Case: Vijayawada Municipal Council Vs. Andhra Pradesh State Electricity Board and Another

This is a defendants appeal by special leave against the judgment of the High Court of Andhra Pradesh decreeing, with costs, the claim of the plaintiffs respondents, the Andhra Pradesh State Electricity Board and the Andhra Pradesh State Government for Rs. 3, 34, 443.77 as arrears of electricity charges said to be due from the Vijayawada Municipal Council in respect of amounts which were shown in its books as payable to it by consumers ofplaintiffs claim flowed from the terms of the Andhra Pradesh (Andhra Area) Electricity Supply Undertaking (Acquisition) Act 15 of 1954 (hereinafter referred to as the Act), the provisions of which were applied to the electricity undertaking of the appellant Municipal Council with effect from 22nd December, 1961, . by the Government of Andhra Pradesh. The rights of the State were transferred to the Andhra Pradesh Electricity Board therespondent. The amounts claimed were shewn in the books of the Councils electricity undertaking on the date of its acquisition as due to it from direct consumers of electricity to whom it used to sell electricity supplied to it in bulk.The "Electricity undertaking" was taken over by the Government by an order under Section 4 (1 ) of the Act. This sectionPower of Government to take over any) The Government may, in respect of any undertaking not taken over by them before the commencement of this Act, by order in writing, declare that it shall vest in them on the date specified therein, such date not being earlier than four months from the date of theMunicipal Council was the licensee from whom the "undertaking", as a commercial concern, was taken over. A licensee is defined by section 2(j) to.... a person licensed under part II of the Electricity Act to supply electricity energy, or a person who has obtained sanction under section 28 of that Act to engage in the business of supplying electricity and in relation to an undertaking taken over or an undertaking which has vested in the Government under section 4 the person, who was the licensee at the time the undertaking was taken over or vested in the Government, as the case may be, and includes theof any suchState Electricity Board stepped into the shoes of the licensee on behalf of the State, to discharge all the existing obligations of the licensee, arising out of past transactions, and, for this reason, became entitled to the benefits of all contracts, whether they had accrued in the past or were to arise in future, which existed at the time of the taking over of theeffect of the "taking over" of an undertaking and the vesting the rights and liabilities of the former licensee in the State, by operation of law, was indicated by sections 5 and 6 of the Act.

Court's reasoning:
It appears that no question was raised before the High Court as to the nature of the obligation incurred by the Municipal Council to pay the amount claimed apart from its right to appropriate the amount itself as part of the assets which had, it was asserted, not vested in the State Government. An attempt was, however, made before us to confuse it with the payment made by the Municipal Council itself to the Government for the bulk supply of electricity used, inter alia, for street lighting and other purposes by the Council itself. But, no question was raised in the pleadings to indicate that the plaintiffs claim included these past dues. We do find that the licensee had set up certain reasons for its inability to realise certain amounts from the consumers. We do not know what all these reasons precisely were or whether the licensee, was really unable to realise them for any of these reasons. But, ground No. 1 of the special leave petition shows that the Municipal Council had Rs. 9 lakhs with it in deposit for the recovery of the claims not realised from which it proposed to deduct the amounts claimable towards dues and to. appropriate them itself. The ground runs as follows:"In the instant; case the learned trial judge found that there was a deposit of 3 lakhs of rupees with the Vijayawada Municipality and the Vijayawada Municipality by virtue of section 10(2)(b)( iii) is certainly entitled to adjust and by virtue of section 10(2)(b)(iii) of the Act 15 of 1964, the Government can deduct that security from out of compensation less the amount due to the licensee from its consumers upto the vestingmay also mention that it was not argued on behalf of the Municipal Council that what was vested in the Government was only the right to realise the claims itself and not an amount of money which the Municipal Council had actually realised or could have realised if it took steps to make realisations. On the other hand, ground No. 1 of the grounds of appeal quoted above, shows that the case of the Municipal Council was simply that it is entitled to deduct amounts claimed from whatever may be the amounts in deposit because. the claims against the consumers had vested in the Municipal Council and not in the Government. We think that legal questions of interpretation of the Act, to which the learned Counsel for the parties rightly confined their arguments, apart from some attempts to raise questions outside the pleadings which could not succeed, were rightly answered by the High Court when it held that the relevant provisions, if correctly interpreted, meant that the claims for dues on electricity supplied at enhanced rates, the validity of which had been unsuccessfully challenged by some consumers in certain other proceedings initiated before filing of the suit now before us, had vested in the Stateappears that no question was raised before the High Court as to the nature of the obligation incurred by the Municipal Council to pay the amount claimed apart from its right to appropriate the amount itself as part of the assets which had, it was asserted, not vested in the State Government. An attempt was, however, made before us to confuse it with the payment made by the Municipal Council itself to the Government for the bulk supply of electricity used, inter alia, for street lighting and other purposes by the Council itself. But, no question was raised in the pleadings to indicate that the plaintiffs claim included these past dues. We do find that the licensee had set up certain reasons for its inability to realise certain amounts from the consumers. We do not know what all these reasons precisely were or whether the licensee, was really unable to realise them for any of these reasons. But, ground No. 1 of the special leave petition shows that the Municipal Council had Rs. 9 lakhs with it in deposit for the recovery of the claims not realised from which it proposed to deduct the amounts claimable towards dues and to. appropriate them itself. The ground runs as follows:"In the instant; case the learned trial judge found that there was a deposit of 3 lakhs of rupees with the Vijayawada Municipality and the Vijayawada Municipality by virtue of section 10(2)(b)( iii) is certainly entitled to adjust and by virtue of section 10(2)(b)(iii) of the Act 15 of 1964, the Government can deduct that security from out of compensation less the amount due to the licensee from its consumers upto the vestingy also mention that it was not argued on behalf of the Municipal Council that what was vested in the Government was only the right to realise the claims itself and not an amount of money which the Municipal Council had actually realised or could have realised if it took steps to make realisations. On the other hand, ground No. 1 of the grounds of appeal quoted above, shows that the case of the Municipal Council was simply that it is entitled to deduct amounts claimed from whatever may be the amounts in deposit because. the claims against the consumers had vested in the Municipal Council and not in the Government. We think that legal questions of interpretation of the Act, to which the learned Counsel for the parties rightly confined their arguments, apart from some attempts to raise questions outside the pleadings which could not succeed, were rightly answered by the High Court when it held that the relevant provisions, if correctly interpreted, meant that the claims for dues on electricity supplied at enhanced rates, the validity of which had been unsuccessfully challenged by some consumers in certain other proceedings initiated before filing of the suit now before us, had vested in the State