NADIAD BOROUGH MUNICIPALITY Vs. NADIAD ELEC COMPANY LIMITED

JUDGEMENT

(1.) This appeal raises a short but interesting question relating to the construction of sec. 22A of the Indian Electricity Act 1910 The question is one of considerable importance and consequence and is certainly not free from difficulty. The task of determination has however been rendered considerably easier by the very able assistance received by me from the learned advocates appearing on behalf of the parties and having regard to the full and detailed arguments which have been advanced before me on both sides. I think it right and proper that I should give in some detail my reasons for the conclusion which I have reached on this rather difficult question of construction. The facts giving rise to this appeal are few and for the most part undisputed and may be briefly stated as follows.

(2.) The plaintiff is a Municipality for the Municipal Borough of Nadiad established under the Bombay Municipal Boroughs Act 1925 The defendant has been granted a licence to supply electrical energy under sec. 3(2)(d) of the Indian electricity Act 1910 and the defendant is pursuant to such licence carrying on the business of supplying electrical energy within the municipal limits of the City of Nadiad. The plaintiff requires electrical energy for the purpose of its office buildings as also for the purpose of carrying out street-lighting programme and working water-pumps for effectuating water supply to residents within the municipal limits of the City of Nadiad. An agreement was therefore reached between the plaintiff and the defendant on 3rd April 1937 regulating the terms and conditions on which the defendant would supply electrical energy to the plaintiff for the aforesaid purposes. The period of the agreement was 25 years and there was an express clause conferring on the plaintiff an option to renew the agreement for a further period of 15 years or until the expiry of the period of the licence held by the defendant on the same terms and conditions as provided by the agreement. It appears that some rate-payers of the plaintiff at Nadiad filed a suit being Civil Suit No. 258 of 1938 challenging the legality of the agreement and by a decree passed in that suit the agreement was declared null and void on some technical grounds with which I am not concerned for the purpose of the present appeal. This happened on 17th November 1939. The plaintiff and the defendant thereafter carried on negotiations for entering into a new agreement and ultimately on 14th August 1940 an agreement was concluded between the plaintiff and the defendant for supply of electrical energy by the defendant to the plaintiff The period of the agreement was 20 years but according to the plaintiff there was an option of renewal in favour of the plaintiff contained in the agreement. The defendant however denied the existence of any such option of renewal. The contention that there was an option of renewal contained in the agreement was founded on clauses 14 and 15 of the agreement which were in the following terms:-

(3.) Mr. S. V. Gupte learned advocate appearing on behalf of the plaintiff urged before me in support of the appeal the same two contentions which were pressed before the learned trial Judge and the learned Assistant Judge and were rejected by them. To briefly restate the first contention was that there was an option of renewal to be found in clauses 14 and 15 of the agreement and that even if the words used did not expressly state in whose favour the option of renewal was it must be assumed to be in favour of the plaintiff who was the grantee under the agreement and that the plaintiff was therefore entitled to a renewal of the agreement. The second contention was-and this was the contention most vehemently pressed by Mr. S. V. Gupte that the plaintiff was an establishment used or intended to be used for maintaining supplies and services essential to the community and that since the agreement expired after the coming into force of the Indian Electricity (Amendment) Act 1959 the defendant was bound by reason of the provisions of sec. 22A(3) of the Indian Electricity Act 1910 to continue to supply electrical energy to the plaintiff on the same terms and conditions as were contained in the agreement until the plaintiff gave notice in writing to the defendant requiring the defendant to discontinue such supply. Mr. M. P. Amin on the other hand supported the judgment of the learned Assistant Judge and urged that there was no substance in either of the two contentions pressed by Mr. S. V. Gupte and submitted that the appeal should be dismissed.