THE OKARA ELECTRIC SUPPLY CO. LTD., AND ANOTHER versus THE STATE OF PUNJAB AND ANOTHER

Citation: [1960] 2 S.C.R. 239 · Decided: 13-11-1959 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Dismissed

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
239 
principal appeal fails it would not be necessary to 
z959 
make any effective orders on the rest of the appeals in N h. PP 
Chettiar 
this group. The said appeals also fail and are ac ia v~ 
dismissed ; but there would be no order as to costs. 
Subramaniam 
.A.ppeals dismissed. 
• 
Chettiai' 
Gajendragadkar J, 
THE OKARA ELECTRIC SUPPLY CO. LTD., 
AND ANOTHER· 
v. 
THE STATE OF PUNJAB AND ANOTHER 
(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR, 
K. SUBBA RAO, K. C. DAS Gui:TA and J. C. SHAH, JJ.) 
1-
' 
Constitution--Electricity undertaking-Grant of temporary 
sanction for supplying energy-Condition imposed for compulsory 
acquisition of undertaking on . payment of compensatio.n-W hether 
ultra vires-Stat11te authorising imposition of such condition-
W hether infringes fundamental rights-Indian Electricity Act, r9w 
(IX of r9ro), s. 28(r)-Constitution of India, Arts. r9(r)(f) and 
Art. 3r. 
Section 28(r) of the Indian Electricity Act, l9IO authorised 
the State Government to grant sanction to a non-licensee to 
engage in the business of supplying energy on "such conditions 
in this behalf" as it may fix. 
By a notification dated May 26, 
1948, issued under s. 28(1) the first respondent granted sanction 
to the first petitioner, to engage in the business of supplying 
energy to Mliktsar. Clause II of the notification provided that 
"' 
the Provincial Government shall have the option of acquiring 
the undertaking at anytime after October 21, 1950, after giving 
one year's notice and that it shall pay the price of lands, buildings, 
works, material and plant. that may be acquired at the fair 
market value. On January 3, 1958, the first respondent issued a 
notice exercising the option given under cl. II and intimated to 
the first petitioner that upon expiry of one year its undertaking 
shall vest and become the absolute property of the first respon-
dent. On January 4, 1959, the first respondent took possession 
of the undertaking in pursuance of the notice. The petitioners 
contended that cl. II of the notification was ultra vires s. 28 and 
that if cl. II was justified by s. 28 then s. 28 was void as it 
offended Arts. 19 and 31 of the Constitution. , · 
Held, that cl. II of the notification was intra vires s. 28. 
A statutory provision which Q(!alt with the 9rant of sanction tq 
-
I959 
N oveniber r3. 
• 
240 
SUPREME COURT REPORTS [1960(2)] 
r959 
a person to engage in the bnsiness of supplying energy must, 
-
having regard to the special features of the business, necessarily 
The Okara Electric deal with the position which would arise on the termination of 
Supply Co., Ltd. the sanction; so it could be assumed that such statutory provision 
v. 
would make adequate provision empowering the State Govern-
The State of 
ment to provide for the compulsory acquisition of the assets of 
Punjab 
the supplier on payment of proper compensation. Though s. 28(1) 
did not specifically provide for compulsory acquisition on payment 
of compensation, the expression "such conditions in this behalf " 
in s. 28(1) in the context would include conditions dealing with 
the position . which would inevitably arise when the business 
came to an end. The sanction under s. 28 being necessarily 
temporary it was in the interest of the grantee himself that some 
provision was made for payment of compensation to him. A 
condition for acquisition like cl. rr was, therefore, within the 
scope of s. 28(1). 
New Orleans Gas Light Co. v. Louisiana Light and Heat 
Producing and Manufacturing Co. rr5 U.S. 650; 29 L. Ed. 516, 
referred to. 
Held, further, that s. 28 was valid and did not offend either 
Art. 19 or Art. 3r. The Act could not be challenged on the 
ground of violating Art. 31(2) as it was an existing law which was 
saved by clause (5) of the Art. 3r. Similarly, it was saved by 
s. 299(4) of the Government of India Act, 1935. from an attack 
under s. 299(2). 
The restrictions imposed by s. 28 of the Act 
were reasonable restrictions imposed in the interests of the 
general public within the meaning of Art. 19(5). Such limitations 
were generally imposed on the business of supplying energy. 
ORIGINAL JURISDICTION: Petition No. 19 of 1959. 
Petition under Article 32 of the Constitution of India, 
for enforcement of fundamental rights. 
Veda Vyasa, S. K. Kapur and Ganpat Rai, for the 
petitioners. 
· 
S. M. Sikri, Advocate-General for the State of Punjab, 
N. S. Bindra and D. Gupta, for the respondents. 
1959. N

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