LexTINSUKHIA ELECTRIC SUPPLY CO. LTD. versus STATE OF ASSAM AND ORS.
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A B TINSUKHIA ELECTRIC SUPPLY CO. LTD. v. STATE OF ASSAM AND ORS. APRIL 13, 1989 [R.S. PATHAK, CJ, SABYASACHI MUKHARJI, S. NATARAJAN, M.N. VENKATACHALIAH AND S. RANGANATHAN, JJ.] 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 legis- C · lation and the objectives and principles of nationalisation-Court to look into the real nature of the statute. -Y Indian Electricity Act, 1910/ Indian Electricity (Assam Amendment) Act, 1973: Sections 5(2), 6(7) and ?A-Acquisition and D take over of electricity supply companies-Constitutional validity of. Tinsukhia and Dibrugarh Electric Supply Undertakings (Acquisi- tion) Act, 1973: Sections 1(3), 2(f), (h), (j), 2(1), 3 to 10, 20 and 23- Constitutional validity of-Acquisition and take over of Tinsukhia -f.-- Electric Supply Co. Ltd. and Dibrugarh Electhc Supply Co. Ltd.-'- E Protection under Article 31-C of the Constitution of India-Payment of compensation-Justiciability of. p G The petitioners-Public Limited Companies-were granted 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 Dil>rugarh 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 ml the expiry of 20 years and thereafter on the expiry of every 20 years. H The State Government negotiated with the ·companies for pur- 544 - - - TINSUKHIA ELECTRIC SUPPLY CO. v. STATE 545 chasing them. The negotiations were going on for several years. On 27 .9.1972 the Governor promulgated two ordinances for the com- pulsory acquisition of the undertakings of the two companies. Subse- quently, the ordinances were replaced by the Indian Electricity (Assam Amendment) Act, 1973 and the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973. ~ The two legislations, one amending the provisions of Sections 5(2), }-6(7) and 7-A ?~t~e Indian Electricity Act'.1910 ?nd the other pr~viding · for the acqu1S1bon of the two undertakings viz., the Tinsukh1a 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 negotiaticms and the exercise Of the ·option to purchase, the legislations were not' bona fide, but con- y stituted a mere colourable exercise 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 con- tended that what was sought to be acquired was not the undertakings of the two companies, hut the difference between the_ market value of the undertakings agreed to by the State Government and the Book-value of the undertakings which the law has substituted by virtue of the amend- ments' made in the Indian Electricity Act, 1910. The Article 31-C pro- .~ tection given to the legislatio;.,,, 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 b~n a material source of the community and any legislativ_e ;.... measure to nationalise the undertaking 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 valuation in_ accountancy, and it cannot be characterised as, illusory even if the legislations did not enjoy the protection of Article 31-C. Dismissing the writ petitions, -+ HELD: (µ.S. Pathak. CJ, M.N. Venkatachaliah, S. Natarajan. and S. Ranganathan, JJ-per Venkatachaliah, ]. J A B c D E F G 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 s
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