U P GOVERNMENT Vs. LMANMOHAN DAS

JUDGEMENT

(1.) The question referred for decision to this Full Bench is "whether a charge is or is not a transfer within the meaning of Clause (2) of Section 9, Electricity Act (9 of 1910)." By that Act "licensee" is defined as meaning "any person licensed under part 2 to supply energy," and it is provided by Clouse (2) of Section 9 that: The licensee shall not at any time assign his license or transfer his undertaking, or any part thereof, by sale, mortgage, lease, exchange or otherwise without the previous consent in writing of the Provincial Government.

(2.) The penalty for violation of the mandatory provisions of Clouse (2) of Section 9 is prescribed by Clouse (3) of the same section in the following words: Any agreement relating to any transaction of the nature described in.... Sub-section (2), unless made with, or subject to, such consent as aforesaid, shall be void.

(3.) The question whether the creation of a charge as distinguished from a mortgage, over the undertaking amounts to a transfer within the meaning of Clause (2) of Section 9, was considered by my brother Allsop in In re Official Liquidators V/s. Debenture-holders of the Lower Ganges-Jumna Electricity Distributing Co., Ltd. (in liquidation) and was answered in the affirmative. He held that because a charge is not necessarily a transfer in some circumstances it does not follow that the Legislature did not mean to prevent a licensee from creating a charge upon his property without the sanction of the Local Government. There seems to be no reason why the licensee should be forbidden to mortgage his undertaking or any part of it and yet at the same time should be allowed to create a charge upon it. I am inclined to think, therefore, generally that it was the intention of the Legislature to prevent a licensee from charging his property with any debt unless the Local Government agreed that he should do so. In the second place, it is necessary to point out that the provisions of Section 9 not only prevent a transfer but also prevent an agreement to transfer.... Under the provisions of Section 100, T.P. Act, a charge on immovable property creates the same effect generally as a simple mortgage.... I should think, therefore, that a charge, if it is not an immediate transfer, is at least an agreement to transfer when certain contingencies arise ... The result is that the creation of a charge is an agreement to transfer property and as such in my judgment it is void if the property is an undertaking or part of an undertaking to which the provisions of the Indian Electricity Act apply.