Case: Vellore Electric Corporation Limited and Another Vs. State of Tamil Nadu and Others

already vested in government. There is no substance in this contention eitherRe Contention (f). 28. This contention arises in the context of Section 5(2) (i) of the Act. In computing the amount payable under "Basis B" the aggregate value of the sums specified in several clauses of Section 5(2) has to be taken. Section 5(2)(i) while requiring the book value of all "completed works in beneficial use pertaining to the undertaking and handed over to the government" to be taken, however, excludes therefrom works paid for by the consumers. The contention of the petitioners is that the "works paid for by the consumer" is also the property of the licensee and cannot legitimately be excluded. A substantially similar contention was urged and has been considered and negatived at para 29 of our judgment in W.P. Nos. 457 and 458 of 1972. The reasons stated by us in negativing the contention in that case fully answer the present point. Contention (f) is also insubstantial. Re Contention (g) Section 10(d) envisages deduction from the amount payable towards and on account of arrears of electricity charges payable by the licensee to the government or the Electricity Board as the case may be, for the supply of electricity made by them to the licensee. This is a legitimate item of deduction. But, the point Sri Salve sought to put across is that even a disputed and untenable claim in that behalf becomes entitled to deduction. There is no justification for this apprehension. Section 13(1)(e) makes such a dispute as one of the arbitrable disputes and no deduction of a disputed claim can be justified by government if the arbitrator - who is or has been a District Judge Contention (g) has no substance either. Re Contention (h) 29. The grievance sought to be made out on the matter is that while Section 6(2) of the Act has the effect of vesting all the assets specified in Section 6(2)(i)(b) in government free from encumbrances and the proviso to Section 6(2) renders the amount payable to the licensee as substituted security for the debts, mortgages and obligations in substitution of the assets vesting in government, however, Section 10(e) renders one species or such debt viz., sums due to the government or the Electricity Board, liable to be deducted from the amount. Sri Salve contends that this would make for a double recovery of the same debt. This, we are afraid, is a wrong way of looking at the two provisions. If a debt is deducted from the "amount", the debt is satisfied and is extinguished and no further debt remains outstanding to get itself attached to and become an encumbrance upon the substituted security viz., the amount". Section 6(2) and Section 10(e) must be construed harmoniously and in a reasonable manner. There is no scope for any apprehension of a possible double recovery of the same debt. There is no substance in contention (h)Re Contention (i). 30. The point of the matter is that Section 10(f) entitles the deduction of the market value of any "property" or "right" which vests in government and which is not delivered by the licensees to government. The grievance of the petitioner is that while recovery of "market value" is sought to be made for non-delivery of the item, however, in computing the "amount" only the "book value" of such "property" or "right" is taken into account. This, it is contended, is an instance of application of double standards and is, therefore, arbitrary. We see no substance in this contention. The measure of the reimbursement for an asset withheld by the licensee is the corresponding expenditure to be incurred by government for replacement which, in eminently conceivable cases, could be the market value of the asset which is so withheld by the licensee and which has to be replaced to keep the undertaking functioning. There is no substance in this contention either. Re Contention (J) 31. Sri Salve submitted that the accredited representative is, under Section 8(1), given only a months time from the date of his appointment to signify the choice under Section 5 as to the basis of determination of the amount. The time granted, it is said, is unreasonably short. The argument clearly overlooks the clause or such further time as may be granted by the government occurring in Section 8(1). If the exercise of this power is arbitrary or capricious the licensee has remedies in Administrative Law. But the provision itself cannot be held to be bad. There is no substance in this contention either. 32. Certain other subsidiary contentions were urged at the hearing. All these matter have been elaborately considered in our judgment in Writ Petition Nos. 457 and 458 of 1972 (Tinsukhia Electric Supply Co. Ltd. v. State of Assam, (1989) 3 SCC 709 ) arising out of the Assam legislation. We have not found any merit in them. 33. However, there is one aspect which merits consideration. Sri Salve submitted that the petitioners in Writ Petition No. 5(N) of 1974, who initially, on January 16, 1974, had opted for Basis A had sought a change to Basis B by their application dated October 4, 1977. On February 2, 1978, government refused to permit the change. Sri Salve submits that a serious and indeed, irreparable hardship has been occasioned to the petitioners by this arbitrary refusal. In these writ petitions we have dealt with questions of constitutionality leaving the questions of construction of the provisions to the appropriate authorities. However, having regard to the chequered history of the proceedings, it appears to us that Sri Salves submission deserves to be accepted. Accordingly the order of the government dated February 2, 1978 refusing a change in the basis for determination of the amount is set aside and the government is directed to consider and dispose of the application dated October 4, 1977 afresh within two months from today. We make it clear that the government shall not unreasonably withhold the permission for the change. 34.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]These contentions could be dealt with together. The principal argument is that that there is no rational and direct nexus between the objects of the Act and the Directive Principles of State Policy adumbrated in clauses (b) and (c) of Article 39 inasmuch as the impugned Act was brought forth only to avoid the consequences of the terms of the licenses and the beneficent provisions of Sections 6, 7 and 7-A of the Electricity Act, 1910. If there is, thus, no protection to the law of Article 31-C, then its provisions would clearly violate Articles 14, 19 andThese contentions have to be examined with reference to the provisions of the Constitution as they stood in 1973. Article 31-C was introduced by Section 3 of theAmendment) Act, 1971 with effect from April 20, 1972. Article 31-C, before the expansion of its scope by the 42nd Amendment, protected a law giving effect to the policy of the State towards implementing the principles specified in clauses (b) and (c) of Article 39. Article 31 itself had not then been deleted but its scope had been considerably cut down and a law providing for acquisition of property, even if it did not have the protection of Article 31-C, could not be tested with reference to the adequacy of the amount payable for the acquisition. The just equivalent or full indemnification principle had been done away with and the question of the adequacy of the amount was renderedcontention was not accepted. Repelling it, we observed in the course of the judgment in W.P. Nos. 457 & 458 of 1972 (Tinsukhia Electric Supply Co. Ltd. v. State of Assam, (1989) 3 SCC 709 ) : (SCC p. 735, para 53; p. 737, para 57; p. 738, para 61; pp. 738-39, paraproposition of Sri Sorabjee, in principle, is, therefore, unexceptionable; but the question remains whether, upon the application of the appropriate tests, the impugned statute fails to measure up to the requirements of the Constitution to earn the protection under Article 31-C"It is not disputed that the electricity generated and distributed by the undertakings of the petitioner-companies constitute "material resources of the community" for the purpose and within the meaning of Article 39(b)"... The idea of distribution of the material resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries. That is one of the modes of "distribution". Nationalisation is another mode"On an examination of the scheme of the impugned law the conclusion becomes inescapable that the legislative measure is one of nationalisation of the undertakings and the law is eligible for and entitled to the protection of Articleto the contention in that case that not every provision of a law can and need be eligible for the protection of Article 31-C and that, accordingly, the provisions as to the quantification of the amount which were meant to achieve an oblique motive and interdicting and extinguishing rights to receive market value under the 1910 Act would not attract the protection of Article 31-C, it was held : (SCC p. 739, para 63; p. 739, para 64)"... We are afraid this contention proceeds on an impermissible dichotomy of the components integral to the idea of nationalisation. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core element in nationalisation. The need for constitutional immunities for such legislative efforts at social and economic change recognise the otherwise unaffordable economic burden ofis, therefore, not possible to divorce the economic considerations or components from the scheme of the nationalisation with which the former are inextricably in integrated. The financial cost of a scheme of nationalisation lies at its very heart and cannot be isolated. Both the provisions relating to the vestiture of the undertakings in the State and those pertaining to the quantification of the "amount" are integral and inseparable parts of the integral scheme of nationalisation and do not admit of being considered as distinct provisions independent of each other.e observations fully answer the contention of Sri Salve in regard to the question whether impugned Act attracts the protection of Article 31-C or not. If Article 31-C comes in, Articles 14, 19 and 31 goOn a consideration of the matter, we think that all the contentions - (a), (b), (c) and (d) - are covered in one form or the other by our pronouncement in W.P. Nos. 457 and 458 of 1972 (Tinsukhia Electric Supply Co. Ltd. v. State of Assam, (1989) 3 SCC 709 ). We are also of the opinion that Sri Salves contention that what was sought to be acquired was mere "choses-in-action" is not sound. In any event, the decision of this Court in State of Madhya Pradesh v. Ranojirao Shinde ((1968) 3 SCR 489 : AIR 1968 SC 1053 ) relied upon by Sri Salve to contend that choses-in-action could not be acquired would require to be read with later pronouncement in Madan Mohan Pathak v. Union of India (115 US 650). It is not necessary, however, to pronounce on this point as in our view what was acquired were not merely chose-in-action but the undertakingsContentions (a), (b) and (c) accordingly fail and are held and answered against theThe grievance sought to be made out on the matter is that while Section 6(2) of the Act has the effect of vesting all the assets specified in Section 6(2)(i)(b) in government free from encumbrances and the proviso to Section 6(2) renders the amount payable to the licensee as substituted security for the debts, mortgages and obligations in substitution of the assets vesting in government, however, Section 10(e) renders one species or such debt viz., sums due to the government or the Electricity Board, liable to be deducted from the amount. Sri Salve contends that this would make for a double recovery of the same debt. This, we are afraid, is a wrong way of looking at the two provisions. If a debt is deducted from the "amount", the debt is satisfied and is extinguished and no further debt remains outstanding to get itself attached to and become an encumbrance upon the substituted security viz., the amount". Section 6(2) and Section 10(e) must be construed harmoniously and in a reasonable manner. There is no scope for any apprehension of a possible double recovery of the same debt. There is no substance in contention (h)Re ContentionThe point of the matter is that Section 10(f) entitles the deduction of the market value of any "property" or "right" which vests in government and which is not delivered by the licensees to government. The grievance of the petitioner is that while recovery of "market value" is sought to be made for non-delivery of the item, however, in computing the "amount" only the "book value" of such "property" or "right" is taken into account. This, it is contended, is an instance of application of double standards and is, therefore, arbitrary. We see no substance in this contention. The measure of the reimbursement for an asset withheld by the licensee is the corresponding expenditure to be incurred by government for replacement which, in eminently conceivable cases, could be the market value of the asset which is so withheld by the licensee and which has to be replaced to keep the undertaking functioning. There is no substance in this contentionSri Salve submitted that the accredited representative is, under Section 8(1), given only a months time from the date of his appointment to signify the choice under Section 5 as to the basis of determination of the amount. The time granted, it is said, is unreasonably short. The argument clearly overlooks the clause or such further time as may be granted by the government occurring in Section 8(1). If the exercise of this power is arbitrary or capricious the licensee has remedies in Administrative Law. But the provision itself cannot be held to be bad. There is no substance in this contentionCertain other subsidiary contentions were urged at the hearing. All these matter have been elaborately considered in our judgment in Writ Petition Nos. 457 and 458 of 1972 (Tinsukhia Electric Supply Co. Ltd. v. State of Assam, (1989) 3 SCC 709 ) arising out of the Assam legislation. We have not found any merit inHowever, there is one aspect which merits consideration. Sri Salve submitted that the petitioners in Writ Petition No. 5(N) of 1974, who initially, on January 16, 1974, had opted for Basis A had sought a change to Basis B by their application dated October 4, 1977. On February 2, 1978, government refused to permit the change. Sri Salve submits that a serious and indeed, irreparable hardship has been occasioned to the petitioners by this arbitrary refusal. In these writ petitions we have dealt with questions of constitutionality leaving the questions of construction of the provisions to the appropriate authorities. However, having regard to the chequered history of the proceedings, it appears to us that Sri Salves submission deserves to be accepted. Accordingly the order of the government dated February 2, 1978 refusing a change in the basis for determination of the amount is set aside and the government is directed to consider and dispose of the application dated October 4, 1977 afresh within two months from today. We make it clear that the government shall not unreasonably withhold the permission for the change