Gauhati High Court
Bharat Hydro Power Corporation Ltd., ... vs State Of Assam And Anr. on 19 July, 1997
Equivalent citations: AIR1998GAU49, AIR 1998 GAUHATI 49, (1997) 3 GAU LR 162
ORDER M. Sharma, J.
1. In the writ petition in Civil Rule 283/97 under Article 226 of the Constitution of India, the petitioners have challenged the validity of the Act, namely. The Bharat Hydro Power Corporation Limited (Acquisition and Transfer of Undertaking) Act, 1996, being Assam Act No. I of 1997 published in the Assam Gazette Extraordinary dated 6th January, 1997.
2. Petitioners No. 1 and 2 are the companies registered under the Companies Act, 1956, limited by shares and petitioners No. 1 claims to be the sole and absolute owner of the "100MW Karbi Langpi (Lower Barapani) Hydro Electric Power project for short "the project").
3. The chronology of the installation of the power project as emerged from the submissions of the parties is that in 1979 the Planning Commission sanctioned a project for production of 100 MW electricity , known as "Karbi Langpi (Lower Barapani) Hydro Electric Power Generating project in the State of Assam at the approved cost of Rs. 34.15 crores. The Assam State Electricity Board (ASEB) was entrusted with the responsibility of setting up and commissioning of the said project. The ASEB commenced the work of the project with a target to complete by the year 1985 by taking loan from Japan. Originally the ASEB (respondent No. 2) was entrusted with the project and work was started from 1980 but there was inordinate delay in execution of the works and only 50% of the work was done. Consequently, further construction work of the project came to a stand still at the end of 1992 due to non availability of fund and the project was lying almost abandoned. At the end of 1992 a policy decision was taken by the respondents No. 1 and 2 commensurate with the Central Govt. Policy declarations that in order to ensure speedy completion of the said : project private participation and capital should be" introduced. The ASEB procured 1.7 million Yen loan from the Overseas Economic Cooperative Fund and the Govt. of Assam procured a loan of Rs. 58 crores in 1983 from Japan through Govt. of India for purchase of Turbo Generator and other equipments at a very low rate of interest. The said loan which is refundable in Yen alongwith interest has now increased to about Rs. .100 crores taking into account the increase in value of Yen in exchange rate as against rupees and interest. Further contention of the petitioners is that the ASEB commenced the project work with a target to complete it by the year 1985 taking the said loan from Japan, but by 1993 the ASEB could complete only 50% of the project work incurring total cost till then of about Rs. 130 Crores and thereafter the, ASEB virtually abandoned the project and the project work was entrusted to different contractors including Rastriya Pariyojna Nirman Nigam Limited from time to time by ASEB, but the work could not be completed and the project was, as contended, virtually in abandoned position for non availability of fund/resources. As the estimated cost was increased to Rs. 45.8 Crores in 1992, tenders were again invited and total costs came to Rs. 189.90 crores. In the meantime, the Government of India changed the policy regarding private participation in power project and the State Government decided to transfer the project to an assisted sector company. At this time the petitioner company came forward to undertake the project with participation of the ASEB and/or State Government. Petitioner's contention is that the matter was concerned practically at all suitable levels both by the ASEB and by the State of Assam and a number of meetings were held in course of negotiations and ultimately the matter was placed before the State Cabinet. The State Cabinet after negotiations approved the policy and gave its approval in the matter of entering into the Memorandum of Understanding (MoU) with the petitioner No. 2; that the MoU dated 25th March, 1993 was drawn with consent of the three parties, namely, the State of Assam, the ASEB and M/s. Sub has Project & Marketing Ltd. and the same was signed by three parties. In accordance with the provisions of the said MoU, a Deed of Assignment was executed and accordingly all assets and properties of the project were transferred in favour of the petitioner No. 1. It is alleged that respondent No. 2 ASEB has taken about one year to hand over the assets and properties of the project in question, the value of which is about Rs. 40 crores, in spite of repeated requests.
4. Petitioners annexed copy of MoU and the Deed of Assignment with the petition, being Annexures-A and B, respectively. As per the MoU the petitioner No\2 was to form a new company with 11% share holding of the ASEB; 40% of the petitioner No. 2 and the rest was to be through subscription from general public. As per said MoU total consideration for the project was fixed at Rs. 116,21,12,000/-(One hundred sixteen crores twenty one lakhs twelve thousand) only and the said liability of the ASEB is to be liquidated by the Company as per Clause 22 of the MoU by supplying a minimum 30% of the power generated by the project. The tariff was to be fixed as per the guidelines of Central and State Government and the balance 70% of power generated could be sold by the Company to HT and LT Consumers/ custom . at the rate to be determined by the Compa with the approval of the Govt. of Assam/ASEb. It is contended that after execution of the MoU the Company was incorporated and thereafter the Deed of Assignment was executed on or about 8th April, 1993 containing similar terms and conditions as in the MoU and the MoU was made part of the said Deed of Assignment. Both the MoU and the Deed of Assignment cast obligations on the respondents to enable the petitioners to complete the project at the schedule time. Further as per the terms of the MoU the respondent No. 2 nominated two Directors of the Company and petitioner No. 1 and the petitioner No. 2 nominated four Directors.
5. Further, as contended by the petitioners, the Planning Commission sanctioned the project with the main purpose to produce electricity to the extent of 100 MW with the use of water and other equipments including Turbo Generators'; that after the execution of MoU and the Deed of Assignment the project was handed over to the petitioner No. 1 Company by 1 -4-94 to complete the project with rights and powers to generate power and to supply the same under the terms and conditions incorporated in the MoU. Petitioner No. 1 claims itself as the generating station within the meaning of Section 2(4-A) of the Electricity Supply Act, 1948 and the said project is a generating station within the meaning of Section 2(5) of the Supply Act 1948. In support of this contention, the petitioners referred to Section 26-A of the Supply Act 1948.
6. I have gone through the Section 26A of the Supply Act 1948. From the reading of the said section it is seen that under Section 26A, a generating company need not obtain licence. Section 26-A (2) further provides that wherever the word licence has been used, the same will amount to reference to generating company. Petitioners assert that power has been granted to it by the Respondents under the terms arid conditions of the MoU and the Deed of Assignment to complete the generating station of the said project as per schemes and plans as sanctioned by the ASEB (Respondent No. 2) to generate and supply electricity, including all other powers as provided under the provisions, of Indian Electricity Act, 1910(for short Act 1910) and Supply Act, 1948. It is asserted that the petitioner No. 1 became the licencee or the purpose of completion, setting up generating and supply of electricity; that Section 26A of the Supply Act, 1948 as inserted in 1976 exempts generating companies to obtain a licence under the Act, 1910 and it can exercise the powers of licence for the purpose of various works. That in 1991 due to change of policy in respect of private participation in power sector, Electricity (Amendment Act was passed and the definition of generating company in Section 2(vi) of the Supply Act 1948 was substituted and that as per the definition the petitioner No. 1 is a generating company. Further, it is asserted that under Section 28 of the Act, 1910, State Government can grant/ sanction/ licence to a non licencee for engaging in the business of supply of energey of public.
7. As per the MoU the project was to be completed by June 1995 but, it is alleged due to various obstructions created by and, inaction on the part of the Respondents for non performance of their obligation and although the petitioner No. 1 was ready to perform all obligations as per, MoU and Deed of Assignment the ASEB failed and refused to perform their obligation. Petitioners have given a detailed description of failure and negligence on the part of the respondents in para 23of the writ petition. According to the petitioners as the ASEB could not extend full co-operation in completing the project work, as a result, the ASEB extended the time for completion of the project by the end of December 1996.
8. The petitioners further alleged that in spite of various obstructions and difficulties created by the respondents particularly the respondent No. 2 and other officers the petitioners proceeded with the project work to complete the same expeditiously arid invested huge sum of money in the project; and the authorities including' the secretaries of the State Govt. Power Deptt. as well as the Minister of Power expressed their satisfaction on the progress of the project work. It is further contended that due to inaction and for non compliance of the obligations by the Respondents the petitioner No. 1 had filed a suit (TS No. 244/96) in the Court of the Asstt. District Judge No. 1 Guwahati for specific performance of the contract and the said suit is pending disposal, and according to the petitioner as the suit relates textile MoU and the Deed of Assignment and the project in question, the matter is subjudice. While the period extended by the ASEB was yet to be expired, the Government of Assam promulgated an Ordinance in 1996, being Assam Ordinance No. VII of 1996. Petitioner filed a writ petition (Civil Rule No. 6/97) challenging the vires of the Ordinance, which was moved on 10-1-97. Thereafter, the Legislative Assembly of Assam passed an Act, namely, the Bharat Hydro Power Corporation Limited (Acquisition and Transfer of Undertaking) Act, 1996 (for short 'the Act') and it was subsequently published in Assam Gazette, Extra Ordinary dated 6-1-97, This Act has been challenged by the writ petitioners in this writ petition (CR 283/97). Counsel for the respondents informed the Court by producing a copy of the Gazette Notification that the Act has already been passed and published in the Assam Gazette. Counsel for both sides submitted that as the provisions of both the Ordinance and the Act are similar and the Ordinance is replaced by the Act the similar and the ordinance is replaced by the Act 1996, the Court can take up the writ petition challenging the Act and Ordinance together. Accordingly, I propose to dispose of these two writ petitions by a common judgment. It is further submitted that the Ordinance and the Act were passed with the consent of the Governor of the State of Assam and they were not reserved for the assent of the President nor they received the assent of the President.
9. Petitioners' further contention was that the dominant, purpose of enacting the Act is acquisition of the right, title and interest of the undertaking and the matters connected therewith or incidental thereto to enable the Govt. to supervise arid execute the project work efficiently and expeditiously in view of the acute power shortage in the State. Hence by Section 4(3) of the Act 1996, the right and liabilities granted to the petitioner No. 1 under the Electricity Act, 1910 has been terminated and all such right deemed to have been devolved in the State Government and as such the Act was enacted for the, purpose of acquisition of the right of the petitioner company. The petitioners have challenged the legislative competency of the State in enacting the Act 1996 as the Central Legislations, that is, Indian Electricity Act 1910.
Electricity (Supply) Act, 1948 are already existing in respect of the said subject. Petitioners contended that the Act is in violation of Article 254 of the Constitution inasmuch as the same has been enacted without assent of the President or reserved for consideration of the president; that even if the legislation is relatable to any one of the entries of List III, the same is to be read alongwith Article 254 of the Constitution of India and as the Central Legislations, namely, the Act 1910 and the supply Act 1948 operate in the same field, as there is provision of compulsory purchase of generating stations/undertakings and that the State Act invades the Central Acts as the field of legislation of both the Acts are same and not different.
The petitioners challenged the impugned Act on the ground of repugnancy as the provisions of the impugned Act invades the provisions of Act 1910. Supply Act 1948. Industrial Disputes Act as well as Companies Act.
10. Petitioners further stated before this Court that an application under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 has been filed before this Court for appointment of an Arbitrator to decide all pending disputes by and between the petitioners and Respondents and also for deminuation of consideration amount as there was a quantifiable discrepancy in the assets handed over to the petitioner No. 1 Company amounting to Rs. 39.94 crores, but the reference, being Civil Reference No. 6/96ispending decision before this Court.
11. The Respondent No. 1 - the State of Assam filed Affidavit-in-opposition through the Under Secretary to the Govt. of Assam, Power Department. It is stated in the affidavit that to meet the scarcity in electricity requirement the ASEB located a site for creating a Hydro Electrict Power Station in the District of Karbi Anglong from the river Barapani at Lengeri, Amreng and submitted a Scheme to the Planning Commission through the Slate of Assam and the same was forwarded to the Central Government. Upon approval of the Scheme through proper channel, for the project the techno economical approval was obtained and the same was sanctioned by the Planning Commission in 1979 at an estimated cost of Rs. 36.36 crores. The project, it is averred, comprised construction of 51 meter high concrete dam on the river Barapani near Hatidubi for utilising flow from catchment area of 1178 sq., km. The installed capacity of the project is 2 x 50 MW for utilising a maximum head of 240 M. The annual energy generation is estimated to be 390 million units in 90% year and 454 million units in an average year. From the averments made in the affidavit of the Respondent No. 1 it transpires that from the inception of the project the progress has been stalled due to Court litigations. Initially construction was given to a local construction Contractor M/s Sibson Construction Co., Guwahati which was to complete the Dam in 1986, but due to the failure bf the said Contractor the Respondent No. 2 terminated the contract and protracted litigation ensued upto this Court. Subsequently, the project work was entrusted to National Project Construction Corporation (NPCC) and the same followed the similar fate and had to terminate the contract in December 1992. It is averred that due to escalation of price of various input cost of the project initially sanctioned at Rs. 36.36 crores increased tremendously; that the cost of the Dam sanctioned originally was at Rs. 5.01 crores which increased to Rs. 12.8 crores when the work was allotted to NPCC and Respondent No. 2 had to prepare revised estimate of the Dam and invited tenders from reputed contractors. Estimated costs of the Dam escalated to Rs. 45.8 crores by the year 1992 when the tender was invited in 1992 and other incidental cost for other incomplete items of the work of the project required to be revised, total cost being Rs. 189.90 crores in September 1992. It is further averred that out of the aforesaid estimate the work completed was of about Rs. 116 crores and the ASEB needed about Rs. 60 crores to complete the project excluding other liabilities. It is contended that with the additional fund of Rs. 60 crores, the ASEB could have completed the project. It is further averred that due to the policy of privatisation of the Central Government in 1992-93 opening up the generation of electricity amongst others for private sector participation, scope for availability of Government fund for generation project narrowed down and consequently, ASEB could not get additional fund from the State Government nor did it get any firm indication of fund from the Slate Government, therefore, the ASEB could not take any decision on the tenders received after the contract with NPCC was rescinded. In view of the backdrops of the situation, it is averred, the State Government following the policy of privatisation of the Central Government decided to transfer the project to an assisted Sector Company. The deponent' admitted execution of the Moll and the Deed of Assignment between the ASEB, State Government of Assam and the petitioners 1 and 2. This deponent also admitted the terms and conditions put forth in the said documents on the basts of which the petitioner 1 and 2 came forward taking the responsibility to complete the project agreeing with the equity participation under the terms and conditions of the Moll being equity participation of 11% of ASEB, 40% of petitioner No. 2 and 49% of General Public. In terms of the Deed of Assignment the petitioner No. 1 was to complete the project and start generating electricity by June J 995, which was subsequently extended till June 1996. The deponent further stated that prior to the aforesaid Deed of Assignment the ASEB completed 16% of work in respect of the major items of concreting the Dam and procurement of the items for erection of the radial gate, a major component of Dam construction was completed through other contractors. The Respondent No. 1 also admitted litigation and alleged non-compliance of High Court's order, by which the petitioner No. 1 was directed to deposit Rs. 3.14 crores pending disposal of the appeal, in terms of the MoU and the Deed of Assignment. However, the petitioner No. 1 paid Rs. 25 lakhs only, as a result of which, ASEB was crippled due to attachment of principal Bank Account of the ASEB and the threat of attachment and sale of ASEB's property, including the Headquarter building in the execution proceeding. The ASEB, it is averred, suffered severe resource crunch due to the failure of the petitioner No. 1 to discharge its liabilities. Deponent also alleged failure on the part of the petitioner No. 1 to discharge various liabilities in regard to the project, resulting financial burden on the ASEB due to the demand for compound interest and compensation by the Claimants-contractors, as is evident from the Annexure-I and II to the Affidavit-in-opposition of Respondent No. 1). This Respondent refuted the charges of impediment and negligence made against it by the petitioner for delay in progress of the project work and averred that the progress was slow due to the inability of the petitioners. Though the petitioner No. 1 received the Certificate of Commencement of business on 6-4-93 after its incorporation, it failed to take charge of the project till 5-4-94in spite of repeated reminders by ASEB, resulting huge maintenance and custody cost of the project by ASEB on account of interest on the investment by it in the project as the liquidation of the dues are liable to be deferred due to the delayed generation of power, apart from the huge loss of generation due to the delay in commissioning the project as per target fixed in the MoU.
12. Counter allegations have been made imputing non-performance on the part of the petitioners. The deponent averred that the writ petitioners suppressed the material facts from the nominated Directors of ASEB and that the Directors of the petitioner company were responsible for the day-today management of the Company, as they utilised its funds for purpose other than completion of the project. The funds of petitioner have been utilised for loans and investments in an unauthorised manner in violation of the provisions of the Companies Act and the Articles of Association of the Company and that the Directors of the company have caused the Company to enter into contract with associate companies which is illegal as per the Companies Act; that the details were not placed before the Board for approval and necessary permission of the Central Government was also never obtained resulting in violation of the provisions of the Companies Act. The deponent, in their affidavit, has given a detailed description of such laches, breaches and defaults on the part of the writ petitioners alleging suppression of actual facts before the Court. The sum and substance of the averments in the affidavit of the Respondent No. 1 is that while the decision of transfer of the project to private party was taken by the State Government and the ASEB with the sole purpose of assuring speedy completion within a specific time frame, so that the State Government could get rid of the critical shortage of power. This deponent has given details of the losses the ASEB has suffered for laches and negligent attitude of the petitioners for completion of the project and averred that the financial implication on the loan taken from the Overseas Economic Cooperation Fund of the Government of Japan by the Government of India, Govt. of Assam/ASEB including the liability of repayment with interest have not been incorporated in the DPR. Thus, it is averred, the entire financial burden on the account remained unaccounted for; that due to the non performance of the writ petitioners of their liability, the entire financial burden falls on the ASEB causing huge loss.
13. In support of the taking over of the undertaking the deponent averred that the project having been delayed rendering its completion totally (SIC)ertain, the very purpose of private particip (SIC) on being the speedy completion of the project, has been totally defeated with the obvious consequence of continued shortage of power situation in the State; that because of non completion of the project even during the extended period, it is apprehended, there will be colossal commercial loss to ASEB of about Rs. 100-crores per year, for each year of the delay in its completion. It is further averred that due to the failure of the petitioners to complete the work within the extended period, the ASEB vide letter dated 27-5-1996 (Annexure-III) informed the petitioners that the MOU was liable for termination and repudiation and rescission in accordance with the provisions of Clause 41 of the MOU and that the Board reserved its rights to invoke those provisions at appropriate time in appropriate forum. As no concrete assurance was given by the petitioners for completion of the balance work within a time frame, the State Government by the impugned Act/Ordinance acquired the said project from the petitioner No. 1 by notification No. PEO/135/95/Pt.IV/2-Adated 1-12-1996 (Annexure-IV) and transferred to and vested the said project in the Respondent No. 2 under the provisions of Section 6( 1) of the impugned Act. That, after the said notification the possession of the project was handed over to the Respondent No. 2 in presence of the representatives of both sides on 2-12-1996 and on 5-12-1996 Memorandum of Handing over and taking over was signed (Annexures-V & VI).
14. This deponent denied the deed of Assignment as valid and legal for which a suit is pending and also denied that 50% of the total work still remains to be completed; that the work was delayed due to omission and commission on the part of the respondent No. 2; that even within 13 years the respondent No. 2 could not complete 50% of the work. The deponent denied all the allegations made in the writ petition regarding obtaining of permission from various departments of the Government of Assam and also from the District Council of Karbi Anglong which is an autonomous body; obtaining permission from the concerned authorities is the responsibility of the petitioner, however, the respondent No. 2 requested all concerned authorities on behalf of the petitioners so that the project could be completed in time and, therefore, the petitioners' default cannot be attributed as a ground for non-commissioning the project.
15. Respondent No. 1 further stated that the provisions of the impugned Act as referred to in the writ petition are not repugnant to the provisions of the Central Acts. Nothing has been done to nullify any direction given by the Central Acts by any provisions of the impugned Act, and therefore, it does not suffer from repugnancy; that the question of repugnancy for the whole of the Act would not come even if certain provisions are found repugnant; that for such repugnancy the whole Act would not be void. Denying violation of the Sections 3,4, 5, 6 and 7 of the Act 1910 by Sections 3 and 4 of the impugned Act deponent averred that those Sections are not applicable as the petitioners are not 'licensee' within the meaning of the Act 1910; that the Govt. has jurisdiction and power to acquire any property in public interest making adequate provisions for compensation and the impugned Act has taken adequate care on that behalf for assessment of amount payable by the Commission. Further it is averred that there is no ambiguity in understanding the definition "undertaking". The impugned Act has been enacted within the legislative competency and as per settled law. Deponent also denied that the petitioner company is. a power generating company to get licence on that behalf. Deponent further denied violation of Constitutional rights under Articles 14, 19(1)(g), 300A and 301 of the Constitution. Finally the deponent has taken the stand that question of Article 254 of the Constitution does not arise unless the State law is in its pith and substance repugnant in any manner as there is no direct conflict between the provisions of the Central Acts and the State Act on account of which one cannot be obeyed without disobeying the other and that it impossible for the Central Acts and the impugned State Act to co-exist even though the State Jaw provides for certain additional/supplementary provisions. This respondent gave much stress on the point that while the impugned Ordinance/Act was enacted public good and individual hardship was taken into consideration and the "undertaking" was taken over for the greater public interest of the State of Assam.
16. Respondent No. 2 -- the ASEB, filed Affidavit-in-opposition through its Secretary supporting the contents of the affidavit of the Respondent No. 1. The ASEB denied all the allegations made against them in the writ petition. In their affidavit respondent No. 2 gave a detailed account of irregularities and suppression of facts regarding the performance of the petitioners and non information/misinformation to the nominated Directors of the ASEB/Govt. and denied" the imputation of non-completion of the project on ASEB by suppressing real facts. Respondent No. 2 alleged laches and breaches and defaults on the part of the writ petitioners in carrying out their lawful obligations under MoU apart from irregularities in the accounts, maintenance of statutory books and holding meetings, and the Directors of the petitioner company were responsible for day-to-day working of the Company. It is averred that while the decision of transfer of the Project to a private party was taken by the State Govt. and the ASEB with the sole purpose of ensuring speedy completion of the project within the scheduled time and as the petitioner failed to show business like effort for its completion, the project was take never for the public interest. Respondent No. 2 further alleged heavy financial loss to the ASEB for non-completion of the project in time. It is further averred that financial implication on the loan taken from the Overseas Economic Co-operation Fund, Govt. of Japan by the Govt. of India and Govt. of Assam/ASEB including the liability of repayment with interest have not been incorporated in DPR and that consequent to this entire financial burden remained unaccounted for; that due to non-performance of the petitioners of their liability the entire financial burden falls on the ASEB causing huge loss. Deponent denied the validity of the Deed of Assignment and averred that in terms of MoU, the Deed of Assignment comprises immovable properties including land, building etc. situated within the Karbi Anglong Autonomous District Council and under the provisions of Sixth Schedule, which governs the said Autonomous District Council, the tribal land is not subject to transfer in any manner and the said land was given to ASEB for constructing the project which cannot be alienated to others and therefore, it is averred, that the petitioners did not take steps to get the deed of Assignment registered by completing required formalities. Apparently both the Respondent No. 1 and 2 made similar averments in their respective affidavits and, therefore, those can be taken into consideration as one.
17. Petitioners filed reply to the affidavits-in-opposition filed by the Respondents against which further affidavit has been filed by the Respondent No. 1. A stream of affidavits and counter affidavits have been filed mainly on the factual position inflicting allegations and counter allegations repeating the same facts.
18. I heard the learned counsel for the parties at length.
The facts and circumstances which have been highlighted by both the parties may have immediate or distant effect leading to the enactment of the impugned Act, but this Court desire to consider the points -- Whether the impugned Act suffers from repugnancy in view of its alleged contradiction, inconsistency and direct clash with the Central Acts, namely, the Act 1910, Supply Act, 1948, Indian Contract Act and the Industrial Disputes Act; and whether the Act is bad and liable to be set aside for non receipt of President's assent.
Taking this view of the matter, this Court did not allow the prayer of some of the applicants for impleading them as party respondents in this writ petition. According to these applicants they have filed public interest Litigations before this Court and these petitions are pending disposal, therefore, their representation in the writ petition is necessary. Heard Mr. Pathak and Mr. P. O. Uzir, learned counsel for some of the applicants. Upon hearing the counsel for the parties, I do not consider it necessary to implead them as party respondents in this writ petition as this Court decides to consider limited points as stated above, and the respective Pils would be decided on its own merit.
19. M/s. Tristar Commercial Pvt. Ltd. and others have also filed an application for impleading them as party respondents in this writ petition, being Misc. Case No. 208/97. Mr. N.Dutta, learned counsel for these eight applicants submitted that they are necessary parties to the instant writ petition as they are shareholders of the petitioners Company and have invested 7 crores of rupees for specific purpose and speedy completion of the project; that the Directors representing the applicants Associate group were not informed about the decision of preferring this Civil Rule and that this was done with ulterior motive for seeking relief from this Court by suppressing material facts, which are within the knowledge of the applicants' associate group. These applicants claimed to be share-holders of the petitioners company, who have invested a substantial amount in the project, supported the case of the respondents and Mr. Dutta has adopted the arguments of Respondent Nos. 1 arid 2.
20. Writ petitioners have filed affidavit objecting the prayer of these applicants. Denying the allegation of non information regarding filing of the writ petition petitioners claimed that notices were issued under Certificate of posting to the Directors and Shareholders of the. Company as per Companies Act as well as Articles of Association. Further, petitioners denied all allegations made in the application. In his arguments Mr. Jain, counsel for the petitioners submitted that the applicants are not entitled to be impleaded as respondents on the ground that they claimed themselves to be the share-holders and, therefore, being share-holders they have no right.
21. In support of his submission the learned counsel for the petitioners has referred to a decision of the Supreme Court in Rustom Cavasjee Cooper v. Union of India, AIR 1970 SC 564. That case had been preferred by the petitioner against the Nationalisation of Banks under the provision of Banking Companies (Acquisition and Transfer of Undertakings) Act (22 of 1969) (Ordinance 8 of 1969) claiming Constitutional protection against the provisions of the Act by which petitioner claimed to be prejudiced as a share-holder of the Bank. The Apex Court in the said decision held thus (para 13) :--
"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 share-holders. 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 share-holder, 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."
22. Upon considering the arguments of the parties. I am of the view that the applicants' prayer for impleading is not for protection of their rights and interest as share-holders; but they jfiled this application to be impleaded as respondents to support the case of the respondents. 3n that view of the matter the applicants are not necessary and proper parties to the writ petition. As stated above, this writ petition continues only to a limited question as to whether the impugned Act is repugnant to Central Acts. For the reasons plated above, the application for impleadment is accordingly rejected.
23. By the impugned Act the entire undertaking of the petitioner company vests in the State Govt. and the Company is prohibited from proceeding with the project work. The work which the petitioner was carrying on was for production of electricity to the extent of 100 MW with the use of water and other equipments including turbo generators. The entire project was handed over to the petitioner No. 1 on 1-4-94 with rights and power to complete the project, generate power and to supply the same as agreed by the Mou and was to be completed by June, 1995. Subsequently time was extended for, that is, till June, 1996 and as the work of the project was not completed within the specific period, the State Govt. decided to take over the undertaking for public interest as delay of the completion of the project culminated to large financial loss to the ASEB under whom the project was undertaken with foreign fund and also for acute shortage of electricity to meet its demand in the State. Respondents' repeated demand for expediting the completion of the project work was not taken seriously by the petitioners' company. Petitioner's Company delayed the project work on this or that pretext which made the respondents sure that the project would not be completed even in near future. As stated above both the parties involved in allegations and counter allegations imputing the case of delay on each other making it sure that there was belak possibility of completion of the project in near future.
24. With this backdrop of the situation, the State Legislature promulgated the impugned ordinance and then the Act, and this Act has been under challenge claiming that by the impugned Ordinance and the Act rights guaranteed to the petitioners under the Act 1910 and the Supply. Act 1948 and the Central Acts, are impaired and, therefore, the Act is repugnant to the said Central Acts under Article 254 of the Constitution for which no assent of the President has been obtained. Stand of the petitioners is that the impugned Ordinance and the Act are without legislative competence as it transgresses the provisions of the Central Acts particularly the Act 1910 and the Supply Act 1948 and both the Ordinance and the Act were passed with the consent of the Governor of Assam and none of them were reserved for consideration of the President nor they received assent of the President.
25. As submitted by the learned Advocate General, Assam the dominant purpose of enacting the Act was the acquisition of the Undertaking and the matters incidental there to and also to enable the Govt. to efficiently supervise, manage and execute the work expeditiously in the context of acute power shortage in the State by virtue of Section 4(3) of the Act. Apparently, by the impugned Act the rights and liabilities granted to the petitioner No. 1 company under Electricity Act has been terminated and the rights were deemed to have been devolved in the State Govt. and as such, the Act was enacted for the purpose of acquisition of the rights and interest conferred with it under the Mou.
26. Mr. Jain, learned counsel for the petitioners has submitted that Entry 42 of the Constitution of India deals with the acquisition/requisition of property and there is an existing Central Act--The Land Acquisition Act, 1894; that similarly as far as generating company and licensee are concerned, the Central Govt. has made specific provisions in the Act 1910 and Supply Act 1948 for compulsory purchase of Undertaking and a detailed procedure has been prescribed under Section 6,7, 7A, 8, 9, 10 and 11 of the Act 1910 and Section 37 of the Supply Act 1948. That "electricity" for the purpose of legislation is enumerated in Entry No. 38 of the Concurrent List. It is further submitted that "electricity" in broad term includes "generation of electricity from any source whether thermal, water, gas, wind or any other source"; and that the definition of "generating station" mentioned in Section 2(5) of the Supply Act 1948 also deals with the same.
27. As it is seen, stand of the respondent Nos. 1 and 2. is t hat the impugned Act has been enacted by the State Legislature as per Entry 17 of the State List which deals' with water supply, irrigation, canal, drainage and embankment water storage and water power project subject to the provisions of Entry 55 of List I (Water Power) --Union List. In the said entry water power is meant in, its natural state arid not for the purpose of generation of electricity.
28. Mr. Hansaria, learned counsel for the respondent No. 2 in his submission urged that the impugned State Act and the Central enactments in the instant case operate on two different fields without encroaching upon each others field, inasmuch as, the true nature and character of the impugned State Act is to acquire the undertaking, whereas both the Central Acts -- the Act 1910 and the Supply Act 1948, have made general provisions with regard to supply and use of electrical energy, it is further submitted that the field of legislations of both the Acts are totally different, arid they do riot operate in the same field; that the Central Acts do not occupy the entire field of electrical energy, inasmuch as, there is no provision under any of the two Central Acts for compulsory acquisition of any electrical undertaking which is the pith and substance of the impugned State Act.
29. Water power as mentioned in Entry 55 of List I is the power of water in its natural state and, therefore, it is not for the purpose of generation of electricity. Submission of the learned Advocate General that the generation of electricity is an incidental purpose and not main purpose, is not sustainable on the basis of the title and preamble of the impugned Act. Applying the doctrine of "pith and substance", it can be concluded that the impugned State Act has been enacted by virtue of the power given under Entry Nos. 38 and 42 of the Concurrent List and not Entry No. 17 of the two State Lists. Section 72 of the Supply Act 1948 provides for grant of concession by the State Government for development and use of water power for any electrical purpose to Board and generating company. In this case concession was given long back. Further, Section 70 of the Supply Act 1948 provides that the provisions of Section 70 of the Act 1910 which is inconsistent with the provisions of the Supply Act 1948 will not have any effect.
30. Referring to a decision of the Supreme Court in the Second GT Officer, Mangalore v. DH Hazareth, AIR 1970 SC 999, Mr. Jain, counsel for the petitioners has submitted that even in case of overlapping between the two Entries, the doctrine of "pith and substance" has to be applied to find out the true nature of legislation in question and the entry within which it would fall. If, however, no entry in any of the three lists covers it, then it must be regarded as a matter not enumerated in any of the three lists. Then it belongs exclusively to Parliament under Entry 97 of the Union List as a topic of legislation.
31. In the affidavit-in-opposition, the respondent No. 1 averred that the question of application of Art; 254 does not arise, unless the State Law is in its "pith and substance" repugnant in any manner. The question of repugnancy arises normally when there is direct conflict between the two provisions on account of which one cannot be obeyed without disobeying the other. Respondent denied any such conflict and averred that applying the test of "pith and substance'' it would be seen that there is no repugnancy and it is possible for Central Act and the State Act to exist even though the State Act provides for certain additional or supplementary provisions.
32. Mr. Hansaria, counsel for the respondent No. 2 in his argument has submitted that the Act in pith and substance, is a legislation on water power and for acquisition of the undertaking of the petitioners' company for public interest. Apparently, the stand of the respondents is that while the Act was enacted the rule of 'pith and substance' of the Act was kept in mind, so that the legislation in question would not fall within any of the Entries under List II.
33. In view of the above, the stand of the respondents is that 'pith and substance' of the Act is a legislation on water power for the acquisition of the undertaking and that the generation of electricity is an incidental purpose In order to appreciate the contentions of the parties it is necessary to look to the preamble of the impugned Act which I quote.--
"Whereas the Bharat Hydro Power Corporation Limited, having its registered office in the State of Assam, has been engaged for speedy execution and completion of the Karbi Langpi (Lower Barapani) Hydra Electric Project for ensuring adequate supply of electricity in the State of Assam in view of the chronic shortages of power in the State.
Whereas it was agreed upon in the Memorandum of Understanding entered into between the Government of Assam, the Assam State Electricity Board and the M/s. Subhas Projects and Marketing Limited on 25th March, 93 that the project would be completed and would be commissioned by the month of June, 1995:
And whereas the Company failed in the sole object of speedy execution of the project within the specified time;
Whereas it is expedient in the public interest that the undertaking of the Bharat-Hydro Power Corporation Limited should be acquired for the purpose of enabling the State Government to efficiently supervise, manage and execute the work expeditiously as to subserve the common good, in the context of the acute power shortage in the State; It is hereby enacted in the Forty Seventh Year of the Republic of India as follows:"
From the above, it is clear that the 'pith and substance' of the impugned Act is to acquire the undertaking for public purpose and the Act, therefore, in my opinion, is a legislation on water power. It is an admitted position that the Act was enacted to take over the undertaking which has been engaged in producing electricity. Electricity being a subject under List II, legislative competency of the State legislation is required to be examined. Now the question arises--whether this legislation can be invalidated by employing Article 246(3) of the Constitution on the ground of ' legislative in competency of the State legislature. This State Legislation is relatable to Entry No. 38 pf List III and its validity can be ensured only subject to a Parliamentary enactment, by which the. Parliament gives approval of such State Legislation. Article 254 of the Constitution deals with such situation and two colliding legislations can co-exist subject to the approval of Parliament.
34. In Rajahmundry Electric Supply Corporation Ltd. v. State of Andhra, AIR 1954 SC 251 the Supreme Court had the occasion to scrutinise the validity of the Madras Electricity Supply Undertakings (Acquisition) Act, 1949. The Apex Court in the said decision held that in pith and substance the Act was to provide for acquisition of electrical undertakings and as such the Act in question being found similar in nature as it related for acquisition of electrical undertakings. The petitioner in that case was a company registered under Companies Act, 1924, for generating and supplying electrical energy to the public. The said Act was passed by the legislature in 1949 and it received assent of the Governor General and was published in the Official Gazette. Subsequently, upon the Constitution of India coming into force on 26-1-50 the Act was submitted to the President of India for certification. The Govt. of Madras acting under S, 4(1) of the said Act declared the undertaking of the petitioner company vested in Government on the date specified therein. The Act was challenged by the petitioner as ultra vires as it was beyond the competency of the State Legislature; not enacted to subserve any public purpose; and that the compensation provided for was illusory. High Court rejected the petition and appeal was preferred before the Apex Court. One of the reasons of the High Court for rejection of the petition was that the Act having received the certificate of the President, the challenge based on an alleged absence of public purpose or the illusory nature of the compensation was shut out and could not be raised. The Apex Court found that the High Court, however, held that the Act was, in pith arid substance, a law with respect to electricity and was, therefore, within the legislative competency of the Provincial Legislature. The Apex Court decided the appeal on the following two grounds offered on behalf of the appellant/petitioner:--
"(a) the acquisition of an electrical undertaking was not a legislative item in any of the three Lists in the Seventh Schedule to the Government of India Act, 1935; and
(b) in so far as it relates to the acquisition of an electrical undertaking of a corporation it is a law with respect to corporations under Entry 33 in List I." -
(Entry 33 omitted by Section 26 of Act, 1956) The Apex Court after examining the impugned legislation came to the conclusion that from the long title, the preamble and the Sections it was, in pith and substance, nothing but an Act to provide for the acquisition of electrical undertakings.
35. In the case in hand the respondents' attempt to show the "Undertaking" as non electrical one but an "Undertaking" on water power does not hold good, as discussed above, as the undertaking in question was an electrical undertaking- though the words "engage in producing electricity" was omitted and certainly in my view, this cannot create any ambiguity to the actual nature of the undertaking. In that view of the matter, the question of invasion into the territory of another legislature is to be defended by substance and not by degree. After examining the nature and character of the impugned Act, I am of the opinion that it is a legislation for acquisition of a generating undertaking and, the before, falls within the purview of Entry 38 and, 42 of the Concurrent List III and in this field, power of legislation is given by Article 246 and other Acts of the Constitution.
36. Allegation of inconsistency between the Central Acts, namely the Act 1910 and the Supply Act, T94& Contract Act and Industrial Disputes Act and the impugned Act requiring examination of the, relevant laws in context with the provisions of the impugned Act as to the question of repugnancy with the Central Act arises if the State Act covers the field of legislation under the Concurrent List. The law is that even if the impugned State Legislation is covered by Entry 38 and 42 of the Concurrent List the Court has to scrutinise whether the State Legislation is in respect of the same matter. In that case, the Court has also to see whether the State Legislation deals with the matter which does not form the subject of the earlier Central legislation, but with distinct matters though of a cognate and allied character, so that application of Article 254(2) can be decided upon. The Apex Court in the case of Zaverbhai Amaidas v. State of Bombay, AIR 1954 SC 752 held when there is legislation covering the same ground both by Centre and the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of. The State".
37. Mr. Hansaria, counsel for the respondent No. 2 has submitted that while the constitutional validity of a legislation is under challenge-the Court is required to see whether the grounds there of are available, namely, (i) whether the legislature does not possess the legislative competency; (ii) that legislation violates any provisions of the Constitution, i.e., Part III of the Constitution and (in) that the legislation falls under Concurrent List and is enacted by State legislature which is repugnant to Central legislation on the same field. That question of repugnancy and inconsistency with the Central Act arises only if the State covers the field of legislation under the Concurrent List.
38. As discussed hereinbefore, the respondents stated that the impugned legislation relates to "water power" under List II Entry 17, subject to the provision of Entry 56 of List I. Further, as stated above, the preamble of the impugned Act without ambiguity reflects that the legislation relates to the taking over of the Hydro Electric undertaking which is engaged in producing electricity. It cannot be said that the State Legislation relates to a project which engaged in utilising water power only and/or relates to subjects under Entry 56 of List I. In view of these reasons, I hold that the impugned legislation is in respect of the same matter which falls under Entry 38 List III. The State legislation is competent to enact the Act under Entry 38 of List III if the State Legislation deals not with the matters which forms the subject of the earlier Central Legislations, i.e. the Act 1910, but with other and distinct matter though subject seems to be cognate and allied. There is no dispute that the State Legislature is competent to enact the legislation in question, but it is to be seen whether this State' Legislation covers the same area of the Act 1910 and the Supply Act 1948 or any provisions of Contract Act and Industrial Disputes Act as alleged. The principle of law is that in such A situation the Central Act prevails over that of the State.
39. The stand of the respondents is that --(1) the State Legislation relates to Entry 17 of the List II and, therefore, cpmpetency of State Legislature to, enact the legislation in hand is wider in scope and includes what is contemplated in Entry 56 of List I. In other words, the learned Advocate General sought to argue that the subject matter of the State Legislation in this case, is exclusively in the State List and the Central Acts\ referred to by the petitioners and Article 254(2), which apply only with reference to legislation on subjects of Concurrent List, have no application; (2) the Entry 38 of Concurrent List III is a concurrent subject and the State Legislature is competent to enact the Legislation and the Act so passed by the State Legislature is, in pith and substance, an Act to provide acquisition of the electrical undertaking; (3) the electricity being a concurrent subject the State Legislature is competent to enact it as the relevant provisions of the impugned State Legislation 'do not conflict with any of the Central Legislations, mainly, the Act 1910 and the Supply Act 1948 or Contract Act.
40. The learned Advocate General has placed reliance on a decision of the Federal Court in Shyamakant Lal v. Rambhajan Singh, reported in AIR 1939 FC 74. In that case the Federal Court while determining the question whether Section 16 of Bihar Money-lenders Act, 1930 (No. 3 of 1938) was void as being repugnant to a provision of an "existing Indian Law" within the meaning of Section 107 of the Constitution Act, held thus:
".................The only suggestion is that they are repugnant to an existing Indian Law. Now Section 107(1) does not mean that a Provincial law, must yield if it is repugnant to any existing Indian law whatsoever. It will give way (to the extent of the repugnancy) only if it is repugnant; to an existing India Law, ''with respect to one of the matters enumerated in the Concurrent Legislative List", unless the assent of the Governor, General or of His Majesty has been obtained as is referred to in Sub-section (2)."
The Federal Court while dealing with the 'principles of construction' guiding determination whether Provincial legislation is repugnant to existing Indian law stated thus :
"When the question is whether a Provincial legislation is repugnant to an existing Indian Law, the onus of showing its repugnancy and the extent to which it is repugnant should be on the party attaching its validity. There ought to be a presumption in favour of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other; and care should be taken to see whether the two do not really operate in different fields without encroachment....... It is a well established principle that if the invalid part of an Act is really separate in its operation from the other parts, and the rest are not in severably connected with it, then only such part is invalid, unless, of course, the whole object of the Act would be frustrated by the partial exclusion. If the subject which is beyond the legislative power is perfectly distinct from that which is within such power, the Act can be ultra vires in the former, while intra vires in the latter."
The Federal Court after referring to a decision in the King v. The Commonwealth Court of Conciliation, (1890) 11 CLR 1, held thus :
"A particular section of an Act however may not be an isolated and independent clause, and may form part of one connected indissoluble scheme for the attainment of a definite object; in which case it would have to be considered as an inseparable part of the whole. A law which is ultra vires in whole if the object of the Act cannot at all be attained by excluding the bad part............"
This case is the touch stone which is the base of all subsequent laws on this subject and holds good to scrutinise a State Legislation on the question of repugnancy. Counsel of both sides relied on this case to support their respective cases. This position of law has also been relied in subsequent cases of the Supreme Court in a series of judicial pronouncements.
41. The learned counsel for the petitioner has referred to the decision of the Supreme Court in State of T.N. v. Adhiyaman Educational & Research Institute, (1995) 4 SCC 1.04 : (1995 AIR SCW 2179) in which the Apex Court while considering the distribution of power between the Parliament and the State Legislature by Article 246, 248 and 254 of the Constitution scrutinised -- whether the State Law encroaches upon Entry 66 of the Union List or is repugnant to the law made by the Centre under Entry 25 of the Concurrent List, will have to be determined by the examination of the two laws and will depend upon the facts of each case. In that case, the State Govt. of Tamil Nadu permitted private managements to start new Engineering Colleges under the self financing scheme without any financial commitment to the Govt. but subject to the fulfilment of certain conditions. The Institute applied to the Govt. for permission to start a new self financing Private Engineering College in terms of the said policy. The Govt. granted the permission to the Trust to start a Private Engineering College. One of the conditions imposed by the Govt. was that the Trust could admit candidates of its choice upto 50% of the approved intake under the management quota and the remaining 50% of the seats would be allotted by the Directorate of Technical Education with the approval of the Govt. and that failure to fulfil any of the conditions the permission granted would be withdrawn and Govt. would have the right to take over the College with all its movable and immovable properties including endowment arid cash balance without paying compensation. The College started functioning. In the meanwhile the State Govt. appointed a High Court Committee to assess its functioning which reported the non-fulfilment of conditions imposed by Govt. as well as the conditions imposed by the University. Consequently, show cause notice was issued by the University and resolved to reject the request of the Trust for provisional affiliation for the year 1989-90 and also informed the Trust that it should make alternative arrangement to distribute the students already admitted to the academic year 1988-89 amongst other institutions with adequate facilities. Writ petition was preferred by the Trust for prohibiting the Directorate of Technical Education from taking further proceedings in pursuance of the show cause notice and also filed another writ petition for quashing the resolution passed by the Syndicate of the University and for granting affiliation to its college. The Single Pench held that after the passing of the Central Act -- the All India Council for Technical Education Act, 1987 the State Govt. had no power to cancel the permission granted to the Trust to start the College and it could not rely for the purpose on a report of the High Power Committee appointed by it, since appointment of such committee was illegal and unconstitutional, that the only course open to the State Govt. was to refer the matter to the AH India Council of Technical Education, that under the Central Act, the duty was imposed on the Council for recognising or de-recognising any technical institution in the country and that it was not open to the State Govt./University to give approval or disapproval to any technical institution and that* after coming into operation of the Central Act each State Govt. and University would follow different yardsticks which will be against the objects of the Central Act. Against this decision the Trust, the State Govt. as well as the University preferred appeals and the Writ Appellate court affirmed the judgment of the Single Judge holding that State Govt. has no jurisdiction to derecognise the College and that even the University could not have acted on the report of the High Power Committee appointed by the State Govt. arid could not have, refused extension of affiliation without giving reasons for the same which were not admittedly discussed in its impugned communication.
42. The Apex Court while taking the matter for consideration formulated the issue as to the conflict between the Central Act and the Tamil Nadu Private Colleges (Regulation) Act, 1976 and the Rules made thereunder and the Statutes and Ordinances made thereunder, though before the Courts what was questioned was power of the State Govt. and the University respectively to derecognise and disaffiliate the Engineering Colleges in question. The Apex Court after considering the provisions of the Constitution delineating respective spheres of Central and State Legislatures regarding the legislation on Entry 66 of the Union List held thus :
"The validity of the State Legislation on University education and as regards the education in Technical and Scientific Institutions not falling within Entry 64 of List I would have to be judged having regard to whether it impinges on the field reserved for the Union under Entry 66. In other words, the validity of State legislation would depend upon whether it prejudically affects coordination and determination of standards, but not upon the existence of some definite Union legislation directed, to achieve that purpose. If there be Union legislation in respect of coordination and determination of standards, that would have paramountcy over the State law by virtue of the first part of Article 254 (1); even, if that power be not exercised by the Union Parliament the relevant legislative entries, being in the exclusive lists, a State law trenching upon the Union field would still be invalid."
43. The learned counsel for the petitioners has referred to another decision of the apex Court in Pt. Rishikesh v. Salma Begum (Smt), reported in (1995) 4 SCC 718: (1995 AIR SCW 2176). The apex Court relying on its earlier decision in the . cases of M. Karunanidhi v. Union of India, (1979) 3 SCC 431 : (AIR 1979 SC 898), and Gauri Shankar Gaur v. State of U.P., (1994) 1 SCC 92 : (AIR 1994 SC 169) (at p. 2482, para 15 of AIR), held thus:
"Clause (2) of Article 254 is an exception to Clause (1). If law made by the State Legislature is reserved for consideration and receives assent of the President though the State Law is inconsistent with the Central Act, the law made by the Legislature of the State prevails over the Central law and operates in that State as valid law. If Parliament amends the law, after the amendment made by the State Legislature has received the assent of the President, the earlier amendment made by the State Legislature, if found inconsistent with the Central amended law, both Central law and the State Jaw cannot co-exist without colliding with each other. Repugnancy thereby arises and to the extent of the repugnancy the State law becomes void under Article 254(1) unless the State Legislature again makes law reserved for the consideration of the President and receives the assent of the President."
44. The position of law as enunciated by the Apex Court in various decisions is that in order to examine the true character of enactment, regard" must be given to the enactment as a whole to its objects and to the scope and effect of the. provisions. The question of invasion into the territory of another legislature is to be determined not by degree but by substance. As far as Article 254 is concerned, if any provisions of law made by the State Legislature is repugnant to any provisions of the Central law or to any provisions of existing law enacted as per Entries of the Concurrent List then subject to Clause (2) of Article 254, the State law to the extent of repugnancy will be void. The State Law whether it is enacted in respect of entries of State List or Concurrent list becomes void under Article 254(1), unless the State Legislature again makes a law reserving for consideration of the President and received the assent of the President.
45. In the case of T. Barai v. Henry Ah Hoe reported in AIR 1983 SC 150, the Apex Court while considering the scope of Article 254 held as follows (Para 15):
"A State law would be repugnant to the Union law when there is direct conflict between the two laws. Such repugnancy may also arise where both laws operate in the same Held and the two cannot possibly stand together, e.g. where both prescribe punishment for the same offence-but the punishment differs in degree or kind or in the procedure prescribed. In all such cases, the law made by Parliament shall prevail over the State law under Article 254(1)."
46. Both the learned counsel for the petitioner and the learned Advocate General referred to a decision of the Apex Court in State of A.P. v. McDowell & Co., (1996) 3 SCC 709 : (AIR 1996 SC 1627), in support of their respective contentions. In that case the Apex Court considered a series of its earlier decision as well as of the Privy Council and held that whenever a piece of legislation is said to be beyond the legislative competence of a State Legislature, what one must do is to find out', by applying the rule of pith and substance, whether that legislation falls within any of the entries in List II. If it does, no further question arises; the attack upon the ground of legislative competence shall fail. It cannot be that even in such a case, Article 246(3) can be employed to invalidate the legislation on the ground of legislative incompetence of State Legislature. If, on the other hand, the State legislation in question is relatable to an entry in List III applying the rule of pith and substance, then also the legislation would be valid, subject to a Parliamentary enactment inconsistent with it, a situation dealt with by Article 254.
47. Taking into consideration the question of repugnancy and the ratio laid down by the Apex Court in its various decisions this Court has to see whether the impugned State Legislation encroaches upon Entry 38 of the Concurrent List or is repugnant to the Central Acts, namely, the Act 1910 and the Supply Act 1948 and/or the Contract and the Industrial Disputes Act.
48. In repating the facts and allegations, it is seen that the petitioner No. 1 from time to time requested the Respondent No. 2 -- ASEB,' to perform its obligations under the Agreement and' MoU, but the same was not complied with and have been threatening to cancel the agreement, though the petitioner performed and was ready and willing to perform their part but they were prevented by the Respondents, and their officers, as alleged, having vested interest against the policy laid down and followed by the Government, started obstructing completion of the project by adopting a various wrongful means; that the Power Purchase Agreement was not finalised though it had been approved by the State Cabinet; that the District Forest Officer, Hamren Division of the State of Assam wrongfully put a ban on blasting and quarry operations at the construction site of the Project, though the blasting and quarrying operation are necessary to complete and carry out the construction of the project; that so far as land is concerned the same had already been acquired by the State Government and were handed over to the ASEB for the purpose of the project and there was no bar in handing over the land to the petitioner No. 1 and in the said land the Karbi Anglong Autonomous District Council has no interest. But it is alleged, the District Council also caused various obstructions in the way of carrying out construction work of the project. The net result of non-cooperation by the respondents No. 1 and 2 was that the' said project could not further be advanced due to the restrictions and obstructions created by them with mala fide intentions and motives. It is further contended that though the undertaking was sought to be taken over by the impugned Act on the ground of public interest, the action of the respondents by their conduct and action defeated the purpose of public interest by taking 13 years without any fruitful result though the project was sanctioned by the Planning Commission in the year 1979; that the public interest required the completion of the project at the earliest, so that about 100 MW electricity might be made available to the State for upliftment and industrialisation; that by wrongful means and heavy power loss being caused, the development of the said area is stalled by wrongful acts of the respondents. Further, it is contended that there cannot be any plausible reason that the completion of the said project should not have been allowed in spite of the clearance thereof at the highest level.
49. On the facts of the case, the petitioners claim that the public interest requires that the petitioner No. 1 should have been granted liberty to complete the said project upon their undertaking to complete the same within the revised target period, i.e. 31-12-96. On facts, petitioners point out that ASEB has spent Rs. 130 crores and no return has been obtained as yet; that production of 39,59,00,000 units of electric power per year has been lost for 2 years upto December, 1996. due to the wrongful acts of the respondents. Respondents' objection regarding the land for the project, which falls within the Karbi Anglong District, is that the land being within the Tribal area the petitioner being private party cannot be allowed to carry on the acts of completion of the said project. According to the petitioner so far as the District Council is concerned it never raised any objection to carrying out the works of the project by the ASEB. Admittedly the land was already acquired by the State Govt. for the project and does not form a part of the Tribal area. In support of their contention that the petitioners were carrying out the project work satisfactorily they mentioned the remarks written in the Visitors' Book on 1 -4-95 (Annexure-G to the writ petition), by the Secretary to the Govt. of Assam, Power, Mines and Minerals and the Minister of the Power Department on 20-1-95, the Senior Representatives of the Overseas Economic 'Cooperation Fund of Japan on 10-12-95. As stated above the petitioner filed a Title Suit (TS 244/95) and an application under Sections 8 and 11 of Arbitration and Conciliation Act, 1996. Respondent filed application for rejection of that application on the ground of issuance of Ordinance. The letter dated 29-8-95 written by the Secretary, ASEB (Annexure-I to the writ petition) clearly indicates that time had been extended for completion of the project till 31-12-96 and, therefore, there is no question of delay until the said time had expired. Petitioners, stating the facts as the backgrounds of the impugned Ordinance and the Act claims that they being the licensee under the provisions of Supply Act are entitled to notice etc. under Section 5 of the Act, 1910 and the Act is repugnant as the said Act has not been reserved for the consideration of the President nor it received the assent of the President, as such the said provisions are repugnant to the laws passed by the Parliament, namely, the Act 1910 and the Supply Act 1948. 50. On the rival contentions of the parties, the question falls for consideration is whether the Sections 3, 4, 5, 6, 7, 7A, 15 (2), 23 and 24 of the impugned Act, as alleged by the petitioners, are repugnant to or inconsistent with the laws passed by the Act 1910 and the Supply Act 1948 and that Sections 3, 4, 6 and 7 of the Act 1910 relates to the revocation of/the licence and acquisition of the undertaking and vesting the same in the State Govt. of Assam.
51. In order to appreciate the contentions of the parties, it will be apposite to look into some of the provisions of the impugned Act as well as the Act 1910 and the Supply Act 1948.
52. Sections 3, 4, 5, 15 (2), 23 and 24 of the impugned Act are quoted below :
"3. on the appointed day the undertaking of the company and the right, title and interest of the company in relation to its undertaking shall, by virtue of this Act, be transferred to and vest in the State Government:
Provided that nothing herein contained or contained in any other law for the time being in force or in the Memorandum or Articles of Association of the company shall preclude from transferring and vesting the undertaking of the company to the State Government.
4. (1) On the appointed day the property, rights, liabilities and obligations specified hereinbelow in respect of the company shall vest in the Slate Government:--
(i) all the fixed assets of the company and all the documents relating to the company;
(ii) all the rights, liabilities and obligations of the company under hire purchase agreement, if any, for supply of materials or equipments made before the appointed day;
(iii) all the rights, liabilities and obligations of the company entered into bona fide before the appointed day not being a contract relating to borrowing or lending of money or to the employment of staff.
(2) All the assets specified in Clause (i) of subsection (1) shall vest in the State Government free from all debts, mortgages, or similar obligations of the company or attaching to the company:
Provided that debts, mortgages or obligations shall attach to the amount payable under this Act for the assets.
(3) The rights and liabilities granted to the company under the relevant Electricity Act shall be deemed to have been terminated on the appointed day and all rights, liabilities and obligations which were granted in favour of the company under any agreement to supply electricity shall be deemed to have devolved on the State Government;
Provided that when any such agreement is not in conformity with the rates and terms and conditions of supply approved by the State Government and in force on the appointed day, the agreement shall be voidable at the option of the State Government.
(4) Any contract, whether express or implied, or other arrangement, in so far it relates to the management of the affairs of the Company in relation to its undertaking and in force immediately before the appointed day, shall be deemed to have terminated on the appointed day;
' (5) It shall be lawful for the State Government or their authorised representative on or after the appointed day to remove the obstructions, if any, and to take possession of the entire company, or as the case may be, the fixed assets and of all documents relating to the company which the State Government may require for carrying it on.
(6) All the liabilities and obligations, other than those vested in the State Government under Clauses (i) and (iii) of Sub-section (1) shall continue to be the liabilities and obligations of the company after the appointed day.
EXPLANATION :-- All the liabilities and obligations in respect of staff, taxes, provident fund, Employees' State Insurance, industrial dispute and all other matters upto the appointed day, shall continue to be liabilities and obligations of the Company.
Section 5 (1) Liabilities of the undertaking of the Company incurred in any period upto the appointed day shall be the liabilities of the company and shall be enforceable against it and not against the State Government or where the undertaking of the company are directed, under Section 6 to vest in the Board, against that Board :
Provided that the State Government may, after observing proper financial formalities and by notification, declare certain liabilities or class or classes of liabilities to be the liabilities of the State Government or the Board, as the case may be.
(2) No award, decree or order of any Court, Tribunal or other authority in relation to the undertaking of the Company passed on or after the appointed day in respect of any matter, claim or dispute arising before the appointed day shall be enforceable against the State Government or against the Board where the undertaking of the company stands transferred to and vested in the Board under this Act.
(3) No legal liability for contravention before the appointed day by the undertaking of any provision of law, for the time being in force, shall be enforceable against the State Government or where the undertaking of the company are directed under section 6 to vest in the Board, against that Board.
xxxx xxxx Section 15 (1)....
(2) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or any other law for the time being in force, the transfer of the services of any Officer or employee in the undertaking of the company to the State Government or to the Board, as the case may be, shall not entitle such Officer or employee to any compensation under this Act or any other law for the time being in force and no such claim shall be entertained by any Court, Tribunal or other authority.
xxxx xxxx Section 23. Notwithstanding anything contained in any other law for the time being in force, no Court or Tribunal shall call in question any order, investigation or any other Act done or purported to have been done under this Act.
Section 24. No provision of the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 or any other Act for the time being in force and of any rule made under any of those Acts or of any instrument having effect by virtue of any of those Acts or any rule made thereunder, shall in so far as it is inconsistent with any of the provisions of this Act, have any effect."
Sections 3, 4, 5, 6 and 7 of the Act 1910 are quoted below :
"Section 3. Grant of Licenses : (1) The State Government may, on application made in the prescribed form and on payment of the prescribed fee (if any) 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.
(2) In respect of every such license and the grant thereof the following provisions shall have effect namely:--
(a) any person applying for the license under this part shall publish a notice of his application in the prescribed manner and with the prescribed particulars, and the license shall not be granted.
(i) until all objections received by the State Government with reference thereto have been considered by it:
Provided that no objection shall be (so) considered unless it is received before the expiration of three months from the date of the first publication of such notice as aforesaid; and
(ii) until, in the case of an application for a license for an area including the whole or any part of any canonment, aerodrome, fortress, arsenal, dockyard or camp or of any building or place in the occupation of the Government for defence purposes, the State Government has ascertained that there is no objection to the grant of the license on the part of the Central Government;
(b) where an objection is received from any local authority concerned, the State Government shall, if in its opinion the objection is insufficient, record in writing and communicate to such local authority its reasons for such opinion;
(c) no application for a license under this Part shall be made by any local authority except in pursuance of a resolution passed at a meeting of such authority held after one month's previous notice of the same and of the purpose thereof has been given in the manner in which notices of meetings of such local authority are usually given;
(d) a license under this Part --
(i) may prescribe such terms as to the limits within which, and the conditions under which, the supply of energy is to be compulsory or permissive, and generally as to such matters as the State Government may think fit; and
(ii) save in cases in which under Section 10, Clause (b), the provisions of Sections-5 and 6, or either of them, have been declared not to apply, every such license shall declare whether any generating station to be used in connection with the undertaking shall or shall not form part of the undertaking for the purpose of purchase under Section 5 or Section 6;
(e) the grant of a license under this Part for any purpose shall not in any way hinder or restrict the grant of a license to another person within the same area of supply for a like purpose; .
(f) the provisions contained in the Schedule shall be deemed to be incorporated with, and to form part of, every license granted under this Part, save in so far as they are expressly added to, varied or expected by the license, and shall, subject to any such additions, variations or exceptions which the State Government is hereby empowered to make, apply to the undertaking authorised by the license;
Provided that, where a license is granted in accordance with the provisions of Clause IX of the Schedule for the supply of energy to other licensees for distribution by them, then, in so far as such license relates to such supply, the provisions of Clauses IV, V, VI, VII, VIII and XII of the Schedule shall not be deemed to be incorporated with the license.
Section 4. Revocation or amendment of licences--
(1) The State Government may if in its opinion the public interest so requires 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 there for by order under Section 4-A, 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 duties and obligations imposed on him by his license, or
(ii) to make the deposit or furnish the security required by his license;
(d) 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;
(e) where a licensee, in the opinion of the State Government, has made default in complying with any direction issued under Section 22-A. (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 subsection (1) unless the State Government has given to the licensee not less than three months' notice, in writing, slating 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.
(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.
Section 5. Provisions where licence of a licensee is revoked.-- (1) Where the State Government revokes under Section 4, Sub-section (1), the license of a licensee, the following provisions shall have effect, namely :--
(a) the State Government shall serve a notice of revocation upon the licensee and shall fix a date on which the, revocation shall take effect; and on and with effect from that date, or on and with effect from the date, if earlier, on which the undertaking of the licensee is sold to a purchaser in pursuance of any of the succeeding Clauses or is delivered to a designated purchased in pursuance of Sub-section (3), all the powers and liabilities of the licensee under this Act shall absolutely cease and determine;
(b) the State Government shall enquiry from the State Electricity Board, and where the licensee is not a local authority, also from any local authority constituted for the area within which the whole of the area of supply is included, whether it is willing to purchase the undertaking;
(c) if the State Electricity Board is willing to purchase the undertaking, the State Government shall, by notice in writing, require the licensee to sell, and thereupon the licensee shall sell the undertaking to the State Electricity Board;
(d) if the State Electricity Board is not willing to purchase the undertaking, the State Government shall have the option of purchasing the undertaking and if it elects to purchase, it shall by notice in writing require the licensee to sell, and thereupon the licensee shall sell the undertaking to it;
(e) if the State Electricity Board is not willing to purchase the undertaking and the State Government does not itself elect to purchase it, the State Government in any case where the local authority referred to in Clause (b) is willing to purchase the undertaking shall by notice in writing require the licensee to sell and thereupon the licensee shall sell the undertaking to that local authority;
(f) if no sale of the undertaking is effected under any of the foregoing Clauses and if any other person is willing to purchase the undertaking, the State Government may by notice in writing require the licensee to sell, and thereupon the licensee shall sell the undertaking to such other person.
(2) Where an undertaking is sold under subsection (1), the purchaser shall pay to the licensee the purchase price of the undertaking determined in accordance with the provisions of Sub-sections (1) and (2) of Section 7-A, or as the case may be, subsection (3) of that section.
(3) Where the State Government issues any notice under Sub-section (1) requiring the licensee to sell the undertaking, it may by such notice require the licensee to deliver, and thereupon the licensee shall deliver on a date specified in the notice the undertaking to the designated purchaser pending the determination, and payment of the purchase price of the undertaking :
Provided that in any such case, the purchaser shall pay to the licensee, interest at the Reserve Bank rate ruling at the time of delivery of the undertaking plus one per centum, on the purchase price of the undertaking for the period from the date of delivery of the undertaking to the date of payment of the purchase price.
(4) Where before the date fixed in the notice issued under Clause (a) of Sub-section (1) as the date on which the revocation of the license shall take effect, no notice has been issued to the licensee requiring him to sell the undertaking or where for any reason no sale of the undertaking has been effected under that Sub-section, the licensee shall have the option of disposing of all lands, buildings, works, materials and plant belonging to the undertaking in such manner as he may think fit:
Provided that if the licensee does not exercise such option within a period of six months from the aforesaid date, the Stale Government may forthwith cause the works of the licensee in, under, over, along, or across any street to be removed and every such stree to be reinstated, and recover the cost of such removal and reinstatement from the licensee.
Section 6. Purchase of undertakings.--(1) Where a license has been granted to any person, not being a local authority, the State Electricity Board shall --
(a) in the case of a license granted before the Commencement of the Indian : Electricity (Amendment) Act, 1959 (32 of 1959) on the expiration of each such period as is specified in the license; and
(b) in the case of a license granted on or after the commencement of the said Act, on the expiration of such period not exceeding twenty years and of every such subsequent period, not exceeding ten years, as shall be specified in this behalf in the license; have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this Sub-section.
(2) Where a State Electricity Board has not been constituted, or if constituted, does not elect to purchase the undertaking, the State Government shall have the like option to be exercised in the like manner of purchasing the undertaking.
(3) Where neither the State Electricity Board nor the State Government elects to purchase the undertaking, any local authority constituted for an area within which the whole of the area of supply is included shall have the like option to be exercised in the like manner of purchasing the undertaking.
(4) If the State Electricity Board intends to exercise the option of purchasing the undertaking under this section, it shall send an intimation in writing of such intention to the State Government at least eighteen months before the expiry of the relevant period referred to in Sub-section (1) and if no such intimation as aforesaid is received by the State Government the State Electricity Board shall be deemed to have elected not to purchase the undertaking.
(5) If the State Government intends to exercise the option of purchasing the undertaking under this section, it shall send an intimation in writing of such intention to the local authority, if any, referred to in Sub-section (3) at least fifteen months before the expiry of the relevant period referred to in Sub-section (1) and if no such intimation as aforesaid is received by the local authority, the State Government shall be deemed to have elected not to purchase the undertaking. (6) Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this section, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on the expiration of the relevant period referred to in Sub-section (1) pending the determination and payment of the purchase price.
(7) Where an undertaking is purchased under this section, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of Sub-section (4) of Section 7-A. Section 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 under taking Provided that any such debt, mortgage or similar obligation shall attach to the purchaser 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 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.
53. Section 6 of the Act 1910 provides for compulsory purchase of undertaking of the licensee. This Section, in fact, is a section wherein acquisition and/or transfer of undertakings of a licensee has been dealt with. Then comes the question whether the petitioner No. 1 is a "licensee" under the meaning of the Act 1910. Mr. Jain, learned counsel for the petitioner has submitted that the petitioner No. 1 is a licensee under Section 37 of the Supply Act 1948. It is further submitted that in view of the changes brought about by the Amendment Act 1991 State was given power to allow anybody to produce electricity. Under the amended provisions of the Supply Act 1948, the State of Assam entered into the MoU with the petitioner, which was signed by the State of Assam and the ASEB, and thus, power was given to the petitioner No. 1 to complete the project as a licensee.
54. Mr. Jain, learned counsel for the petitioner has submitted that as a matter of fact the entire dealing and transactions between the respondents Nos. 1 and 2 and the petitioners Nos. 1 and 2 are governed by the MoU and the Deed of Assignment between the parties and such rights and obligations are governed by those documents. According to him, the respondents have no right to take away the rights conferred by the said agreement except by due process of law or as per contract and Specific Relief Act. Further it is submitted that the petitioner No. 1 is a licensee" under Section 26A of the Electricity Supply Act 1948. The respondents denied repugnancy in the impugned Act and averred that Sections 3 and 4 of the impugned Act have not violated the said Sections are not applicable as the petitioner No. 1 is not a 'licensee' within the meaning of Act 1910 and that the State Govt. has jurisdiction and power to acquire property in public interest making adequate provisions for compensation and that the impugned Act has taken adequate care to pay compensation and provided for assessment of the Commission headed by a sitting or Retired Judge of the High Court and payment thereof and that when the provisions of the Act 1910 are not attracted the petitioner being not a 'licensee' the question of repugnancy does not arise.
55. As it is seen the Mou was executed between the parties wherein petitioner No. 1 is a 'generating company' under the Karbi Langpi (Lower Barapani) Hydro Electric Power Generating project in the State and in the said power generating project the petitioner No. 2 was formed as generating company under the Companies Act, 1956 under Clause 2 of the Mou.
56. "Generating Company" has been defined in Section 2(4-A) of the Supply Act 1948 which has been substituted by Act No. 50 of 1991. This Section reads as follows :
"Section 2(4-A) : "Generating Company" means a company formed --
(a) either by the Central Government or by any State Government; or
(b) jointly by the Central Government and one or more State Governments or by two or more State Governments, and registered under the Companies Act, 1956 (1 of 1956)".
57. Section 2(5) of the Supply Act 1948 provides as follows :
"Section 2(5) "generating station" or "station" means any station for generating electricity, including any building and plant with step-up transformer, switch-gear, cables or other appurtenant equipment, if any, used for that purpose and the site thereof, a site intended to be used for a generating station, and any buildings used for housing the operating staff of a generating station, and where electricity is generated by water-power, includes penstocks, head and tail works, main and regulating reservoirs, dams and other hydraulic works but does not in any case include any Sub-station".
Prior to amendment/substitution of this definition by the Act 50 of 1991, i.e. under the old definition a generating company" could be formed only in the public sector by the Central Govt. or by a State Govt. or jointly by the Central Govt. and one or more State Governments or by two or more State Governments. Under the substituted definition made under the Act 1991 a "generating company" can be formed either in the public sector, or in the private sector or in the joint sector and requirements being; (a) it must be registered under the Companies Act, 1956 and (b) and it must have amongst objects the establishment, operation, and maintenance of generating stations. After the substitution of the definition under the Act 1991 a "generating company" is not required to take out a licence under the Act 1910 for the purpose of carrying out the activities.
58. Section 26A of the Supply Act 1948 lays down the exact position of generating companies vis-a-vis the Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948. Section 26A is reproduced below :
"Section 26A. Applicability of the provisions of Act 9 of 1910 to Generating Company.--
(1) Notwithstanding anything contained in Sub-section (2), nothing in the Indian Electricity Act 1910 (9 of 1910), shall be deemed to require a Generating Company to take out a licence under that Act, or to obtain sanction of the State Government for the purpose of carrying on any of its activities.
(2) Subject to the provisions of this Act, Sections 12 to 19 (both inclusive) of the Indian Electricity Act, 1910 (9of 1910) and Clauses XIV to XVII (Both inclusive) of the Schedule thereto, shall, as far as may be, apply in relation to a Generating Company as they apply in relation to a licensee under that Act (hereafter in this section referred to as the licensee) and in particular a Generating Company may, in connection with the performance of its duties, exercise --
(a) all or any of the powers conferred on a licensee by Sub-section (1) of Section 12 of the Indian Electricity Act, 1910 (9 of 1910),as if--
(i) the reference therein to licensee were a reference to the Generating Company;
(ii) the reference to the terms and conditions of licence were a reference to the provisions of this Act and to the articles of association of the Generating Company; and
(iii) the reference to the area of supply were a reference to the area specfied under Sub-section (3) of Section 15-A in relation to the Generating Company;
(b) all or any of the powers conferred on a licensee by Sub-section (1) of Section 14 of the Indian Electricity Act, 19)0 (9 of 1910), as if--
(i) the references therein to licensee were references to the Generating Company; and
(ii) the Generating Company had the powers of a licensee under the said Act (3) The provisions of Section 30 of the Indian Electricity Act, 1910 shall not apply to the transmission or use of energy by a Generating Company.
(4) For the removal of doubts, it is hereby declared that Sections 31 to 34 (both inclusive) of the Indian Electricity Act, 1910 (9 of 1910), shall apply to a "Generating Company." These provisions of the above Sections make it clear that neither a licence nor a permission from the State Govt. is necessary for its' functioning, yet the Generating Company will have the status of a licensee, but with impunity from applicability of certain provisions of the Act 1910.
59. From the foregoing discussions I hold that the petitioner No. 1 is a "Generating Company" within the meaning of Section 2(4-A) of the Supply Act 1948 and the said project is a "Generating Station" within the meaning of Section 2(5) and Section 26-A(2) as these Sections, inter alia, provide that wherever the word "licensee" has been used the same will amount to reference to "Generating Company".
60. Section 37 of the Supply Act 1948 deals with the rights and liabilities of the former owner under any contract for such construction, extension or repair shall be deemed to have been transferred to the Board except such rights or liabilities acquired for or incurred after the date of receipt of notice of purchase without the prior sanction of the Board. The MoU and the Deed of Assignment show that power has been granted to the Generating Company by respondents to complete the said Generating Station of the project as schemes and plans of ASEB were sanctioned to generate and supply electricity, including all other powers as provided under Act 1910 and the Supply Act 1948. In that view of the matter, petitioner No. 1 is a 'licensee' for the purpose of completion setting up Generating Station and supply of electricity. Due to change in policy in respect of private participation in power sector Electricity (Amendment) Act, 1991 was passed and the definition of Generating Company in Section 2(vi) of the Supply Act 1948 was substituted. Further, Section 28 of the Act 1910 provides that State Government can engage a non licensee for supplying energy to public with the previous sanction of the State Government.
61. In view of the above discussion, I hold that the writ petitioner No. 1 is a "licensee" and, therefore, under the provisions of the Act 1910 is entitled to notice.
62. Now coming to the question of repugnancy it is required to see whether the above quoted sections of impugned Act are repugnant to the Act 1910, or any other Central Acts as contended by the petitioners.
63. Sections 3 and 4 of the impugned Act provide for transfer and vesting of the undertaking of the petitioner No. 1 in the State of Assam. The consequence of the action under Sections 3 and 4 involve revocation of the licence and acquisition of the undertaking of Electric generation. Section 3 of the Act 1910 provides for granting licences. Learned Advocate General, Assam has submitted that under Section 3 of the Act 1910 the petitioner is not a 'licensee' as no licence was granted at any time by the State Government;' that to be a licensee the conditions mentioned therein are required to be fulfilled and in the instant case no terms and conditions of a licence holder has been executed between the State and the petitioner. As already held by me in this case the petitioner being a 'generating station' is a 'licensee' under the Supply Act, 1948 and, therefore, licence under Section 3 is not required.
64. Section 4 of the Act 1910 provides for revocation and amendment of licence, if in the opinion of the State Government the public interest so requires and also can revoke a licence after consultation with the State Electricity Board, but licence can be revoked on some conditions as enumerated in the said section. As submitted by Mr. Jain, counsel for the petitioner, Section 4( 1) of the Act has made nugatory the provisions of the Act, 1910 and the same is inconsistent with the provisions of the Act, 1910 as regards the liabilities made at the various places of the impugned Act.
65. As it is seen, Section 4 of the impugned Act provides for revocation of the licence of the petitioner No. 1 without following the provisions of Section 4 of the Act, 1910. Section 4(3) of the Act, 19.10 provides that no licence 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 licence and has considered any cause shown by the licensee within a period of that notice against the proposed revocation. Section 4(4) of the Act, 1910 further provides that where the State Govt. might under Sub-section (1) revoke a licence it may instead of revoking the licence permit it to remain in force subject to such further terms and conditions as it thinks fit to impose. Any further terms/conditions 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 licence. Apparently, no circumstances as provided under Section 4 of the Act, 1910 for revocation of the licence nor such any case been made out by the impugned Act. The mandatory provision of a notice of three months in writing stating the grounds upon which it was proposed to revoke the licence has not been issued nor any opportunity of show cause has been given as provided in the Act, 1910.
66. Section 6 of the Act, 1910 as stated hereinabove, provides for compulsory purchase of undertaking of the licensee and in fact it provides for acquisition of undertakings of licensee. The petitioner No. 1 being found a licensee, the said section has totally been made nugatory by Section 3 and the proviso thereunder of the impugned Act with regard to the liabilities made in various provisions of the impugned Act. As submitted by the learned counsel for the petitioners Section 3 of the impugned Act has made nugatory the provisions made in the Companies Act, 1956 which is a Central Act and on which the Central Government, alone is competent to legislate.
67. The dominant purpose of the impugned Act is acquisition of the right, title and interest of the 'undertaking' in question and the matters connected therewith or incidental thereto and to enable the Government to efficiently supervise, manage and execute the work expeditiously in the context of the acute power shortage by virtue of Section 4(3) of the impugned Act, and therefore, the impugned Act was enacted for the purpose of acquisition of the rights of the Company.
68. As submitted by the learned counsel for the petitioners when an undertaking is taken over the entire liabilities required to be taken over as on the date of taking over. In support of this contention the learned counsel has placed reliance on a decision of the Apex Court in Rustom Cavasjee Cooper v. Union of India, AIR 1970 SC 564. According to Mr. Jain Section 3 of the impugned Act made nugatory the Section 6 of the Act, 1910 which provides for a notice in writing by the Board upon the licensee. The provisions of Section 6 of the Act provides for the procedure to be followed in purchasing/taking over of an undertaking by the State Government which provides for a notice in writing in a fixed period. Sub-section (6) of Section 6 provides that where a notice of exercising the option of purchasing the undertaking has been served upon the licensee, the licensee shall deliver the undertaking to the State Board on the expiry of relevant period referred to in Sub-section (1), pending determination and payment of the purchased price and under Section 7-A the purchaser shall pay to the licensee the purchase price in accordance with the provisions of Section 7-A(4).
69. On examining the provisions of Section 6 of the. Act, 1910, it can be said that this Section has been made nugatory by Sections 3 and 4 of the impugned Act. Similarly, Section 7 of the Act, 1910 has been made nugatory by Sections 7 and 8 of the Act with regard to payment of amount, therefore, these Sections are directly repugnant and inconsistent with the provisions of the Act, 1910 and the Supply Act, 1948.
70. Entry 42 of the Union List of the Constitution deals with the acquisition, requisition of property and there is an exercising Central Authority regarding acquisition of property, i.e. the Land Acquisition Act, 1894. As far as generating Company and the licensee are concerned the Central Government has made specific provisions in the Act, 1910 and the Supply Act, 1948 for compulsory purchase of undertakings. In this regard, a detailed procedure, as discussed above, has been prescribed under Sections 6, 7, 8, 9, 10 and 11 of the Act, 1910andSection 37 of the Supply Act, 1948.
71. Section 37 of the Supply Act, 1948 deals with the purchase of generating stations/ undertakings or main transmission lines by the Board. Section 37 deals with the right and liabilities of the former owner thereof under any contract for such construction, extension or repair shall be deemed to have been transferred to the Board except such rights/liabilities acquired for or incurred after the date of receipt of the notice of purchase without the prior sanction of the Board. In that view of the matter, Sections 3 and 4 of the impugned Act, which deal with transfer and vesting: and with general effect of vesting, are repugnant to the provisions of the Act, 1910 and the Supply Act, 1948 and other provisions of the Act, and therefore, are redundant.
72. Section 5 of the impugned Act provides that the State Government will not be liable to past liabilities and the same, in my view, is repugnant to Section 7 of the Act, 1910. As stated above, Section 7 provides that any such debt, mortgage or other similar obligations shall attach to the purchase money in substitution for the undertaking. I find merit in the submissions of the learned counsel for the petitioners that the State Government has been given unrestricted power to declare certain liabilities or class of liabilities to be of the State Government or the Board. It is seen that Section 5(2), (3) and Section 4(6) including the explanation are repugnant to Section 7 of the Act 1910. It is also seen that Chapter III of the impugned Act, which deals with the payment of amount covering Sections 7 to 13 of the impugned Act, are also repugnant to Section 7-A of the Act, 1910 and Fourth Schedule of the Supply Act, 1948.
73. Apparently, it (is) seen that the effect of the impugned Act under Section 4 is that the Act was given effect to from the date of promulgation and immediately on promulgation of the Act the undertaking is to vest in the State Government which itself, in my opinion, is repugnant to Sections 5 and 6 of the Act, 1910. This provision of Section 4 is also repugnant to Section 37 of the Supply Act, 1948, which deals with the right and liabilities of the owner when an undertaking is purchased by the Board, which is in the course of construction, extension or repair or the date of purchase and the purchase price in this regard is to be fixed as provided under the Fourth Schedule to the Supply Act, 1948.
74. Mr. Jain gave much stress on the point of immediate promulgation of the Act, effect of which would be on the rights, liabilities and obligations, which were granted in favour of the Company under an agreement to supply electricity, shall deemed to have devolved on the State Government. As discussed hereinabove, this aspect of the impugned Act is in direct conflict with Sections 5 and 6 and other provisions of the Act, 1910 as well as Section 37 of the Supply Act, 1948. If this is scrapped, all the rights of the petitioners under those Acts will spring up making the other provisions of the impugned Act, regarding rights and liabilities of the petitioner over the undertaking, nugatory and meaningless.
75. In view of the above position, it is also necessary to see whether any other sections of the impugned Act are also repugnant to the Central Act.
Section 9 of the impugned Act empowers the State Government to deduct such amount, if the Govt. is of the opinion that the Company has disposed of any fixed asset whether by way of sale, exchange, or incurred any expenditure, liability not bona fide. In my opinion, this gives unguided power to the State Government and, therefore, it is violative of Articles 14 and 19(1)(g) of the Constitution.
76. Similarly Section 10 of the impugned Act also empowers the State Government to duduct the amount payable to the Company under this Act, if in the opinion of the Government the company has caused loss or damage or deterioration due to its negligence or otherwise. From the reading of this section it is seen that the State Government has unilateral power to decide the amount without giving any opportunity to the petitioners. The State Government is a party to the MoU and the Deed of Assignment and therefore, in my opinion, cannot unilaterally decide bona fide of any action or loss or damage or negligence of the Company. The submission of learned Advocate General that Section 14 of the impugned Act empowers the State Government to constitute a Commission headed by a sitting or retired High Court Judge and the question of compensation and liability will be ascertained by the Commission is not sustainable on the ground that the power of the Commission has been limited to Section 14(4) of the impugned Act. Moreover, the decision of the State Government declaring any transaction as not bona fide or the opinion of the State Government regarding any loss or damage caused by negligence or otherwise of the Company is not the subject-matter of the Commission and only assessment of the amount is the subject-matter of the Commission. The unilateral power of the Government to assess the loss and decide the amount is writ large in the provisions of those sections. Provisions of these Sections transpire that only the assets and not the liabilities are going to be taken by the State Government. These provisions relating to the rights and liabilities indicate that the petitioner will be left with nothing except liabilities and this aspect, in my view, affects the constitutional rights of the petitioner being contradictory of the provisions of the Act, 1910 and the Supply Act, 1948. It has been argued by the learned counsel for the petitioners that the State Government has taken the role of a Judge of its own cause. Admittedly, the Respondent No. 1 the State Government and the Respondent No. 2 ASEB, are the signatories of the MoU and the Deed of Assignment; Court cases are pending between the parties complaining non-compliance of the terms and conditions of the MoU and the Deed of Assignment. In support of this contention Mr. Jain has referred to a decision of the Apex Court in Cauvery Water Disputes Tribunal, reported in AIR 1992 SC 522. The ratio laid down by the Apex Court in that decision was that a party to the dispute has no power to decide unilaterally and cannot assume the role of a judge in its own cause.
77. Learned counsel for the petitioners further submitted that Section 13 of the impugned Act empowers the State Government to recover any excess amount as arrear of land revenue, if the amount recoverable from the Company by the State Government under this Act exceeds the amount payable by the State to the Company. According to Mr. Jain the entire provisions for payment of amount are nugatory and violative of Articles 14,, 19(1)(g), 31A and 300A of the Constitution and it assume the colour of a confiscatory legislation. Further, the admitted position is that the respondents Nos. 1 and 2 are the parties to the MoU and a suit is pending for violation of the terms of MoU and the Deed of Assignment. In that view of the matter, the respondents cannot take a unilateral stand to vest the undertaking on them under the provisions of Section 3 of the impugned Act.
78. Submission of Mr. Jain that Section 15(2) is repugnant to the provisions of the Industrial Disputes Act has been refuted by the learned Advocate General pointing to the averments made in the affidavit-in-opposition. According to the learned Advocate General the section has provided protection to all the permanent employees of the undertaking and from the appointed day all such employees became the employee of the State Government. Mr. Hansaria, counsel for the ASEB submitted that the writ petition contains vague averments that the provisions of Section 15 of the impugned Act are in conflict with the Industrial Disputes Act without specifying as to which provision of the impugned Act is in conflict with and under what manner. Similarly, Mr. Hansaria submitted that allegation of repugnancy has been made by the petitioner without specifying as to which provisions of Companies Act and Contract Act are in conflict with Sections 15 and 24 of the impugned Act.
79. Section 15 of the impugned Act has to be read with Sections 16, 23 and 24 of the Act and Explanation to Section 4 of the said Act. Explanation to Section 4 of the impugned Act provides that all the liabilities and obligations in respect of staff taxes, provident fund, employees' State Insurance, Industrial Dispute and all other matters upto the appointed day, shall continue to be the liabilities and obligations of the Company. Section 16 provides that the monies standing on the appointed day to the credit of provident fund, welfare fund and/or other fund shall stand transferred to and vest in the respondents. Petitioners' allegation that the effect of these provisions are most anomalous and unreasonable and violative of Articles 14 and 300A of the Constitution has merit, as the provisions of the Act envisages performance by the petitioners impossible to act, and in my opinion, confine the effect of the Explanation to Sections 4 and 16 of the impugned Act is one such example. The net result of such dichotomy would jeopardise the grant of benefits lawfully due to the workers of the undertaking. Sections 23 and 24 of the impugned Act put baron the jurisdiction of Court/Tribunal in questioning any order, investigation or any Act done or purported to have been done under the impugned Act and repugnancy is writ large to the provisions of the Central Acts.
80. From the above, it is seen that the provisions of Sections 3, 4; 5 and 6 give power to the State Government for compulsory acquisition of property for public purpose. There is no dispute that compulsory acquisition of public purpose is within the power of the State Government, but the benefit of Article 31A is not only available to such laws which themselves provide for compulsory acquisition of property for public purpose, but such laws should receive the assent of the President.
81. In the case of Ajit Singh v. State of Punjab, AIR 1967 SC 856, the Apex Court held that the intention underlying Article 31-A was to give protection to State action against violation of Articles 14; 19 and 31 so long as the acquisition is by extinguishment or modification of any such rights, provided President's assent is obtained.
82. In another case in Gram Panchayat of Village Jamalpur v, M. Singh, (1985) 3 SCC 661 : (AIR 1985 SC 1394), while considering the scope of Article 31A, the Apex Court held that the assent of the President under Article 254(2)' of the Constitution is not a matter of idle formality. The President has, at least, to be apprised of the reason why his assent is sought if, there is any special reason to do so. If the assent is sought and given in general terms so as to be effective for all purposes different considerations may legitimately arise. But if, the assent is for specific purpose, it would be limited for the purpose only. So, where the President's assent was taken under Article 31A stating the Act to be agrarian reforms, it cannot be said to have been reserved for assent under Article 254(2) of the Constitution.
83. , Mr. Hansaria, learned counsel for the ASEB has submitted that Article 31-A is not applicable in the instant case on the ground that the provisions of Article 31A provides protection to legislation relating to "agrarian reforms" and such legislation cannot be challenged on the ground of violative of Articles. Hand 19. Counter to this submission, Mr. Jain, however, has submitted that by the impugned Act, the rights of the Managing Director etc. to establish the generating station and supply energy and to manage the same have been extinguished and, therefore, violative of the rights guaranteed under Articles 14, 19(1)(g) and as such the Act comes within the purview of Article 31A of the Constitution.
84. In support of his submission, Mr. Jain has referred and relied on the decision of the Apex Court in R.C. Cooper v. Union of India (AIR 1970 SC 564) (supra) wherein it was held that "property" means the highest right a man can have to anything, being that right which one had to lands or tenements, goods or chattels which does not depend on another's courtesy; it includes ownership, estate sand interest in corporal things, and also rights such as trade-mark etc. It was further held that "undertaking" means a going concern with all its rights, liabilities and assets and distinct from the various rights and assets which compose it.
85. In the case of Tinsukia Supply Co. Ltd. v. State of Assam, AIR 1990 SC 123, similar State Act, viz., Tinsukia and Dibrugarh Electric Supply Undertakings (Acquisition) Act, (Assam Act 10 of 1973), which received the assent of the President was held to be valid being protected under Article 31C of the Constitution. In another case, viz. Maharashtra State Electricity Board v. Thana Electric Supply Co., AIR 1990 SC 153, the Apex Court held that the State Amendment to Electricity Act was given protection under Article 31C and was held to be valid.
86. In view of the foregoing reasons and discussions, I am of the view that Sections 3, 4, 5 and 6 of the impugned Act are violative of Articles 14 and 19(1)(g) as the Act has not received the President's assent nor was it reserved for the consideration, therefore, Article 31A is applicable.
87. Further, as stated above, MoU and the Deed of Assignment were executed between the parties and several cases are pending between the parties. The impugned Act interferes with the process of adjudication by Courts/Tribunals. According to the learned counsel for the petitioners the State Government sought to take law in its own hand and the Act is the manifestation of desire on the part of the State to be the Judge in its own cause. As discussed hereinabove, the Act empowers the State Government to take a unilateral decision and supersede the MoU and the Deed of Assignment and also to decide unilaterally the acts done in pursuance of MoU and recover the alleged loss from the petitioners.
88. From the above, it is to be seen whether the petitioner could undertake the onus to show the repugnancy of the impugned Act and the extent to what it is repugnant, taking reliance in the case of Shyamkant Lal v. Ram Bhajan Singh (AIR 1939 FC 74) (supra). In the said case the Federal Court while dealing with the 'principles of construction' guiding determination whether Provincial legislation is repugnant to existing India law observed that when the question is whether a Provincial legislation is repugnant to an existing India law, the onus of showing its repugnancy and the extent to which it is repugnant should be on the party attacking its validity. There ought to be a presumption in favour of its validity, and every effort should be made to reconcile them and construe both so as to avoid their being repugnant to each other, and care should be taken to see whether the two do not really operate in different fields without encroachment. It is well established principle that if the invalid part of an Act is really separate in its operation from the other parts, and the rest are not in severably connected with it, then only such part is invalid, unless, of course, the whole object of the Act would be frustrated by the partial exclusion. The Federal Court in the said case referred (o a decision in the King v. The Commonwealth Court of Conciliation, (1890) 11 CLR 1, wherein it was held thus :
"A particular section of an Act however may not be an isolated and independent Clause, and may form part of one connected indissoluble scheme for the attainment of a definite object; in which case it would have to be considered as an inseparable part of the whole. A law which is ultra vires in part only may thereby become ultra vires in whole if the object of the Act cannot at all be attained by excluding the bad part. If the offending provisions are so interwoven into the scheme of the Act that they are not severable, then the whole Act is invalid."
The guidelines enunciated by the Federal Court has been the touchstone to deal with the principles of construction guiding determination whether the State law is repugnant to existing Central law.
89. In view of this, the question arises whether the impugned Sections of the impugned Act can be avoided and whether this State legislation can go beyond the Electricity Act, 1910 and the Supply Act, 1948 and other Central Acts in existence.
90. So far as repugnancy is concerned, there need not be a direct conflict. Repugnancy may arise between two enactments even though obedience to each of them is possible without disobeying the other if a competent legislature with a superior efficacy expressly or impliedly evidences by its legislation an intention to cover the whole field. (Re : (1996) 3 SCC 15 : (AIR 1996 SC 2384)), (TKVTSS Medical Educational & Charitable Trust v. State of Tamil Nadu). II is seen that the provisions of those scheme of the impugned Act make non-application of various Central Acts, without referring to any particular provisions. Petitioners have, however, made specific pleadings and non-reference of some" specific provisions cannot estop the petitioners from urging them. As they are legal points and can be raised at the time of argument. Further, it cannot be said that petitioners have no case under Article 31A of the Constitution when the validity of the impugned Act is challenged and absence of the assent of the President is taken as one of the grounds, which is relatable to Articles 31A or Article 254 of the Constitution. Similarly, even if Article 31A is not specifically pleaded and if the impugned Act comes within the purview of the same and is alleged as unconstitutional for not taking assent of the President, Court can go into it and give its decision. Further, as the impugned Act touches and has extinguished the rights of the Managing Directors of the undertaking to establish the generating station and supply energy and to manage the same, it also comes within the purview of Article 31A of the Constitution.
91. Referring to a decision of the Apex Court in Ishwari Khetan Sugar Mills (P) Ltd. v. State of U.P., AIR 1980 SC 1955, the learned Advocate, General has submitted that the 'pith and substance of the impugned Act is to take over the 'undertaking' in the public interest and that 'pith and substance' of the Act has to be looked into an incidental trespass in the Act, 1910 or the Supply Act, 1948 or any other Central Acts would not invalidate the Act. Thereby, the learned Advocate General attempted to meet the attack by pressing the Court to hold that there was no repugnancy at all between the provisions of the impugned Act and the Central Acts. In the Ishwari Khetan Sugar Mills (P) Ltd. (AIR 1980 SC 1955) (supra) the Apex Court held that when the validity of the Act in question has been challenged on the ground of legislative competence it is necessary to ascertain which Entry in the three lists of the legislation is referable to the Court has evolved the theory of 'pith and substance'. If in pith and substance a legislation falls within one entry or other but some portion of the subject-matter of the legislation trenches upon and might enter a field under another list, the Act as a whole would be valid notwithstanding such incidental trenching. In the instant case, apparently, the test is whether some portion of the subject of the impugned section in the Act trenches upon the provisions of the Act, 1910, and Supply Act, 1948 or any other Central Acts which are alleged to be repugnant. Alternative plea taken by the Advocate General was that the impugned Act has been enacted by the State Legislature as per Entry 17 of the State List which deals with the water supply, irrigation, water power subject to the provisions of Entry 55 of List I (Water Power). Union List. As discussed above, the impugned legislation falls within the purview of Entry 38 of the Concurrent List and not Entry 17 of the State List. The impugned Act trenched upon the field occupied by the said Central Acts, The question of invasion into the territory of the Central Legislations is to be determined by degree. As it is seen the dominant purpose of the impugned Act was the acquisition of the right, title and interest of the undertaking and the matters connected therewith or incidental thereto to enable the Government to execute the work expeditiously in the context of acute power shortage and with that view the impugned Act sought to terminate the rights, liabilities granted to the petitioner under the Act, 1910 and the Supply Act, 1948 and also the Companies Act and Contract Act and deemed to devolve all such rights in the State Government. The stand of the respondents to the effect that the generation of electricity is an incidental purpose and not main purpose cannot be accepted, as has already been held by me, the argument of the learned Advocate General negated on the face of title and preamble of the provisions of the impugned Act. 92. In view of my foregoing discussions and also relying on the guidelines enunciated by a series of decisions of the Apex Court stated above, I am constrained to hold that the impugned Act has been enacted by virtue of the power given under the Entry 38 and 42 of the Concurrent List, (sic) Concession was given to the petitioner under Section 72 of the Supply Act, 1948 for use of development and use of water power for electrical purpose. Section 70 provides that the provisions of the Act, 1910 which is inconsistent with the provisions of the Supply Act, 1948 will not have any effect. Even in case of overlapping between the two entries the 'doctrine of pith and substance has to be applied to find out the true nature of the legislation and the entry within which it would fall.
93. As already pointed out, in pith and substance, the impugned legislation is for acquisition of the undertaking and that field of acquisition is occupied by the various provisions of the Central Acts, namely, the Act, 1910, the Supply Act, 1948, which deal with the rights and interest of a licensee and compensation etc. and repugnancy is writ large. A comparison of the aforesaid provisions of the impugned Act and the Central Acts show that both the Acts cannot coexist. Further, the background leading to the requisition of the instant "undertaking" is due to failure on the part of the Respondent-ASEB to complete the project with a heavy backload carried forward loss, the 'undertaking' has been changing hands from one management to another without much improvement. Under the new policy of privatisation in power sector, petitioner No. 1 was given the project to be completed within a fixed period and the time was extended till 31-12-1996, but prior to expiry of that period by the impugned Act the 'undertaking' has been taken over by the State.
94. In the case of RMD Chamarbaugwalla v. Union of India, AIR 1957 SC 628, the Apex Court enunciated guidelines for applicability of the principles of severability while dealing with the question whether a statute which is void in part is to be treated as void in toto or whether it is capable of enforcement as to that part which is valid. It was held that when a legislature whose authority is subject to limitations enacts a law which is wholly excess of its power, it is entirely void and must be completely ignored. But where the legislation falls in part within the area allotted to it and in part outside it, it is undoubtedly void as to the latter; but does it on that account become necessarily void in its entirety? The answer to this question must depend on whether what is valid would be separated from what is invalid and that is a question which has to be decided by the Court on a consideration of the provisions of the Act.
95. Relying on the guideline and in view of the foregoing discussions, I am constrained to hold that the impugned Sections, namely, 3, 4, 5, 6, 7, 7-A, 15(2), 23, 24 are repugnant to the Central Act, particularly the Act, 1910 and the Supply Act, 1948, as the impugned sections are not severable to validate the impugned Act. As the impugned sections are found to be repugnant, the other remaining Sections of the impugned Act cannot give effective power to enforce the impugned legislation to fulfil its objects. If those sections of the impugned Act are broken up from other Sections, it will go against the express language of the impugned enactment. While enunciating the seven guidelines, the Apex Court in the case of RMD Chamarbaugwalla (AIR 1957 SC 628) (supra) laid down the guideline to test the principles of separability to the effect that if after the valid portion is expunged from the statute, what remains cannot be enforced without alterations and modifications therein, then the whole of it must be struck down as void, because otherwise it will amount to judicial legislation.
96. For what has been stated above, I hold that the impugned provisions cannot be separated from the remaining provisions of the impugned Act, therefore, the whole of it must be struck down as void, which I accordingly do.
97. In the result, the writ petitions are allowed to the extent indicated above. The Misc. case stands dismissed. In the facts and circumstances of the case, the parties shall bear their own costs.