Gujarat High Court
Pashchim Gujarat Vij. Co. Ltd vs Kodinar Rural Electricity Co. ... on 15 June, 2022
Author: A. P. Thaker
Bench: A. P. Thaker
C/SA/8/1994 JUDGMENT DATED: 15/06/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SECOND APPEAL NO. 8 of 1994
FOR APPROVAL AND SIGNATURE:
HONOURABLE DR. JUSTICE A. P. THAKER
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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PASHCHIM GUJARAT VIJ. CO. LTD
Versus
KODINAR RURAL ELECTRICITY CO. OPERATIVE SOCIETY LTD. & 3
other(s)
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Appearance:
MR MD PANDYA(548) for the Appellant(s) No. 1
MS MAYA S DESAI(285) for the Appellant(s) No. 1
MR JITENDRA M PATEL(620) for the Respondent(s) No. 2,3,4
MR RC KAKKAD(389) for the Respondent(s) No. 1
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CORAM:HONOURABLE DR. JUSTICE A. P. THAKER
Date : 15/06/2022
ORAL JUDGMENT
1. The present Second Appeal is preferred by the Original-defendant No.2 being aggrieved and dissatisfied th with the judgment and decree dated 30 September, 1992 Page 1 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 passed by the learned Assistant Judge, Amreli dismissing Regular Civil Appeal No.111 of 1994 and thereby confirming the judgment and decree dated 30.07.1984 passed by the learned Civil Judge (J.D.) Kodinar in Regular Civil Suit No. 235 of 1980.
2. The respondent No.1 is original-defendant No.1 whereas respondent Nos.2 to 4 are original plaintiffs and the appellant is defendant No.2. For the brevity and convenience, the parties are referred to in this Judgment as the status assigned to them before the learned Trial Court.
3. The plaintiffs as the heirs of one Danabhai Bhagwanbhai instituted Regular Civil Suit No.230 of 1980 in the Court of Civil Judge (J.D.) Kodinar for compensation of Rs. 20,000/- for the death of Mr. Danabhai Bhagwanbhai and of his goats, who died as a result of electrocution attributable to the failure of maintenance of poles, wire and power supply by the defendant No.1 - Kodinar Rural Electricity Cooperative Society Limited. It was alleged that the said Society had installed electric poles in the sim of village Velan in the field of the plaintiffs through which 11 KV electric Page 2 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 power line was passing. That the wire over the said pole was broken and because of such live broken wire, on 15.3.1980 an accident occurred which took life of Danabhai Bhagwanbhai as well as his four goats attributing negligence to the Cooperative society. The suit was filed after giving notice to the said society under Section 166 of the Gujarat Cooperative Societies Act for recovery of compensation of Rs.20,000/- and ancillary reliefs thereof.
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4. The suit was resisted by the 1 defendant on merits denying each and every allegation made in the plaint. It was contended that the assessment of compensation was hypothetical without any basis. That, the suit is not tenable for want of requisite notice. That the Court had no jurisdiction. It was also contended that it was because of act of god and breaking of wires due to cyclonic winds on the sea shore. There was no negligence on the part of the society or its employees in the matter of maintenance as alleged. 4.1. The defendant No.2 filed Written Statement at Exh. 28 and had denied the claim of the plaintiffs and had pointed out that a Liquidator was appointed of the defendant No.1 Society and that the claim should be Page 3 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 made before him. That the assets were handed over to the defendant - Board without any encumbrances and therefore, there was no liability which could be fastened on the defendant No.2 in as much as the incident had happened prior to the taking over of the assets by the Board.
5. The Trial Court framed issues at Exh.29 and after recording evidence and hearing the parties, came to the conclusion that the plaintiffs were the heirs of deceased Danabhai Bhagwanbhai and has also concluded that the electric poles were installed in the field of the plaintiffs by the defendant No.1 - Cooperative Society through which 11 KV electric line was passing. It has also held that the defendant No.1 - Cooperative Society was under an obligation for the maintenance of line and that the accident had occurred due to negligence for want of proper maintenance of the lines by the defendant No.1. It has also concluded that the accident had occurred on 15.3.1980, wherein deceased Danabhai Bhagwanbhai and his four goats were died due to broken electric wire, which had happened as there was a broken live wire in his field.
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C/SA/8/1994 JUDGMENT DATED: 15/06/2022 5.1. The Trial Court has also concluded that requisite notice as required under the provisions of the Gujarat Cooperative Societies Act was issued to the Registrar of Cooperative Societies, Amreli. It has also concluded that the defendant No.1 - Cooperative Society had failed to establish that the accident was as a result of an act of god beyond human control and that no reliable evidence was produced to establish to the effect that the wire was broken due to heavy winds of the sea-shore. The Trial court has also negatived the contention of the defendants regarding the issues that the jurisdiction of the court was barred. It has also observed that the defendants are liable to pay compensation and ultimately decreed the suit of the plaintiff to the tune of Rs.20,000/- with ancillary relief of interest. The Trial Court has also observed that the second defendant-Board was liable for the suit claim. It has held that the second defendant- Board has accepted the properties of the first defendant and therefore, it was obvious that the second defendant was liable to satisfy the liability of the first defendant which may have arisen before taking the possession of the properties of the first defendant society.
6. Being aggrieved by the said judgment and decree of Page 5 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 the learned Trial Court, the defendant No.2 preferred Regular Civil Appeal No.111 of 1984 before the District Court, Amreli, which came to be heard by the learned Assistant Judge, Amreli. The learned Assistant Judge rejected the appeal filed by the defendant No.2 i.e. the present appellant.
7. Being aggrieved by this judgment, the defendant No.2 preferred the Second Appeal raising the following questions of law:
(i) In the light of the provisions of Gujarat Cooperative Societies Act and in particular Sections 96, 112 and 166, the Civil Court has no jurisdiction to entertain the suit.
(ii) The Courts below have overlooked the relevant provisions of the Indian Electricity Act, 1910 in so far as they relate to obligations / liabilities that could be fastened upon the defendant board upon the revocation of sanction holder and its' handing over possessing of assets of such undertaking to the board.
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(iii) The Courts below have failed to appreciate the legal position that the Board taking over possession of the assets undertaking of sanction holder free from all encumbrances and therefore, there is no question of it being held liable for any claim for unliquidated damages, which may be pending at the time of such take over and which may be crystalized in a liquidated sum by adjudication after such take over.
8. At the time of admitting the Second Appeal, the following substantial questions of law have been framed, for determination of this appeal:
(1) Whether the Court below has erred in law in holding the Appellant liable for claim for unliquidated damages against the first respondent electrical pending at a time undertaking when the Appellant had taken over possession of assets of the first respondent section holders electrical undertaking free from all encumberances, which claim was crystallised in a liquidated sum by adjudication after such take over?Page 7 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
C/SA/8/1994 JUDGMENT DATED: 15/06/2022 (2) Whether the court below has erred in over looking the relevant provisions of the Indian Electricity Act,1910 in so far as they relate to obligations/liabilities that could be fastened upon the Appellant board upon revocation of section of sanction holder and its' handling over possession of assets of such undertaking to the appellant board?
9. My findings on the aforesaid points, for the reasons given below, are as under :
Point No.1 : Negative No.2 : Negative Reasons
10. Points Nos.1 and 2: Since the common questions of law is involved in both these points, to avoid repetition of the same, both are discussed together.
11. Heard learned advocate Ms. Maya S. Desai for the appellant- original defendant No.2 and learned advocate Shri R.C. Kakkad for the respondent original defendant No.1 and learned advocate Mr. J.M. Patel for the original plaintiffs at length.
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12. Learned advocate Ms. Desai for the appellant has vehemently submitted that as per the provisions of the Gujarat Cooperative Societies Act, the Civil Court has no jurisdiction. While referring to the factual matrix, she has submitted that the Kodinar Electricity Cooperative Society was license and installed the electric lines. She has submitted that accident has happened in the year 1980. She has also submitted that 'PGVCL' - GEB was not joined as a party as there was no board at that time in existence.
12.1. She has submitted that earlier 'GEB' and now 'PGVCL' took over the Cooperative Society's undertaking in 1983 and at that time, all the assets of it were undertaken without any encumbrances. She has submitted that since at the time of suit the defendant No.1 was in liquidation, the Civil Court had no jurisdiction to entertain the suit. She has submitted that the licence of the defendant No.1 was cancelled by the defendant No.2. Therefore, it was not a case of merger of defendant No.1 in defendant No.2. She has also submitted that as 'PGVCL' has taken possession of lines and assets of defendant No.1 without any encumbrances. Page 9 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
C/SA/8/1994 JUDGMENT DATED: 15/06/2022 She has submitted that the PGVCL was joined in the suit in 1983 and therefore, at that time, the suit would be time barred against it. She has submitted that no issue regarding limitation has been framed and no opportunity of raising such issue was given to the 'PGVCL'. By referring to the oral and documentary evidence, she has vehemently submitted that the observation of the learned Trial Court as well as the First Appellate Court fastening the liability of the 'PGVCL' is clearly erroneous.
12.2. She has also submitted that the 'PGVCL' was not liable to satisfy the liability of the defendant No.1, if any. She has submitted that as there was cyclone in the vicinity at the relevant time the wire might be fallen and it was an act of God and therefore, no liability ought to have been fastened upon any of the defendants.
12.3. Learned advocate Ms. Desai has also vehemently referred to the provisions of Electricity Act, 1910, Sections 3, 4 and 7 and has submitted that all these provisions clearly falls in favour of the appellant and therefore, judgment and decree of both the Courts below Page 10 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 need to be set aside.
12.4. She has prayed to set aside the impugned judgment and decree. She has also submitted that pending the appeal, as there was execution petition preferred, the appellant has already deposited the entire amount before the Court below.
12.5. Learned advocate Mr. R.C. Kakkad for the defendant No.1 has submitted that the observations made by both the Trial Court are proper one and there is no liability upon defendant No.1 which was in liquidation at the time of the decree. He has prayed to dismiss the Second Appeal qua defendant No.1.
13. Learned advocate Shri Jitendra M. Patel for the plaintiff has vehemently submitted that the Trial Court and First Appellate Court has not committed any error of facts and law in decreeing the suit of the plaintiff. He has submitted that the present appeal does not involve any question of law and therefore, since there is concurrent findings of facts against the present appellant, the present appeal be dismissed and the judgments and decrees of the Courts below be confirmed. Page 11 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
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14. During the course of arguments, learned advocate Ms. Desai has heavily relied upon the provisions of the Cooperative Societies Act. However, if we consider the substantial questions of law as framed at the time of admitting the appeal, it clearly reveals that so far as the defence taken by the appellant regarding the provisions of the Gujarat Cooperative Society Act is concerned, there is no substantial questions of law framed in this regard. The questions of law as framed are regarding the liability of the appellant - defendant No.2 under the provisions of Indian Electricity Act, 1910 and what will the effect of taking over the possession of the assets of defendant No.1 by the defendant No.2 during the Crystallization of liquidation damages after such taking over. Therefore, so far as the factum of applicability of the provisions of the Cooperative Societies Act are concerned there is not a substantial questions of law. Further, both the Courts below have, after considering the evidence on record, have properly considered those aspects and held against the defendants. Further, there is a concurrent findings of facts regarding the happening of the incident, wherein due to electrocution, the deceased Danabhai and his four goats Page 12 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 were died and the factum of negligence in maintaining the lines. The concurrent findings of these facts are based upon the oral and documentary evidence produced in the matter. Since there are concurrent finding of facts, this Court does not find it necessary to dealt with oral and documentary evidence pertaining to them. So far as the provisions of Indian Electricity Act, 1910 is concerned, Section 3 thereof deals with the grant of licences by the State Government. Sub-section 1 of Section 3 provides as under :-
"Section 3(1) in The Indian Electricity Act, 1910
3. Grant of licences.-(1) The State Government may, on application made in the prescribed form and on payment of the prescribed fee (if any) 1[grant after consulting the State Electricity Board, a license to any person] to supply energy in any specified area, and also to lay down or place electric supply- lines for the conveyance and transmission of energy,--
(a) where the energy to be supplied is to be generated outside such area, from a generating station situated outside such area to the boundary of such area, or
(b) where energy is to be conveyed or transmitted from any place in such area to any other place therein, across an intervening area not included therein, across such area."Page 13 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
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15. Sub-section 2 of Section 3 deals with the various other provisions.
This section gives the State Government the power to grant licences to persons after consulting the State Electricity Board for the supply, conveyance and transmission of electrical energy in any specified area, subject to the ascertainment of the wishes or objections of the Central Government and local authority in certain cases. The licence granted under this section are to be in a prescribed form and the provisions contained in the Schedule shall be deemed to be incorporated and to form part of every licence granted unless the State Government chooses to alter or modify the terms of the grant.
16. Now in this case, admittedly the licence was granted to defendant No.1 under the provisions of this Act. Even there is no dispute in this regard between the defendant No.1 and defendant No.2.
17. Now, so far as revocation or amendment of licence is concerned, Section 4 of the Act provides as under :
4. Revocation or amendment of licenses.--Page 14 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
C/SA/8/1994 JUDGMENT DATED: 15/06/2022 "(1) The State Government may, if in its opinion the public interest so requires 1[and after consulting the State Electricity Board], revoke a license in any of the following cases, namely:--
(a) where the licensee, in the opinion of the State Government, makes wilful and unreasonably prolonged default in doing anything required of him by or under this Act;
(b) where the licensee breaks any of the terms or conditions of his license the breach of which is expressly declared by such license to render it liable to revocation;
(c) where the licensee fails, within the period fixed in this behalf by his license or any longer period which the State Government may substitute therefor by order under 2[section 4A, sub-section (1)], and before exercising any of the powers conferred on him thereby in relation to the execution of works,--
(i) to show, to the satisfaction of the State Government, that he is in a position fully and efficiently to discharge the duties and obligations imposed on him by his license, or
(ii) to make the deposit or furnish the security required by his license;Page 15 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022
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(d) 3[where in the opinion of the State Government the financial position of the licensee is such that he is unable] fully and efficiently to discharge the duties and obligations imposed on him by his license; 4[(e) where a licensee, in the opinion of the State Government, has made default in complying with any direction issued under section 22A.] 5[(2) Where in its opinion the public interest so permits, the State Government may, on the application or with the consent of the licensee, and after consulting the State Electricity Board, and the Central Government where that Government is interested, and if the licensee is not a local authority, after consulting also the local authority, if any, concerned, revoke a license as to the whole or any part of the area of supply upon such terms and conditions as it thinks fit.
(3) No license shall be revoked under sub-section (1) unless the State Government has given to the licensee not less than three months' notice, in writing stating the grounds on which it is proposed to revoke the license and has considered any cause shown by the licensee within the period of that notice, against the proposed revocation.
Page 16 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 (4) Where the State Government might under sub-section (1) revoke a license it may instead of revoking the license permit it to remain in force subject to such further terms and conditions as it thinks fit to impose and any further terms or conditions so imposed shall be binding upon, and be observed by, the licensee, and shall be of like force and effect as if they were contained in the license.]"
17.1. The aforesaid provisions provides for revocation of an existing licence which fall under two categories:-
(i) where the license is revoked by the State Government on its own initiative, and
(ii) where the license is revoked at the instance of or with the consent of the licensee.
The primary condition in each case being the existence of public interest. Thus, license can be revoked for the public interest. In this case, the licence of the defendant No.1 has been revoked and thus, the defendant No.1 cannot continue with the work of distributions of electricity. It is also on record that on revocation of the licence, the Board has taken over all Page 17 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 the assets of defendant No.1. It also appears from the record that this exercise has been undertaken during the pendency of the suit.
18. Section 7 of the aforesaid Act makes provisions for vesting of the undertaking in the purchaser, which provides as under :
"[7. Vesting of the undertaking in the purchaser.--Where an undertaking is sold under section 5 or section 6, then upon the completion of the sale or on the date on which the undertaking is delivered to the intending purchaser under sub-section (3) of section 5 or under sub-section (6) of section 6, as the case may be, whichever is earlier--
(i) the undertaking shall vest in the purchaser or the intending purchaser, as the case may be, free from any debt, mortgage or similar obligation of the licensee or attaching to the undertaking:
Provided that any such debt, mortgage or similar obligation shall attach to the purchase money in substitution for the undertaking;
(ii) the rights, powers, authorities, duties and obligations of the licensee under his license shall stand transferred to the Page 18 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 purchaser and such purchaser shall be deemed to be the licensee:
Provided that where the undertaking is sold or delivered to a State Electricity Board or the State Government, the license shall cease to have further operation.]"
18.1. Thus, when the undertaking vests in the purchases, the following consequences ensue ;
(i) the undertaking passes to the purchaser free from all debts, mortgages or similar obligations of the licensee or attaching to the undertaking ;
(ii) the purchase money becomes liable for the satisfaction of any debt, mortgage or similar charge of the licensee or attaching to the undertaking ;
(iii) the rights, powers, authorities, duties and obligations of the licensee under his licence stand transferred to the purchaser and such purchaser assumes the character of the licensee;
(iv) when the undertaking is sold or delivered to a State Electricity Board or the State Government, the licence ceases to have any force, but the State or the Board is Page 19 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 bound by all the obligatioas of the licensee under the existing contracts;
(v) when the State engages in the business of supply of energy to the public, it shall have all the powers and obligations of the licensee.
18.2. Now considering the aforesaid provisions, it clearly transpires that in the present case, there is no iota of evidence produced by the defendant No.2 i.e. present appellant to establish that it has paid any amount to the defendant No.2 at the time of revocation of licence by it or by the State Government.
19. Further, when the assets of the defendant No.1 was taken over by the defendant No.2 - appellant herein, the claim of the appellant for damages was not crystalized nor it was a debt or mortgage or any-other form of encumbrance for the property of defendant No.1.
20. It is an admitted fact that the appellant has taken over all the assets of the defendant No.1. Therefore, at the same time, it would be also entitled to recover Page 20 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 whatever the amount is due from the customers to the defendant No.1. Thus, the rights and liabilities which were in existence in favour of the defendant No.1 are undertaken by the defendant No.2 due to cancellation of the licence of the defendant No.1 by the State Government and directing the defendant No.2 to take over the undertaking of defendant No.1. Therefore, in the facts and circumstances of the present case, when the entire undertaking of the defendant No.1 has been vested in the defendant No.2, all damages, which were crystallized after such exercise of vesting, defendant No.2 is bound to fulfill such obligations of payment of compensation. On perusal of the provisions of the Indian Electricity Act, it clearly transpires that the liability of defendant No.2 to pay the amount of compensation to the plaintiffs is well established and both the Court below have not committed any error in facts and law in fastening the liability of payment of compensation of the plaintiffs by the present appellant - defendant No.2. Therefore, considering the facts and Page 21 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022 C/SA/8/1994 JUDGMENT DATED: 15/06/2022 circumstances of the case, I have decided points No. 1 and 2 in negative.
21. In view of the above, the present Second Appeal deserves to be dismissed. Accordingly, I have pass the following final Order:
: Order :
1. The present Appeal stands dismissed.
2. The impugned judgment and decree dated 30.09.1992 of the Assistant Judge, Amreli passed in First Appeal No.24 of 1984 are hereby confirmed.
3. No order as to costs.
4. Decree to be drawn accordingly in the present Appeal.
5. Alongwith the copies of this judgment and decree, R & P to be sent back to the learned Trial Court.
(DR. A. P. THAKER, J) KUMAR ALOK Page 22 of 22 Downloaded on : Sat Jun 18 20:26:26 IST 2022