LexThe Tamil Nadu Electricity Supply Undertakings (Acquisition) Act, 1954
Tamil Nadu · state statute
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The Tamil Nadu Electricity Supply Undertakings (Acquisition) Act, 1954
Act 29 of 1954
Keyword(s):
Account Year, Annual Account, Electricity Act, Electricity Supply Act, Fixed
Assets, Licensee, Undertaking Taken Over, Vesting Date, Works
-
+.
951 : TO N. Act XxIx] 81Lctricit~ suppry 305
hdertakings (-4 cquisition)
\
THE TAMIL NADU ELECTRICI~FY SUPPLY
UNDERTAmNGs (ACQUISITION) ACT, 1954.
TABLE OF CQNTENTS.
I
hhcrt title, extent and comrneetcernent.
IkS7i*.j~% sriC! imve:&:: d&,
App1uc.11 io:~ of Act.
Powzr of Government to take over any
Comyensdnllio~l pdydble to a licensee.
Vesting of th,: undertaking or assets.
Appointment. of a sole representative.
Choic: of b2sis of compensation.
Effcck of tral~sactions not bonafide.
Deductions fcom the &mpzosation.
Ma~~ner of pxyment or deposit of c0rnpo.n-
sr? tion.
Repayment of debentures, loans , etc.
Termination of managing agency.
Provisions for existing staff oflicensees.
Inveiltory of assets and information in regard
to doc~iments maintained by the hcenset.
Offccces by corporations.
Protection of action taken under the Act.
Power to make rules.
Effect of other lsws.
Powcr to remove difficulties.
Saving and Validation.
Rep221 of Madras Act XLIII of 1949r
".
___ . _ _ _ -- - ------ --r).n
1954 : CN. Act ls~ecriicitjt Supply 307 "
Wider takings (~cquidion) j .
\ t
'&TAMIL NADU] ACT No. XXIX OF 1954.9
\
fIhe T TAMIL NADU] ELECTRICITY SUPPLY UNDER-
TAKINGS (ACQUISITION) ACT, 1954.1
*
(Received the assent of the president ofi the 9th October
1954 ; first published in the Fort St. George Gazette
on the 13th October 1954).
An Act to provide for the acquisition of undertakings
in the 3[State of Tamil Nado] supyIyirkg electricity.
4[Wm~s it is expedient to provide for the acquisition
of undertakings other than those belonging to and under
the control of the State Electricity Board constituted
under section 5 of the Electricity (Snpply) Act, 15-3
(Central Act LIV of 1948), in the 3[State of Tanv; Nadu]
engaged in the business of supplying electricity to the
public ;
1Tkse words were substituted for the word Madras" by the
Tamil Nadu Adaptation of Laws Order, 1969, as amended by the
Tamil Nactu Adaptation of Laws (Second Amendment) Order, 1969.
aFor Statement of Objects and Reasons, see Fort St. George
Gazette, Extraordinary, dated the 3rd May 1954, Part JV-A, page 89, \
This Act was extended to the added territories by section 3 of,
and the First Schedule to, the Tamil Nadu (Added Territories)
Ext~nsian of Laws Act, 1962 (Tamil Nadu Act 14 of 1962), repealing
the corresponding law in force in those territories.
This Act was extended to the Ksnyakumari district and the Shen-
catt-th taluk of the Tirur-relveli district by section 3 of, and the First
Schedule to, the Tamil Nadu (Transferred Territory) Extension of
Laws Act, 1965 (Tamil Nadu Act 22 of 1965), reflealing the corres-
ponding law in force in that territory.
This Act shall cease to apply to any undertnking as dcfined in
section 3 (12) of the Tamil Nadu Private Electricity Supply Under-
takings (Acquisitiori) Act, 1973 (Tamil Nadu Act 30 of 1973) which
ha9 not vested with and taken possession of by tltc Government
under the provisions of the 1954 Act before the commencement
of Tamil Nadu Act 30 of 1973 by virtue of sect ion 23 (1) of the said
1973 Act.
8Thit: expression was substituted for the exrression State of
Madras" by the Tamil Nadu Adaptation af Lan7s Order, 1969, as
amended by the Tamil Nadu Adaptation of Laws (Second Amend.
ment) Order, 1969.
4 This preamble was substituted for the original preable
by section 2 of the Tamil 'Pu'adu Electricity Undertakings (Acquisi-
tian) Amendment Act, 1937 (Tamil Nadu Act \I I of 19571, deemed to have came into farce an the 13th October 1954. .
12353-20~
accbcr c~euy r..r~rl/p&y ~ag371 o ae~.\e LIVI. 4n4sa4~ JVV
Undertakhgs (Acquisition). B
i
BE it enacted in the Fifth Year of the Republic of India k I
as follows :-I. t
Short title, 1. 'J(1) This Act may be called the ?[Tamil Nadul i 1
extent and Electrmty Supply Under takings (Acquisition) Act, 1954. ~mmencement ,
(2) It extends to the whole of tllc 3[St;ite of Tamil
Nadu] .
(3) It shall colllc ;.ntu ibrce at oi~ce.
P i
I
Definitions 2. (1) 111 this Acl, un!css the contcxi o~llcr\\i.sc requires-
and inter- *
pretation. (a) ': act-o~mt yt,ar " ineails the licensee's financial f
year ; f.
(6) " accredited rcpresentativc " ineans the re*
presentative appoio~ed or tieeined to llave been appointed
under sectiolz 7 ;
(c) " annual irccount " means the accollnt of the
undertaking rcndcrcd to the Government annually
under and in accordance with the Electricity Act, or where
I no such accoui~ts has to be rendcrcd under that Act,
the accollnt of the u;ldertaking norlnally made up for
the account ycar of the undertaking and audited by a
certified auditor;
4[(~~) '' Board " means the Tamil Nadu Electricity
Board constituted undtr scction 5 of the Electricity Supply
Act ;]
(d) " doculncut " in relation to an. undertaking,
iilcludes its books, uc~ouiirs, registers, ~lzaps and plans ; - - - --.-- .-- - - - - - . - -.-- A ---- - -
I This sub-sicti(>ii wss ;*il),ii!ti ed for the origin:.! sub-section (1)
by section 3 01 .' )'::mi 1 I ;, 1: 1t;ciricity U it C~I ti1,kjl1g~ Acquisition
Amenc: -tilt AG( , 1957 (, ,117 ;I 'Niid~t AC: Vl Of 1957) deemed ta
hr,ve came in:a fblce (10 I ~LL I 2, h Octobcr i 954,
2 These wdrtjs &crG st~b>tili tcd f~r the kvortis v'n/Eatisas" by the
Tamil N;.tlu (iZ:l;l.pl:l !cii.! i f i.a\vs Orci.c'r, ! Shu, as amendec by
the Tamil Nac,u Ac ap;:~til 11 c f Laws (Secutl~! Amendment) Order
1960,
8 This expressl~n has .~bsi,ii~ted for the expression "State of
Madras" by the Tmil Na4u Rciala! ztiar~ ( f Laws Order, 1969 as
amended by the Tamii N:.itil ihiaptation of Laws (Second Anlend-
ment) Order, 196 '.
4 This clause \~;!s irl\~l le 1 by 5cct ion 2 of L hc Tarnil Nadu Electri.
city Supply Ut1iic~1:1kii-ig, (ilcqiti.;itiuri) Amei~tiinent Act, 1969 (Tamil
Nadu Act 11 of 1 !Itr)), v~hic,~ w:is clcemed to have conlc into force
on the 1st July 1957,
-- - . -
2 d/
1954 : T.N. Aat XXIX] Electr ieir y Supply 309
linderraki'g (Acquisition)
1
(e) " Electricity Act" means the Indian Electri- city Act, 1910 (Central Act IX of 1910) ;
(f) " E1ec:tricity Supply Acr " means ,the Electricity
(Supply) Act, 1948 (Central Act LIV of 1948) ;
(g) " fixed assets " includes works, spare parts9 stores, tools, motor and other vehicles, office equipment
and furniture ;
(h) " Government " means the State Government ;
(i) " intangible assets " means any amount paid
on account of goodwill, under-writers' commission and
such preliminary and promotional expenditure shown
as a debit'in the capital account of the undertaking, as
has fairly arisen in promoting electricity supply ;
(j) " licensee " means a person licensed under
Part I1 of the Electricity Act to supply t:lectrical energy,
or a person who has obtained sanction under section
28 of that Act to engage in the business of supplying electri-
city and, in relation to an undertaking taken over or an
undertaking which has ve3ted in the Government under
section 4, the person who was the licensee at the time the
undertaking was taken over or vested in the Government,
as the case may be, or his successor-in-interest ;
(k) " prescribed " means prescribed by rules
made under this Act ;
(I) Y~ndertaking taken over" means an under-
taking taken over by the Government after the 1st January
1951 and before the commencement of this Act ;
(rn) " vesting date " means, ir relation to . an
undertaking, the date fixed ut~der ~ection 4, sub-section (1)
as the date on which the undertaking shall vest in the
Government or in the case of an undertaking taken over,
the date on which it was taken over ;
(n) " works " includes electric supply lir-0 and any
lands, buildings, machinery or apparatus, required to
supply energy and to carry into effect the objects of a
licence or sanction for the supply of electricity, granted
under the Electricity Act ;
(0) other expressions shall have the meanings re P
pectively assigned to them in the Electricity Act or the
rule8 thereunder.
--- llsr
-0 -
I954 : X.N. Act XXIX] Hectricity SZIPP[, 311
Undertakings (Acquisition)
5. The compnwiion payable to a licensee, on whom Campen-
an order has been served und.er sect ion 4 or whose under- sation payable
taking has been t hken a ver before t he commencemenl'oaliaosee. to a kmme.
of this Act, shall be determined 6nder any one of the
Basis A, B, and C specified below, cas may be chosen
under section 8.
(1) Basis A*--(i) The compensation payable under
this basis shall be zn amount equel to twenty times the I
average net annual prcfit of the undertaking during a
period of five consecutive account years immediztetely
preceding the vesting date.
Explanation.--Bor the purpose of this clause, the net I
annual profit shall be determined in t he mt,nner bid down 1
in Part A or Part B, as the case may be, of Schedule I.
(ii) This basis shall not apply to an undertaking
which has not been supplying electricity fc r five consecu-
tive account years imneciiately pr'eceding the vesl ing dg.te.
(2) Basis B.-Tile cornpensat ion payable under this
basis shall be the aggregal e wlue of all the shares consi itut -
ing the share e.plta.1 of the und.erla,king, reckoned as
shown below :-
(a) In the case of shares issued on or before the
31st March 1946, the value of each shcre sh2.11 be reckoned
at its average value as ~rrivcd at from the . quotalions
for the.shstres as given in the offlcial list of the Madras
Shere Market on the 15th dey of each month and where I
such market was closed on that day, t hie quotations on
the next working dey, during the per icci cf three years
commencing on the 1st Apl il 1946 and ending on the 31st
March 1949 :
Provided th8.t this clause sh?,ll not apply if eny one or
-ore of the d.iff'erent cl~.sses of shares constituting the
capital of the undertaking were not beingregulcxly quoted
in such market during t he pericd of three years aforesaid,
or if such quotetions c'xringl he whcle cf anyone cf those
thee years were not based on actual transactions in such
year.
(b) In the case of shares issued on or br:fore the 31st
M~.rch 1946, if clause (a) does not apply but there h?.ve
been bona fide transfers in each of the ditlerent classes
of shares in every one of the three years aforesaid, and
such transfers have been duly registered in the appro-
priate hooks of the licensee, the value of each share of
312 EIeesri~iiy St4pply [I954 : I'.N. Act XXIX
Oi~~lertirliit~ys (Acquisitiorz) : -
each suclz cl3.s~ tll:l.ll be 1-cckoned ;,t one-t hircf of the
aggreg?!t: of its ,T~rce ktnt~unl p.vil*i:go v;~li.c.s for tlie I hrce
yezrs, the avc;r:!ge v;:lri,e PI- eech yc-:.r being determined
from the ~T~I~SL".C~!UIIS in ihet yea-.
(c) Whcrc ! lu crnounts c2.Jled fc.1- in respect of
any sh::rc ! e Torrcc! to in cIt:~isc (a) OJ- C~BLISC (b) 2re in
arrezrs, rhe valtlo i.1' such sh::rt. sh:.li bc taken to be a
sum which be:~.rs to it 5 vil.luc cs rcckoncd L! rider ckus-e (0)
or cL?usc (b), ;l.s ;tls w.sc 1xw.y bc, 1 h~. sc?luc propoifion
as the amounk paid up bars it? t hc i'iill ;:ruouiit pi>,yit.ble
in respect of 1 he sh:~rc.
) I ti s SIS is 1 I ili~ 31~I Mrrch
1946, thx xggseg -.te vi:lt P sll:.ll E-ru k :?.kc n 1 cl bc r he zmcu nt
actuc.lly pzid i 11 1 espect ! hcrc; f (inclt- c i 11g 1 he pl cmi~ m, if
any), tog:thl:r with. an zdc,i'iorn:l ::LIIII by ~,:y iif solatiurn,
c;?lculated 2.t 1 he i-~tc of ' wo pcr tin' 5~ ev~ry completed
year prececling t1.c vesting crp.ec !.-;I i Ilc i:n~ount so mid
which wc:s i n exislerlcc d i:'-iiig the whole such ye as as
shown in the licelxsre's books :
Provided t 1v.t iio pzrt cf st~cl~ F.~IIC;U 111 sl~?,ll be eatitled
t~ a solztiu~i~ cxcirl~j.ing Ten per ceni ! Ilc~((-i.
Explunotion.-.-This basis s11;lll not apply anlesa
clause (a) or clause (6) is applicable.
(3) Basis C.-The compensation payable under
this basis shall ba the aggregate value of the amounts
specified below :-
(i) the book value of all completed works in
beneficial use pertaining to the undertaking and handed
over ; o the Go- rcr~~rnent (excluding works paid for by
consumers) lesLs d.epreciation calcalated in accordance
with Schedule 11:;
(ii) the book value of all works in progress handed-
over to the Government, excluding works paid for by
consumers or prospective consumers;
(iii) the bcok i7a1ue of all stores including spare
parts hnnd~il 01 er .ill.- Gcn-en::nex: :i::,! 12 &r: caje
*. - - - - - -- - ,~fuwL! s:J:23 :*-:: <:-::- :-LYc. 5:*-- 2 ---- -; -2, - --
.. . . - 'a ti\ i~? :b'>:. - .-:..& Q<cJ~ CI~ZT fcc2,j zzi2t j i~ b~c an
tb3 vcjring Li~iz .:rid ::>ii&d OVZ~ id ihf Guremment /es.,-
depreciation calculstlrd in accordance with Schedule 11;
(v) the book value of dl plant and equipment
existing on the vesting date but no longer in use owing
to wear and tear or to obsolescence, to the extent such
value has not been written off in the books of the licensee
less depreciation calculated in accordance with Schedule 11;
(vi) the book value of all intangible assets, ts
the extent such value has not been written off in the books
~f the licenseo ;
(vii) the amount due from consumers in respect
of every hiire- purchase agreement referred to in sac-
tion 6 (2) (a) (ii) less a sum which bears to the difference
between the total amount of the instalments and the
original cost of the material or equipment, the same
proportion as the amount due bears to the total amount
of the instalments;
(viii) any amount paid actually by the licensee
in respect of every contract referred to in sectlull 6 (2)
(a) (iii) ;
(ix) an additional sum by way of solatiurn- . I
*[(a) in case the licensee is a person licensed
under Part I1 of the Electrjcity Act, at the rate of ten
per cent on the y7nlue refcired to in sub-clause (ii), at the
rate of five per cent on the value referrcd to in sub-clause
(iii) and at the rate specified in the licence in respect of
compulsory purchase, or whe~e no rate is specified in the
licmce, at fifteen per cent on the values referred to in
sub-clauses (i) and (iv) ;]
(b) in case the licensee is a person who has obtained
sanction under section 28 of that Act to engage in the
business of supplying electrical energy, at the rate of ten
per cent on tlie values referred to in sub-clauses (i) and (iv)
and at the rate of five per cent on the values referred to
in sub-clauses (ii) and (iii).
- ...-
1 This clotrse wa? s~~bslit~~ted for I he origi17;ll C]CUSC (a) by
scct ion 4 of tl~e 'i*:am,l N::du Elect rich y ul~dcrtczkings (Acquisi-
tion) Amendmc~~t Act, 1957 (Tamil Ncdu Act V1 of 1957)
deemed io have come into force an the 13th October 1954.
314 EIL7ctricaitj Sipply ji954: 'L'.N. Act XXIX
~~~dertsiiittgs (A cq~11'Sil" ~QIZ)
E~plr.~-fion.-(l j For the purposes of Basis C; the
borl- value of any fixed asset mean5 its original costs, and
shall compiise-
(i) the purchase price paid by the licensca fsr the
asset, including thc cost of delivery and all charges
properly incurred in erectmg and bringing the asset into
beneficial use as shown in the books of the ~rndertaking;
(ii) interest clwrges on capital expendit tire incurred
from borrowed nlolley and shown in the books of the
undertaking as properly attributable lo the asset up to the
date of bringing it into beneficial use, at a ].are ilot excee-
ding six per cent per annum;
(iii) cost of su,)ervision actually incur-red, Sut not
excwding fifteen per corzt of the anzount refcrred to in
paragraph (i).
(2) Whero any asset was acquired afwr ttle expiry of
the period to which the latest annual account relates,
or where no annual account has to be rendered under the
Electricity Act, tl e book value of the ass2ts s11all be such
sum as may be dec,,ded upon by mutual agreement between
the Government a~ncl the licensee.
Vesting of the 6. (1) If compensation is payable in respect of an under-
undertaking assets. Or taking under Baris A or Basis B, all property belonging
to the undertaking including fixed assets, cash , securities,
investments, documents and the like and all its rights,
liabilities and obligations as on the vesting date, shall
vest or? shall be deemed to have vested in the Governnlent:
Provided that liabilities arvd obligations not illcurred in
a bonafide manner shzll not vest or be deorned to have
vested in the Governine~~t-
(i) in so far as they are in excess of the vnluc on the
vesting date of t'l~ corresponding assels, if ;rnv, vesting or
deemed to hcve vested in tlte Goveri~rncrzt ; or
(ii) where there ,Ire, no corresponding assals which
vest or are deennod to Zra.ve .~ested in tlxs C~>vl;ri~lnanr.
Expla~rutic/i.z.----For- the purposes of this sub-section,
"undertaking" incltlctcls evcjey b3*~:-.-~~ ~.l~,rrie~~ or1 by the
licensee, the fuizcis o~" \v hie11 form part c.rt' thw frtnds of ttle
licensee.
1954 : T.N. Act XXIX] Electr ici . y Sicpply 31 5 Underrak ings (A cquisit ion)
(2) (a) If compensation is payable in respect of an
undcrtaicing under Basis C, only the property, rights,
liabilities arid obligations specified herein shall vest or
be deemed ro have vested in the Government on the
vesting date--
(i) al! the fixed assets of the licensee and all
the documents relating to the undertaking ';
(ii) all the rights, liabilities and obligations of
the licensre under hire-purchase agreements, if any,
for the supply of mattrials or equipment made bonafide
before the vesting date ;
(iii) all the rights, liablities and obligations of
the licensee under any other contract enle~ed into
bonafde before the vesting date not being a contract
relating to the borrowing or lending of money.
(b) All the asscts specified in clause (a) (i) shall
vest or shall be deemed to have vested in the Government
free from any debts,mortgages or similar obligations of the ,
licensee or attaching to the undrrtalang :
Provided. that such dcbts, mortgages or obligations
shall attach or shall be deemed to have attached to the
compensation payable under this Act for the assets.
(3) In the case of all undertakings which vest or are
deemed to have vested in the Government under this Act,
the licence granted or the sa ncticn given for the supply of
et-icity shall be deemed to have baen termin. tee, on the
vesting ckte and all the rights , liabilitic and obligatio- of .
the licensee under any agreement to supply electricity
ontered into before that date shall devolve or shall be
deemed to have dolvolved on the Goverr?.ment:
Provided that where any such agreement is not in
conformity with the rates and conditions of supply appro-
ved by the Government and in force on the vesting date, the
agreement shall be voidable or shall be deemed to have
been voidable at the option of the Government.
(4) In respect of any undertaking to whichsection 4
applies or any undertaking takenover, it shall be, and
shall be deemed always to have beeln aw ul ti r the GLVL A -
ment, after removing any obstruction that may bb L- might
have been offarod, to take possession of the entire under-
taking or, as the case may be, of the fixed assats and of
all documents relating to the undertsking which the
Government may require, br required for cmying it on,
316 Electricity S,rppt~ [I934 : T.N. Act XXIX
Undertukitzgs (Arqrrisit ion)
Appoint men t 7. (1) Every licensee may, within thrm months of (he
of a sole receipt of an ordei. under soction 4, sub-section (I), inti-
resresentaiive. mating the vesting date or, in the caso of an undertaw
taken over, within three months of the commencement
of this Act, appoint an individual who may be the rnanagng
agent or a director or an officer of the licensee or l[any
other individual] to act a: his solo and accredited rrprosan-
tative in connoxion with the handing over of the under-
taking Qr the fixed assats, as the case may be, to the
Government and perfarming on behalf of the licanoea the
functions herainaftt r specified.
(2) Where the: licensee is a company registered under
*the Indian Companies Act, 1913 (Central Act VII of
19 13), the appointment of the accredited rapressntative
shall be made by tho shareholders of the company at
a meeting specially convened for aha purpose.
(3) Nothing in the foregoing sub-sacti02 shall be
deemed to require a licensee of an undertaking taken over,
who has appointed an individual as his sole and accredit&
representative, to mak~ a fresh appointment after the com-
mencement of this Act; and the .said representative shall
be deemed for all purposes to be the accredited representa-
tive appointed under the foregoing sub-sections.
(4) Where the :~ccradited roprasantativc reaigns OE
dies or becomes incapable of acting or is ir the opinion
of the Government, incompetent or dishonest or where
the appointment of such representative is set aside or
declared void by corn;>eten t authority, tha Government
shall call upon tho licensee. to appoint within six waeks,
a[another individual] as his accreditad representative.
(5) The remullerntion of, and the expel-Jiture incur-
red by, the accreditec! repmstlntative shall be, and shall
be deemed always to have been, payable from the
compensation deposited or deemed to h~ve been depositd
under this Act and shdl hava and shall be deemed always
to have had priority over all other d~bts and liabilities. - - -- -- -.-- - - --- --- I_- _ ___-
1 These words were suhstitu!ed fbr tfle war(ls "or. any c)tlrer
person" by section I c;f the Tamil Nadu Bl~~ctr.icity Urlclcr.r;,kiilgs
(Acquisition) Atncri(lrncn1 Act, 1957 (T::mil N:ld{i Act VJ fpf' 1 #)57),
deemed 10 have t.clrnc intc) iorcc ort thc 13lll 0ctoirc.t 1054.
Whcsc wortis wci'c. substitut ccf fikr ( tic wcrrtla * *;t~luthcr. I
personcc by sect ion S(ii), ibirl.
* See now the Cornpaflies Act, 1956(Centrai Act 1 of 1956)
1954: T*N. Act XXM] Electricity Supply - 319 --
- -- --
L
Under takings (A cqu hitton)
(6) assurances conveyed, and all statements made,
by such representative (inclusive of a representative whose
appointm~nt is subsequently set aside or declared void
by competent authority) shall be binding on the licensee.
(7) Where the licahsee does not appoint an individual
to act as his sole and accredited representative under sub-
section (1) or sub-section (4), the functions hereinafter
ansigned to the accredited representative shall be performed
by the licensee ; and all references in the rest c f this Act to
the accredited representative shall be construed as references
to the licensee and any referonce to a pe~iod of time to be
reckoned from the date of appointment of the accredited
representative shall, in such a case, be reckoned from the
'
last date on which such accredited representative could have
8. (1) Within one month of his appointment, or such Choice of baa of compensa- h~the~ time as inay be granted by the Government, the tion.
accredited representative shall int ima ta to the Governmem
in writing which basis of compensation, A, B or C, shall be
I
adopted in respect of the undertaking.
(2) The choiw of the basis of compensation once inti-
mated to the Governmefit shall not be open to revision
except with thei~ concurrance.
(3) Whare no choice has been intimated on behalf of
the undertaking within the time allowed by sub-section (I),
tb.e Government shall declare the basis undl:r which com-
pensation will be paid fo~ the undertakilsg and that basis
WE be binding on the licensee as if the choice had been
duly made in accordance with the folqegoing provisions.
(4) Where in respect of an undertaking taken over,
the accredited repr ssentative has intimated to the Govetn-
compensation, Ai B or C, should be
tlzo undertaking, such intimation shall
been made under. this section and is
dec1ara.I not open to sevisiorr exccpt with the con-
of the Go~~~mt:rmt.
rnment are of opinion that any 1 icensee ~e~~t oftva.
st October 1947, disposed of any fixed sactions not
by way of sale, exchange, gift, lease OE other- bon*de
ed capital expenditme otherwise thahan in the
.a 1- -"' - . . .A .. .*I* r().L%IL1
~&rtakin& (Acquisition)
normal course of events with a view to benefit unduly the
licensee ol: some other parson and thereby caused loss to
the Government ai iuzcecil ing owners of the uncit.rtaking,
the Goilern1n:ilt sl-iall be and shall bi: deemed always to
have been entitled to doduct from the compensation payable
to the licensee under this Act, an amount which they consi-
der or considered to be the loss sustained by them:
Provided 'hat notice of r he intention to nlake such
deduction shall be or shall have been given 1.0 the licensee
within one year from tha vesting date.
Dedunions 10. (1) The Goverllrnent shall be and shall be deemed
fror.1 the always to have baen entitled to deduct the following sums
Comp@nsatl~n*from the compensation payable uotler this Act to a
licensee :-
(a) tha amount, it'any, alroarly l~artl 11) ;~tlvi~~lco by
way of c,>~-t~pensai ion ;
(b) the amour L, if any, specified i 11. sect ion 9 ;
(c) the amount due:, if any, froin lhl: lieellsee lo
t1le Governlnent '[or the koard] fbr the emxgy supplied
by the Govrsnment or tile Board/ boforc tlze iesi i1l.g
date ;
(d) all othew a.111ounis aud anens:; of interest, if
any, thereon due i ro m licensee l o tho (iovecninen t
'[OF tho Board] except loans and nrroars of interest, if
any, thereon ;
(e) the atnoul-11, if any, equivalilnt to 'ha loss
sustained by the Government by reasoil of any property or
rights belonging o the :I 11deri aking no! having he011 handed
over to the Govtrnnlgni, the arnouut, of s~ich loss beiug
deemed to be- I
(i) in cases whcrc cornpensat ion is payable under
Basis A or Basis B, tile market value on * he vosting date of
such property or rights, together with any income which
might have been realized by the Government if the proporty
01 rights had been handed over on the vest -ng (late ; and
^- "_ - -- -.- - - - I--_- --__ ll__l___
iThese worcl, wcrcb i,i.;er.ted b;), secti,)n 3 !i) of ?l~e T..niil
Nadu Elecrricity St~l?;)ly Un(!el.takini\s, (Acc~~~is~~~oi,~ k~ineridnic~~f
Act, 1969 (Tamr l Nltciu /\cl 1 1 of 1W;C)) wltich was ct~+emed to
have come irto loicc oil ~JLG 1st July 1957.
--- --
\
(ii) in cases whete compensation is payable I L
undei Basis C, the amount by whch the market value of
such property or rights exceeds the compensation payable
therfor under this Act, together with any income whicb
might have been realiied as aforesaid.
(2) Iri addition to the deductions specified aboves
the Government shall also be and ba doernad always to
have been entitled to make the followink; deductions :-
(a) in cases where the compensation is payable
under Basis h a ELL 2, any sum which during a
period not exceeding three consecut ivc account years
immediately befotre the vesting date has been distributed
as profits, but is not correctly so distributable ;
(6) in ca,s:s where the compensation is payable
under! Basls C-
(i) the amount of all loans due from the licensee
to the Governmant '[and the Board] and arzeaFs of
i nterast, if any, thereon ;
(ii) a portion of the amount of solatium bearing
the same proportion to the total amount of solatium,
as the amount of all loaas due to the Government "and
the Boapd] from the licensee on the vesting date beam
to the aggmgate of-
(a) the paid up' share capital of the licensee not
being a local authority, or the value of the capital assets
shown in the capital account of the undertaking in
(c) the amount of all loans due to the Govern-
en$ '[and the Boaxd] as aforesaid ;
320 Electricity Supply [I954 : T.N. Act XXE
Undcrtci kings (Acquisition)
which according to tha books of the licensee ara due from
the consumers to the licensee for energy supplied by him
before that date ;
(iv) all advances from consumers and prospective
consumers, and all sr!ms which have been or ought to be
set aside to the c~edit of the consumers' fund in so far.
as such advances 0% su111s have not been paid over by
the licensee to th~ Government ;
E.xplnnlrliot).---.-For the purpose ij!' lllis clause,
'consulners' rund' sh;,ll, in the case of tho rii~dertaking of
a licensee being ;r local ;~u..hor;t\r. I Iho itinount refer-
red to as such (13 the bulk suppfy agrwimi. (sI*, where no
su~h reference has b.xn r1.lad.e in the bulk supply agree-
ment, th,a cct prc #fit% ol' the upldertakin~ ren1;iilliizg afte~
effecting tl~e ::jppr(.qy i"ions to the 3cnei.al T!il*~iLs cf the
local authority in ;\.ccoFdr;tllctl wit11 tilo turms of tl~c said
agreement. In thcr cast of the u~zdcst~rkilll?; <)I" u licetlsea
othep thdn a local ;tuii~ority, for any ;~ccount yeltr prior to
the data on whiclz tl~c Sixth SchcJulo to lhc Etoctricity
Supply Act cainc i~zi,o force, it shall nlaan Il~e amount
referred to as such. ilt thc bulk siLppIy agi.uctncnt and, for
any account year on 2nd from the said date, it sliall mean
the amount spesifiod i.1 p;.lragraph i 1 ( 1) of the said
Schedule as the a~noant to be set apart For distribution
to consumers ;
(v) all depo dts ~~*tado by, tind dl ailli-is due to the
staff transferred to the Government on ac~ount of' Provi-
dent Fund or othor hcr~eficial scho~ncn, irl so t'ar. as such
deposits or sulus Itavt not been paid ov.:r by tho licensee
to the Goverlzljzetlt, le.ss the amounts which the Govern-
ment are satisfied are dtic to the licenses froin tllc inembers
of the staff so transferred ;
nrovidea that 119 d~duction sllail be aaiidi: it1 pur-
suance of pavagr;iph (v), in so far as tho depo~its or sums
aforesaid nny be in tl~e custody of lrust@~S urrcrioi ti valid
deed of trust*
(3) In tho a~~ic: ~".sfcrred to in the foragoing proviso,
the Goveriuncot slull have, znd shall be deemed always
to have had pa~ct ~CP ~'r=quire the trrrstees to trarl~fer th(2
funds with ther14 A!: .I rhs se~uritiej ~iid oth.l.: properties,
if any, in ;,-h;<h rha .iame may has.@ bsn irive 14, in
- -
- --
- -. - . -
Electricity su& 32 1
Undertakings (Acquisition)
the staff transferzed to the Govern.
shall be completely discharged in
0, or enforceable against, the
, securities and other properties so transferred.
4
n due to a licensee under this
d in cash, as hereinafter pro+
(2) Within four months from the ve2ting date in
the case of a2 undertaking which vests in the Govem-
ment in pursuance of an order unde~ section 4, sub-sec-
tion (1), and as soon as may be after the commencement
of this Act in the case of an undertaking taken oXr-r. the
Government shall estimate roughly the compensation
payable to the license0 under this Act.
(3) Three-fourths of the amount as so estimated
shall be paid by the Government to the licensee, where
it is a local authority after deducting any amount paid,
whether before or after the comrnencemnt of this Act,
as or towards the coxnpensation payable arid the amounts
referred to in section 10.
ther licensee, the; Government
Eank of India or any other
ment for the purpose (which
inafter refellred to as the Bank)
as estimated under sub-section
om tlie amounts referr d o in
Explanation.-Where the amount to be paid or
deposited under sub-section (3) or this sub-scction is equal
to less than the amount to be daducted tharefro~n as
aforesaid, no payment or deposit need be made under sub-
section (3) or this wb-secrio11.
. (5) Nothing in sub-section (2) or sue -section (4)
sllall require the Government to estimate roughly the com-
pensation payable to a licensee under this Act or to deposit
in the Bank three-fourths of the amount as so estimated
after deducting ther :from the amounts referred to in section
10, in a case where, in respact of an undertaking taken
over, the Government have, before the comenc~rnent of
this Act,estimated roughly the omp pens at ion payable to the
Manner df
p.?yment or
deposit of
compen-
sat :on-
licensee and have deposited in Iha B2tn k t hree-f'ourths
of the amount as so estimated after deducting therefrom the
amounts referred lo in ssction 10 ; and the estimate and the
deposit made by the Govei~i~~i~ub il~ any such case shall be
deemed for all pulposes to be an estimate and a deposit
made under sut -section (2) and sub-section (4), respectively.
(6) (a) Within one year from the date on which the
compensation was estimated urldor sub-section (2), the
Governmcnt sllall doterrnine the :mount of colnpensation
payable in respect of the undertaking and yay to the licen~oci
or deposit in the Bank the balance left from the amount
afcres~id ~ft er deducting I htrcfrom (n)lhc am( unts referred
to in section 10, P [la (b) the payrnent or &posit prcviously
made under sub-sccfion {3) sub-sect ion (4) as the case
may be.
(6) Nothing in cl~~usc (a) shall ~Szquise the Gov~rn-
m~nt +o d~tcrmine !hi: amount of compcnsarion payable in
respect of the undist~iking or to make a dc posit in :j, Bank
jn any cclsc wl~cra in rcspect of an undertaking taka over,
the Gov~rnrnent hgve deter mint a the am~unt c f compen-
sation payablt in rcspect of tb.c undert~king and have
deposited in the Bank the balance left from the amount
aforesaicr. -*"%r deducting therefrom the amounts referred
to 111 s~ ctZon 10 and the deposit p~eviously made or deemed
to have be~n made under sub-section(4); and the determina-
tion and the deposit shall in such a case be deemed to
have been made under clause (a).
(c) Where the accredited rt presentative clams or
in the czse of an urlderstakrng taken over has clz~imed tbat
compensation is or was due to tbe licence^ QVCr 2nd above
that rs deteimined 01 deemed tc hzve determined by the
Government undcr clause (a), the r mor nt ,if any, to which
it is finally dccidcd in pursuance of thic Ac! th?t the
licensee is cnt itled, ?hall be paid to t?le licernee or deposited
in the Bank, 2s the case may be, within one month from
the PI e on which such finel decjsion is arrived at.
(d) All ?mounts lirble to oe ppid or depceited in
pursumce of cbuse (a) or clarlse (c) shall bear interest at
three per cent per snnum from the date of erpiry offow
mom hs from the vegting date.
- . 1154 : T.N. Act Myl Electricity Stlpaly 323 --
U.~dvrtakings (Acquisition)
(7) In the case referred to in the Explanatica to sub-
section (9, that is to say, where oc, paym~nt or deposit has
been previously macle, the Gove~nment shall pay to thg
licensee or deposit in the Bank the amount of compen-
sation determined under ciause (u) of sub-section (6), afte r
deducting therefrom the ardountsrefened to in sectirn 10,
together with interest on the amcunt to be paid or
depoi~itiiled, st three per cent per annum fro= the date
cf expiry of four months from the vesting date.
(8) The amount of cornpensetion as estimated undm
sub-section (2) and the amount of compensaiion as hally
detmmined under sub-section (6) shall be intimated forth-
with to the accredittd representative and he shall, within
two weeks of such intimation or such further time as may
be dowd by the Government, state in writing whether
the amount as determined by the Oov@mrnent is agr6ed to
by him acting on behalf of the licensee.
(9) Every person claiming any amount deposited in
the Bank under the foregoing sub-sections, or any portion
thereof, shall apply to the Special Officer appointed by the
Government in this behalf, within three months from the
date of the deposit or within such further time as the Special
officer my allow.
(10) (a) The Spacial Officcr shall, as expeditiously as
possible, inquire into all claims made under sub-section (9)
and determine the persons who, in his opinion, are entitled
to the amount deposited and the sum to which each of them
Is entitled and disburse the same to him.
(b) The Special OEcer shall have the same powers as
are vested in a Civil Court under the Code of Civil Pro-
cedure, 1908 (Central Act V of 1908), when trying a suit in
respect of the following matters ; -
, (i) enforcing the attendance of any person and
~xamining him on oath ;
(ii) compelling the production of documents; a d
(iii) issuing commissions for i hr caa mination of
witnesses.
The Special Officer shall also have such further
powers 8s may be prescribed.
b,
125-321 A
r,
&
e
licensee and haw deposited in Lhe Bank throe-fourths
of the amount as so astimatad after deducting therefrom the
amounts referred to in section 10 ; and the estimate and he
deposit made by the Government in any such case shall be
deemed for all plrrposes to be at1 estimate and. a deposit
made undar sub-section (2) and sub-section (4), respectively.
(6) (a) With-ill ons year. from tho date on which the
compensation was estimated under sub-section (3, the
Government shall dotarmine the amount ot' con~pensation
payable in respect of tho undertaking nt~ti pay to tho Iicensae
or deposit in the Bank the balur~cc loft from tho amount
afcres~id c?ft cr dcducei~>g 111~rcf1-0m (o)th~ :trn( unts referred
to in section 10, ma (6) the payincnt or dcposit previously
made undcr sub-scction (3) or sub-sect ion (4) as the case
may be.
(b) Nothing in clause (a) shall require the GOVL~II-
m~nt to dcf crminc the amount of compensation payable in
rrspcct of the und'rtnkirg or to makc a dr posit in a Back
in any casc wIzc'rc in rzspect of ol~ undertaking iakcn over,
the Government hJvz determinto the amcunt cf compen-
sation payablt in respect of the undert~king and have
deposited in the Bank the balance left from the amount
aforesaid* after deducting therefrom the amounts referred
to in stct:on 10 and the deposit previously made or deemed
to have be~n made under sub-section(4) ; and the determina-
tion and the deposit shall in such a case be deemed to
have been made under clause (a).
(c) Where the accredited rtpresentative cla~ms or
in the czse of an understaking taken over has chimed that
compensation is or was due to tbe licencet ova- 2nd above
thatrs deteiminetl 01 deemed tc have determined by the
Government unc' er clause (a), the a mor nt ,if any, to which
it is finally decij~rl in pursuance of this Act tbet the
licensee is entitlcd, hall be paid to the licemee or deposited
in the Bank, esthecasemay br, within onc month from
the d?te on which such final decision is ariivcd at.
(d) A11 ?mounts lirble to- oe p?id or depcrited in
pursuence of clause (a) or clarlse (c) shall bear inleiat at
three per cent per snnum from the date of elrpiry of fow:
mom hs from the ve~~ting date.
II
1954 : T.N. Act XXIX] EZectricity .Tupply 325
Undertakings (Acqr{isition)
may be prescribed, it shall be determined by an arbitrator
appointed by the Government who shall b: . District Judge
or a person who is a retired High Court Judge or a retired
District Judge :- -
9
(a) the ainount of the compeni'ation payable in res-
pect of the undertaking as a whole or any component part
thereof ; I
(b) whether any property belonging, or any right.
lia.bi:ity or obligation attaching, to the undertaking vests
in the Government ;
(cr whether any fixed asset forms palt cf the
undertaking ;
(d) whether any contract or hire-purch ase agreement
or other contract referred to in section 6 (2) (a) (ii) or (iii)
bas been ,entered ir;l:o bnnn fide or not ;
(e) whether any agreement to su-ply electricity entered
into by the licensee j~rior to the vesting date is of the nature
referred to in sectioii 6, sub-section ('9, proviso ;
(f) whether the Government are entitled to deduct
any sum under scction 9 or section 10
(2) Subject to the provisions of this section, the provi-
sions of the Arbitration Ac!, 1940 (Central Act X of 1940),
shall apply to all arbitrations under this Act.
(3) The arbitrator may, if he thinks it expedient to do
so, call in the aid of one or more qualified assessors andi .
hear the whole or any part of the reference with the aid
of such assessor or assessors.
(4) Where, in respect of an undertaking taken over, an
award in a dispute of the nature referred to in sub-section (1)
has been made by an arbitrator appointed by the Govern-
ment, such award is hereby declared to have been validly
made.
14. (1) Any agreement between the licensee and his Termination
managing agent or managing director (by whatever name of managing
known) shall, notiwithstanding anything to the contrary in at~nc~
such agreement, be deemed to have been terminated on the
326 E/ec/ri~~i~~' Sipply 11954: rr.N7 Act XXlX
12 rzdert hl: z'itgs (A cquisi t iolt )
vesting date in so fi~r as it relatcs to the undertaking; and
the managing agont or managing tf iractor shall not be en-
titled to any renmncration or c ~mmissio., I'or suctl period
of the agreement tts rnay remain unexy>ireil on tho vesting
date but shall be entitled only to compensation as deter-
mined under su b-section (2).
(2) Where l11e agreement was in force on the 1st
November 1949 and continued to be in force until the vest-
ing date, without having been i.cnewcd or replaced by a
fresh agrccmcnt r'lx a t'urthcr puiucl, t ltc managiizg agcat
or managing &rector shall, lor sucll periocl of thc agrec-
m ,nt as may re~cain unexpired on the vesting date or
for a period of two years, whicheyer is less, be entitled to
compel,., .+;on calculated at the following rate per annum,
t -,'nely :-
The average annual ordinary remuneration (including
purchasing commission and office allowar,ce) to which a
~nanaging agent of the licensee would have beerr entitled
under paragraph XI Jl of the Sixth Scl~edulc to the Electri-
city Supply Act during a period of t\vo complete account
years iinmediately preceding the vesting date.
(3) Ally amount payable to a managing agent or
managing director undei sub-stetion (1) shall be payable
from the compensation depositcd 01- daemed to have
been dep ,sited uuder this Act.
Plovisions 15. Notwithstanding anything to the contrary in any
r or existing contract or agreement or in any law for the time being in
staff of force, the following provisions shall apply and shall be
IiGensees* deemed always to have applied in regard to the persons on
the staff of the liccnsee immediately before the vesting
date:--
(I) The Goverilrnent shall have and ~11alI be deemed
always to have had power to terminate the services of an.4
such person after giving him three calender months' notice
i1- writing or paying him three months' pay in lieu of such
notice.
(2) Persolzs whose services arc retailled shall be
by sue!! rules as the Government may, from
time to time, mako in regard to them.
--
A- - - --- - - *- - , *
ct XXIX] Elecfri city SIC~~I~ 327 . . j
Undertakfngs (Aapdsition) a*
16. (1) Every licensee shall within three 'months from Inventory of
date on which an order undtr section I, sub-section (I), assets and
information served on him, 01 such further time as may be allowed in regard to
nment, piepare and hand over 10 them documenh
ntory of all the assets belonging to his maintained
of its documents. by the licensee.
(2) The licensee shallalso write up t he accounts of his
undertaking up to the vesting date, get t:~em audited, and
submit themtc the Government within three monthsfrom
that date or such further time as may be granted by the
(3) The licensee shallalso, within such time as may be
specifi~d by the Government, furrish to th~m such infor-
mation and particulars as may be required by the Govern-
ment in rrgard to tExcerpt shown. Open the full act in Lexace.