VIJAYAWADA MUNICIPAL COUNCIL versus ANDHRA PRADESH STATE ELECTRICITY BOARD & ANR.

Citation: [1977] 1 S.C.R. 846 · Decided: 20-10-1976 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
846 
VIJAYAWADA MUNICIPAL COUNCIL 
v. 
ANDHRA PRADESH STATE ELECTRICITY BOARD & ANR. 
October 20, 1976 
[A. N. RAY, C.J., M. H. BEG AND P. N. SHJNGHAL, JJ.] 
Andhrn Pradesh (Andlzra Area) FJectricity Supply Undertakini; 
(Acqui.1i-
1ion) Act (Andlzra 15 of 1954), ss. 5(3) (vi), 6(2)(a)(iii) and 10(2)(b)tiii)--
Amounts due to 'undertaking from consumers prior to vesting in State-If can be 
recovered by State from the licensee. 
Section 4 of the A)ldhra Pradesh (Andhra Area Electricity Suppl~ lJndcr-
taking (Acquisition) Act, 1954, empowered the Government to declare that an 
electricity undertaking of the licensee Municipal Council shall vest in Govern-
ment on a specified date. 
Section 5 provides for compensation t0< be paid on 
one of three alternative bases, A, ll or C set out in thci Act. 
Where compen-
sation is on the basis 'C',· it includes under s. 5 (3) (vi) the book value of all 
intangihle assets to the extent such value has not been written off in the book~ 
of the licensee;· and s. 6 (2 )(a) mentions the items that would vest in the State 
Government. Section 6(2) (a) (iii) relates to all the rights, liabilities and obli-
gations of the licensee under any other contract entered into bona fide, not 
being a contract relating to the borrowing or lending for money. Section 10(2) 
(b )(iii) lays down that the GGJvernment may deduct from the compensationl 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 to 
such consumers before that date. 
In the present case, the State· Government made a declaration regarding the 
vesting of the Ele.ctrioity Undertaking of the appellant in the State Government, 
and transferred its rights to. the respondent Electricity Board. Certain amounts 
were shown in the books of the appellant as due to it from consumers. 
The 
respondent claimed those amounts and filed a suit against the appellant for their 
recovery. 
The trial court dismissed the snit, but the High Court allowed the appeal. 
F 
In appeal to this Court, it was contended that past dues from the consumers 
would not vest in the respondent as they were not specifically 
mentioned in 
s. 6(2)(a); and that under s. 10(2)(b)(iii) the appellant was entitled .t'? deduct 
and appropriate the amounts due from consnmers for supply of clectncl!y from 
G 
H 
their security deposits. 
\. 
Dismissing the appeal to this Court, 
• 
HELD: (1) The explicitly wide language used in s. 6(2) (a)(iii) cliepenses 
with the need to specify all items which are covered by it; and, arrears of dues 
from consumers nre covered by the wide langnage of the clause. [8 50 A] 
12)(a) Section 10(2)(b)(iii) is meant for security deposits and arrears of 
intere't due on them which are generally held in trust by the liccn';ee co as to 
be ultimately returned to the consumers, if the dues of the const11'1er' have been 
met without resorting to the amounts deposited. They are used for a deduction 
of dues from depo,its where these have not been paid. If these deposits have 
not been made over by the licensee to the Government, tl:>ey will be claimable 
by the depositors, and, therefore, they are deducted from the compcnJation. If; 
howover. there arc any amounts due shown in the books of the lic<'n,;~e as due 
from the con"'mers of energy they would become realisablP by the 
Govern-
metit wider s. 6(2)(a)(iii). It is for this reason that the deduction of SC'Cctrity 
r-
, 
VIJAYAWADA MUNICIPAL COUNCIL V. A. P. ELEC. BOARD (Beg, J.) 847 
deposit from compensation is reduced by the amounts which are due from con-
sumers to the Undertaking for energy supplied by the Undertakmg b.efc:re the 
date of vesting as they become the claims realisable by the. suc~essor-m-mterest 
of the Undertaking. 
An exclusion from an item of deduction. trom compe.nsa-
tion could only indicate that this was 
being done because this :-vas 
~n item 
which is covered by the compensation provided for and to be paid. [8)0 Al 
(b) In the present case, the only con!ention of t?e appellant was that the 
right to appropriate the amount of dues did not vest m the respondent but that 
the amount had vested in the appellant. It was not argued on _behalf of t?e 
appellant that what was vested in the Government was onl

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