Tinsukhia Electric Supply Co. Ltd. Vs. State of Assam & Ors [1989] INSC 125 (13 April 1989)
Venkatachalliah, M.N. (J) Venkatachalliah, M.N. (J) Rangnathan, S. Pathak, R.S. (Cj) Mukharji, Sabyasachi (J) Natrajan, S. (J)
CITATION: 1990 AIR 123 1989 SCR (2) 544 1989 SCC (3) 709 JT 1989 (2) 217 1989 SCALE (1)1006
CITATOR INFO : F 1990 SC 153 (19,20) RF 1991 SC 101 (30) RF&R 1992 SC 938 (22,28,35)
ACT:
Constitution of India, 1950: Articles 14, 19, 31-C and 39(b) and (c)--Nationalisation--Acquisition and take over of electric supply companies by State Government--Validity of--Nexus between the legislation and the objectives and principles of nationalisation--Court to look into the real nature of the statute.
Indian Electricity Act, 1910/Indian Electricity (Assam Amendment) Act, 1973: Sections 5(2), 6(7) and 7A--Acquisition and take over of electricity supply compa- nies--Constitutional validity of.
Tinsukhia and Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973: Sections 1(3), 2(f), (h), (j), 2(1), 3 to 10, 20 and 23Constitutional validity of--Acquisi- tion and take over of Tinsukhia Electric Supply Co. Ltd. and Dibrugarh Electric Supply Co. Ltd.-Protection under Article 31-C of the Constitution of India--Payment of compensation--Justiciability of.
HEAD NOTE:
The petitioners--Public Limited Companies--were grant- ed licences under the provisions of the Indian Electricity Act, 1910 for supply of electricity within the respective licensed areas of Tinsukhia and Dibrugarh Municipal Boards.
The Dihrugarh Company was granted licence in 1928 on certain terms and conditions with an option to the State to purchase the under. taking on the expiry of 50 years and thereafter on the expiry of every subsequent period of twenty years.
So also, the Tinsukhia company was granted licence in 1954 on certain terms and conditions with an option to the State Government to purchase the undertaking on the expiry of 20 years and thereafter on the expiry of every 20 years.
The State Government negotiated with the companies for pur- 545 chasing them. The negotiations were going on for several years. On 27.9.1972 the Governor promulgated two ordinances for the compulsory acquisition of the undertakings of the two companies. Subsequentiy, the ordinances were replaced by the Indian Electricity (Assam Amendment) Act, 1973 and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisi- tion) Act, 1973.
The two legislations, one amending the provisions of Section 5(2), 6(7) and 7-A of the Indian Electricity Act, 1910 and the other providing for the acquisition of the two undertakings viz. the Tlnsukhia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, '1973 were Challenged in this Court by the writ-petitioners on several grounds. It was contended that in view of the private negotiations and the exercise of the option to purchase, the legislations were not bona fide, but constituted a mere colourable exer- cise of legislative power and that the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in Article 39(b) of the Constitution. It was also contended that what was sought to be acquired was not the undertakings of the two companies, but the differ- ence between the market value of the undertakings agreed to by the State Government and the Book-value of the undertak- ings which the law has substituted by virtue of the amend- ments made in the Indian Electricity Act, 1910. The Article 31-C protection given to the legislations, and some of the specific provisions of the acquisition law which excluded certain items from the computation of compensation and authorised certain deductions in the amount of compensation have also been challenged.
On behalf of the Respondents, it was contended that electrical energy has been a material source of the communi- ty and any legislative measure to nationalise the undertak- ing fell squarely within the ambit of Article 39(b) and was entitled to Article 31-C protection. It was also asserted that book-value has been a well accepted concept of valua- tion in accountancy and it cannot be characterised as illu- sory even if the legislations did not enjoy the protection of Article 31-C.
Dismissing the writ petitions,
HELD: [R.S. Pathak. CJ, M.N. Venkatachaliah, S. Natara- jan and S. Ranganathan, J J----per Venkatachaliah, J.]
1.1. The proposition that the legislative declaration of the nexus between the law and the principles in Article 39 is inconclusive and justiciable is well settled. The sequen- tor is that whenever any immunity 546 is claimed for a law under Article 31-C, the Court has the power to examine whether the provisions of the law are basically and essentially necessary for the effectuation of the principles envisaged in Article 39(b) and (c). [539E, F]
1.2. It can, hardly be gain-said that the electrical energy generated and distributed by the undertakings of the petitioners constitutes "material resources of the communi- ty". The idea of distribution of the material resources of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst the intended beneficiaries. That is one of the modes of "distri- bution". Nationalisation is another mode. The economic cost of social and economic reform is, perhaps, amongst the most vexed problems of social and economic change and constitute the core element in Nationalisation. The need for constitu- tional immunities for such legislative efforts at social and economic change recognise the otherwise unaffordable econom- ic burden of reforms. It is not possible to divorce the economic considerations or components from the scheme of nationalisation with which the former are inextricably integrated. The financial cost of a scheme of nationalisa- tion lies at its very heart and cannot be isolated. Both the provisions relating to the vestiture of the undertakings in the State and those pertaining to the quantification of the "Amount" are integral and inseparable parts of the integral scheme of nationalisation and do not ambit of being consid- ered as distinct provisions independent of each other. The debate whether nationalisation is by itself to be considered as fulfilling a public purpose or whether the nationalisa- tion should be shown to be justified effectuation of the avowed objectives of such nationalisation--the choice be- tween the pragmatic and the doctrinaire approaches---is concluded and no longer available. [578C. D, E, 579C, D, H, 580A, B, E]
1.3. The right, title and interest of the licensee in the undertaking does not get transferred to the Board or the State, as the case may be, immediately upon the mere exer- cise of the option to purchase. The exercise of the option would have no such effect on the licensee's right to carry on his business until the undertaking was actually taken over and paid for. The contentions that immediately upon the exercise of the option, ipso-facto, the relationship between the parties get transformed into one as between a Debtor and a Creditor and that the interest of the licensee in the undertaking becomes an "actionable-right", or a 'chosein- action" and that no public-purpose could be said to be served by the acquisition of a "chose-in-action" are all out of place in the instant case. [582E, 583C] 547
1.4. The acquisition legislation was brought-forth for securing the principles contained in Article 39(b) of the Constitution and is protected under Article 31-C. The Assam amendment made to the provisions of the Indian Electricity Act, 1910, amending the basis for quantification of the amount payable in the case of a statutory purchase pursuant to the exercise of the option in terms of the licence would apply to and govern cases of statutory-sales and would not assume any immateriality in the instant case. [585E, F] Kesavananda Bharati v. State of Kerala; [1973] Suppl.
SCR 1; Minerva Mills Ltd. v. Union of India, [1981] 1 SCR 206; Sanjeev Coke Mfg. Co. v. Bharat Coking COal Ltd., [1983] 1 SCR 1000; State of Tamil Nadu v.L. Abu Kavar Bai, AIR 1984 SC 326; Akadasi Padhart v. State of Orissa and Ors., AIR 1963 SC 1047; Godra Electricity Co. Ltd. and Anr. v. The State of Gujarat and Anr., [1975] 2 SCR 42 and Madan Mohan Pathak v. Union of India and Ors., [1978] 2 SCR 334, relied on.
Fergusan v. Skrupa, 372 U.S. 726; Fazilka Electric Supply Co. Ltd. v. The Commissioner of Income Tax, Delhi, [1962] Suppl. 3 SCR 496 and Gujarat Electricity Board v. Shantilal, [1969] 1 SCR 580, referred to.
Bihar State Electricity Board v. Patna Electricity Supply Co. Ltd., AIR 1982 Cal, 74; distinguished.
"History of the treatment of choses in-action by the common law"--by W.S. Holdsworth--Vol. 33--Harvard law Review referred to.
2. It may not be just to deprive a recompence that is just and fair, in all cases. But that. is not to say that even ,under a law which has the protection of Art. 31-A or 31-C, the adequacy, or justness or fairness of the compensa- tion would, yet, be justiciable. Article 31-C is in effect and substance is to 'urban property' of what Article 31-A is to 'agricultural property'. All the same, the concept of "Book-Value" is an accepted accountancy concept of value. It cannot be held to be illusory. Even if the impugned law had no protection of Article 31-C and tests appropriate to and available are applied, in the circumstances of the present case, it cannot be said that the principles envisaged in the acquisition law lead to an "amount" which can be called unreal or illusory. [590C, 592B] 548 Eswari Khetan Sugar Mills v. State of U.P., [1980] 3 SCR 331; relied on.
Gwalior Rayon v. Union of India, [1974] SCR 1 671; referred to.
3. Under the law when a requisition is made by an in- tending consumer for electrical-energy, the licensee has an obligation to lay down service-lines. But, according to the provisions the entire cost of service-line is not required to be borne by the licensee. The licensee is entitled to call upon the consumer to pay part of the cost of service- line--which may in a given case amount to a substantial part--in accordance with the provisions in the Schedule to the Electricity Supply Act. While it is true that the ex- pression 'works' in Section 2(h) of the Indian Railways Act, 1910 includes 'Service-lines', the reason why 'Service- lines' could justifiably be excluded from valuation for purposes of determination of the 'amount', is that the new licensee is to repair and maintain them. [593B, C; 592F, G] Dakor-Umreth Electricity Co. Ltd. v. State of Gujarat, 13 GLR 88; approved.
4. On a reasonable construction, the expressions 'amounts remaining' and 'in so far as such amounts have not been paid over' necessarily exclude any such duplication of the accountability of the licensee for these 'Reserves'. If any part of the reserves is invested in "fixed assets" and the reserves in the form of such "fixed assets" are taken- over by the Government pursuant to the acquisition, what remains to he accounted for by the licensee is only the 'amounts remaining' in the pertinent accounts. The liability of the licensee for deduction of the 'Reserves' from the 'amount' would arise only if the balance remaining in those accounts are not paid. [594F, G]
5. As regards the liability of the licensee under Sec- tion 11(3) of the Acquisition Act in respect of the amounts payable to employees retrenched by the Government or the 'Board' as the case may be, within one year from the vesting date after the take-over-even if this question is justicia- ble---it is not unreasonable or arbitrary as it envisages the continuance of a liability which was, otherwise, sub- stantially that of the licensee. [595F, G, H, 596A, B]
6. Though some of the liabilities arising out of the conduct of the licensees' business prior to vesting are not taken over by Government, some of those liabilities are, yet, authorised to be deducted from the 549 amount. The purpose of this provision is too obvious to require any statutory declaration or the obligations that arise in law and are attandant upon these sums coming to the hands of and retained by the Government. Quite obviously, the provision is not intended for an unjust enrichment in the hands of Government. The purpose is obviously to facili- tate recovery of certain types of debts owed to public institutions etc., and the deduction is for the benefit of those creditor institutions. The Government would, plainly, be under a legal obligation to pay the sums so deducted, to the concerned creditors. The provisions of the Statute must be read along, and in consonance, with the general princi- ples of law which import such obligations on the part of the Government and an implied corresponding discharge to the petitioners to the extent of such deductions in their li- abilities. There is a resulting statutory-trust in the hands of the Government to pay the sums so deducted to the respec- tive creditors, even in the absence of express provisions in this behalf in the Statute, the general principles of law operate. As a matter of construction it requires to be held that these obligations and consequences follow. [596E, F, G, H, 597A]
7. The Courts strongly lean against any construction which tends to reduce a Statute to a futility. The provision of a Statute must be so construed as to make it effective and operative, on the principle "but res majis valeat quam periat". It is, no doubt, true that if a Statute is abso- lutely vague and its language wholly intractable and abso- lutely meaningless, the Statute could be declared void for vagueness. This is not in judicial-review by testing the law for arbitrariness or unreasonableness under Article 14; but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute the meaning and purpose which the legislature in- tended for it. It is, therefore, the Court's duty to make what it can of the Statute, knowing that the statutes are meant to be operative and not inept and that nothing short of impossibility should allow a Court to declare a Statute unworkable. [597F, G, 598C] Manchester Ship Canal Co. v. Manchester Race Course Co., [1904] 2 Ch. 352 and Fawcet Properties v. Buckingham County Council, [1960] 3 AII.E.R. 503, referred to.
8. Section 10 of the Acquisition Act enjoins upon the Government to appoint a person having adequate knowledge anti experience in matters relating to accounts "to assess the net amount payable under the Act by the Government to the licensee after making the deductions mentioned in sec- tion 9". Proviso to Sections 8 and 9 envisages prior 550 notice to be issued to the licensee by the Government to show cause against any deduction proposed to be made under Section 8 or 9, as the case may be, within the period speci- fied in the provisos. Even after the Government so makes such determination of the amounts which, according to it, are deductible from the gross amount, such determination would not be final. The assessment of the net amount payable to the licensee will have to be made by the "Special Offi- cer". It is reasonable to construe that the decision of the Government both under Sections 8 and 9 arrived at, even after giving an opportunity to the lincensee of being heard, would not be final, but the final determination will have to be made by the "Special Officer" appointed under section 10 of the Act. Section 10(1) and (2) of the Act must be so construed as to enable the "Special Officer" to take into account the determination respecting the deduction under Sections 9 and 10 of the ACt made by the Government and take the decision of his own in the matter. The power to "assess" the net amount by necessary implication takes within its sweep the power to examine the validity of the determination made by the Government .in the matter of deduction from the gross amount. This power to determine and assess the 'net- amount' payable by necessary implication cover matters envisaged in Sections 8 and 9. Though only Section 9 is specifically referred to in sub-sections (1) and (2) of section 10, the language of sub-sections (1) and (2) which enable the Special Officer to "assess" the net amount pay- able would by necessary implication, attract the power to decide as to the validity and correctness of the deduction to be made under Section 8 as well. So construed. the provi- sions of Section 10 would furnish a reasonably adequate machinery for the assessment of the "net-amount" payable to the licensee. [598E-H; 599A-E]
9. So far as Arbitration is concerned, even after the decision of the "Special Officer", there is the further arbitral forum to decide disputes in respect of the specific areas in which disputes are rendered arbitrable under Sec- tion 20. There is a provision for appointment of a sitting or retired District or High Court Judge as arbitrator under the said section. Hence it cannot be said that there is no proper machinery for resolving the disputes between the Government and the licensee rendering the Acquisition Act unworkable. [599F, G] Per Mukharji, J. (Concurring)
1. Article 39(b) of the Constitution enjoins that the State in particular should direct its policy towards secur- ing that the ownership and control of the material resources of the community are so distri- 551 buted as to best subserve the common good and that the operation of the economic system does not result in concen- tration of wealth and means of production to the common detriment. In order to decide whether a Statute is within Article 31-C, the Court, if necessary, may examine the nature and the character of the legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus between the legislation and the objectives and the principles mentioned in Article 39(b) and (c), the legisla- tion will not enjoy the protection of Article 31-C. In order to see the real nature of the Statute, if need be, the Court may also tear the veil. [553E-H] Kesavananda Bharati v. State of Kerala, [1973] Suppl. SCR 1; relied on. Charles Russel v. The Queen, [1882] VII AC 829; referred to.
2. Whenever a question is raised that the Parliament or the State Legislature have abused their powers and inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) and (c), the Court can and must necessarily go into that question and decide. If the Court comes to the conclusion that the decla- ration was merely a pretence and that real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) and (c), the declaration would not debar the Court from striking down any provision therein which violates Articles 14, 19 or 31.
In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. The only question open to judicial review under_Article 31-C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) and (c). Reasonableness is evidently regarding the nexus and not regarding the law.
[554D, E, F, 555B, C] Kesavananda Bharati v. State of Kerala, [1973] Suppl.
SCR 1; Minerva Mills Ltd. v. Union of India, [1981] 1 SCR 206 and Sanjeer Coke Mfg. Co. v. Bharat Coking Coal Ltd. & Anr., [1983] 1 SCR 1000, relied on.
3. It is indisputed that the electric energy generated by the petitioner companies constitutes material resources of the community 552 within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legisla- tions, reading the legislations entirely, the legislations have a direct and reasonable nexus with time objective of distributing the material resources so as to subserve the common good. The determination of value thereof and the substitution of the book-value in place of market value, are only methods for such acquisition and do not disclose the true nature and character of the legislation, but are inci- dental provisions thereof. if that is the position then it is incorrect to say that what was acquired, was not the material resources but chose-in-action. The true nature and character of the legislations in question was to acquire the material resources, namely, the electric energy for better supply and distribution. [556D, E, F] State of Tamil Nadu & Ors. v. L. Abu Kavur Bai & Ors., [1984] 1 SCC 515, relied on.
Bihar State Electricity Board & Ors. v. Patna Electrici- ty Supply Co. Ltd., AIR 1982 Cal. 74. distinguished.
4. Having regard to the true nature and character of the legislations in question the legislations are not colourable legislations in the sense that there was no direct and reasonable nexus with Article 31(b) and (c) of the Constitu- tion. [556H]
ORIGINAL JURISDICTION: Writ Petition No. 457 of 1972 (Under Article 32 of the Constitution of India) Soli J. Sorabji, S. Rangarajan, Harish N. Salve, D .N. Mukharji, Ranjan Kukherjee, Udey K. Lalit, S.K. Nandi and S. Parekh for the Petitioner.
Dr. Shankar Ghosh, G.L. Sanghi, P. Chowdhary, C.S. Vaidyanathan, C.V. Subba Rao, for the Respondents.
Mrs. A.K. Verma for the Intervener.
The following Judgments of the Court were delivered:
SABYASACHI MUKHARJI, J. I agree with Brother Venkata- chaliah, that the contentions urged on behalf of the peti- tioner in support of the challenge to the impugned legisla- tions must fail and the writ petitions must be dismissed. I would, however, like to express my 553 views only on one aspect of the matter, which is common to this case as well as the writ petition No. 458/72, civil appeal No 4113/85 and writ petition No. 5(N)/74, i.e. the scope of judicial review of legislation where there is declaration in the legislation under Art. 31C of the Consti- tution.
In these writ petitions we are concerned with two legis- lations, namely, the Indian Electricity (Assam Amendment Act, 1973, (Assam Act IX of 1973), and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973 (Act X of 1973). The main point which is significant in these writ petitions, is the extent and scope of judicial review of legislation where there is 'declaration under Art. 31-C of the Constitution, which enjoins that no law giving effect to the policy of the State towards securing all or any of the principles laid down, inter alia, namely, Arti- cles 38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49 to 51 shall be deemed to be void on the ground that those are inconsistent or take away or abridge any of the rights conferred by Article 14 or 19, and further provides that no law containing a declaration that it is for giving effect to such a policy, shall be called in question in any court on the plea that it does not give effect to such a policy. The two legislations in question are covered by the declaration under Article 31C of the Constitution.
The principal question which falls for consideration is, whether that declaration is justiciable and open to judicial review and the extent of that judicial review. Article 39(b) of the Constitution enjoins that the State in particular should direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as to best subserve the common good and that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment. See, in this connection, the observations of Ray J. as the learned Chief Justice then was, in Kesava- nanda Bharati v. State of Kerala, [1973] Suppl. SCR 1 at 45 1-452. Hence, in order to decide whether a Statute is within Article 31C, the Court, if necessary, may examine the nature and the character of legislation and the matter dealt with as to whether there is any nexus between the law and the principles mentioned in Article 39(b) and (c). On such an examination if it appears that there is no such nexus be- tween the legislation and the objectives and the principles mentioned in Article 39(b) & (c), the legislation will not enjoy the protection of Article 31C. In order to see the real nature of the Statute, if need be, the court may also tear the veil.
554 Justice Jaganmohan Reddy in the same decision at page 530 of the report reiterated that a law not attracting Article 31C cannot be protected by a declaration by just mixing it with other laws really failing within Article 31-C with those that do not fall under that Article. Hence, in such a case the Court will always be competent to examine the true nature and character of the legislation in the particular instance and its design and the primary matter dealt with--its object and scope. In this connection, reli- ance was placed on the observations of the Privy Council in Charles Russel v. The Queen, [1882] VII AC 829 at 838-840.
Justice Palekar in the same decision at page 63 1 also reiterated that if the court comes to the conclusion that the object of the legislation was merely a pretence and the real object was discrimination or something other than the object specified in Article 39(b) and (c), Article 31C would not be attracted and the validity of the Statute would have to be tested independently of Article 31C.
Whenever a question is raised that the Parliament or the State legislature have abused their powers and inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) & (c), the court can and must necessarily go into that question and decide. See the observations of Justice Mathew in Kesavanan- da Bharati's case (supra) at page 855 of the report. If the court comes to the conclusion that the declaration was merely a pretence and that the real purpose of the law is the accomplishment of some object other than to give effect to the policy of the State towards securing the Directive Principles as enjoined by Article 39(b) & (c), the declara- tion would not debar the court from striking down any provi- sion therein which violates Articles 14, 19 or 31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one for accomplishing an unauthorised object, the Court would be entitled to tear the veil created by the declaration and decide according to the nature of the law. Also see pages 851 & 856 of the report. Justice Beg, as the learned Chief Justice then was, at pages 884-885 of the report reiterated that a colourable piece of legislation with a different object altogether but merely dressed up as a law intended for giving effect to the specified principles would fail to pass the test laid down by the first part, and the declara- tion by itself would not preclude a judicial examination of the nexus, so that the courts can still determine whether the law passed is really the one covered by the niche carved out by Article 31C or merely pretends to be so protected by parading under cover of the declaration. Justice Dwived at page 934 of the report said that the Court still retains power to determine whether the law has relevancy to the distribution of the ownership and 555 control of the material resources of the community and to the operation of the economic system. If the Court finds that the law has no such relevancy, it can declare the law void. The declaration cannot be utilised as a clog to pro- tect law bearing no relationship with the objectives men- tioned in the two clauses of Article 39.
With respect, I am inclined to agree with the observa- tions of Justice Chandrachud, as the learned Chief Justice then was, at page 996 of the said report that the declara- tion under Article 31-C does not exclude the jurisdiction of the Court to determine whether the law is for giving effect to the policy of the State towards securing the principles specified in Article 39(b) & (c).
Chief Justice Chandrachud in Minerva Mills Ltd. v. Union of India, [1981] 1 SCR 206 at 261 observed that the clear intendment of Article 31C is that the power to enquire 'into the question whether there is a direct and reasonable nexus between the provisions of a law and a Directive Principle can not confer upon the courts the power to sit on judgment over the policy itself of the State. At the highest, courts can, under Article 31C, satisfy themselves as to identity of the law in the sense whether it bears a direct and reasona- ble nexus with the directive principles. If the court is satisfied as to the existence of such nexus, the inevitable consequence provided for by Article 31C must follow. He recorded that all the 13 Judges in Kesavananda Bharati's case (supra) agreed. The only question open to judicial review under Article 31-C is whether there is a direct and reasonable nexus between the impugned law and the provisions of Article 39(b) & (c). Reasonableness is evidently regard- ing the nexus and not regarding the law.
Justice Bhagwati, as the learned Chief Justice then was, reiterated at pages 337-338 of the report that if the Court finds that the law though passed seemingly for giving effect to a Directive Principle is, in pith and substance, one for accomplishing an unauthorised purpose-unauthorised in the sense of not being covered by any Directive Principle, such law would not have the protection of the amended Article 31C, which does not give protection to a law which has merely some remote or tenuous connection with a Directive Principle. What is necessary is that there must be a real and substantial connection and the dominant object of the law must be to give effect to the Directive Principles. Also see the observations of this Court in Sanjeev Coke Mfg. Co. v. Bharat Coking Coal Ltd. & Anr., [1983] 1 SCR 1000 at 1020.
556 Looked at from this point of view, it cannot be said that the principles of colourable legislation would not be applicable. If it was demonstrated that there was no direct and reasonable nexus between these two impugned laws and the principles as enshrined under Article 3 l(b) & (c) of the Constitution, then that would have been colourable legisla- tions and would have been bad on that score.
It was contended on behalf of the petitioner by Mr. Sorabji as well as Mr- Rangarajan that in order to bye-pass 'the payment of compensation for acquisition of property of the petitioner in negotiations the device of the impugned Acts was envisaged. In that context, the substitution of the book-value in place of market value was, therefore, depriva- tion of property and is illusory and would amount to taking away of' property without compensation.
I do not and cannot agree. It is indisputed that the electric energy generated by the supplier petitioner compa- nies constitutes material resources of the community within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legislations, reading the legislations entirely the object of the legislations have a direct and reasonable nexus with the objective of distributing the material resources so as to subserve the common good. The determination of value thereof and the substitution of the bookvalue in place of market value, are only methods for such acquisition and do not disclose the true nature and character of the legislation, but are inci- dental provisions thereof. If that is the position then it is incorrect to say that what was acquired, was not the material resources but choses-in-action. The true nature and character of the legislations in. question was to acquire the material resources, namely, the electric energy for better supply and distribution. In that view of the matter the principles of the decision of the Division Bench of the Calcutta High Court in Bihar State Electricity Board & Ors. v. Patna Electricitv Supply Co. Ltd., AIR 1982 Cal. 74 would have no scope of application to this case. A Constitution Bench of this Court in State of Tamil Nadu & Ors. v. L. Abu Kavur Bai & Ors., [1984] 1 SCC 515 has expressed the view that the Act giving effect to Article 39(b) & (c) is pro- tected if a reasonable nexus is established.
In that view of the matter, I agree having regard to the true nature and character of the legislations that the impugned legislations are not colourable legislations in the sense that there was no direct and reasonable nexus with Article 31(b) & (c) of the Constitution.
557 On the other aspects of the matter, I agree with re- spect, with the conclusion indicated in the judgment of Justice Venkatachaliah.
VENKATACHALIAH, J. 1. In these two writ petitions invok- ing Article 32 of the Constitution of India, the Tinsukia Electric Supply Company Limited and the Dibrugarh Electric Supply Company Limited, which are licensees under the Indian Electricity Act 19 10 for the supply of electricity within the areas of the municipal boards of Tinsukhia and Dibrugarh towns respectively, in the. State of Assam and the share- holder-Managing Directors of the two companies assail the constitutional validity of the Indian Electricity (Assam Amendment) Act, 1973, and of the Tinsukia and Dibrugarh Electric Supply Undertaking (Acquisition) Act, 1973. By the latter enactments, the undertakings of the two companies were sought to be acquired so as to vest them in the Govern- ment with effect from 27.9. 1972.
The petitioners also urge, in the petitions, a challenge to the validity of the Twentyfourth and Twenty fifth Amend- ments to the Constitution. This part of the petition, in view of the subsequent pronouncements of this court on these amendments, does not survive.
2. The petitioner-companies are Public Limited Companies registered under the Indian Companies Act, 1913, and are existing companies under the Companies Act 1956 with their registered offices at Tinsukhia and Dibrugarh respectively in the State of Assam. The two companies, Tinsukhia Electric Supply Company Ltd., and the Dibrugarh Electric Supply Company Ltd.--hereinafter referred to respectively as the 'Tinsukhia Co.' and 'Dibrugarh Co.'--were granted 'licences under the provisions of the Indian Electricity Act, 1910 ( 1910 Act for short) for supply of electricity within the respective licenced areas viz. of the Tinsukhia and Dibru- garh Municipal Boards. The 'Dibrugarh Company' was granted the 'Dibrugarh Electricity Licence, 1928' on terms and conditions particularised in the grant, incorporating, inter alia, an option to the State to purchase the undertaking on the expiration of 50 years from 13.2.1928 the date of com- mencement of the licence and thereafter on the expiration of every subsequent period of twenty years.
The Tinsukhia Company was similarly granted the 'Tinsuk- hia Electricity Licence, 1954', incorporating, inter-alia, a condition as to the option exercisable by the State of Assam to purchase the electricity undertaking of the licencee on the expiration of 20 years from 21.7. 1954, the date of commencement of the licence, and thereafter on 558 the expiration of every subsequent decennial period.
3. However, by two Ordinances, namely, The Indian Elec- tricity (Assam Amendment) Ordinance, 1972: (Assam Ordinance VII, 1972) and the Tinsukhia & Dibrugarh Electricity Supply Undertakings (Acquisition) ordinance, 1972, (Assam Ordinance VIII of 1972) promulgated by the Governor in exercise of his legislative powers under Article 2 13 of the Constitution, the Electricity Supply Undertakings of the two companies were acquired by, and stood vested in, the Government with effect from 23.30 hrs. on 27.9.1972. Possession and control of the two undertakings were, accordingly, taken-over by the Government of Assam that day. The two ordinances were subse- quently replaced by the two corresponding legislative enact- ments viz., the Indian Electricity (Assam Amendment) Act, 1973, (Assam Act IX, 1973) and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973, (Assam Act, X of 1973).
At the time of filing of the writ petitions the two Ordinances had not been replaced by the legislative meas- ures. However, after the coming into force of the two legis- lative enactments, with retrospective effect from:the date of promulgation of the earlier ordinances, petitioners sought, and were granted by an order of this Court dated 18.12.1973, leave to amend the petitions so as to direct the challenge against the enactments.
4. An advertence, though brief, to the factual anteced- ents leading upto to the promulgation of the Ordinances and to certain earlier steps taken by the State Government to acquire the said undertakings, first by negotiations, and later by exercise of the option to purchase, is necessary in order to put the grounds of challenge in their proper per- spective.
Respondent No. 4 i.e. the Assam State Electricity Board, it would appear, had been expressing its intention to take- over the undertaking of the Tinsukia Co. by private negotia- tions even from the year 1964. Pursuant to and in implemen- tation of this proposal the Board had constituted a commit- tee of 3 members for assessing the value of the assets of the Tinsukhia's undertaking. On the valuation so made and the inventories so prepared, the Board, on 27.3.1970, in- formed the Tinsukia Co. that the Board had approved the valuation of the assets of the undertaking at Rs.30,54,246, excluding, the value of the land, whose value was later estimated at Rs.2,40,000. By letter dated 4.3.1971, the Chairman of the Assam State Electricity Board 559 informed Tinsukia Co., that the company should immediately signify and communicate its acceptance of the proposal to transfer the undertaking to the Board at the valuation of Rs.33,00,000. The company, appears to have tarried and did not signify and communicate its immediate and unqualified acceptance of the offer; but appears to have had some coun- ter-proposal in mind and, in the expectation of pursuading the Board to its view, requested the Chairman of the Board to visit Tinsukia for holding further discussions in the matter of valuation of the Undertaking. Thereafter the Chairman along with the officers of the Board visited Tinsu- kia sometime in June, 1971, and held discussion with the company. The company avers that pursuant to these discus- sions, the Executive Engineer of the Board was asked by the Chairman to prepare a fresh inventory as on 31.10.1971 in collaboration with the company.
However, the Secretary of the Board sent a communication dated 10.12.1971 to the company to the effect that as the company had not conveyed its concurrence to the offer con- tained in the Board's letter dated 25.3.1970 the said offer be treated as withdrawn. Thereafter, the Board issued the notice dated 15/23 May 1972 to the company conveying the Board's intention to exercise its option of purchasing the undertaking under Section 6(1) of the 1910 Act read with clause 12(iv) of the licence on the expiration "the term of the licence" and, accordingly, required the company to sell the undertaking to the Board on the expiration of 21.9.1974 when the 20 year period of the licence would come to an end.
In response to this notice, the company sent its communica- tion dated 17.8.1972 seeking confirmation of its expectation that the purchase price for the statutory sale would be determined in accordance with the provisions of section 7A of the 1910 Act and that such price would also be tendered to the company on or before the date of taking-over. Nothing further appears to have happened pursuant to this notice to purchase. But, as stated earlier, the two Ordinances were promulgated on 27.9.1972 for the compulsory acquisition of the undertaking of the company.
So far as the Dibrugarh company is concerned, similar negotiations for purchase by private negotiations had been initiated and the Chief Engineer of the Board accompanied by the Finance and Accounts Member of the Board visited Dibru- garh on 27.1.1965 for discussions as to the valuation of the undertaking. Nothing moved in the matter for some years.
However, in the communication dated 3.8.1970 addressed by the Secretary to Government of Assam, Power (Electricity), Mines and Minerals Department, to the Secretary of the 560 Board, it was reiterated that Government had decided that the undertaking of the Dibrugarh Co. should be taken-over by negotiation. While matters remained thus, the company's undertaking was taken over on 27.9.1972 pursuant to the two ordinances promulgated by the Governor.
5. We may briefly turn to the provisions of the two enactments which have since replaced the two Ordinances:
The amendments made to Sections 5, 6 and 7A of the Indian Electricity Act, 1910, by the Indian Electricity (Assam Amendment) Act, 1973, are substantial and far-reaching. Section 2 of the Amending Act amended Section 5 of the Principal Act by substituting the expression "the purchase price of the undertaking" in sub-sec. (2) of Section 5 by the expression 'an amount'. Section 3 of the Amending Act which amended sub-Sec. (7) of Section 6 of the Principal Act substituted the words 'the purchase-price' occurring in sub-Sec. (7) of Section 6 by the words "an amount". The amendments brought about by Section 4 of the Amending Act to Section 7-A of the Principal Act were equally substantial.
Section 7A of the Principal Act,' it may be recalled, pro- vided that where an undertaking of a licensee, not being a local authority, was sold under sub-Sec. (1) of Section 5 the purchase-price of the undertaking shah be the market- value of the undertaking at the time of purchase, or where the undertaking had been delivered before the purchase under sub-Sec. (3) of Sec. 5, at the time of delivery of the undertaking, and that if there was any difference of dispute regarding such purchase price, the same shall be determined by arbitration. But Section 4 of the Amending Act substitut- ed an entirely different provision in the place of the old section 7-A. It substituted "book-value" in place of "mar- ket-price". Sections 5(2), 6(7) and 7-A, of the Principal Act after their amendment-read thus:
"Section 5(2): Where an undertaking is sold under sub-section (1) the purchaser shall pay to the licencee an amount in accordance with the provisions of sub-sections (1) and (2) of Section 7-A." Sub-sec. (7) of Section 6, after the amendment, reads:
Section 6(7): Where an undertaking is purchased under this section, the purchaser shall pay to the license an amount determined in accordance with the provisions of sub-sections (1), (2) and (3) of Section 7A.
561 Section 7A reads:
"7-A. Determination of amount pay- able. (1) where an undertaking of a licensee is sold under sub-section (1) of Sec. 5 or purchased under Sec. 6, the amount payable for the undertaking shall be the book value of the undertaking at the time of purchase or where the undertaking has been delivered before the purchase under sub-Section (3) of Sec. 5, at the time of delivery of the undertaking.
(2) The book value of an undertaking for the purpose of sub-section (1) shall be deemed to be the depreciated book value as shown in the audited balance-sheet of the licensee under the law for the time being in force, of all lands, buildings, works, materials and plant of the licensee, suitable to and used by him for the purpose of the undertaking, other than (i) a generating station declared by the licensee not to form part of the undertaking for the purpose of purchase, and (ii) service lines or other capital works or any part thereof which have been construct- ed at the expense of the consumers, but with- out any addition in respect of compulsory purchase or of goodwill or any profit which may be or might have been made from the under- taking or of any similar consideration.
(3) Notwithstanding anything contained in any licence or any instrument, order agreement or law for the time being in force in respect of any additional sum by whatever name may it be called, payable to a licensee for compulsory purchase, the licensee shall be entitled only to a solatium of ten per centum of the book value as determined under sub-sections (1) and (2) for compulsory purchase of his undertaking under Sec. 6.
(4) No provision of any Act for the time being in force including the other provi- sions of this Act and of any rules made there- under or of any instrument including licence have effect by virtue of any of such Acts or any rule made thereunder, shall, in so far as it is inconsistent with any of the provisions of this section, have any effect." It is material to point out that sub-section (3) of Section 1 of the Amending Act provides that the Amending Act shall be deemed to 562 have come into force on 27.9.1972, which was the date of promulgation of the earlier Ordinance.
6. We may now notice some of the material provisions of the Acquisition Act i.e. Assam Act X of 1973. Section 1(3) provides that the Act shall be deemed to have come into force on 27.9.1972. Clauses (f), (h), (j) & (l) of the interpretation-clause (Sec. 2) may be noticed:
2(f) 'Fixed Assets' includes works, spare parts, stores, tools, motor and other vehicles, office equipment and furniture;
2(h): 'Licensee' means the Tinsukia Electric Supply Company Ltd. and/or the Dibrugarh Electric Supply Company Private Ltd., as the case may be;
2(j): 'Undertaking' means the Tinsukia Elec- tric Supply Undertaking owned and managed by the Tinsukia Electric Supply Company Ltd., and/or the Dibrugarh Electric Supply Undertak- ing owned and managed by the Dibrugarh Elec- tric Supply Company Private Ltd., as the case may be;
2(1): 'Works' includes electric supply lines and any lands, buildings, machinery or appara- tus required to supply energy and to carry into effect the object of a licence granted under the Electricity Act;
Section 3(2) provides:
3(2): Any notice given under any of the provisions of the Electricity Act or the Electricity Supply Act to the licensee for the purchase of the undertaking and in pursuance of which notice the undertaking has not been purchased before the commencement of this Act, shall lapse and be of no effect.
Explanation: There shall be no obligation on the part of the Government or the Board to purchase any undertaking in pursuance of any notice given as aforesaid, nor shall the service of such notice' be deemed to prevent the Government from taking any proceeding de novo in respect of the undertaking under this Act.
Section 4 provides:
4. Vesting date. The Tinsukia and Dibrngarh Electric Sup- 563 ply Undertakings shall be deemed to be trans- ferred to and shall vest in the Government, on the 27th day of September, 1972, at 11.30 P.M.
Section 5 provides for the transfer of the undertaking so acquired by Government to the Board.
Section 6 provides for the gross amount pay- able to the licensee.
6. Gross amount payable to Licensee. (1) The gross amount payable to a licensee shall be the aggregate value of the amounts specified below:
(i) the book value of all completed works in beneficial use pertaining to the undertaking and taken over by the Government (excluding works paid for by consumers) less depreciation calculated in accordance with Schedule I;
(ii) the book value of all works in progress taken over by the Government, exclud- ing works paid for by consumers or prospective consumers;
(iii) the book value of all stores including spare parts taken over by the Gov- ernment and in the case of used stores and spare parts, if taken over, such sums as may be decided upon by the Government;
(iv) the book value of all other fixed assets in use on the vesting date and taken over by the Government less depreciation calculated in accordance with Schedule I;
(v) the book value of all plants and equipments existing on the vesting date, if taken over by the Government, but no longer in use owing to wear and tear or to obsolescence, to the extent such value has not been written off in the books of the licensee less depreci- ation calculated in accordance with Schedule I;
(vi) the amount due from consumers in respect of every hire purchase agreement referred to in Sec. 7(i)(ii) less a sum which bears to the difference between the total amount of the instalments and the original cost of the material or equipment, the same proportion as the amount due bears to the total amount of the instalments;
564 (vii) any amount paid actually by the licensee in respect of every contract referred to in Section 7(i)(iii).
Explanation--The book value of any fixed asset means its original cost and shall com- prise-- (i) the purchase price paid by the licensee for the asset, including the cost of delivery and all charges properly incurred in erecting and bringing the asset into benefi- cial use as shown in the books of the under- taking;
(ii) the cost of supervision actually incurred but not exceeding fifteen per cent of the amount referred to in paragraph (i);
Provided that before deciding the amounts under this subsection, the licensee shall be given an opportunity by the Govern- ment of being heard, after giving him a notice of at least 15 days therefor.
(2) In addition a sum equal to 10 per cent of the amounts assessed under Clauses (i) to (iv) of sub-section (1) shall be paid to the licensee by the Government.
(3) When any asset is acquired by the licensee after the expiry of the period to which the latest annual accounts relate, the book value of the asset shall be such as may be decided upon by the Government;
Provided that before deciding the book value of any such asset, the licensee shall be given an opportunity by the Government of being heard after giving him a notice of at least 15 days therefor.
Section 7 provides:
7. Vesting of undertakings. (1) The property, rights, liabilities and obligations specified below in respect of the undertaking shall vest in the Government of the vesting date;
(i) all the fixed assets of the licensee and all the documents relating to the under- taking;
565 (ii) all the rights, liabilities, and obligations of the licensee under hire-pur- chase agreements, if any, for the supply of materials or equipment made bona fide before the vesting date;
(iii) all the rights, liabilities and obligations of the licensee under any other contract entered into bona fide before the vesting date, not being a contract relating to the borrowing or leading of money, or to the employment of staff.
(2) All the assets specified in sub- Section (1)(i) shall vest in the Government free from any debts, mortgages or similar obligations of the licensee or attaching to the undertaking;
Provided that such debts, mortgages or obligations shall attach to the amount payable under this Act for the assets.
(3) In the case of an undertaking which vests in the Government under this Act, the license granted to it under part II of the Electricity Act shall be deemed to have been terminated on the vesting date and all the rights, liabilities and obligations of the licensee under any agreement to supply elec- tricity entered into before that date shall devolve or shall be deemed to have devolved on the Government;
Provided that where any such agreement is not in conformity with the rates and condi- tions of supply approved by the Government and in force on the vesting date, the agreement shall be voidable at the option of the Govern- ment.
(4) In respect of any undertaking to which Sec. 4 applies, it shall be lawful for the Government or their authorised representa- tive on and. after the vesting date, after removing any obstruction that may be or might have been offered, to take possession of the entire undertaking, or as the case may be the fixed assets and of all documents relating to the undertaking which the Government may require for carrying it on.
(5) All the liabilities and obliga- tions, other than those vesting in the Govern- ment under sub-Sections (1) and (3), shall continue to be the liabilities and obligations of the licensee, after the vesting date.
Explanation. All liabilities and obligations in respect of 566 staff, taxes, provident fund, employees' state Insurance, Industrial disputes and all other matters, upto and including the vesting date, shall continue to be the liabilities and obligations of the licensee, after the vesting date.
Section 9 provides:
9. Deductions from the gross amount. The Government shall be entitled to deduct the following sums from the gross amount payable under this Act to a licensee-- (a) the amount, if any, already paid in ad- vance;
(b) the amount if any, specified in Sec. 8;
(c) the amount due, if any, 'including interest thereon, from the licensee to the Board, for energy supplied by the Board before the vesting date;
(d) all amounts and arrears of interest, if any thereon, due from the licensee to the Government,
(e) the amount, if any, equivalent to the loss sustained by the Government by reason of any property or rights belonging to the undertaking not having been handed over to the Government, the amount of such loss being deemed to be the amount by which the market value of such property or rights exceeds the amount payable therefor under this Act, to- gether with any income which might have been realized by the Government, if the property or rights had been handed over on the vesting date;
(f) the amount of all loans due from the licensee to any financial institutions consti- tuted by or under the authority of the Govern- ment and arrears, or interest, if any, there- on;
(g) all sums paid by consumers by way of security deposit and arrears of interest due thereon on the vesting date, in so far as they have not been paid over by the licensee to the Government, less the amounts which according to the books of the licensee are due from the consumers to the licensee for energy supplied by him before that date;
(h) all advances from consumers and prospec- tive consum- 567 ers, and all sums which have been or ought to be set aside to the credit of the consumers' fund, in so far as such advances or sums have not been paid over by the licensee to the Government;
(i) the amounts remaining in Tariffs and Dividends Control Reserve, Contingencies Reserve and Development Reserve, in so far as such amounts have not been paid over by licen- see to the Government;
(j) the amount, if any, as specified in Ss. 11(2) and 11(3):
(k) the amount, if any, relating to debts, mortgages or obligations as mentioned in proviso to sec. 7(2);
Provided that before making any deduc- tion under this section, the licensee shall be given a notice to show cause against such deduction, within a period of fifteen days from the date of receipt of such notice.
Section 10 enables the Government to appoint, by order in writing, a person having adequate knowledge and experience in matters relating to accounts as Special Officer to assess the net amount payable under this Act, after making the deductions enumerated in section 9.
Section 20 provides:
20. Arbitration. (1) Where any dispute arises in respect of any of the matters speci- fied below, it shall be determined by an arbitrator appointed by the Government, who shall be a sitting or retired District or High Court Judge-- (a) whether any property belonging, or any right, liability or obligation attaching to the undertaking, vests in the Government;
(b) whether any fixed asset forms part of the undertaking;
(c) whether any contract or hire-purchase agreement or other contract referred to in SEC. 7(1)(ii) or (iii) has been entered into bona fide or not;
(d) whether any agreement to supply electricity entered into by the licensee prior to the vesting date is of the nature referred to in proviso to S. 7(3).
568 (2) Subject to the provisions of this section, the provisions of the Arbitration Act, 1940 (Central Act 10 of 1940) shall supply to all arbitrations under this Act.
Section 23 of the Act incorporates a declaration to the effect that the legislation is for giving effect to the policy of the State to secure the principle of State Policy contained in Article 39(b) of the Constitution of India.
7. The two legislations, one amending the provisions of Sections 5(2) 6(7) and 7-A of the Indian Electricity Act, 1910, and the other providing for the acquisition of the two undertakings are challenged by the petitioner on several grounds, the principal attack, however, being that the legislations, brought forth, as they were, in the wake of the private-negotiations and the exercise of the option to purchase, are not bona .fide, but constitute a mere colour- able exercise of the legislative power and that, at all events the real objects of the two legislations have no direct and reasonable nexus to the objects envisaged in clause (b) of Article 39 of the Constitution and that a careful and critical discernment of the context in which the legislation was brought forth would lay bare before the judicial eye that what was sought to be acquired was not the "undertakings" of the two companies but really the differ- ence between the "market-value" of the undertakings which the State has agreed, under the private treaties, to pay and what, in any event, the State was obliged to pay under the provisions of Section 7A, as it then stood on the one hand and the "Book-Value" of the undertaking, which the law seeks to substitute on the other. If the protective umbrella of Article 31-C is, thus, out of the way, the 'amount' payable under the impugned law, it is urged, would be illusory even on the judicially accepted tests applied to Article 31(2) as it then stood. The validity of some of the specific provi- sions of the acquisition law which excluded certain items from valuation and envisaged and authorised certain deduc- tions in the amount are also assailed.
8. These writ petitions were heard along with a batch of writ petitions, viz, WP Nos. 5, 14, and 15 of 1974, where the constitutionality of an analogous statute of the State of Tamil Nadu was assailed by the companies whose undertak- ings were similarly sought to be acquired and civil appeal No. 243 of 1985, C.A. 344 of 1985 and C.A. 4113 of 1985 arising out of the Judgment, dated 20.7.1984, of the High Court of Bombay striking down certain amendments to the Indian Electricity Act, 1910, made by the Maharashtra State Legislature in the matter of statutory purchase of some of the private 569 electricity supply undertakings in the State of Maharashtra.
The three batches of cases arising from Assam, Tamil Nadu and Maharashtra were heard together as there were certain aspects common to-them. However, in view of the distinctiveness and particularities of the facts of the cases and the situational variations even in respect of the legal context in which questions arise for decision, the three batches of cases are disposed of by separate Judg- ments. The present Judgment disposes of the challenge made to the Assam Legislation.
9. We have heard Shri Soli J. Sorabji, learned Senior Advocate, and Shri Harish Salve, learned Advocate, for the petitioner in W.P. 457 of 1972 and Sri Rangarajan, learned Senior AdVocate for the petitioner in W.P. 458 of 1972 and Dr. Shankar Ghosh, learned Senior Advocate, for the State of Assam and Sri G.L. Sanghi, learned Senior Advocate for the Assam State Electricity Board and its authorities. On the contentions urged at the hearing, the points that fall for consideration in the writ-petitions admit of being formulat- ed thus:
(a) That the declaration in Sec. 23 of Assam Act X 1973 is invalid as the impugned Act has no reasonable and direct nexus to the principles in Article 39(b) of the Constitu- tion and is merely a cloak which the law is made to wear to undo the legitimate obliga- tions arising out of the intended statutory- sale of the undertakings and, accordingly, Article 31-C is not attracted.
That, at all events, not every provision of a statute is entitled to the protection of Article 31-C but only those provisions which are basically and essentially necessary for giving effect to the principle in Article 39(b) and that, accordingly, the provisions in the impugned law relating to the determination of the amount do not attract Article 31-C.
(b) That in effect and substance the law is not one for the acquisition electricity undertakings but is merely one to acquire a 'chose-in-action' and to extinguish the legal rights of the Tinsukhia Co. for the difference between the "market-price" of the undertakings which the State was obliged to pay under the intended statutory-purchase and the "Book- Value" to which the liability is sought to be limited under the impugned legislations.
(c) That, if the immunity under Article 31-C for the legis- 570 lations is not available, the 'amount' payable in accordance with the provision of the ac- quiring law is wholly "illusory" and is an attempt to take away a 'fortune for a far- thing'.
And accordingly, the law is ultra-vires and violative of Article 31(2) of the Consti- tution (as it then stood). Payment of "Book- Value" of the assets acquired irrespective of their 'market-value' renders the 'amount' unreal and illusory.
(d) That the exclusion of "service- lines", which are part of the assets of the licensee as from valuation, renders the law unconstitutional and ultra-vires.
(e) That the provision of Section 9(i) for the deduction of the 'Reserves' from the "Amount", in addition to the takingover of the same in the form of 'fixed assets' and the omission to value the unexpired period of licence are unreasonable and arbitrary.
(f) That the continued liability of the petitioner-licensee under Section 11(3) for payment to employees retrenched by Government after the vesting-date and the provision for deduction of such sums from the "Amount" payable for the acquisition are arbitrary and unreasonable.
(g) That while Section 7(5) makes all the liabilities of the licensee, other than
