GUJARAT ELECTRICITY BOARD versus GIRDHARLAL MOTILAL AND ANR.

GUJARAT ELECTRICITY BOARD

GIRDHARLAL MOTILAL AND ANR.

August 6, 1968

[R. S. BACHAWAT AND K. S. HEGDE, JJ.J

Indian Electricity Act, 1910, s. 6(1)-as amended by Act 32 of 1959-notice to exercise option to purchase undertaking-requirement as ta calling upon licensee to sell undertaking-if mandatory for exercising power to purchase. The respondent held licence granted by the Government of Baroda under the Baroda Electricity Act 1 of 1964 to supply electric energy with· in certain defined territories. On June 23, 1961 the appellant, which was constituted under s. 5 of the Indian Electricity (Supply) Act, 1948, served notice on the respondent to the effect that in exercise of the powers conferred on it by virtue of s. 71 of the Electricity (Supply) Act, 1948 read together with section 6 0f the Indian Electricity Act, 1910, as amended by the Indian Electricity (Amendment) Act 32 of 1959, the appellant had decided to and would exercise the option to purchase the respondent's undertaking on 3-1-1963 i.e. the date on which the licence was due to expire. The respondent challenged the validity of this notice and the High Court held the notice. was invalid.

On appeal to this Court,

HELD : The High Court was tight in holding that the impugned notice was invalid and by virtue df that notice the appellant could not compel the respondent to sell the undertaking. [594 A]

Before the option to purchase the undertaking can be exercised. the ~tate Electricity Board must call upon the licensee by means of notice in writing within the period mentioned in s. 6( I) to sell the undertaking to it on· the expiration of the period for which the licence was given. The impugned notice did not require the licensee to sell the undertaking. It merely notified the respondent that the appellant Board has decided to exercise and would exercise th·e option of purchasing the respondent's undertaking on the date of expiry of the licence. [592 D-E]

Nazir Ahmad v. King Emperor, L.R. 63 I.A. 372: and Ballavdas

Agarwala v. Shri S. C. Chakravarty, [1960] 2 S.C.R. 739; referred to.

There was no force in the contention that the notice complied subs-tantially with the requirements of the law and should therefore be given c;:ffect to. The issuing of notice strictly in accordance with the provisions •f s. 6(1), which prescribes that the notice must specifica!iy cal! upon the licensee to sell the undertaking, is condition precedent to the exercise of the power conferred on the State Electricity Board to purchase the undertaking. Furthermore, on reading the impugned notice, the licensee could not have been definite whether th.c appellant Board purported to exe'rcise the power under the law as it was on the date of the notice i.e . . the Indian Electricity Act. 1910 as amended by Act 32 of 1959, or as it was under the unamended act. The rights and liabilities of the Electricity Board .and the licensee before Act 32 of 1959 came into force were ~ubstantially different from those after the amendment. [593 C-G]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2526 of 1966.

Appeal from the judgment and order dated October 30, 31, l 963 of the Gujarat High Court in Special Civil Application No. 1098 of 1962.

C. K. Daphtarl', A11omey-Genera/ and /. N. Shroff, for the appellant. ·

M. C. Chagla, R. M. Vin and R. Gopalakrishnan, for respon-

dent No. 1.

R. If. Dhebar and S. K. Dholnkia, for respondent No. 2.

The Judgment of the Court was delivered by

Hegde, J. The only question for decision in this appeal is whether the notice issued by the appellant on June 23, 1961 under s. 6 of the Indian Electricity Act, 1910 as amended by Act 32 of 1959 (lo be hereinafter referred to as the Act) is valid. The High Court has come to the conclusion that it is not valid notice.

On 4th January 1923, the father of respondent No. 1 was

granted licence lo supply electric energy within the area consist-ing of municipal limits. of .Dabhoi and the territories comprised within half mile radius from the municipal boundary lines by the Government of Baroda under the Baroda Electricity Act Samvat 1964 (Act I of 1964). The said Company was known as Dabhoi Electricity Company. Respondent No. I was at all material tim~s the holder of this licence.

The said licence conferred an option on the Government t<> purchase the undertaking in accordance with the terms of the licence. Clause 26(a) of that licence is material for our present purpose. That clause reads :

"The option of purchase given by s. 8 of the Act shall be exercisable on the expiration of 40 years com-puted from the commencement of this licence and there-after on the expiration of every subsequent period of 8 years during the subsistence of this licence ...... "

On the merger of Baroda Stale with the then P~ovince Bombay, the Indian Electricity Act, 1910 and the Indian E;Iect;n-city (Supply) Act, 1948 were made applicable t? the terntones of the former State of Baroda and the corresponding Baroda Act was repealed with the saving clause that t~e Ikences issued .under the repealed Act shall continue to remam m force un!Il tho expiration of the penod of licence as if they were issued under the Act of 1910.

P~ovince ~

In exercise of the powers conferred by s. 5 of the T~diaa Electricity (Supply) Act. 1948. the State Government constttuted the appellant Corporation. 1l1e appellant served upon respon-

dent No. 1 notice on June 23, 1961. That notice is important for our present purpose. Hence we shall quote the same in full. It is as· follows :-

"THE GUJARAT ELECTRICITY BOARD

Kothi Building, Raopura Road, Baroda Dated 23 June, 196L

Regd. A.D. Ref. No. PLE.BRD.7(A)19648.

The Dabhoi Electric Power Supply Co.

C/o Shri Girdharlal Motilal Contractor

(Sheth), Ajit Bungalow, Pratapnagar Society, Baroda.

SUB: (i) Notice under section 6 of the Indian Electricity Act, 1910 and exercise of option vested in the Gujarat Electricity Board to purchase your undertaking.

(ii) The Dabhoi Electric Licence 1923 granted by the Government of Baroda under the State Electricity Act, Samvat 1964.

Dear Sir,

In exercise of the powers conferred on the Gujarat Electricity Board by virtue of s. 71 of the Electricity (Supply) Act, 1948, read together with section 6 of the Indian Electricity Act, 1910, as amended by the Indian Electricity (Amendment) Act, 1959 (32 of 1959) this is to give you notice that the Gujarat Electricity Board has decided to exercise and shall exercise the option of pur-F chasing your undertaking on 3-1-1963, the date on which the · .license granted to you by the Government of Baroda expires. · The receipt of this notice may please be acknowledged.

Yours faithfully, Sd/- Secretary, The Gujarat Electricity Board."

As this notice was issued after the Indian Electricity Act, 1910 was amended by Act 32 of 1959, we have to see whether that notice complies with the requirements of s. 6 ( 1 )(a) of the Act which says:

"Where license has been granted to any person not being local authority, the State Electricity Board H' shall.-

( a) in the case of a: license granted before the com-mencement of the Indian Electricity (Amend-

ment) Act, 1959 on the expiration of each such period as is specified in the license ..... .

have the option of purcha,ing the undertaking and such option shall be exercised by the State Electricity Board servmg upon the licensee notice in writing of not Jess than one year requiring the licensee to sell the under-taking to it at the expiry of the relevant period referred to in this sub-section."

These provisions confer power on the State Electricity Board to purchase the property of the licensee hut that right can be exercised only in the manner provided in the Act and not in any other way. must he remembered that the provisions in ques-tion empower the State Electricity Board to interfere with the property rights of the licensee. Therefore such power will have to be strictly construed. The legislature has prescribed mode fof the exercising of that power and hence that power can be exercised only in that manner and in no other manner. See Nazir Ahmad v. King Emperor(') and Bal/avdas Agarwala v. Shri S. C. Chakravarty{°). Before the option to purchase the undertaking can be exercised, the State Electricity Board must call upon the licensee by means of notice in writing within the period mentioned in s. 6 ( 1) to sell the undertaking to it on the expiration of the period for which licence was given. The im-pugned notice does not require the licensee to sell the undertaking. It merely notifies the respondent that the appellant Board has decided to exercise and shall exercise the option of purchasing the respondent's undertaking on 3-1-1963, the date on which the lieence granted to him by the Government of Baroda expired.

It was contended by the learned Attorney-General on behalf of the appellant that in matters like these rigid compliance with the provisions of law should not be insisted upon. According to 1 him if the legal requirements are substantially satisfied the validity of the notice given, should be upheld. Proceeding further he urged that so long as tbe notice given by the Electricity Board is sufficient to intimate the licensee the intention of the Board, the mandate of the law is complied with; in notice under s. 6( 1) what is of the essence is the substance of the matter mentioned therein and not the manner in which the notice is worded. He urged that the licensee must have imported some commonsense into the notice received by him and he could not be allowed to riggle out of his obligation by having recourse to technicalities. Tn advancin" these arguments. the learned Attorney-General over-looked the fact that notice required by s. 6 (I) is not notice of an action to be taken or merely procedural step. It is mode LR. 63 I.A. 372. (2) 11960] 2 S.C.R. 739.

(I) LR. 63

I.A. 372.

of exercising the power conferred on the State Electricity Board by the exercise of which the property rights of the licensees can be affected. Section 6 ( 1) confers power on the State Electri-city Board to take away the property of the licensee. Such power must be exercised strictly in accordance with law. The legislature has prescribed the manner of its exercise. It must exercise in that manner and in no other way. It must also be seen that the Parliament deliqerately changed the form of the nonce to be given from what it was before Act 32 of 1959 was enacted. It presc:ribe4_, that the notice must specifically call upon the licensee to sell the undertaking. The mandate of the law is clear and it must be obeyed. We agree with Mr. M. C. Chagla learned Counsel for the licensee that the issuing of notice strictly in accordance with the provisions of s. 6 ( 1) is condition precedent to the exercise of the power conferred on the State Electricity Board to purchase the undertaking. That being so, we must hold that s. 6 ( 1) is mandatory and it must be strictly com-plied with.

In this case we are not satisfied that the requirements of law have at least been substantially complied with. Obviously the person who issued the notice was not familiar with the legal posi-tion. He appears to be under the misapprehension that s. 71 of the Electricity (Supply) Act, 1948 was still in operation when he gave the notice. He appears to have been in two minds. He was not sure whether he should issue the notice under the provi-sions of the Act as they stoo~ on the date of the notice or in accordance with the provisions as they were prior to the coming into force of Act 32 of 1959. At the top of the notice it is mentioned that it is given under s. 6 of the Act but in the body of tile notice it is purported to be given in exercise of the power available under s. 71 of tile Indian Electricity (Supply) Act. Again the contents of notice indicate that it is notice under s. 7(1) read witll s. 7(4) of the Indian Electricity Act, 1910 as they stood prior to 1959. Quite clearly the notice speaks in two voices. It is the product of confused mind. We fail to see how any commonsense can be read into it. On reading that notice the licensee could not have been definite whether the State Electri-city Board purported to exercise the power under the law as it was on the date of the notice or as it was under the unamended V Act. Rights and liabilities of the Electricity Board and the licensee before Act 32 of 1959 can1e into force are substantially different from their rights and liabilities under the Act. On reading the impugned notice it could not have been clear to the licensee that he had been called upon to sell the undertaking in accordance with the law as it then stood. We are unable to accede to the request of the Attorney-General to read into the notice worcls which are not there.

For the reasons mentioned hcrembcforc we agree with the High Court that the impugned notice is invalid and by virtue of that notice the appellant ca1UJot compel the respondents to sell the undertaking in question.

Accordingly this appeal fails and the same is dismissed with costs.

R.K.P.S.

Appeal dismissed.