Case: Gujarat Electricity Board Vs. Shantilal R. Desai

right. His argument on this question proceeds thus: Section 7 (1) prior to its amendment in 1959 empowered the local authority or the State Government to make the purchase contemplated under that Section; the Electricity Board is not within the contemplation of that Section; the finding of the High Court that the provisions contained in sub-ss. (1), (2) and (4) of S. 7 of the Act read with S. 71 of the Electricity (Supply) Act 1948, confers on the appellant such a power is not correct because the right or option to purchase the undertaking was conferred on the State Government or the appropriate local authority under the licence and not under the provisions of the Act; in other words the said right is merely a contractual right and not a right flowing from the provisions contained in S. 7 of the Act as held by this Court in Fazilka Electric Supply Co., Ltd. v. Commr. of Income-tax, Delhi, 1962 (3) Supp SCR 496 = (AIR 1963 SC 464 ) and therefore the appellant cannot take any assistance from S. 71 of the Electricity (Supply) Act, 1948. This contention did not commend itself to the High Court. We shall now proceed to examine how far the same is correct.13. Section 71 of the Electricity (Supply) Act, 1948 provides:"Rights and options to purchase under Act 9 of 1910 to vest in Board.-Where under the provisions of the Indian Electricity Act 1910 (9 of 1910), any right or option to purchase the undertaking of a licensee vests in the State Government or a local authority such right or option shall be deemed to be transferred to the Board, and shall be exercisable by the Board in accordance with the provisions of the said Act applicable to the exercise of such right or option by the State Government or a local authority, as the case may be."Board is defined in S. 2 (2) of that Act as meaning State Electricity Board constituted under S. 5 tbereof. It is true that before S. 71 can be held to be attracted to a case it must be shown that the right or option to purchase the undertaking of the licensee vested in the State Government or a local authority under the provisions of the Act.It is also true that this Court had held in Fazilka Electric Supply Companys case, 1962 (3) Supp SCR 496 = (AIR 1963 SC 464 ) that from the provisions of the Act read with the rules made thereunder it is manifest that the condition as to the option of purchase either by the local authority or by the Government is the result of an agreement between the applicant who had applied for licence and the Government who granted the licence.In that case this Court was considering whether the sale concerned in that case fell within the scope of S. 10 (2), (7) of the Indian Income Tax Act or whether it can be held to be compulsory acquisition as contended by the assessee. A sale compelled by law may also be a sale under the Sale of Goods Act.But that does not mean that the right to purchase the undertaking does not vest in the concerned authority by virtue of S. 7. That right may accrue either because it is directly conferred by S. 7 or because it is obtained as a result of a contract compelled by that Section. In either case it is a right obtained by the authority by virtue of S. 7. There is no dispute that the licence granted must conform to the requirements of S. 7.14. In Okara Electric Supply Ltd. v. State of Punjab, 1960-2 SCE 239 = (AIR 1960 SC 284 ) this Court observed that Ss. 5, 6 and 7 show that in the case of a licensee,specific provisions have been made for the acquisition of the undertaking in cases o revocation or cancellation of licenses. For the aforementioned reasons we hold that appellant had acquired the right to purchase the undertaking by the combined operation of S. 7 of Act and S. 71 of the Electricity (Supply) Act, 1948.15. It was next contended on behalf of the respondent that by the time the licence period expired, S. 7 of the Act had been amended and S. 71 of the Electric (Supply) Act, 1948 repealed, no provision was made to preserve the rights already acquired under those provisions, hence the appellant is not entitled to purchase the undertaking. It is not the case of the respondent that either expressly or by necessary implication, the new law had taken away the right acquired earlier. That being so S. 6 of the General Clauses Act comes to the aid of the appellant.That Section provides that where that Act or any Central Act or Regulation made after the commencement of that Act repeals an enactment hitherto made or hereafter to be made then unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed. It also saves the previous operation of any enactment so repealed or anything duly done or suffered thereunder.16.The right to purchase the respondents undertaking came to vest firstly in the Bombay State Electricity Board subsequently in the appellant in view of the various notifications referred to earlier. That right has to be worked on the basis of law as it stood on the date the notice under S. 7 (4) of the Act was given.17. In this Court a new contention was taken on behalf of the respondent namely that in any case, the appellants right to purchase is conditional on the payment of the price as provided in S. 7 and hence the appellant cannot demand possession of the undertaking without paying the price after the same is determined according to law. This contention had not been taken before the High Court. The High Court may go into this question while deciding the writ petition.

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

Explanation:
1[ds]9. In our opinion sub-s. (4) of S. 4 is complementary to sub-ss. (1) and (2) of that Section and therefore they must be read together. On an analysis of these provisions it is seen that before a licensee can be compelled to sell his undertaking, the authority entitled to purchase must elect to purchase the same by exercise of the option given to it under the licence read with S. 7 of the Act followed by a notice as required by S. 7 (4) of the Act. In S. 7 the expression "option of purchasing an undertaking" merely means the right of purchasing the undertaking. The word option is used because two courses are open to the concerned authority namely, either to purchase the undertaking or renew the licence. Once the authority elects to purchase then the notice prescribed in sub-s. (4) should be given before the period mentioned therein. We are not able to agree with the High Court that the Section contemplates two stages namely (1) to elect to purchase the undertaking at least two years before the expiration of the licence and (2) exercise the option to purchase at the end of the licence period. The exercise of option to purchase as well as electing to purchase is one integral process and not two independent steps. By the very act of electing to purchase the authority exercises its option to purchase. In our opinion sub-ss. (1), (2) and (4) of S. 7 are plain and unambiguous. They do not lend themselves to any subtleties.10. In construing a provision, all its relevant parts should be considered together and their true effect ascertained.One can easily find out the reasons behind the procedure prescribed in S. 7. In view of the terms of the licence read with S. 7 (1) and (2) the concerned authority has two courses open before it. It can either decide to purchase the undertaking or renew the licence on the expiration of the period for which the licence is granted. The licensee must know in good time what course the authority is going to adopt so that he may so arrange his affairs as to cause least inconvenience to himself. Hence though the power to exercise the option to purchase arises on the expiration of the period of licence as per the terms of the licence, S. 7 lays down that if the authority wants to purchase the undertaking it must elect to do so at least two years before the expiration of the licence and communicate the same to the licensee. Once the concerned authority exercises its option and communicates the same to the licensee, the same is binding on the authority as well as the licensee. Otherwise there is bound to be considerable inconvenience both to the licensee and to the public.We are not able to find any good reason for reading into S. 7 a requirement that after a notice under S. 7 (4) is issued the authority must again exercise its option to purchase on the expiration of the period of licence. It is no doubt true that the right to purchase the undertaking accrues only at the expiration of the period of licence but for exercising that right, the authority must make its election within the period prescribed in S. 7 (4) and issue a notice as required by that sub-section. The requirements of S. 7 were fully complied with by the notice issued by the Bombay State Electricity Board on January 8, 1959.It was next contended on behalf of the respondent that by the time the licence period expired, S. 7 of the Act had been amended and S. 71 of the Electric (Supply) Act, 1948 repealed, no provision was made to preserve the rights already acquired under those provisions, hence the appellant is not entitled to purchase the undertaking. It is not the case of the respondent that either expressly or by necessary implication, the new law had taken away the right acquired earlier. That being so S. 6 of the General Clauses Act comes to the aid of the appellant.That Section provides that where that Act or any Central Act or Regulation made after the commencement of that Act repeals an enactment hitherto made or hereafter to be made then unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed. It also saves the previous operation of any enactment so repealed or anything duly done or suffered thereunder.16.The right to purchase the respondents undertaking came to vest firstly in the Bombay State Electricity Board subsequently in the appellant in view of the various notifications referred to earlier. That right has to be worked on the basis of law as it stood on the date the notice under S. 7 (4) of the Act was given.17. In this Court a new contention was taken on behalf of the respondent namely that in any case, the appellants right to purchase is conditional on the payment of the price as provided in S. 7 and hence the appellant cannot demand possession of the undertaking without paying the price after the same is determined according to law. This contention had not been taken before the High Court. The High Court may go into this question while deciding the writ petition.