Case: Upper Ganges Valley Electricity Supply Company Ltd Vs. U.P. Electricity Board

purchases price". Under the relevant part of sub-section (2) of that section, the market value of an undertaking is to be the value of all lands, buildings, works etc. other than "service lines ..............which have been constructed at the expense of consumers". The appellants undertaking having been acquired on 4/5 May 1959, the provisions of old Section 7 and not of the newly added Section 7A would govern his rights. The Umpire made his award on November 27, 1961 relying, probably, on Section 7A which had no application. 23. Learned counsel for the respondent is right that even a mistake of law cannot vitiate the award unless the mistake is apparent on the face of the award. But here, the Umpire framed specific issues for decision, the first of these being : whether the respondent was "entitled to get a credit for the amount of consumers contribution paid for the service lines, laid on their premises and at their cost". The finding of the Umpire on this issue was that "The company is not entitled to claim from the Board the value of the portion of the service lines which were laid at the cost of the consumers." The calculations made by the Umpire in the award for ascertaining the true market value of the appellants undertaking show that the "value of the portion of services installed at the cost of the consumers" was expressly excluded from the total market value of the assets of the undertaking. It seems beyond the pale of controversy that the Umpire did not award compensation to the appellant in respect of the service lines for the sole reason that they were laid at the cost of the consumers. Some market-value the service-lines must have had, even if it be no more than the scrap value. But to the way of thinking which the Umpire adopted, that consideration had no relevance. The service-lines were paid for by the consumers and that, for the Umpire, was the end of the matters. That, patently, was the wrong end. 24. Respondent drew our attention to the decision in Durga Prosad Chamria v. Sewkishendas Bhattar, AIR 1949 PC 334 in which it was held that if a question of law is specifically referred to an arbitrator for his decision it would be contrary to well-established principles for a Court of law to interfere with the award, even if the Court itself would have take a different view of the point of law, had it been before it. This decision can have no application because the parties here did not refer any specific question of law for the decision of the arbitrators. The reference to arbitrators was on the broad question as to what was the fair market-value of the appellants undertaking. Being unable to agree on this question, the two arbitrators referred the matter to an Umpire. The Umpire raised a question of law and decided it. Parties had invited none to decide a specific question of law. 25. We are not disposed to hold as contended by the respondent, that if a part of the award be found to be invalid, the entire award should be set aside and remitted back for a fresh decision. The error which has occurred in the award of the Umpire relates to a matter which is distinct and separate from the rest of the award. The part which is invalid being severable from that which is valid, there is no justification for setting aside the entire award. 26. Normally, we would have remitted the award for a decision in the light of our judgment but that is likely to involve undue delay and expense in a dispute which is pending since 1959. Learned counsel for the appellant was agreeable that we should ourselves amend the award. Learned counsel for the respondent demurred but he was unable to indicate any cogent reason why we should not adopt a course which, far from causing any prejudice to the parties, was clearly in the interests of justice. 27. The Umpire has held that on the date of sale, the fair market value of the appellants undertaking was Rupees 23,81,670/-. He arrived at this figure after excluding from the total market value, the sum of Rupees 2,38,255/- which represented the consumers contributions to the cost of laying the service lines. These contributions, according to him, were made from April 1, 1958 to March 31, 1959. The date of sale being 4/5 May, 1959 the consumers contribution will roughly represent the market value of the service lines even if as required by the first proviso to Section 7 (1) of the Act as it then stood, due regard is to be had to the nature and condition for the time being of the "works", to the state of repair thereof, to the circumstance that they are in such a position as to be ready for immediate working and to the suitability of the same for the purposes of the undertaking. 28. Accordingly we direct that the award of the Umpire will stand amended to the extent that the fair market value of the appellants undertaking shall be Rupees 23,81,670/- plus Rupees 2,38,255/-, that is to say Rupees 26,19,925/-. We have not allowed solatium on the additional amount, so as to offset reasonable depreciation in the value of the service lines after they were laid. 29. The Umpire has directed the appellant to refund Rupees 98,568/- to the respondent, on the basis that the amount was paid to the appellant in excess of its just dues. This amount shall have to be adjusted as against the sum of Rupees 2,38,255/- which we have found to be due to the appellant in addition to what was awarded to it by the Umpire. Respondent, therefore, shall pay to the appellant a sum of Rupees 2,38,255/- minus Rupees 98,568/-, that is to say, Rupees 1,39,687/- with interest at six per cent per annum from the date of this judgment till payment.

Court's decision (1 = petition accepted / positive for appellant, 0 = rejected / negative): 1

Reasoning from the judgment:
1[ds]22. The reason for this error may easily be this : Under Section 7 of the Act to which we have called attention, the licensee was entitled to the "payment of the value of all lands, buildings, works" etc. This section, along with certain others, was amended by the Electricity (Amendment) Act, 32 of 1959, which came into force on September 5, 1959. By this amendment, a new Section 7A was inserted in the Act in order to provide for the "Determination of purchases price". Under the relevant part of sub-section (2) of that section, the market value of an undertaking is to be the value of all lands, buildings, works etc. other than "service lines ..............which have been constructed at the expense of consumers". The appellants undertaking having been acquired on 4/5 May 1959, the provisions of old Section 7 and not of the newly added Section 7A would govern his rights. The Umpire made his award on November 27, 1961 relying, probably, on Section 7A which had no application23. Learned counsel for the respondent is right that even a mistake of law cannot vitiate the award unless the mistake is apparent on the face of the award. But here, the Umpire framed specific issues for decision, the first of these being : whether the respondent was "entitled to get a credit for the amount of consumers contribution paid for the service lines, laid on their premises and at their cost". The finding of the Umpire on this issue was that "The company is not entitled to claim from the Board the value of the portion of the service lines which were laid at the cost of the consumers." The calculations made by the Umpire in the award for ascertaining the true market value of the appellants undertaking show that the "value of the portion of services installed at the cost of the consumers" was expressly excluded from the total market value of the assets of the undertaking. It seems beyond the pale of controversy that the Umpire did not award compensation to the appellant in respect of the service lines for the sole reason that they were laid at the cost of the consumers. Some market-value the service-lines must have had, even if it be no more than the scrap value. But to the way of thinking which the Umpire adopted, that consideration had no relevance. The service-lines were paid for by the consumers and that, for the Umpire, was the end of the matters. That, patently, was the wrong end24. Respondent drew our attention to the decision in Durga Prosad Chamria v. Sewkishendas Bhattar, AIR 1949 PC 334   in which it was held that if a question of law is specifically referred to an arbitrator for his decision it would be contrary to well-established principles for a Court of law to interfere with the award, even if the Court itself would have take a different view of the point of law, had it been before it. This decision can have no application because the parties here did not refer any specific question of law for the decision of the arbitrators. The reference to arbitrators was on the broad question as to what was the fair market-value of the appellants undertaking. Being unable to agree on this question, the two arbitrators referred the matter to an Umpire. The Umpire raised a question of law and decided it. Parties had invited none to decide a specific question of law25. We are not disposed to hold as contended by the respondent, that if a part of the award be found to be invalid, the entire award should be set aside and remitted back for a fresh decision. The error which has occurred in the award of the Umpire relates to a matter which is distinct and separate from the rest of the award. The part which is invalid being severable from that which is valid, there is no justification for setting aside the entire award26. Normally, we would have remitted the award for a decision in the light of our judgment but that is likely to involve undue delay and expense in a dispute which is pending since 1959. Learned counsel for the appellant was agreeable that we should ourselves amend the award. Learned counsel for the respondent demurred but he was unable to indicate any cogent reason why we should not adopt a course which, far from causing any prejudice to the parties, was clearly in the interests of justice27. The Umpire has held that on the date of sale, the fair market value of the appellants undertaking was Rupees 23,81,670/-. He arrived at this figure after excluding from the total market value, the sum of Rupees 2,38,255/- which represented the consumers contributions to the cost of laying the service lines. These contributions, according to him, were made from April 1, 1958 to March 31, 1959. The date of sale being 4/5 May, 1959 the consumers contribution will roughly represent the market value of the service lines even if as required by the first proviso to Section 7 (1) of the Act as it then stood, due regard is to be had to the nature and condition for the time being of the "works", to the state of repair thereof, to the circumstance that they are in such a position as to be ready for immediate working and to the suitability of the same for the purposes of the undertaking.