Cochin State Power and Ugbt Corporation Ltd. v. State of Kerala

Bachawat, J. The short question in this appeal is whether the proposed acquisition of the electrical supply undertaking of the appellant by the State of Kerala in pursuance of the notice Ex. G, dated November 20, 1959 is authorised by s. 6 of the Indian Elei:tricity Act, 1910.

The appellant is the holder of a license for the supply of elec-trical energy in Ernakulam and other places in Cochin. The license was originally granted to the managing agents of the appellant under the Cochin Electricity Regulation III of 1902 then in force in Cochin and subsequently assigned to the appellant wiih the permission of the Cochin Government. On the merger of Travan-core-Cochin with the Union of India, the Indian Electricity Act, 1910 was made applicable by the Part-B States Laws Act, 1951 (Act lllof 1951) to the Travancore-Cochin area, and the Cochin Electricity Regulation stood repealed. The Electricity (Supply) Act, 1948 (Act 54 of 1948) was also made applicable to the Travan-core-Cochin area by the Part-B Stat~s Laws Act, 1951. On March 31, 1957 the Kerala Electricity Board. was constituted, and by s. 71 of Act 54 of 1948, any right and option to purchase the under-taking of the licensee under the Indian Electricity Act, 1910 was transferred to and vested in the Board. Now, the right or option to purchase the undertaking of a licensee under s.7(1) of the Indian Electricity Act, 1910 then in force was exercisable "on the expira-tion of such period, not exceeding fifty years, and of every such subsequent period, not exceeding twenty years as shall be specifi-ed in this behalf in the license." Sub-section (4) of s. 7 provided:

"Not less than two years' notice in writing of any elec-tion to purchase under this sect;on shall be served upon the licensee by the local authority or the State Govern-ment, as the case may be."

Clause 15(a) of the license held by the appellant provides:

"The option of purchase given by Section 7, sub-sec-tion (i) of the Regulation shall first be exercisable on the expiration of 25 years from the commencement of this license and on the expiration of every subsequent period of ten years during the continuance of this license." Section 7(1) of the Indian Electricity Act, 1910 corresponds to s. 7(i) of the Regulation, that is to say, of the Cochin Electricity. Regulation. The date of the commencement of the license is December 3, 1935. The period of 25 years mentioned .in cl. 15(a) of the L'cense expired on December 2, 1930. The last date for · giving the twc;> years' notice of the election to p.urchasc on the ex· piry of December 2. 1960 required under s. 7 (4) of the Indian Flectricity Act, 1910 expired on December 2, 1958. On February 11, 1959, the Stat..: Electricity Board served on the appellant notice, Ex. B, of its election to purchase the undertaking of the appellant on the expiry of December 2, 1960, but this notice was not being in accordance wtih s. 7(4) was of no legal effect.

By the Indian Electricity (Amendment) Act, 1959 (Act 32 of \959), s.6 now in force was substituted for the old s.7 of the Indian Electricity Act. 1910, with effect fr0m Sl)ptember 5, 1959. Section 6 of the Indian Electricity Act, 1910 now in force reads:

"6. (I) 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 grant~d before the com-mencement of the Indian Electricity (Amendment) Ac~. 1959, on the expiration of each such period as is specified in the license: and

Cb) in the case of a liceose granted on or after the com-mencement of the said Act, on the expiration of such period n0t excced'ng twenty years and of every such sub-sequent peried, n0t exceeding ten years, as· shall be specified in this hehalf in the license;

have the option of purchasing thq undertaking and such opt'on 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 undertak-ing to it at the expiry of the re\evant period referred t6 in this sub-section.

(2) Where a State Electricity Board has not been con-stituted, or if constituted. does n('ft elect to purchase the undertaking, the State Government shall have the like option to be exercised In the like manner of purchasing the undertaking.

0) Where ne'ther the State Electricity Board nor the State G.over~ment el~cts to purchase the undertaking, any local authonty 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 purchas-ing the wderta big.

f4l 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 in-tention to the State Government at least eighteen months before the expiry of the relevant period referred to in >Uh· section (!) and if no such intimat'on as aforesaid is receiv 190 SUl'BEME CQURT REl'OllTa (1960 J 3 8.0.ij.

ed by the State Government the State Electricity Board shall be deemed to have elected not to purchase the un. dcrtaking,

(5) If the Sj;ate 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 rele-

vant period referred to in sub-section (I) 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, Cl

(6) Where a notice exercising the option of purchasing the undertaking has been served upon the licensee under this sect;on, 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 (I) pending the determination and payment of the purchase price.

(7) Where an undertaking is purchased under this sec· tion, the purchaser shall pay to the licensee the purchase price determined in accordance with the provisions of sub-section (4) of section 7A."

On October 24, 1959,'llthe State Electricity Board served upon the appellant a notice Ex. D, of its election to purchase the under-taking on the expiry of December 2, 1960. On October 29, 1959, the State Electrlcity Board served upon the appellant another notice, Ex. E, of its election. On November 20, 1959, the State Government served upon the appellant a notice, Ex. G, of its elec-tion to purchase the undertaking on the expiry of December 2, l960. On November 14, 1960, the appellant filed a wrlt petition in the High Court of Kerala impleading the State of Kerala and the Kerala State Electricity Board and asking for the issue of al>' propriate writs and orders restraining them from taking any ac-tion pursuant to the notices, Exs. B,D,E and G. On December 20, 1961, a learned single Judge of the High Court passed the follow· ing order:

"In view of the representation made before me by both the learned Advocate-General appearing for the State, the 1st respondent, and Mr. Krishnaswami Iyengar, learned counsel appearing for the Kerala State Electricity· Board, the second respondent, that for the purpose of this writ petit'on, t'ie notices issued by the Kerala State Electri-city Board, Exs. B. D and E can be ignored, it follows that neither the 1st respondent nor. the -2nd respondent has any jurisdiction or power to take any action on the basis Of Exs. B, D or E. In view of the fact that I am uphold-

ing the action of the State Government, who had issued the notice Ex. G, it follows that the 1st respondent alone is entitled to take further action under the Act, in pursu-ance of the notice, Ex. G, issued and sent along with the covering letter, Ex.Fon 20-11-1959. It follows, subject to what is stated about Exs. B, D and E, that the writ petition has to be dismissed. There will be no order as to costs."

The effect of this order was that the State Electricity Board waived and abandoned all its rights of purchase of the undertaking under the notices, Exs. B, D and E, and neither the Kerala State Elec-tricity Board nor the State of Kerala had any jurisdiction or power to take any action on the basis of those notices, and save as afore-said, the writ petition was dismissed, and it was held that the State Government was entitled to take further action under its notice, Ex. G. Aggrieved by this order, the appellant filed an ap-peal in the Kerala High Court impleading the State Government only as the party respondent. The State Electricity Board did not file any appeal from the order of the learned single Judge. By its judgment dated October 4, 1962, a Division Bench of the High Court dismissed the appeal. In paragraph 15 of its judgment, the Bench observed :

"In its petition the appellant asked for reliefs both against the State Government and the State Electricity Board. However, in the course of the hearing of the peti-tion, the Board gave up its claims under Exts. B. D and E, and only the claim of the State Government under Ext. G was canvassed. The petition was, in effect, allowed against the Board. The Baord has not appealed and is not a party to the present appeal; and its notices may therefore be ignored except to the extent that they may affect the rights of the State Government."

The appellant now appeals to this Court under a certificate grant-ed by the High Court under Arts. 133(l)(a) and 133(l)(c) of the Constitution.

On behalf of the appellant, Mr. Vishwanath Sastry contended that ([) as the two years' notice in writing of the election to pur-chase the undertaking on the expiry of December, 2, 1960 was not served on the appellant as required by the old s. 7(4) of the Indian Electricity Act, 1910, the appellant acquired a vested right to ho.Id the license. until the expiry of a further period of ten years, that 1s to say, unll.l December, 2, 1970, and this vested right was not taken away either expressly or by necessary implication by the new s.6 of the Indian Electricity Act, 1910 introduced by the amending Act 32 of 1958; (2) the expression "on the expiration of each such period as is specified in the license" in thi; new s.6(l)(a) means a period which has not expired and on the expiry of which the option may be legally exercised, and since in the absence of the two years' notice required under the old s. 7(4), the option of purchase on the expiry of December 2, 1960 could not be legally L/ll!D)2SCI-15 exercised, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960 and the first option exercisable under the new s.6(1) would be on the expiry of December 2, 1970; (3) sub-sections (4) and (5) of the new s.6 show that the period on the expity of which the option under sub-s(l) of s.6 is exercisable, is a period which would expire at least 18 mqnths after the coming into force of the new s.6, that is to say, after September 5, 1959, and since the period expiring on December 2, 1960 is not such a period, the new s.6(1) did not confer any option of purchase on the expiry of December 2, 1960; and (4) in any event, the State Electricity Board having duly elected to purchase the undertaking on the expiry of December 2, 1960, the State Government acquir· ed no option of purchase under sub-s(2) of s.7 of the Indian Elec· tricity Act, 1'910.

On behalf of the respondent, Mr. V.P. Gopalan Nambiar, the Advocate-General of Kerala, contended (!) that the absence of two years' notice under the old s.7(4) of the Indian Electricity Act, 1910 did not confer upon the appellant a vested right to hold the license until the expiry of December 2, 1970, and the immu-nity from compulsory purchase under the old s.7 arising from the non-service of the requisite two years' notice could be, and, in fact, was taken away by the new s.6, which required only one year's notice of intention to purchase the undertaking; (2) assum-ing that the appellant acquired under the old s. 7 a vested right to hold the lic10.ise until December 2, 1970, sµch vested right was taken away by the new s.6, which expressly applies to licenses granted before its commencement, and the period of 25 years is a period specified in as the license on the expiry of which the option of purchase was legally exercisable; (3) sub-sections (4) and (5) of the new s.6 did not cut down the plain me(lning of sub-s(l) of the P iCction and the option on the expiry of the period of 25 years was vested under sub-s(l) of s.6, though this period did not expire 18 months after September 5, 1959; and (4) as the State Electricity Board did not send to the State Government any intimation in writing of its intention to exercise the option on the expiry of December 2, 1960 as required by sub-s(4) of s.6, the Board must be deemed to have elected not to exercise this option, and conse-quently by sub-s(2) of s.6, the State Govermnent is vested with the option.

We think that the fourth contention of Mr. Viswanatha Sastry is sound, and should be accepted. Assuming, without deciding, that the option of purchasing the undertaking on the expiry of the period of 25 years specified in the license was avail-able under sub-s(l) of s.6, such option vested in the State Electri-city Board, and as the Board duly elected to purchase the under-taking, the State Government acquired no right or option of pur· chasing the undertaking under s.6. On this ground alone, the appeal chould be allowed, and in this view of the matter, we do not think it necessary to express any opinion on the other contentions urged before us. As far as the State Electricity Board is concerned, it has abandoned and waived its option of purchase on the expiry of 25 years.

Sub-section (!) of s.6 expressly vests in the State Electricity Board the option of purchase on the expiry of the relevant period specified in the license. But the State Government claims that under sub-s(2) of s.6 it is now vested with the option. Now, under sub-s(2) of s.6, the State Government would be vested with the option only "where a State Electricity Board has not been consti-tuted, or if constituted, does not elect to purchase the undertak-ing." It is common case that the State Electricity Board was duly constituted. But the State Government claims that the State Elec-tricity Board did not elect to purchase the undertaking. For this purpose, the State Government relies upon the deeming provisions of sub-s(4) of s.6, and contends that as the Board did not send to the State Government any intimation h writing of its intention to exercise the option as required by the sub-section, the Board must be deemed to have elected not to purchase the undertaking. Now, the effect of sub-s(4) read w'th sub-s(2) of s.6 is that on failure of the Board to give the notice prescribed by sub-s(4), the dption vested in the Board under sub-s(l) of s.6 was liable to be divested. Sub-section (4) of s.6 imposed upon the Board the duty of giving after the coming into force of s.6 a notice in writing of its intention to exercise the option at least 18 months before the expiry of the relevant period. Section 6 came into force on Sep-tember 5, 1959, and the relevant period expired on December 3, 1960. In the circumstances, the giving of the requisite notice of 18 months in respect of the option of purchase on the expiry of Dec-ember 2, 1960, was impossible from the very commencement of s.6. The performance of this impossible duty must be excused in accordance with the maxim, lex non cogit ad impossibilia (the law does not compel the doing of impossibilities), and sub-s(4) of s.6 must be construed as not being applicable to a case where com-pliance with it is impossible. We must therefore, hold that ;!le State Electricity Board was not required to give the notice under sub-s(4) of s.6 in respect of its option of purchase on the expiry of 25 years. It must follow that the Board cannot be deemed to have elected not to purchase the undertaking under sub-s(4) of s.6. By the notice served upon the appellant, the Board duly elected to purchase the undertaking on the expiry of 25 years. Consequently, the State Government never became vested with the option of purchasing the undertaking under sub-s(2) of s.6. The State Gov-ernment must, therefore, be restrained from· taking further action under its notice, Ex. G, dated November 20, 1959.

In the result, the appeal is allowed, and the respondent State of Kerala is restrained from taking any action unde; the notice, Ex. G, dated November 20, 1959. The respondent shall pay to the appellant the costs in this Court. We direct the parties to pay and bear their own costs in the Courts below.

Appeal allowed.