Case: U.P. State Electricity Board Vs. Upper Jamuna Valley Electri.Sup.Co

the provisions of Articles 19(1)(f) and 31 stood at the relevant time. Articles 19(1)(f) and 31 were deleted later; but that does not affect the constitutional position with reference to which the present cases would require to be decided." * Thus, in this case this Court proceeded on the basis that Articles 19(1)(f) and 31 applied to the facts of that case. The Court still set aside the judgment of the High Court which had upheld the challenge. This Court still held that the challenge on grounds of violation of Articles 14, 19 and 31 fails. The contention that compensation was not adequate and/or illusory was not accepted. In Vallore Electric Corporations case 1989 SC 575) also this court considered the challenge to the change in the method of valuation from market value to book value on the basis of Articles 19(1)(g) and 31. In this case also it was held that such a contention was not available, as it had been negatived in Tinsukhias case 1989 SC 576). 19. In our view, the authorities in Tinsukhias case 1989 SC 576) Thana Electric Supply Companys case 1989 SC 578) and Vellore Electric Corporations case 1989 SC 575) fully cover the point urged by Dr. Singhvi. Even if the principles laid down in Coopers case 1970 SC 575) (supra) are applicable, still it has been held by this Court, in the above mentioned three cases that principles of valuation on book value is a well known concept of valuation and that the amount is not illusory. We, therefore, see no. substance in this challenge. 20. Dr. Singhvi, however, submitted that the notice to take over the undertaking was given on November 30, 1962 and the undertaking was taken over on June 28, 1964. He submitted that on the date of takeover the rights of the 1st Respondent had crystallised. He submitted that the 1st respondent, therefore, became entitled to receive the market value of the property. He submitted that as the amount payable had already got crystallised, a subsequent acquisition could only be acquisition of money. He submitted that on June 28, 1964 the vesting took place. He submitted that thereafter nothing more than payment of money was to be done. He submitted that by a retrospective amendment, made in 1975, money could not be compulsory acquired. He submitted that there could be no. public purpose in acquisition of money and that such acquisition would amount to a forced loan. He submitted that the restrictions laid down by the retrospective amendment were not reasonable. He submitted that no. reasons for such restrictions were given or could exist. He submitted that by the amendment the crystallised right to money was being taken away. 21. In support of his submission Dr. Singhvi relied upon the case of Madan Mohan Pathak v. Union of India reported in 1978 SC 152 : 1978 Lab IC 612). In that case there was a settlement between the management and the labour under which an annual cash bonus was to be paid to Class III and Class IV employees. By the Life Insurance Corporation (Modification of Settlement) Act, 1976 Class III and Class IV employees were sought to be deprived of the annual cash bonus that they are entitled to receive under the settlement. This Court held that the term Property under Articles 19(1)(f), 31(1) and 31(2) had to be given the widest interpretation and refers to property of every kind, tangible or intangible, debts and chose-in-action. It was held that the chose-in-action could be compulsory acquired under Article 31(2). It was held that the right to receive the annual cash settlement was a right to property within the meaning of Article 31(2). It was held that extinguishments of the debt of a creditor with the corresponding benefit to the State or State owned/controlled corporation would be transfer of ownership to the State and would amount to compulsory acquisition under Article 31(2). It was held that acquisition of money, debt and/or chose in action must be made to serve a public purpose. It was held that the Impugned Act was a pure and simple case of deprivation of the rights of the Class II and Class IV employees without any apparent nexus with any public interest. It was held that an acquisition of a chose-in-action could not be for the purpose of augmenting the revenues of the State or reducing State expenditure as that would not be a public purpose and would be violative of the constitutional guarantee embodied in Article 31(2). It was held that an acquisition of this nature amounted to forced loan. Dr. Singhvi also relied upon the case of State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga reported in 1952 SCR 889 : 1952 AIR(SC) 252). 22. We are unable to accept the submission. As has been held in Tinsukhias case 1989 SC 576); Thana Electric Supply Companys case 1989 SC 578) and Vellore Electric Corporations case 1989 SC 575) what has been acquired is not a chose-in-action or a debt. What been acquired is the undertaking which dealt with material resource of the country. There was no. crystallisation of any amount. The only right was a right to receive compensation which was to be worked out on certain principles. All that the amending Act has done is to change the method or principle on the basis of which the compensation was to be worked out. It has been held that the legislation is not a piece of colourable legislation. It has also been held, in the above mentioned cases, that the provisions for quantification of the amount payable to the undertaking form an integral and inseperable part of the nationalisation and do not admit of being considered as distinct provisions independent of each other. It has been held that the economic costs of nationalization was not justiciable. In our view this case is fully covered by the judgments in Tinsukhias case, Thana Electric Supply Companys case and Vallore Electric Corporations case.

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

Explanation:
1[ds]16. We have considered the submissions of Dr. Singhvi undoubtedly, the law which is to prevail is the law which was prevailing on the date of take over, i.e., 28th of June, 1964. It is also clear that on that day the Constitutionh Amendment) Act had not been enacted and Article 31(c) was not there. Undoubtedly, in Coopers case 1969 SC 442) it has been held that even after amendment of Article 31(c) the term "compensation" meant "just equivalent" or "full indemnification." However, Coopers case itself notes that there has been a change inasmuch as if the law pertains to change in the principles of the method of determination of compensation and the method is a recognized principle applicable in the determination of compensation and the principle is appropriate in determining the value of the property, then it would not be open to the Courts to question the valuation. Coopers case also lays down that if several principles are appropriate and one is selected for determination of the value of the property to be acquired, selection of that principle to the exclusion of other principles is not open to challenge, for the selection must be left to the wisdom of the Parliament. Of course, the principles specified must be appropriate to the determination of compensation for an appropriate class of property sought to be acquired19. In our view, the authorities in Tinsukhias case 1989 SC 576) Thana Electric Supply Companys case 1989 SC 578) and Vellore Electric Corporations case 1989 SC 575) fully cover the point urged by Dr. Singhvi. Even if the principles laid down in Coopers case 1970 SC 575) (supra) are applicable, still it has been held by this Court, in the above mentioned three cases that principles of valuation on book value is a well known concept of valuation and that the amount is not illusory. We, therefore, see no. substance in this challengeDr. Singhvi, however, submitted that the notice to take over the undertaking was given on November 30, 1962 and the undertaking was taken over on June 28, 1964. He submitted that on the date of takeover the rights of the 1st Respondent had crystallised. He submitted that the 1st respondent, therefore, became entitled to receive the market value of the property. He submitted that as the amount payable had already got crystallised, a subsequent acquisition could only be acquisition of money. He submitted that on June 28, 1964 the vesting took place. He submitted that thereafter nothing more than payment of money was to be done. He submitted that by a retrospective amendment, made in 1975, money could not be compulsory acquired. He submitted that there could be no. public purpose in acquisition of money and that such acquisition would amount to a forced loan. He submitted that the restrictions laid down by the retrospective amendment were not reasonable. He submitted that no. reasons for such restrictions were given or could exist. He submitted that by the amendment the crystallised right to money was being taken away21. In support of his submission Dr. Singhvi relied upon the case of Madan Mohan Pathak v. Union of India reported in 1978 SC 152 : 1978 Lab IC 612). In that case there was a settlement between the management and the labour under which an annual cash bonus was to be paid to Class III and Class IV employees. By the Life Insurance Corporation (Modification of Settlement) Act, 1976 Class III and Class IV employees were sought to be deprived of the annual cash bonus that they are entitled to receive under the settlement. This Court held that the term Property under Articles 19(1)(f), 31(1) and 31(2) had to be given the widest interpretation and refers to property of every kind, tangible or intangible, debts and. It was held that then could be compulsory acquired under Article31(2). It was held thatthe right to receive theannual cash settlement was a right to property within the meaning of Article31(2). It was held thatextinguishments of the debt of a creditor with the corresponding benefit to the State or State owned/controlled corporation would be transfer of ownership to the State and would amount to compulsory acquisition under Article31(2). It was held thatacquisition of money, debt and/or chose in action must be made to serve a publicpurpose.It was held that theImpugned Act was a pure and simple case of deprivation of the rights of the Class II and Class IV employees without any apparent nexus with any public interest. It was held that an acquisition of an could not be for the purpose of augmenting the revenues of the State or reducing State expenditure as that would not be a public purpose and would be violative of the constitutional guarantee embodied in Article31(2). It was held thatan acquisition of this nature amounted to forced loan. Dr. Singhvi also relied upon the case of State of Bihar v. Maharajadhiraja Sir Kameshwar Singh of Darbhanga reported in 1952 SCR 889 : 1952 AIR(SC) 252)22. We are unable to accept the submission. As has been held in Tinsukhias case 1989 SC 576); Thana Electric Supply Companys case 1989 SC 578) and Vellore Electric Corporations case 1989 SC 575) what has been acquired is not an or a debt. What been acquired is the undertaking which dealt with material resource of the country. There was no. crystallisation of any amount. The only right was a right to receive compensation which was to be worked out on certain principles. All that the amending Act has done is to change the method or principle on the basis of which the compensation was to be worked out. It has been held that the legislation is not a piece of colourable legislation. It has also been held, in the above mentioned cases, that the provisions for quantification of the amount payable to the undertaking form an integral and inseperable part of the nationalisation and do not admit of being considered as distinct provisions independent of each other. It has been held that the economic costs of nationalization was not justiciable. In our view this case is fully covered by the judgments in Tinsukhias case, Thana Electric Supply Companys case and Vallore Electric Corporations case.