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Firm Kishore Chand Shiva Charan Lal Through Raghunath Prasad Tandon and anr. Vs. Budaun Electric Supply Co., Ltd., Through P.L. Jaitey and Co. - Court Judgment

LegalCrystal Citation
SubjectElectricity;Civil
CourtAllahabad
Decided On
Reported inAIR1944All66
AppellantFirm Kishore Chand Shiva Charan Lal Through Raghunath Prasad Tandon and anr.
RespondentBudaun Electric Supply Co., Ltd., Through P.L. Jaitey and Co.
Excerpt:
- - on 9th june 1932, the provincial government revoked the license on the ground that the company had failed to satisfy the government that it was in a position fully and efficiently to discharge its duties and obligations imposed by the license. (a) the licensee shall within the period fixed in that behalf by his license, or any longer period which the provincial government may substitute therefor by order under section 4, sub-section (3), clause (b), electricity act, 1910, before exercising any of the powers by the license conferred on him in relation to the execution of works show, to the satisfaction of the provincial government, that he is in a position fully and efficiently to discharge the duties and obligations imposed upon him by the license throughout the area of supply, (b).....bajpai, j.1. this is an appeal against a judgment and decree, dated 8th march 1940, of the civil judge of budaun by which the plaintiffs' claim for execution of the sale deed of an undertaking was dismissed. defendant 1, heareafter called the company, is an electric supply company for the supply of electricity within the municipality of budaun, and defendant 2 is its managing agents. by an order of the government, the company was required to sell its undertaking to the plaintiffs and by an award of the arbitrator appointed by the government the sale price of the undertaking was determined to be rs. 1,71,084-3-6. the plaintiffs alleging that they had been working the undertaking under the orders of the government and that they were entitled to set off against the sale price the amount due.....
Judgment:

Bajpai, J.

1. This is an appeal against a judgment and decree, dated 8th March 1940, of the Civil Judge of Budaun by which the plaintiffs' claim for execution of the sale deed of an undertaking was dismissed. Defendant 1, heareafter called the company, is an electric supply company for the supply of electricity within the Municipality of Budaun, and defendant 2 is its managing agents. By an order of the Government, the company was required to sell its undertaking to the plaintiffs and by an award of the arbitrator appointed by the Government the sale price of the undertaking was determined to be Rs. 1,71,084-3-6. The plaintiffs alleging that they had been working the undertaking under the orders of the Government and that they were entitled to set off against the sale price the amount due to them for debentures of the company of rupees two lacs held by them raised an action in the Court of the Civil Judge of Budaun for an order against defendant 1

to execute the sale deed of the entire Electrical Undertaking at Budaun within a period prescribed by the Court, in default whereof the said sale deed be executed and sale completed by the Court on behalf of the said defendant.

The defendants challenged the validity of the order of sale. They further challenged the validity and the finality of the award and they demurred that the action was misconceived and pleaded that the relief claimed could not be granted in law. The Civil Judge accepted the defence and dismissed the claim.

2. In this appeal the questions which arise for our consideration are largely legal ones, but before we examine them it is necessary to state certain facts about which there is no dispute and settle other facts about which there is some controversy. On 22nd April 1929, the Governor-in-Council in these Provinces granted a license to defendant 2 for supply, of electricity within the municipal area of Budaun. In or about the month of October in the same year, the company was incorporated with a share capital of seven lacs and one of the objects set out in its memorandum of association was to acquire the said license and to supply electrical energy within the Municipality of Budaun. On 20th November 1930, the Provincial Government sanctioned the transfer of the said license to the said company. On 9th June 1932, the Provincial Government revoked the license on the ground that the company had failed to satisfy the Government that it was in a position fully and efficiently to discharge its duties and obligations imposed by the license.

3. At the time when this license was revoked the undertaking of the company was in a most nebulous condition. It certainly was not in possession of a plant to generate electricity and had no means to pay for it. It had acquired some land on lease from the municipality and had put up some buildings. It had purchased a large stock of cables, wires and poles and probably it had put up some of the mains and service lines on the streets, but its installations and the works which it was required to do under the license were wholly incomplete and it was not in any position to supply electrical energy. After the revocation of the license the company continued in the hope that its license would be renewed. To improve its finances on 17th November 1932 it arranged a loan of two lacs from the plaintiffs which is a joint Hindu family firm owned by three brothers. Under this arrangement the company issued debentures of rupees two lacs secured by a trust deed with two trustees, one of whom was one of the plaintiffs, which were underwritten and later on purchased by the plaintiffs. By another agreement of the same date the same plaintiff who acted as one of the trustees in the trust deed was also made an agent of defendant 2 and was to share in the commission of managing agency of defendant 2 and was to manage the business of the company at Budaun.

4. As a result of the combined efforts of the plaintiffs and of the defendants, the company secured a plant and completed its works and installations and became in a position to supply electricity. On 1st June 1933, the Governor-in-Council granted the company an interim sanction under Section 28(1), Electricity Act (9 of 1910) to supply electrical energy within the Municipality of Budaun subject to certain conditions, one of which was that it should apply within a specified time for a license. This application was duly made, but unfortunately by this time the plaintiffs decided to secure the license for themselves and they opposed the application with the result that the Government refused the license to the company and directed that the undertaking be sold by the company to the plaintiffs. The interpretation of the order of the Government, which is dated 5th March 1934, is a matter of controversy and is in these words:

With reference to your application No. 150/E. 403/33, dated 14th August 1933, for the grant of a license to supply electric energy within the municipal limits of Budaun, I am directed to say that the Governor in Council regrets that he is unable to grant a license to the company.

2. In regard to the company's undertaking at Buduan I am to say that Messrs. Kishore Chand Shiva Charan Lall, landowners, Bankers and Mill Agents, Bareilly, have expressed their willingness to purchase the entire undertaking on the conditions laid down in Section 5, Electricity Act, 1910. In exercise of the powers conferred by Section 5(c) of the aforesaid Act, the Governor in Council, therefore, requires the company to sell the entire Budaun Electric supply undertaking to the Baid Messrs. Kishore Chand Shiva Charan Lall of Bareilly on payment of a price not less than that for which the Municipal Board of Budaun might have purchased the same on the conditions stipulated in Section 5(b) of the Act. I am accordingly to ask you kindly to take immediate action to complete the Bale within 60 days of the date of this order. Should the sale be not completed by that date Messrs. Kishore Chand Shiva Charan Lall are authorised, under Section 5(g) of the Act, to work the undertaking pending the completion of the sale.

3. I am to add that the sanction of the Government conveyed in their Letter No. 123-E. 1, dated 1st June 1933, under Section 28(1), Electricity Act, 1910, will continue to be in force till the sale proceedings are completed.

5. At the time when this order was passed the plaintiffs and the defendants were in joint possession of the undertaking and the plaintiffs' possession was that of an agent of the defendants. Under the cover of a series of orders--executive and magisterial, some of which it would be difficult to justify--the plaintiffs ousted the defendants from possession of the undertaking and since 15th May 1934, the plaintiffs have been in exclusive possession of the undertaking and have been, supplying electricity within the Municipality of Budaun. At the request of the plaintiffs the Provincial Government appointed an arbitrator to determine the price of the undertaking of the company and the arbitrator gave an award, dated 14th November 1936, by which the sale price was assessed at Rs. 1,71,084-3-6. This award later oh was forwarded by the arbitrator to the District Judge of Budaun to be deposited in Court and by the following order of the District Judge, dated 1st October 1937, it was consigned to the record room:

The arbitration award has come back from the collectorate of Budaun with a certificate of the Collector that stamp and penalty have been realised. It is, therefore, ordered that the file be consigned to the record room. If at the time of execution any application will be made, then at that time a decision will be given about the award.

6. At the request of the plaintiffs, the Provincial Government also decided by an order, dated 9th July 1934, that the plaintiffs were entitled to set off the sale price of the undertaking from the value of the debentures of the company held by them. During the time when the arbitration proceedings were held and the award was made injunctions were out against the plaintiffs and the defendants issued by Courts at the instance of creditors prohibiting the plaintiffs from purchasing and the defendants from selling the undertaking. When these injunctions expired the plaintiffs called upon the company to execute a sale deed of the undertaking and on its refusal to do so raised this action.

7. The questions which now arise relate to the validity of the order of revocation, of the order of sale and of the award and assuming the validity of these to the validity of relief which the plaintiffs have claimed in this action. The Provincial Government derives its power to grant license by Section 3, Electricity Act (9 of 1910), hereafter called the Act, and Section 3(2)(f) of the Act provides that the provisions contained in the schedule of the Act shall be deemed to be incorporated with, and to form part of, every license granted under the Act,

save in so far as they are expressly added to, varied or excepted by the license, and shall, subject to any such additions, variations or exceptions which the Provincial Government is hereby empowered to make, apply to the undertaking authorised by the license.

8. Clause 1 of the schedule of the Act is in these words:

1. Where the licensee is not a local authority, the following provisions as to giving security shall apply, namely:

(a) The licensee shall within the period fixed in that behalf by his license, or any longer period which the Provincial Government may substitute therefor by order under Section 4, Sub-section (3), Clause (b), Electricity Act, 1910, before exercising any of the powers by the license conferred on him in relation to the execution of works show, to the satisfaction of the Provincial Government, that he is in a position fully and efficiently to discharge the duties and obligations imposed upon him by the license throughout the area of supply, (b) The licensee shall also within the period fixed in that behalf by his license, or any longer period which the Provincial Government may substitute therefor by order under Section 4, Sub-section (3), Clause (b), Electricity Act, 1910, and before exercising any of the powers conferred on him in relation to the execution of works, deposit or secure to the satisfaction of the Provincial Government such sum (if any) as may be fixed by the license or, if not so fixed, by the Provincial Government, (c) The said sum deposited or secured by the licensee under the provisions of this clause shall be repaid or released to him on the completion of the works or at such earlier date or dates and by such instalments, as may be approved by the Provincial Government.

And Clause (iv) of the schedule is as follows:

The licensee shall, within a period of three years after the commencement of the license, execute to the satisfaction of the Provincial Government all such works as may be specified in the license, in this behalf or, if not so specified, as the Provincial Government may, by order in writing issued within six months of the date of the commencement of the license, direct.

9. The Act also gives power to the Provincial Government to revoke a license without the consent of the licensee under certain definite conditions, when wilful and prolonged default is made in doing anything required by the Act, when any term or condition of the license is broken which expressly entails revocation and on account of the insolvency of the licensee. But there is one other power of revocation which is a subject of controversy in this case and which is provided in Section 4(1)(c) in these words:

The Provincial Government may, if in its opinion the public interest so requires, revoke a license in any of the following eases, namely...(c) Where the licensee fails, within the period fixed in this behalf by his license or any longer period which the Provincial Government may substitute therefor by order under Sub-section (3), Clause (b) and before exercising any of the powers conferred on him thereby in relation to the execution of works--(i) to show, to the satisfaction of the Provincial Government that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his license, or (ii) to make the deposit or furnish the security required by his license.

10. By para. 3(1) of the license granted to the company, dated 22nd April 1939, a period of three years was fixed within which the licensees were to satisfy that they were in a position to discharge their duties and obligations imposed by the license and by Clause 3(2) Rs. 5000 was fixed as the amount of security which was to be given within six months. By para. 5 of the license the compulsory works which were set out in the second annexure of the license and which the licensees were required e to execute under Clause (iv) of the schedule were to be completed within three years, and by para. 5(2) the license was liable to be revoked in case the works were not so completed. The license of the company was revoked on 9th June 1932. By that time the period of three years fixed in the license both for completion of works and for giving satisfaction to the Government that the licensees were in a position to discharge their duties had run out and during this time the licensees had exercised undoubtedly some of the powers conferred upon them by the license in relation to the execution of works though the works required, by them to be completed had not been completed. The Provincial Government in revoking the license in its order dated 9th June 1932 expressly relied upon the powers conferred upon it by Section 4(1)(c) of the Act and the actual order is as follows:

Notice under Section 5, Electricity Act, 9 of 1910. Whereas you, the permitted assigns of Messrs. P.L. Jaitly & Co. of Allahabad, the licensees from the supply of electricity at Budaun, have failed to satisfy the Local Government that you are in a position fully and efficiently to discharge the duties and obligations imposed upon you by the Budaun Electric license, issued under Notification No. 174-EI/25-EI 1928 dated 22nd April 1929, as required by Clause 3(1) of that license, Notice is hereby given under sub, Section (a) of Section 5, Electricity Act, 1910 (9 of 1910), that the Local Government in exercise of the powers conferred by Section 4(1)(c)(1) of the Act, have revoked the said license on 9th June 1932, and with effect from 9th July 1932 all your powers and liabilities under the Act shall absolutely cease and determine.

11. The Provincial Government is no party to these proceedings. All the circumstances which were taken in consideration by the Government in passing this order are not before us, but in a letter which the Government wrote to the company on 28th July 1932 in reply to the explanation offered by the company for the delay in completing the work, the Government gave out some of the reasons which prompted it to revoke the license. This letter further shows that the Government at that time did not contemplate a compulsory acquisition of the undertaking of the company and it was of opinion that the licensees were free to dispose of the undertaking when they wished and the licensees' only obligation was to clear up the public streets in Budaun within six months, and thus throws light also on another matter of controversy which will be discussed later on and we, therefore, propose to quote it in extenso:

In reply to your letter of 5th July, I am directed to say that Government are unable to accept your explanation of the delay in completing the work in Budaun as satisfactory.

2. In Para. 4 of your letter you say that the conditions for revoking the license do not concern the undertaking of the Budaun Electric Supply Co. Ltd., at all, but were connected with that of the Lower Ganges Jumna Electricity Distribution Co., Ltd. This is not in accordance with the facts. It is true that your failure to pay the amount due to the Irrigation Branch for power supplied to Bulandshahr and Aligarh was taken into consideration, but Clause 3 of the Budaun license says that the licensee shall show to the satisfaction of Government that they are in a position fully and efficiently to discharge the duties and obligations imposed on them by this license throughout the area of supply. In arriving at a conclusion Government are not bound to take into consideration only conditions in Budaun. If they conclude from conditions elsewhere that the licensee is not in a position to discharge his duties in Budaun they are at liberty to cancel the Budaun license.

3. In Para. 5 of your letter you say that in the time of one month which has been allowed it is not possible to adjust the liabilities or to sell the undertaking in Budaun. You state that the negotiations will take at least six months, and that that time should be allowed by the Government if they insist on revoking the license. This statement rests on a misapprehension. It is true that one month is mentioned in the notice, but that month is not the period within which the licensee must sell the concern. Section 5, Electricity Act, makes this clear. The licensee can sell when he wishes, but if he has not done so within six months Government may remove obstruction in a public street.

4. You finally ask that Government will reconsider their decision to revoke the Budaun license. I am to say that this matter is under consideration and that Government will address you later about it.

12. For the defendants, it was broadly contended that the Government revoked the license not because the company had failed to complete its works within the time fixed by the license but because the company could not satisfy the Government about its qualification to discharge the duties and obligations under the license and this conclusion was arrived at by the Government not on any failure of duty of the company but on account of the failure of duty of other companies with which the company had no concern, and the Government's order of revocation is based upon irrelevant matters and is not a proper revocation in law. It was further contended that the power of revocation of the Government is subject to two limitations that it should be exercised within the period fixed in the license for giving satisfaction by the licensee and before the licensee had exercised any powers under the license, and once these powers under the license had been exercised by the licensee or the time limited for giving satisfaction had run out the Government's power to revoke the license under Section 4(1), Clause (c)(1) of the Act, came to an end.

13. The conditions about satisfying the Government as to qualification and about furnishing security in Section 4(1), Clause (c) are subject to identical limitations, namely, that they have to be within a specified time and before the exercise of any of the powers conferred by the license. It is manifest that the licensee, would be entitled to deposit his security up to the last hour of the last day fixed in the license and if the license is to be revoked on the ground of failure of deposit of the security, the revocation of necessity shall have to be made after the time for depositing the security had run out. It follows, therefore, that the time limit with regard to security operates only in favour of the licensee and against the licensee and it does not apply to Government which can make the revocation after time had run out. For a similar reason the condition that satisfaction as to his qualification by the licensee shall be given before any powers are exercised and within the time fixed in the license also operates in favour of and against the licensee and they do not apply to Government and it is open to Government to revoke the license even after powers had been exercised by the licensee and time fixed in the license had run out. The Act nowhere prescribes the manner in which the Government would be satisfied and the evidence which is required for this satisfaction. It is also obvious that if once the Government has finally come to the conclusion that the licensee was qualified to discharge his duties it cannot change its mind subsequently and act under Section 4(1)(c) of the Act. Ordinarily, it will be in the interest of all parties that this decision should be reached before any powers under the license are exercised. And after the supply had begun, or when the works had considerably advanced or when the power was exercised long after the time fixed for satisfaction in the license, a presumption might arise that satisfaction in fact was given by the licensee and it might not be open to Government to revoke the license on that ground. But it is also open under the Act to Government to fix any period for the satisfaction and to make the period of completion of works and of satisfaction as to qualification synchronise and to judge the qualification of the licensee with reference to the progress of his work. In such a ease no presumption can arise by the mere exercise of powers under the license that the Government had in fact received satisfaction as to qualification of the licensee and it is for the licensee if he wants not to exercise the powers under the license before giving satisfaction to Government to insist on a condition in the license that the work shall not begin till the satisfaction is accepted and to insist on a short term for satisfaction of qualification and a long term for the completion of works.

14. Having regard to the fact that the license provided a period of three years for satisfaction of qualification and also for completion of works, it is not possible to hold that by mere exercise of powers under the license by the licensee an inference should be drawn that the Government had received satisfaction as to qualification before the exercise of power was allowed. Having regard to the facts that the defendant company had not completed its works within the time fixed in the license and that defendant 2 its managing agent was also the managing agent of certain other electric supply companies in the province which had made serious defaults, the Government was entitled to come to a decision whether the company with such a managing agent was in a position to discharge its duties and if the decision was arrived at as it was within 45 days of the time limit fixed in the license and was adverse to the company, we cannot say that the decision arrived at was made with any unreasonable delay or was unjustified or was beyond the powers of the Government.

15. But there is yet a more serious objection to the restoration of the license. At the time when the license was revoked the undertaking of the company was in a most nebulous condition, indeed if it had assumed any definite shape at all. The undertaking virtually came into existence after the revocation of the license. For about twelve months the company supplied electrical energy within the 'Municipality of Budaun under a sanction from the Government and not under any license. For nine years after that the plaintiffs have been supplying energy with the permission of the Government in anticipation of the sale in their favour. For a similar period, the company has not supplied any energy, has not worked any undertaking and, for all practical purposes, has ceased to function except for purposes of litigation. New rights and new liabilities have come into existence and have remained in operation since then. To unsettle these facts and to receive a license which has now been dead for eleven years in favour of a moribund company against the wishes of Government in relation to a matter of public utility is a proposition which cannot be entertained except for most compelling reasons. The legal effects of the revocation of the license are provided in Section 5 of the Act, which is as follows:

Where the Provincial Government revokes, under Section 4, Sub-section (1), the license of a licensee, not being a local authority, the following provisions shall have effect namely:

(a) the Provincial Government shall serve a notice of the revocation upon the licensee, and, where the whole of the area of supply is included in the area for which a single local authority is constituted, upon that local authority, also, and shall in the notice fix a date on which the revocation shall take effect; and on and with effect from that date all the powers and liabilities of the licensee under this Act shall absolutely cease and determine;

(b) Where a notice has been served on a local authority under Clause (a), the local authority may, within three months after the service of the notice, and with the written consent of the Provincial Government by notice in writing, require the licensee to sell, and thereupon the licensee shall sell, the under. taking to the local authority on payment of the value of all lands, buildings, works, materials and plant of the licensee suitable to and used by him for, the purposes of the undertaking, other than a generating station declared by the license not to form part of the undertaking for the purpose of purchase, such value to be, in case of difference or dispute, determined by arbitration:

Provided that the value of such lands, buildings, works, materials and plant shall be deemed to be their fair market value at the time of purchase, due regard being had to the nature and condition for the time being of such lands, buildings, works, materials and plant, and to the state of repair thereof, and to the circumstance that they are in such a position as to be ready for immediate working, and to the suitability of the same for the purposes of the undertaking, but without any addition in respect of compulsory purchase or of goodwill or of any profits which may be or might have been made from the undertaking, or of any similar considerations;

(c) Where no purchase has been effected by the local authority under Clause (b), and any other person is willing to purchase the undertaking, the Provincial Government may, if it thinks fit, with the consent of the licensee or without the consent of the licensee in case the price is not less than that for which the local authority might have purchased the same, require the licensee to sell, and thereupon the licensee shall sell, the undertaking to such other person

(d) Where no purchase has been effected under Clause (b) or Clause (c) within such time as the Provincial Government may consider reasonable, or where the whole of the area of supply is not included in the area for which a single local authority is constituted, the Provincial Government shall have the option of purchasing the undertaking and, if the Provincial Government elects to purchase, the licensee shall sell the undertaking to the Provincial Government upon terms and conditions similar to those set forth in Clause (b);

(e) Where a purchase has been effected under any of the preceding clauses;

(i) the undertaking shall vest in the purchasers free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking;

Provided that any such debts, mortgages or similar obligations shall attach to the purchase money in substitution for the undertaking; and

(ii) the revocation of the license shall extend only to the revocation of the rights, powers, authorities, duties and obligations of the licensee from whom the undertaking is purchased, and, save as aforesaid, the license shall remain in full force, and the purchaser shall be deemed to be the licensee;

Provided that where the Provincial Government elects to purchase under Clause (d), the licensee shall, after purchase, in so far as the Provincial Government is concerned, cease to have any further operation;

(f) Where no purchase has been effected under any of the foregoing clauses, the licensee shall have the option of disposing of all lands, buildings, works, materials and plant belonging to the undertaking in such manner as he may think fit:

Provided that, if the licensee does not exercise such option within a period of six months from the date on which the same became exercisable, the Provincial Government may forthwith cause the works of the licenses' in, under, over, along or across any street to be removed and every such street to be reinstated, and recover the cost of such removal and reinstatement from the licensee;

(g) If the licensee has been required to sell the undertaking, and if the sale has not been completed by the date fixed in the notice issued under Clause (a), the purchaser may, with the previous sanction of the Provincial Government work the undertaking pending the completion of the sale.

16. Section 5 (a) of the Act provides that a date shall be fixed in the notice on which the revocation shall take effect and 'with effect from that date all the powers and liabilities of the licensee under the Act shall absolutely cease and determine.' By the notice, dated 9th June 1932, given by the Government to the company the revocation was to take effect from 9th July 1932, and the notice also expressly provided that with effect from that date 'all the company's powers and liabilities under the Act shall cease.' The Government ordered the company under Section 5(c) of the Act to sell its undertaking to the plaintiffs on 5th March 1934, long after the company's liabilities under the Act had ceased. Could the Government pass such an order admittedly to enforce a liability which arose under the Act, after the liability of the company had ceased under the Act?

17. For the defendants, it is contended that Clause (a) of Section 5 precedes and governs all other clauses of the section, namely, Clauses (b) to (g) and it is at the option of the Government to bring into operation Clauses (b) to (g) or not. If the Government wishes to do so, the Government is required to provide a long term in the notice at the expiration of which revocation is to take effect so that during the subsistence of the powers and liabilities of the licensee under the license Clauses (b) to (g) of the Act might be brought into operation, but if by mistake, accident or intention the Government has given a short term in the notice, on which the revocation is to take effect, then Clauses (b) to (g) are destroyed and cannot be brought into operation. The first observation which falls to be made on this contention is that some of the rights and liabilities which arise under Clauses (b) to (g) of Section 5 can only come into existence after the powers and liabilities of the e licensee under the license as also under the Act had ceased and determined. So long as the license subsists, the licensee is bound to supply electrical energy to public and to maintain his undertaking and his works under the license. It is only after the revocation of license and its taking effect that he can be permitted under Clause (f) of Section 5 to pull down his works and to dispose of his undertaking and he has six months within which to do so, at the expiration of which the Government can clear up the public streets and recover costs from him. Undoubtedly, these costs are a liability under the Act and they cannot possibly be recovered till after the revocation had taken effect. If Clause (f) of Section 5 comes in operation only after revocation has taken effect under clause (a), there is no reason why other clauses, namely, (b) to (e) also should not take similar effect. It may also be noticed that Clause (a) does not give any statutory period on expiration of which the revocation is to take effect and the Government is left entirely free to give a short term or long term after which the revocation is to take effect. It may further be noticed that Section 5 provides that when the Government revokes the license the following provisions, viz., Clauses (a) to (g) of the section shall have effect which implies that all clauses shall have effect and not that Clause (a) shall have effect and Clauses (b) to (g) may have effect. Clause (a) of Section 5 that 'with effect from that date all the powers and liabilities of the licensee under this Act shall absolutely cease and determine' therefore obviously means 'powers and liabilities' other than those specified in Section 5 of the Act.

18. Clause (b) of Section 5 authorises the local authority to require the licensee to sell the undertaking to the local authority on payment of the value of the undertaking, 'such value to be, in case of difference or dispute, determined by arbitration.' Clause (d) of Section 5 authorises the Government to purchase the undertaking 'upon terms and conditions similar to those set forth in el. (b).' There is no express arbitration clause occurring in Clause (d), but as terms and conditions of Clause (b) apply to Clause (d) these words are wide enough to bring in the arbitration clause which is to be found in Clause (b). Clause (c) of Section 5 authorises the Government to require the sale of the undertaking to any other person with the consent of the licensee or without his consent 'in case the price is not less than that for which the local authority might have purchased the same.' There is no express arbitration clause to be found in Clause (c) and the change in the language in Clause (e) from Clauses (b) and (d) is striking. Can the Government order a sale at all under this clause when no price was mutually agreed or determined by arbitration between the licensee and the local authority and can the Government order an arbitration under this clause in ease of difference or dispute between the licensee and the purchaser?

19. Relying mainly upon the change in language in three clauses of the same section and upon the fact that such a power does not exist in England, the defendants contend that Clause (c) was enacted to provide for an exceptional case for an emergency when the price had been settled by mutual agreement or by arbitration between the local authority and the licensee and after completion of these proceedings the local authority, for financial reasons or for some other unexpected causes, was unable to carry out its engagement and was faced with a suit for specific performance and damages and the Government was faced with the danger of the undertaking being closed and some town being plunged in darkness. It was to provide for this kind of emergency that this power was given and not to provide a patronage for the Electric Department of the Government.

20. There is no warrant for the supposition that this clause was enacted to provide for an emergency or for an exceptional case which may rarely arise in practice. The Act was intended to develop electricity in this country and to attract private and joint stock enterprise in its development. The Legislature must have been aware that for many years to come the local authorities in this country would not be in a position to finance or run electrical undertakings. Even now there are very few municipalities in this country who can or do manage these undertakings. The presumption, therefore, is the other way that the clause was enacted to meet the case of a frequent occurrence. The argument on the change of language in three clauses remains. But it is conceded that in Clause (d) an arbitration clause can be read into. In our opinion, an arbitration clause can also be read into in Clause (c) and the language of Clause (c) is wide enough to permit its application to cases where the local authority did not care to purchase the undertaking from the very outset and where no price was fixed by mutual agreement or arbitration between the licensee and the local authority and under this clause a sale can be ordered in favour of a third person and in case of difference and dispute as to price it can be determined by arbitration.

21. The trial Judge held that the order of sale was invalid on the ground that it was contradictory and inconsistent and it was passed as a result of misrepresentation made by the plaintiffs without serving a notice upon the Municipality of Budaun as required by Clause (a) of Section 5 of the Act. With some of these findings it is difficult to agree. No doubt the last three : lines of para. 2 of G.O., dated 5th March 1934, which we have quoted above, authorised the plaintiffs to work the undertaking 'pending the completion of the sale' and para. 3 of that order also authorised the company to work the undertaking 'till the sale proceedings are completed' and the language used, in these two paragraphs is somewhat unhappy and lends itself to a possible construction that at one and the same time two different persons were authorised to work the undertaking. But, in our opinion, the order of the Government really means that the company was to work the undertaking under the sanction of 1st June 1933, till the sale proceedings were completed but within a period of sixty days mentioned in para. 2 and after the period of sixty days the plaintiffs were to work the undertaking and so interpreted the order does not contain inconsistent provisions. And though it is possible to take the view that the plaintiffs being agents of the defendants were not justified while retaining their character as an agent to act against the interest of the defendants, there is no definite evidence upon which to come to the conclusion that the order of the Government was passed as a direct result of the misrepresentations made by the plaintiffs whatever may be the suspicious circumstances which surround this part of the case.

22. But there is some difficulty with regard to the question of the notice to the Municipal Board of Budaun. Admittedly no such notice has been proved and on the evidence we cannot go any further than this that the Municipal Board, in all probability, were aware of the revocation of the license and were not opposed to a grant of license to the plaintiffs and were not themselves prepared to purchase the undertaking. But this finding does not dispense with the requirement of a notice and it is not possible to accept the contention of the plaintiffs that service of a notice is an official act which may be presumed under Section 114, Evidence Act.

23. It was submitted on behalf of the plaintiffs that as a matter of fact notice was served by the Government to the Municipality of Budaun as required by Section 5(a) of the Act and by mistake some relevant documents could not be produced at the trial. An application was also made to us to admit fresh documents on this part of the case which was opposed and had to be rejected. It would not have been sufficient merely to receive fresh documents. It would also have been necessary to call witnesses to prove these documents and to give an opportunity to the other side to rebut this new case and this would have necessitated practically a remand and a fresh trial of an issue. If the order of sale had to be invalidated on the sole ground of want of evidence relating to the service of notice, we might have considered the propriety of a remand, but as we have come, to the conclusion that the order of sale is liable to be questioned on another ground it is not necessary to pursue this matter any further. An undertaking can be required to be sold under Section 5 of the Act as provided by Clause (b) of the section on payment of

the value of all lands, buildings, works materials and plant of the licensee suitable to, and used by him for, the purposes of the undertaking...such value to be, in case of difference or dispute, determined by arbitration' and 'that the value of such lands, buildings, works, materials and plant shall be deemed to be their fair market value at the time of purchase....

Two matters arise on the construction of this clause. Must lands, buildings, works, materials and plant all co-exist and must they be all acquired together? If so, the clause implies that an incomplete undertaking which has not substantially reached the stage of supplying electrical energy and comprises only of one or two or more of these things but not of all of them cannot be compulsorily ordered to be sold. This is a possible construction, but even if the other construction be accepted and it might be possible to acquire lands, buildings, works, materials and plant, one or more of them but not all of them, provided it or they comprise the entire undertaking at the time, there must be evidence to show that the property which was sought to be ordered to be sold was suitable to, and was used for, the purposes of the undertaking. And it would be a question of fact in each case whether the particular property sought to be acquired did or did not answer the description. Now, there is no definite and reliable evidence to show that on the date when the revocation of its licence came into effect how much of lands, buildings, works and materials of the company were suitable to and were used for the purposes of the undertaking. At the time of revocation of licence, the Government took the view that the undertaking of the company, such as it existed at the time, was not worth a compulsory order of sale and the company was free to dispose it off as it wished and its only liability was to remove obstructions from the streets within six months. Relying upon this view of the matter, the company completed its undertaking and worked it under a sanction which was granted under Section 28 of the Act. Lands, buildings, works and materials which had existed at the time of revocation of the licence were merged into a new and complete undertaking which came into existence after the revocation of licence had taken effect. The Government never exercised its rights to acquire that portion of the undertaking which was in existence at the time of the revocation. And it will be late in the day now for the Government to acquire that portion of the undertaking even if it had any legal right to do so at the time of revocation.

24. The other matter which arises is whether the undertaking which can be compulsorily ordered to be sold is the undertaking which existed on the date when the revocation of the licence took effect or the undertaking which existed on the date of the order of sale. Ordinarily, the undertaking on both occasions will be substantially identical, and the question would be of no importance. But in this case on the date when the revocation took effect, the undertaking was incomplete and in embryo and by the time the order of sale was passed a real undertaking had come into existence. It is not disputed that any property and undertaking which came into existence not under a licence but independently during the pendency of sanction granted under Section 28 of the Act cannot be required to be sold. What then is the determining date to fix the property which can be ordered to be sold? On the wording of the proviso of Clause (b) which enacts that the value of lands, buildings, works, materials and plant shall be deemed to be their fair market value at the date of purchase, it is contended that the date of the order of sale should also determine the property which can be acquired. That proviso only furnishes a rule for determining the market value of property and it fixes it to be the date of its purchase and not the date of its original acquisition. That proviso does not lend any support to the contention that the property which came into existence after the rights and liabilities of the licensee had ceased under Clause (a) of Section 5 of the Act could be ordered to be sold under Section 5(b) of the Act. The order of the Government therefore dated 5th March 1934, by which the company was required to sell its undertaking as it existed on that date to the plaintiffs was without jurisdiction. It follows that all consequential orders also which were passed on the same date or subsequently terminating the sanction of the company under Section 28 of the Act and directing the plaintiffs to work the undertaking under Section 5, Clause (g) of the Act and the subsequent order by which an arbitrator was appointed to value the undertaking as it existed on the date of purchase were all based under a misapprehension of law and are wholly inoperative. Section 52 of the Act is as follows:

Where any matter is, by or under this Act, directed to be determined by arbitration, the matter shall unless it is otherwise expressly provided in the license of a licensee, be determined by such person or persons as the Provincial Government may nominate in that behalf on the application of either party, but in all other respects the arbitration shall be subject to the provisions of the Arbitration Act, 1899.

The Arbitration Act of 1899 extends to whole of India, but by Section 2, Arbitration Act, the application of that Act, in the first instance, is limited to presidency towns and the power is reserved to Local Governments to declare any local area as if it were a presidency town for the application of that Act. At the material time, the Arbitration Act of 1899 did not apply to the town of Budaun, but by virtue of Section 52 of the Act the Arbitration Act became applicable to any matter which was decided under the Act by arbitration. Now Section 11, Arbitration Act, enjoins that notice of making of an award shall be given to the parties by the arbitrator and at the request of any party to the submission, the arbitrator shall cause the award to be filed in Court and a notice of filing of the award shall also be given to the parties. Under Section 14, Arbitration Act, the Court has power to set aside an award for the misconduct of the arbitrator or when the award has been improperly procured. Under Section 15, Arbitration Act, an award on being filed shall be enforceable as if it were a decree of Court, and under Section 4, Arbitration Act, 'the Court' means 'the Court of the District Judge.' It thus appears that in regard to an award under the Act the procedure laid down in the Arbitration Act of 1899 has to be followed and notice of making of an award and of filing of an award in the Court of the District Judge has to be given to parties who are entitled to raise objections, and if the objection succeeds the award is liable to be set aside and it is only when an award is filed and properly filed it can be enforced as if it were a decree of Court. But an award which has not been properly filed under the Arbitration Act of 1899, though not a nullity, is not final and is not enforceable as a decree of Court till proper steps are taken to file it and the Court properly e orders it to be filed.

25. The cost of the undertaking to the company was about six and a half lacs of rupees including all its investments of share capital, money borrowed by loans and on debentures. The arbitrator has fixed the total value of the undertaking at Rs. 1,71,084-3-6. An attempt was made by the company at the trial to get an independent valuation of the undertaking by a commissioner appointed by the Court, but it failed on opposition of the plaintiffs. The proceedings before the arbitrator-were mostly, if not entirely, ex parte against the company. During most of the time when the arbitration proceedings were held and at the time when the award was made, if not during the entire period of proceedings, injunctions issued by Courts were out both against the plaintiffs and the defendants and their agents and servants prohibiting the former from purchasing and the latter from selling the undertaking and its property and assets. There is no evidence that any notice of making of an award or of filing of an award was given to the company by the arbitrator or by the Court. There is no proper order of the District Judge filing the award; his order merely states that the award be consigned to the re< cord room and the validity of the award shall be determined at the time of execution. The company denies that any proper notice of arbitration proceedings was served upon the company or that the ex parte proceedings1 against it were justified. The arbitrator was to value the undertaking of the company on the date of the order of sale. The identity of this property is in dispute. The company alleges that the property which should not have been excluded was excluded and the property which should not have been included was included in making the valuation by the arbitrator. There is no evidence that the company had any opportunity for making such objections before the District Judge and had missed its opportunity.

26. The plaintiffs produced at the trial an incomplete copy of the award shorn of its schedules and annexures which might have explained the award and they alleged that the award having been filed in Court might now be enforced as a decree of Court in these proceedings. On the material before us, we cannot say that this award was properly filed and it can be enforced as a decree of Court. It may be open to the plaintiffs to get the award properly filed before the District Judge after giving an opportunity to the company to contest the award, but till this opportunity is granted and a proper order of filing the award is passed, it cannot be said that the price of the undertaking determined by the award has become final and can be made the basis of a decree for specific performance. Section 5 of the Act empowers a local authority and the Provincial Government in certain circumstances to require the licensee to sell the undertaking and Sections 5 and 52 of the Act provide for an arbitration in case of dispute or difference as to the value of an undertaking. The Act thus creates a relation of vendor and purchaser and provides a machinery for the determination of sale price and brings into existence certain rights and liabilities in favour of the prospective vendor and purchaser, but it provides no remedy in case of breach of obligation by either party after the price has been fixed by the arbitrator. It is stated in Halsbury's Laws of England, Edn. 2, vol. 31, at pp. 550 and 551, in paras. 736, 737(2) and 739 as follows:

736. Where a statute directs things to be done or not to be done, either the statute itself provides the means for its own enforcement, or parliament acts upon the supposition that the existing laws of the realm are sufficient to enforce the rights and liabilities arising thereunder....

737. For the purpose of enforcement, statutes may be divided into three classes, namely:

* * * *(2) Those in which an obligation not previously existing at common law is created, but no remedy is provided:

* * * * 739. In the second class, where an obligation is created, but no mode of enforcing its performance is ordained, common law sanctions and incidents will ordinarily attach.

27. In England mere service of notice to treat under the Land Clauses Act, 1845, does not constitute a contract by the land owner for the sale of the land. But where, however, the price is ascertained, either by arbitration or by the valuation of two surveyors, or by agreement, or the verdict of a jury, the contract is complete and may be specifically enforced: see Dart on Vendors and Purchasers, Edn. 7, Vol. 1, pp. 277 and 278; Seton's Judgments and Orders, Edn. 7, vol. 3, p. 2139; Regent's Canal Co. v. Ware (1857) 23 Beav. 575 at p. 582; Mason v. Stokes Ray Co (1863) 32 L.J. Ch. 110, Harding v. Metropolitan Ry. Co. (1870) 7 Ch. 154 at p. 158; and In re Pigott and G.W. Ry. Co. (1881) 18 Ch. D. 146 at p. 150.

28. Is the law any different in this country? The defendants contend that the entire law of specific relief in this country is codified in the Specific Relief Act (1 of 1877) and the relief for execution of the sale deed which the plaintiff's demand in this action is in the nature of specific performance, and this relief can only be granted in relation to contracts under Chap. 2, Specific Relief Act, or in relation to awards and settlements to which the provision of chap. 2 has been extended by Section 30, the last section of chap. 2 and it cannot be granted with regard to an obligation which is not provided by chap. 2. The defendants further contend that the law in this country provides no remedy for the breach of statutory obligation like the one under the Act where the statute itself has failed or missed to provide the remedy.

29. The larger contention of the defendants that there is no remedy in India for the breach of statutory obligation where the statute itself has not provided for the remedy is clearly untenable. The definition of 'obligation' in Section 3, Specific Relief Act, and the language of Section 5, Specific Relief Act, which defines and explains the specific reliefs which are available in this country as also the language of Sections 42 and 53, Specific Relief Act, is sufficiently wide to cover obligations which arise under a statute. If, after an order of sale of an undertaking under Section 5 of the Act and determination of the sale price under Section 5 read with Section 52 of the Act and its tender by the purchaser, the licensee wrongfully refuses to complete the sale and to execute a conveyance or to give possession of the undertaking, an action for declaration of of title, for possession of the undertaking and for injunction restraining the defendant from interference will certainly lie. And these reliefs, one or the other, as the circumstances may require, could be granted. Is there any valid reason to refuse the relief of the execution of the sale if such a relief is also claimed in addition to or in substitution of the above reliefs simply because such a relief cannot be brought in within the four corners of chap. 2 of the Act? We note that the Specific Relief Act was enacted not to consolidate but only 'to define and amend the law relating to certain kinds of specific relief,' and though the Specific Relief Act may be exhaustive with regard to those matters which are specifically dealt with by that Act, there is no reason to hold that the entire law in relation to Clause (b) of Section 5, Specific Relief Act, was codified in Chap. 2, and the relief for specific performance should be confined to obligations contractual or those arising under Section 30, Specific Relief Act, and cannot be granted in relation to statutory obligations. Nor is there any valid reason for not following the English law in this matter and holding in conformity with it that the direction of sale followed by an award by which the sale price has been determined brings into existence an obligation which, though originally statutory, becomes also contractual and may be specifically enforced. In the action as originally framed, the plaintiffs had claimed a right to set off the sale price against the debentures of the company which they held. The trial Judge while affirming the validity of the debentures disallowed the claim on the ground that the debentures had not matured and one of the trustees of the debenture deed had not agreed to set off and join in the action. At the hearing of the appeal, the plaintiffs did not press the claim to set off the sale price and they were willing to take a decree on payment of the sale price leaving the question of debentures to be settled by a separate litigation, and by consent it has become unnecessary to express any opinion on the validity or otherwise of these debentures and the entire controversy with regard to these debentures remains at large. Defendants was impleaded in this action also in his personal capacity. The proceedings against him in the trial Court were ex parte. Before us his counsel has strongly pressed that defendant 2 never in fact made the assignment of the licence in favour of the company and even if he did the company did not thereby become a licensee within the meaning of the Act, and that a number of documents which were exhibited at the trial relating to the subject-matter of the controversy were not duly proved and were inadmissible in evidence. One of the objects of incorporation stated in the memorandum of association of the company was the acquisition of the licence granted to defendant 2 by the Government. There is an order of the Government dated 20th November 1930, permitting the assignment of the licence to the company. There is ample evidence to show that the company acted on the licence and was treated as an assignee of the licence by the Government. It was against the company subsequently that the order of revocation was passed; and the undertaking which came into existence for the supply of electrical energy to Budaun is undoubtedly the property of the company. It is true that there is no formal document of assignment proved in this case, but it is not necessary that any such document must necessarily exist. An assignment of a licence can be made by word of mouth and from part performance and acting on an inference may be raised of the assignment. As between the plaintiffs and the company there is no dispute as to the assignment and the fact of the assignment is admitted by the company. On the evidence in this case the assignment must be taken to be an established fact.

30. A somewhat elaborate argument was presented to us with reference to various sections of the Act to the effect that the statute draws a distinction between a licensee and a purchaser, and an assignee of the license is not given expressly the status of a licensee under the Act, and it was contended that notwithstanding an assignment the licence remains with the original licensee and the assignee only gets a right to work the undertaking if he could secure a sanction under Section 28 of the Act as the company did in this case. It was further contended that notwithstanding the revocation of the licence in the hands of the company defendant 2 still retained his status of a licensee. We have been utterly unable to appreciate this argument. The Act and the licence granted by the Government to defendant 2 clearly provide for assignment with the consent of the Government. Admittedly the consent of the Government for the assignment was given. We have found that the assignment took place in fact. We have no doubt in law that the position of the assignee was that of a licensee and it is difficult to see what right remains in defendant 2 after the revocation of the licence, but if any such rights remain in him independently and notwithstanding the assignment, it is not necessary for us to express any opinion on that.

31. The objections with regard to admissibility of documents are of a highly technical nature. These objections were repelled by the trial Court, and we do not find much substance in them either. The documents in relation to which these objections were made relate mostly to the award and other matters which we have found in favour of the defendant and even if these objections could have been sustained, they might have only resulted in a remand and a formal proof of the documents. The legal effect of the above findings may now be summarised. The licence granted to the company stands revoked. The order of sale of the undertaking passed by the Government against the company in favour of the plaintiffs and all consequential orders following it are wholly inoperative. The plaintiffs acquire no title to the undertaking by purchase. The application for fresh licence made by the company to the Government has not yet been validly disposed of and is pending. The sanction granted to the company to work the undertaking under Section 28 of the Act, by the order of the Government dated 1st June 1933, is still operative and is subject to the conditions and restrictions laid down therein including those set out in Clause (d) of that order which make certain sections of the Act applicable to the working of the undertaking and prohibit its transfer and assignment. It is open to the Government to grant a fresh licence to the company or to withhold it. It is also open to the Government to continue the sanction under Section 28 of the Act or to modify or to revoke it, but it is not open to the Government to order the compulsory sale of the undertaking under Section 5 of the Act.

32. The plaintiffs have since 15th May 1934, been exclusively working the undertaking of the company. The company has claims against them as agents and mortgagees; the plaintiffs have claims against the company for their debentures and for their loans. It is also possible that claims of some strangers also are outstanding. These rights and liabilities can only be a matter of one or more separate and independent enquiry. The provisions of the Companies Act (7 of 1913) point to an appropriate and simple procedure by which the rights and liabilities of all parties can be properly and expeditiously adjusted, and in the result the undertaking can also be sold with the consent of the Government in such a manner that the public utility of the undertaking might not be lost or impaired: One may hope that this procedure will be followed. Should this hope proved be illusory and the disputes travel to ordinary Courts, we have no doubt that the Courts concerned shall properly deal with the situation as it arises and shall so shape their procedure that the public utility of the undertaking is not unduly disturbed or impaired. In the meantime, the Government is free to take such action as the public interest demands and the law allows. We approve the decree of the Court below and in the result the appeal fails and is dismissed with costs.


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