SOUTH ARCOT ELECTRICITY DISTRIBUTION CO., LTD., BY ITS ACCREDITED REPRESENTATIVE, SRI V.N. KRISHNASWAMI Vs. STATE ELECTRICITY BOARD REPRESENTED BY ITS SECRETARY

JUDGEMENT

(1.) THE South Arcot Electricity Distribution Company Limited was a concern which was acquired by the State under the Madras Electricity Supply Undertakings (Acquisition) Act (XXIX of 1954). On 2nd July, 1955, the Chief Electrical Inspector to Government intimated the licensee that the undertaking was likely to be taken over by Government in 1959 -60. This is of some importance, as this might have lulled the undertaking into a sense of freedom from imminent acquisition till that period, and freedom to expand in accordance with its plan. For purposes of that extension scheme, in September, 1955, the licensee applied to Government for sanction of a loan of Rs. five lakhs from the Madras Industrial Investment Corporation. G.O. Ms. No. 43, P.W.D., dated 4th January, 1956 actually accorded such sanction under Section 9(2) of the Indian, Electricity Act, 1910. But subsequently, on 10th January, 1957, the Madras Industrial Investment Corporation declined the loan ; this was on the ground that the undertaking was likely to be acquired by the Government shortly thereafter. On 25th January, 1957, G.O. Ms. No. 290,P.W.D., dated 25th January, 1957, was published notifying acquisition of the undertaking with effect from 1st June, 1957

(2.) WHILE matters stood thus, there are two other events of which we will have to take note. The first was that substantial goods were ordered by the company in accordance with its expansion scheme, and the goods had been received by the time that acquisition was imminent. The second was that a sum of Rs. 2,50,421 -66 nP. was due from the licensee (company) to Government, as arrears of energy charges payable to Government. We might here note that the company claims that the brand -new materials ordered by it, and in its possession in pursuance of the expansion scheme, were of the value of Rs. 2,87,823 -12 nP. The company chose Basis ' A ' of the three Basises 'A', 'B' and 'C' for the compensation payable to the licensee under Section 5 of the Electricity Supply Undertakings (Acquisition) Act. As a study of that section will show, Basis ' A ' related to compensation as equivalent to 20 times the average net annual profits of the undertaking computed upon the principle embodied in Section 5(1). Basis 'B' is the aggregate value of all the shares constituting the share capital of the undertaking, broadly stated, and, similarly, Basis ' C ' consists of the aggregate of the various book values including fixed assets, stocks and stores. It is not in dispute that it is only if the licensee had chosen Basis ' C' that the licensee would have a right to insist that the brand -new goods acquired for the expansion scheme, that we have referred to, should be paid for as part of the compensation.

(3.) THE licensee claims that this representation or prohibition, whatever it may be termed, was taken by the licensee at full value, as proceeding not merely from a responsible officer of Government, but the Acquisition Officer functioning as such under Madras Act (XXIX of 1954). For this reason the licensee felt that it had no option to dispose of the goods in the open market, and the licensee could only hope that the proposal of Mr. Appadurai would be accepted by Government, namely, the acceptance of these goods at full value by Government, and the set -off towards arrears of energy charges due to Government.