1. In these petitions under Article 226 of the Constitution the Narasaraopet Electric Corporation Ltd., represented by its Managing Director attacks the constitutionality of the Andhra Electricity Supply Undertakings (Acquisition) Act (XV of 1954).

2. The petitioner was incorporated as a public limited company on 14th December, 1935, inter alia, with the object of supplying electricity to the town of Narasaraopet. After complying with Certain formalities as required by the provisions of the Indian Electricity Act, 1910, the petitioner obtained a licence from the Government under G. O. 968 dated 21st April, 1936. That licence contained Certain conditions and privileges but it is unnecessary for us to refer to all of them, except the one which says that the corporation was liable to be taken over by the Government after the expiry of twenty years.

It also provided that when the undertaking is purchased, compensation should be paid at the market value in addition to a solatium of twenty per cent. Before the expiry of this period, the Madras Legislature enacted the Madras Electricity Supply Undertaking (Acquisition) Act (XLIII of 1949). Pursuant to the provisions of this enactment, the Composite State of Madras served a notice on the petitioner stating that the undertaking would be taken over by the Government in January, 1951, but by a later G. O. the vesting was postponed till 26th February, 1951.

Meanwhile, the petitioner, as also the Rajahmundry Electric Supply Co., Ltd., filed writ petitions challenging the validity of the aforesaid Madras Act XLIII of 1949. The High Court of Madras rejected the contentions put forward on behalf of the petitioners therein and declared that the Act (XLIII of 1949) was intra vires except with regard to certain provisions, which are not quite material for the purpose of this enquiry.

The Rajahmundry Electric Supply Company Limited took the matter in appeal to the Supreme Court, which reversed the judgment of the Madras High Court and held that the Act was ultra vires the powers of the Madras Legislature for the reason that the pith and substance of the impugned legislation was 'the acquisition of a commercial undertaking', a subject which was not included within any of the lists in schedule IX of the Government of India Act, 1935.

It was ruled that in the absence of any provision in either of the lists, it was open to the Governor-General under Section 104 of the Government of India Act, 1935, which conferred the residuary power of legislation on him, to legislate on that subject and it was not competent for the Madras legislature to make the enactment in question.

3. Subsequently, the Andhra State legislature enacted the impugned statute. This law was made in exercise of the powers conferred by the Constitution by means of entry 30 in list II which gives power to State legislatures to make laws bearing on 'acquisition or requisitioning of property, except for purposes of the Union, subject to the provisions of entry 42 of list III'.

We are not here concerned with the later amendment which deleted entry 36 from list II and substituted entry 42 in the concurrent list. Indisputably, the acquisition is not for the purpose of the Union. Consequently, it falls within the sweep of entry 36 of list II. Therefore, the competency of the State legislature to enact this legislative measure cannot be questioned and, in fact, is not questioned. But the vires of certain provision of the impugned legislation is brought in issue.

4. It is urged that Section 5 of the Andhra Electricity Supply Undertaking (Acquisition) Act, 1954 infringes both Articles 14 and 31 ot the Constitution. The argument as amplified by Sri Ramanarasu is this, Under Section 7 of the Indian Electricity Act, 1910, every licensee whose undertaking is purchased would be paid compensation on the basis of the fair market value thereof, in addition to a solatium not exceeding twenty per cent.

Section 5 of the impugned Act which provides-different modes of calculation of compensation, affects the provisions of this 'existing law' and, therefore, is obnoxious to Article 31(2) read with. Article 31(5) of the Constitution. Article 31(5) imposed a fetter on the power of the legislature-derived under Article 31(2) to pass any law which affects the 'existing law' which in this context, is the Indian Electricity Act. In our opinion, this argument is the result of a misconception of the relevant Articles.

It is not Article 31(2) that invests the State legislature with powers of legislation and, therefore, there is no question of Article 31(5) enacting limitation on the legislative power of the State legislature. Article 31(2) gives only certain rights to the citizens and those rights are subject to Article 31(5). The effect of a combined reading of these two is that the rights guaranteed to a citizen under Article 31(2) are subject to the provisions of any 'existing law' governing the acquisition and payment of compensation therefor.

It is difficult to read Article 31(2) as vesting legislative authority in the State legislature and Article 31(5) as curtailing those powers. There is no scope for putting the interpretation that Article 31(5) disables thg State legislature to enact laws inconsistent with the 'existing law' as defined in Article 366(10). We have already pointed out the object and purpose of Article 31 and it is impossible to attribute the intendment suggested by the learned counsel for the petitioner to that Article. We are not, there-fore, impressed with this argument and it is to be rejected.

It is not disputed that the State legislature can make its own laws providing for payment of compensation. All that Article 31 contemplates is that there should be no compulsory acquisition unless it be for a public purpose. That the acquisition in the instant case is for a public purpose is not denied. That the impugned law provides for acquiring the undertaking and for payment of compensation cannot also be disputed IInd is not, In fact, disputed. Therefore, we are unable to see how Article 31(2) comes to the rescue of the petitioner.

5. That apart, by force of the Constitution Fourth Amendment Act of 1955, no law could be called in question in any court on the ground that the compensation provided by that law is inadequate, In other words, the basis of compensation is not justiciable. It is argued by Sri Ramanarasu that the instant case is not attracted by the last part of Article 31(2) for the reason that he is not questioning the quantum of compensation but only the basis of compensation. We are unable to appreciate this distinction which, in our opinion, is without any basis. He is certainly calling in question the provisions of Section 5 of Act XV of 1954 which prescrilies a particular basis for estimating the compensation. There can, therefore, be little doubt that it is covered by the latter part of Article 31(2) of the Constitution.

6. Turning to the next contention of Sri Ramanarasu, we are unable to see how Section 5 is violative of the equal protection clause enshrined in Article 14 of the Constitution. The argument that the, Act gives scope for discriminative treatment to different corporations is without any substance. Section 5 which deals with the compensation payable to a licensee whose undertaking has been taken over by the Government before the commencement of that Act (XV of 1954), provides that the compensation should be determined under any of the leases A, B and C specified thereunder as may be chosen under Section 8 of that Act.

It is needless for us to advert to the bases, as nothing turns on them at present. Section 8 enables the licensee through an accredited representative, to chose any of the bases indicated in Section 5. It is noted that it is a right given to every one of the licensees. The licensee is entitled to intimate the Government in writing which basis of compensation shall he adopted in respect of his undertaking. It is not as if any discretion is vested in the Government to choose one mode of classification for one licensee and another for another person. We are, therefore, unable to see how Section 5 constitutes any discrimination among the licensees. It follows that neither of the contentions can prevail. We hold that none of the provisions of the impugned Act is ultra vires.

7. The Writ Petitions are, therefore dismissed with costs. Advocate's fee in both the petitions is fixed at Rs. 100/-.

8. Mr. Ramanarasu wants us to direct that further proceedings may be conducted as expediliously as possible. That is not a matter for us to give any direction. It is entirely for the Government to do it and we have no doubt that this will be done as early as possible.

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