Case: Rajahmundry Electric Supply Corporation Limited, by its Vice-Chairman - Appanna Ranga Rao  Vs. State of Andhra Pradesh

The appellant company was formed and registered under the Indian Companies Act in 1924 with the object, inter alia, of generating and supplying electrical , energy to the public in Rajahmundry. In 1949 the Madras Legislature passed the Madras Electricity Supply Undertakings (Acquisition) Act, 1949. The Act received the assent of the Governor-General on the 18th January, 1950, and was published in the Official Gazette on the 24th January, 1950. Upon the Constitution of India coming into force on the 26th January, 1950, the Act was submitted to the President for his certification and on the 12th April, 1950, the President certified that the Act should not be called in question m any court on the ground that it contravened the provisions of clause (2) of article 31 or it-contravened the provisions of sub-section (2) of section 299 of the Government of India Act, 1935. By a norder in writing made on the 2nd September, 1950, the Government of Madras acting under section 4(1) of the Act declared that the undertaking of the appellant company should vest in the Government on the date specified therein. Under the proviso to section 4(1) the Government from time to time postponed the date of vesting and the 2nd April, 1951, was the last-extended date fixed for such vesting. On the 29th March, 1951, the appellant company filed C.M.P. No. 4697 of 1951, under article 226 for quashing the order of the Government.Shortly stated the contentions of the. appellant before the High Court were that the Act was ultra vires in that (1) it was beyond the legislative competency of the Madras Legislature to enact it, (2) it was not enacted to subserve any public purpose, and (3) the compensation provided for was illusory. The High Court repelled each and all of the aforesaid contentions of the appellant company. It held that the legislation was with respect to electricity under entry 31 of the concurrent list in the seventh Schedule to the Government of India Act, 1935, and was not a legislation with respect to corporations under entry 33 in list I as contended by the appellant and that, therefore, the Madras Legislature was competent to enact it. It further held that the Act having received the certificate of the President the challenge based on an alleged absence of public purpose or the illusory nature of the compensation was shut out and could not be raised. The High Court, however, held that certain sections and rule 19(2) of the Rules framed under the Act were invalid and subject thereto dismissed the application of the appellant company. The High Court granted leave to the appellant company to appeal before this court. The appeal has now come up for heating before us.

Court's reasoning:
It is quite true that the powers of each Legislature to make laws with respect to the different subjects assigned to it by the, appropriate list were to be regarded as wide and plenary and also covering matters incidental or ancillary to such subject-matter, but it is, nevertheless, clear from the provision of the Act that the power to make a law for compulsory acquisition was, under entry 9 in list II, given only to Provincial Legislatures and that such power of the Provincial Legislatures was, under that entry, limited to making a law for the compulsory acquisition of land only and that unless the Governor-General made an .order under section 104 of the Act the Provincial Legislatures had no power to make a law for the compulsory acquisition of an property other than land , and that the Federal Legislature had no power to make any law with respect to the compulsory acquisition of any property at all. If the argument of the learned Advocate-General were correct then entry 9 in list II was wholly unnecessary for under entry 21 in list II the Provincial Legislatures could make a law for the compulsory acquisition of land. A similar argument was repelled by this court in the State of Bihar v. Maharajadhiraja Sir Kameshwar Singh([1952] S.C.R. 889.).The matter is placed beyond any doubt or dispute By the provisions of section 127 of the Government of India Act, 1935, which provided that the Federal might, if it , deemed it necessary to acquire any land situate in a Province for any purpose connected with a matter with respect to which the Federal Legislature had power to make laws, require the Province to acquire the land on behalf and at the expense of the Federation. If power inhered in the Federal Legislature to make a law for the acquisition of any property for any purpose connected with a matter with respect to which it had power to make laws then section 127 would not have been necessary at all. The absence of any entry empowering any Legislature to make laws with respect to compulsory acquisition of a commercial or industrial undertaking and the provisions of section 127 to, which reference has just been made make it abundantly clear that the contentions urged by the learned Advocate- General cannot possibly be sustained. In our opinion, therefore, it must be held that the Madras Legislature had no legislative competency to enact the impugned law. This is sufficient to dispose of this appeal and it is not necessary to express any opinion, on the other points raised in the court below.