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CochIn State Power and Light Corporation Ltd., Ernakulam Vs. State of Kerala - Court Judgment

LegalCrystal Citation
SubjectElectricity
CourtKerala High Court
Decided On
Case NumberWrit Appeal No. 17 of 1962
Judge
Reported inAIR1963Ker286
ActsElectricity Act, 1910 - Sections 5 to 7A and 7(4); Electricity (Amendment) Act, 1959; Cochin Electricity Act, 1102 - Sections 3
AppellantCochIn State Power and Light Corporation Ltd., Ernakulam
RespondentState of Kerala
Appellant Advocate K.V. Suryanarayana Ayyar,; C.M. Devan,; T.L. Viswanatha
Respondent AdvocateAdv. General
DispositionAppeal dismissed
Cases ReferredMaxsted and Co. v. Durant
Excerpt:
electricity - notification - sections 5 to 7a and 7 (4) of electricity act, 1910, electricity (amendment) act, 1959 and section 3 of cochin electricity act, 1102 - appeal filed challenging notification by which electricity supply undertaking owned by appellant proposed to be taken by respondent-state government - as per section 6 right to purchase vested in board, state government and local authority - object of section 6 is more easy replacement of private agencies by public agencies in matter of supply of electricity to public - notification valid - appeal challenging same dismissed. - - 3. section 7 of the unamended act runs-thus :7. purchase of undertakings -(i) where a license has been granted to any person not being a local authority, and the whole of the area of supply is.....raman nayar, j.1. the short question is whether the proposed acquisition of the electric supply undertaking of the appellant company by the respondent state government in pursuance of its notice ext. g, dated 20th november 1959, is authorised by section 6 of the indian electricity act, 1910. our learned brother, vaidialingam, j., has held that it is and has dismissed the appellant's petition under article 226 of the constitution for the issue of a writ or order quashing the notice and forbidding the acquisition. hence this appeal. i might add that the validity of the section is not questioned; only its application is.2. the statutory provisions that fall for consideration are section 7 of the indian electricity act, 1910 as it stood before amendment by act 32 of 1959, the unamended act.....
Judgment:

Raman Nayar, J.

1. The short question is whether the proposed acquisition of the electric supply undertaking of the appellant company by the respondent State Government in pursuance of its notice Ext. G, dated 20th November 1959, is authorised by Section 6 of the Indian Electricity Act, 1910. Our learned brother, Vaidialingam, J., has held that it is and has dismissed the appellant's petition under Article 226 of the Constitution for the issue of a writ or order quashing the notice and forbidding the acquisition. Hence this appeal. I might add that the validity of the section is not questioned; only its application is.

2. The statutory provisions that fall for consideration are Section 7 of the Indian Electricity Act, 1910 as it stood before amendment by Act 32 of 1959, the unamended Act for short, and Section 6 of that Act after the amendment, the amended Act, as I shall call it.

3. Section 7 of the unamended Act runs-thus :

'7. Purchase of undertakings -- (i) Where a license has been granted to any person not being a local authority, and the whole of the area of supply is included in the area for which a single local authority is constituted, the local authority shall, on the expiration of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years, as shall be specified in this behalf in the license, have the option of purchasing the undertaking, and, if the local authority, with the previous sanction of the State Government, elects to purchase, the licensee shall sell the undertaking 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 incase of difference or dispute, determined by arbitration :

X X X X (2) Where -

(a) the local authority does not elect to purchase under Sub-section (i), or

(b) the whole of the area of supply is not included in the area for which a single local authority is constituted, or

(c) a licensee supplies energy from the same generating station to two or more areas of supply each controlled by its own local authority, and has been granted a license in respect of each area of supply, the State Government shall have the like option upon the like terms and conditions.

(3) Where a purchase has been effected under Sub-section (i) or Sub-section (2), --

(a) 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

(b) save as aforesaid, the license shall remain in full force, and the purchaser shall be deemed to be the licensee:

Provided that where the State Government elects to purchase under Sub-section (2), the license shall, after purchase, in so far as the State Government is concerned, cease to have any further operation.

(4) Not less than two years' notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government as the case may be. * * * * *'

And Section 6 of the amended Act which replaced Section 7 of the unamended Act, thus;

'6. (i) 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 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 on 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 (i) 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 (i) 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 7A'.

4. The appellant company supplies electric energy to the public of the municipal area of Ernakulam and its environs under a licence, Ext. A, dated 3-12-1935, granted by the Government of Cochin under Section 3 of the Cochin Electricity Act, 1102. The licence was not for any limited period and would ordinarily have been regarded as permanent and irrevocable. But Section 7 of the Cochin Electricity Act, which is in the same terms as Section 7 of the unamended Act, provided for the compulsory purchase, after not less than two years' notice, of a licensee's undertaking by the local authority or the Government (in the present case only the Government since the whole of the area of supply was not included in an area for which, a single local authority was constituted) at intervals to be specified in the licence, and, in the case of a purchase by the Government, for ending the further operation of the licence.

In compliance with this section, Clause 15 of Ext. A said that the option of purchase given by the section shall first be exercisable on the expiration of 25 years from the commencement of the licence, and then on the expiration of every subsequent period of 10 years during the continuance of the licence. Thus the option of purchase was first exercisable in this case on 3-12-1960, and notice of the election to purchase should have been served upon the licensee on or before 2-12-1958; failing that, the option would next become exercisable only on 31-12-1970. On 1-4-1951, the Cochin Electricity Act was replaced by the unamended Act, which, being in terms similar to the Cochin Electricity Act, effected no change in the rights of the parties.

By Section 71 of Act 54 of 1948, the option to purchase the undertaking of a licensee, vested in the State Government or a local authority by the unamended Act, was transferred to the State Electricity Board constituted under the former Act and a Board having been constituted for this State on 31-3-1957, the option, so far as the present case is concerned, stood transferred from the State Government to the Board as from that date. The amending Act, Act 32 of 1959, came into force on 7th (5th?) September-1959, and, by Section 6 of the amended Act, the option of purchase was given to the State Electricity Board, the State Government, and any local authority constituted for an area within which the whole of the area of supply is included' (in the present case, only the former two) in order of preference, the State Government to have the option where a State Electricity Board has not been constituted, or, if constituted, does not elect to purchase the undertaking, and the local authority to have the option if neither the State Electricity Board nor the State Government elects to purchase the undertaking.

In the case of a license granted before the amending Act came into force, the option was to be exercised on the expiration of each such period as is specified in the licence, but, the period of the notice was reduced from two years to one year so that, if Section 6 of the amended Act applies, the last date for giving notice in the present case for exercising the option on the 3rd December 1960 became the 2nd December 1959. On nth February 1959, before the amending Act came into force, the State Electricity Board (which was the 2nd respondent in the petition out is not a party to this appeal) had issued a notice (Ext. B) to the appellant requiring it to sell the undertaking to the Board, either on the expiry of the first period of 25 years mentioned in Ext. 'A, or on the expiry of two years from the date of receipt of the notice, at the option of the appellant. This, of course, was of no avail since it did not give the two years' notice required by Section 7(4) of the unamended Act.

After the amending Act came into force, the Board issued two notices, Ext. D, dated 24th October 1959, and Ext. E, dated 29th October 1959, (the latter merely correcting an error in the former) to the appellant under Section 6 of the amended Act requiring it to sell the undertaking to the Board on the expiry, on 2nd December 1960, of the term of 25 years specified in the license. Ext. A. This was followed by the impugned notice, Ext. G, dated 20th November 1959, by the State Government to the appellant under the same section requiring it to sell its undertaking to the Government on the expiry of the same period.

5. In its petition, the appellant asked for reliefs both against the State Government and the State Electricity Board. However, in the course of the hearing of the petition, the Board gave up its claims under Exts. B, D and E' and only the claim of the State Government under Ext. G was canvassed. The petition was, in effect, allowed against the Board. The Board has not appealed and is not a party to the present appeal; and its notices may therefore be ignored except to the extent that they may affect the rights of the State Government.

6. The contention of the appellant has throughout been that, on the failure of the Board (in which alone the option vested at the time) to exercise the option by the service of a notice on or before 2nd December 1958 under Section 7 (4) of the unamended Act, the appellant became entitled to continue under the licence and retain its undertaking until the expiry of the second period on 2nd December 1970. This right had vested in the appellant on 2nd December 1958, before Section 6 of the amended Act came into force. That section is not retrospective in operation, and, therefore, notwithstanding that the notice Ex. G was a sufficient notice under that section, it could not divest the appellant of its vested right.

7. I do not think that the appellant acquired any vested right by reason of the failure of the Board to give it the requisite notice under 5. 7 (4) of the unamended Act. But I am prepared to assume for the purpose of the argument that the appellant did. What follows? The contention is not, and indeed cannot be, that a vested right cannot be taken away by subsequent legislation; it is only that the statute must' do so by express language or by necessary intendment. As the Judicial Committee observed in Reynolds v. Attorney General for Nova Scotia (1896) A. C. 240 at p. 244.

'No doubt the maxim, 'Omnis nova constitutio futuris formam imponere debet non praeteritis' has been applied to the extent that a new law ought to be construed so as to interfere as little as possible with vested rights, and in Main v. Stark, (1890) 15 AC 384 at p. 388 the Earl of Sel-borne says, 'words not requiring a retrospective operation, so as to affect an existing status prejudicially, ought not to be so construed', yet the result is that in all cases it is necessary to ascertain what the Legislature meant.'

In my view, the express language of Section 6 of the amended Act takes away whatever right might j have vested in the appellant. Clause (a) of Sub-section (i) of this section makes it clear that the section applies in the case of licences like the present granted before the enactment of the section, and what the section says is that the Board, or, failing the Board, the State Government, or, failing both, the local authority, shall have the option to purchase the undertaking of the licensee on the expiration of each such period as is specified in the licence, and that the option shall be exercised by serving upon the licensee a notice of not less than one year requiring the licensee to sell the undertaking at the expiry of the period. By its express terms, the section applies in the case of the license in the present case even though it was granted before the section came into force; the first period specified in the licence was to expire on 2-12-960; and again, under the express terms of the section, the option given by it could be exercised by a notice served on the licensee on or before 2-12-1959. There is nothing in the section, or anywhere else in the Act, to indicate that the option is not exercisable in the case of licences like the present, where the option given by Section 7 of the unamended Act had become unavailable for failure to serve the requisite notice. And to say that the section does not apply in cases where the time for giving the two years' notice required by Section 7(4) of the unnmended Act had already passed when the section was enacted, without notice being given, is to read into the section words that are not merely not there, but would be contrary to the words that are there. The notice, Ext. G, was admittedly served on the appellant on 23-12-1959, more than one year before the expiry of the first period mentioned in the licence, Ext. A. It is a sufficient notice under Section 6 of the amended Act, and, under the terms of that section, the appellant was bound to deliver its undertaking to the State Government, assuming, of course, as I shall presently show was the case, that the option vested in the State Government.

8. It is argued that Sub-section (4) of Section 6 of the amended Act contemplates an intimation by the Board to the State Government, at least 18 months before the expiry of the relevant period, of its intention to exercise its option. This, it is said, indicates that the section as a whole is not intended to apply in cases like the present where the relevant period would expire within 18 months of the section coming into force. For, in such cases, the Board would be unable to give the State Government the 18 months' intimation required by Sub-section (4) and will therefore be deemed to have elected not to purchase the undertaking with the consequence that, by reason of Sub-section (2), it would lose its option in favour of the State Government. Thus, Sub-section (4) would rob the Board of the option conferred on it by Sub-section (i) without giving it a chance of exercising the option. Therefore, a reasonable construction of the section as a whole would be that it does not apply in such cases.

I must confess that I am entirely unable to appreciate this argument, quite apart from that it is against the express language of Clause (a) of Sub-section (i). For, the argument amounts to this: The section confers the option on the State Electricity Board, the State Government, and the local authority (if there is one covering the whole area of supply) in order of preference. But because by reason of Sub-section (4), a provision designed for determining when the Board loses the option and the State Government acquires it, the Board, which is the first in the order of preference, is disabled from exercising the right of option, reason requires that the two other authorities on - whom the section expressly confers that right should also lose it. It seems unnecessary to say more. But, it would be pertinent to point out that, before Section 6 of the amended Act came into force, it was only the Board that could exercise the options vested in the State Government and the local authority under the unamended Act. The Board was the transferee of these options that was the effect of Section 71 of Act 54 of 1948. By Section 6 of the amended Act, ' rights were conferred on the State Government and the local authority, not, it is to be noted, under the Board, but independently of it, although the Board was to have the first option, the State Government the second, and the local authority only the third. This was obviously to facilitate the replacement of private agencies by public bodies in the business of the supply of electric energy to the public. And, with the same end in view, the period of notice was reduced from two years to one year even in the case of licences granted before the amendment came into force. One year's notice had to be given whoever was exercising the option, and, since the State Government would get the option only on the Board electing not to exercise it, and the local authority would get the option only on both the Board and the State Government not electing to exercise it, it was necessary to ensure that the local authority would not lose its right by reason of the inaction of the State Government and the Board, and that the State Government would not lose its, right by reason of the inaction of the Board. Hence the fictions in Sub-section (4) and (5) by reason of which on the failure of the Board to give 18 months intimation to the Government, the option vests in the State Government, and, on the failure of the State Government to give 15 months' intimation to the local authority, the option vests in the local authority. This would give the State Government and the local authority three months' time to exercise the option by giving due notice to the licensee. The periods of 18 months and 15 months prescribed by Sub-sections (4) and (5) are therefore related to the one year's period of notice required by Sub-section (i) of Section 6 of the amended Act, and seem to me entirely unrelated to the two-years' period of notice required by Section 7(4) of the unamended Act. If, in enacting Section 6 of the amend-ed Act, the Legislature did advert to the effect of Sub-sections (4) and (5) in cases where there was less than 18 months and 15 months respectively left for the expiry of the relevant period, it might well be, having regard to the policy behind the section, that it intended that the local authority should have the option if the State Government could not have it by reason of there not being 15 months to give the local authority the requisite intimation, and that the State Government should have the option if the Board could not have it by reason of there not being 18 months to give the State Government the requisite intimation. At best what can be said is that the Legislature did not advert to the effect that the fictions it created under Sub-sections (4) and (5) would have in such cases and did not make special provision in that behalf. But that cannot alter the plain language of Sub-section (i) or make oat that it was not intended to apply in such cases. I am tempted to recall the following words of Evershed, M. K. in Boddington v. Wisson, (1951) I KB 606 at p. 612.

'I would be disposed to agree with Mr. Hardy that the result is perhaps one which Parliament, if asked, would have said that it did not contemplate. We, however, must interpret the language which Parliament has thought fit to use or which it has thought fit to delegate to a minister to use. I think that this may welt be a casus omissus; but looking at the language of this statutory instrument, or of the two statutory instruments together, I cannot for myself see any such ambiguity as would entitle us, by investigating the policy of the Agricultural Acts, to import into the second regulation words which would keep alive, for the purpose of this notice, and other notices like it, the full effect of the revoked regulation.'

I would only add that if we proceed to investigate the policy underlying Section 6 of the amended Act we would find that, as I have endeavoured to show, the experss words of the section, as I have construed them, are in keeping with the policy.

9. So far, I have assumed that there accrued to the appellant a vested right on 3rd December 1958, on the failure of the Board to issue the notice required by Section 7 (4) of the unamended Act on or before 2nd December, 1958. But it seems to me that the entire argument of a vested fight stems from a misconception--in fact, two misconceptions. The first is that the licence. Ext. A, is for an initial term of 25 years with provision for automatic renewals for further periods of 10 years each in the absence of notice, and the second that Section 7 (4) makes provision for such notice. Had that been the case, it might have been possible to maintain that, on the failure of the Board to serve notice on the appellant on or before 2nd December 1958, there vested in the appellant on 3rd December 1958 a further term of 10 years--the circumstance that this term would commence only on 3rd December 1960 would be no bar to the vesting. For, the case considered by the Supreme Court in Jivabhai v. Chhagan AIR 1961 SC 1491, was the converse case of a lease determining on the expiry of the period of notice and might not apply. The corresponding right of the landlord to get possession would, in such a case, accrue only on the determination of the lease, in other words, on the expiry of the period of notice, not on its commencement. But, in the converse case of a term vesting on the failure to give the requisite notice, it might be possible to argue that this term vests when the failure occurs, in other words, when the last day for giving notice passes without notice being given, and not on the expiry of the original term. But, as we have already seen, what we have in the present case is not a licence for a particular term with provision for successive renewals, but a permanent licence with provision made by statute for the compulsory purchase of the licensee's undertaking at stated intervals after due notice, the effect of such a purchase, when the purchaser is the Government, being to stop the further operation of the licence. The statute, namely, Section 7 of the unamended Act, vests no right in the licensee. What it does is to give the Government and the local authority (after Act 54 of 1948, the Board, if any, constituted under that Act) the right of purchase, exercisable in a particular way. At the most what can be said, taking the present case as an illustration is that on the failure of the Board to issue a notice in time, there vested in the appellant on the 3rd December 1958 an immunity from compulsory acquisition until the 3rd December 1970 under the provisions of Section 7 of the unamended Act, not be it noted, a general or absolute immunity. But of what avail would this immunity under a repealed enactment be against the larger rights conferred by the new enactment with no provision made for saving it? Especially when, as in this case, the right conferred by the new enactment is a new right conferred on new persons--it will be remembered that under Section 7 of the unamended Act read with Section 71 of Act 54 of 1948 the only person entitled to the option was the State Electricity Board, and that what Section 6 of the amended Act did was to confer the right of option for the first time on the State Government and the local authority who were in no sense successors of the State Electricity Board. No one has a vested interest in a statute, and if one statute is replaced by another conferring new or larger rights on others, the person on whom the corresponding obligation is cast cannot complain that the new statute is being retrospectively applied against him on the score that under the terms of the old statute he was under no such obligation. As well might the appellant have contended, if the unamended Act made no provision for the compulsory acquisition of his undertaking, that there had accrued to him an immunity against compulsory acquisition, and that Section 6 of the amended Act could not be applied so as to take away that vested right. The following observations of Kajamannar, C. J. in Alagappa v. Nachiappa AIR 1953 Mad 810 at p. 812 wherein it was held that the application of a new statute, giving larger rights to a debtor as against his creditor than the statute it replaced, could not be excluded on the ground that it would be taking away rights already vested in the creditor under the repealed statute, seems to me apposite:

'All that was adjudicated upon in the priorlitigation was whether the defendants were entitled to obtain relief under that Regulation as'agriculturists'. It was held by the court thatthey were not 'agriculturists' within the meaning of the Regulation then in force.Does the adjudication mean that thejudgment-debtors were precluded fromever obtaining any relief in future, evenunder new enactments? Can it be said that adecision that the judgment-debtor is not entitledto a particular relief under a particular statuteconfers any absolute indefeasible right on thedecree-holder? Of course, the rule of res judicata bars any attempt to re-adjudicate on thesame question, con lining the question to thatwhich directly and substantially was decided onthe prior occasion. Otherwise, I think that thedoctrine of vested rights cannot be extended tosuch cases. Take for instance, a case where aperson is held to fall outside the purview of anenactment, having regard to a particular definition in force at the time, If there is subsequentlya change in the definition which would draw theperson within the purview of the statute, can theperson maintain the plea that he should be excluded from the operation of the new definitionbecause it had been held that he did not fallwithin the old definition? I think not. A decision of a Full Bench of our Court appears tosupport my view.'

10. The case considered in Sakharam v. Manik-chand Motichand Shah (1962-1 SCJ 396) : (AIR 1963 SC 354) was different. There the repealed statute had conferred certain rights, including a qualified fixity of tenure on those to whom it gave the status of protected tenants. Those rights, it was held, had vested in the tenants and were not affected by the repeal. Nor were they divested by reason of the fact that the new statute excluded certain areas (in one of which the land in question was situate) from the operation of its provisions conferring rights on protected tenants. But supposing the new statute had conferred on the landlords larger rights than under the old statute in the matter of eviction and that would be a case nearer the present case--I do not suppose the tenants would be entitled to say that they were not liable to be evicted under the provisions of the new statute on the score that they were not so liable under the old statute and had therefore acquired a vested right or immunity.

11. Cases such as Sachindra Nath v. Maharaj Bahadur, AIR 1922 PC 187, S. C. Prasharv. Vasantsen Dwarkadas, (S) AIR 1956 Bom 530, Lakh-mir Singh v. Commissioner of I. T. B. and O. AIR 1957 Pat 538, Sarkar Dutt Roy and Co. v. Shree Bank Ltd. AIR 1960 Cal 243 and Bansi-dhar v. Assistant C. E. Property, AIR 1960 Pat 306 are readily distinguishable, for they proceed os the footing that, once a legal remedy has become barred by limitation, that remedy--that very remedy and not a new remedy--is not revived by a subsequent statute extending the period of limitation or doing away with limitation altogether,

12. It is next contended that, under the provisions of Section 6 of the amended Act, the option is vested in the State Electricity Board and not in the State Government. Therefore there is no compulsion on the appellant to sell its undertaking to the State Government. Under Sub-section (2) of the section, the State Government gets title only where the State Electricity Board does not elect to purchase the undertaking, but, in this case, the State Electricity Board far from electing not to purchase has, by the notices it served on the appellant, elected to purchase the undertaking.

The answer to this argument is that, under Sub-section (4), if the Board does not send an intimation in writing of his intention to exercise the option at least 18 months before the expiry of the relevant period, the Board shall be deemed to have elected not to purchase the undertaking. No such intimation was sent in this case, or indeed could have been sent, having regard to the fact that the section itself came into force less than 18 months before the expiry of the relevant period. But it is contended that in such cases the deeming clause in Sub-section (4) (and in cases where there is less than 15 months to expire, that in Sub-section (5)) cannot apply. The Sub-section contemplates an intimation at least 18 months in advance, and enacts the fiction that, if such intimation is not sent, the State Government shall be deemed to have elected not to purchase the undertaking. Therefore, the fiction is applicable only in cases where the 18 months is available, for, it cannot have been the intention to require the Board to issue 18 months' intimation, in cases where it could not possibly issue such intimation, on pain of losing its right of option.

So runs the argument, and it is as well to bear in mind the caution that, in deciding whether the contention is well-founded or not, the undeniable (and undenied) consideration that this solicitude for the Board's rights has for its object the denial of the option both to the Board and the Government and the retention of the undertaking by the appellant, is irrelevant. But, ignoring that consideration altogether, I am still far from persuaded that the argument is well-founded. It is true that, as Lord Lindley said in Keighley, Maxsted and Co. v. Durant, (1901) AC 240 at p. 262, care must be taken not to treat a fiction as a fact, that is, the fiction should not be applied beyond the limits set for its operation. But within the limits of its operation, it must be given full rein and one must not boggle at the consequences -- not that the consequences here call for any boggling.

What then are the conditions required for the deeming clause in Sub-section (4) to come into play. It is, in the language of the sub-section itself, that 'no such intimation as aforesaid is received by the State Government'. And what is attracted by the words 'if no such intimation as aforesaid' is nothing more than intimation in writing by the Board to the Government, at least 18 months before the expiry of the relevant period, of its intention to exercise the option. We might re-write the deeming clause thus :

'If no intimation in writing of its intention to exercise the option is received by the State Government from the State Electricity Board at least 18 months before the expiry of the relevant period, the State Electricity Board shall be deemed to have elected not to purchase the undertaking.'

That it should be possible for the Board to send an intimation at least 18 months in advance or even that the Board should have come into being at least 18 months before the expiry of the relevant period, are not considerations either stated or implied for the fiction to operate, and I am unable to accept the contention that the words 'such intimation as aforesaid' postulate these conditions. All that the clause requires for the fiction to operate is that the Board has not sent the 18 months' intimation. True, in this case, the Board could not possibly have sent such intimation; but that does not alter the fact that it did not. The Board not having sent the State Government the intimation referred to in sub-section (4), under the terms of that sub-section, it shall be deemed to have elected not to purchase the undertaking, with the result that, by reason of Sub-section (2), the option vests in the State Government. (No question of the option vesting in the local authority instead of in the State Government by reason of the provisions of Sub-section (5) read with Sub-section (3) can arise in the present case since under the terms of Sub-section (3) no local authority can have the option, there being no such authority covering the whole of the area of supply). There the matter ends and no inquiry as to whether it was possible for the Board to send such intimation is contemplated.

13. Neither the wording of Section 6 of the amended Act nor the policy underlying it -- about which I have already said enough--lends at least support to the contention which, I have already shown, amounts to this: Because by reason of the provisions of Sub-sections (4) and (5) of Section 6 of the amended Act designed to regulate the rights as between the Board, the State Government, and the local authority inter se -- that the licensee cannot claim any advantage under these provisions is an argument which has been advanced, but which we need not stop to consider -- it becomes impossible for the first in order of preference, of the three authorities in whom the right to purchase is vested, to exercise its option, the entire section which has for its object the more easy replacement of private agencies by public agencies in the matter of the supply of electric energy to the public must fail, and all three must be denied the option.

14. I dismiss the appeal with costs.

Velu Pillai, J.

15. I am unable to agree, that upon the failure or omission of the Board to issue a notice interms of Section 7 . (4) of the unamended Act, novested right had accrued to the appellant. ThoughI agree that Ext. A has to be regarded as a permanent licence subject to the 'option of purchase' exercisable periodically, the 'immunityfrom compulsory acquisition until the 3rd December 1970' to borrow the language employed bymy learned brother, is, in my view, a vested orsubstantive right, and a valuable one too, whichno statute can take away or destroy except byexpress language or by necessary intendment.This I say, quite apart from the application ofthe principle that no one can have a vested rightin a statute. However, it is unnecessary to pursue this, because I agree that Section 6 of theamended Act has by express language taken awaysuch vested right. On further reflection, I amalso convinced that the operation of the fictionunder the latter part of Section 6(4) of the amended Act, cannot be circumscribed by or be madeto depend upon the condition that it should alsobe possible for the Board to comply with theprescription as to the period of 18 months in theformer part. For these reasons, the appeal mustbe dismissed with costs.


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