GUJARAT ELECTRICITY BOARD versus SHANTILAL R. DESAI

Citation: [1969] 1 S.C.R. 580 · Decided: 06-08-1968 · Supreme Court of India · Bench: R.S. BACHAWAT · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

580 
GUJARAT ELECTRICITY BOARD 
v. 
SHANTILAL R. DESAI 
August 6, 1968 
[R. S. BACHAWAT AND K. S. l-fF.DGf,, JJ.j 
The Electricity Act 9 of 1910, s. 7-The Electricity (Supply) Act 
54 of 1948, s. 11--Coinpulsory purchase of 
elcc1rici1y 
/ron1 
licen_\'Ce 
under s. ?-Steps to be taken by purchc.ser--Option to purchase whether 
has 10 be separately exercised apart from Mticc under sec1ion-Electrici1y 
Hoard whether en1poH:ercd under s. 71 of 1948 Act to 1nake co1npulsory 
pwchase under s. 7, 
' On January 8, 1959 the Bombay State Electricity Board purporting to 
exercise its po\\'crs under s. 7 of the Indian Ek•cLricity Act, 1910 read 
with s. 71 of the Electricity (Supply) Act, 1948 gave notice to the res-
pondent that it v.-·ould exercise its option of purchasing the electric supi)ly 
undertaking which the respondent ran under a lic:::ncc, on the expiry cf 
the said licence on February 10, 1962. 
On the creation of the State of 
Gujarat the appellant corporation was formed and succeeded to the rights 
and liabilities of the Bombay State Electricity Board, 
The respondent 
filed a \\Tit petition in the High Court in which he chal!cngcd the right 
of the appellant to purchase his undertaking. 
The High Court cao-.e 
to the conclusion that though the notice issued on January 8, 1959 was a 
valid notioe under s. 7( 4) of the Act that by itself was not sufficient to 
compel the respondent to sell his undertaking to the appellant; before the 
respondent could be compelled to sell bis undertaking it was necessary 
for the appcIJant to exercise its option to purchase the undertaking on 
tbe expiration of th;, period of licence, which it bad not done. 
Tr.e 
respondent's writ petition was therefore allowed. 
The appellant came to 
this Court. The questions that fell for consideration were: (i) whether 
the High Court's intcl'prctation of s. 7 was correct; (ii) whether the appel-
lant was empowered under s. 71 of the Electricity (Supply) Act, 1948 to 
exercise the powers of the local authority under s. 7. 
HELD : (i) The provisions of the sub-section of s. 7 must he read 
together. So read the section only means that before a licensee can be 
compelled to sell his undertaking the authority entitled to purchase must 
elect to pufcha~ the same by exercise of the option given to it under 1hc 
licence read with s. 7 of the Act followed by a notice as required by 
s. 7(4) of the Act. 
In s. 7 the expression 'option 
of purchasing 
an 
undertaking' merely means the right Of purchac;ing the undertaking. The 
word 'option' is used because tv.·o courses arc open to the concerned 
authority namely either to purchase the undertaking or renew the I cence. 
Once the authority elects to purchase then the notice prescribed in sub-s. 
4 should bo given before the period mentioned therein. 
The object of 
the prO'\rision is that the licensee must know in good time what course 1hc 
authority is going to adopt. 
OthcrwL~c there is hound .fl) be considerable 
inconvenience to the licensee 
as \\'Cll as to the public. 1584 F-H, 585 
C-DJ 
There is no good reason for reading into s. 7 a requirement that after 
a notice under s. 7 ( 4) is issued the authority must again exercise its aption 
to purchase on the expiration of the period of Jicense. 
The exerci.~e of 
option to purchase as well as electing to purchase is o~c integral process 
and not two independent steps. 
By the very act of elcchng to purchase the 
alffhoritv e~erciscs its option to purchase. [585 E-FJ 
• 
A 
B 
c 
D 
E 
F 
G 
H 
• 
A 
B 
c 
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D 
E 
F 
G 
H 
ELECTY. BOARD v. SHANTILAL (Hegde, l.) 
581 
In the present case therefore the requirements of s. 7 were fully com-
plied with by the notice issued on January 8, 1954. [585 F-Gl 
(ii) It is true that before s. 71 can be held to be attracted to a case 
it must be shown that the right or option to purchase the undertaking of 
the licensee vested in the State Government or a local authorny under 
the provisions of the Act. In the present case the right to purchase .vested 
in the concerned authority by virtue of s. 7, and it could n~t be said that 
the right accrued only by virtue of the agreement under which the llc~n<:e 
was granted. 
The right to purchase may accrue 
enher 
because 1: IS 
directly conferred by s. 7 o~ because ~t is obtain.ed. as a .result of. a con· 
tract compelled by that sectton. In either case it is a ·nght obtamed by 
the authority by virtue of s. 7. The appellant 
Board 
was 
therefore 
empowered by s. 71 t

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