Case: Maharashtra State Electricity Board And Thestate Of Maharas Vs. Nagpur Electric Light And Power Company Ltd.&amp; Anr

On May, 4, 1905, a licence was granted under Section 4 (1) of the Indian Electricity Act 1903, to Cromption and Co. Ltd., London, for the supply of electricity in the municipal area of Nagpur. A notification granting the above licence was published in the Central Provinces Gazettee on May 6, 1905. On January 1, 1911, the Indian Electricity Act. 1910, came into force. On June 28, 1913 a notification permitting the assignment of the licence in favour of the Nagpur Electric Light and Power Company Ltd., respondent before us, was published in the gazettee. On May 2, 1947, amendments in the terms and conditions of the licence made in exercise of the powers conferred by sub-s. (3) of Section 4 ofthe Indian Electricity Act, 1910, were published. In the preamble it was stated that these amendments were "in the terms and conditions of the Nagpur Electricity Licence, granted under the Public Works Department Notification No. 46, dated the 4th May 1905 ....." In the various amendments made throughout, reference was made to May 4, 1947, as being the date when various changes were deemed to start or operate. For instance, in Clause 2, paragraph (v) the expression "deposited map" was defined as follows:"2 (v) the expression "deposited map" shall mean the plans and statements showing(a) the area of supply(b) details of distribution system laid and in use as on 4th May 1947;(c) additions or alterations or both to existing distribution system as on 4th May 1947 ...."Again Clause 2, paragraph (ix) defined the expression "Net Book Value" to mean the written down value of the assets as on May 4, 1947. In Clause 3, paragraph (b) (ii) it is provided that "nothing in this license shall be construed to prevent that Great Indian Peninsula Railway, the Bengal Nagpur Railway or the Provincial Government or the Central Government from taking from the Government a supply of electrical energy for its exclusive use within the area of supply for new installations set up by them after 4th May, 1947". In Clause 3, paragraph (d) it was provided that "the licensee shall, within six months from the 4th May 1947. Reduce its retail rates for the supply of energy for various purposes to its consumers...." In cl. 3. Paragraph (e) (I) (b) it was provided that the "continuous current system shall be in use for a limited period of 5 years up to 4th May 1952, or such longer period as the Government may direct...." It was provided further in clause 3, paragraph (f) (vii) as follows:"It is desirable that the existing distribution system viz. As on 4th May, 1947 should also conform with the foregoing in all respects......"In clause 3, paragraph (o) (I), which is the clause which we have to interpret, it was provided as follows:"The option of purchase given by sub-section (1) of Section 7 of the Act shall be exercisable on the expiration of ten years or 4th May 1957 and the expiration of every subsequent period of ten years during the continuance of this license."3. We may mention that there was some debate before us whether the word "or" in this para was misprint for "on ". We checked up the original and it is common ground that the word in the original license is "or" and not "on"4. in the first annexure headed "compulsory works" (see Clause 3 of the License) it is provided that the "existing distribution system together with transformers and control gear as laid in use on 4th May 1947 in streets and roads delineated in the deposited map shall be the Compulsory Works for purposes of the section."5. On September 10, 1948,the Electricity (Supply) Act, 1948, came into force. We need only notice S. 71 of this Act under which the rights and options to purchase underthe Indian Electricity Act, 1910 were deemed to have been transferred to the Provincial (not State) Electricity Board6. The Indian Electricity (Amendment) Act, 1959 (32 of 1959) amendedthe Indian Electricity Act, 1910. We need only notice the insertion of new Sec. 4-A (1) at present. This reads:"4A. Amendment of licenses. - (1) - Where in its opinion the public interest so permits, the State Government, on the application of this licensee or otherwise and, after consulting the State Electricity Board, and if the licensee is not a local authority, also the local authority, if any, concerned, may make such alterations and amendments in terms and conditions of a license, including the provisions specified in Section 3, sub-section (2), cl. (f), as it thinks fit:Provided that no such attractions or amendments shall be made except with the consent of the licensee unless such consent has, in the opinion of the State Government, been unreasonably withheld."The purchase of undertakings is to be regulated by Section 6 which reads:"6. Purchase of undertakings. (1) Where a license has been granted to any person, not being a local authority,. the State Electricity Board shall,-(a) in the case of a license granted before the commencement of the Indian Electricity (Amendment) Act. 1959, on the expiration of each such period as is specified in the license... have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub-section."Sub-section (4) of Section 6 provides that if the State Electricity Board intends to exercise the option of purchasing the undertaking under this section, it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in sub-section (1) and if no such intimation as aforesaid is received by the State Government the State Electricity Board shall be deemed to have elected not to purchase the undertaking." Sub-section (6) of Section 6 provides that "where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this section the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in sub-section (1) pending the determination and payment of the purchase price." Under sub-section (7). Section 6" where an undertaking is purchased under this section, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of sub-section (4) of Section 7A."7. On September 15, 1965 notice was given to the respondent under sub-section (1) and sub-s. (6) of Section ofthe Indian Electricity Act, 1910, as follows:"I am directed to give you notice that the Maharashtra State Electricity Board has decided to purchase your Electricity Undertaking at Nagpur (District Nagpur) in exercise of the option to purchase vested in the Board by sub-section (1) of Section 6 of the India Electricity act, 1910, and to require you to sell your said undertaking to the Board on the midnight of 3rd/4th May 1967 being the date of expiry of the license granted to you by the Government under the said Act and also to call upon you under subsection (6) of Section 6 of the said Act to deliver the said undertaking to the Board on the said date of expiry of the said license pending determination and payment of purchase price."8. Doubts arose as to the interpretation of Clause 3, paragraph (o) (I) of the license, which we have set out above. The State Government, therefore, decided to amend the para so as to remove any doubts that there might be on the matter, and on April 129, 1966, published a notification which reads as follows:"Whereas as required by sub-section (3) of Section 4-A ofthe Indian Electricity Act, 1910 (IX of 1910) a draft of the further amendment proposed to be made by the Government of Maharashtra in the terms and conditions of the Nagpur. Electricity License, granted by the Government of the Central Provinces, Public Works Department, Notification No. 46, dated the 4th May, 1905, as subsequently amended, was published in Government Notification, Industries and Labour Department No. LNA(M)-1265/8126-Elec.1, dated the 4th January, 1956, for inviting objections and suggestions:And whereas no objections on suggestions have been received by the Government of Maharashtra:And whereas the Government of Maharashtra has consulted the Maharashtra State Electricity Board and the local authorities concerned and obtained the consent of the Central GovernmentAnd whereas the Government of Maharashtra also requested the Licensee, the Nagpur Electric Light and Power Company Limited to give its consent to the proposed amendment, as required by the proviso to sub-sec (1) of the said Section 4-A but, in the opinion of the Government of Maharashtra, such consent has been unreasonably withheld:And whereas in the opinion of the Government of Maharashtra, the public interest so permits to make the proposed amendmentNow, therefore, in exercise of the powers conferred by the said Section 4-A and of all other powers enabling it in this behalf, the Government of Maharashtra hereby amends the terms and conditions of the said licence, as follows:In Clause 3 of the license, in paragraph (o) in sub-paragraph (I) for the portion beginning with the words "shall be exercisable" and ending with the word and figures "May 1957" the following shall be substituted, namely:-"shall be exercisable on the expiration of the period of ten years on the 4th May 1957."9. After this amendment, another notice was given under Sub-sections (1) and (6) of Section 6 of the Indian Electricity Act. 1910, on April 26, 1966. The wording of this notice is similar to the notice dated September, 15, 1965, which we have set out above. This notice was expressly given in suppression of the earlier notice10. While approaching the Central Government for its consent, the Government for its consent, the Government of Maharashtra in its letter dated January 17, 1966, stated that "the draft amendment seeks to remove the ambiguity, if any, in respect of the date of which the option of purchase is exercisable underthe Indian Electricity Act, 1910."11. On November 10, 1966, the licensee, the Nagpur Electric Light and Power Company Ltd., filed the petition under Article 226 challenging the aforesaid notice dated April 26, 196612. The High Court held that the amendments in the license made in 1947 were in order. No serious challenge to those amendments has been made before us. The High Court however, seems to have held that the amendment of 1966 was invalid.

Reasoning:
14. It seems to us that after the amendments Para 4 of the original license ceased to have effect for the purposes of construing the license as amended in 1947 and subsequently18. It seems to us that if Cl. 3, paragraph (o) (I) is interpreted in the light of the rest of the amendments made in the license in 1947, it is quite clear that the previous period was deemed to have expired on May 3, 1947 and the fresh period started on 1947 and the fresh period started on May 4, 1947 and the subsequent periods of 10 years ended on May 3, 1957 and May 3, 1967. It is impossible to read the license as amended in 1947 in any way other than that it was agreed that the period of 10 years mentioned in the license would start from May 4, 1947. The details of distribution system (Para 2) extracted above), the valuation of assets as on May 4, 1947 and other clauses extracted above all point to this conclusion19. It was pointed out that the license still talked of Section 7 of the Electricity Act. Why was this not amended when it was under Section 6, as inserted in 1959, that the option to purchase became exercisable? It seems to us that it was rightly not amended because the license still provided for the starting of the period of 10 years from May 4, 1947. This could only be provided for while the old Section 7 stood20. It seems to us that the notice dated April 26, 1966 was in accordance with the terms of the licence and the law.