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PETITIONER: TINSUKHIA ELECTRIC SUPPLY CO. LTD.

       Vs.

RESPONDENT: STATE OF ASSAM AND ORS.

DATE OF JUDGMENT13/04/1989

BENCH: VENKATACHALLIAH, M.N. (J) BENCH: VENKATACHALLIAH, M.N. (J) RANGNATHAN, S. PATHAK, R.S. (CJ) MUKHARJI, SABYASACHI (J) NATRAJAN, S. (J)

CITATION:  1990 AIR  123            1989 SCR  (2) 544  1989 SCC  (3) 709        JT 1989 (2)   217  1989 SCALE  (1)1006  CITATOR INFO :  F          1990 SC 153  (19,20)  RF         1991 SC 101  (30)  RF&R       1992 SC 938  (22,28,35)

ACT:     Constitution  of India, 1950: Articles 14, 19, 31-C  and 39(b) and (c)--Nationalisation--Acquisition and take over of electric  supply  companies  by  State  Government--Validity of--Nexus  between  the legislation and the  objectives  and principles  of nationalisation--Court to look into the  real nature of the statute.     Indian   Electricity   Act,    1910/Indian   Electricity (Assam  Amendment)  Act,  1973:  Sections  5(2),  6(7)   and 7A--Acquisition  and take over of electricity supply  compa- nies--Constitutional validity of.     Tinsukhia  and  Dibrugarh Electric  Supply  Undertakings (Acquisition)  Act,  1973: Sections 1(3),  2(f),  (h),  (j), 2(1), 3 to 10, 20 and 23Constitutional validity of--Acquisi- tion and take over of Tinsukhia Electric Supply Co. Ltd. and Dibrugarh Electric Supply Co. Ltd.-Protection under  Article 31-C    of   the   Constitution   of    India--Payment    of compensation--Justiciability of.

HEADNOTE:     The  petitioners--Public  Limited Companies--were grant- ed  licences under the provisions of the Indian  Electricity Act,  1910 for supply of electricity within  the  respective licensed areas of Tinsukhia and Dibrugarh Municipal Boards.     The  Dihrugarh  Company was granted licence in  1928  on certain terms and conditions with an option to the State  to purchase  the  under. taking on the expiry of 50  years  and thereafter  on  the  expiry of every  subsequent  period  of twenty years.     So  also, the Tinsukhia company was granted  licence  in 1954  on certain terms and conditions with an option to  the State  Government to purchase the undertaking on the  expiry of 20 years and thereafter on the expiry of every 20 years. The State Government negotiated with the companies for pur-

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545 chasing  them.  The negotiations were going on  for  several years. On 27.9.1972 the Governor promulgated two  ordinances for  the compulsory acquisition of the undertakings  of  the two companies. Subsequentiy, the ordinances were replaced by the  Indian Electricity (Assam Amendment) Act, 1973 and  the Tinsukhia & Dibrugarh Electric Supply Undertakings (Acquisi- tion) Act, 1973.     The  two  legislations, one amending the  provisions  of Section  5(2), 6(7) and 7-A of the Indian  Electricity  Act, 1910 and the other providing for the acquisition of the  two undertakings  viz.  the  Tlnsukhia  and  Dibrugarh  Electric Supply Undertaking (Acquisition) Act, ’1973 were  Challenged in this Court by the writ-petitioners on several grounds. It was  contended that in view of the private negotiations  and the  exercise  of the option to purchase,  the  legislations were not bona fide, but constituted a mere colourable  exer- cise  of legislative power and that the real objects of  the two legislations have no direct and reasonable nexus to  the objects  envisaged in Article 39(b) of the Constitution.  It was  also contended that what was sought to be acquired  was not  the undertakings of the two companies, but the  differ- ence between the market value of the undertakings agreed  to by the State Government and the Book-value of the  undertak- ings  which the law has substituted by virtue of the  amend- ments made in the Indian Electricity Act, 1910. The  Article 31-C  protection given to the legislations, and some of  the specific  provisions of the acquisition law  which  excluded certain  items  from  the computation  of  compensation  and authorised certain deductions in the amount of  compensation have also been challenged.     On  behalf  of the Respondents, it  was  contended  that electrical energy has been a material source of the communi- ty and any legislative measure to nationalise the  undertak- ing fell squarely within the ambit of Article 39(b) and  was entitled  to Article 31-C protection. It was  also  asserted that  book-value has been a well accepted concept of  valua- tion in accountancy and it cannot be characterised as  illu- sory  even if the legislations did not enjoy the  protection of Article 31-C. Dismissing the writ petitions,     HELD: [R.S. Pathak. CJ, M.N. Venkatachaliah, S.  Natara- jan and S. Ranganathan, J J----per Venkatachaliah, J.]     1.1. The proposition that the legislative declaration of the  nexus between the law and the principles in Article  39 is inconclusive and justiciable is well settled. The sequen- tor is that whenever any immunity 546 is  claimed for a law under Article 31-C, the Court has  the power  to  examine  whether the provisions of  the  law  are basically and essentially necessary for the effectuation  of the principles envisaged in Article 39(b) and (c). [539E, F]     1.2.  It  can, hardly be gain-said that  the  electrical energy generated and distributed by the undertakings of  the petitioners constitutes "material resources of the  communi- ty".  The idea of distribution of the material resources  of the community in Article 39(b) is not necessarily limited to the idea of what is taken over for distribution amongst  the intended beneficiaries. That is one of the modes of "distri- bution". Nationalisation is another mode. The economic  cost of social and economic reform is, perhaps, amongst the  most vexed problems of social and economic change and  constitute the core element in Nationalisation. The need for  constitu- tional immunities for such legislative efforts at social and economic change recognise the otherwise unaffordable econom-

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ic  burden  of reforms. It is not possible  to  divorce  the economic  considerations  or components from the  scheme  of nationalisation  with  which  the  former  are  inextricably integrated.  The financial cost of a scheme of  nationalisa- tion lies at its very heart and cannot be isolated. Both the provisions relating to the vestiture of the undertakings  in the State and those pertaining to the quantification of  the "Amount" are integral and inseparable parts of the  integral scheme of nationalisation and do not ambit of being  consid- ered  as distinct provisions independent of each other.  The debate whether nationalisation is by itself to be considered as  fulfilling a public purpose or whether the  nationalisa- tion  should  be shown to be justified effectuation  of  the avowed  objectives of such nationalisation--the  choice  be- tween     the     pragmatic     and     the      doctrinaire approaches---is concluded and no longer available. [578C. D, E, 579C, D, H, 580A, B, E]     1.3.  The right, title and interest of the  licensee  in the undertaking does not get transferred to the Board or the State,  as the case may be, immediately upon the mere  exer- cise  of the option to purchase. The exercise of the  option would  have no such effect on the licensee’s right to  carry on  his  business until the undertaking was  actually  taken over and paid for. The contentions that immediately upon the exercise of the option, ipso-facto, the relationship between the parties get transformed into one as between a Debtor and a  Creditor  and that the interest of the  licensee  in  the undertaking  becomes an "actionable-right", or  a  ’chosein- action"  and  that  no public-purpose could be  said  to  be served by the acquisition of a "chose-in-action" are all out of place in the instant case. [582E, 583C] 547     1.4.  The acquisition legislation was brought-forth  for securing  the principles contained in Article 39(b)  of  the Constitution and is protected under Article 31-C. The  Assam amendment  made to the provisions of the Indian  Electricity Act,  1910,  amending the basis for  quantification  of  the amount payable in the case of a statutory purchase  pursuant to the exercise of the option in terms of the licence  would apply  to and govern cases of statutory-sales and would  not assume any immateriality in the instant case. [585E, F]     Kesavananda  Bharati v. State of Kerala;  [1973]  Suppl. SCR  1; Minerva Mills Ltd. v. Union of India, [1981]  1  SCR 206;  Sanjeev  Coke  Mfg. Co. v. Bharat  Coking  COal  Ltd., [1983]  1 SCR 1000; State of Tamil Nadu v.L. Abu Kavar  Bai, AIR  1984  SC 326; Akadasi Padhart v. State  of  Orissa  and Ors., AIR 1963 SC 1047; Godra Electricity Co. Ltd. and  Anr. v. The State of Gujarat and Anr., [1975] 2 SCR 42 and  Madan Mohan  Pathak v. Union of India and Ors., [1978] 2 SCR  334, relied on.     Fergusan  v.  Skrupa,  372 U.S.  726;  Fazilka  Electric Supply  Co. Ltd. v. The Commissioner of Income  Tax,  Delhi, [1962]  Suppl.  3 SCR 496 and Gujarat Electricity  Board  v. Shantilal, [1969] 1 SCR 580, referred to.     Bihar  State  Electricity  Board  v.  Patna  Electricity Supply Co. Ltd., AIR 1982 Cal, 74; distinguished.     "History  of  the treatment of choses in-action  by  the common law"--by W.S. Holdsworth--Vol. 33--Harvard law Review referred to.     2.  It may not be just to deprive a recompence  that  is just  and fair, in all cases. But that. is not to  say  that even  ,under a law which has the protection of Art. 31-A  or 31-C, the adequacy, or justness or fairness of the compensa- tion  would, yet, be justiciable. Article 31-C is in  effect and substance is to ’urban property’ of what Article 31-A is

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to  ’agricultural  property’. All the same, the  concept  of "Book-Value" is an accepted accountancy concept of value. It cannot be held to be illusory. Even if the impugned law  had no  protection of Article 31-C and tests appropriate to  and available  are applied, in the circumstances of the  present case, it cannot be said that the principles envisaged in the acquisition  law  lead to an "amount" which  can  be  called unreal or illusory. [590C, 592B] 548     Eswari Khetan Sugar Mills v. State of U.P., [1980] 3 SCR 331; relied on. Gwalior Rayon v. Union of India, [1974] SCR 1 671;  referred to.     3.  Under the law when a requisition is made by  an  in- tending consumer for electrical-energy, the licensee has  an obligation to lay down service-lines. But, according to  the provisions  the entire cost of service-line is not  required to  be  borne by the licensee. The licensee is  entitled  to call  upon the consumer to pay part of the cost of  service- line--which  may  in a given case amount  to  a  substantial part--in  accordance with the provisions in the Schedule  to the  Electricity Supply Act. While it is true that  the  ex- pression ’works’ in Section 2(h) of the Indian Railways Act, 1910  includes  ’Service-lines’, the  reason  why  ’Service- lines’  could  justifiably be excluded  from  valuation  for purposes  of determination of the ’amount’, is that the  new licensee is to repair and maintain them. [593B, C; 592F, G]     Dakor-Umreth  Electricity Co. Ltd. v. State of  Gujarat, 13 GLR 88; approved.     4.   On  a  reasonable  construction,  the   expressions ’amounts remaining’ and ’in so far as such amounts have  not been paid over’ necessarily exclude any such duplication  of the accountability of the licensee for these ’Reserves’.  If any  part of the reserves is invested in "fixed assets"  and the  reserves in the form of such "fixed assets" are  taken- over  by  the Government pursuant to the  acquisition,  what remains  to  he accounted for by the licensee  is  only  the ’amounts remaining’ in the pertinent accounts. The liability of  the  licensee for deduction of the ’Reserves’  from  the ’amount’ would arise only if the balance remaining in  those accounts are not paid. [594F, G]     5.  As regards the liability of the licensee under  Sec- tion 11(3) of the Acquisition Act in respect of the  amounts payable  to  employees retrenched by the Government  or  the ’Board’ as the case may be, within one year from the vesting date after the take-over-even if this question is  justicia- ble---it  is not unreasonable or arbitrary as  it  envisages the  continuance of a liability which was,  otherwise,  sub- stantially that of the licensee. [595F, G, H, 596A, B]     6.  Though  some of the liabilities arising out  of  the conduct of the licensees’ business prior to vesting are  not taken  over  by Government, some of those  liabilities  are, yet, authorised to be deducted from the 549 amount.  The  purpose of this provision is  too  obvious  to require  any statutory declaration or the  obligations  that arise in law and are attandant upon these sums coming to the hands  of and retained by the Government.  Quite  obviously, the  provision is not intended for an unjust  enrichment  in the hands of Government. The purpose is obviously to facili- tate  recovery  of  certain types of debts  owed  to  public institutions  etc., and the deduction is for the benefit  of those creditor institutions. The Government would,  plainly, be under a legal obligation to pay the sums so deducted,  to the concerned creditors. The provisions of the Statute  must

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be  read along, and in consonance, with the general  princi- ples of law which import such obligations on the part of the Government  and  an implied corresponding discharge  to  the petitioners  to the extent of such deductions in  their  li- abilities. There is a resulting statutory-trust in the hands of the Government to pay the sums so deducted to the respec- tive creditors, even in the absence of express provisions in this  behalf in the Statute, the general principles  of  law operate. As a matter of construction it requires to be  held that these obligations and consequences follow. [596E, F, G, H, 597A]     7.  The  Courts strongly lean against  any  construction which tends to reduce a Statute to a futility. The provision of  a Statute must be so construed as to make  it  effective and  operative, on the principle "but res majis valeat  quam periat".  It is, no doubt, true that if a Statute  is  abso- lutely  vague and its language wholly intractable and  abso- lutely  meaningless, the Statute could be declared void  for vagueness. This is not in judicial-review by testing the law for arbitrariness or unreasonableness under Article 14;  but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute  the meaning and purpose which the  legislature  in- tended  for it. It is, therefore, the Court’s duty  to  make what  it can of the Statute, knowing that the  statutes  are meant  to be operative and not inept and that nothing  short of  impossibility should allow a Court to declare a  Statute unworkable. [597F, G, 598C]     Manchester Ship Canal Co. v. Manchester Race Course Co., [1904] 2 Ch. 352 and Fawcet Properties v. Buckingham  County Council, [1960] 3 AII.E.R. 503, referred to.     8.  Section 10 of the Acquisition Act enjoins  upon  the Government  to  appoint a person having  adequate  knowledge anti  experience in matters relating to accounts "to  assess the  net amount payable under the Act by the  Government  to the  licensee after making the deductions mentioned in  sec- tion 9". Proviso to Sections 8 and 9 envisages prior 550 notice  to  be issued to the licensee by the  Government  to show  cause against any deduction proposed to be made  under Section 8 or 9, as the case may be, within the period speci- fied  in  the provisos. Even after the Government  so  makes such  determination of the amounts which, according  to  it, are  deductible  from the gross amount,  such  determination would not be final. The assessment of the net amount payable to  the licensee will have to be made by the "Special  Offi- cer". It is reasonable to construe that the decision of  the Government  both  under Sections 8 and 9  arrived  at,  even after giving an opportunity to the lincensee of being heard, would not be final, but the final determination will have to be made by the "Special Officer" appointed under section  10 of  the  Act. Section 10(1) and (2) of the Act  must  be  so construed  as to enable the "Special Officer" to  take  into account  the  determination respecting the  deduction  under Sections 9 and 10 of the ACt made by the Government and take the decision of his own in the matter. The power to "assess" the  net  amount by necessary implication takes  within  its sweep the power to examine the validity of the determination made by the Government .in the matter of deduction from  the gross  amount. This power to determine and assess the  ’net- amount’  payable  by  necessary  implication  cover  matters envisaged  in  Sections 8 and 9. Though only  Section  9  is specifically  referred  to in sub-sections (1)  and  (2)  of section  10, the language of sub-sections (1) and (2)  which enable  the Special Officer to "assess" the net amount  pay-

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able  would by necessary implication, attract the  power  to decide  as to the validity and correctness of the  deduction to be made under Section 8 as well. So construed. the provi- sions  of  Section 10 would furnish  a  reasonably  adequate machinery for the assessment of the "net-amount" payable  to the licensee. [598E-H; 599A-E]     9.  So far as Arbitration is concerned, even  after  the decision  of  the "Special Officer", there  is  the  further arbitral forum to decide disputes in respect of the specific areas  in which disputes are rendered arbitrable under  Sec- tion  20. There is a provision for appointment of a  sitting or retired District or High Court Judge as arbitrator  under the  said section. Hence it cannot be said that there is  no proper  machinery  for resolving the  disputes  between  the Government  and the licensee rendering the  Acquisition  Act unworkable. [599F, G] Per Mukharji, J. (Concurring)     1.  Article 39(b) of the Constitution enjoins  that  the State in particular should direct its policy towards  secur- ing that the ownership and control of the material resources of the community are so distri- 551 buted  as  to  best subserve the common good  and  that  the operation of the economic system does not result in  concen- tration  of  wealth and means of production  to  the  common detriment.  In order to decide whether a Statute  is  within Article  31-C,  the  Court, if necessary,  may  examine  the nature  and the character of the legislation and the  matter dealt with as to whether there is any nexus between the  law and  the principles mentioned in Article 39(b) and  (c).  On such  an  examination if it appears that there  is  no  such nexus  between  the legislation and the objectives  and  the principles mentioned in Article 39(b) and (c), the  legisla- tion will not enjoy the protection of Article 31-C. In order to see the real nature of the Statute, if need be, the Court may also tear the veil. [553E-H]     Kesavananda  Bharati v. State of Kerala,  [1973]  Suppl. SCR 1; relied on. Charles Russel v. The Queen, [1882] VII AC 829; referred to.     2. Whenever a question is raised that the Parliament  or the State Legislature have abused their powers and  inserted a declaration in a law for not giving effect to securing the Directive Principles specified in Article 39(b) and (c), the Court  can  and must necessarily go into that  question  and decide. If the Court comes to the conclusion that the decla- ration  was merely a pretence and that real purpose  of  the law is the accomplishment of some object other than to  give effect  to  the  policy of the State  towards  securing  the Directive  Principles as enjoined by Article 39(b) and  (c), the declaration would not debar the Court from striking down any provision therein which violates Articles 14, 19 or  31. In other words, if a law passed ostensibly to give effect to the policy of the State is, in truth and substance, one  for accomplishing  an  unauthorised object, the Court  would  be entitled  to  tear the veil created by the  declaration  and decide according to the nature of the law. The only question open to judicial review under_Article 31-C is whether  there is  a direct and reasonable nexus between the  impugned  law and the provisions of Article 39(b) and (c).  Reasonableness is evidently regarding the nexus and not regarding the  law. [554D, E, F, 555B, C]     Kesavananda  Bharati v. State of Kerala,  [1973]  Suppl. SCR  1; Minerva Mills Ltd. v. Union of India, [1981]  1  SCR 206  and Sanjeer Coke Mfg. Co. v. Bharat Coking Coal Ltd.  & Anr., [1983] 1 SCR 1000, relied on.

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   3.  It is indisputed that the electric energy  generated by  the petitioner companies constitutes material  resources of the community 552 within  the scope and meaning of Article 39(b),  and  having regard  to the true nature and the purpose of  the  legisla- tions,  reading the legislations entirely, the  legislations have  a direct and reasonable nexus with time  objective  of distributing  the material resources so as to  subserve  the common  good.  The determination of value  thereof  and  the substitution of the book-value in place of market value, are only  methods for such acquisition and do not  disclose  the true nature and character of the legislation, but are  inci- dental  provisions thereof. if that is the position then  it is  incorrect  to say that what was acquired,  was  not  the material resources but chose-in-action. The true nature  and character of the legislations in question was to acquire the material  resources, namely, the electric energy for  better supply and distribution. [556D, E, F]     State  of Tamil Nadu & Ors. v. L. Abu Kavur Bai &  Ors., [1984] 1 SCC 515, relied on.     Bihar State Electricity Board & Ors. v. Patna Electrici- ty Supply Co. Ltd., AIR 1982 Cal. 74. distinguished.     4. Having regard to the true nature and character of the legislations in question the legislations are not colourable legislations  in  the  sense that there was  no  direct  and reasonable nexus with Article 31(b) and (c) of the Constitu- tion. [556H]

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 457 of 1972 (Under Article 32 of the Constitution of India)     Soli  J. Sorabji, S. Rangarajan, Harish N. Salve, D  .N. Mukharji, Ranjan Kukherjee, Udey K. Lalit, S.K. Nandi and S. Parekh for the Petitioner.     Dr.  Shankar  Ghosh,  G.L. Sanghi,  P.  Chowdhary,  C.S. Vaidyanathan, C.V. Subba Rao, for the Respondents. Mrs. A.K. Verma for the Intervener. The following Judgments of the Court were delivered:      SABYASACHI  MUKHARJI, J. I agree with Brother  Venkata- chaliah,  that the contentions urged on behalf of the  peti- tioner in support of the challenge to the impugned  legisla- tions must fail and the writ petitions must be dismissed.  I would, however, like to express my 553 views  only on one aspect of the matter, which is common  to this  case  as well as the writ petition No.  458/72,  civil appeal  No 4113/85 and writ petition No. 5(N)/74,  i.e.  the scope  of  judicial  review of legislation  where  there  is declaration in the legislation under Art. 31C of the Consti- tution.     In these writ petitions we are concerned with two legis- lations,  namely,  the Indian Electricity  (Assam  Amendment Act,  1973,  (Assam  Act IX of 1973), and  the  Tinsukhia  & Dibrugarh  Electric Supply Undertakings  (Acquisition)  Act, 1973 (Act X of 1973). The main point which is significant in these  writ petitions, is the extent and scope  of  judicial review of legislation where there is ’declaration under Art. 31-C  of the Constitution, which enjoins that no law  giving effect  to the policy of the State towards securing  all  or any  of the principles laid down, inter alia, namely,  Arti- cles  38, 39, 39A, 40, 41, 42, 43A, 44 to 48, 48A and 49  to 51  shall be deemed to be void on the ground that those  are

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inconsistent  or  take  away or abridge any  of  the  rights conferred by Article 14 or 19, and further provides that  no law containing a declaration that it is for giving effect to such  a policy, shall be called in question in any court  on the plea that it does not give effect to such a policy.  The two legislations in question are covered by the  declaration under Article 31C of the Constitution.     The principal question which falls for consideration is, whether that declaration is justiciable and open to judicial review and the extent of that judicial review. Article 39(b) of  the  Constitution enjoins that the State  in  particular should direct its policy towards securing that the ownership and  control of the material resources of the community  are so distributed as to best subserve the common good and  that the  operation  of the economic system does  not  result  in concentration  of  wealth  and means of  production  to  the common detriment. See, in this connection, the  observations of Ray J. as the learned Chief Justice then was, in  Kesava- nanda Bharati v. State of Kerala, [1973] Suppl. SCR 1 at  45 1-452. Hence, in order to decide whether a Statute is within Article 31C, the Court, if necessary, may examine the nature and  the character of legislation and the matter dealt  with as  to  whether there is any nexus between the law  and  the principles  mentioned in Article 39(b) and (c). On  such  an examination  if it appears that there is no such  nexus  be- tween the legislation and the objectives and the  principles mentioned  in Article 39(b) & (c), the legislation will  not enjoy  the  protection of Article 31C. In order to  see  the real  nature of the Statute, if need be, the court may  also tear the veil. 554     Justice  Jaganmohan Reddy in the same decision  at  page 530  of  the  report reiterated that a  law  not  attracting Article  31C  cannot be protected by a declaration  by  just mixing it with other laws really failing within Article 31-C with  those that do not fall under that Article.  Hence,  in such  a case the Court will always be competent  to  examine the  true  nature and character of the  legislation  in  the particular  instance and its design and the  primary  matter dealt with--its object and scope. In this connection,  reli- ance was placed on the observations of the Privy Council  in Charles  Russel v. The Queen, [1882] VII AC 829 at  838-840. Justice  Palekar  in  the same decision at page  63  1  also reiterated  that if the court comes to the  conclusion  that the object of the legislation was merely a pretence and  the real  object was discrimination or something other than  the object specified in Article 39(b) and (c), Article 31C would not be attracted and the validity of the Statute would  have to be tested independently of Article 31C.     Whenever a question is raised that the Parliament or the State  legislature have abused their powers and  inserted  a declaration  in a law for not giving effect to securing  the Directive  Principles specified in Article 39(b) & (c),  the court  can  and must necessarily go into that  question  and decide. See the observations of Justice Mathew in Kesavanan- da Bharati’s case (supra) at page 855 of the report. If  the court  comes  to  the conclusion that  the  declaration  was merely  a pretence and that the real purpose of the  law  is the accomplishment of some object other than to give  effect to  the policy of the State towards securing  the  Directive Principles as enjoined by Article 39(b) & (c), the  declara- tion would not debar the court from striking down any provi- sion therein which violates Articles 14, 19 or 31. In  other words,  if  a law passed ostensibly to give  effect  to  the policy  of  the State is, in truth and  substance,  one  for

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accomplishing  an  unauthorised object, the Court  would  be entitled  to  tear the veil created by the  declaration  and decide  according to the nature of the law. Also  see  pages 851  & 856 of the report. Justice Beg, as the learned  Chief Justice then was, at pages 884-885 of the report  reiterated that  a  colourable piece of legislation  with  a  different object  altogether but merely dressed up as a  law  intended for giving effect to the specified principles would fail  to pass the test laid down by the first part, and the  declara- tion by itself would not preclude a judicial examination  of the  nexus, so that the courts can still  determine  whether the law passed is really the one covered by the niche carved out by Article 31C or merely pretends to be so protected  by parading  under cover of the declaration. Justice Dwived  at page  934  of the report said that the Court  still  retains power  to  determine whether the law has  relevancy  to  the distribution of the ownership and 555 control  of the material resources of the community  and  to the  operation  of the economic system. If the  Court  finds that  the law has no such relevancy, it can declare the  law void.  The declaration cannot be utilised as a clog to  pro- tect  law bearing no relationship with the  objectives  men- tioned in the two clauses of Article 39.     With  respect, I am inclined to agree with the  observa- tions  of Justice Chandrachud, as the learned Chief  Justice then  was, at page 996 of the said report that the  declara- tion under Article 31-C does not exclude the jurisdiction of the Court to determine whether the law is for giving  effect to  the policy of the State towards securing the  principles specified in Article 39(b) & (c).     Chief Justice Chandrachud in Minerva Mills Ltd. v. Union of  India, [1981] 1 SCR 206 at 261 observed that  the  clear intendment of Article 31C is that the power to enquire ’into the question whether there is a direct and reasonable  nexus between  the provisions of a law and a  Directive  Principle can not confer upon the courts the power to sit on  judgment over the policy itself of the State. At the highest,  courts can, under Article 31C, satisfy themselves as to identity of the law in the sense whether it bears a direct and  reasona- ble  nexus  with the directive principles. If the  court  is satisfied as to the existence of such nexus, the  inevitable consequence  provided  for by Article 31C  must  follow.  He recorded  that  all the 13 Judges in  Kesavananda  Bharati’s case  (supra)  agreed. The only question  open  to  judicial review  under Article 31-C is whether there is a direct  and reasonable nexus between the impugned law and the provisions of Article 39(b) & (c). Reasonableness is evidently  regard- ing the nexus and not regarding the law.     Justice Bhagwati, as the learned Chief Justice then was, reiterated at pages 337-338 of the report that if the  Court finds that the law though passed seemingly for giving effect to a Directive Principle is, in pith and substance, one  for accomplishing  an unauthorised purpose-unauthorised  in  the sense of not being covered by any Directive Principle,  such law  would  not have the protection of the  amended  Article 31C,  which  does  not give protection to a  law  which  has merely  some remote or tenuous connection with  a  Directive Principle.  What is necessary is that there must be  a  real and  substantial connection and the dominant object  of  the law must be to give effect to the Directive Principles. Also see the observations of this Court in Sanjeev Coke Mfg.  Co. v.  Bharat  Coking Coal Ltd. & Anr., [1983] 1  SCR  1000  at 1020. 556

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   Looked  at  from this point of view, it cannot  be  said that  the principles of colourable legislation would not  be applicable. If it was demonstrated that there was no  direct and reasonable nexus between these two impugned laws and the principles  as enshrined under Article 3 l(b) & (c)  of  the Constitution, then that would have been colourable  legisla- tions and would have been bad on that score.     It  was  contended on behalf of the  petitioner  by  Mr. Sorabji as well as Mr- Rangarajan that in order to  bye-pass ’the payment of compensation for acquisition of property  of the  petitioner in negotiations the device of  the  impugned Acts was envisaged. In that context, the substitution of the book-value in place of market value was, therefore, depriva- tion of property and is illusory and would amount to  taking away of’ property without compensation.     I  do  not and cannot agree. It is indisputed  that  the electric energy generated by the supplier petitioner  compa- nies constitutes material resources of the community  within the scope and meaning of Article 39(b), and having regard to the true nature and the purpose of the legislations, reading the  legislations  entirely the object of  the  legislations have  a  direct and reasonable nexus with the  objective  of distributing  the material resources so as to  subserve  the common  good.  The determination of value  thereof  and  the substitution of the bookvalue in place of market value,  are only  methods for such acquisition and do not  disclose  the true nature and character of the legislation, but are  inci- dental  provisions thereof. If that is the position then  it is  incorrect  to say that what was acquired,  was  not  the material resources but choses-in-action. The true nature and character  of the legislations in. question was  to  acquire the  material  resources, namely, the  electric  energy  for better  supply and distribution. In that view of the  matter the principles of the decision of the Division Bench of  the Calcutta High Court in Bihar State Electricity Board &  Ors. v. Patna Electricitv Supply Co. Ltd., AIR 1982 Cal. 74 would have  no scope of application to this case.  A  Constitution Bench of this Court in State of Tamil Nadu & Ors. v. L.  Abu Kavur  Bai & Ors., [1984] 1 SCC 515 has expressed  the  view that  the Act giving effect to Article 39(b) & (c)  is  pro- tected if a reasonable nexus is established.     In that view of the matter, I agree having regard to the true  nature  and  character of the  legislations  that  the impugned legislations are not colourable legislations in the sense  that  there was no direct and reasonable  nexus  with Article 31(b) & (c) of the Constitution. 557     On  the  other aspects of the matter, I agree  with  re- spect,  with  the conclusion indicated in  the  judgment  of Justice Venkatachaliah.     VENKATACHALIAH, J. 1. In these two writ petitions invok- ing  Article 32 of the Constitution of India,  the  Tinsukia Electric  Supply Company Limited and the Dibrugarh  Electric Supply Company Limited, which are licensees under the Indian Electricity  Act 19 10 for the supply of electricity  within the areas of the municipal boards of Tinsukhia and Dibrugarh towns  respectively, in the. State of Assam and  the  share- holder-Managing  Directors of the two companies  assail  the constitutional  validity  of the Indian  Electricity  (Assam Amendment)  Act,  1973, and of the  Tinsukia  and  Dibrugarh Electric Supply Undertaking (Acquisition) Act, 1973. By  the latter  enactments,  the undertakings of the  two  companies were sought to be acquired so as to vest them in the Govern- ment with effect from 27.9. 1972.     The petitioners also urge, in the petitions, a challenge

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to the validity of the Twentyfourth and Twenty fifth  Amend- ments  to  the Constitution. This part of the  petition,  in view of the subsequent pronouncements of this court on these amendments, does not survive.     2. The petitioner-companies are Public Limited Companies registered  under  the Indian Companies Act, 1913,  and  are existing  companies under the Companies Act 1956 with  their registered  offices at Tinsukhia and Dibrugarh  respectively in the State of Assam. The two companies, Tinsukhia Electric Supply  Company  Ltd.,  and the  Dibrugarh  Electric  Supply Company  Ltd.--hereinafter referred to respectively  as  the ’Tinsukhia Co.’ and ’Dibrugarh Co.’--were granted  ’licences under  the provisions of the Indian Electricity Act, 1910  ( 1910  Act  for short) for supply of electricity  within  the respective  licenced areas viz. of the Tinsukhia and  Dibru- garh  Municipal Boards. The ’Dibrugarh Company’ was  granted the  ’Dibrugarh  Electricity  Licence, 1928’  on  terms  and conditions particularised in the grant, incorporating, inter alia, an option to the State to purchase the undertaking  on the  expiration of 50 years from 13.2.1928 the date of  com- mencement of the licence and thereafter on the expiration of every subsequent period of twenty years.     The Tinsukhia Company was similarly granted the ’Tinsuk- hia Electricity Licence, 1954’, incorporating, inter-alia, a condition as to the option exercisable by the State of Assam to  purchase the electricity undertaking of the licencee  on the  expiration  of 20 years from 21.7. 1954,  the  date  of commencement of the licence, and thereafter on 558 the expiration of every subsequent decennial period.     3. However, by two Ordinances, namely, The Indian  Elec- tricity (Assam Amendment) Ordinance, 1972: (Assam  Ordinance VII, 1972) and the Tinsukhia & Dibrugarh Electricity  Supply Undertakings (Acquisition) ordinance, 1972, (Assam Ordinance VIII of 1972) promulgated by the Governor in exercise of his legislative  powers under Article 2 13 of the  Constitution, the  Electricity  Supply Undertakings of the  two  companies were  acquired by, and stood vested in, the Government  with effect from 23.30 hrs. on 27.9.1972. Possession and  control of the two undertakings were, accordingly, taken-over by the Government of Assam that day. The two ordinances were subse- quently replaced by the two corresponding legislative enact- ments  viz., the Indian Electricity (Assam  Amendment)  Act, 1973,  (Assam  Act IX, 1973) and the Tinsukhia  &  Dibrugarh Electric Supply Undertakings (Acquisition) Act, 1973, (Assam Act, X of 1973).     At  the  time of filing of the writ  petitions  the  two Ordinances  had not been replaced by the  legislative  meas- ures. However, after the coming into force of the two legis- lative  enactments, with retrospective effect from:the  date of  promulgation  of  the  earlier  ordinances,  petitioners sought,  and  were granted by an order of this  Court  dated 18.12.1973, leave to amend the petitions so as to direct the challenge against the enactments.     4. An advertence, though brief, to the factual  anteced- ents leading upto to the promulgation of the Ordinances  and to  certain earlier steps taken by the State  Government  to acquire  the said undertakings, first by  negotiations,  and later by exercise of the option to purchase, is necessary in order  to put the grounds of challenge in their proper  per- spective.     Respondent No. 4 i.e. the Assam State Electricity Board, it would appear, had been expressing its intention to  take- over the undertaking of the Tinsukia Co. by private negotia- tions even from the year 1964. Pursuant to and in  implemen-

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tation of this proposal the Board had constituted a  commit- tee  of 3 members for assessing the value of the  assets  of the  Tinsukhia’s undertaking. On the valuation so  made  and the  inventories so prepared, the Board, on  27.3.1970,  in- formed  the  Tinsukia Co. that the Board  had  approved  the valuation of the assets of the undertaking at  Rs.30,54,246, excluding,  the  value of the land, whose  value  was  later estimated  at  Rs.2,40,000. By letter  dated  4.3.1971,  the Chairman of the Assam State Electricity Board 559 informed  Tinsukia Co., that the company should  immediately signify  and communicate its acceptance of the  proposal  to transfer  the undertaking to the Board at the  valuation  of Rs.33,00,000.  The company, appears to have tarried and  did not  signify and communicate its immediate  and  unqualified acceptance of the offer; but appears to have had some  coun- ter-proposal  in mind and, in the expectation of  pursuading the  Board to its view, requested the Chairman of the  Board to  visit  Tinsukia for holding further discussions  in  the matter  of  valuation  of the  Undertaking.  Thereafter  the Chairman along with the officers of the Board visited Tinsu- kia  sometime  in June, 1971, and held discussion  with  the company.  The company avers that pursuant to  these  discus- sions, the Executive Engineer of the Board was asked by  the Chairman  to prepare a fresh inventory as on  31.10.1971  in collaboration with the company.     However, the Secretary of the Board sent a communication dated  10.12.1971 to the company to the effect that  as  the company  had not conveyed its concurrence to the offer  con- tained in the Board’s letter dated 25.3.1970 the said  offer be  treated as withdrawn. Thereafter, the Board  issued  the notice  dated  15/23 May 1972 to the company  conveying  the Board’s  intention to exercise its option of purchasing  the undertaking  under  Section 6(1) of the 1910 Act  read  with clause 12(iv) of the licence on the expiration "the term  of the licence" and, accordingly, required the company to  sell the undertaking to the Board on the expiration of  21.9.1974 when the 20 year period of the licence would come to an end. In response to this notice, the company sent its  communica- tion dated 17.8.1972 seeking confirmation of its expectation that  the  purchase price for the statutory  sale  would  be determined  in accordance with the provisions of section  7A of  the 1910 Act and that such price would also be  tendered to the company on or before the date of taking-over. Nothing further appears to have happened pursuant to this notice  to purchase.  But, as stated earlier, the two  Ordinances  were promulgated  on 27.9.1972 for the compulsory acquisition  of the undertaking of the company.     So  far as the Dibrugarh company is  concerned,  similar negotiations  for purchase by private negotiations had  been initiated and the Chief Engineer of the Board accompanied by the Finance and Accounts Member of the Board visited  Dibru- garh on 27.1.1965 for discussions as to the valuation of the undertaking.  Nothing  moved in the matter for  some  years. However,  in the communication dated 3.8.1970  addressed  by the  Secretary to Government of Assam, Power  (Electricity), Mines and Minerals Department, to the Secretary of the 560 Board,  it was reiterated that Government had  decided  that the undertaking of the Dibrugarh Co. should be taken-over by negotiation.  While  matters remained  thus,  the  company’s undertaking was taken over on 27.9.1972 pursuant to the  two ordinances promulgated by the Governor.      5.  We  may briefly turn to the provisions of  the  two enactments which have since replaced the two Ordinances:

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    The  amendments  made to Sections 5, 6 and  7A  of  the Indian  Electricity  Act, 1910, by  the  Indian  Electricity (Assam Amendment) Act, 1973, are substantial and  far-reach- ing. Section 2 of the Amending Act amended Section 5 of  the Principal  Act by substituting the expression "the  purchase price  of the undertaking" in sub-sec. (2) of Section  5  by the  expression ’an amount’. Section 3 of the  Amending  Act which amended sub-Sec. (7) of Section 6 of the Principal Act substituted  the  words ’the  purchase-price’  occurring  in sub-Sec.  (7)  of Section 6 by the words  "an  amount".  The amendments brought about by Section 4 of the Amending Act to Section  7-A of the Principal Act were equally  substantial. Section  7A of the Principal Act,’ it may be recalled,  pro- vided  that where an undertaking of a licensee, not being  a local  authority, was sold under sub-Sec. (1) of  Section  5 the  purchase-price of the undertaking shah be  the  market- value  of the undertaking at the time of purchase, or  where the undertaking had been delivered before the purchase under sub-Sec.  (3)  of  Sec. 5, at the time of  delivery  of  the undertaking, and that if there was any difference of dispute regarding such purchase price, the same shall be  determined by arbitration. But Section 4 of the Amending Act substitut- ed  an entirely different provision in the place of the  old section  7-A. It substituted "book-value" in place of  "mar- ket-price".  Sections 5(2), 6(7) and 7-A, of  the  Principal Act after their amendment-read thus:                          "Section 5(2): Where an undertaking               is  sold under sub-section (1)  the  purchaser               shall pay to the licencee an amount in accord-               ance  with the provisions of sub-sections  (1)               and (2) of Section 7-A."               Sub-sec.  (7) of Section 6, after  the  amend-               ment, reads:                     Section  6(7): Where an  undertaking  is               purchased            under this  section,  the               purchaser  shall pay to the license an  amount               determined  in accordance with the  provisions               of          sub-sections (1), (2) and  (3)  of               Section 7A.               561               Section 7A reads:                        "7-A.  Determination of  amount  pay-               able.  (1) where an undertaking of a  licensee               is  sold  under sub-section (1) of Sec.  5  or               purchased under Sec. 6, the amount payable for               the undertaking shall be the book value of the               undertaking  at the time of purchase or  where               the undertaking has been delivered before  the               purchase  under sub-Section (3) of Sec. 5,  at               the time of delivery of the undertaking.                         (2) The book value of an undertaking               for  the purpose of sub-section (1)  shall  be               deemed  to  be the depreciated book  value  as               shown  in  the audited  balance-sheet  of  the               licensee  under the law for the time being  in               force, of all lands, buildings, works, materi-               als and plant of the licensee, suitable to and               used  by him for the purpose of the  undertak-               ing,  other  than  (i)  a  generating  station               declared  by the licensee not to form part  of               the  undertaking for the purpose of  purchase,               and (ii) service lines or other capital  works               or any part thereof which have been construct-               ed at the expense of the consumers, but  with-               out  any  addition in  respect  of  compulsory

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             purchase  or of goodwill or any  profit  which               may be or might have been made from the under-               taking or of any similar consideration.                         (3)    Notwithstanding      anything               contained  in  any licence or any  instrument,               order  agreement or law for the time being  in               force  in  respect of any  additional  sum  by               whatever  name may it be called, payable to  a               licensee for compulsory purchase, the licensee               shall  be entitled only to a solatium  of  ten               per  centum  of the book value  as  determined               under sub-sections (1) and (2) for  compulsory               purchase of his undertaking under Sec. 6.                         (4) No provision of any Act for  the               time being in force including the other provi-               sions of this Act and of any rules made there-               under  or of any instrument including  licence               have  effect by virtue of any of such Acts  or               any rule made thereunder, shall, in so far  as               it is inconsistent with any of the  provisions               of this section, have any effect."     It  is  material to point out that  sub-section  (3)  of Section 1 of the Amending Act provides that the Amending Act shall be deemed to 562 have  come  into force on 27.9.1972, which was the  date  of promulgation of the earlier Ordinance.     6. We may now notice some of the material provisions  of the  Acquisition Act i.e. Assam Act X of 1973. Section  1(3) provides  that  the Act shall be deemed to  have  come  into force  on  27.9.1972.  Clauses (f), (h), (j) &  (l)  of  the interpretation-clause (Sec. 2) may be noticed:                     2(f)  ’Fixed  Assets’  includes   works,               spare  parts, stores, tools, motor  and  other               vehicles, office equipment and furniture;               2(h):  ’Licensee’ means the Tinsukia  Electric               Supply  Company  Ltd.  and/or  the   Dibrugarh               Electric  Supply Company Private Ltd., as  the               case may be;               2(j):  ’Undertaking’ means the Tinsukia  Elec-               tric  Supply Undertaking owned and managed  by               the  Tinsukia  Electric Supply  Company  Ltd.,               and/or the Dibrugarh Electric Supply Undertak-               ing  owned and managed by the Dibrugarh  Elec-               tric Supply Company Private Ltd., as the  case               may be;               2(1):  ’Works’ includes electric supply  lines               and any lands, buildings, machinery or appara-               tus  required  to supply energy and  to  carry               into  effect the object of a  licence  granted               under the Electricity Act;               Section 3(2) provides:                     3(2): Any notice given under any of  the               provisions  of  the  Electricity  Act  or  the               Electricity Supply Act to the licensee for the               purchase  of the undertaking and in  pursuance               of  which notice the undertaking has not  been               purchased before the commencement of this Act,               shall lapse and be of no effect.                     Explanation:  There shall be no  obliga-               tion  on  the part of the  Government  or  the               Board to purchase any undertaking in pursuance               of  any notice given as aforesaid,  nor  shall               the  service  of  such notice’  be  deemed  to               prevent  the Government from taking  any  pro-

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             ceeding de novo in respect of the  undertaking               under this Act.               Section 4 provides:               4.  Vesting date. The Tinsukia  and  Dibrngarh               Electric Sup-               563               ply Undertakings shall be deemed to be  trans-               ferred to and shall vest in the Government, on               the 27th day of September, 1972, at 11.30 P.M.                   Section 5 provides for the transfer of the               undertaking  so acquired by Government to  the               Board.               Section  6 provides for the gross amount  pay-               able to the licensee.               6.  Gross amount payable to Licensee. (1)  The               gross  amount payable to a licensee  shall  be               the  aggregate value of the amounts  specified               below:                      (i)  the  book value of  all  completed               works  in  beneficial use  pertaining  to  the               undertaking  and taken over by the  Government               (excluding  works paid for by consumers)  less               depreciation  calculated  in  accordance  with               Schedule I;                      (ii)  the  book value of all  works  in               progress taken over by the Government, exclud-               ing works paid for by consumers or prospective               consumers;                      (iii)  the  book value  of  all  stores               including  spare parts taken over by the  Gov-               ernment  and  in the case of used  stores  and               spare  parts, if taken over, such sums as  may               be decided upon by the Government;                      (iv) the book value of all other  fixed               assets  in use on the vesting date  and  taken               over  by  the  Government  less   depreciation               calculated in accordance with Schedule I;                      (v)  the book value of all  plants  and               equipments  existing on the vesting  date,  if               taken over by the Government, but no longer in               use owing to wear and tear or to obsolescence,               to the extent such value has not been  written               off in the books of the licensee less depreci-               ation  calculated in accordance with  Schedule               I;               (vi) the amount due from consumers in  respect               of  every hire purchase agreement referred  to               in Sec. 7(i)(ii) less a sum which bears to the               difference  between  the total amount  of  the               instalments  and  the  original  cost  of  the               material or equipment, the same proportion  as               the  amount due bears to the total  amount  of               the instalments;               564                     (vii)  any amount paid actually  by  the               licensee in respect of every contract referred               to in Section 7(i)(iii).                     Explanation--The book value of any fixed               asset  means its original cost and shall  com-               prise--                     (i)  the  purchase  price  paid  by  the               licensee for the asset, including the cost  of               delivery and all charges properly incurred  in               erecting  and bringing the asset into  benefi-               cial  use as shown in the books of the  under-

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             taking;                     (ii)  the cost of  supervision  actually               incurred but not exceeding fifteen per cent of               the amount referred to in paragraph (i);                     Provided   that  before   deciding   the               amounts  under this subsection,  the  licensee               shall  be given an opportunity by the  Govern-               ment of being heard, after giving him a notice               of at least 15 days therefor.                     (2)  In addition a sum equal to  10  per               cent of the amounts assessed under Clauses (i)               to  (iv) of sub-section (1) shall be  paid  to               the licensee by the Government.                     (3)  When any asset is acquired  by  the               licensee  after  the expiry of the  period  to               which  the latest annual accounts relate,  the               book  value of the asset shall be such as  may               be decided upon by the Government;                     Provided  that before deciding the  book               value of any such asset, the licensee shall be               given  an  opportunity by  the  Government  of               being  heard after giving him a notice  of  at               least 15 days therefor.               Section 7 provides:                     7.  Vesting  of  undertakings.  (1)  The               property, rights, liabilities and  obligations               specified below in respect of the  undertaking               shall  vest in the Government of  the  vesting               date;                     (i) all the fixed assets of the licensee               and  all the documents relating to the  under-               taking;               565                      (ii)  all the rights, liabilities,  and               obligations  of the licensee  under  hire-pur-               chase  agreements, if any, for the  supply  of               materials  or equipment made bona fide  before               the vesting date;                      (iii)  all the rights, liabilities  and               obligations  of the licensee under  any  other               contract  entered  into bona fide  before  the               vesting date, not being a contract relating to               the  borrowing or leading of money, or to  the               employment of staff.                      (2)  All the assets specified  in  sub-               Section  (1)(i) shall vest in  the  Government               free  from  any debts,  mortgages  or  similar               obligations  of the licensee or  attaching  to               the undertaking;                      Provided that such debts, mortgages  or               obligations shall attach to the amount payable               under this Act for the assets.                      (3) In the case of an undertaking which               vests  in the Government under this  Act,  the               license  granted  to it under part II  of  the               Electricity  Act shall be deemed to have  been               terminated  on  the vesting date and  all  the               rights,  liabilities  and obligations  of  the               licensee  under any agreement to supply  elec-               tricity  entered into before that  date  shall               devolve or shall be deemed to have devolved on               the Government;                      Provided that where any such  agreement               is not in conformity with the rates and condi-               tions of supply approved by the Government and

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             in  force on the vesting date,  the  agreement               shall be voidable at the option of the Govern-               ment.                      (4)  In respect of any  undertaking  to               which  Sec. 4 applies, it shall be lawful  for               the Government or their authorised representa-               tive  on  and. after the vesting  date,  after               removing any obstruction that may be or  might               have  been offered, to take possession of  the               entire undertaking, or as the case may be  the               fixed assets and of all documents relating  to               the  undertaking  which  the  Government   may               require for carrying it on.                      (5)  All  the liabilities  and  obliga-               tions, other than those vesting in the Govern-               ment  under  sub-Sections (1) and  (3),  shall               continue to be the liabilities and obligations               of the licensee, after the vesting date.               Explanation.  All liabilities and  obligations               in respect of               566               staff, taxes, provident fund, employees’ state               Insurance,  Industrial disputes and all  other               matters, upto and including the vesting  date,               shall  continue  to  be  the  liabilities  and               obligations of the licensee, after the vesting               date.               Section 9 provides:                     9. Deductions from the gross amount. The               Government  shall  be entitled to  deduct  the               following  sums from the gross amount  payable               under this Act to a licensee--               (a)  the amount, if any, already paid  in  ad-               vance;               (b) the amount if any, specified in Sec. 8;                     (c)  the amount due, if any,  ’including               interest  thereon,  from the licensee  to  the               Board, for energy supplied by the Board before               the vesting date;                     (d) all amounts and arrears of interest,               if  any thereon, due from the licensee to  the               Government,                     (e)  the amount, if any,  equivalent  to               the loss sustained by the Government by reason               of  any  property or rights belonging  to  the               undertaking not having been handed over to the               Government,  the  amount of  such  loss  being               deemed  to be the amount by which  the  market               value  of such property or rights exceeds  the               amount  payable therefor under this  Act,  to-               gether  with any income which might have  been               realized by the Government, if the property or               rights  had  been handed over on  the  vesting               date;                     (f) the amount of all loans due from the               licensee to any financial institutions consti-               tuted by or under the authority of the Govern-               ment and arrears, or interest, if any,  there-               on;                     (g) all sums paid by consumers by way of               security  deposit and arrears of interest  due               thereon on the vesting date, in so far as they               have not been paid over by the licensee to the               Government,  less the amounts which  according               to the books of the licensee are due from  the

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             consumers to the licensee for energy  supplied               by him before that date;               (h)  all advances from consumers and  prospec-               tive consum-               567               ers, and all sums which have been or ought  to               be  set aside to the credit of the  consumers’               fund, in so far as such advances or sums  have               not  been  paid over by the  licensee  to  the               Government;                     (i) the amounts remaining in Tariffs and               Dividends   Control   Reserve,   Contingencies               Reserve and Development Reserve, in so far  as               such amounts have not been paid over by licen-               see to the Government;               (j)  the amount, if any, as specified  in  Ss.               11(2) and 11(3):                      (k)  the  amount, if any,  relating  to               debts,  mortgages or obligations as  mentioned               in proviso to sec. 7(2);                      Provided that before making any  deduc-               tion under this section, the licensee shall be               given  a  notice to show  cause  against  such               deduction,  within  a period of  fifteen  days               from the date of receipt of such notice.                   Section  10  enables  the  Government   to               appoint, by order in writing, a person  having               adequate  knowledge and experience in  matters               relating  to  accounts as Special  Officer  to               assess the net amount payable under this  Act,               after  making  the  deductions  enumerated  in               section 9.               Section 20 provides:                      20. Arbitration. (1) Where any  dispute               arises in respect of any of the matters speci-               fied  below,  it  shall be  determined  by  an               arbitrator  appointed by the  Government,  who               shall be a sitting or retired District or High               Court Judge--                      (a) whether any property belonging,  or               any  right, liability or obligation  attaching               to the undertaking, vests in the Government;               (b) whether any fixed asset forms part of  the               undertaking;                      (c)  whether any contract or  hire-pur-               chase agreement or other contract referred  to               in  SEC.  7(1)(ii) or (iii) has  been  entered               into bona fide or not;                      (d)  whether  any agreement  to  supply               electricity entered into by the licensee prior               to the vesting date is of the nature  referred               to in proviso to S. 7(3).               568                     (2)  Subject to the provisions  of  this               section,  the  provisions of  the  Arbitration               Act,  1940  (Central  Act 10  of  1940)  shall               supply to all arbitrations under this Act.     Section 23 of the Act incorporates a declaration to  the effect  that  the legislation is for giving  effect  to  the policy of the State to secure the principle of State  Policy contained in Article 39(b) of the Constitution of India.     7. The two legislations, one amending the provisions  of Sections  5(2) 6(7) and 7-A of the Indian  Electricity  Act, 1910, and the other providing for the acquisition of the two undertakings  are  challenged by the petitioner  on  several

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grounds,  the  principal  attack, however,  being  that  the legislations,  brought forth, as they were, in the  wake  of the  private-negotiations and the exercise of the option  to purchase, are not bona .fide, but constitute a mere  colour- able  exercise  of the legislative power and  that,  at  all events  the  real objects of the two  legislations  have  no direct  and  reasonable nexus to the  objects  envisaged  in clause  (b)  of Article 39 of the Constitution  and  that  a careful and critical discernment of the context in which the legislation  was  brought forth would lay  bare  before  the judicial eye that what was sought to be acquired was not the "undertakings"  of the two companies but really the  differ- ence  between the "market-value" of the  undertakings  which the State has agreed, under the private treaties, to pay and what,  in any event, the State was obliged to pay under  the provisions  of Section 7A, as it then stood on the one  hand and the "Book-Value" of the undertaking, which the law seeks to  substitute on the other. If the protective  umbrella  of Article 31-C is, thus, out of the way, the ’amount’  payable under the impugned law, it is urged, would be illusory  even on the judicially accepted tests applied to Article 31(2) as it  then stood. The validity of some of the specific  provi- sions  of the acquisition law which excluded  certain  items from  valuation and envisaged and authorised certain  deduc- tions in the amount are also assailed.     8. These writ petitions were heard along with a batch of writ  petitions, viz, WP Nos. 5, 14, and 15 of  1974,  where the  constitutionality of an analogous statute of the  State of Tamil Nadu was assailed by the companies whose  undertak- ings  were similarly sought to be acquired and civil  appeal No.  243  of 1985, C.A. 344 of 1985 and C.A.  4113  of  1985 arising  out of the Judgment, dated 20.7.1984, of  the  High Court  of  Bombay striking down certain  amendments  to  the Indian Electricity Act, 1910, made by the Maharashtra  State Legislature  in the matter of statutory purchase of some  of the private 569 electricity supply undertakings in the State of Maharashtra.     The  three  batches of cases arising from  Assam,  Tamil Nadu  and  Maharashtra  were heard together  as  there  were certain  aspects  common to-them. However, in  view  of  the distinctiveness  and  particularities of the  facts  of  the cases and the situational variations even in respect of  the legal  context  in which questions arise for  decision,  the three  batches  of cases are disposed of by  separate  Judg- ments.  The present Judgment disposes of the challenge  made to the Assam Legislation.     9.  We have heard Shri Soli J. Sorabji,  learned  Senior Advocate,  and Shri Harish Salve, learned Advocate, for  the petitioner  in W.P. 457 of 1972 and Sri Rangarajan,  learned Senior  AdVocate for the petitioner in W.P. 458 of 1972  and Dr. Shankar Ghosh, learned Senior Advocate, for the State of Assam  and Sri G.L. Sanghi, learned Senior Advocate for  the Assam  State Electricity Board and its authorities.  On  the contentions  urged at the hearing, the points that fall  for consideration in the writ-petitions admit of being formulat- ed thus:                      (a) That the declaration in Sec. 23  of               Assam  Act X 1973 is invalid as  the  impugned               Act has no reasonable and direct nexus to  the               principles  in Article 39(b) of the  Constitu-               tion  and is merely a cloak which the  law  is               made  to wear to undo the  legitimate  obliga-               tions  arising out of the intended  statutory-               sale  of  the undertakings  and,  accordingly,

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             Article 31-C is not attracted.               That, at all events, not every provision of  a               statute  is  entitled  to  the  protection  of               Article  31-C but only those provisions  which               are  basically and essentially  necessary  for               giving  effect  to the  principle  in  Article               39(b) and that, accordingly, the provisions in               the impugned law relating to the determination               of the amount do not attract Article 31-C.                      (b)  That in effect and  substance  the               law is not one for the acquisition electricity               undertakings  but is merely one to  acquire  a               ’chose-in-action’ and to extinguish the  legal               rights of the Tinsukhia Co. for the difference               between the "market-price" of the undertakings               which  the State was obliged to pay under  the               intended  statutory-purchase  and  the  "Book-               Value" to which the liability is sought to  be               limited under the impugned legislations.               (c)  That, if the immunity under Article  31-C               for the legis-               570               lations is not available, the ’amount’ payable               in  accordance with the provision of  the  ac-               quiring  law  is wholly "illusory" and  is  an               attempt  to  take away a ’fortune for  a  far-               thing’.                     And accordingly, the law is  ultra-vires               and violative of Article 31(2) of the  Consti-               tution  (as it then stood). Payment of  "Book-               Value" of the assets acquired irrespective  of               their  ’market-value’  renders  the   ’amount’               unreal and illusory.                     (d)  That  the  exclusion  of  "service-               lines",  which are part of the assets  of  the               licensee  as from valuation, renders  the  law               unconstitutional and ultra-vires.                     (e)  That the provision of Section  9(i)               for  the deduction of the ’Reserves’ from  the               "Amount", in addition to the takingover of the               same  in  the form of ’fixed assets’  and  the               omission  to  value the  unexpired  period  of               licence are unreasonable and arbitrary.                     (f) That the continued liability of  the               petitioner-licensee  under Section  11(3)  for               payment to employees retrenched by  Government               after  the vesting-date and the provision  for               deduction  of  such  sums  from  the  "Amount"               payable for the acquisition are arbitrary  and               unreasonable.                     (g)  That while Section 7(5)  makes  all               the  liabilities of the licensee,  other  than               those  specifically referred to and  expressly               taken over by Government under the Act, as the               continuing  liabilities of the  licensee,  yet               some  of  those  liabilities  referred  to  in               clauses (c) (d) and (f) of Section 9, are  yet               made deductible from the "Amount", without the               corresponding  express obligation on the  part               of the Government to hold the sums so deducted               in trust for, and for benefit of the concerned               creditors and without statutory discharged  to               the petitioner in that behalf. This is  unjust               enrichment.                     (h) That there is no machinery envisaged

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             by  and set-up under the ’Act’  to  adjudicate               upon and determine either the amounts deducti-               ble under clauses (c) (d) and (e) of Section 9               or the "loss" deductible under Section 8. This               renders the provisions of the ’Act’  intracta-               ble and liable to be declared unworkable.               571                      (i) That Section 20 limits arbitrabili-               ty  only to matters enumerated in clauses  (a)               to  (d)  of that section, leaving  many  other               disputes  arising under the ’Act’ between  the               Government  and the licensee without  any  ma-               chinery  for their resolution, also  rendering               the ’Act’ unworkable.     10.  The contentions noticed at (a), (b) and  (c)  cover amongst them certain overlapping areas. The central  attack, however, remains that Assam Act X of 1973 has no  reasonable and  direct  nexus with the effectuation of  the  principles envisaged  in clause (b) of Article 39 of  the  Constitution and that the relationship of the impugned legislation to the objects  of Article 39(b), being merely remote and  tenuous, the legislation is a colourable legislation. The contentions are, however, noticed distinctively to make due acknowledge- ment  for the shifts of emphasis in the course of the  argu- ments.     In  this case the legal and constitutional position  has to  be  examined  with reference to the  provisions  of  the Constitution  as  they  stood as in 1972.  Article  31C  was inserted  by the 25th Amendment with effect  from  20.4.1972 prior  to  its more comprehensive expansion  to  extend  its protection  to the laws giving effect to "All or any of  the provisions  laid down in Part IV’ brought about by the  Con- stitution  (Fortysecond  Amendment) 1976. Article  31C  gave protection  in respect of a law giving effect to the  policy of  the State towards securing the principles  specified  in clause  (b) or clause (c) of Article 39. Then again,  though Article  31 had not, by then, been deleted, its content  had been  cut-down so much, so that even under a  law  providing for  acquisition of property which did not have the  protec- tion of 31C the adequacy of the "Amount" determined was  not justiciable  and all that was necessary was that  it  should not be unreal or illusory. By then the Constitution had done away with the idea of a Just-equivalent or full  idemnifica- tion  principle  and substituted therefore the  idea  of  an "Amount"  and rendered the question of the adequacy  or  the inadequacy of the amount non-justiciable.     The Indian Constitutional experiments with the ’right to property’  offer an interesting illustration of how  differ- ences in the interpretation of the fundamental law sometimes conceal--or, perhaps, expose--conflicts of economic idealog- ics  and philosophies. With the right to property  conceived of as a fundamental fight at the inception of the  Constitu- tion,  it found so strong an entrenchment that in its  pris- tine vigour it tended to be overly demanding and sought  the sacrifice of too many social and economic goals at its alter and made 572 the economic cost of social and economic change unaffordably prohibitive  and the fulfilment of the constitutional  ethos of  the  promise of an egalitarian social  order  difficult. Inevitably  the constitutional process of  de-escalation  of this  right in the constitutional scale of values  commenced culminating, ultimately, in the deletion of this right  from the  fundamental-rights  part. Articles 31-A and  31-C  were significant Constitutional milestones in the harnessing  and

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socialisation of the concept of the right to property which, in  its  laissez-faire trappings, became  an  unruly  horse. Article  31-C in effect and substance is to  urban  property what Article 31-A is to agricultural-property.     11. The arguments in this case in regard to what, if  at all,  survives  for judicial scrutiny in the matter  of  the Constitutional-tests of the validity, under Article 31(2) of the  ’amount’ if the law has the protection of Article  31C, were marked by a forensic resourcefulness aimed at a  resus- citation and re-kindling of the relics and embers of old and hard   fought--but  lost--legal  battles.  Sri   Rangarajan, learned  Senior  Advocate,  relying  upon  the  construction suggested by him of certain observations of Chandrachud,  J. in  the  Keshavananda case (1973 SCR Suppl  1)  and  certain observations  of Fazl Ali J. in State of Tamil Nadu  v.  Abu Kavur Bai, AIR 1984 SC 326 strenuously, and quite seriously, attempted the exercise that even if a law had the protection of  Article 31C, yet the court would be  required--when  the provision  is  challenged--to go into the  question  of  the "Amount" being illusory or the principles for its determina- tion  being  arbitrary. Learned Counsel  further  propounded that  despite Article 31-C, the burden of proving  that  the amount is not illusory and principles for its  determination not arbitrary is on the State. We may excerpt the  substance of the contention from the written-submissions filed by  Sri Rangarajan:                         "   .....  Therefore, where the  law               provides  for compensation, fin spite  of  the               same being protected by Article 31-C the Court               can  go into the question of the amount  being               illusory  or the principles  being  arbitrary.               Not merely that, the burden of providing  that               the amount is not illusory and the  principles               are not arbitrary, is on the State."     We shah later examine how far this contention is at  all available  in the light of the authoritative  pronouncements of this Court on the effect of Article 31C and whether if  a law has such protection, the plenitude of its constitutional immunity  would not extend to all attacks based on  Articles 14, 19 and 31 (as it then stood). 573     We may now examine the contentions seriatim. Contentions (a) and (b) admit of being dealt with together.          12. Re: Contentions (a) and (b):     Shri Soli J Sorabjee submitted that in the present case, notwithstanding  the legislative declaration in Sec.  23  of Assam Act X of 1973, the question whether there is any  real nexus  between the legislation and the principles  envisaged in Article 39(b) is justiciable and indeed the existence  of such  nexus or connection is a condition-precedent  for  the attraction and applicability of Article 31-C. Learned  Coun- sel  submitted that in order to decide whether a Statute  is within  Article  31-C or not, the Court has to  examine  the nature  and  character of the legislation and if  upon  such scrutiny  it  appears  that there is no  nexus  between  the legislation and the principles in Article 39(b) the legisla- tion must be held to fall outside the protection of  Article 31-C.  Shri Sorabjee said, stripped of its veils  and  vest- ments,  the  law, would show its real nature  as  one  whose avowed nexus to Article 39(b) is merely a pretence and  that its  purpose is other than the objects envisaged in  Article 39(b).  The  validity of the  legislation,  learned  counsel says, would have to be examined independently of the immuni- ty under Article 31C.     The proposition that the legislative declaration of  the

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nexus  between the law and the principles in Article  39  is in-conclusive  and justiciable is well settled. Indeed  that part of Article 31-C which sought to impart a Constitutional sanctity,  conclusiveness  and  nonjusticiability  to   such legislative declarations was struck-down in the  Keshavanada case. The sequintor is that whenever any immunity is claimed for  a law under Article 31-C, the Court has the  power  .to examine whether the provisions of the law are basically  and essentially necessary for the effectuation of the principles envisaged  in  Article 39(b) and (c).  The  observations  of Mathew,  J.  in Keshvananda case ( 1973 SCR Supp 1)  may  be recalled:                         "   .....   Whenever a  question  is               raised  that the Parliament or State  Legisla-               tures  have abused their power and inserted  a               declaration in a law not for giving effect  to               the  State Policy towards securing the  direc-               tive  principles specified in Article 39-B  or               39-C, the Court must necessarily go into  that               question and decide it  .....  "               (P. 855)               574                        "   .....  If the Court comes to  the               conclusion  that the declaration was merely  a               pretence and that the real purpose of the  law               is  the  accomplishment of some  object  other               than to give effect to the policy of the State               towards  securing the directive principles               in Article 39(b) and (c) the declaration would               not  be a bar to the court from striking  down               any  provision therein which violates  Article               14, 19 or 31. In other words, if a law  passed               ostensibly to give effect to the policy of the               State  is,  in truth and  substance,  one  for               accomplishing  an  unauthorised  object,   the               court  would  be  entitled to  tear  the  veil               created by the declaration and decide  accord-               ing to the real nature of the law  ......  "               (P. 855-56)               Chandrachud,  J. observed in the  Keshavananda               case:                        "’Laws passed under Article 31-C can,               in  my opinion, be upheld only, and  only  if,               there is a direct and reasonable nexus between               the law and the directive policy of the  State               expressed in Article 39-B or C."               (P. 996)                   To the same effect are the observations of               the  learned  Chief Justice in  Minerva  Mills               Ltd. v. UOL. [1981] 1 SCR 206:                        "   .....   the  Courts  can,   under               Article  31-C,  satisfy themselves as  to  the               identity  of the law in the sense  whether  it               bears  direct  and  reasonable  nexus  with  a               directive principle."                        "The  only question open to  judicial               review  under the unamended Article  31-C  was               whether there is a direct and reasonable nexus               between the impugned law and the provisions of               Article 39(b) and (c)" (P. 261)               (Emphasis Supplied)               In the same case, Bhagwati, J. observed:                        "   .....  The point that I  wish  to               emphasis is that the amended Article 31-C does               not give protection to a law which has  merely

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             some  remote  or  tenuous  connection  with  a               directive principle."               575                         "   .....  Even where  the  dominant               object of a law is to give effect to a  direc-               tive  principle it is not every  provision  of               the  law  which is entitled to  claim  protec-               tion  ......"                                                       (P.               338)                         "  .....  it is not every  provision               of  a statute which has been enacted with  the               dominant  object of giving effect to a  direc-               tive  principle, that it entitled  to  protec-               tion, but only those provisions of the statute               which are basically and essentially  necessary               for giving effect to the directive  principles               are protected under the amended Article 31-C               "                     ......                               (P.               339)                                                (Emphasis               Supplied)     13.  The proposition of Sri Sorabjee, in principle,  is, therefore, unexceptionable; but the question remains  wheth- er,  upon  the  application of the  appropriate  tests,  the impugned statute fails to measure-up to the requirements  of the Constitution to earn the protection under Article  31-C. Learned  counsel  sought  to contend that  the  Assam  State Electricity Board having exercised the option of  purchasing the  undertaking of the Tinsukia Co., under Section 6(1)  of 1910  Act by the statutory notice dated 23.5.1972  requiring the  company  to sell the undertaking to the  Board  on  the expiration of the period of the licence, the question of any further  need to acquire the undertaking for the purpose  of effectuating  the  objects envisaged in Art.  39(b)  of  the Constitution by the expedience of a separate and independent legislation  was, indeed, unreal or non-existent.  The  real object,  therefore, of the enactment of Assam Act X of  1973 it was urged, was not to enact a law for purposes of  effec- tuating  the objects envisaged by Article 39(b) of the  Con- stitution  which had already been accomplished by the  exer- cise of the option to purchase; but was only to deprive  the petitioner of its legitimate entitlements under the statuto- ry-sale. What was sought to be acquired by the impugned law, it is contended, was not the undertaking but the  difference between  the ’Market-price’ and the ’Book-value’  which  the impugned legislation envisaged. It is urged that the purpose of the impugned law is, therefore, something other than  the effectuation  of  principles in Article 39(b).  It  is  also urged that with the exercise of the option to purchase  what remained  to. be acquired--and what really was sought to  be acquired--was a mere actionable-claim or a  chose-in-action. It  is further urged that, at all events, since not all  the provisions  of  a  legislative  enactment  need  necessarily qualify for protection of Article 31-C but only those provi- sions that have a direct nexus with the principles of  Arti- cle 39(b), the 576 provisions in the impugned legislation touching the determi- nation  of the quantum of the "Amount" are not so  protected as they are intended merely to inter-dict and extinguish the vested rights of the Tinsukhia Co. under the intended statu- tory-sale. The object of the legislation, it was urged,  was not the legitimate one of securing the objects envisaged  in

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Article  39(b) but a less honourable and less  sanctimonious one of depriving the petitioner of the benefit of the statu- tory-contract  for the sale of the undertaking  pursuant  to and  in terms of the statutory notice dated  23.5.1972.  The court,  so  goes  the argument, is entitled  to  pierce  the apparent veil under which the acquiring legislation masquer- ades as one for securing the object of Article 39(b).     Dr.  Shankar Ghosh and Sri G.L. Sanghi for the State  of Assam  and the Assam State Electricity Board,. the  contest- ing-Respondents, however, say that the Assam Act X, 1973, is entitled to the protection of Article 31-C as, indisputably, Electrical  energy is a material resource of  the  community and  any legislative measure to nationalise the  undertaking falls squarely within the ambit of Article 39(b). Any appeal by the petitioner to the doctrine of colourable legislation, they  say, is wholly inapposite as, indeed, where, as  here, legislative competence is undisputed, any speculation as  to the  motives of the legislative is impermissible.  No  mala- fides  could be attributed to the  Legislature.  Respondents further  submit  that on the question of even  the  possible ’illusory’  nature, let alone the adequacy, of the  "Amount" could  not  be  agitated if the law has  the  protection  of Article  31-C. They, however, assert that ’Book-value’ is  a well  accepted accountancy concept of value and could  never be  characterised as illusory, even if the law did not  come under Article 31-C.     The questions that arise for consideration are,  sequen- tially, whether the electrical-energy generated and supplied by  the petitioner-companies is a "material resource of  the community" within the meaning of Article 39(b); whether  the impugned  legislation has a reasonable and direct  nexus  to the objective of distributing this materials resource so  as to  subserve  the common good and what are  the  appropriate tests to ascertain this nexus. The incidental questions that arise  on  certain specific contentions  centre  around  the effect  of the option to purchase the undertaking  exercised by the Assam State Electricity Board in the case of Tinsukia Co. and whether immediately upon the exercise of the  option the  proprietory  rights respecting the undertaking  of  the company  get  transformed into a mere  "actionableclaim"  or "chose in action", as contended for by the petitioners. 577 Apropos  of the contention that, at all events,  the  provi- sions pertaining to the "amount" could have no reasonable or direct  nexus to the principles envisaged in Article  39(b), but are merely intended to extinguish the legitimate  rights of the petitioner-company to receive the price of the under- taking  under the 1910 Act, as the law then stood,  pursuant to  the option exercised by the ’Board’, it would,  perhaps, be  necessary to ascertain the composite-elements that  make for a law of nationalisation and whether provisions touching the quantification of the "amount" payable for the  acquisi- tion are not an essential and integral part of such law.     On  the contention urged by Shri Rangarajan as  to  what could  be  said to survive for consideration  under  Article 31(2), (as it then stood), if the law has the protection  of Article 31-C the question that arises is whether anything at all survives for consideration under Article 31. The conten- tion indeed, runs in the teeth of several pronouncements  of this  Court which lay down that when Article 31-C  comes-in, Articles  14,  19 and 31 (the last mentioned article  as  it then stood) go out. This we will consider under point (c).     14.  It is not disputed that the  electricity  generated and distributed by the undertakings of the petitioner-compa- nies  constitute "material resources of the  community"  for

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the purpose and within the meaning of Article 39(b).     In  Sanjeev Coke Manufacturing Company v. Bharat  Coking Coal  Ltd., [1983] 1 SCR 1000 this Court, referring to  what constitute "material resources of the community" and whether resources  produced  by, or at the command of,  private,  as distinguished  from  the  State  agencies,  constitute  such resources  as  the resources of the community,  noticed  the contention urged in that case thus:                         "   .....   The submission  of  Shri               A.K.  Sen was that neither a coal mine  nor  a               coke oven plant owned by private parties was a               ’material resources of the community’. Accord-               ing  to the learned counsel they would  become               material resources of the community only after               they were acquired by the State and not  until               then.  In  order to qualify  as  material  re-               sources of the community the ownership of  the               resources must vest in the community i.e.  the               State  .....  A law providing for  acquisition               was not a law for distribution  ......  "               (P. 1022)               578               Repelling  this  argument  which  suggested  a               limited concept of "Material resources of  the               Community" the Court observed:                        "  .....  We are unable to appreciate               the  submission  of Shri Sen:  The  expression               ’material  resources of the  community’  means               all  things  which are  capable  of  producing               wealth for the community. There is no  warrant               for interpreting the expression in so narrow a               fashion  as suggested by Shri Sen and  confine               it  to  public-owned material  resources,  and               exclude private-owned material resources.  The               expression involves no dichotomy  ......  "                                                                  ( P.               1022 & 23)     It can, therefore, hardly be gain-said that the electri- cal energy generated and distributed by the undertakings  of the petitioner constitutes "material resources of the commu- nity".     15. This takes us to the question whether the provisions of  the  impugned Assam Act X 1973 have any  reasonable  and direct  nexus  to  the principles in Article  39(b)  of  the Constitution.  It  is true that if such  a  relationship  is merely remote and tenuous the protection under Article  31-C may not be available. The idea of distribution of the  mate- rial  resources  of the community in Article  39(b)  is  not necessarily  limited to the idea of what is taken  over  for distribution amongst the intended beneficiaries. That is one of  the modes of "distribution". Nationalisation is  another mode.  In State of Tamil Nadu v. L. Abu Kavur Bai, AIR  1984 SC  326 this Court had occasion to refer to this aspect.  It was held:                        "In other words, the word  ’distribu-               tion’  does not merely mean that  property  of               one  should be taken over and  distributed  to               others like land reforms where the lands  from               the big landlords are taken away and given  to               landless  laboureft,  .....  That is only  one               of the modes of distribution but not the  only               mode  ......  "                        "By  nationalising the  transport  as               also  the units the vehicles would be able  to

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             go  the farthest comer of the State and  pene-               trate as deep as possible  ......                        "This would undoubtedly be a  distri-               bution  for the common good of the people  and               would be clearly covered               by clause (b) of Article 39." 579     On an examination of the scheme of the impugned law  the conclusion becomes inescapable that the legislative  measure is one of nationalisation of the undertakings and the law is eligible  for and entitled to the protection of  Article  31 -C.     16. It was then contended that not all the provisions of a law can and need be eligible for the protection of Article 31-C  and that accordingly, in the present case  the  provi- sions  as to the quantification of the "amount", which  were meant  to  achieve  an oblique motive  of  interdicting  and extinguishing the vested rights of the petitioner-company to receive  payment  in accordance with the provisions  of  the 1910 Act, as they then stood, should not have the protection of  Article 31-C. We are afraid this contention proceeds  on an impermissible dichotomy of the components integral to the idea  of  nationalisation. The economic cost of  social  and economic reform is, perhaps, amongst the most vexed problems of  social and economic change and constitute the core  ele- ment in Nationalisation. The need for constitutional immuni- ties  for  such legislative efforts at social  and  economic change recognise the otherwise unaffordable economic  burden of  reforms. The observations of Mathew J.  in  Keshavananda case on the point are worth recalling:                        "If full compensation has to be paid,               concentration of wealth in the form of immova-               ble  or movable property will  be  transformed               into  concentration of wealth in the  form  of               money  and how is the objective underlined  in               Article  39(b) and (c) achieved by the  trans-               formation?  And will there be enough money  in               the coffers of the State to pay full compensa-               tion?"                        "   .....  I am unable to  understand               the purpose of substituting the word  ’amount’               for the word ’compensation’ in the sub-Article               unless  it  be  to deprive the  Court  of  any               yard-stick or norm for determining the adequa-               cy  of  the amount and the  relevancy  of  the               principles fixed by law. I should have thought               that  this coupled with the express  provision               precluding  the  Court  from  going  into  the               adequacy  of  the amount fixed  or  determined               should  put it beyond any doubt that  fixation               of the amount or determination of the  princi-               ple for fixing it is a matter for the  Parlia-               ment  alone and that the Court has no  say  in               the matter." (1973 Supp. SCR 1 at page 846) It  is,  therefore,  not possible to  divorce  the  economic considera- 580 tions or components from the scheme of nationalisation  with which the former are inextricably integrated. The  financial cost  of a scheme of nationalisation lies at its very  heart and can not be isolated. Both the provisions relating to the vestiture  of the undertakings in the State and  those  per- taining  to the quantification of the "Amount" are  integral and inseparable parts of the integral scheme of nationalisa- tion and do not admit of being considered as distinct provi-

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sions independent of each other.     17.  The memorandum of the writ petition contains  aver- ments  as to the efficiency and public-utility of the  serv- ices  rendered by the undertakings and that on the  date  of the  take-over the market value of the Tinsukhia and  Dibru- garh  undertakings were Rs.55 lakhs and Rs.35 lakhs  respec- tively  and  that. the undertakings were  discharging  their obligations to the consumers efficiently and satisfactorily. The case of the petitioners is that there was no  justifica- tion at all for the nationalisation as the undertakings were efficient  and fully catered to the needs of the  consumers. It was also averted that it was the Government and the Board the  had come in the way of the expansion envisaged  by  the undertakings by withholding the requisite permission for the installation of additional capacity for generation of  elec- tricity. The Respondents have sought elaborately to traverse these  grounds and to justify the measure  for  nationalisa- tion.     We are afraid, the debate whether nationalisation is  by itself  to be considered as fulfilling a  public-purpose  or whether the nationalisation should be shown to be  justified by the actual effectuation of the avowed objectives of  such nationalisation--the  choice between the pragmatic  and  the doctrinaire  approaches--is concluded and no  longer  avail- able.  In  Akadasi Padhan v. State of Orissa and  Ors.,  AIR 1963  SC 1047 this debate on the philosophy of  nationalisa- tion is concluded. was held:                        "   .....   Broadly  speaking,   this               discussion discloses a difference in approach.               To  the  socialist, nationalisation  or  State               ownership  is  a matter of principle  and  its               justification is the general notion of  social               welfare.  To the rationalist,  nationalisation               or. State ownership is a matter of  expediency               dominated by considerations of economic  effi-               ciency     and     increased     output     of               production  .....  ".                        "  ......  The amendment made by  the               Legislature in Art. 19(6) shows that according               to the Legislature, a law               581               relating  to  the creation of  State  monopoly               should  be presumed to be in the interests  of               the general public  ......  "                         "  .....  In other words, the theory               underlying  the  amendment  in so  far  as  it               relates to the concept of State monopoly, does               not  appear to be based on the  pragmatic  ap-               proach, but on the doctrinaire approach  which               socialism accepts  .....".                   Indeed,  in the United States  of  America               after  the  hey-days of  the  substantive  due               process, the Supreme Court in 1963 in Ferguson               v. Skrupa, 372 US 726 said:                         "We refuse to sit as a  ’superlegis-               lature  to weigh the wisdom  of  legislation’,               and  we emphatically refuse to go back to  the               time  when courts used the Due Process  Clause               ’to  strike  down state  laws,  regulatory  of               business  and industrial  conditions,  because               they  may  be unwise, improvident, or  out  of               harmony   with   a   particular   school    of               thought’  .....               Whether the legislature takes for its textbook               Adam  Smith, Herbert Spencer, Lord Keynes,  or

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             some other is no concern of ours."               (Emphasis Supplied)     18.  Equally  untenable is the contention based  on  the assumption that immediately upon the exercise of the  option to purchase, the proprietory-rights of the Tinsukhia Company in  relation to the undertaking stood transformed into,  and was crystalised in the form of, a mere actionable-claim or a "chose-in-action" and that, therefore, what was sought to be acquired  by  the present legislative-measure was  merely  a "chose-in-action".  It was contended that no public  purpose is achieved by the acquisition of a "chose-in-action".  This needs  examination of the legal character and  incidents  of the  consequences that flow from the exercise of the  option to purchase under the 19 10 Act. The contention  presupposes that  contemporaneous with the service of the notice on  the licensee, the proprietory-rights of the licensee in relation to  the undertaking, proprio-vigore, get transformed into  a mere "chose-in-action". This consequence does not flow  from the  pro:  visions of 1910 Act. In Fazilka  Electric  Supply Company  Limited v. The Commissioner of  Income-Tax,  Delhi, [1962]  Supp. 3 SCR 496 this court, referring to the  nature of the transaction emerging from the exercise of the option, said: 582                         "It merely provides for an option of               purchase to be exercised on the expiration  of               certain periods agreed to between the parties,               and  section  10 further provides that  in  an               appropriate  case Government may  even  forego               the option. This section does not provide  for               a  compulsory purchase or compulsory  acquisi-               tion without reference to and independently of               any  agreement  by the  licencee."  (See  Page               505).               (Emphasis Supplied)                   In Gujarat Electricity Board v. Shantilal,               [1969] 1 SCR 580 referring to the legal conse-               quences  that ensue by a mere exercise of  the               option, it was held:                         "  ....  that the right to  purchase               the undertaking accrues only at the expiration               of  the period of licence but  for  exercising               that right, the authority must make its  elec-               tion within the period prescribed in sec. 7(4)               and  issue a notice as required by  that  sub-               section  .....  "               (Emphasis Supplied)                   That the right, title and interest of  the               licensee  in  the  undertaking  does  not  get               transferred to the Board or the State, as  the               case  may be, immediately upon the mere  exer-               cise  of  the option to  purchase  is  further               clear  from what is implicit in  the  observa-               tions  of  this  Court  in  Godra  Electricity               Company  Limited and another v. The  State  of               Gujarat  and another, [1975] 2 SCR 42 at  page               54.  The  proposition  contended  for  by  the               Learned  Additional Solicitor General in  that               case was noticed thus:                        "In  support of the  contention  that               when once the notice exercising the option  to               purchase the undertaking has been served,  the               licensee has no further right to carry on  the               business,  the  learned  Additional  Solicitor               General  placed  reliance on the  decision  of

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             this  Court  in Kalyan Singh v.  State  of  U.               P  ........  "                   This  Court held that the exercise of  the               option would have no such effect on the licen-               see’s right to carry on his business until the               undertaking was actually taken over and  paid-               for. It was held:                        "A  licensee cannot be told  that  he               has no right to carry on the business unless a               valid  purchase is made at the expiry  of  the               period  .....  "               583                        "  ......  Admittedly, the  undertak-               ing  belonged to the licencee and if  delivery               of the undertaking is to be taken by the State               Electricity Board, the purchase price must  be               paid  before the delivery or, there must be  a               provision  for  payment  of  interest  on  the               purchase  price  for the period  during  which               payment  is withheld. Otherwise,  the  licence               will  not  cease  to have  operation  and  the               licensee  wilt  be entitled to  carry  on  the               business." (See Page 54).     The  contentions that immediately upon the  exercise  of the option, ipso-facto, the relationship between the parties get transformed into one as between a Debtor and a  Creditor and  that  the interest of the licensee in  the  undertaking becomes  an  "actionableright", or a  "chose-in-action"  and that  no  public-purpose could be said to be served  by  the acquisition  of a "chose-in-action" are all out of place  in this case.     19.  It  is  not necessary, therefore, to  go  into  the question whether a "chose-in action" can at all be acquired. Certain observations of this Court in Madan Mohan Pathak  v. Union  of India and Ors., [1978] 3 SCR 334 do  suggest  that "chose-in-action"  could also be acquired. It will also  not be  necessary to go into the legal concept of  a  "chose-in- action"  in  Indian  law and its  distinctiveness  from  the principles in English law. Williams on "Personal-property" refers to "chose-in-action" thus:               "  ............  another important distinction               exists among personal things. Such things  are               said to be in possession or in action; or they               are  called, in law French, choses in  posses-               sion or choses in action. Choses in possession               are  movable goods, of which their  owner  has               actual possession and enjoyment, and which  he               can  deliver  over to another upon a  gift  or               sale;  tangible  things, as  cattle,  clothes,               furniture, or the like  ....  "                         "The  term choses in action  appears               to have been applied to things, to recover  or               realise  which,  if  wrongfully  withheld,  an               action  must  have been  brought;  things,  in               respect  of which a man had no actual  posses-               sion  or enjoyment, but a mere right  enforce-               able  by action. The most  important  personal               things recoverable by action only were               584               money  due  from  another, the  benefit  of  a               contract   and  compensation  for   a   wrong;               and .these have always been the most prominent               choses in action, though not the only   things               to  which  the term has  been  applied   .....

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             "(see page 29 and 30)               Indeed, in English law the difficulties in the               precise  definition of  chose-in-action  arise               out of the fact that the meaning attributed to               the expression has been expanded from time  to               time by judicial decisions and the  principles               pertaining  to the concept did not develop  on               any logical or scientific basis.                   W.S. Holdsworth also refers to this diffi-               culty in apprehending the precise incidents of               the concept of a "chose-in-action":                        "It is sometimes difficult to  ascer-               tain  the sense in which the  legislature  has               used  the term ’chose-in-action ’we have  seen               that Bankruptcy Act affords one  illustration,               and, as we can see from the case of Edwards v.               Dicard  the  modifications introduced  by  the               Courts  have some times occasioned  a  similar               difficulty.  Some of these difficulties  might               be  perhaps mitigated by a codifying Act,  for               which there is plenty of material. But, it  is               probable that a branch of the law which  comes               at  the meeting place of the law  of  property               and  the law of obligation can never  be  any-               thing but difficult to formulate and apply."               (Emphasis Supplied)                        (See:  "The History of the  treatment               of  chose-inaction by the common  law":-  Vol.               33--Harvard Law Review 997 at 1030).                   20.  Petitioners, however,  placed  strong               reliance upon a decision of the Calcutta  High               Court  in  Bihar State  Electricity  Board  v.               Patna  Electricity Supply Co. Ltd.,  AIR  1982               Cal.  74  and in particular on  the  following               observations of the Division Bench of the High               Court in para 22:                        "  ......  The purported  acquisition               of  part  of the debt or chose  in  action  by               Sections  2(ii)  and 3 of the Bihar Act  7  of               1976 with retrospective effect is,  therefore,               without any public purpose. Sections 2(ii) and               3 also do not provide for payment of compensa-               tion. In the circumstances, it must be               585               held  that Sections 2(ii) and 3 of  the  Bihar               Act  7 of 1976 are ultra vires Art.  31(2)  of               the Constitution."     It is not necessary to consider the correctness of  this pronouncement  in view of the circumstance that even to  the extent the decision goes it is distinguishable. On 5.1.1973, the  Electricity Board exercised its option to purchase  the undertaking.   On  2.2.1974,  the  Board  paid  a   sum   of Rs.36,00,000  "on-account"  to the  licensee.  On  6.2.1974, possession was taken. On 2.2.1974, Ordinance 50 of 1974  was promulgated  amending Section 7A of the 19 10  Act  reducing the price payable under Section 7A to the book-value of  the assets.  This Ordinance was renewed by two successive  ordi- nances  No. 83 of 1974 and 123 of 1974. The  last  ordinance was  replace  by  Bihar Act 15 of 1975.  On  10.2.1976,  the Indian  ’Electricity  (Bihar Amendment) Act 7  of  1976  was brought into force validating the substitution of Section  6 and  7A,  made by Bihar Act 15 of  1975  with  retrospective effect  from 2.2.1974. The Validating Act sought  to  affect the  rights and obligations of the parties  retrospectively. The High Court was persuaded to the view that the  purported

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acquisition,  virtually,  pertained to the debt  or  "chose- inaction" and not the undertaking itself. It is,  therefore, not  necessary  to consider the submissions of  the  learned counsel for the respondent that it does not lay down the law correctly in as much as the arguments based on Article  31-C were neither advanced nor considered in that case.     It  requires,  therefore, to be held that  the  impugned legislation  viz., Assam Act X, 1973, was  broughtforth  for securing  the principles contained in Article 39(b)  of  the Constitution and is protected under Article 31-C. The amend- ment  made to the provisions of the Indian Electricity  Act, 1910, by Assam Act IX of 1973, amending the basis for  quan- tification of the amount payable in the case of a  statutory purchase pursuant to the exercise of the option in terms  of the  licence would apply to and govern cases  of  statutory- sales and would not assume any immateriality in this case as the Assam Act X of 1973 is itself--as we have held--a  valid piece of legislation.      22. We find, therefore, no substance in the contentions (a) and (b) urged by the petitioner. 23. Re. contention (C):      This  pertains to the question whether  the  principles laid  down  in  the Act for determination  of  the  "amount" payable for the acquisition 586 are so arbitrary as to render the "amount" unreal and merely illusory. This contention would not, in law, be available to the petitioners inasmuch as the law providing for the acqui- sition  has the protection of Article 31-C of the  Constitu- tion.  The arguments of Shri Soli J. Sorabjee in  regard  to the  alleged "illusory" nature of the  "amount"  presupposes and  proceeds on the premise that the impugned law does  not have  the protection of Article 31-C. Now that we have  held that  Article 31-C is attracted, the argument in  regard  to the  alleged illusory nature of the amount does not  survive at all.     24.  Shri Rangarajan, however, contended  that  notwith- standing that a law has the protection of Article 31-C,  the question would yet be justiciable under Article 31(2), as it then  stood, if the "amount" is illusory or  the  principles for  its determination arbitrary. To support this,  somewhat difficult,  proposition Shri Rangarajan relied upon  certain observations  of Chandrachud, J. in the  Keshavananda  case; whose import and importance, according to the learned  coun- sel, has not been fully and properly comprehended in  subse- quent cases. The passages relied upon are:                         "   ....  But to say that an  amount               does not bear reasonable relationship with the               market value is a different thing from  saying               that  it  bears no such relationship  at  all,               none whatsoever. In the later case the payment               becomes illusory and may come within the ambit               of permissible challenge." (See para 2 137  at               page 2051 of AIR 1973).                         "   .....   Courts  would  have  the               powers  to  question such a law if  an  amount               fixed  thereunder is illusory; if the  princi-               ples,  if any are stated, for determining  the               amount  are wholly irrelevant for fixation  of               the amount; if the power of compulsory  acqui-               sition  or  requisition  is  exercised  for  a               collateral purpose; if the law offends Consti-               tutional  safeguards other than the  one  con-               tained  in Article 19(1)(f); or if the law  is               in  the nature of a fraud on the  Constitution

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             ". (See: para 2138 at page 2051 of AIR 1973).                   These  observations. Sri Rangarajan  says,               were  intended to govern even a law which  had               the protection of Article 31-C. Shri  Rangara-               jan  also relied upon certain observations  of               Fazal Ali, J. in State of Tamil Nadu v. L. Abu               Kaur Bai AIR 1984 SC 326 which say:               "87. Thus, so far as this aspect of the matter               is con-               587               cerned, two conclusions broadly emerge:                        (1)  that  in  view  of  the  express               provisions of Article 31-C which excludes Art.               31(2)  also  where a property is  acquired  in               public  interest  for the  avowed  purpose  of               giving  effect to the principles enshrined  in               Art. 39(b) and (c), no compensation is  neces-               sary and Art. 31(2) is out of the harm’s  way,               and                        (2) that even if the law provides for               compensation,  the courts cannot go  into  the               details or adequacy of the compensation and it               is sufficient for the State to prove that  the               compensation was reasonable and not  monstrous               or  illusory so as to shock the conscience  of               the court."               (Emphasis of counsel)     Sri  Rangarajan would say that the  observations  empha- sised would show that even if Article 31-C was attracted yet the  State should show that compensation was reasonable  and not illusory.     We are afraid, these passages are quoted out of  context and,  if properly understood, were not intended  to  support the proposition now propounded by Shri Rangarajan. Indeed in the Keshavananda case itself Chandrachud J. referring to the effect of Article 31-C observed:                        "... In fact article 31-C is a  logi-               cal  extension  of the  principles  underlying               article    31(4)   and   (6)    and    article               31A. .............  The true nature and  char-               acter of article 31-C is that it identifies  a               class  of legislation and exempts it from  the               operation of articles 14, 19 and 31   ........               "               (1973 supp. SCR 1 at 995)               Khanna J. observed in that case:                        Both  articles 31A and 31C deal  with               right  to  property. Article 31-A  deals  with               certain  kinds of property and its effect  is,               broadly  speaking,  to  take  those  kinds  of               property  from the persons who have rights  in               the  said property. The objective  of  article               31C is to prevent concentration of wealth  and               means of production and to ensure the  distri-               bution of ownership and control of the materi-               al  resources of the community for the  common               good. Article               588               31C  is thus essentially an extension  of  the               principle   which  was  accepted  in   article               31A  ......  "(page 743)               Beg, J said:                         "Article  31-C  has two  parts.  The               first part is directed at removing laws passed               for  giving effect to the policy of the  State

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             towards  securing the principles specified  in               clause (b) or clause (c) of Article 39 of  the               Constitution  from the vice of  invalidity  on               the ground that any such law "is  inconsistent               with  or  takes away or abridges  any  of  the               rights conferred by Articles 14, 19 and 31  of               the  Constitution."  ......   the  effect   of               invalidity for alleged violations of  Articles               14 or 19 or 31 would vanish so long as the law               was really meant to give effect to the princi-               ples of Article 39(b) and (c)  ......  "                   In State of Karnataka v. Ranganath  Reddy,               [1978]  1 SCR 641 this Court had  occasion  to               observe:                        "  .....  For the purpose of deciding               the  point  which fails for  consideration  in               these  appeals,  it will suffice to  say  that               still  the over-whelming view of the  majority               of  judges in Kesavandanda Bharati’s  case  is               that  the  amount  payable  for  the  acquired               property  either fixed by the  legislature  or               determined  on  the basis  of  the  principles               engrafted in the law of acquisition cannot  be               wholly arbitrary and illusory. When we say  so               we  are not taking into account the effect               of  Article 31-C inserted in the  Constitution               by the 25th Amendment (leaving out the invalid               part as declared by the majority)." (p. 653)               (Emphasis Supplied)                   In  Sanjeev  Coke  Manufacturing  Co.   v.               Bharat  Coking Coal Company Lt., [1983] 1  SCR               1000 this Court said:                        "  .....  To accept the submission of               Shri Sen that a law rounded on  discrimination               is  not entitled to the protection of  Article               31-C, as such a law can never be said to be to               further  the Directive Principle  affirmed  in               Art.  39(b), would indeed, be, to use a  hack-               neyed  phrase,  to  put the  cart  before  the               horse.  If the law made to further the  Direc-               tive Principle iS necessarily  non-discrimina-               tory or is based               589               on a reasonable classification, then such  law               does  not  need any protection  such  as  that               afforded by Art. 31-C. Such law would be valid               on  its  own strength, with no aid  from  Art.               31-C. To make it a condition precedent that  a               law  seeking  the haven of Art. 31-C  must  be               non-discriminatory  or  based  on   reasonable               classification  is to make Art. 31-C  meaning-               less  ...... " (p.1019)                        "We  are firmly of the  opinion  that               where   Art.  31-C  comes  in  Art.  14   goes               out  ....  " (p. 1021)                   What  applies to Article 14 would  equally               apply  to Article 31 (as it then stood  before               its  deletion by the Constitution  Fortysecond               (Amendment) Act, 1978).                   In  State  of Tamil Nadu v. L.  Abu  Kavur               Bai, AIR 1984 SC 326 on which Shri  Rangarajan               relied, Fazal Ali J. categorily said:                        "It  is manifest from a bare  reading               of  the  newly added Art. 31-C  that  any  law               effectuating the policy of the State in  order

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             to secure or comply with the directive princi-               ples specified in clauses (b) and (c) of  Art.               39  would not be deemed to be void even if  it               is inconsistent with or violates Articles  14,               19 or 31  .....  "               (P. 332)               In the same case Fazal Ali J. further said:               "  ....  If, once the conditions mentioned  in               Article  31C  are  fulfilled by  the  law,  no               question  of compensation arises  because  the               said Article expressly excludes not only Arti-               cles  14, and 19 but also 31 which, by  virtue               of  the 25th amendment, had replaced the  word               ’amount’ for the word ’compensation’ in  Arti-               cle 31(,2)  .....  "                                                (p.      334)               (Emphasis supplied)                   Sri Rangarajan cannot, therefore, draw any               sustenance from Fazal Ali J. for his argument.               Sri  Rangarajan  then placed reliance  on  the               following observa-               590               tions  of Krishna Iyer J. in Gwalior Rayon  v.               UOL, [1974] SCR 1671.                        "  ....  the legislature is  expected               except  in exceptional  socio-historical  set-               ting, to provide just payment for the deprived               persons. To exclude judicial review is not  to               block out the beneficient provisions of  Arti-               cles 14, 19 and 31."               (p. 695)     But we see nothing in these observations which can  lend support to justiciability of an alleged violation of Article 31 by a law protected under Article 31-C. Ideally,  perhaps, it may not be just to deprive a recompence that is just  and fair, in all cases. But that is not to say that even under a law which has the protection of 31-A or 31-C, the  adequacy, or  justness or fairness of the compensation would, yet,  be justiciable.     The  contention  of Shri Rangarajan in our  opinion,  is wholly  unsupportable. Indeed, the purpose of  Article  31-C is, amongst others, to exclude Article 31, as it then stood. The effect of accepting Sri Rangarajan’s contention would be to  let in Article 31 by the backdoor, frustrating the  very object of Article 31-C and to unsettle the law laid down  in a series of authoritative pronouncements of this Court.  The contention  really, is not available to the  petitioners  at all.     26. Even if the impugned law did not have the protection of  Article  31-C, a hypothesis on which contention  (c)  is based,  the  adequacy  or inadequacy of the  amount  is  not justiciable. The limitations of the courts’ scrutiny explic- it  in  Article 31(2), are referred to by Mathew J.  in  the Keshavananda case:                        "  ....  the word ’amount’ conveys no               idea  of any norm. It supplies no  yard-stick.               It  furnishes  no measuring rod.  The  neutral               word ’amount’ was deliberately chosen for  the               purpose. I am unable to understand the purpose               in substituting the word ’amount’ for the word               ’compensation’ in the sub-article unless it be               to deprive the Court of any yard stick or norm               for determining the adequacy of the amount and               the relevancy of the principles fixed by law               (para 1765)

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             Referring  to  what  might, yet,  be  open  to               judicial scrutiny, under               591               Article 31(b), Shelat and Grower, JJ  observed               in the Keshavananda case:                         "But    still   on    the    learned               Solicitor   General’s argument, the  right  to               receive the amount continues to be a fundamen-               tal right. That cannot be denuded of its iden-               tity. The obligation to act on some  principle               while  fixing  the  amount  arises  both  from               Article  31(2)  and  from the  nature  of  the               legislative  power for, there can be no  power               which permits in a democratic system an  arbi-               trary use of power."                         "But  the norm or the  principle  of               fixing  or determining the ’amount’ will  have               to be disclosed to the Court. It will have  to               be satisfied that the ’amount’ has  reasonable               relationship  with the value of  the  property               acquired  or requestioned and one or  more  of               the relevant principles have been applied  and               further that the ’amount’ is neither  illusory               nor it has been fixed arbitrarily, nor at such               a figure that it means virtual deprivation  of               the right under Article 31(2). The question of               adequacy  or  inadequacy, however,  cannot  be               gone into."               Justice Chandrachud observed:                        "The  specific obligation to  pay  an               ’amount’ and in the alternative the use of the               word  ’principles’ for determination  of  that               amount  must  mean that the  amount  fixed  or               determined  to be paid cannot be illusory.  If               the  right to property still finds a place  in               the  Constitution, you cannot mock at the  man               and  ridicule his right. You cannot tell  him:               ’I will take your fortune for a farthing’."                   27.  All the same, the concept  of  "Book-               Value"  is an accepted accountancy concept  of               value. It cannot be held to be illusory.                   In  Eswari Khetan Sugar Mills v. State  of               U.P., [1980] 3 SCR 331 at page 359 it has been               held  that even the concept of  "written  down               value"  which is more disadvantageous  to  the               owner than the "Bookvalue" is not irrelevant:                        "  ........  This Court has in  terms               accepted  that payment of compensation on  the               basis of written down value calculated accord-               ing to the income-tax law for used               592               machinery is not irrelevant as a principle for               determining   compensation.   That   principle               appears to have been adopted for valuing  used               machinery though the legislation fixes compen-               sation  payable to each undertaking  in  round               Sum ....."     28. Accordingly, even if the impugned law had no protec- tion of Article 31-C and tests appropriate to and  available are applied, in the circumstances of this case, it cannot be said that the principles envisaged in the impugned law  lead to  an  "amount"  which can be called  unreal  or  illusory. Contention (c) is accordingly held and answered against  the petitioners. 29. Re: Contention (d):

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   This point is again, available only if the impugned  law is outside Article 31-C. The contention that "Service Lines" which  are expressly excluded from the valuation do  consti- tute  the property of the licensee and their exclusion  from valuation would make the principles for determination of the ’amount’  arbitrary  does  not  have  much  to  commend  it. Learned-counsel  for the petitioner placed reliance  on  the definition of ’works’ in Section 2(n) of the 1910 Act and on the pronouncement of this Court in Calcutta Electric  Supply Corporation v. Commissioner of Wealth-tax, [1972] 1 SCR 159. The question in that case was whether in the computation  of net  wealth of the licensee, the "Service-lines"  should  be included. That was a converse case where the licensee  rely- ing  upon  the statutory provisions of the  Electricity  Act contended  that  "Service-lines"  were not  a  part  of  his wealth. This Court negatived that contention for purposes of assessment to wealth tax. Learned counsel placed some  store by this pronouncement to contend that the exclusion of  this ’wealth’ from valuation is arbitrary.     But, in our opinion, the pronouncement relied upon  does not advance petitioners’ case on the point. While it is true that the expression ’works’ in Section 2(n) of the 1910  Act includes  ’Service-lines’,  the reason  why  ’Service-lines’ could justifiably be excluded from valuation for purposes of determination  of the ’amount’ is indicated in page 166  the report:                        "It  is  true that in  view  of  Sec.               7(A)(2)  of the Electricity Act, in  computing               the market value of the undertaking sold under               sub-section  (1) of section 5 of that Act  the               value  of  service lines which had  been  con-               structed at the expense               593               of  the consumers will not be taken into  con-               sideration.  The reason for this provision  is               obvious. It will be the duty of the new licen-               see  to  not only maintain  and  repair  those               lines  but  also  to replace  them  when  they               become unserviceable."     Under  the law when a requisition is made by an  intend- ingconsumer  for  electrical-energy,  the  licensee  has  an obligation tO lay down Service-lines. But, according to  the provisions  the entire cost of service-line is not  required to  be  borne by the licensee. The licensee is  entitled  to call  upon the consumer to pay part of the cost of  service- line--which  may  in a given case amount  to  a  substantial part--in  accordance with the provisions in the Schedule  to the Electricity Supply Act.     Dealing with a similar provision the Gujarat High  Court in  Dakor-Umreth   Electricity  Company Ltd.  v.   State  of Gujarat, ( 13 Gujarat Law Reporter 88 at page 106) held:                         "   ......  The question is  whether               the  exclusion of such service lines from  the               valuation  can  be said to have  rendered  the               principle of compensation irrelevant or  inap-               propriate.  We do not think so   .......   The               petitioner  is not constituted .the  owner  of               these  service lines for all  purposes.  More-               over,  even after the purchase, these  service               lines  would continue to be utilised for  sup-               plying electrical energy to the consumers  who               paid for them. It would be most inequitable in               these circumstances to provide for payment  of               compensation  to  the  petitioner  for   these               service lines. There is no reason in logic  or

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             principle why the petitioner should be allowed               to  make  unjust and  undeserved  profit  from               transfer  of these service lines for which  it               has paid nothing and which are not the product               of its own labour  .....  "     This reasoning, if we may say so with respect, is  sound and should be accepted. Contention (d) is, therefore, insub- stantial and is answered against the petitioners. 30. Re: Contention (e):     The  apprehensions of the petitioners on this  point  is that  while under Section 9(1)(i) of the impugned Act  X  of 1973, Government 594 would  be entitled to deduct from the ’amount’ such sums  as remain  in  the  "Tariffs  and  Devidend  Control  Reserve"; "Contingency-Reserve"  and the "Development Reserve", in  so far as such amounts have not been paid over by the licensees to  the  Government, the provision, however, does  not  take into  account and provide for cases where such reserves  are invested  in ’fixed assets’ and as such "fixed assets"  vest in the Government under the Acquisition. There would, there- fore, it is urged be, a duplication of the liability of  the licensee  on  this score, in the sense that while  the  "Re- serves" in the form of fixed-assets vest in the  Government, the  licensee  is  still exposed to the  liability  for  the deduction  of  the  amount shown in  the  accounts.  Section 9(1)(i) provides:                         "Deductions  from the Gross  amount:               The Government shall be entitled to deduct the               following  sums from the gross amount  payable               under this Act to the licensee.               (a)               (to)               (h) Omitted as unnecessary                         (i) The amounts remaining in tariffs               and  dividends control reserve,  contingencies               reserve and development reserve, in so far  as               such amounts have not been paid over by licen-               see to the Government;               (j)               (k) Omitted as unnecessary     On  a reasonable construction, the expressions  ’amounts remaining’ and ’in so far as such amounts have not been paid overl’  necessarily exclude any such duplication of the  ac- countability  of the licensee for these ’Reserves’.  If  any part  of the reserves is invested in "fixed assets" and  the reserves in the form of such "fixed assets" are takenover by the Government pursuant to the acquisition, what remains  to be  accounted for by the licensee is only the  ’amounts  re- maining’  in  the pertinent accounts. The liability  of  the licensee  for deduction of the ’Reserves’ from the  ’amount’ would arise only if the balance remaining in those  accounts are not paid. Indeed, Dr. Shankar Ghosh, learned counsel for the  State  of  Assam, submitted that this  is  the  correct interpretation  to be placed on Section 9(1)(i) of the  Act. With  this construction of the provision, the contention  of the petitionercompany on this point, does not survive. 595     31. The other contention raised under this point is that the  property of the licensees represented by the  unexpired portion  of the licence has not been taken into  account  in computing the amount payable for the acquisition. As already indicated, the law having the protection of Article 31C  the contention is not available at all. Section 7(3) of the impugned Act provides:

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                      "In the case of an undertaking  which               vests  in the Government under this  Act,  the               licence  granted  to it under Part II  of  the               Electricity  Act shall be deemed to have  been               terminated  on  the vesting date and  all  the               rights,  liabilities  and obligations  of  the               licensee  under any agreement to supply  elec-               tricity  entered into before that  date  shall               devolve or shall be deemed to have devolved on               the Government:                        Provided  that where any such  agree-               ment  is not in conformity with the rates  and               conditions  of supply approved by the  Govern-               ment  and  in force on the vesting  date,  the               agreement  shall be voidable at the option  of               the Government."     This provision is a part of a scheme of  nationalisation and is protected by Article 31C.     32.  Contention  (e) is accordingly  held  and  answered against the petitioners.     33. Re: Contention (f):     This contention pertains to the liability of the  licen- see under Section 11(3) of the Act in respect of the amounts payable  to  employees retrenched by the Government  or  the "Board’  as the case may be, within one year from the  vest- ing-date after the take-over. Section 11(3) provides that if the Board or the Government, as the case may be,  retrenches any  employee within a period of one year from the  vesting- date,  the  liability  for the amounts payable  to  the  re- trenched employee shall be deducted from the ’amount’.  This provision,  it  is contended, imposes a liability  which  is arbitrary.  Dr. Shankar Ghosh submitted that this  point  is purely  academic inasmuch as there has been no such case  of retrenchment. Dr. Ghosh further submitted that the provision is not unreasonable because in the case of employees so 596 retrenched,  the amounts payable would substantially  relate to  the period during which the employment  subsisted  under the  licensee and that it is not unreasonable to  take  this circumstances  into  account in  continuing  the  licensee’s liability  which would, even otherwise, be substantially  be that of the-licensee. ’On a consideration of the matter,  we are inclined to the view--even if this question is justicia- ble--that the provision is not unreasonable or arbitrary  as it  envisages  the  continuance of a  liability  which  was, otherwise,  substantially that of the licensee. There is  no merit in this contention (f) either.       34. Re: Contention (g):       The  grievance of the petitioners on this  aspect,  we are afraid, proceeds on a total misconception of the  effect of  the statutory provisions. The contention, in  substance, is  that while certain liabilities of the  licensee  arising out  of  its Quondam business-operations are  not  expressly taken-over  by  the Government and are-declared  to  be  the subsisting  and  continuing  liabilities  of  the  licensee, however,  Section 9(7) authorises the deduction of  some  of those  very liabilities from the ’amount’ without  a  corre- sponding statutory obligation on the part of the GOvernment, in  turn, to pay the same to the creditors on whose  account and  for whose benefit the deductions are made  and  without providing an express statutory discharge to the  petitioners in that behalf.      There is no substance in this contention. The  legisla- tive  intention  is plain and manifest. Though some  of  the liabilities  arising  out of the conduct of  the  licensees’

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business prior to vesting are not taken over by  Government, some of those liabilities are, yet, authorised to be deduct- ed  from  the amount. The purpose of this provision  is  too obvious to require any statutory declaration of the  obliga- tions  that arise in law and are attendant upon  these  sums coming to the hands of and retained by the Government. Quite obviously,  the  provision  is not intended  for  an  unjust enrichment in the hands of Government. The purpose is  obvi- ously to facilitate recovery of certain types of debts owing to  public institutions etc., and the deduction is  for  the benefit  of  those creditor-institutionS. Government  would, plainly,  be  under a legal obligation to pay  the  sums  so deducted  to the concerned creditors. The provisions of  the Statute  must  be read along, and in  consonance,  with  the general  principles of law which import such obligations  on the  part  of the Government and  an  implied  corresponding discharge  to the petitioners to the extent of  such  deduc- tions in their   liabilities. There is a resulting, statuto- ry-trust in the hands of the Gov- 597 ernment to pay the sums so deducted to the respective credi- tors,  even  in the absence of express  provisions  in  this behalf in the Statute the general principles of law operate. As  a  matter of construction it requires to  be  held  that these  obligations and consequences follow. There is  really no  justifiable grievance on this score. Contention (g)  is, accordingly, held and answered against the petitioners.     35. Re: Contentions (h) and (i):     These two contentions pertain to the machinery envisaged by  and  set  up under the impugned law  for  resolution  of disputes on questions essential for the determination of the amount  in  accordance with the provisions of the  Act.  The contention  of the petitioners, in substance, is that  there is  no  machinery  set up under the  Act  to  determine  the amounts  under Section 9(c), (d) and (e) and to  assess  the loss referred to in Section 8.     The  Other contention on the point is that the  arbitra- tion  clause is a limited one and is confined only  to  dis- putes  in four areas specifically enumerated in clauses  (a) to (d) of sub-section (1) of Section 20 of the Act.     These  lacunae in the Statute, it is contended,  render- the scheme of the Act for the determination of the  ’Amount’ unreasonable and the scheme of the ’Act’ in relation to  the determination  of the ’Gross Amount’, the deductions  to  be made  therefrom and the assessment of the  ’amount’  payable for the acquisition, unworkable.     36.  The Courts strongly lean against  any  construction which tends to reduce a Statute to a futility. The provision of  a Statute must be so construed as to make  it  effective and  operative, on the principle "ut res majis  valeat  quam periat".  It is, no doubt, true that if a Statute  is  abso- lutely  vague and its language wholly intractable and  abso- lutely  meaningless, the Statute could be declared void  for vagueness. This is not in judicial-review by testing the law for arbitrariness or unreasonableness under Article 14;  but what a Court of construction, dealing with the language of a Statute, does in order to ascertain from, and accord to, the Statute  the meaning and purpose which the  legislature  in- tended  for it. In Manchester Ship Canal Co.  v.  Manchester Racecourse Co., [1904] 2 Ch. 352 Farwell J. said:                         "Unless the words were so absolutely               senseless that I could do nothing at all  with               them, I should be bound to find               598               some meaning and not to declare them void  for

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             uncertainty." (See page 360 and 361)                   In Fawcett Properties v. Buckingham  Coun-               try Council, [1960] 3 All ER 503 Lord  Denning               approving the dictum of Farwell, J. said:                         "But  when a Statute has some  mean-               ing,  even  though it is obscure,  or  several               meanings,  even though it is little to  choose               between  them,  the Courts have  to  say  what               meaning the Statute to bear rather than reject               it as a nullity." (Vide page 516)                   It is, therefore, the Court’s duty to make               what  it can of the Statute, knowing that  the               Statutes  are  meant to be operative  and  not               inept and that nothing short of  impossibility               should  allow  a Court to  declare  a  Statute               unworkable.  In  Whitney  v.  Inland   Revenue               Commissioner, [1926] AC 37 Lord Dunedin said:                         "A Statute is designed to be  worka-               ble, and the interpretation thereof by a Court               should  be to secure that object, unless  cru-               cial  omission or clear direction  makes  that               end unattainable." (vide page 52)     37.  On consideration of the Statute on hand, it is  not possible to subscribe to the view that the impugned law  has not envisaged any machinery for the due ascertainment of the sums  referred to in clauses (c), (d) and (e) of  Section  9 which require, on such ascertainment and quantification,  to be  deducted from the gross amount. Section 10 enjoins  upon the Government to appoint a person having adequate knowledge and experience in matters reling to accounts "to assess  the net  amount payable under this Act by the Government to  the licensee  after making the deductions mentioned  in  Section 9". Sub-Section (2) of Section 10 provides that the  Special Officer  may  call for the assistance of  such  Officer  and staff  of the Government or the Board or the undertaking  as he may deem fit "in assessing the net amountpayable".  These provisions,  contemplate  the determination by  the  Special Officer,  who is constituted as a statutory authority  under the  Act,  of the net amount payable. The functions  of  the Special Officer include an examination of the correctness of all the determinations made by the Government in the  matter of  the deductions, except where Government  is  statutorily specially  constituted as an appellate authority in  respect of certain matters under the Act. The Proviso to Sections 8 and 9 envisages prior notice to be 599 issued  to  the  licensee by the Government  to  show  cause against any deduction proposed to be made under Section 8 or 9,  as the case may be, within the period specified  in  the Provisos. Even after the Government so makes such determina- tion  of the amounts which, according to it, are  deductible from  the  gross  amount, such determination  would  not  be final.  The  assessment  of the net amount  payable  to  the licensee  will have to be made by the "Special Officer".  It is  reasonable to construe that the decision of the  Govern- ment  both  under Sections 8 and 9 arrived  at,  even  after giving an opportunity to the licensee of being heard,  would not  be final, but the final determination will have  to  be made by the "Special-Officer" appointed under Section 10  of the  Act. Section 10(1) and (2) of the Act must be  so  con- strued  as  to  enable the "Special-Officer"  to  take  into account  the determinations respecting the  deduction  under Section 9 and 10 of the Act made by the Government and  take a  decision of his own in the matter. The power to  "assess" the  net  amount by necessary implication takes  within  its

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sweep the power to examine the validity of the determination made by the Government in the matter of deductions from  the gross  amount. This power to determine and assess the  ’net- amount’  payable  by  necessary  implication  cover  matters envisaged  in  Sections 8 and 9. Though only  Section  9  is specifically  referred to in sub-section (1) of section  10, the  language  of sub-section (1) and (2) which  enable  the Special Officer to "assess" the net amount paybale would, by necessary implication, attract the power to decide as to the validity  and correctness of the deduction to be made  under Section  8 as well. So construed, the provisions of  Section 10  would  furnish a reasonably adequate machinery  for  the assessment of the "net-amount" payable to licensee.     38.  So far as Arbitration is concerned, even after  the decision  of  the "Special-Officer", there  is  the  further Arbitral forum to decide disputes in respect of the specific areas  in which disputes are rendered arbitrable under  Sec- tion 20.     In  view of these circumstances, we think the  grievance of  the petitioners on these points questions are  not  sub- stantial. The points (h) and (i) are also, accordingly, held and answered against the petitioners.     39.  In  the result, for the foregoing reasons  all  the contentions  urged  by the petitioners in support  of  their challenge to the impugned legislations fail. The Writ  peti- tions are, accordingly, dismissed; but in the circumstances, there will be no order as to costs. G.N.                                         Petitions  dis- missed. 600