Case: Moradabad Water Supply Company Limited Vs. Moradabad Municipal Board and Others

This is an appeal by special leave against the judgment of the Allahabad High Court which had dismissed the writ petition of the appellant challenging the validity of the Ordinance which was issued on 12-6-1975, followed by an Act, which had taken over the Moradabad Waterworks which were being run by the appellant.The licence for establishing and running the waterworks was granted to the appellant on 7-3-1937. Over the years, moneys had been invested and fixed assets come into existence when on 12-6-1975, as already noticed, the Ordinance was issued as a result of which the waterworks at Moradabad were taken over by the State Government. We are informed that there was only one other privately managed waterworks which was at Aligarh which was also taken over by the said Ordinance.Amendment was made in the U.P. Municipalities Act and Section 224-C was inserted which contained provisions relating to payment of compensation where licence of a licensee is revoked.In this appeal, the question of the validity of the Ordinance does not arise, inasmuch as the validity of the same has already been upheld by this Court. The only question which now arises for consideration is the amount of compensation which is payable to the appellant in respect of the fixed assets which were taken over by the State Government.

Court's reasoning:
As we read the said provision, it is clear that under sub-section (5)the amount which is payable to the licensee in respect of all the items, except in case of stores, is to be the book valuewhich means the original cost including such charges which may be incurred in respect thereof after deducting depreciation calculated in accordance with the table appended to the section. With regard to the stores, sub-section (5)(iii) does not contemplate the deduction of any depreciation and, therefore, it is the original cost which has to be taken into consideration.