Patna High Court
Tenughat Vidyut Nigam Ltd. vs Union Of India (Uoi) And Ors. on 21 June, 2004
Equivalent citations: [2005(2)JCR165(PAT)]
Author: Chandramauli Kr. Prasad
Bench: Chandramauli Kr. Prasad
JUDGMENT Chandramauli Kr. Prasad, J.
1. Prayer of the petitioner in this writ application are as follows :--
(1) To quash the order dated 27.2.2001 (Annexure-4) of the Government of Jharkhand in the Department of Water Resources and Energy whereby Tenughat Vidyut Nigam Ltd. has been declared to be an undertaking of the Government of Jharkhand in exercise of the power under Section 47 of the Bihar State Re-organisation Act, 2000. By this order it has been further declared that in the Memorandum and Article of Association of the Tenughat Vidyut Nigam Ltd. the expression "Bihar" and "Bihar Rajya" be read as "Jharkhand" and "Jharkhand Rajya" respectively;
(2) To quash the order dated 24.5.2001 (Annexure-5) of the Government of Jharkhand in its Energy Department whereby in exercise of power under Article 49(1)(b)(d) and (e) of the Articles of Association and in supersession of all the earlier orders, it had constituted the Board of Directors of the Tenughat Vidyut Nigam Ltd;
(3) To quash the order dated 31st of October, 2002 (Annexure-6) of the Government of India whereby it had ordered that all the assets and liabilities relating to Tenughat Vidyut Nigam Ltd. shall pass on to the State of Jharkhand with effect from such takingover by the Government of Jharkhand under Section 47 of the Bihar Re-organisation Act 2000;
(4) To quash the communication dated 2nd of September, 2003 (Annexure-10) of the Government of India whereby the Secretary to the Government of Bihar in the Department of Energy has been informed that the point of view of the Government of Bihar was taken into consideration before passing the impugned order dated 31st of October, 2002 (Annexure-6). It may be stated that in the aforesaid letter inadvertently instead of the date of order dated 31st of October, 2002, 22nd of March, 2003 was mentioned and by letter dated 29th of October, 2003 (Annexure- 10/1) it has been clarified that the order dated 22nd of March, 2003 be read as 31st of October, 2002.
2. Facts which are necessary for decision in the present application are that the State of Bihar by resolution dated 10th of September, 1987 (Annexure-2) resolved to establish Tenughat Vidyut Nigam under the provisions of the Indian Companies Act and the Electricity (Supply) Act, 1948. The resolution stated that as soon as the Memorandum and Article of Association of the Tenughat Vidyut Nigam Ltd. are registered with the Registrar of the Companies, it shall start functioning. Tenughat Vidyut Nigam Ltd. was incorporated as a Company by the Registrar of the Companies and a certificate to that effect dated 26.11.1987 (Annexure-1) was granted to it. The registered office of the Tenughat Vidyut Nigam Ltd. (hereinafter referred to as TVNL) is at Patna. According to the Memorandum of Association the main object of the TVNL is construction, generation and maintenance of Thermal Power Stations and Projects and to sell the power so generated to Bihar State Electricity Board. The registered office of the TVNL is at Patna and its generating plant is at Lalpania within the State of Jharkhand. Petitioner before this Court is the TVNL having its registered office at Patna.
3. The Parliament enacted the Bihar Re-organisation Act, 2000, providing for reorganisation of the State of Bihar and it provided for formation of a new State of Jharkhand comprising the territory earlier included in the State of Bihar. After coming into force of the Bihar Re-organisation Act (hereinafter referred to as the Act), the State of Jharkhand by the impugned order dated 27.2.2001 (Annexure-4) acquired the TVNL as its undertaking and also made amendment in its Memorandum and Article of Association and declared that the expression "Bihar" and "Bihar Rajya" be read as "Jharkhand" and "Jharkhand Rajya" respectively. Further by the impugned order dated 24.5.2001 (Annexure-5) the State of Jharkhand constituted Board of Directors of the TVNL which has been arrayed as TVNL, Ranchi. The Board of Directors of the TVNL constituted by the Government of Jharkhand having its office at Ranchi issued press communique dated 18.8.2001 to the effect that the head office of the TVNL has been shifted from Patna to Ranchi, the account of Patna has been closed and any one dealing with TVNL, Patna would do so at its own risk.
4. Aggrieved by the actions of the Government of Jharkhand, Government of Bihar by its letters dated 19.7.2001, 18.9.2001 and 16.10.2001 addressed to the Government of India requested for annulling the orders of the Government of Jharkhand. It seems that in the light of the request made, the Government of India in the Ministry of Home Affairs convened a meeting and both the State Governments were asked to submit report with specific reference to Sections 46(1), 60 and 63 of the Act. The Government of Jharkhand submitted its report dated 3.5.2002 and 13.5.2002 and asserted that it had rightly taken over the TVNL. The. Government of India convened a meeting to decide the fate of the TVNL fixing 14.6.2002 as the date of the meeting and asked the Government of Bihar to submit its comment and attend the meeting. The meeting was ultimately held on 17.6.2002 and the Government of Bihar was asked to submit its comment by 21.6.2002 which it did and filed its comment on 19.6.2002. The Government of India in the Ministry of Power by the impugned order dated 31.10.2002 (Annexure-6) passed an order that TVNL is a State undertaking and its assets and liabilities have passed on to the State of Jharkhand with effect from the date of such takingover by the Government of Jharkhand under Section 47 of the Act. The TVNL Ranchi by letter dated 14.11.2002 wrote to the Chairman of the Bihar State Electricity Board to hand over all the documents and assets of TVNL, Patna to it.
5. After the impugned decision of the Government of India dated 31.10.2002 the Energy Minister of the Government of Bihar also wrote to the Minister of Power, Government of India letter dated 21.11.2002 to reconsider the decision dated 31.10.2002. The Government of India by the impugned order dated 2.9.2003 refused to reconsider its decision stating that before passing the impugned order dated 31.10.2002 the plea of the Government of Bihar was taken note of.
6. It is relevant here to state that in view of the decision of the Government of Jharkhand TVNL, having its office at Ranchi had started functioning and although it has not been Incorporated as a separate company it filed W.P. (G) No. 1542 of 2003, TVNL Ltd. v. State of Bihar and Ors., in the High Court of Jharkhand inter alia praying for a direction to the TVNL, Patna i.e. petitioner herein for providing the records of the TVNL. The writ application filed by TVNL Ranchi, was referred to Division Bench by the Jharkhand High Court by its order dated 29.8.2003 and one of the questions framed in the writ application is in regard to its maintainability at the instance of TVNL Ranchi without its incorporation and registration under the Companies Act. The State of Jharkhand had also filed a writ application bearing No. W.P.(C) 297 of 2004 The State of Jharkhand v. State of Bihar and Ors., in the Jharkhand High Court for a declaration that the order dated 27.2.2001 passed by it and the order dated 31.10.2002 of the Government of India whereby the TVNL has been treated as the undertaking of the State of Jharkhand is legal and valid and the TVNL Patna be directed to hand over the records and the share certificates to TVNL Ranchi. In the writ application filed by the State of Jharkhand, the Jharkhand High Court by its order dated 16.3.2004 passed an interim order permitting inspection and grant of photostat copy of the document of TVNL, Patna to the State of Jharkhand. Thus two writ applications filed by the TVNL, Ranchi and State of Jharkhand are pending before the Jharkhand High Court whereas the present writ application filed by TVNL Patna is pending before this Court. It is relevant here to state that the State of Bihar had also filed a suit in the Supreme Court under Article 131 of the Constitution of India on the issue of ownership of TVNL and the State of Jharkhand has been arrayed as defendant in the said suit. TVNL, Patna filed a petition in the Supreme Court for transfer of all the three writ petitions pending before the Jharkhand High Court and this Court before the Supreme Court but by order dated 22.3.2004 the Supreme Court rejected the said prayer.
7. It is relevant here to state that one Ashok Kumar filed a writ application before this Court inter alia praying for his appointment to the post of Assistant Engineer at Lalpania Thermal Power Station of the TVNL. This Court by order dated 25.4.2001 directed the TVNL to appoint him to the post of Assistant Engineer and when the said order of this Court was not being carried out, said Ashok Kumar filed MJC No. 1417 of 2002 before this Court. When the said application along with the modification application filed by TVNL, (MJC No. 1228 of 2002) was taken up by this Court on 7.10.2002, this Court directed for issuance of notice to the Secretary, Department of Energy, Government of Jharkhand. Thereafter the matter was taken up on 12.3.2003 when the Secretary (Energy) of the State of Jharkhand intimated to this Court that he had already issued direction for carrying out the orders of this Court which shall be complied within two months. The Court directed the matter to be listed on 21st May, 2003 and on that date it was brought to the notice of the Court that TVNL, Ranchi had carried out the order and accordingly the contempt proceeding was dropped.
8. Mr. Ram Balak Mahto, Senior Advocate as also Mr. Mihir Kumar Jha appear on behalf of the petitioner, TVNL, Panta. Mr. Jha has advanced submission on its behalf. Respondents No. 1 to 3 are represented by Mr. P.K. Shahi, Central Government. Senior Standing Counsel whereas the State of Jharkhand and its officers are represented by Mr. S.S. Ray, Senior Advocate and Mr. D. Jerath. Mr. Tara Kant Jha, Senior Advocate appears on behalf of the State of Bihar. For TVNL, Ranchi, Mr. Rudreshwar Prasad Singh had advanced argument and a written submission has also been filed on its behalf.
9. The stand of the State of Bihar, TVNL, Patna and Bihar State Electricity Board is one and the same whereas the State of Jharkhand, TVNL, Ranchi and Jharkhand State Electricity Board sail in the same boat. Union of India and its officers have not filed any reply and their submission is that the decision taken by the Government of India is legal and valid.
10. Mr. S.S. Ray has objected to the hearing of the present writ application and prayed for its dismissal on the ground that the writ application bearing W.P.(C) No. 1542 of 2003 and W.P.(C) 2971 of 2004 involving the same issue are pending before the Jharkhand High Court and in his submission propriety demands dismissal and if not at least deferment of the hearing of the present writ application till decision by the Jharkhand High Court. He further points out that by an interim order dated 16.3.2004 passed in W.P.(C) 297 of 2004 the Jharkhand High Court had directed for inspection and making available photocopy of the document to the TVNL, Ranchi by the petitioner TVNL, Patna and the said order having not been complied with, hearing of the present writ application be deferred till the said order is complied by the petitioner. It has also been pointed out that the State of Bihar had also filed a suit before the Supreme Court in which the question involved in the present application shall be gone into.
11. When the aforesaid facts were brought to my notice, I was inclined to defer, not to do dismiss, the hearing of the writ application till the decision by the Supreme Court on the suit filed by the State of Bihar but when it was brought to my notice that the petitioner had filed petition before the Supreme Court for transfer of all the three writ applications pending before this Court and the Jharkhand High Court to the Supreme Court and the Supreme Court by its order dated 22.3.2004 had rejected the said prayer. I am obliged to hear the same and adjudicate the issues involved in the writ application. In my opinion propriety, instead of deferring the hearing of the writ application, demands its hearing. I fail to understand how the suit filed by the State of Bihar later than the present application can at all be taken into account to dismiss the present application. Hence, I overrule this submission of Mr. Ray.
12. Answering respondents have also prayed for dismissal of the writ application on the ground that the petitioner had not challenged the order dated 2.9.2003 whereby Government of India had declined to review its order. This communication has been made to the Government of Bihar in response to its objection and hence the writ application is not fit to be dismissed on this plea. Further relief is to be couched by the Court and on the oral prayer of the petitioner, I had permitted it to assail this order. Hence I reject this submission of the answering respondents.
13. Mr. Jha contends that the TVNL is neither a commercial or industrial undertaking of the State of Bihar and hence Section 47 of the Act shall not entail transfer of TVNL to the State of Jharkhand, after reorganisation of the State. He also contends that the registered office of the TVNL is at Patna and as such it cannot be said that the TVNL is located within the State of Jharkhand and as such Section 47 of the Act is not remotely attracted. Once it is held so; Mr. Jha highlights that the action of the State of Jharkhand in taking over the TVNL is in the teeth of the petitioner's constitutional right guaranteed under Article 300-A of the Constitution of India. In support of his submission he has placed reliance on a judgment of the Bombay High Court in the case of Basantibai Fakirchand Khetan and Ors. v. State of Maharashtra and Ors., AIR 1984 Bom 366 and of the Supreme Court in the case of Bishamber Dayal Chandra Mohan v. State of U.P., AIR 1982 SC 33 and State of West Bengal v. Vishnunarayan and Associates (P) Ltd., (2002) 4 SCC 134. He also submits that the petitioner is a company not coming within the scope of Section 47(1) of the Act and as such its take over by the State of Jharkhand without complying the provision of the Companies Act is illegal and ultra vires. Mr. T.K. Jha, Senior Advocate, who appears on behalf of the State of Bihar supports the aforesaid submission of the petitioner. The contesting respondents, however, contend that TVNL was an undertaking of the State of Bihar and having located within the territory of the State of Jharkhand, its assets and liabilities shall pass to the State in which the undertaking is located. It has been pointed out that the primary function of the TVNL is of generating electricity and generating plant being located at Lalpania in the State of Jharkhand, the impugned orders of the Government of Jharkhand and the Government of India treating that the assets and liabilities of the TVNL shall pass on to the State of Jharkhand are legal and valid. In answer thereto petitioner contends that generating plant at Lalpania is not an undertaking but an asset of the petitioner.
14. I am of the opinion that in case it is held that TVNL is not covered under Section 47 of the Act, petitioner shall be right in contending that the impugned action of the State of Jharkhand in taking over the assets and liabilities of the TVNL in the manner and the order passed by the Government of India shall not only be in breach of petitioner's right guaranteed under Article 300-A of the Constitution of India but ultra vires the provision of the Companies Act. Having accepted this submission on principle, I do not consider it expedient to refer to the various authorities relied on by Mr. Jha.
15. In view of the rival submission, what needs to be examined is the scope and ambit of Section 47 of the Act. Same reads as follows :--
"47. Assets and liabilities of State undertakings.--(1) The assets and liabilities relating to any commercial or industrial undertaking of the existing State of Bihar shall pass to the State in which the undertaking is located.
(2) Where a depreciation reserve fund is maintained by the existing State of Bihar for any such commercial or industrial undertaking, the securities held in respect of investments made from that fund shall pass to the State in which the undertaking is located."
16. To answer the question as to whether TVNL shall come within the ambit of Section 47 of the Act, what needs to be answered is as to whether it is an undertaking and if so whether its nature is commercial or industrial and in case it is found to be so, was it of the State of Bihar prior to its re-organisation? If the answer to the aforesaid question is in the affirmative what further requires to be determined is as to where the undertaking is located?
17. Now I proceed to examine the aforesaid questions one by one :--
(I) Whether TVNL is an undertaking?
18. Mr. Jha counsel for the petitioner contends that TVNL is not an undertaking and he emphasises that the expression undertaking having not been defined in the Act, same has to be interpreted in a harmonious way. True it is that the word undertaking has not been defined under the Act and as such it has to be understood in its natural and ordinary meaning. One cannot depart from that meaning unless reading the word in a natural way leads to absurd result or the context in which the word is used indicates different meaning. The Memorandum and Articles of Association of the TVNL reveal that its main object is to establish thermal power station and to generate and sale electricity. Thus the TVNL has undertaken a work of the nature indicated above and in the context this expression is used under Section 47 of the Act, I have no manner of doubt that it is an undertaking. Reference in this connection can be made to a decision of the Supreme Court in the case of D.N. Banerji v. P.R. Mukherjee, AIR 1953 SC 58 in which in paragraph 10 it has been observed as follows :--
"In the ordinary or non-technical sense, according to what is understood by the man in the street, industry or business means an undertaking where capital and labour co-operate with each other for the purpose of producing wealth in the shape of goods, machines, tools etc., and for making profits..."
(II) Whether the undertaking would mean the whole body i.e. the company and its generating plant at Lalpania or the generating plant at Lalpania can be said to be an undertaking also?
19. Petitioner contends that the expression undertaking would mean the whole body meaning thereby that generating plant at Lalpania cannot be truncated from the petitioner-company so as to hold it as an undertaking under Section 47 of the Act. Mr. Jha for the petitioner points out that petitioner-TVNL, a company incorporated under the Companies Act, even if held to be covered by the expression 'undertaking' its generating plant at Lalpania, by no stretch of imagination can be said to be an undertaking. In support of the submission, reliance has been placed on a large number of decisions of the Supreme Court viz., AIR 1953 SC 58, D.N. Banerjee v. P.R. Mukherjee; AIR 1968 SC 554, Secretary, Madras Gymkhana Club Employees' Union v. Management of Gymkhana Club; AIR 1970 SC 564, Rustom Cavasjee Cooper v. Union of India; AIR 1975 SC 2260, Crew and Company Ltd. v. Union of India; AIR 1979 SC 170, Avon Services Production Agencies (P) Ltd. v. Industrial Tribunal, Haryana and Ors.; 2004 (4) SC 98 and U.P. State Sugar Corporation v. Burwal Sugar Mills Ltd. and Ors.
20. There is no difficulty in accepting the broad submission of Mr. Jha that the company is a much wider entity as the undertaking which is only one of the assets of the company but that itself does not solve the problem. Here in the present case the petitioner-company has been established as generating company and its generating plant is situated at Lalpania in the area falling within the territory of the State of Jharkhand on re-organisation of the State. In my opinion the petitioner company having been established as the generating company and its generating plant being situated within the State of Jharkhand, which had undertaken to generate electricity and sale it to the Bihar State Electricity Board, same would be an undertaking also.
(III) Whether TVNL is a commercial or industrial undertaking?
21. The expression "commercial" or "industrial" or for that matter undertaking has not been defined under the Act. In that view of the matter, its meaning, plain and simple in the context has to be ascertained. The Memorandum and Articles of Association of the TVNL reveal that its main object is establishment of thermal power station, generation of electricity and its sale to the Bihar State Electricity Board and to carry on "the business of development, manufacture, generation, operation, maintenance, distribution and sale of non- conventional forms of energy". It is well settled that a trading body comes within the ambit of undertaking. The very fact that the petitioner's business is to sale power, I have no manner of doubt that TVNL is a commercial undertaking within the meaning of Section 47 of the Act. The view which I have taken finds support from the judgment of the Supreme Court in the case of Poona Electric Supply Co. Ltd., Bombay v. Commissioner of Income-tax, Bombay City, AIR 1966 SC 30 in which in paragraph 11 it has been held as follows :--
"11. The appellant Company is a commercial undertaking. It does business of the supply of electricity subject to the provisions of the Act. As a business concern its real profit has to be ascertained on the principles of commercial accountancy. As a licensee governed by the statute its clear profit is ascertained in terms of the statute and the schedule annexed thereto. The two profits are for different purposes--one is for commercial and tax purposes and the other is for statutory purposes in order to maintain a reasonable level of rates. For the purpose of the Act, during the accounting years the assessee credited the said amounts to the "Consumers Benefit Reserve Account". They were a part of the excess amount paid to it and reserved to be returned to the consumers. They did not form part of the assessee's real profits. So, to arrive at the taxable income of the assessee from the business under Section 10(1) of the Act, the said amounts have to be deducted from its total income."
(IV) Whether TVNL was an undertaking of the State of Bihar before its re-organisation?
22. Petitioner-TVNL, represented by its counsel Mr. Jha, contends that it is a company registered under the Companies Act and hence a separate legal entity, whereas the answering respondents submit that the moment its corporate veil is lifted, it would be crystal clear that it is an instrumentality of the State of Bihar.
23. Petitioner in support of its contention has placed reliance in the case of Tamlin v. Hansaford, 1950 KB 18 wherein Lord Denning spoke as follows :--
"In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a Government department nor do its powers fall within the province of Government."
24. Strong reliance has-been placed on a decision of the Supreme Court in the case of Heavy Engineering Mazdoor Union v. State of Bihar and Ors., AIR 1970 SC 82 wherein in paragraph 4 it has been held as follows :--
"4...The company so incorporated derives it powers and functions from and by virtue of its memorandum of association and its articles of association. Therefore, the mere fact that the entire share capital of the respondent-company was contributed by the Central Government and the fact that all its shares are held by the President and certain officers of the Central Government does not make any difference. The company and the share-holders being, as aforesaid, distinct entities the fact that the President of India and certain officers hold all its shares does not make the company an agent either of the President or the Central Government...."
25. My attention has also been drawn to paragraph 13 of the Constitution Branch judgment of the Supreme Court in the case of R.C. Cooper v. Union of India, AIR 1970 SC 564 in which it has been observed as follows :--
"A company registered under the Companies Act is a legal person, separate and distinct from its individual members. Property of the Company is not the property of the shareholders. A shareholder has merely an interest in the company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the profit. Again a Director of a Company is merely its agent for the purpose of management. The holder of a deposit account in a Company is its creditor : he is not the owner of any specific fund lying with the Company. A shareholder, a depositor or a director may not therefore be entitled to move a petition for infringement of the rights of the Company, unless by the action impugned by him, his rights are also infringed."
26. Another decision on which reliance has been placed is the decision of the Supreme Court in the case of Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr., AIR 1982 SC 697 and my pointed attention has been drawn to the following passage from paragraph 20 of the judgment, which reads as follows :--
"20....The short answer to this contention is that even though the entire share capital of the appellant-companies has been subscribed by the Government of India it cannot be predicated that the companies themselves are owned by the Government of India. The companies which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the companies, the Government of India only owns the share capital."
27. Yet another decision on which strong reliance has been placed is the judgment of the Supreme Court in the case of Steel Authority of India Ltd. and Ors. v. National Union Waterfront Workers and Ors., (2001) 7 SCC 1 and my attention has been drawn to paragraph 37 of the judgment, which reads as follows :--
"37. We wish to clear the air that the principle, while discharging public functions and duties the Government companies/corporations/societies which are instrumentalities or agencies of the Government must be subjected to the same limitations in the field of public law constitutional or administrative law as the Government itself, does not lead to the inference that they become agents of the Centre/State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law."
28. There is no difficulty at all in accepting the submission of Mr. Jha that the petitioner being a company incorporated under the Companies Act, is a separate legal entity, distinct from the department of State of Bihar and the authorities relied on do support his contention but from that can it be said that it ceases to be the instrumentality of the State? In my opinion merely because a Government company is a separate legal entity it does not necessarily follow that thereby it ceases to be the instrumentality or the agency of the State. Reference in this connection can be made to the decision of the Supreme Court in the case of Central Inland Water Transport Corporation Ltd. and Anr. v. Brojo Nath Ganguly and Anr., AIR 1986 SC 1571 wherein in paragraph 69 it has been held as follows :--
"...If there is an instrumentality or agency of the State which has assumed the garb of a Government company as defined in Section 617 of the Companies Act, it does not follow that it thereby ceases to be an instrumentality or agency of the State. For the purpose of Article 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the fact of an instrumentality or agency of the State. The Corporation, which is the Appellants in these two Appeals before us, squarely fall within these observations and it also satisfies the various tests which have been laid down. Merely because it has so far not the monopoly of inland water transportation is not sufficient to divest it of its character of an instrumentality or agency of the State. It is nothing but the Government operating behind a corporate veil, carrying out a Governmental activity and Governmental functions of vital public importance. There can thus be no doubt that the Corporation is "the State" within the meaning of Article 12 of the Constitution."
29. Thus, in my opinion, petitioner, a company registered under the Companies Act, is a separate legal entity but at the same time it can be the instrumentality of the State. Whether it is so or not will depend upon the facts and circumstances of the case. Answering respondents contend that when one sees through the corporate veil it is evident that the petitioner is an instrumentality of the State. Lifting of the corporate veil is possible by this Court, contend the answering respondents and in support thereof reliance has been placed on the decision of the Supreme Court in the case of Guru Gobinda Basu v. Sankari Prasad Ghosal and Ors., AIR 1964 SC 254 and my attention has been drawn to the following passage from paragraph 12 of the judgment, which reads as follows :--
"12...Therefore if we look at the matter from the point of view of substance rather than of form, it appears to us that the appellant as the holder of an office of profit in the two Government Companies, the Durgapur Projects Ltd. and the Hindustan Steel Ltd., is really under the Government of India; he is appointed by the Government of India; he is removable from office by the Government of India; he performs function for two Government companies under the control of the Comptroller and Auditor-General who himself is appointed by the President and whose administrative powers may be controlled by rules made by the President."
30. Reliance has also been placed on the decision of the Supreme Court in the case of Life Insurance Corporation of India v. Escorts Ltd. and Ors., AIR 1986 SC 1370 and my attention has been drawn to the following passage from paragraph 90 of the judgment which reads as follows :--
"90...It was emphasised that regard must be had to substance and not the form of a transaction. Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since, that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc."
31. My attention has also been drawn to a portion of paragraph 11 of the judgment of the Supreme Court in the case of Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers' Association and Anr., (2002)2 SCC 167. Same reads as follows :--
"....The concept of instrumentality or agency of the Government is not to be confined to entities created under or which owes its origin to any particular statute or order but would really depend upon a combination of one or more of relevant factors, depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be, piercing the corporate veil of the entity concerned."
(underlining mine)
32. Reliance has also been placed on the decision of the Supreme Court in the case of Kapila Hingorani v. State of Bihar, (2003) 6 SCC 1 and my attention has been drawn to paragrapha 25, 26 and a passage from paragraph 27 of the judgment. Same read as follows :--
"25. It is now well settled that the corporate veil can in certain situations be pierced or lifted. The principle behind the doctrine is a changing concept and it is expanding its horizon as was held in State of U.P. v. Renusagar Power Co., (1998) 4 SCC 59. The ratio of the said decision clearly suggests that whenever a corporate entity is abused for an unjust and inequivable purpose, the Court would not hesitate to lift the veil and look into the realities so to identify the persons who are guilty and liable therefor."
"26. The proposition that a company although may have only one shareholder will be a distinct juristic person as adumbrated in Salomon v. Salomon and Co., 1897 AC 22 : 1895-99 All ER Rep. 33 : 66 LJ Ch 35 (HL). has time and again been visited by the application of doctrine of lifting the corporate veil in revenue and taxation matters. See Dal Chand and Sons v. CIT, (1944) 12 ITR 458 (Lah) and Juggilal Kamlapat v. CIT, AIR 1969 SC 932.
"27. The corporate veil indisputably can be pierced when the corporate personality is found to be opposed to justice, convenience and interest of the revenue or workman or against public interest..."
33. Mr. Jha, however, enters a caveat and submits that the facts of the present case do not justify lifting of the corporate veil. In fairness he concedes that in the facts of a given case, the Court may take recourse to that option but in the present case in which it is established that TVNL is a company registered under the Companies Act it shall be fraught with danger to charter the course suggested by the answering respondents. In support of the submission reliance has been placed on a decision of the Supreme Court in the case of Western Coalfields Ltd. v. Special Area Development Authority, Korba and Anr., AIR 1982 SC 697 and my attention has been drawn to the following passage from paragraph 21-A of the judgment, which reads as follows :--
"...In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have regard to the realities of the situation. The appellant-companies were incorporated under the Companies Act for a lawful purpose. Their property is their own and it, vests in them. Under Section 5(1) of the Coal Mines (Nationalisation) Act, 26 of 1973, which applies in the instant case, the right, title and interest of a nationalised coal mine vest, by direction of the Central Government, in the Government company. If the lands and buildings on which respondent 1 has imposed the property tax cannot be regarded as the property of the Central Government for several other purposes like attachment and sale, there is no reason why, for taxing purposes, the property can be treated as belonging to that Government as distinct from the company which has a juristic personality."
34. Having appreciated the rival submission, I do not find any substance in the submission of Mr. Jha and authority relied on is clearly distinguishable. A long line of decisions of the Supreme Court, referred to above, clearly contemplate lifting or piercing the corporate veil to know the face behind the corporate. In my opinion in a case in which lis cannot be decided without lifting the corporate veil, the Court will certainly indulge in that. Here in, the present case lis is as to whether TVNL is an undertaking of the erstwhile State of Bihar or not? This question, in my opinion, cannot be decided without knowing the real status of the TVNL and hence it is a fit case in which corporate veil deserves to be pierced.
35. When I do so I find that the authorised share capital of the TVNL is Rs. 100 crores divided into 10 lakhs equity share of Rs. one thousand each and entire share is held by his Excellency the Governor of Bihar excepting one share which is held by the Finance Commissioner of the Government of Bihar. Not only this the Government of Bihar had deep and pervasive control over the TVNL which would be evident from the fact that the power to manage the TVNL has been vested in its Board of Directors, under Article 47 of the Articles of Association and the power to determine the number of Director and to appoint Chairman, Vice Chairman, Managing Director and Directors have been vested in the Governor of the State under Articles 48 and 49 of the Articles of Association.
36. In view of the entire share capital having been held by the Governor of the State, in substance the Government and the Finance Commissioner and deep and pervasive control of the Government of Bihar, answering respondents contend that TVNL is an instrumentality of the State of Bihar. In support of the submission reliance has been placed on a decision of the Supreme Court in the case of Sukhdev Singh v. Bhagatram, AIR 1975 SC 1331 and my attention has been drawn to the following passage from paragraph 36 of the judgment, which reads as follows :--
"36...The expression "other authorities" in Article 12 has been held by this Court in the Rajasthan Electricity Board Case to wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India. This Court further said referring to earlier decisions that the expression "other authorities" in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. The State itself is envisaged under Article 298 as having the right to carry on trade and business. The State as defined in Article 12 is comprehended to include bodies created for the purpose of promoting economic interest of the people. The circumstance that the statutory body is required to carry on some activities of the nature of trade or commerce does not, indicate that Board must be excluded from the scope of the word "State"."
37. Reliance has also been placed on the decision of the Supreme Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India and Ors., (1979) SCC 489 and my attention has been drawn to the following passage from paragraph 14 of the judgment, which reads thus :--
"14...Now, one thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. But, as is quite often the case, a corporation established by statute may have no shares or share-holders, in which case it would be a relevant factor to consider whether the administration is in the hands of a Board of Directors appointed by Government, though this consideration also may not be determinative, because even where the Directors are appointed by Government, they may be completely free from governmental control in the discharge of their functions. What then are the tests to determine whether a corporation established by statute or incorporated under law is an instrumentality or agency of Government? It is not possible to formulate an all inclusive or exhaustive test which should adequately answer this question. There is no cut and dried formula which would provide the correct division of corporations into those which are instrumentalities or agencies of Government and those which are not."
38. Reference has also been made to a Constitution Bench judgment of the Supreme Court in the case of Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors., (1981) 1 SCC 722 and my attention has been drawn to paragraph 9 of the judgment, which reads as follows :--
"9. The tests for determining as to when a corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in the International Airport Authority case (1979) 3 SCC 489. These tests are not conclusive or clinching, but they are indicating indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression "other authorities", it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority case as follows:
(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (SCC p. 507, para 14).
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. (SCC p. 508, para 15).
(3) It may also be a relevant factor... whether the corporation enjoys monopoly status which is State conferred or State protected. (SCC p. 508, para 15).
(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p. 508, para 15).
(5) If the functions of the corporation are of public importance and closely related to Governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government. (SCC p. 509, para 16).
(6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government. (SCC p. 510, para 18).
If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12."
39. My pointed attention has also been drawn to paragraph 67 of the judgement of the Supreme Court in the case of Central Inland Water Transport Corporation v. Brojo Nath Ganguly and Anr., (1986) 3 SCC 156 to contend that the petitioner is an instrumentality of the erstwhile State of Bihar. Same reads as follows :--
"67. What is the position before us? It is only one case decided on a concession and another based upon an assumption that a Government company is "the State" under Article 12 ? That is the position in fact but not in substance. As we have seen, authorities constituted under, and corporations established by, statutes have been held to be instrumentalities and agencies of the Government in a long catena of decisions of this Court. The observations in several of these decisions, which have been emphasised by us in the passages extracted from the Judgments in those cases, are general in their nature and take in their sweep all instrumentalities and agencies of the State, whatever, be the form which such instrumentality or agency may have assumed. Particularly relevant in this connection are the observations of Mathew, J., in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, of Bhagwati, J. (as he then was), in the International Airport Authority case and Ajay Hasia case, and of Chinnappa Reddy, J., in U.P. Warehousing Corpn. case. If there is an instrumentality or agency of the State which has assumed the garb of a Government company as defined in Section 617 of the Companies Act, it does not follow that it thereby ceases to be an instrumentality or agency of the State."
40. Paragraph 46 of the judgment of the Supreme Court in the case of Steel Authority of India Ltd. and others (supra) has also been referred in support of the submission, which reads as follows :--
"46. We have held above that in the case of Central Government company/undertaking, an instrumentality of the Government, carrying on an industry, the criteria to determine whether the Central Government is the appropriate Government within the meaning of the CLRA Act, is that the industry must be carried on by or under the authority of the Central Government and not that the company/undertaking is an instrumentality or an agency of the Central Government for purposes of Article 12 of the Constitution; such an authority may be conferred either by a statute or by virtue of the relationship of principal and agent or delegation of power and this fact has to be ascertained on the facts and in the circumstances of each case. In view of this conclusion, with due respect, we are unable to agree with the view expressed by the learned Judges on interpretation of the expression "appropriate Government" in Air India case."
41. When I test the case of the TVNL in the light of the principles laid down by the Supreme Court, I find that the entire share capital of the petitioner has been held by the State Government over which the later had deep and pervasive control. In view of the aforesaid fact and the principle laid down by the Supreme Court I have no manner of doubt that the petitioner-TVNL is instrumentality and agency of the State of Bihar. However, I wish to clarify that this would not mean that TVNL was ever the department of the erstwhile State of Bihar and its employee the State Government employees and for that matter the agent of the State Government for all purposes so as to bind the later for all its acts.
42. The aforesaid discussion leads me to conclude that the petitioner TVNL is a juristic person and a separate legal entity but instrumentality of the State of Bihar distinct from its department.
43. Now the question is, as to whether TVNL being an instrumentality of the State of Bihar can be said to be its undertaking before the re-organisation of the State. Mr. Jha points out that Section 47 of the Act is in Part VI of the Act and Section 41(1) thereof which is also in Part VI of the Act, clearly contemplates that Part VI shall apply in relation to the apportionment of the assets and liabilities of the erstwhile State of Bihar before the appointed date and the petitioner being a corporate body from the date of its incorporation as envisaged under Section 34 of the Companies Act is the owner of the generating plant at Lalpania. Can there be an owner of an owner questions Mr. Jha, Mr. Jha emphases that in case the TVNL is held to come within the expression "undertaking of the existing State of Bihar" under Section 47 of the Act. Part VII of the Act which had made provisions in relation to certain corporation shall be rendered useless. It is pointed out that if all the companies are held to be coming within the ambit of Section 47 of the Act, there was no occasion of making provision under Section 65 of the Act in regard to the Companies specified in the 9th Schedule of the Act. It is pointed out that the 9th Schedule of the Act contains the list of the State owned corporations/companies but the same does not include the petitioner-company which clearly shows that the Parliament never intended that the petitioner-company shall come within the ambit of Section 47 of the Act. Accordingly, Mr. Jha points out that the petitioner-TVNL, a company incorporated under the Companies Act cannot be said to be an undertaking of the existing State of Bihar as envisaged under Section 47 of the Act.
44. It is well settled that while interpreting the expression used in a statute, it has to be understood in the context it is used and the interpretation should be purposeful. To me it looks absurd that assets and liabilities of the company, the main purpose of which is of generating electricity and the plant for that purpose when situated within the territorial limits of the State of Jharkhand, will on the re-organisation of the State shall pass on to the State of Bihar. It would be senseless to hold that on apportionment of assets and liabilities of the State of Bihar after its re-organisation, the generating unit of a company although situated in the territory of the State of Jharkhand shall still pass on to the State of Bihar.
45. A word in the statute has to be interpreted to make it effective, workable and purposeful and, therefore, the Court will reject a construction which will defeat the plain intention of the Legislature even when there may be some inexactitude in the language used. Even at the cost of repetition, I am not in a position to comprehend that the Parliament would have ever intended that the assets and liabilities of the TVNL whose main activity is of generating electricity and the generating station falling within the territorial limits of the State of Jharkhand, shall pass on to the State of Bihar. In this connection I am reminded of what the father of the Nation Mahatma Gandhi said in his Autobiography MY EXPERIMENT WITH TRUTH although stated in somewhat different context but so relevant in deciding the issue :
"A few observations about the interpretation of vows or pledges may not be out of place here. Interpretation of pledges has been a fruitful source of strife all the world over. No matter how explicit the pledge, people will turn and twist the text to suit their own purposes. They are to be met with among all classes of society, from the rich down to the poor, from the prince down to the peasant. Selfishness turns them blind, and by a use of the ambiguous middle, they deceive themselves and seek to deceive the world and God. One golden rule is to accept the interpretation honestly but on the pledge by the party administering it. Another is to accept the interpretation of the weaker party, where there are two interpretations possible. Rejection of these two rules gives rise to strife and iniquity, which are rooted in untruthfulness. He who seeks truth alone easily follows the golden rule. He need not seek learned advice for interpretation."
46. Here in the present case the petitioner and the State of Bihar are attempting to turn and twist the true meaning of the provision of Section 47 of the Act. Same word may mean one thing in one context and another in a different context. It is relevant hereto state that in the cover page of the Article of Association of the petitioner it has been stated that it is an undertaking of the Government of Bihar. Although what is stated in the Article of Association may not be of any assistance if it is otherwise not permissible in law but how the party understood its status for long years may be relevant consideration. Petitioner for a long time thought and projected itself as undertaking of the State of Bihar. In my opinion the expression "undertaking of the existing State of Bihar" in the context it is used and applying the principle of purposeful construction one cannot escape from the conclusion that TVNL was an undertaking of the erstwhile State of Bihar and I answer the said question accordingly.
(V) Which is the location of the TVNL?
47. It is common ground that the registered office of the petitioner-company is at Patna falling within the State of Bihar and its generating plant is situated within the State of Jharkhand. There is controversy in this regard to the number of employees posted at the registered office but what is not in dispute that only few of the employees of the petitioner-TVNL are working in its registered office whereas the majority of the employees are posted at generating plant, Lalpania. Mr. Jha points out that the location of the petitioner-company cannot be determined on the basis of location of its generating plant and according to his submission in a case of company registered under the Companies Act its location shall be the place where its registered office is situated. It is emphasised that the location of the petitioner- company shall be at Patna as provided under Sections 146 and 147 of the Companies Act as it is from its registered office all the decisions and activities are carried out and not at Lalpania where the generating situation is located and generation made. In support of the submission reliance has been placed on a decision of the Supreme Court in the case of Morgan Stanley Mutual Fund v. Kartick Das, (1994) 4 SCC 225 and my attention has been drawn to paragraph 42 of the judgment, which reads as follows :--
"42. As Jar as India is concerned, the residence of the company is where the registered office is located. Normally, cases should be filed only where the registered office of the company is situate. Courts outside the place where the registered office is located, if approached, must have regard to the following. Invariably, suits are filed seeking to injunct either the allotment of shares or the meetings of the Board of Directors or again the meeting of general body. The Court is approached at the last minute. Could injunction be granted even without notice to the respondent which will cause immense hardship and administrative inconvenience. It may be sometimes difficult even to undo the damage by such an interim order. Therefore, the Court must ensure that the plaintiff comes to Court well in time so that notice may be served on the defendant and he may have his say before any interim order is passed. The reason set out in the preceding paragraphs of our judgment in relation to the fact which should weigh with the Court in the grant of ex parte injunction and the rulings of this Court must be borne in mind."
(underlining mine)
48. Reference has also been made to the following passage from paragraph 83 from the Halsbury's Laws of England. Fourth Edition, Volume 7, page 55 :
"83. Nationality, domicile and residence.--When incorporated, the company is a legal entity or persona distinct from its members, and its property is not the property of the members. The nationality and domicile of a company is determined by its place of registration. A company incorporated in the United Kingdom will normally have both British nationality and English or Scottish domicile, depending upon its place of registration, and it will be unable to change that domicile..."
49. It is fraught with danger to blindly follow the judgment of English Court, contends Mr. Jha and submits that a Full Bench of this Court in the case of Ramnandan Singh v. Ramadhar Singh, 1966 BLJR 553 had sounded a note of caution. He draws my attention to paragraph 17 of the judgment, which reads as follows :--
"17. In applying the principles of English law on the subject, a rule of caution is required. In the Interpretation Act there is no provision corresponding to Section 9 of the General Clauses Act, 1897. Hence English decisions cannot be strictly applied in India when construing the relevant provisions either of the statutes or statutory rules or notifications issued under the statutes, for which resort must be made to the provisions of General Clauses Acts. But even in England the general rule, as pointed out in Halsbury's Laws of England, 3rd Edition, Volume 37, at page 92, is as follows :--
"Expressions such as 'from such a day' or 'until such a day' are equivocal, since they do not make it clear whether the inclusion or the exclusion of the day named may be intended. As a general rule, however, the effect of defining a period in such a manner, is to exclude the first day and to include the last day."
50. The answering respondents contend that the location of the registered office is not conclusive to determine its location. It is contended that what determines the location of the undertaking is the place where the activity for which the Company is incorporated is carried out. It has been pointed out that only 7 persons are stationed at the petitioner's registered office at Patna whereas over 700 persons are engaged at Lalpania in the State of Jharkhand where the main activity of generating the energy is conducted. This according to the answering respondents clinches the issue. In this connection my attention has been drawn to the following passage from paragraph 83 of Halsbury Laws of England, same reads as follows :--
"The residence of a company is of great importance in revenue law, and the place of incorporation is not conclusive on this question. In general, residence depends upon the place where the central control and management of the company is located. It follows that if such central control is divided, the company may have more than one residence. The locality of the shares of a company is that of the register of shares. The head office of a company is not, however, necessarily the registered office of the company, but is the place where the substantial business of the company is carried on and its negotiations conducted. Like an individual or a firm, a company can, for the purposes of the Rules of the Supreme Court, carry on business in more places than one."
51. Reliance has also been placed on a decision of the House of Lords in the case of De Beers Consolidated Mines Limited AND Howe (Surveyor of Taxes) 1906 Appeal Cases 455 and my attention has been drawn to the following passage from the said judgment :--
"Mr. Cohen propounded a test which had the merits of simplicity and certitude. He maintained that a company resides where it is registered, and nowhere else. If that be so, the appellant company succeed, for it is registered in South Africa.
I cannot adopt Mr. Cohen's contention. In applying the conception of residence to a company, we ought, I think, to proceed as nearly as we can upon the analogy of an individual. A company cannot eat or sleep, but it can keep house and do business. We ought, therefore, to see where it really keeps house and does business."
52. Yet another decision on which reliance has been placed is the decision of the House of Lords in the case of Egyptian Delta Land and Investment Company Limited and Todd, 1992 Appeal Cases 1, wherein it has been held as follows :--
"....Either the place of trade or the place of manufacture or the "ordinary residence" is to be the place. If the respondent company has no place of trade here and does nothing at its head office but the minimum and occasional formalities' required by the Act, it is surely an impossible straining of plain words to call that its "ordinary residence." I cannot find anything to forbid the discharge of these obligations by purely mechanical means. A name on a door-post; a letter-box in a door, accessible to the public; a glass-fronted case under a lamp, containing the lists required, so placed that they may always be read from outside, with an occasional visit of a clerk to alter the lists and take away the letters, would seem to satisfy the Act-though of course I express no decided opinion about it. In so far as service may be by post or delivery at the office, the letter-box suffices. If it has to be personal, the Act merely authorizes some one, whom the company arranges to have there--an office-keeper or a typist-to accept service, a thing which the company might have done for itself. Notices and returns could be sent to the registrar from abroad. Though the spirit of the company may be imagined to brood over these arrangements, I do not see how the company itself is there at all. The office is its English address but its business may be elsewhere. If this is "residence", I think it is "residence" not by analogy to that of a natural person but by an independent metaphor. At any rate, if it is to be called "residence," only the Legislature can do it...."
53. Reliance has also been placed on the decision of the Supreme Court in the case of Subbayya Chettiar v. Commissioner of Income-tax, Madras, AIR 1951 SC 101 and my attention has been drawn to the following passage from paragraph 8 of the judgment, same reads as follows :--
"8. The principles which are now well-established in England and which will be found to have been very clearly enunciated in Swedish Central Railway Co. Ltd. v. Thompson, (1925) 9 T.C. 342 at p. 373 : 1925 AC 495, which is one of the leading cases on the subject, are: (1) that the conception of residence in the case of a fictitious "person", such as a company, is as artificial as the company itself, and the locality of the residence can only be determined by analogy, by asking where is the head and seat and directing power of the affairs of the company."
54. Having appreciated the rival submission I have no difficulty in accepting the submission of Mr. Jha that the decision of the English Courts cannot be followed blindly and it is the judgment of the Supreme Court only which binds this Court under Article 141 of the Constitution of India but at the same time it cannot be said that this Court in all circumstances have to ignore their judgments. Wisdom is nobody's monopoly and in my opinion nothing prevents this Court from accepting the ratio of the judgments of the English Courts or, for that matter, any Court which appears to this Court to be sound. Wisdom or the light coming from any source can and should be seen and it found to be sound can be accepted. Decision of English Courts are of more persuasive value to Which the Court may legitimately turn for assistance as they are decisions of the Courts of a country from which Indian jurisprudence and large part of our law is derived.
55. In the present case, one is concerned with the locality of an undertaking for the purpose of its apportionment. The test for determination of location of an undertaking for all purposes cannot be one and the same and it shall depend upon the facts and circumstance of each case. The place of registration of the company, in my opinion, is not the only determining factor and from the high authorities, referred to above, there is no difficulty in holding that in the facts of a given case, the location of an undertaking can be at a place other than where it is registered.
56. Petitioner-company had been incorporated as a generating company for generation and sale of energy and its generating plant is situate within the territorial limit of the State of Jharkhand and, therefore, in my opinion, for the purpose of apportionment of the undertaking the place where the main activity of the company for which it is created is carried out shall be the location of the undertaking for the purpose of passing on the assets and liabilities under Section 47 of the Act. It does not stand to reason that Parliament would have intended to pass on the generating plant to the State of Bihar although it is situated in the State of Jharkhand. In my opinion no other interpretation is possible but even if I assume that interpretation putforth by the petitioner is feasible, it will result into a situation that an undertaking situated in the State of Jharkhand shall pass on to the State of Bihar after reorganisation of the State, which the Parliament would not have envisioned and hence I have adopted an interpretation which advances justice and suppresses the evil.
57. Having held that TVNL and its generating plant are undertakings and its nature is commercial and belonged to the erstwhile State of Bihar and located within the territorial jurisdiction of the State of Jharkhand same shall come within the ambit of Section 47 of the Act. In view of the aforesaid finding the submission of the petitioner that take over of the assets and liabilities of the petitioner by the State of Jharkhand is in breach of the petitioner's fundamental right guaranteed under Article 300-A of the Constitution of India and ultra vires the provisions of the Companies Act fall to the ground.
58. There is yet another reason to hold that the impugned orders of the Government of Jharkhand and the Government of India are good and valid. As stated earlier, the petitioner-company was registered under the Companies Act and one of its objects is of establishment, operation and maintenance of generating station. In view of aforesaid, the petitioner-company shall come within the definition of generating company under Section 2 (4-A) of the Electric (Supply) Act. 1948. The generating station of the company is situated within the State of Jharkhand and in view of Section 2(3-A) of the said Act, the competent Government in respect of the generating company shall be the Government of State in which the generating station of a generating company is located. In that view of the matter for the generating station at Lalpania, the competent Government shall be the Government of Jharkhand. Further Section 1-5-A(3) of the Electric (Supply) Act, 1948 the generating company can carry on its activities within such areas as the competent Government may from time to time specify. Further Section 18-A of the Electric (Supply) Act provides for the duties of the generating company and for that also the competent Government has a role to play. The Government of Jharkhand being the competent Government under the Electric (Supply) Act, the Government of Bihar cannot pass any order and as such it will be reasonable to hold that the petitioner-company which is a generating company shall pass on to the State of Jharkhand.
59. To over come this Mr. Jha submits that the Electric (Supply) Act, 1948 has been repealed with effect from 10.6.2003 and as such same has no bearing on the decision of the present application. It is not disputed that at the time when the impugned orders were passed, the Electric (Supply) Act, 1948 was in vogue. In my opinion its repeal later on shall not be relevant as the validity of the orders have to be judged on the date it was passed. The principle that the validity of the order of detention or, for that matter, certain other orders is judged on the date of the return of the rule shall not apply in the facts of the present nature.
60. Mr. Jha submits that the petitioner has been deprived of its property and the impugned orders have been passed without giving the petitioner notice and as such the same is in violation of the principle of natural justice. In support of the submission reliance has been placed on a decision of the Supreme Court in the case of State of West Bengal and Ors. v. Vishnunarayan and Associates (P) Ltd. and Anr., (2002) 4 SCC 134 and my attention has been drawn to paragraph 20 of the judgment, which reads as follows :--
"20. In the absence of specific statutory provision can a person, on the ground of public interest, be evicted by force by the State or its executive officers without following due course of law? In view of the ratio laid down in Bishan Das and Maharaja Dharmander Prasad Singh we hold that such an action of eviction by force cannot be justified in law and for taking possession, action has to be taken in accordance with the law."
61. I do not find any substance in the submission of Mr. Jha and the authority relied on is clearly distinguishable. Petitioner is unnecessarily issuing a hue and cry that it has been deprived of its property. Petitioner instead of continuing as the undertaking of the State of Bihar has become the undertaking of the State of Jharkhand after re-organisation of the State. It is well settled that principle of natural justice is not an unruly horse and its application depends upon the facts and circumstances of each case. Here in the present case the view point of the State Government of Bihar was elicited and on consideration thereof it has been observed that the petitioner- company conies within the ambit of Section 47 of the Act and shall pass on to the State of Jharkhand. Further petitioner TVNL is not deprived of its property. The generating station remains its property and on apportionment of assets and liabilities of the erstwhile State of Bihar, it goes to the State of Jharkhand. Not only this petitioner had become an undertaking of the State of Jharkhand in view of Section 47 of the Act. In the case of State of West Bengal and others (supra) it has further been observed as follows :--
"10. It is the settled position of law that the State or its executive officers cannot interfere with the rights of others unless they can point to some specific provision of law, which authorises their acts. A Constitution Bench of this Court in Bishan Das v. State of Punjab, held that the State or its executive officers did not have any right to take law into their own hands and remove a person by an executive order. The Court further observed: (SCR p. 60).
"Before we part with this case, we feel it our duty to say that executive action taken in this case by the State and its officers is destructive of the basic principle of the rule of law."
(Underlining mine)
62. In view of the specific provision in the Act i.e. Section 47 it cannot be said that State of Jharkhand had taken over the TVNL without authority of law. Hence I reject the submission of Mr. Jha.
63. Mr. Jha contends that the impugned orders are vitiated on the ground that although it had adjudicated to the right of the parties but in the impugned orders no reason has been mentioned. The question in the present case is as to whether the petitioner comes within the ambit of Section 47 of the Act and the order of the State Government dated 27.2.2001 indicates the reason for notifying the petitioner as undertaking of the Government of Jharkhand on the ground that it is covered under Section 47 of the Act. The Government of India had also assigned the reason in its order and has observed that the State Government of Bihar had formed the petitioner-company in conformity with the provision of Electric (Supply) Act, 1948 and, therefore, it is an undertaking of the State of Bihar and its assets and liabilities is to be dealt with under Section 47 of the Act. Therefore, the very assumption of the petitioner that no reason has been assigned in the impugned orders is illegal in the eye of law.
64. Petitioner has also made a grievance in regard to the manner in which the Government of Jharkhand had shifted the registered office of the TVNL at Ranchi. constituted the fresh Board of Directors and amended its Articles of Association. Mr. Jha, its counsel points out that the registered office of the petitioner is at Patna and certificate to that effect has been granted by the Registrar of the Companies but the Government of Jharkhand without following the provisions of the Companies Act had shifted its registered office at Ranchi. There is a procedure prescribed in the Companies Act for change of the registered office of the company and in case the Government of Jharkhand has done so, it may be illegal but it shall have no bearing on its decision in regard to the passing of the assets of the petitioner-company to the State of Jharkhand. Further the TVNL having passed on to the State of Jharkhand it is competent to amend its Articles of Association in accordance with the procedure prescribed by law.
65. To put the record straight, it is relevant here to state that the answering respondents have prayed for dismissal of the writ application also on the ground that when the question of implementing the order of this Court passed in the writ application filed by one Ashok Kumar for appointment as Assistant Engineer in Lalpania Thermal Power Station the State of Bihar took the plea that the direction has to be carried out by the State of Jharkhand. It has been pointed out that it was the Secretary of the Energy Department of the State of Jharkhand which had carried out the order and as such petitioner is stopped from changing its stand. In the contempt application there is no adjudication in regard to apportionment of the petitioner-company and as such the fact that the direction was carried out by the Government of Jharkhand shall ipso facto not disentitle the petitioner the relief claimed in the present application. In my opinion, same shall turn on the true interpretation of Section 47 of the Act and having found that the petitioner comes within the ambit of Section 47 of the Act, impugned orders cannot be faulted.
66. In the result, I do not find any merit in the application and it is dismissed accordingly with no order as to costs.