LexU.P.STATE ELECTRICITY BOARD, LUCKNOW versus THE OFFICIAL LIQUIDATOR LOWER GANGES JAMUNA ELECTRICITY DISTRIBUTING CO. LTD.
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U.P. STATE ELECTRICITY HOARD, LUCKNOW v. THE OFFICIAL LIQUIDATOR LOWER GANGES JAMUNA ELECTRICITY DISTRIBUTING CO. LTD. May l, 1973 A [D. G. PALEKAR AND A. ALAGIRISWAMI, JJ.] B Electricity Supply Act, 1948, schedule 6, cl. ·vA-Liability to lu11ul ·over ·derefop1ne11t reserre-Scope of. Under cl. VA of the 6th Schedule to the Electricity Supply Ad, 19~8, on the pur·:hase of an undertaking the development reserve shall be handed over to the purchaser. The appellant-Board purchased an electricity distributing company in liquidation and insisted that a certain sum in the development re- serve sho11ld be handed over to it or deducted from the purchase price. The C official liquidator, who \Vas administering th~ company, contended that the development reserve had_ been uSed in adding to the assets of the electricity •Unde1iaking and that, therefore that amount could not be paid. Th:: High ·Court held against the appellant. Dismissing the appeal to this Court, · I-IELD : The development reserve can be handed over to the purchaser only if it is a\·ailable, Since the entire sum has been· utilised by investment in the business and there is no an1ount left in cash in the develooment reserve the official liquidator cannot be directed to pay an:Y amount, as -representing the development reserve to the a~pellant-Board. [144-G] (1) The whole of the development reserve had admittedly gone into the creation of assets \Vhich had enhanced the value of the undertaking, and the .appellant-Board had the benefit of all such additions, improvements and accre- tions to trrl:- assets of the undertaking. \Vhat is really asked on behalf of the appellant-Board is that the official liquidator should pay to it a notional sum representing \Vhat should have been the developn1ent reserve and not that there is any an1ount available in the development reser\'e, but a notional amount cannot be handed over. The demand of the Board \vould amount to saying that it n1ust be paid t\vice over, once in the form of the assets created out of the develo!)ment ·reserve which it had already got, and again in cash as. though it is still available. There is no justification either in la\v or in equity for such ca demand. [l44E-HJ (2) Under cl. VA (3) of the 6th Schedule to the Electricity Supply Act, the development reser-ve shall be available only for investment _in the business of electricity supply of the undertaking. There is no allegation that the deve- lopment reserve was used for any purpose other than in the business of electri- city supply of the undertaking or on any item not permissible either under the Electricity Supply Act, of the Indian Electricity Act, 1910. [l44D-E] (3) The provision regarding development reserve came into existence in 1957 \vhen the new cl. VA \vas inserted in the 6th Schedule. The language of that clause therefore is not the same as the language of els. II, III and IV which 'have been in the Act from the very beginning. But that does not cre.'.'.te ally difficulty or problem in the interpretation of cl. VA. [145C-DJ CIVIL APPELLIATE JURISDICTION: Civil Appeal No. 1201 of 1967. Appeal by certificate !rpm the judgment and. decree dated Decem- ber 5, 1963 of the Allahabad High Court in Special Appeal No. 727 of D K F G 19~. H S. N. Kacker, and 0. P. Rana, for the appellant. B. Sen, A. Banerjee and B. Dutta, for the respondent. A B c D U.P. Sl ATE ElECt. BOARD v. OFFICIAL LIQUIDATOR (Alagiriswami, J) 143 The Judgment of the Court was delivered by ALAGIRISWAMI, J. This is an appeal against the judgment ot a Division Bench of the Allahabad High Court affirming on appeal the judgment of a learned Single Judge dealing with company matters .. The appellant is the U.P. State Electricity B_oard and the respondent is the Official Liquidator of the Lower Ganges Jamuna Electricity Distributing Co. Ltd. This company went into liquidation in 1937 and had been administered by the Official Liquidator till it was purchased by the appellant Board on 1-6-1961 for a sum of Rs. 7,82,256/- as mutually agreed. Thereafter disputes arose about certain reserves of the com- pany and in the present appeal we are concerned only with what is called the Development Reserve. It was by the Finance Act of 1955 that a provision was made in the Income Tax Act for development rebate. In 1957 the Sixth Sch~dule of the Electricity (Supply) Act, 1948 was amended introducing a new c
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