http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

CASE NO.: Appeal (civil)  6487-6488 of 1998

PETITIONER: Bharat Hydro Power Corp. Ltd. & Ors.                     

RESPONDENT: State of Assam & Anr.                                    

DATE OF JUDGMENT: 07/01/2004

BENCH: Ashok Bhan & S.B. Sinha.

JUDGMENT: J U D G M E N T

BHAN, J.

                These appeals are directed against a common judgment passed by the  Division Bench of the High Court of  Gauhati wherein the  Division Bench  while setting aside the judgment of the learned Single Judge dated 19th July,  1997 has dismissed the writ petition filed by the appellants.  The writ  petition was filed by the appellants challenging the constitutional validity of  the Bharat Hydro Power Corporation Limited (Acquisition and Transfer of  Undertaking) Act, 1996 being Assam Act 1 of 1997 published in the Assam  Gazette Extraordinary dated 6th January, 1997.

Facts:

       In the year 1979, the Planning Commission of India sanctioned a  proposal of the Assam State Electricity Board (hereinafter referred to as ’the  Board’) for construction of a Hydro Electric Power Station in the District of  Karbi Anglong on the river Barapani at an estimated cost of Rs.36.36 crores.   The project comprised construction of 51 meter high concrete dam on the  river Barapani near Hatidubi for utilising flow of water from catchment area  of 1178 Sq. km.  The installed capacity of the project was 2 x 50 MW.  The  dam was to be completed in the year 1986, but due to the failure of the local  contractor, the project could not be completed and the Board terminated the  contract and protracted litigation ensued.

       In the year 1992, after termination of the contract as aforesaid, the  project was entrusted to National Project Construction Corporation  (in short  ’NPCC’),  but the similar fate followed and Board had to terminate their  contract as well in December, 1992.  In the mean time, cost of the project  initially sanctioned at Rs. 36.36 crores rose to Rs. 189.90 crores.  Out of the  aforesaid estimate, the work completed was of about Rs.116 crores and the  Board needed about Rs. 60 crores to complete the project excluding other  liabilities.  The Board could not generate the additional fund required for  completing the project.  

The   Central Government in the year 1992-93 accepted the policy of  privatisation even in the power sector.  The State Government following the  policy of privatisation of the Central Government decided to transfer the  project to  joint sector.

On 25th March, 1993, Memorandum of Undertaking (MOU) was  signed between the Board, Government of Assam and M/s Subhash Project  and Marketing Limited (SPML), appellant No.2 herein.  According to the  said MOU, SPML was to promote a new company to complete the project.  In terms of the said MOU a new company under the name and style of  M/s.  Bharat Hydro Power Corporation Limited (hereinafter referred to as  ’appellant No.1’) came into existence in which the equity participation was

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

as follows:

       ASEB(the Board)         -       11%         SPML(appellant No.2)    -       40%         General Public          -       49%

On 8th April, 1993 the Deed of Assignment was executed between the  Board and the appellant No.1, in terms of which all the assets and liabilities  of the project were transferred to appellant No.1 w.e.f. 8.4.1993.  In terms of  the said Deed of Assignment appellant No.1 was to complete the project and  start generation by June, 1995 which was subsequently extended to June,  1996.  Disputes arose between the parties.  According to Board as well as  the State of Assam, the appellant No.1 after its incorporation failed to take  charge of the project till 5th April, 1994.  Even after taking over of the  project, the appellant No.1 could not achieve any progress towards  completion of the project due to serious lapses and negligence on its part.   On the other hand, appellants Nos. 1 & 2 put the entire blame on the Board  and the State Government for the delay in the progress of the project.

On 20th December, 1995, appellant No.1 filed a suit being TS No.  244/96 in the Court of the Assistant District Judge No.1, Guwahati for  specific performance of the contract against the Board alleging that the  Board was remiss in the  performance of its obligation under the MOU and  the Deed of Assignment.  Board filed an application for stay of suit in view  of arbitration clause.  Appellant No.1 filed an application in the High Court  under Sections 8 and 11 of the Arbitration and Conciliation Act, 1996 for  appointment of Arbitrator to decide pending disputes between the parties.   On 27th May, 1996, Board wrote to appellant No.1 that due to the failure of  the appellant No.1 to complete the work within the extended period, the  MOU was liable to be terminated and repudiated.

On 30th November, 1996 the State of Assam, keeping in view, the  inordinate delay in the completion of the project and to safeguard the public  interest by completing the project as early as possible in the context of acute  power shortage in the State, promulgated Bharat Hydro Power Corporation  Limited ( Acquisition  and Transfer of Undertaking) Ordinance, 1996  acquiring the undertaking of Karbi Langpi Project of appellant No.1.  The  Ordinance was subsequently replaced by Bharat Hydro Power Corporation  Limited (Acquisition and Transfer of Undertaking) Act, 1996 (hereinafter  referred to as ’the Act’).  On 1st December, 1996, the State Government by  Notification transferred to and vested the said project in the Board.  After the  said notification the possession of the project was handed over to the Board  in the presence of the representatives of the both sides on 2nd December,  1996.  On 5th December, 1996 Memorandum of handing over and taking  over was signed. Thereafter writ petitions being CR 6/97 and CR 283/97  were filed in the High Court of Assam challenging the legality and validity  of the Ordinance and the Act.

In the writ petitions the appellants challenged the constitutional  validity of the Act being ultra vires and violative of Articles 14 and 19 (1)(g)  of the Constitution of India and on the ground of being vague, unfair and  arbitrary.  It was prayed that the Act be struck down being unconstitutional  and beyond the legislative powers of the State and/or is inoperative and void  in law on the grounds mentioned in the writ petitions.

The Preamble of the Act reads as follows: "ASSAM ACT NO.1 OF 1997 (Received the Assent of the Governor on 6th January, 1997) THE BHARAT HYDRO POWER CORPORATION LIMITED  (ACQUISITION AND TRANSFER OF UNDERTAKING) ACT,  1996   

                                       AN ACT

To provide for the acquisition, in the public interest, of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

right, title and interest of the undertaking of the Bharat Hydro  Power Corporation Limited and for matters connected therewith  or incidental thereto.                  WHEREAS the Bharat Hydro Power Corporation Ltd., having  its registered office in the State of Assam, has been engaged for  speedy execution and completion of the Karbi Langpi (Lower  Barapani) Hydro Electric Project for ensuring supply of  electricity in the State of Assam in view of the chronic  shortages of power in the State;

Whereas it was agreed upon in the Memorandum of  Understanding entered into between the Government of Assam,  the Assam State Electricity Board and the M/s Subhas Project  and Marketing Limited on 25th March, 1993 that the project  would be completed and would be commissioned by the month  of June, 1995;

And whereas the company failed in the sole object of speedy  execution of the project within the specified time;

Whereas it is expedient in the public interest that the  undertaking of the Bharat Hydro Power Corporation Limited  should be acquired for the purpose of the enabling the State  Government to efficiently supervise manage and execute the  work expeditiously as to subserve the common good, in the  context of the acute power shortage in the State."     

       In the impugned Act Section 4 provides for general effect of vesting.   Section 5 provides that the State Government shall not be liable for past  liabilities.  Section 6  provides that notwithstanding anything contained in  Sections 3 and 4, the State Government may, if it is satisfied that the Board  is willing to comply, or has complied with such terms and conditions as that  Government may think fit to impose, direct by notification, that the  undertaking of the company and the right, title and interest of the company  in relation to its undertaking which has vested in the Government, vest in the  Board either on the date of the notification or on such earlier or later date as  may be specified in the notification.  The Board shall on and from the date  of such vesting, be deemed to have become the owner in relation to such  undertaking  and all the rights and liabilities of the State Government in  relation to such undertaking shall, on and from the date of such vesting, be  deemed to have become the rights and liabilities, respectively of the Board.   Section 7 provides for payment of compensation that may be fixed by the  Commission considering the value of the assets of the company after  observing proper financial formalities.  Section 8 provides for the gross  amount payable to the company.  Section 9 provides that the State  Government if it is satisfied that the appellant has on or before the appointed  day, disposed of any fixed asset whether by way of sale, exchange, gift,  lease or otherwise than in the normal course of events, with a view to benefit  the company or some other person unduly and thereby causing loss to the  State Government as the succeeding owner of the company, the State  Government shall be entitled to deduct such amount from the amount  payable to the Company under the Act.  Section 10 provides for recovery of  loss from the company.  Section 11 provides for certain deductions to be  made from the gross amount payable.  Section 12 provides for payment of  net amount.  Section 13 provides for recovery of excess amount. Section 14  provides for constitution of Commission. Section 15 provides for the  continuance in service of employees already working on the same terms and  conditions as were applicable to them earlier.  Section 16 provides for  provident fund and other funds.  Section 17 provides for making inventory  of assets.  Section 19 provides for penalty.  Section 20 provides that no court  shall take cognizance of an offence punishable under this Act except with  the previous sanction of the State Government.  Section 22 provides that no

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

suit against the State Government or the Board shall lie for any act done by  them in good faith or intended to be done in good faith in pursuance of the  Act or the Rules made thereunder. Section 23 provides  for bar of  jurisdiction of the court to call in question any act done or purported to have  been done under the Act or the Rules.  Section 24 provides that no provision  of the Indian Electricity Act, 1910, Electricity (Supply) Act, 1948 or any  other Act for the time being in force and of any rule made under any of those  Acts, shall, in so far as it is inconsistent with any of the provisions of the  Act, have any effect.  Section 26 provides  for arbitration in case of any  dispute arising in respect of the matters mentioned thereunder.                  On completion of the pleadings, the writ petitions were placed for  hearing before a learned Single Judge who after hearing the counsel for the  parties, passed a detailed order striking down Sections 3, 4, 5, 6, 7, 7A,  15(2), 23 and 24 of the Act being repugnant to the Central Acts, i.e, the  Indian Electricity Act, 1910 and the Electricity (Supply) Act, 1948.  It was  observed that because of the striking down of the various provisions, the  impugned Act could not be given effect to.  The entire Act was held to be  unenforceable.

       The Board and the State of Assam filed separate Writ Appeals Nos.  460 of 1997 and 464 of 1997 challenging the order of the learned Single  Judge.  The Division Bench by its impugned judgment has set aside the  judgment of the learned Single Judge and held the Act and its provisions to  be intra vires of the Constitution.  Resultantly the writ appeals were accepted  and writ petition filed by the appellants were ordered to be dismissed.            

Before adverting to the submissions made before us we would broadly  refer to a few fundamental principles  regarding the competence of the  respective legislatures to enact laws and as to which law would prevail in  case of inconsistency between the laws made by the Parliament and the laws  made by the State Legislature.   The principles are being referred to in the  context of the controversy involved in the present appeals.

       India being a Union of States has Union Legislature (Parliament) and  the State Legislatures for framing laws.  Legislative fields in which the  union or the State legislatures can frame laws are prescribed in the three lists  contained in the Seventh Schedule to the Constitution of India \026 Union List  (List I); State List (List II); and Concurrent List (List III ).  Source of power  for enacting laws relating to the three lists is to be found in Articles 245 and  246 of the Constitution of India.  Article 245 provides that subject to the  provisions of the Constitution, Parliament may make laws for the whole or  any part of the territory of India, and the Legislature of a State may make  laws for the whole or any part of the State.  Law made by the Parliament  shall not be deemed to be invalid on the ground that it would have extra- territorial operation.  Article 246 reads:

"246. Subject-matter of laws made by  Parliament and by the Legislatures of States.-  (1) Notwithstanding anything in clauses (2) and  (3),  Parliament  has exclusive power to make laws  with respect to any of the matters enumerated in  List I in the Seventh Schedule (in this Constitution  referred to as the "Union List").

(2) Notwithstanding anything in clause (3),  Parliament and, subject to clause (1), the  Legislature of any State also, have power to make  laws with respect to any of the matters enumerated  in List III in the Seventh Schedule (in this  Constitution referred to  as the "Concurrent List").

(3) Subject to clauses (1) and (2), the Legislature  of any State has exclusive power to make laws for  such State or any part thereof with respect to any

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

of the matters enumerated in List II in the Seventh  Schedule (in this Constitution referred to as the  ’State List’).

(4) Parliament has power to make laws with  respect to any matter for any part of the territory of  India not included in a State notwithstanding that  such matter is a matter enumerated in the State  List."  

         Without going into the finer aspects but broadly speaking it provides  that Parliament has exclusive power to legislate with respect to matters in  List I.  The State Legislature has exclusive power to legislate in respect to  matters in List II.  Both Parliament and the State Legislature have power to  make laws with respect to any of the matters enumerated in List III.   

In a federal Constitution, in which there is a division of legislative  powers between the Central and the Provincial Legislatures, controversies  often arise as to whether one or the other legislature is not exceeding its  legislative power, and encroaching on the other’s constitutional legislative  power.  To resolve the dispute as to which law would prevail in a case where  both the Union as well as the State Legislature have the competence to enact  laws, Article 254 provides that if any provision of a law made by the  Legislature of a State is repugnant to any provision of law made by  Parliament which Parliament is competent to enact, or to any provision of an  existing law with respect to one of the matters enumerated in the Concurrent  List, then, subject to the provisions of clause (2), the law made by  Parliament shall prevail and the law made by the Legislature of the State  shall to the extent of the repugnancy be void.   Clause (2) provides that  where a law made by the Legislature of a State with respect to one of the  matters enumerated in the Concurrent List contains any provisions repugnant  to the provisions of an earlier law made by the Parliament or an existing law  with respect to the matters, then, the law so made by the Legislature of such  State shall, if it has been reserved for the consideration of the President and  has received his assent, prevail in that State.

       It is likely to happen from time to time that enactment though  purporting to deal with a subject in one list touches also on a subject in  another list and prima facie looks as if one legislature is impinging on the  legislative field of the another Legislature.  This may result in large number  of statutes being declared unconstitutional because the legislature enacting  law may appear to have legislated in a field reserved for the other  legislature.  To examine whether a legislation has impinged in the field of  other legislatures, in fact or in substance, or is incidental, keeping in view  the true nature of the enactment, the Courts have evolved the doctrine  of  "pith and substance" for the purpose of  determining whether it is legislation  with respect to matters in one list or the other.  Where the question for  determination is whether a particular law relates to a particular subject  mentioned in one list or the other, the courts look into the substance of the  enactment.  Thus, if the substance of enactment falls within Union List then  the incidental encroachment by the enactment on the State List would not  make it invalid.  This principle came come to be established by the Privy  Council when it determined appeals from Canada or Australia involving the  question of legislative competence of the federation or the States in those  countries.  This doctrine came to be established in India and derives its  genesis from the approach adopted by the Courts including the Privy   Council in dealing with controversies arising in other federations.   For  applying the principle of "pith and substance" regard is to be had (i) to the  enactment as a whole, (ii) to its main objects, and (iii) to the scope and effect  of its provisions.  For this see: Southern Pharmaceuticals & Chemicals  Vs. State of Kerala, AIR 1981 SC 1863; State of Rajasthan Vs.  G.Chawla, AIR 1959 SC 544; Thakur Amar Singh Vs. State of  Rajasthan, 1955 (2) SCR 303, Delhi Cloth and General Mills C o. Ltd.  Vs. Union of India AIR 1983 SC 937 and Vijay Kumar Sharma & Ors.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

Vs. State of Karnataka & Ors., AIR 1990 SC 2072.  In the last mentioned  case it was held:

"Where a law passed by the State Legislature  while being substantially within the scope of the  entries in the State List entrenches upon any of the  Entries in the Central List the constitutionality of  the law may be upheld by invoking the doctrine of  pith and substance if on an analysis of the  provisions of the Act it appears that by and large  the law falls within the four  corners of the State  List and entrenchment, if any, is purely incidental  or inconsequential."

       Another principle which needs to be stated here is that when the  question is as to whether a provincial legislation is repugnant to the laws  enacted by the Parliament the onus to showing its repugnancy and the extent  to which it is repugnant would be on the party attacking its validity.  There  ought to be a presumption in favour of its validity and every effort should be  made to reconcile them and construe both so as to avoid they being  repugnant to each other.  Repugnancy has to be there in fact and not based  on a mere possibility.  If the two enactments operate in different fields  without encroaching upon each other then there would be no repugnancy.  In  Shyamakant Lal Vs. Rambhajan Singh & Ors., AIR 1939 FC 74, the  Court held:

"When the question is whether a provincial  legislation is repugnant to an existing Indian Law,  the onus of showing its repugnancy and the extent  to which it is repugnant should be on the party  attacking its validity.  There ought to be a  presumption in favour of its validity, and every  effort should be made to reconcile them and  construe both so as to avoid their being repugnant  to each other; and care should be taken to see  whether the two do not really operate in different  fields without encroachment.  Further repugnancy  must exist in fact, and not depend merely on a  possibility:

       Their Lordships can discover no adequate  grounds for holding that there exists repugnancy  between the two laws in districts of the province of  Ontario where the prohibitions of the Canadian Act are  not and may never be in force: (1896) AC 348 at pages  369-370."    

       It was conceded by the learned counsels appearing on both sides that  this view has been accepted and reiterated by this Court in a number of  judgments.  It is not necessary to refer to all those cases which would be  repetitive only. Though in the High Court (both before the learned Single  Judge as well as Division Bench) and in the special leave petition number of  points were taken/argued but before us the submissions were limited to three  points to which reference would be made in the subsequent paragraphs.   

Before adverting to the actual submissions made by the respective  learned counsels, entries in the three lists relating to generation of  power/electricity and acquisition may be noticed, which read: Entry 56 of List I:  Regulation and development of inter-State rivers         and river valleys to the extent to which such  regulation and development under the control of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

the Union is declared by Parliament by law to be  expedient in the public interest.

Entry 17 of List II: Water, that is to say, water supplies, irrigation and  canals, drainage and embankments, water storage  and water power subject to the provisions of entry  56 of List I.  

Entry 38 of List III: Electricity;  

Entry 42 of List III:  Acquisition and requisitioning of property.    

It was conceded before us that Entry 56 List I would not be  applicable.   

Learned Single Judge held that the Act enacted by the Assam  Legislature would fall under Entry 38 of List III.  Since the Parliament had  already enacted comprehensive laws regarding the generation and supply of  electricity by enacting the Indian Electricity Act, 1910 (hereinafter referred  to "Act of 1910") and the Electricity (Supply) Act, 1948 (hereinafter  referred to "Act of 1948") covering the entire field,  the field being  occupied, the State Legislature did not have the competence to enact the  laws under Entry 38 of List III. As the Act passed by the State Legislature   related to a field which was already occupied by enactments of the Central  Legislature, was not  reserved for the assent of the President of India and  assented to by him the same was void being repugnant to the Central  legislation.  Division Bench reversing the judgment of the learned Single  Judge held that the Act passed by the Assam Legislature would fall under  Entry 17 of List II and not under Entry 38 of List III and therefore would not  be repugnant to the Central legislation.  Another finding recorded by the  Division Bench is that even if the Act is taken to be enacted under Entry 38  of List III, even, then there was no actual repugnancy as both the Acts did  not operate in the same field.  Since there was no repugnancy, it was not  necessary to keep the Act for the assent of the President of India.  Division  Bench held the Act to be valid, intra vires and falling within the legislative  competence of the State Legislature.  

       Mr. V.R. Reddy learned senior counsel for the appellants contended  that "Electricity" for the purpose of legislation is enumerated in Entry 38 of  the concurrent list.  That electricity in broad term includes "generation of  electricity from any source whether thermal, water, gas, wind or any other  source".  As far as generating company and licensee are concerned the  Central Government has made specific provisions in the Act of 1910 and  Act of 1948 for compulsory purchase of undertaking and a detailed  procedure has been prescribed under Sections 6, 7, 7A,  8, 9, 10 and 11 of  the Act of 1910 and Sections 37 of the Act of 1948.   The impugned Act and  Acts of 1910 and 1948 passed by the Central Legislative operate in the same  field as in both the sets of Acts there are provisions for compulsory purchase  of undertakings producing electricity.  The State Act transgresses the Central  Acts and therefore repugnant to the Central Acts.  In view of the provisions  of Article 254 Central Acts would prevail as the State Act was neither kept  reserved for the assent of the President of India nor assented to by the  President of India.  The State Act was bad in law and could not be enforced  being ultra vires of the Constitution of India and beyond the Legislative  competence of the State Legislature.  

On the other hand, Mr. Vijay Hansaria, learned senior counsel  appearing for the State of Assam as well as the Board contended that the  impugned Act was not repugnant to the provisions of the Central Acts.   According to him, impugned Act and the Central Acts  in the instant case  operate in two different fields without encroaching upon each others field in  as much as the true nature and character of the impugned State Act is to  acquire the undertaking, whereas both the Central Acts have made general  provisions with regard to supply and use of electrical energy. It was  vehemently contended that there was no violation of Sections 3, 4, 5, 6, 7 of  

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

7A  of the Act of 1910, by Sections 3 and 4 of the impugned Act as the  appellants were not ’licensees’ under the Act of 1910 and the State  Government had the jurisdiction and power to acquire any property for  public purposes making necessary provisions for payment of compensation.    That the impugned Act has taken adequate care for payment of  compensation after proper assessment by the Commission to be constituted  by the authority.  There is no direct conflict between the provisions of the  Central Act and the State Act bringing a position where one cannot be  obeyed without disobeying the other and the impugned Act and the Central  Act both can stand together even though the State law may provide for  certain additional/supplementary provisions.   In substance the submission  made is that in pith and substance the State Act is not repugnant to the  Central Acts as the two sets of Acts operate in different fields.

Learned counsel appearing for the appellants placing reliance on a  Constitution Bench decision of this Court in Deepchand Vs. State of U.P.,   AIR 1959 SC 648, contended that even in the absence of direct conflict, the  State law would be inoperative as the Central Acts of 1910 and 1948  intended to be exhaustive Codes in the field of electricity and the State  Legislature did not have the legislative competence  to enact law in the field  occupied by the Central Legislation.  Law made by the State Legislature in  the occupied field could not come into operation unless it was reserved for  the assent of the President of India and assented by him in terms of Article  254 (2).  It was observed in para 29:

"Nicholas in his Australian Constitution, 2nd Edn.  Page 303, refers to three tests of inconsistency or  repugnancy: (1)     There may  be inconsistency in the actual  terms of competing statutes; (2)     Though there may be no direct conflict, a  State Law may be inoperative because the  Common Wealth Law, or the award of the  Common Wealth Court, is intended to be a  complete exhaustive Code; and   (3)     Even in the absence of intention, a conflict  may arise when both State and Common  Wealth seek to exercise their powers over  the same subject matter.

This Court in Tika Ramji vs. State of Uttar  Pradesh, 1956 SCR 393: [(S) AIR 1956 SC 676]  accepted the said three rules, among others, as  useful guides to test the question of repugnancy.   In Zaverbhai Amaidas vs. State of Bombay, 1955- 1 SCR 799: (AIR 1954 SC 752), this Court laid  down a similar test.  At page 807 (of SCR): (at p.  757 of AIR), it is stated:

       "The principle embodied in section 107 (2)  and Article 254 (2) is that when there is legislation  covering the same ground both by the  centre and  by the Province, both of them being competent to  enact the same, the law of the Centre should  prevail over that of the State."

Repugnancy between two statutes may thus be  ascertained on the basis of the following three  principles:

(1)     Whether there is direct conflict between the  two provisions; (2)     Whether Parliament intended to lay down an  exhaustive code in respect of the subject  matter replacing the Act of the State

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

Legislature; and  (3)     Whether the law made by Parliament and  the law made by the State Legislature  occupy the same field."   

This Court laid down three broad principles to find out whether there  is  any  Repugnancy between the two statutes, i.e., whether there is a direct conflict  between the two statutes, whether the two statutes occupied the same field  and as to whether the Parliament intended to lay down an exhaustive code in  respect of the subject matter.           In M.Karunanidhi Vs.  Union of India,  AIR 1979 SC 898, Fazal  Ali, J. reviewed the authorities on repugnancy under Article 254 and held  that the following propositions emerged from decided cases:

"1.     That in order to decide the question of  repugnancy it must be shown that the two  enactments contain inconsistent and irreconcilable  provisions so that they cannot  stand together or  operate in the same field.

2.      That there can be no repeal by implication  unless the inconsistency appears on the face of the  two statutes.

3.      That where the two statutes occupy a  particular field, but there is room or possibility of  both the statutes operating in the same field  without coming into collision with each other, no  repugnancy results.   4.      That where there is no inconsistency but a  statute occupying the same field seeks to create  distinct and separate offences, no question of  repugnancy arises and both the statutes continue to  operate in the same field."

       Without entering into the controversy whether the State Act would fall  under Entry 17 of List II or under Entry 38 of List III and assuming (but not  holding that it falls under Entry 38 of List III) we examine as to whether  there is any conflict between the provisions of the Central Act and the State  Act.  If there is no conflict at all the question of repugnancy would not arise.   

The State Act has been enacted to take over the Bharat Hydro Power  Corporation in public interest as it could not complete the project within  time so that the State could efficiently supervise manage and execute the  work expeditiously to subserve the common good, in the context of the acute  power shortage in the State.  The State after taking over the project had the  power to hand it  over to the Board for completing the project.  Provision has  been made to pay adequate compensation which is to be determined by a  Commission constituted under the Act for payment of adequate  compensation.  Contention raised on behalf of the appellants is that Central  Act makes specific provisions for compulsory purchase of undertaking and a  detailed procedure has been prescribed and the State Act has created a  parallel procedure for purchase of the undertaking thereby impinging on the  Central Act and is therefore repugnant to the Central Act.  We do not find  any substance in this submission.

       The Act of 1910 relates to the supply and use of electrical energy.   Section 3 provides   that the State Government may on an application made  in the prescribed form and on payment of the prescribed fee (if any) grant a  license to supply energy in any specified area and also to lay down or place

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

electric supply \026lines for the conveyance and transmission of energy.   Section 4 speaks of revocation or amendment of licenses under the specified  conditions.  Section 4A speaks of the amendment of  licenses.  Section 5   makes provisions where license of a licensee is revoked.  Section 6 relates to  purchase of undertakings.  Section 6 of the Act of 1910 reads:          "6. Purchase of undertakings.- (1) Where a  license has been granted to any person, not being a  local authority, the State Electricity Board shall,- (a)     in the case of a license granted before the  commencement of the Indian Electricity  (Amendment) Act, 1959 (32 of 1959) on the  expiration  of each such period as is  specified in the license; and  (b)     in the case of license granted on or after the  commencement of the said Act, on the  expiration of such period not exceeding  thirty years and of every such subsequent  period, not exceeding twenty years, as shall  be specified in this behalf in the license,

have the option of purchasing the undertaking and  such option shall be exercised by the State  Electricity Board serving upon the licensee a  notice in writing of not less than one year requiring  the licensee to sell the undertaking to it at the  expiry of the relevant period referred to in this sub- section.

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

(3) Where neither the State Electricity Board nor  the State Government elects to purchase the  undertaking, any local authority constituted for an  area within which the whole of the area of supply  is included shall have the like option to be  exercised in the like manner of purchasing the  undertaking.

(4) If the State Electricity Board intends to  exercise the option of purchasing the undertaking  under this section, it shall send an intimation in  writing of such intention to the State Government  at least eighteen months before the expiry of the  relevant period referred to in sub-section (1) and if  no such intimation as aforesaid is received by the  State Government the State Electricity Board shall  be deemed to have elected not to purchase the  undertaking.

(5) If the State Government intends to exercise the  option of purchasing the undertaking under this  section, it shall send an intimation in writing of  such intention to the local authority, if any,  referred to in sub-section (3) at least fifteen months  before the expiry of the relevant period referred to  in sub-section (1) and if no such intimation as  aforesaid is received by the local authority, the  State government shall be deemed to have elected  not to purchase the undertaking.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

(6) Where a notice exercising the option of  purchasing the undertaking has been served upon  the licensee under this section, the licensee shall  deliver the undertaking to the State Electricity  Board, the State Government or the local authority,  as the case may be, on the expiration of the  relevant period referred to in sub- section (1)  pending the determination and payment of the  purchase price.

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

       Section 4 which provides for revocation or amendment of licenses,  Section 4A which provides for amendment of  licenses at the instance of the   licensee or otherwise and Section 5 which enumerates the procedure to be  followed where the Government revokes the license  under Section 4 would  not be attracted/applicable as the appellants are admittedly not licensees.   These provisions would apply to licensees only. Section 6 is again  applicable to licensees only.  It is not applicable to sanction holders.  It talks  of  pre-emptory right of the Board to purchase the undertaking on the expiry  of the period mentioned in clauses (a) and (b) of Section 6 which can be  done after serving upon the licensee a notice in writing of not less than one  year requiring the licensee to sell the undertaking to it at the expiry of the  period referred to in clauses (a) and (b) of Section 6.   Section 6 (7) provides  for payment of purchase price by the purchaser to the licensee determined in  accordance with the provisions of Section 7A.  Since the appellants have not  been given a license and are not ’licensees’, Section 6 would not apply.  Under Section 6 there is an ’option’ with the Board to purchase.   The word  ’option’ leaves two courses open to the authority, i.e.,  either to purchase an  undertaking or to renew the license.  Either of the two courses would not be  available as the appellant No. 1 is not a licensee.  

Section 7A which deals with the determination of purchase price  again talks of where an undertaking of a licensee is purchased.  Since the  appellants are not the licensees they would not be covered under any of the  provisions dealing with the sale or purchase of undertaking as provided  under the Act of 1910.  The benefit of Sections 7 and 7A shall also not be  available because it speaks of an undertaking of a licensee.  As the  appellants are not covered by the provisions of the Act of 1910 the question  of the State Act which seeks to take over the appellants’ undertaking and  make provisions for compensation would not be repugnant to any of the  provisions of the Act of 1910.  Submission made by the learned counsel for  the appellants that the State Act creates procedure parallel to the existing  procedure provided under Section 6 of the Act of 1910 or for determing the  purchase price as provided under Section 7A cannot be accepted because the  provisions of Chapter II (Sections 3 to 11) are not applicable to the  appellants as they are not licensees.  

       Faced with this situation Mr.V.R. Reddy, learned senior counsel for  the appellants, submitted that the appellants are deemed licensees under the  provisions of Act of 1948. For this he has referred to Section 26A of the Act  of 1948.  Section 26A reads as:     "26A. Applicability of the provisions of Act 9 of  1910 to Generating Company.- (1)  Notwithstanding  anything contained in sub- section (2), nothing in the Indian Electricity Act,  1910, shall be deemed to require a Generating  Company to take out a  licence under that Act, or  to obtain sanction of the State Government for the  purpose of carrying on any of its activities.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

(2)     Subject to the provisions of this Act,  Sections 12 to 19 (both inclusive) of the Indian  Electricity Act, 1910 (9 of 1910) and clauses XIV  to XVII (both inclusive) of the Schedule thereto,  shall, as far as may be, apply in relation to a  Generating Company as they apply in relation to a  licensee under that Act (hereafter in this section  referred to as the licensee) and in particular a  Generating Company may, in connection with the  performance of its duties, exercise-    

(a)     all or any of the powers conferred on a  licensee by sub-section (1) of Section 12 of the  Indian Electricity Act, 1910, as if -   

(i)     the reference therein to licensee were  a reference to the Generating  Company; (ii)    the reference to the terms and  conditions of licence were a reference  to the provisions of this Act and to the  articles of association of the  Generating Company; and  (iii)   the reference to the area of supply  were a reference to the area specified  under sub-section (3) of section 15A  in relation to the Generating  Company;  

(b)     all or any of the powers conferred on a  licensee by sub-section (1) of section 14 of the  Indian Electricity Act, 1910 (9 of 1910), as if -

(i)     the references therein to licensee were  references to the Generating Company, and  (ii)    the Generating Company had the powers of  a licensee under the said Act.

(3)     The provisions of section 30 of the Indian  Electricity Act, 1910 (9 of 1910) shall not apply to  the transmission or use of energy by a Generating  Company.

(4)      For the removal of doubts, it is hereby  declared that sections 31 to 34 (both inclusive) of  the Indian Electricity Act, 1910 (9 of 1910) shall  apply to a Generating Company."

       Section 26A provides that notwithstanding the provisions of Sub- Section (2) a generating company would not be required to take a licence  under the Act of 1910 or to obtain sanction of the State Government for the  purpose of carrying on any of its activities.  Under sub-section (2) provisions  of Sections 12 to 19 of the Act of 1910 are made applicable to a generating  company as they apply to a licensee under the 1910 Act.  It is to be noted  that provisions of Sections 3 to 11 of 1910 Act have not been made  applicable to the generating company.  

       "Generating Company" has been defined in Section 2(4A) of the 1948  Act to mean:

"’Generating Company’ means a company  registered under the Companies Act 1956 (1 of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

1956) and which has among its objects the  establishment operation and maintenance of  generating stations"

         "Licensee" has been defined under this Act in Section 2(6) as under:

" "licensee" means a person license under Part II of the  Indian Electricity Act, 1910 (9 of 1910) to supply energy  or a person who has obtained sanction under Section 28  of that Act to engage in the business of supplying energy  but the provisions of Section 26, or 26A of this Act  notwithstanding, does not include the Board or a  Generating Company."    

A combined reading of Sections 2(4A) and 2(6) makes it clear that  even if  the appellant No. 1 is taken to be a generating company (which is  not necessary to be determined in this case) it would not be a ’licensee’  because the generating company has been specifically excluded from being a  licensee notwithstanding the provisions of Sections 26 or 26A of the 1948  Act.  As pointed out earlier only Sections 12 to 19 of the Act of 1910 have  been made applicable to a generating company.  Sections 3 to 11 of  Act of  1910 do not apply to a generating company.

Section 37 of Act of 1948 provides for purchase of generating stations  or undertakings or main transmission lines by the Board.  This Section  would also not apply to the present case.  The legislature in its wisdom made  only certain provisions of Act of 1910 applicable to a generating company in  Section 26A. Contention that the impugned Act is in violation of provisions  of Act of 1910 or the Act of 1948 has no basis to stand on.  

The impugned Act and the Central Acts in the instant case operate in  two different fields without encroaching upon each other’s field in as much  as the true nature and character of the impugned State Act  is to acquire the  undertaking and pay compensation as provided in the Act whereas both the  Central Acts (Acts of 1910 and 1948) have made general provisions with  regard to supply and use of electrical energy.  The provisions regarding  purchase of undertaking in the Act of 1910 would not be applicable as the  appellants are not licensees within the meaning of the Act of 1910. There is  not even a semblance of conflict what to talk of direct conflict between the  impugned State Act and  the Central Acts to bring about the situation where  one cannot be obeyed without disobeying the others.   Both the Acts can  operate simultaneously as they do not occupy the same field.  As the  enactments operate in two different fields without encroaching upon each  other’s field there is no repugnancy.

Since there is no repugnancy the question of the State Act being kept  for the consideration of the President or receiving his assent did not arise.

For the reasons stated above, we do not find any merit in these appeals  and the same are dismissed.  Parties shall bear their own costs in these  appeals.