Appeal No 72 of 1952
Appeal under articles 132 1 and 133 1 b of the Constitution of India from the Judgment and Order dated the 27th April 1951 of the High Court of Judicature at Madras Rajamannar CJ and Satyanarayana Rao J in Civil Miscellaneous Petition No 4697 of 1951
MK Nambiyar U Sethumadhava Rao with him for the appellant
M Seshachalapathi for the respondent
VKT Chari Advocate General of Madras Porus A Mehta and VV Raghavan with him for fife Intervener State of Madras
February 10
The Judgment of the Court was delivered by DAs J
This is an appeal arising out  of a judgment delivered on the 27th April 1951 by a Bench o15 the Madras High Court in CMP No 4697 of 1951 filed under article 226015 the Constitution for the issue of a writ of certiorari or other appropriate writ to call 780 for the records and quash the order of the Government passed under section 41 of the Madras Act XLIII of 1949 declaring the undertaking of the appellant company to vest in the Government
The appellant company was formed and registered under the Indian Companies Act in 1924 with the object inter alia of generating and supplying electrical energy to the public in Rajahmundry
In 1949 the Madras Legislature passed the Madras Electricity Supply Undertakings Acquisition Act 1949
The Act received the assent of the Governor General on the 18th January 1950 and was published in the Official Gazette on the 24th January 1950
Upon the Constitution of India coming into force on the 26th January 1950 the Act was submitted to the President for his certification and on the 12th April 1950 the President certified that the Act should not be called in question m any court on the ground that it contravened the provisions of clause 2 of article 31 or it contravened the provisions of sub section 2 of section 299 of the Government of India Act 1935
By an order in writing made on the 2nd September 1950 the Government of Madras acting under section 41 of the Act declared that the undertaking of the appellant company should vest in the Government on the date specified therein
Under the proviso to section 41 the Government from time to time postponed the date of vesting and the 2nd April 1951 was the last extended date fixed for such vesting
On the 29th March 1951 the appellant company filed CMP No 4697 of 1951 under article 226 for quashing the order of the Government
Shortly stated the contentions of the
appellant before the High Court were that the Act was ultra vires in that 1 it was beyond the legislative competency of the Madras Legislature to enact it 2 it was not enacted to subserve any public purpose and 3 the compensation provided for was illusory
The High Court repelled each and all of the aforesaid contentions of the appellant company
It held that the legislation was with respect to electricity under entry 31 of the 781 concurrent list in the seventh Schedule to the Government of India Act 1935 and was not a legislation with respect to corporations under entry 33 in list I as contended by the appellant and that therefore the Madras Legislature was competent to enact it
It further held that the Act having received the certificate of the President the challenge based on an alleged absence of public purpose or the illusory nature of the compensation was shut out and could not be raised
The High Court however held that certain sections and rule 192 of the Rules framed under the Act were invalid and subject thereto dismissed the application of the appellant company
The High Court granted leave to the appellant company to appeal before this court
The appeal has now come up for heating before us
Learned counsel appearing in support of the appeal has not pressed before us the contention raised in the High Court as to the absence of public purpose or the illusory nature of the compensation provided by the Act
He has confined his submissions to the question of the legislative competency of the Madras Legislature to enact this piece of legislation
In the High Court the contest centered round the question whether the Act was a law with respect to electricity under entry 31 of the concurrent list or with respect to corporations under entry 33 in list I The High Court held that the Act was in pith and substance a law with respect to electricity and was therefore within the legislative competency of the Provincial Legislature
In his arguments before us learned counsel contended that the act is in substance and effect one for the acquisition of an electrical undertaking and as such is ultra vires because a the acquisition of an electrical undertaking was not a legislative item in any of the three lists in the seventh schedule to the Government of India Act 1935 and b in so far as it relates to the acquisition of an electrical undertaking of a corporation it is a law with respect to corporations under entry 33 in list I 782 In our opinion this appeal can be disposed of on the first of the two grounds mentioned above
Turning to the Act it will be noticed that the long title of the Act is an Act to make provision for the acquisition of undertakings in the Province of Madras supplying electricity
 The preamble recites the expediency of making Provision for the acquisition of undertakings in the Province of Madras engaged in supplying electricity
 Section 1 gives the short title extent and commencement of the Act
Section 2 is a definition section
Section 3 provides that the Act shall apply to all undertakings of licensees including certain undertakings therein mentioned
Section 4 empowers the Government to take over any undertaking by making an order in writing declaring that such undertaking shall vest in the Government on a specified date
Section 5 provides for compensation payable to a licensee who is not a local authority
The section gives an option to the licensee to claim compensation on one of three bases therein specified
Section 6 deals with compensation payable where the licensee is a local authority
Section 7 specifies the properties or assets which will vest according aS compensation is claimed under one basis or another
Section 8 provides for the appointment of a sole representative to act as the sole and accredited representative of the licensee in connection with the handing over of the undertaking and performing on behalf of the licensee the functions thereinafter specified
The choice of basis of compensation is to be made within one month under section 9 and such choice once intimated to the Government is not to be open to revision except with the concurrence of the Government
Section 10 authorises the Government in case the licensee has disposed of any of the assets otherwise than in the normal course of events causing loss to the Government as succeeding owners to deduct from the compensation payable to the licensee an amount which they consider to be the loss sustained by them
Section 11 prescribes the various deductions which the Government shall be entitled to make from the compensation payable under the Act
The manner of 783 payment or deposit of compensation is laid down in section 12
Section 13 permits the Government to repay all loans debentures mortgages and the like outstanding on the vesting date at any time before the time fixed for repayment
Section 14 is the arbitration section
Section 15 provides for the termination of the managing agency
Section 16 authorises the Government to terminate the services of any person on the staff of the licensee immediately before the vesting date
Section 17 requires all licensees to prepare and hand over to the Government a complete inventory of all the assets
Section 18 gives power of entry to the Government or any officer authorised by the Government upon any land or premises in the possession of the licensee
Section 19 prescribes penalties for various defaults therein specified
Section 20 makes certain officers of a company liable for the offence committed by the company
Section 21 gives protection against suit or prosecution for anything done in good faith under any rule or order made under the Act
Section 22 confers rule making power on the Government
Section 23 provides that the provisions of certain Acts in so far as they are inconsistent with the provisions of this Act shall have no effect
Section 24 gives power to the Government to do anything which appears to them necessary for the purpose of removing any difficulty
From the above summary it will be noticed that the Act does not purport to make any provision for the granting of licenses or maintenance of works for generating or transmitting energy or for supplying electrical energy as one would expect to find in a law dealing with electricity nor does the Act purport to make any provision for the incorporation regulation or winding up of trading corporations
On the contrary it is abundantly clear from the long title the preamble and the sections that it is in pith and substance nothing but an Act to provide for the acquisition of electrical undertakings
Section 299 2 of the Government of India Act 1935 provided that neither the Federal nor a Provincial Legislature would have power to make any law authorising the compulsory acquisition for public purposes 784 of any land or any commercial or industrial undertaking or any interest in or in any company owning any commercial or industrial undertaking unless the law provided for the payment of compensation for the property acquired
Compulsory acquisition of property is undoubtedly an important sovereign right of the State but this right has to be exercised under a law
The legislative power of the State was distributed by sections 99 and 100 amongst the Federal Legislature and the Provincial Legislatures in the manner provided  in the several lists set forth in the Seventh Schedule to the Act
Section 100 read with entry 9 in list II authorised the Provincial Legislature to make a law with respect to compulsory acquisition of land
There was no entry in any of the three lists relating to compulsory acquisition of any commercial or industrial undertaking although section 299 2 clearly contemplated a law authorising compulsory acquisition for public purposes of a commercial or industrial undertaking
The acquisition of a commercial or industrial undertaking not being the subject matter of any entry in any of the three legislative lists neither the Federal Legislature nor the Provincial Legislature could enact a law with respect to compulsory acquisition of a commercial or industrial undertaking
Under section 104 however the Governor General in his individual discretion could by public notification empower either the Federal Legislature or a Provincial Legislature to enact a law with respect to any matter not enumerated in any of the lists in the seventh schedule to the Act
It is therefore clear that although Parliament expressly entrusted the Provincial Legislature with power to make a law with respect to compulsory acquisition of land it did not straightaway grant any power either to the Federal Legislature or the Provincial Legislature to make a law with respect to compulsory acquisition of a commercial or industrial undertaking but left it to the discretion of the Governor General to empower either of the Legislatures to enact such a law
There is no suggestion that the Governor General had in exercise of his discretionary powers under section 104 authorised the Madras 785 Legislature to enact the impugned Act and therefore the Act was prima facie beyond the legislative competency of the Madras Legislature
The learned Advocate General of Madras urges that there was implicit in every entry in the legislative lists in the Seventh Schedule to the Government of India Act 1935 an inherent power to make a law with respect to a matter ancillary or incidental to the subject matter of each entry
His argument is that each entry in the list carried with it an inherent power to provide for the compulsory acquisition of any property land or any commercial or industrial undertaking while making a law under such entry
It is quite true that the powers of each Legislature to make laws with respect to the different subjects assigned to it by the appropriate list were to be regarded as wide and plenary and also covering matters incidental or ancillary to such subject matter but it is nevertheless clear from the provision of the Act that the power to make a law for compulsory acquisition was under entry 9 in list II given only to Provincial Legislatures and that such power of the Provincial Legislatures was under that entry limited to making a law for the compulsory acquisition of land only and that unless the Governor General made an order under section 104 of the Act the Provincial Legislatures had no power to make a law for the compulsory acquisition of any property other than land and that the Federal Legislature had no power to make any law with respect to the compulsory acquisition of any property at all
If the argument of the learned Advocate General were correct then entry 9 in list II was wholly unnecessary for under entry 21 in list II the Provincial Legislatures could make a law for the compulsory acquisition of land
A similar argument was repelled by this court in the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh 
The matter is placed beyond any doubt or dispute by the provisions of section 127 of the Government of India Act 1935 which provided that the Federal might if it deemed it necessary to acquire any land situate in a 1 786 Province for any purpose connected with a matter with respect to which the Federal Legislature had power to make laws require the Province to acquire the land on behalf and at the expense of the Federation
If power  inhered in the Federal Legislature to make a law for the acquisition of any property for any purpose connected with a matter with respect to which it had  power to make laws then section 127 would not have  been necessary at all
The absence of any entry empowering any Legislature to make laws with respect to compulsory acquisition of a commercial or industrial undertaking and the provisions of section 127 to which reference has just been made make it abundantly clear that the contentions urged by the learned  Advocate General cannot possibly be sustained
In our opinion therefore it must be held that the Madras Legislature had no legislative competency to enact the impugned law
This is sufficient to dispose of this appeal and it is not necessary to express any opinion on the other points raised in the court below
The result therefore is that this appeal must be  allowed with costs both in the High Court as well as in this court
Appeal allowed
Agent for the intervener RH Dhebar


Summary:
The Madras Electricity Supply Undertakings Acquisition Act Madras Act XLIII of 1949 was beyond the legislative competency of the Madras Legislature because there was no entry in any of the three Lists of the Seventh Schedule of the Government of India Act 1935 relating to compulsory acquisition of any commercial or industrial undertaking although section 299 2 clearly contemplated a law authorising compulsory acquisition for public purposes of a commercial or industrial undertaking
State of Bihar vs Maharajadhiraja Sir Kameshwar Singh 1952 SCR 889 referred to