GODHRA ELECTRICITY COMPANY LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The appellants filed a writ petition before the High Court of Gujarat challenging the validity of a notice issued by the Gujarat State Electricity Board, respondent No. 2 dated November 8, 1971, whereby respondent No. 2 purported to exercise the option of purchasing the electrical undertaking of appellant No. 1 under Section 6 of the Indian Electricity Act, 1910 (hereinafter referred to as 'the Act' ) and for a declaration that the provisions of Sections 6, 7 and 7-A of the Act are ultra vires Articles 14, 19(1) (f), 19 (1) (g) and 31 of the Constitution. The High Court dismissed the petition and this appeal by certificate, is against that judgment.

(2.) The Government of the Province of Bombay granted a licence by notification dated November 16, 1922, under Section 3 of the Act known as the 'Godhra Electric Licence, 1922' in favour of Lady Sulochana Chinubhai and Company, Ahmedabad The licence was signed on November 17, 1922 and the notification granting it was published in the Bombay Government Gazette dated November 23, 1922. The licence was transferred to the 1st appellant-company viz., the Godhra Electricity Co. Ltd. The licence was for a period of 50 years initial from its commencement. The initial period of 50 years, according to the respondents, was to expire on the midnight intervening between the 15th and 16th November, 1972. The second respondents exercised the option to purchase the undertaking of the 1st appellant company by a notice dated November 8, 1971, under Section 6 (1) of the Act by calling upon the appellants to sell the undertaking to it on the midnight intervening between the 15th and 16th of November, 1972. Thereafter, the Government of Gujarat issued a notification under R. 115 (2) of the Defence of India Rules, taking over the management of the undertaking on November 18, 1973. On December 21, 1973, the State Government handed over the undertaking to the 2nd respondent

(3.) Before we proceed further, it would be convenient at this stage to note the amendment made in the Act by Act 32 of 1959. A comparison of the original Section 7 with Sections 6, 7 and 7-A shows that the changes made by Sections 6, 7 and 7-A in the original Section 7 were six in number. They were:(1) the maximum length of the initial period to be specified in the licence for exercise of the option to purchase was originally fifty years whereas after the amendment, it was reduced to thirty years 'and the maximum length of subsequent periods was also reduced by the amendments from twenty years to ten years, (2) the notice of exercise of option was originally required to be of not less than two years but after the amendments, a notice of not less than one year would be sufficient for exercising the option; (3) the option to purchase under the old law vested in the Board but after the amendments it was also conferred on the State Government and the local authority in case the Board did not elect to purchase; (4) the licensee could not be obliged under the old law to sell the undertaking to the purchaser except against payment of the purchase price but after the amendments, the licensee was bound to deliver the undertaking to the purchaser on the expiration of the relevant period pending the determination and payment of the purchase price; (5) there was a right of waiver of the option to purchase under the old law but as a result of the amendments, that right was taken away; and (6) the service lines constructed at the expense of the consumers were not required by the old law to be excluded in determining the purchase price but under the amended law they were required to be specifically excluded.